Guest Post: Assessing Khan Resources Arbitration

Matthew Levine

Following expropriation of Dornod uranium investment, Khan Resources announces conclusion of arbitration with Mongolian government


Khan, a mining company listed on the Toronto Stock Exchange’s venture board, its holding company, and its erstwhile joint-venture partner, recently announced victory in arbitration with Mongolia. Khan has apparently been awarded a base amount of US$80 million plus interest as compensation for Mongolia’s expropriation of its investment in the Dornod uranium deposit.

There is still a great deal about the arbitration that remains unknown: the information in Khan’s press release provides an outline while leaving the details blank, and the award itself has not yet been made public. Non-lawyer colleagues likely have questions about Khan’s apparent victory. Some of these questions – for instance, how was the expropriated investment valued, we do not know whether the tribunal used a discount cash flow analysis or some other method to value the Dornod deposit – will only be answered once the award is made public. Other questions though, about for instance the basis for arbitration between Khan and Mongolia as well as the arbitration’s procedure, can be answered based on past experience with investor-state arbitration.


Readers of this blog may be aware that Khan began investing in the Dornod project in the mid 1990s as Ulaanbaatar was undergoing post-Soviet reforms. And that, after some years Khan released a feasibility study in 2009 showing commercial viability, which prompted a takeover bid from China National Nuclear Corporation in February 2010. Subsequently, to simplify a complicated chain of events, the Mongolian government expropriated a majority interest in Dornod without compensation, suspending and then cancelling Khan’s mining licenses.

Readers may also be aware that Canada and Mongolia have started negotiating a Foreign Investment Promotion and Protection Agreement (FIPA). FIPAs like other International Investment Agreements (IIAs) contain both substantive obligations – standards of treatment – and dispute settlement provisions that aim to protect foreign investors from discriminatory or otherwise expropriatory conduct by the host state. In the case of Khan, this would have potentially meant an obligation for Mongolia to pay compensation and access to international tribunal with Mongolia whereby Khan could enforce the compensation obligation judicially. However, while negotiations towards a FIPA started in 2009, progress appears to have stalled and there is to date no treaty.

Arbitration agreement(s)

Given the lack of a FIPA between Canada and Mongolia, it only makes sense to question the basis on which Khan filed for arbitration. A complete answer will have to wait for the award, but some details emerge from Khan’s 10 January 2011 Notice of Arbitration (Notice). In the Notice, Khan cites a series of legal instruments as the basis for arbitration with Mongolia, i.e.: the Energy Charter Treaty, the Mongolian Foreign Investment Law, the CAUC Founding Agreement, and the UNCITRAL Arbitration Rules.

The key point to understand here is that each part of Khan’s ‘corporate family’ or ‘corporate structure’ relied on different instruments to bring arbitration against Mongolia. For example, Khan’s offshore holding company – Khan Resources BV – was able to rely on the Energy Charter Treaty. (The Energy Charter Treaty, or ECT, was one of the most ambitious agreements arising from the collapse of European communism. Among other objectives, it aimed to bring western European capital to oil-rich former-Soviet spaces through the inclusion of an IIA. Mongolia is a signatory to the ECT as is the Netherlands.) Khan Resources BV as a company incorporated in the Netherlands is an investor for the purposes of the ECT and was thus able to claim its protections, including arbitration, against Mongolia.

Dutch holding companies such as Khan Resources BV are routinely used for tax planning but sophisticated solicitors are recognizing that the ECT – not to mention the Netherlands extensive network of bilateral IIAs – provides for investment protection advantages as well. The result is referred to as ‘treaty structuring’ by sympathetic observers and as ‘treaty shopping’ by critics.

The Mongolian Foreign Investment Law is also noteworthy. Khan’s Notice refers to Article 25 as providing that “the settlement of disputes may be resolved pursuant to the provisions of ‘international treaties to which Mongolia is a party or by any contract between the parties’”. The Notice concludes that this provides an “additional basis of consent” beyond the ECT. Mongolia undertook major revisions to this statute, which also dates to the post-Soviet period, in 2013.

Arbitration Procedure

I have been asked whether the arbitration’s procedure was impacted by the fact that the Canada – Mongolia FIPA has not been concluded. One useful way of approaching this question is to note the fourth legal instrument relied on in Khan’s Notice, i.e. the UNCITRAL Arbitration Rules. The United Nations Commission on International Trade Law (commonly referred to as UNCITRAL) first adopted arbitration rules in 1976. A major revision exercise was completed in 2010. Canada’s FIPAs always include the option of using the UNCITRAL Arbitration Rules.

The UNCITRAL Arbitration Rules are today one of the two leading sets of procedural rules for investor-state arbitrations. The other being the arbitration rules of the International Centre for the Settlement of Investment Disputes (ICSID), which is a branch of the World Bank. There are a range of differences between ICSID and UNCITRAL procedure, but it cannot be said that one or other systematically advantages claimants as opposed to defendants, or investors as opposed to governments.


I hope that this albeit short blog post helps non-specialists to better understand Khan’s investor-state arbitration claim against Mongolia. As we have seen, Khan relied on multiple arbitration agreements and each member of Khan’s corporate family was involved in ‘treaty structuring’. Also, the procedure of the arbitration took place according to the UNCITRAL Arbitration Rules rather than the arbitration rules of ICSID. These developments fit the pattern found in many other cases where a developing country government expropriates a lucrative natural resource investment. According to the World Bank, for instance, more than one third of ICSID arbitrations initiated in 2014 involved oil, gas, or mining investments.

Exxon-Mobil’s claim against Venezuela for expropriation of two major assets is a relatively well known case featuring facts not dissimilar to the Dornod expropriation. First off, Exxon-Mobil’s claim was brought by five parts of Exxon’s corporate structure including an offshore holding company and various local operating companies. Although the arbitration was not brought under the Energy Charter Treaty, it again involved the Netherlands and took place under an IIA between the Netherlands & Venezuela. The arbitration used the ICSID Arbitration Rules. As it happens, I have prepared a somewhat more detailed summary that can be accessed here,

In addition to treaty shopping and the choice of ICSID over UNCITRAL procedure, the Exxon-Mobil award sheds light on how arbitration tribunals approach the valuation of expropriated assets. On the one hand, the tribunal used a discounted cash flow analysis (DCF) for one of the two assets on the basis that it was already at the production stage. On the other hand, the second asset was not yet at the production stage and the tribunal found it more appropriate to consider the claimants’ sunk investment, rather than DCF. As mentioned in the intro to this blog post, we do not know how the Khan tribunal approached valuation: certainly the Dornod project had not advanced to production; but investor-state tribunals are not bound by precedent instead interpreting the specific treaty being invoked, i.e. the ECT in this case.

About Matthew Levine

Matthew Levine is a Canadian lawyer and a fellow at the University of Toronto, Faculty of Law. Matthew began his legal career as an articled student and associate with the International Trade and Arbitration group of a national firm. His practice with mining companies and entrepreneurs includes corporate, securities, and tax law advice as well as arbitration-related work. His international experience includes stints in Geneva and Singapore. Matthew is a graduate of the University of British Columbia (JD, MA) and McGill University (BA).

Posted in Business, Canada, Foreign Investment, International Agreements, International Relations | Leave a comment

Guest Post: Mongols on the International Film Stage

Marissa Smith

Mongols on the International Film Stage: Negotiating the International Relations of Mongolia By Means of Their Understanding by Others

During a press conference in Berlin March 3rd with Chancellor Merkel, President Elbegdorj quipped, “Die Mongolen sind wieder da, aber mit friedlichen Absichten!” (The Mongols are back, but with friendly intentions!”) In meetings coinciding with the International Tourism Fair (ITB) in Berlin, Mongolian officials called on Germany to support further involvement in Mongolian transport infrastructure, perhaps involving Lufthansa as well as rail projects needed to access natural resources (particularly rare earth minerals that Germany has expressed interest about in recent years).

President Elbegdorj’s comment reveals the quality of the tourism fair and government talks as not simply Mongolia’s asking for development aid or marketing its natural resource commodities, but as Mongolia beckoning foreign partners while managing and capitalizing on these partners’ own strong impressions and ideas about Mongolia and Mongols. Since Mongolia’s Democratic Revolution (now a period of twenty-five years), films about Mongols have been another example of how Mongolians often use and negotiate with, rather than flatly deny the validity of, understandings that others have of them.

With Wolf Totem’s recent release and box office success in France, China, and Mongolia, Mongolia’s presence on the international film stage continues to demonstrate how Mongolians maintain involvement in creative works spearheaded by others and use them to build further international relations, but ones that usually remain un-depicted in international popular culture.

Directed by Jean Annaud (Seven Years in Tibet, The Name of the Rose, The Bear, Enemy at the Gates) and produced by China’s largest state film enterprise (China Film Group), Wolf Totem is based on the semi-autobiographical novel by Lu Jiamin, who penned the book using the pseudonym Jiang Rong. Translated into Mongolian in 2010, the novel was a best-seller in Mongolia as well as in China and the United States. As in the case of Sergei Bodrov’s “Mongol,” however, only one of the lead actors was Mongolian, the female love interest (R. Ankhnam in Wolf Totem as Gasmaa, and Khulan Chuluun as Borte in Mongol). A few additional cast members (including Gasmaa’s husband Batu who dies around halfway through the film) were Mongols from China and Russia.

Early responses to the book and to the film in Mongolian online journalism and associated discussions have thus far not much elaborated on the lack of Mongolian actors per se, let alone how Chinese (and Russians, in the case of Mongol and Urga) frame relations with Mongolia and Mongols in terms of gender. (See Uradyn Bulag’s collections The Mongols at China’s Edge and Collaborative Nationalism in particular for this, and the study of these films for their insight into the Chinese and Russian sides of their relations with Mongolia is definitely further merited but beyond the scope of this post).

Rather, early discussions in the Mongolian context have:

  1. Emphasized the international character of the film and the role of Mongolians and Mongolia as part of a particular international endeavor and general international community. An American connection is made by citing director Jean Annaud as “Oscar-winning” and the participation of actors from France, Canada, and Australia ( as well as China and Mongolia is noted. Most news stories coming up in a search of “Chonon Suld” (the title of the film in Mongolian) around the release are features about Mongolian actress R. Ankhnam, and comments of “amjilt khusii Ankhnam” (“wishing you success, Ankhnam”) are common in threads below articles about the film.
  2. Debated about the accuracy with which Mongolian culture is portrayed. It is within these discussions that (widely varying) comments about the Mongolness of Inner Mongols are made and (often very strong and violently put) critical statements of Mongol-Chinese relations made. See in particular the argumentative comments on an article describing a panel of academics’ denouncement of the film’s accuracy vis-à-vis Mongolian culture (, and a piece comparing the making of Wolf Totem to that of Urga, in the sense that Mongolia disallowed production and China saw opportunity so the films were made in Inner Mongolia: Recall that “Mongol” was filmed in Kazakhstan after the Mongolian government also refused Bodrov’s script. Also here ( is another opinion piece critical of the film’s representation of Mongolian practices that obliquely comments on the film’s reflection of Mongolian-Chinese relations more broadly. I would emphasize however, that comments approving of the film are prevalent, including encouragements that all Mongols see the film and “khiimor sergeene” (

In short, through ambivalence and debate about the accuracy of films about Mongolia and Mongols that have taken prominent positions in international popular culture, Mongolians reconsider thorny issues of national and international identity and relation among themselves while enticing foreigners to visit Mongolia as the truly authentic site of the timelessly pastoral and environmentally friendly. The film will undoubtedly spur tourists to visit this summer and in years to come.

Unfortunately, creative international relations like those involved in the making of Wolf Totem (for instance the involvement of Mongolian wolves and gazelles and Canadian animal trainers:, and Jean Annaud’s dramatic shift in relation to the Chinese government:, unfortunately remain largely unportrayed in international popular culture.

The converse is true of the Sundance-winning Genghis Blues, a point of reference for many Americans interested in Mongolia, while I have not known Mongolians to claim as their own (the film was made in and about Americans and Tuvans in Tuva). Mongolian-made films shown at international film festivals vary widely in this regard, yet the most prestigious awards go to those that maintain the illusion of Mongolians as isolated and timeless (The Story of the Weeping Camel) or undergoing a violation of this isolation and along with it the disruption of supposedly socially and environmentally critical tradition (Khadag).

In any case, being perceived as quaint and naive “grasslanders,” let alone marauding hordes (in both cases as essentially anti-international) compromises Mongolian’s ability to pursue international relationships as an experienced and developed partner, as it continues to drive hard bargains in international mining projects and seek a direct flight between Ulaanbaatar and Berlin operated by Lufthansa.

(Special thanks to “Olav” for helping me access the film! I also thank him and others for their conversations about Wolf Totem on Facebook.)

About Marissa Smith

Marissa J. Smith is a PhD Candidate in Anthropology at Princeton University. Her dissertation work concerns relationships of “international friendship” in Erdenet, Mongolia, which involve Russians as well as Americans, mining engineers as well as herders. Marissa works to bring this ethnographic work to bear in conversations on alterity and translation, nationalism, corporations, development, and social mobility, particularly between urban centers and so-called rural peripheries.

Posted in Cinema, Marissa Smith, Mongolia and ..., Pop Culture | 1 Comment

A Potential Breakthrough in Mongolia’s Relations With North and South Korea

Mongolia takes a resolutely middle road when it comes to North and South Korea. It values its long-standing relations with the North while developing its newly-declared strategic partnership with the South. Due to its geographic location, wedged between Russia and China, Mongolia is often considered a “regionless” state. Therefore, engaging the two Koreas is particularly important for Mongolia as it attempts to integrate itself into Northeast Asia as well as expand its foreign economic and cultural interactions beyond China. Until now, the two Koreas have been hesitant about engaging in trilateral engagements with Mongolia, while the other major powers have, heretofore, paid little attention to Ulaanbaatar’s constructive engagements with Seoul and Pyongyang. However, the series of diplomatic initiatives that transpired over the past year suggest that the members to the Six Party Talks on de-nuclearizing North Korea—the United States, China, Russia, Japan, and North and South Korea—are changing their attitude toward Mongolia’s efforts. Meanwhile, both the Republic of Korea (ROK—South Korea) and the Democratic People’s Republic of Korea (DPRK—North Korea) are evidently beginning to seek increasing economic opportunities in and with Mongolia.

In 2014, key international players began to publicly commend Mongolia’s sustained diplomacy, which does not isolate North Korea. Notably, Japanese Prime Minister Shinzo Abe recognized Mongolia’s role in facilitating and hosting several meetings between Japan and the DPRK, especially for talks on the issue of North Korea’s abductions of Japanese citizens (Japanese Ministry of Foreign Affairs, September 24, 2014). Mongolia hosted three rounds of meeting between Japan and North Korea in 2007–2012, and a secret meeting between the abductees and their Japanese relatives in March 2014 (Japan Times, March 26, 2014). Even though Mongolia’s diplomatic efforts seemed to attract little to no attention from the United States, they have been well received in the Japanese media.

It should also be noted that last year, Mongolia organized the so-called Ulaanbaatar Dialogue, involving all Northeast Asian states. The Ulaanbaatar Dialogue’s track II format includes a city mayors’ forum, women parliamentarian meetings, and a numerous sporting activities; and North Korea actively participated in all of these programs. Chinese President Xi Jinping has repeatedly expressed his support for the Ulaanbaatar Dialogue initiative during his August 2014 visit to the Mongolian capital, as well as during a meeting on the sidelines of the Shanghai Cooperation Organization summit in Dushanbe, last September (Ikon, 22 August 2014; Dushanbe SCO Summit Press Release, September 12, 2014).

South Korean and Russian attitudes toward Mongolia’s regional role are also changing. In particular, Seoul seems to regard Ulaanbaatar as a valued partner for its Northeast Asia Peace and Cooperation Engagement Initiative (NAPCI) as well as its Eurasia Initiative (Yonhap News, August 26, 2014). Meanwhile, with the upsurge in political contacts between Russia and the DPRK in 2014, Moscow has supported Mongolia’s engagement with North Korea (38 North, November 6, 2014). Indeed, during Russian President Vladimir Putin’s visit to Ulaanbaatar last September, both sides even agreed to collaborate on using the North Korean Rason port (Ikon, September 3, 2014). Both North Korea and Mongolia, as Russia’s traditional geopolitical pivots to Northeast Asia, welcome Russia’s engagement. Whereas, it is clearly in Russia’s interest to transform North Korea from a roadblock to an entryway for reaching non-Chinese markets across Northeast Asia.

Even Mongolia’s view in Washington has been undergoing a moderate shift. US policymakers are now weighing the options of using Mongolia as: 1) an example for political and economic transitions, 2) a venue for dialogue on economic cooperation, and/or 3) a staging area for humanitarian activities in the wider region (Brookings Op-Ed, No. 84, January 2015; CSIS, December 3, 2014).

With these increasingly positive attitudes among all the major players, Mongolia may be able to capitalize on its secure domestic and political situation, as well as its political neutrality toward both Koreas, in order to strengthen its ties with potential partners across Northeast Asia. At the same time, Ulaanbaatar hopes to be able to provide more opportunities for trilateral collaboration among Mongolia, the ROK and the DPRK, especially in areas of sustainable development.

In mid-January 2015, a North Korean aircraft picked up 104 heads of cattle from Mongolia, the first shipment of 10,000 promised animals to help the DPRK develop its animal husbandry sector as a part of Mongolia’s humanitarian assistance package to this country (, January 13). Although Mongolia provided livestock (goats) to North Korea in the past, this time both sides aim to implement a much larger project, which will help the DPRK build up its long-term food-production capacity. With its traditional experience in the animal husbandry industry, Mongolia raises 51.9 million grazing animals and is re-building its export capacity to Chinese, Russian and Japanese markets (National Statistics Office of Mongolia, January 2015).

Another area that both Koreas are interested in is the leasing of fertile Mongolian land—especially along the major river basins in the eastern and northern parts the landlocked Asian country. Under a four-year-old agreement between the ROK’s Korea-Mongolia Agricultural Development Initiatives (KMADI) and the local government of Mongolia’s Dornod province, South Korea leased 30,000 hectares of land in eastern Mongolia to develop eco-friendly agriculture and livestock breeding (Korea IT Times, March 11, 2011). In the long run, the project aims to bring South Korean capital and technology into Mongolia with a long-term objective of creating sustainable sources of agricultural and livestock production.

Finally, about 30–40 thousand Mongolians live in South Korea, and 3,000 South Koreans and 2,000 North Koreans reside (or work) in Mongolia. Moreover, South Korea is becoming a major gateway for Mongolians to reach the Asia-Pacific region and North America: 65,000 Mongolians travel to and through Seoul every year. Currently, there are 20 flights in the summer and 12 in the winter between Seoul and Ulaanbaatar. Thus, South Korea has grown into one of Mongolia’s largest trading partners and has increased its investment in the landlocked country’s mining, infrastructure and services sectors. Although on a smaller scale, Mongolian businesses are also eyeing investments in North Korea, if Pyongyang gradually opens up its economy.

If these trends continue, Mongolia may appeal for even more economic and cultural collaboration with the two Koreas. And there appears to be ever greater potential for collaboration on sustainable economic projects such as agriculture, tourism and infrastructure development.

Note: re-posted with the permission of the Eurasia Daily Monitor of the Jamestown Foundation, for the original news, EDM (2015/03/02).

Posted in Eurasia Daily Monitor, International Relations, Mongolia and ..., North Korea, South Korea | Tagged | Leave a comment

Arbitration Award to Khan Resources

On Mar 2 2015 it was announced that erstwhile Canadian uranium miner Khan Resources was awarded US$100mio in arbitration proceedings administered by the Permanent Court of Arbitration based in The Hague (Netherlands). The proceedings were rooted in the 2009 cancellation of Khan Resources’ mining licenses in Mongolia and consist of $80mio of compensation + $20mio of interest.

What does this mean for Canada-Mongolia relations and for foreign investment into Mongolia?


Of significant relevance is the fact that this announcement comes on the heals of the presidential pardon for three foreign employees of South Gobi Resources who had been convicted of tax evasion. This is one of a series of decisions and events since 2009 that have soured investors on Mongolia due to perceptions of shifty and sometimes arbitrary policies.

As far as I can tell (without being a specialist of any kind in these kind of arbitrations), this award is final, binding and can be enforced because Mongolia is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. A quick scan of news coverage of arbitration awards to junior mining companies seems to suggest that this award is not unusual in its amount.

Canada-Mongolia Relations

Canada and Mongolia are currently negotiating a Foreign Investment Protection Agreement. This appears to be a priority for the Canadian government and at times it has seemed that other activities regarding Mongolia have been held hostage to progress on these negotiations. While the Conservative government has made it explicit policy to pursue trade agreements, it is not clear to me who exactly would benefit from the conclusion of such a FIPA. Would Khan Resources have been in a different situation had a FIPA been in place in 2009? If you have views on this, please do comment below.

So, will this award have an impact on FIPA negotiations if these are on-going?

It’s easy to imagine populist arguments that might be made in Mongolia that would portray this as “yet another” case of Canadian greed displayed in Mongolia. Personally, I would very much disagree with this position, but its proponents would point to Robert Friedland’s role in Oyu Tolgoi, various activities around Centerra’s Boroo mine, and so forth. It is of course particularly Friedland’s controversial role that has produced most of the latent Mongolian resentment towards Canada, but for some, this award will clearly be one element in a series of events.

Note also that observers who were inclined to a negative portrayal of Canada-Mongolia relations will point to an arbitration panel that included a Canadian, L. Yves Fortier Q.C.. From what I can gather from the Permanent Court of Arbitration website, it appears to be the practice that the two parties in a corporate-state dispute appoint a member of the tribunal each and that the two appointed members then select a third member (Permanent Court of Arbitration Arbitration Rules, 2012, Art. 9). Based on that I would surmise that Khan Resources had appointed Mr. Fortier who is not only a former Canadian ambassador to the UN, but also previously presided over the London Court of International Arbitration. Clearly, his involvement and qualifications appear to be above any reproach.

It’s also easy to imagine that this narrative might produce some kind of opposition to the FIPA negotiations in particular. “See how we’re getting treated by Canada, now we’re meant to sign an agreement that protects Canadian investors further?” Perhaps this is an ignorant position, but it’s one that might well get some attention.

A more generic isolationist sentiment might see this as an instance of Mongolia being cheated by international investors/actors, rather than specifically Canadian ones and thus argue for much greater care in entering into any agreements with international investors.

Impact on Mongolian Politics

There’s the very real practical challenge of raising US$100mio to pay this award. As far as I read the announcement, Khan Resources’ legal costs will also have to be reimbursed to the tune of US$9mio.

Beyond this practical challenge that obviously comes at a very inopportune time in terms of the fiscal crisis that Mongolia is facing at the moment, the most likely impact will be a whole lot of finger-pointing to place blame on a series of events on someone and explain why every Mongolian man, woman and child now individually “owes” a Canadian company approx. ₮65,000.

Khan Resources’ licences were – as far as anyone can tell from the outside – yanked under strong Russian pressure to push into the uranium sector in Mongolia. The process was centred around passage of the Nuclear Energy Law on July 16 2009. Note that some of the evens around Khan Resources and the Nuclear Energy Law feature in a US cable that is part of Wikileaks.

So, some will surely blame Russia as the source of the pressure that led to passage of the Nuclear Energy Law. But I suspect that no actors in Russia will be particularly bothered by this blame.

The presidential election had been held on May 24. Current President Elbegdorj won his first term in this election and was sworn in as president on June 18. S Bayar was leading a grand coalition of MPP and DP at the time.

Surely, some will blame Bayar directly as prime minister for caving to Russian pressure on this. But, parliament was implicated as the Khan Resources licenses were ultimately cancelled to comply with the Nuclear Energy Law which had been passed by parliament, though without much debate or consultation.

Presumably, the DP will blame Bayar and the MPP, while the MPP might point to Pres Elbegdorj.

The fact that China National Nuclear Corporation made an offer for Khan Resources in 2010 is also likely to colour discussions.

One of the main conclusions that should be reached about this is that international agreements should not be entered into lightly, and more significantly that when you make binding commitments, you will be held to these commitments.

Impact on Foreign Investment

Some investors will cheer this arbitration award as a victory of the rule of law. As one of the members of then-PM Batbold’s delegation argued during the PM’s visit to Canada in 2010, “Would you rather invest in a country where you can take the government to court [i.e. Mongolia], or one where you cannot?”

That is true to some extent, of course. Investors are likely to be somewhat reassured that ultimately their investments may be protected by international agreements that Mongolia has entered into.

On the other hand, these arbitration proceedings began over four years ago, a period during which Khan Resources’ investment was stuck. While investors may feel somewhat compensated by the LIBOR + 2% interest awarded by the tribunal, some investors may still not be pleased with the risk of capital being tied up for that long a period.

Another view might also be that this award confirms the arbitrary interventions in mining licences that they government of Mongolia has engaged in and thus raise the spectre of future interventions.

Whatever implications and interpretations will follow this announcement, it is likely to take its place in a series of events that are structuring Mongolia’s (investment) relations with the rest of the world.


Posted in Canada, Foreign Investment, International Agreements, International Relations, Mining | Tagged | Leave a comment

Feeling (Politically) Pessimistic for Coming Year

It is Tsagaan Sar, so happy new year to all of Mongolia and to Mongolians! Сар шинэдээ сайхан шинэлээрэй

What will the year of the sheep bring? The sheep Gestalt (зурхай) seems to expect a windy Spring and windy early parts to seasons, good pasture this summer, and lots of snow in winter (but no dzud). This year’s cowboy is an older person suggesting a peaceful year for the elderly, wives and cattle, but tough times for younger Mongolians, especially infants, and poor people. The Khaan will be issuing strict decrees.

While I have been perpetually optimistic about Mongolia’s development and future (and still remain optimistic on the long-term prospects), I’m feeling more and more depressed about the current situation, and some worries about democracy and the 2016 parliamentary election are beginning to creep into my thoughts.

Current Crisis

After a brief moment of hopefulness (“maybe Saikhanbileg will be able to rally this super-coalition around real change”, “maybe Saikhanbileg will turn out to be a different kind of leader”), things currently look pretty dismal.

The proposal to swap strategic deposit equity for a special royalty rate looked like an initially hopeful sign, at last a step that is a departure from previous policy, but has some constructive/positive potential. Now, that hope is fading.


  • On Oyu Tolgoi, it doesn’t look like Rio Tinto is likely to be interested in this offer. They appear to be in a wait-and-see mode on Phase II especially given the high up-front investment required for the underground development and current commodity prices.
  • Is there someone else who would want to take over the government’s 34% stake? Quite possibly since the resource is obviously still very attractive, but one would imagine that any bidder would require a significant risk discount. Ch(in)alco would seem like an obvious candidate. Would Friedland be tempted to stage a “comeback”?
  • Even if there was a buyer for the government stake, what would this “special royalty” be? It seems like this would lead to yet another round of interminable negotiations with the government working at a very significant information/experience deficit so the setting of this rate would be very difficult.
  • Tavan Tologi has an even greater potential to produce some cash flow for the government quickly, but its governance has been so mired in government interference, competition between private and government businesses, foreign interests, etc. that it remains hard to think that a solution is imminent, esp. when Saikhanbileg’s honeymoon has come to a quick end, and the DP continues its current self-destructive tendencies.
  • Even Boroo’s Gatsuurt project (of obvious interest from a Canadian perspective) continues its roller coaster ride through regulation.

In the meantime, the fiscal crisis and looming debt repayments will make it difficult to continue to replace private investment with state programs like the mortgage subsidy, etc., but demands for such spending might increase from the population as growth from private investment will be limited. This seems like a situation rife to be exploited by populism, esp. as the 2016 parliamentary election draws nearer. That temptation in turn raises the spectre of a vicious inflation-debt-spending spiral that is likely to only be broken by significant private investment, most likely Phase II at OT.

Party Politics

It sure seems like the DP has made a real mess of its opportunity in government. Not all this is the government’s fault of course, commodity prices, for example, are out of its control. The government also continues to operate with a significant information deficit vis-a-vis mining and global capacity markets. Capacity has declined, if anything, due to the DP’s massive personnel shifts towards its own people in virtually all positions.

At the same time, the DP has clearly been hamstrung by its factionalism which has prevented real action even in areas that may seem ripe or attractive for action. There’s not much optimism in me in terms of hoping that Saikhanbileg or any of the other crew of DP leaders would be very likely to be able to combat this factionalism in any effective manner.

The MPP also offers no particular policy proposals or direction that would make any difference, so its participation in the super-coalition seems to be more out of a sense of obligation to the country (obviously a very attractive trait in politicians) and some willingness to address some concrete challenges. However, the MPP will obviously leave the coalition before the beginning of the election campaign (the DP left a grand coalition six months before the election in 2012 so the same seems likely a year from now), if the current coalition even lasts that long. If the MPP emerges as the winner of the parliamentary election in 2016 (though perhaps falling short of a majority), at least its party discipline allows more decisive action than the DP’s factionalism.


The current situation then raises some worries about democracy. I have been a great admirer of the achievements of Mongolian democracy, in part on the basis of my experience as an election monitor in the last four elections.

The strength of Mongolian democracy has been rooted in two factors (not exclusively, but I do think these are very important) and it will be good to remember these when the 25th anniversary of the resignation of the MPRP Politburo comes next month:

  1. The 1990 revolution was home-made. Yes, some of the revolutionaries at the time (including people like Pres Elbegdorj, Ulaanbaatar mayor and likely next president Bat-Uul) clearly brought some reformist ideas back with them from studying abroad, but ultimately and with the Soviet Union/Russia’s hands-off stance at the time, the change was orchestrated by Mongolians for Mongolians. There was some interest in these changes in Europe and N America, of course, but very little involvement in the design of the constitution and democratic institutions throughout the 1990s.
  2. The institutionalization of democracy preceded the mining boom. Of course, Erdenet and other projects had been operating for decades, but the sense that natural resources might be an avenue to real development and prosperity did not arrive until the Oyu Tolgoi discovery, I would argue.

And now? No one would be surprised to hear of voters’ frustration with political parties in Mongolia. Lots of promises, but mostly chaos for the past 10 years. Some real improvements (economic growth, etc.), of course, but not nearly to the level promised or to Mongolia’s potential.

For now, there are no real arguments for a “strong hand”, i.e. some kind of benevolent authoritarian figure, nor a suitable candidate, but it seems like the conditions for such an argument are developing.

My main concern and worry at the moment is thus for the 2016 parliamentary election. There are a variety of proposals floating around for the “reform” of the electoral system. Ditching electronic counting, moving away from the mixed PR-first-past-the-post system, etc.

If the experience of previous elections is anything to go by, any reform proposals will be considered more seriously “at the last minute”, i.e. at the end of 2015. Changes will thus be administratively very difficult to implement and produce a certain amount of chaos.

Another concern is that the DP might well be fairly desperate. If nothing really changes in the next year, it will look likely that the DP will be trounced in the election. Will they resist temptation to try to prevent such a thumping through fiddling with the election?

The Electoral Commission is no more independent now than it had been in the past. The DP has clearly “taken over” the security apparatus with various agencies and has been accused of using agencies like the Anti-Corruption Agency (АТГ) as a political tool.

All in all then, I think there’s enough reason to be concerned about the current situation that I certainly hope that international election observers will be involved again, ideally in a well-organized efforts like the OSCE’s, but that that observation might focus a bit less on polling stations, and instead more on the general regulatory framework to the parliamentary election.


There are no easy solutions and I wouldn’t pretend that I could change things overnight if given the opportunity either (this just to dampen speculation that I’ll be running in the 2016 election).

However, I am fairly convinced that education of all kinds is the solution.

Education to build capacity in parliament, in the government, among policy-analysts. Education has to be a tool to overcome the information deficit vis-a-vis global capitalism.

Education of the people also seems like an important antidote to populism. Until today, there still hasn’t been any concerted attempt through the education system or other channels to raise the general level of awareness of the choices that mineral resources offer. How does the mining industry operate? How does a country benefit from development of the extractive sector? What are the possible revenue streams? What are the environmental and other risks? How can investment make revenue streams sustainable?

These are all questions that Mongolians have been asking themselves and others, but the level of basic understanding of industry and policy dynamics makes it easy for critics and populists to pretend like there are easy solutions and doesn’t allow the debate to reach a level of quality where agreement on the options that present themselves (much less on solutions) is possible.

Posted in Constitution, Democracy, Democratic Party, Economics, Elections, Foreign Investment, Governance, Ikh Khural 2016, Inflation, Mongolian People's Party, Oyu Tolgoi, Party Politics, Policy, Politics, Populism, Security Apparatus | Tagged | 2 Comments

Poll Results – Direct and Indirect

PM Saikhanbileg has announced the results of the mega-projects vs austerity SMS poll.

This announcement is important because we learn about this particular direct democracy initiative, but also because it included an announcement of proposals to revise the Mining Law to allow for the trading of extra royalty payments for the government stake in strategic deposits. If this proposal passes parliament it might well turn out to be the big shift away from previous policy that Saikhanbileg’s super-coalition might enable.


In some ways, the poll has been a flop. Participation was low and the vote somewhat inconclusive.

356,841 votes were cast (out of 3mio+ subscribers that had seemed “eligible”) and of those 56.1% voted for mega-projects while the remaining 43.9% expressed a preference for austerity.

With somewhere around 1.6mio Mongolians eligible to vote (let’s assume that this is the likely maximum number of SMS respondents, though minors might well have been invited to respond to the poll on the basis of their ownership of a cell phone contract), that would be a turnout of less than 25%. Not particularly inspiring given that the practical hurdles to participation were much lower than for voting (no registration, no need to visit polling station, 3-day window, but note potential confusion about process).

And, 56:44 is not exactly a decisive majority that makes this result a ringing endorsement of a particular path to take.

So, perhaps “flop” is a strong statement as the experiment has not gone awry entirely, but also not exactly an inspiring result or encouragement to pursue SMS polls further.

Why Disappointing Participation?

I can only imagine that the wording and the false choice must have played a role in Mongolians’ decision not to participate. From jokes about the choices being akin to being forced to choose between mother or father (while really preferring one’s spouse) to comments about the trustworthiness of the polling and Saikhanbileg’s intentions in asking for the poll in the first place, there was not a lot of enthusiasm for the poll in the public.

As is surely the case with an democratic participation, when voters/citizens’ perceive participation to be meaningless they stay away. It is hard to resist the conclusion that meaningless is how many Mongolians may have seen this poll.

The Big Results

When I wrote about the poll last week, I offered an interpretation of Saikhanbileg’s initiative that does not rely on a view of his weakness as PM. Instead, I wrote

Maybe [Saikhanbileg] has a sense that he is actually nearing a breakthrough on major projects. If such a breakthrough is coming and if it includes some drastic decisions by the government (for example, to sell their stake in OT, but lots of other options might be considered), he will be able to make any announcements at least in the course of the Spring in reference to the expression of popular support that the SMS poll might provide.

It appears that this interpretation may have been right.

Saikhanbileg’s announcement appears to include a proposed amendment to legislation on strategic deposits that would “establish a legal framework to transfer state-owned shares to the special license holder in order to collect special royalty payments”.

That sounds like an offer of a deal to Rio Tinto (and others, obviously) to trade the 34% stake in Oyu Tolgoi for a higher rate of royalty payments. Presumably that would mean that the government would no longer invest in development at the mine, but would instead begin to collect a higher royalty on current and future production.

Two recent developments may have also been stepping stones along the way to this announcement.

When Gatsuurt was designated a strategic deposit recently paving the way for further development by Canadian Centerra Gold there were discussions of a lower stake (say, 20%) in exchange for a reduced investment. The new initiative might see this stake go to 0 in return for a higher royalty, it appears.

Two weeks ago there were discussions in Australia that Rio Tinto had offered to forego the royalty on a smelter that would be constructed under the Investment Agreement. Perhaps this was part of a round of negotiations about what might be traded for the 34% government stake.

What’s Next

Presumably, Saikhanbileg will introduce amendments along the line of what he has suggested here. But, this is unlikely to happen before Tsagaan Sar, lunar new year celebrations. Then March will bring some holidays (women’s day on Mar 8, for example), and perhaps some commemorations/celebrations of 25 years since the resignation of the Politburo paving the way for democratic elections. So, it is not clear how quickly this amendment might be before the Ikh Khural.

When it does come to parliament it will make its way through committees and discussion, obviously, and I would not guess at the level of support this proposal might get in parliament, even in the context of a super coalition, and especially if it is introduced some weeks from now.

But, if this amendment does receive support, it could be enacted in the course of the Spring (more than a year ahead of parliamentary elections) and apply to OT negotiations almost immediately. In the meantime, some negotiations on the basis of the hope for this amendment to pass might be occurring already.

In a very different way, this poll might thus have been a turning point for the Saikhanbileg government and for Mongolia.

Posted in Democracy, Foreign Investment, Governance, Mining, Mining, Oyu Tolgoi, Policy, Politics, Public opinion | Tagged | 2 Comments

Digital Democracy: PM Saikhanbileg’s Policy Choice SMS Poll

This week Prime Minister Ch Saikhanbileg has posed a question to Mongolians on television and he is asking them to reply by SMS.

There are examples of direct involvement by the electorate in political decisions, of course (from Athenian voting to Swiss market places and beyond), but this is certainly an interesting initiative that at least looks like it could have some impact on democratic engagement.

What’s the Question?

So far, the exact wording has not been announced (see Comments below for more discussion and exact wording), but the choice that Saikhanbileg wants to hear from Mongolians on is essentially whether his government should prioritize the pursuit of big projects (presumably meaning OT and TT) in 2015/16 or respond to the on-going economic challenges with austerity measures.

Since the exact wording is not available yet, it is a little difficult to say how exactly the question will be play out.

On the face of it, however, it seems unlikely that many people would chose austerity in this situation.

I would comment, of course, that this is a false choice in that austerity is not the flip-side of the pursuit of major projects, one choice does not preclude the other choice, so this is an odd way to frame this particular question unless it gets re-worked for the version that will actually be sent out.

Why this Poll?

The initial interpretation might be that Saikhanbileg might be acting out of weakness in turning to the people for a mandate. Such weakness might be perceived in that the honeymoon period has been very brief and that there are rumblings about dissent in the coalition already, particularly focused on the DP’s handling of appointments below the cabinet level.

But there are alternative explanations to the PM’s decision for this poll.

Since he is asking specifically about big projects (and probably assuming that a majority of responses will pick those over austerity), the weakness explanation is less plausible. In all likelihood, cabinet (including the various parties represented in this super-coalition) as well as parliament in general appears to be supportive of any progress Saikhanbileg might be able to make on the big projects. If that is the case, a popular “mandate” based on an SMS poll would not add much.

Instead, it seems more plausible that Saikhanbileg has created this poll as an opportunity to communicate with Mongolians. He has just created a chance for himself to send a message to just about every Mongolian!

Why would he want to communicate with citizens?

Maybe he has a sense that he is actually nearing a breakthrough on major projects. If such a breakthrough is coming and if it includes some drastic decisions by the government (for example, to sell their stake in OT, but lots of other options might be considered), he will be able to make any announcements at least in the course of the Spring in reference to the expression of popular support that the SMS poll might provide.

If a breakthrough is not coming any time soon, the poll presents an opportunity for Saikhanbileg to illustrate to voters that he is facing very difficult choices (nothing unusual about that in politics) and to recognize that following some populist arguments against big projects, for example, has consequences by necessitating savings or a cut in expenses. So perhaps this is aiming at populist arguments (in and around parliament) rather than any opposition within cabinet or within the coalition.

Digital Democracy?

This is not the first time that SMS polling is being used in Mongolia. The mayor of Ulaanbaatar, E Bat-Uul, has gone to the residents of the capital on three occasions to seek their input via SMS, though in combination with web polling.

It is also important to point out that there is no legal or legislative basis for this poll. It is not a formal referendum of any kind that would be based on legislation for the holding of such plebiscites. Instead it is a poll that happens to have been mentioned by the current Prime Minister.

It is somewhat of an official poll as the PM is clearly involving state resources in the administration of this poll. I learned from Independent Mongolian Metals & Mining Research’s Dale Choi, for example, that the Information Technology, Post and Telecommunications Agency has briefed the public on procedures that are to be used [more on that below]. But at the same time, this does not elevate the poll to anything other than that, an opportunity for some part of the population to voice their opinion on a specific topic in a non-binding way.

The fostering of a democratic consciousness has been a prominent element in official rhetoric, especially under President Elbegdorj. The most concrete implementation of direct participation has been the Local Development Fund which has now placed discussions about priorities in local infrastructure spending in the hands of citizens’ halls. It is still very unclear how evenly this is being implemented and with what results, but it has been a prominent initiative nevertheless. Note also that many of these discussions are likely to be occurring around this time of year, i.e. after the budget was passed in parliament at the end of the year and at a time when rural populations are relatively less busy with herding. The poll might thus compliment any discussions that are occurring in citizens’ halls around the same time. I have not heard any mention of institutionalizing these kinds of polls as an element in participatory democracy and would frankly be surprised to see another poll of this kind before the 2016 parliamentary election, but it may well be an experiment that will be mentioned in Mongolia and beyond. As Mongolia is engaging Myanmar and the Kirghiz Republic on democratization in particular through its development program, this might be an experiment that will have more replications or at least produce discussions beyond Mongolia as well.

Digital Democracy as Mongolia’s Future

If the argument that this poll is at least to some extent an opportunity for the Prime Minister to communicate with the electorate is plausible, what might this imply for Mongolian politics and for political culture? One of the obstacles to decision-making in Mongolia has been the fact that parties have been primarily identified with individuals and patronage and not with policy agendas. This is far from unique or limited to Mongolia and in fact very common across democracies. In the Mongolian context, however, where a single route to economic development seems to present itself forcefully, the absence of substantive policy choices in political debates has been particularly acute and has led to some policy failures in my eyes.

Will a communication to voters that points to the stark choices politics involved change this? Will voters demand more substantive electoral platforms that would actually specify a party’s stand on questions like the prioritization of large projects or austerity. Probably not in a major way, but perhaps somewhat.

Obviously, this kind of poll might breed democratic cynicism, especially if the results are in doubt, are very mixed, or Saikhanbileg/government does not implement what emerged as the popular view. But it might also foster an understanding in voters of policy choices and difficulties associated with them.

Procedures in an SMS Poll

There have been three SMS polls (in combination with in-person and web polling) in Ulaanbaatar city. Two about car regulations in 2013 (a ban on right-hand drive cars, and a system by which even/odd license plate numbers would allow drivers to use their cars) and one about a recycling scheme in 2014. In all three cases there have been some rumblings about the reliability of the results announced and contradictions int he results of the polling through the web as opposed to SMS. In the end, however, the UB city administration accepted the polling results and acted accordingly.

Voting is meant to happen between Jan 31 and Feb 3. Every cell phone number gets one vote (excluding very recently acquired numbers). The SMS will be sent free of charge allowing even subscribers who do not have any credits to send this message. The message will be in response to an SMS that will be sent out and the response will only be 1 or 2 referring to the options offered in the question posed.

Some obvious challenges:

  •  there is no connection to voter registration, reinforcing the lack of a legal or official status to this poll
  • people might vote multiple times if they have multiple subscriptions
  • it is unclear whether there will be a record of any kind
  • who knows about security of SMS?
  • any technical issues with overburdened servers or anything like that
  • cell phone usage is not distributed equally (in regional or socio-economic status terms) though it is certainly common enough to use as a tool in Mongolia


As so often, my views particularly my views on what might motivate Saikhanbileg to call for this poll, were formed in conversation with Mongolian graduate students at UBC, including but not limited to Damdinnyam G and Mendee J.

The focus on “digital democracy” and the implications for this in Mongolia came in part out of a conversation with David Williams, Senior Desk Officer at the Department of Foreign Affairs, International Trade and Development.

Posted in Democracy, Governance, Mining, Oyu Tolgoi, Party Politics, Public opinion, Social Media, Ulaanbaatar | Tagged | 9 Comments

Lingering anti-Sinic sentiments in post-Communist Mongolia: Why dislike the Chinese?

Just sharing a long-waited working paper on anti-Chinese sentiments in Mongolia.  The following is the abstract, for the full paper – here is the link.

Sino-Mongolian relations have been amicable ever since the Sino-Soviet and Sino-Mongolian rapprochements of the late 1980s, after over three decades of hostility. Today Mongolia and the People’s Republic of China have broadened relations in all areas of cooperation, returning to a state of relations similar to the 1950s. However, in Mongolia, anti-Chinese discourses continue to appear in daily conversations, the news media, in Internet comments, literature, hip-hop, and even graffiti. This paper advances four reasons for such lingering anti-Chinese sentiment. First, like any small state, Mongolia remains vulnerable to the dominance of its two large neighbours. Memories of colonization are still vivid. Second, Mongolians, like many other ethnic groups, are concerned with the population’s “purity of blood.” Third, the communist regime’s use of anti-Chinese sentiment during the Sino-Soviet conflicts of the 1960s-70s has had a lingering impact on the views and attitudes of Mongolians toward China, Chinese people, and Chinese culture. The anti-Chinese myths and narratives that were institutionalized have not been critically analyzed. Finally, various external and internal actors use anti-Chinese sentiment to forward their business interests.

Posted in China, Mendee Jargalsaikhan | Tagged | 2 Comments

Policy Series: Failure of Not Strengthening the Parliament

Under the 1992 Constitution, the parliament is supposed to become the state policy black box.  It was empowered to develop, approve, and enforce state policies that would strengthen the country’s sovereignty, maintain its domestic stability, facilitate the economic development, and more importantly, protect core principles of democracy (i.e., our rights and rule of law).  But, now we’re already losing trust in the legislature. Firstly, we witness increasingly polarized debates without any subtantial studies and facts. Secondly, we see intense factionalized fightings over the political posts, election laws, and allocations of funds, loans, and bonds. Thirdly, we see erratic temptations of changing laws, rules, and regulations even without giving justifiable reasons.  Finally, we now can rationally expect what would be major issues for any parliaments in pre-election years (i.e., the changing the constitution, election laws, and revision to the state budget) and post-elections (i.e., dividing up ministries and agencies, cancelling/revising previous economic/financial decisions, and typical ‘pork and barrel’ politics).  This was the case for all past parliaments from 1992. No surprise, same applies to present one.

So, why our parliament is becoming less respected, weak, and the easiest target for the political blame game?  Why it moves from the most powerful constitutional institution to more like ‘symbolic’ one?  Why the law (policy) making institution becomes ‘law (policy) breaking’ one?  Are our ‘esteemed parliamentarians’ trading the power of the parliament for their parochial, short-term interests?  So, what the parliament should do now to regain its real policy-making power and our trust?

We all know – if parliamentarians respect the rule of law and hold their temptations of ‘cheating’ from their own approved rules, the parliament would easily gain the public trust. But, the overall structure appears to encourage cheating; therefore, even a good principled person talks about moral principles and patriotic deeds, but acts in favour of parochial interests.  The result is mistrust and fragmentation.

So, how can we get out of this proverbial crabs in a barrel scenario without dictatorship, oligarchy, revolutions, and foreign interventions?  We need to improve our institutions – especially, the parliament.  Our esteemed members should unite on common objectives of the national sovereignty, development, and democracy (i.e., human rights and rule of law) while constraining their tactical (may be strategic) parochial interests.

In this regard, a key solution seems to me to invest and to empower the parliamentary policy making and enforcing capacity.  It’s constitutionally given, but neglected.

Let’s learn from the institutionalization process of the President.  The 1992 Constitution intentionally made the presidential institution symbolic and deal-broker (for the national interests) along with some rights of checks and balances.  As a result, Mongolia didn’t slide into ‘super-presidentialism’ which is common in most post-communist, esp., post-Soviet, cases and all our presidents played quite constructive roles during major crises (e.g., hunger strike of 1994, July 1 in 2008).  But, they made the presidential institution – the most bureaucratic and influential one.  Each president enlisted leading experts (as advisors); expanded the National Security Council, its secretariat and think tank; enshirned its power in judiciary and foreign affairs; and brought all security organizations under the presidential influence (esp., the president’s power to confer the highest ranks for leaders of these security institutions).

In contrast, the parliament did not increase its bureaucracy and even stripped numerous executive power-checking rights for others.  Yes, the parliament has 8 standing committees, 10 sub-committees, and secretariat with 9 special departments.  But, the real question is – do they matter in the parliamentary policy-making process?  How much autonomy and power does the parliament give to its own bureaucracy?  Or, the parliament and its members simply use them for daily secretarial, clerical, and protocol purposes?

The fault of our parliament is unable to unite and empower its own bureaucracy to regain its chief policy-making power and to increase the public trust.  To do that, parliament members need to get over their parochial interest and self-defeating internal bickering.

The law (policy) making is a complicated process.  First, we need to state the problem and identify main causes.  Here the parliament needs to provide greater autonomy for its standing committee members and staffers.  They must be empowered to question all stakeholders, including outside experts.  Second, we need to develop short, mid, and long-term solutions and attempt to calculate its possible intended and un-intended consequences.  Parliament members could not do that because they are constrained by multiple interests (party, business, local, and personal).  The parliamentary staffers with help of experts could perform these tasks of developing and evaluating different options.  Finally, we need to follow up our policy outcomes for years.  Parliament members couldn’t do that because they are temporary political creatures and overwhelmed with their interests.  Therefore, the parliament needs to build up and empower its own non-partisan bureaucracy – that would build up the parliamentary institutional memory, knowledge, and expertise, and serve as gate-keepers against parochial, corporate, and ad-hoc interests.

Otherwise, our policy-making process will still be failure and victim of parochial interests.

First, repeated elections of parliament members would not provide the policy continuity.  Just take an example of this parliament, there are 28 new members, 19 members in their second term, 16 in their third, and 12 in their fourth and more terms. Previous parliaments had quite well-balanced representation of new and old members.  Have we seen the policy-continuity and responsible policy-making?

Second, increasing the number of individual staffers also couldn’t contribute for the good policy-making.  From 1992, parliament members continuously adding funding and numbers of their staffers.  But, they are also political creatures – more concerned with their own options and interests – than contributing to the institutional memory of the legislature.

Third, increasing the secretarial capacity of the parliamentary secretariat without adding more powerful policy experts will not strengthen the parliament.  Even though the current parliamentary secretariat has many fine policy experts, they would not stand for the good policy making unless the parliament provides the protection from the political and business interests.

The parliamentary non-partisan staffers – who are protected from political and business interests – could help the parliament to ensure proper policy-making and monitoring capacity.  Otherwise, we will continue to operate on the USB (flash drive) memories of parties, factions, and influential politicians.

There are many policy issues are waiting for parliamentary non-partisan policy reviews, the followings are just examples.

1. The control and use of the security, law-enforcement organizations and tax authority: as we have witnessed explicit and implicit attempts by politicians, parties, and factions to insert their control and influence in security organizations and to use them for their own interests.  The politicization and fractionalization of the security, law-enforcement, and tax organizations are the most dangerous phenomena for any states [examples are abundant].  Now it is time for the parliament to re-examine the entire set of policies of institutionalization of security, law-enforcement, and taxation agencies to keep them outside of domestic politics and committed for the public good.

2. The investment agreements especially in mining: the parliament could set up an independent commission to examine the past mining investment agreements, including the OT, for the policy-making (learning) purposes.  The commission along with parliamentary staffers should able to question and examine all past agreements and evaluate the state policy-making procedures in order to improve its own policy-making processes and to train policy experts.  The commission results should not be used for political purposes; therefore, the commission could be headed prominent politicians – outside of the current politics.  Otherwise, we don’t learn anything from our past and most current policy-making expertise.

3. The public service is another aspect, which dearly needs non-partisan review.  The current politicization (could even we called, privatization of ministries and agencies by parties, factions, and politicians) of the public service adds to public mistrust of politicians and parties.  If public servants, especially, those are entering into service, lose their fate in principle of rational bureaucracy (based on professional merits), it is hard to expect good policies and dedications.  Changing and re-appointing political appointees to the ministerial, vice-ministrial, and directorial posts are not the solution.  They would be the part of the problem – deepens the current legitimacy crisis. [There are many examples in our neighbourhood – both good and bad – in South Korea, Taiwan, and Japan.]

In the past, there were attempts to investigate and conduct open hearings on the July 1 riots and anti-corruption reporting, but members used them for their own political purposes.  But, now it is a time for our politicians to rise above parochial interests and focus on national imperatives – by strengthening and empowering the law (policy) making capacity of the parliament.  More importantly, parliamentarians need to cure their ‘let’s change it’ syndrome.  If parliamentarians keep changing rules without thinking (i.e., not asking hard questions), parliamentarians are (non)intentionally propagating the culture of ‘rule of chaos’ – not ‘rule of law’.  If parliamentarians couldn’t strengthen their own base, it will breed the ground for unstable domestic politics, emergence of authoritarian figures, and may be even foreign intervention.

At the macro level of international relations (i.e., systemic level), we clearly see how our own domestic polarization and fragmentation makes the state (a Mongolian state) a weak actor to deal with other state and non-state actors (i.e., multi-national corporations, international institutions).  If we look our domestic political structure at micro-level (i.e., domestic level), we could easily see how parochial interests of parliamentarians deteriorate the institutional capacity of the parliament.  Now it is a time for parliamentarians to strengthen the policy (law)-making capacity of the parliament.

Posted in Policy Series | Tagged | 1 Comment

Saikhanbileg Cabinet Nominations

After about a month of self-inflicted turmoil, the government of Mongolia is heading for some stability again. With a supercoalition of all parties seemingly in place, PM Saikhanbileg has now nominated the following individuals for cabinet positions:

[On Dec 8, as the State Great Khural is preparing to vote on these nominations, we’ve added some biographical information on the nominees below]

Prime Minister (Монгол Улсын Ерөнхий Сайд): Ch Saikhanbileg (DP: Polarstar Faction)
Born 1969
Moscow State University for the Humanities (History), National University of Mongolia (Law), George Washington University (Law)
Russian and English
MP 1996-2000, 2008-present
Min of Education 1998-2000
Cabinet Secretary 2012-14

Deputy Prime Minister (Шадар сайд): U Khurelsukh (MPP)
Born 1968
Defense University of Mongolia (Political Science), Institute of Public Administration and Development (Public Administration), National University of Mongolia (Law)
MP 2000-2008
Min of National Emergency Agency 2004-06
Min in charge of Professional Inspections 2006-08
MPP Gen Secretary 2008-2012

Cabinet Secretary (Хэрэг эрхлэх газрын дарга): S Bayartsogt (DP: Polarstar Faction)
Moscow State Univ (Economics), Foreign Trade Academy (Germany), National University of Mongolia (Law)
English, Russian, German
MP 1990-92, 1996-2000, 2004-present
Part of OT Investment Agreement negotiation team (2008-09), debated S Ganbaatar in 2013
Forced to resign as deputy speaker in 2013 after publication of $1mio offshore accounts in Cook Islands
Min of Environment 1998
Cabinet Secretary 2004-06
Finance Minister 2008-12

Minister of Environment, Green Development, and Tourism (Байгаль орчин, ногоон хөгжил, аялал жуулчлалын сайд): D Oyunkhorol (MPP)
Mongolian State Univ of Education, National University of Mongolia (Law)
English, Russian
MP 2000-04, 2008-present

Minister of Foreign Relations (Гадаад харилцааны сайд): L Purevsuren (DP: Presidential Faction)
Moscow International Relations Institute
English, German, Russian
Foreign Policy & Security Advisor to the President 2008-2014

Minister of Finance (Сангийн сайд): J Erdenebat (MPP)
Trade and Industry Institute, Academy of Administration, Mongolian Univ of Agriculture
MP 2012-present
Governor of Selenge Aimag 2008-12

Minister of Justice (Хууль зүйн сайд): D Dorligjav (DP: Presidential Faction)
Born 1959
Dep Premier 1992-96
Min of Defense 1996-98
Head of Erdenet (Mining) 2004-10
Prosecutor General 2010-2014

Minister of Industry (Аж үйлдвэрийн сайд): D Erdenebat (DP: Head of DP Caucus)
University of Polytechnics, Irkutsk
MP 2012-present
Head of DP caucus in parliament 2012-present

Minister of Defense (Батлан хамгаалахын сайд): Ts Tsolmon (Justice Coalition: MPRP)
Born 1953
Polytechnic Institute of Irkutsk, Diplomatic Academy of Moscow
English, Russian
Min of Labour 1990-92
Min of Construction and Infrastructure 2006-08
MP 2012-present

Minister of Construction and Urban Development (Барилга, хот байгуулалтын сайд): D Tsogtbaatar (MPP)
Born 1970
Moscow International Relations Institute, Australian National Univ (Law)
English, Russian
Foreign Policy & Security Advisor to the President 2000-2008
Min of Environment 2012

Minister of  Education, Culture and Science (Боловсрол, соёл, шинжлэх ухааны сайд): Lu Gantumur (DP: One Democracy)
Sandei College (Japan), Nagaoka Technology University, Japan
English, Russian, Japanese
MP 2004-present
Min of Education & Science 2012-2014

Minister of Roads and Transport (Зам, тээврийн сайд): N Tumurkhuu (MPP)
National Univ of Mongolia

Minister of Mining (Уул уурхайн сайд): R Jigjid (DP: Falcon Faction)
Born 1958
National Univ of Mongolia, Shinshu Univ, Japan,

Minister of Labour (Хөдөлмөрийн сайд): S Chinzorig (MPP)
Born 1964

Minister of Population Development and Social Welfare (Хүн амын хөгжил, нийгмийн хамгааллын сайд): S Erdene (DP: Mongolian Democratic Union Faction)
Otgontenger Univ (Law), Defense Univ of Mongolia, Management Academy
English, Russian
MP 2009-present
Minister for Population Development and Social Protection 2012-2014

Minister of Food and Agriculture (Хүнс, хөдөө аж ахуйн сайд): R Burmaa (DP: Mongolian Democratic Union Faction)
Electronic Technical Institute, Bulgaria, National Univ of Mongolia
English, Russian, Bulgarian
MP 2012-present

Minister of Energy (Эрчим хүчний сайд): D Zorigt (DP: Polar Star)
Construction & Engineering School, USSR
MP 2008-12

Minister of Health and Sports (Эрүүл мэнд, спортын сайд): G Shiilegdamba (Justice Coalition: MPRP)
Min of Environment & Tourism 2006-08

Minister of Mongolia (Монгол Улсын сайд): M Enkhsaikhan (Justice Coalition: MNDP)
Chief of Staff, President 1993-95
Prime Minister 1996-98

So, Is This a Technocratic Cabinet?

Only two ministers from Altankhuyag’s cabinet have re-nominated:  MP Lu Gantumur, acting Minister of Education, Culture, and Science, and MP S Erdene, acting Minister Population Development and Social Welfare.

“Double Deel” (давхар дээл) candidates:

  • 6 out 9 from the DP candidates
  • 2 out 6 from the MPP candidates
  • 1 out 3 from the Justice Coalition

These nominations did not satisify the public and presidential demand for “single deel.”

Two women candidates: MP R Burmaa (DP) and MP D Oyunkhorol (MPP).

Prominent politicians:

  • D Dorligjav, former Chief Prosecutor, Chairman and General Secretary of the DP, 1st deputy premier, defense minister, minister for professional inspection, and head of Erdenet Mine;
  • U Khurelsukh, former MP, General Secretary of the MPP, minister for national emergency management agency;
  • M Enkhsaikhan, former Prime Minister, MP, Chairman of the DP, presidential candidate from the DP, Chairman of the MNDP

New Generations:

  • 2 out 9 of the DP candidates are new faces in politics (R Jigjid and L Purevsuren)
  • 4 out 6 of the MPP candidates
  • 1 out 3 of the Justice candidates

It is hard to say these candidates form the more technocratic cabinet as political parties, especially the DP, promised and the public expected.


The great hope is that the supercoalition will bring some stability at least until some period close to the summer 2016 elections when it will likely fall apart to prepare for the campaign.

The hope is also that a supercoalition will shield any individual/individual party from blame for certain decisions, so perhaps this government will be more decisive. One might argue that Saikhanbileg himself might not see much glory in leading this government and that only decisive action might save the DP (and assure him of a continued political role) for the next election.

I’ve got my own wishlist of issues that the new government should tackle after immediately dealing with Oyu Tolgoi and the economic crisis.

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A Personal Wishlist for the Saikhanbileg Government

As we’re anticipating a cabinet to be formed under PM Saikhabileg and it now seems likely that a grand coalition (DP + MPP) or a super coalition (DP + MPP + Justice Coalition + CWGP) or some other configuration is likely, some focus areas for government policy over the next year (until six months before the next election) have been coming to my mind.

OT & the Economy First

Note that these are focus areas that are and should be of secondary importance in terms of immediate action which is required in various economic files. I continue to harp on my mantra that OT should be back on track before anything else happens as it is at once a medium-term fiscal fix (Phase II would generate economic activity, even in the short run, but would lead to medium-term revenue streams and be an opportunity to build capacity around that project). That should be the first and most urgent priority for the new government and the fact that a grand or super coalition will shield individual players from political blame will hopefully enable action on this file.

Other Policy Arenas that Should Receive Attention

Beyond the need for immediate economic policy action, I believe that a super coalition would make it possible to have wider political discussions, and possibly reach a consensus on some policy issues that will be essential to the long-term development of Mongolia. I present these as a list that is not ordered in terms of priorities and is very subjective in that it reflects some of my personal preferences and areas that I come into more contact with in Mongolia. Also, it’s Christmas time, so I take the right to present my personal wishlist.


Anti-corruption activities have taken on a very partisan nature under the DP government with some suggestions that these activities have even become elements in personal agendas, and that the Anti-Corruption Agency is becoming too powerful and too arbitrary with its investigative activities.

Anti-corruption activities have to be non-partisan and they have to start at the very top. I can only implore politicians and decision-makers to acknowledge how important it is for them to act on behalf of Mongolians not out of personal or corporate interest. But, beyond such moral appeals, it is important to have debates about structures that would guarantee more independent and effective anti-corruption activities in the future. Whether that would be a directly-elected anti-corruption commissioner of some kind for a limited duration with a mixed education and enforcement budget and a very ambitious transparency mandate, or a re-configuration of reporting structures to make the Anti-Corruption Agency accountable to the Ikh Khural, as well as cabinet and the President, that is not for me to decide, but I do believe very much that such a discussion would be of great potential benefit to the country’s development.

Such discussion might also head off any temptation within the MPP to take revenge on the DP for its activities of the past two years and to steer anti-corruption activities in a more productive, impactful and credible direction in the future.

Public Service

Very much linked to a discussion of anti-corruption are civil service reforms. An independent, credible, properly resourced, and reliable public service would seem to be essential to social and economic development. The current advocacy for a technocratic cabinet made of non-MPs with some subject-area expertise in their portfolios would seem to be an opening for a wider discussion of the role and importance of a competent civil service around some of the issues recently discussed by Mendee.

Unfortunately, this has been one of the areas where the DP government has fallen well short of expectations following the 2012 election in that this government has engaged in partisan appointments even more than previous governments and we have thus seen a wholesale rotation of personnel in almost all areas of the public service, down to a level of decision-making that really should not be subject to patronage appointments. Yes, vice-ministers should carry a popular mandate through elections, but department heads in ministries should be competent on their subject matter and be allowed to speak truth to political power in offering advice and direction for policy-making while also implementing political decisions faithfully.

Higher Education

The need for some independence from political appointments and decision-making is especially glaring in higher education. I first came to Mongolia some ten years ago in the hopes of establishing links between my university, UBC, and Mongolian universities around student and faculty exchanges. I endeavored to build some links for some years, but have given up on institutional linkages entirely since then, in part because I would be introduce to a new “Vice-President for International Affairs” every six months or so and start all discussions anew. This has been the experience in the ministries as well. For the universities this has meant that they have been unable to engage in the substantial institutional reforms that are necessary to transform the universities from teaching institutions under state-socialism to comprehensive institutions of higher education that engage in research as well as teaching, especially as the Academy of Sciences seems to be fading away.

Higher education will be crucial to Mongolia’s long-term development and this sector thus deserves a broader discussion and strategic decision-making.

Various models for uniting (some of the) public universities, moving them to a joint campus, etc. have been discussed, but my sense is that these discussions have contributed to uncertainty in this sector rather than spurring reforms. This sector is in urgent need of some strategic planning and follow-through on that planning.

Long-term Risky Research for Diversification

Higher education is a policy arena that certainly should see public intervention and strategic planning. Some research activities would also fall in this category.

If economic development is brought back on track in coming years, this will begin to produce resources that will allow Mongolia to consider long-term diversification. Note that I said “Mongolia” here not “the Mongolian government” or “Mongolian businesses”. This is an area for a broader social discussion as well.

However, for the greatest opportunities in terms of diversification, high risk research may be necessary. While some believe that there are low-hanging diversification fruit (ie, areas that are obvious for relatively short-term action), I have not been persuaded at all by the efforts around the Saishand industrial complex, nor by promoting UB as a financial or logistics hub.

What I have in mind here is some dedication of public resources to applied and basic research that might capitalize on some of the unique combinations of factors that Mongolia possesses. Some of these factors would include vast territory, ample sunshine, cold, etc. Even if we don’t think of sparsely-populated landscape as a competitive advantage at the moment, there may well be future applications of technology that rely exactly on that, space. What if there were some cold- and sunshine-loving bacteria or chemical processes that could play a role in mitigating greenhouse gas emissions or climate change? Not an area that I specialize in at all, and investments might be entirely lost in such an area, but if there were breakthroughs in any of these areas, Mongolia would emerge as a superpower in some new area of economic activity.

How to structure such research investments? The German Fraunhofer Institutes seem like a good structure that combines basic research. But higher education reforms could also be crucial in building research capacity around such topics across the public universities, for example. Options could be some kind of X Prize-like prize offer, cooperation with other cold countries (though Mongolia is unique in the combination of cold + ample sunshine), etc. None of this would require large immediate investments, though thinking about such directions could benefit from initial brainstorming discussions with international scientists. Of course, the independence of funding-decisions from partisan and personal concerns would seem to be even more essential in a high risk area of activities.

Policy-Making Capacity

This is one of the areas I’ve been talking and thinking about for years. We’re just embarking on a series of posts that aims to think more about some of the failures of Mongolian policy-making.

It seems clear, however, that none of the sectors of society that have well-developed policy-analysis and policy-making capacity in other countries are really well-developed in Mongolia.

The parties have not engaged in policy-making that would lead to competition over their platforms and their party-internal capacity remains underdeveloped.

Parliament is under-resourced in terms of the staffing that would allow MPs to actively craft policy. The NGO world remains mostly atomized with myriad of specific, small-scale NGOs that don’t add up to sector-specific movements.

Even businesses have not evolved any effective associations or industry groups that might offer policy analysis.

Finally, the media remains stuck with still-developing journalistic standards that lead to a lot of reporting of rumour and politically-linked views, but very little policy analysis.

What can government policy do to remedy this? Well, again, discussions of more professional cabinets could be used as momentum towards a more professional public service that would offer the government more policy-making capacity.

Higher education reforms could also play a role in this. It seems odd, for example, that there isn’t some kind of publicly-funded but independent think tank within the universities that focuses on mining policy.

While additional resources devoted to MPs may be politically tricky, but I certainly think that money would be much better spent on some additional staff and research capacity attached to parliament than on a second chamber as seems to be currently suggested in the context of constitutional revisions.

A Role for “Repats”

One of the areas where policy-analysis capacity could be developed is through the integration of “repats”. An increasing number of Mongolians have been educated in developed economies/democracies, and have now embarked on professional careers. My sense from the Mongolian community here in Vancouver is that a number of them are quite interested in eventually returning to Mongolia. The two greatest obstacles to such a return are air pollution in Ulaanbaatar and their doubts about Mongolian schools for their children.

However, while air pollution and education are issues to be addressed in a focused way for all Mongolians, not just for repats (i.e. repatriates, Mongolians who return to Mongolia with the skills that expatriates would have to offer), finding ways to integrate repats into policy-making is an important task that requires some planning. Some repats may face resentments in some contexts and thus be reluctant to offer their experiences and knowledge in such contexts. Are there avenues of integration that would best utilize repats’ knowledge? Can these avenues be developed without aggravating resentments against repats?

Support for Aimag Centres

Many Aimag centres are charming small towns. I am always impressed by the infrastructure that is typically grouped around a main square, including an administrative building, a library, and a culture house.

At the same time, Ulaanbaatar is bursting at the seems, and continued migration to the city leads to additional strains on infrastructure and pollution.

While strong arguments have been made for investments in Ulaanbaatar’s infrastructure and these do seem necessary, I often get the sense that communities outside of the capital are being abandoned in the process. If some of the Aimag centres were strengthened through investments in education and health infrastructure, could these not be more viable as desirable residences, even for younger Mongolians?

Nurturing Democracy

Democracy has come a long way in Mongolia. It seems it has benefitted from two circumstances: a) the purely indigenous roots of the initial democratic revolution, and b) the construction of democratic institutions before the onset of the mining boom.

While the democratic institutions of a parliamentary democracy are intact in Mongolia, as elsewhere, challenges remain and continued vigilance to support popular support for democracy should be pursued.

President Elbegdorj’s initiatives on the building of grassroots democracy through local participation in budgetary decisions (Local Development Fund) should be reinforced through further activities.

In the long run, parties should build their policy-making capacity to offer policy-based platforms rather than patronage campaigns. This process should be supported through political education, but potentially also through funding from public sources, depending as much of this wishlist does on non-partisan and thorough anti-corruption efforts.

Nurturing Democracy as Foreign Policy

Mongolia has achieved a stature in the world and in internal relations that is much beyond its size and significance. In part, this has been built on its status as the only post-state socialist Asian democracy. That is something that the country’s foreign policy should continue to build on. Whether it is through existing foreign aid programs for Myanmar and the Kirghiz Republic, or through the hosting of the Freedom Online Coalition in 2015 or the Asia-Europe Meeting (ASEM) in 2016, the current warm embrace and showering of gifts on Mongolia by much-less-than-democratic Russia and China should not tempt policy-makers to drop their focus on democracy and democratization as an element in foreign policy. Mongolia has an important role to play as an Asian non-OECD promoter of democratization.


As stated at the outset, OT should remain the first and central priority of the new government. Then, other economic initiatives such as continuing discussions around governance and economic activities at TT or continuation of privatization efforts (MIAT!) would be next. However, a super coalition should also offer the chance to discuss and set in motion some long-term strategies to put Mongolia on a positive path of social and political development. It is my wishlist in this latter category that I have drawn up here.

Posted in Constitution, Corruption, Democracy, Foreign Policy, Higher Education, Oyu Tolgoi, Party Politics, Politics, Social Issues | Tagged | Leave a comment

Cabinet Speculation

As it has become clearer over the weekend that the likely constellation for the new Mongolian government under Prime Minister Ch Saikhanbileg will be a super-coalition involving all political parties and thus 73 of the 76 members of the Ikh Khural, speculation online has been active regarding cabinet appointments.

The political mood seems to be very much favouring a cabinet that would involve relatively fewer MPs, i.e. ministers that wear the single deel of cabinet membership rather than the double-deel of MP & cabinet member. This same discussion has sometimes referred to a “professional cabinet“, though as MP S Demberel pointed out in a tweet to me, all government/cabinets should be professional:

There seems to be no easy term that would designate a nominee for a minister who brings substantive expertise and experience rather than “just” political clout and connections, but that’s what I understand people to mean by a professional cabinet.

The rationale behind the super coalition (as opposed to a grand coalition of DP + MPP which would have a clear majority in parliament already) seems to lie in the recognition of the current economic crisis and the need for parliament to take responsibility for this crisis and to take collective action. It’s not clear to me in this logic why the DP and its coalition partners don’t bear primary responsibility for the crisis, but at the same time, I certainly welcome a super coalition as a constellation that seems more likely to tackle real issues by avoiding blaming each other. I can’t imagine that blaming the three-member opposition of independent MPs will fly as an electoral strategy in June 2016.

Cabinet Speculation

Obviously, speculation about cabinet appointments is a bit of idle fun, as was the attempt to guess who the next PM would be. But, there’s nothing wrong with idle fun.

Obviously, we’ve not had even an announcement of whether the new cabinet would be structured around 16 ministries or the Altankhuyag-introduced 13 ministries. In some ways, a supercoalition would suggest more posts that could be divided between coalition members, but perhaps not.

Some of the following will surely be included: Deputy PM (multiple), Min of Foreign Affairs, Min of Justice, Min of Finance, Min of Mines & Energy, Cabinet Secretary, Min of Agriculture, Min of Labour, Min of Health, etc.

I wouldn’t claim that I’ve made an exhaustive list of possibilities that are being mentioned, but some names do seem to be cropping up more regularly.

L Purevsuren had already been nominated by Altankhuyag to replace L Bold as foreign minister. That Possibility seems to still exist. Obviously, Purevsuren would be seen as an expert in the appropriate portfolio coming out of the diplomatic service himself. He would also be a bridge to Pres Elbegdorj, serving as his foreign policy and security advisor at the moment, which would be useful given the role of the presidency in foreign relations.

R Jigjid is on a couple of lists as a possible Min of Mining which would be a similarly substantive appointment.

MPs who are being mentioned frequently for various posts include U Khurelsukh (MPP), M Enkhsaikhan (MNDP), Ya Sodbaatar (MPP), S Byambatsogt (MPP). Byambatsogt and Khurelsukh also seem likely candidates for Deputy PM representing the MPP.

Other appointments that would involve individuals who are not prominent (party) politicians are a little harder to guess about and not too many of those seem to be on many lists, so there may well be some surprises. It also seems like most lists include very few women, so the actual announcement of nominations will be interesting to watch in that regard as well, particularly because the Women’s Caucus has been quite active in legislative terms, and some women like M Batchimeg have been playing quite a prominent role in recent weeks (as leader of the DP coalition negotiations in Batchimeg’s case, for example).

Some of the prominent politicians who seem to be absent from speculation about cabinet posts: “Genco” Battulga, R Amarjargal, “Fortuna” Batbayar, L Bold, Kh Temuujin.

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Policy Series: Failure of Not Asking Hard Questions

Government policies should provide solutions to our problems. They reduce uncertainty by building trust among all players.  But, in Mongolia’s case, policies have been fragile, unstable, and unpredictable.  Overall, our policies increase uncertainty and build mistrust among ourselves and our partners.

What do we usually do?  Blame each other – politicians, parties, factions, civil society activists, and even foreigners – just in order to escape from the responsibility and raise our own profiles.  We don’t ask hard questions – because our blame game usually ends up in conspiracy theories.

Hard Questions that Need to be Asked

For each major policy issues – we need to ask hard questions and then, we should revoke, revise, or introduce new policies.

  • Why do we need to change the policy?
  • What part of the policy is working or not working?
  • Why did it work or fail? What are causes of success and failure (external and/or internal causes)?
  • What would be the impact of not changing or changing policy?
    • short-term
    • mid-term
    • long-term
  • How will these changes impact all players?
  • How much changes are acceptable to all players?
    • short-term
    • mid-term
    • long-term
  • What would be the optimal options to pursue (i.e., ‘win-win’)?
  • How can policies be implemented?

We know these questions, but rarely ask them.  For a variety of reasons, we, especially our politicians, prefer to blame the people (even if they were part of the policy-making process) and favour a quick temporary fix – within their electoral cycles.  Some even don’t recall their own positions at the different stages of policy-making – because they didn’t ask these hard questions and didn’t rack their brains.

Policy Areas that Need Questioning

There are many policies in Mongolia – require us asking and answering hard questions.  Let’s take a few of them.

Constitutional Reform

The constitutional revision has been on the table on and off. It has very strong, long-term impact on the policymaking process. But, no one really has laid out their reasons in quite convincing ways.  When we’re frustrated with the nature of the legislative process (esp. micromanagement of the executive branch, ineffective decision-making), we seek solutions like a bicameral legislature and a strong presidency.

However, we haven’t addressed the pros and cons of our current setting and didn’t ask why our legislature gradually became the weakest institution.  Until we find satisfying answers to this question, adding a chamber to the legislature or strengthening the power of the presidency will not solve our current policy challenges.

OT Investment Agreement

The Oyu Tolgoi Investment Agreement is another puzzle.  We all debate over the Oyu Tolgoi shares and our discussions are seemingly influenced by a temporary economic crisis and populist politics.  Even if the parliament provided rights for its governmental negotiating team, it did not initiate a non-partisan study in regards with the strategic mines, including Oyu Tolgoi.  The policy-making process for Oyu Tolgoi could serve us a good policy-making tool to educate our policy community how to deal with multi-national corporations, foreign state-owned enterprises, and domestic investors.  Instead of revoking the past investment agreement decisions, we need to learn from our mistakes and successes and work forward to improve the policy-making process.  Without substantial, non-partisan studies, we could not improve our policies.

Let’s Begin to Ask Hard Questions

Unless our policies address the primary cause of the problem and provide expectations at various phases of the policy implementation, we will not succeed and all will end up as losers.  So, we need to ask hard questions – why and then to find how solutions.  For example, our parliamentarians along with foreign and domestic investors declared their successful changes in the major mining investment legislations (including the windfall profit tax, protection against the state-owned enterprises).  But, they did not address why they had these laws on the first place.  Yes, no one will challenge them during the bust cycle.  Since they didn’t ask hard questions and find solutions for these ad-hoc policies, no one could guarentee – these are permanent solutions.  If you don’t ask hard questions and agree on acceptable solutions – including the nationalist politicians and civil society actors, problems will recur and trigger the another circle of the blame game.

So, let’s ask and answer hard questions together on major policies.

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Policy Series

Over the past several weeks, discussions in “Little Mongolia” in UBC’s Choi Bldg about Mongolian politics have heated up in parallel with the turmoil the Mongolian government is experiencing.

Mendee (UBC Political Science PhD candidate), Damdinnyam Gongor (UBC Mining Engineering MSc candidate) and I keep debating various aspects of party politics, constitutional reform, the need for decisions to remedy the current economic crisis, etc.

The current situation at the office is thus very similar to that which led to the original inception of this blog, when Mendee, Byambajav Dalaibuyan (now a Post-Doc at the Centre for Social Responsibility in Mining at the Univ of Queensland) and I kept having discussions about contemporary Mongolia that we ultimately wanted to share with others.

To focus some of our current discussions, we’re hoping to run a bit of a series that looks at different aspects of the policy-making process over the coming weeks. We hope that this series might inspire some discussion and reaction and would welcome submissions of guests posts that respond to issues that we will be raising.

Posts so far:

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Mongolia – From Sino-Russian Buffer to Conversion Zone

Last autumn, Presidents Xi Jinping and Vladimir Putin made separate visits to Mongolia, met for a tri-lateral (Russia-China-Mongolia) summit in the Tajikistan capital of Dushanbe during the leadership summit of the Shanghai Cooperation Organization (SCO), and dispatched their vice-foreign ministers for a working-level meeting in preparation for next year’s summit in Ufa, Russia. With only a very brief amicable period between these three neighbors during the 1950s, China’s and Russia’s recent constructive behavior is new, even anomalous. What might it mean?

China and Russia have competed over Mongolia for centuries. As a result, greater Mongolia was shattered into two major geopolitical entities—Inner Mongolia, which is now part of the PRC, and Outer Mongolia, an independent nation-state. Both Mongolias served as geo-strategic buffer zones during Sino-Soviet split in the 1960s. Even in the post-Cold War period, China and Russia avoided any joint collaboration over Mongolia. As a result, major infrastructure projects like railroad and power plants became hostages of the geopolitical and economic competition of Mongolia’s two larger neighbours. A ten-year debate over the railroad extension in Mongolia—about whether to use Chinese or Russian standard gauges—was just one salient example. Earlier, Mongolia’s neutrality was supported by Russia, but no longer.

The joint move of China and Russia indicates a new dynamic in Inner Asia. Russia’s complicated geopolitical competition in Europe is compelling Russia into a more junior partner position in Sino-Russian interactions. Unable to resist Chinese political and economic expansions in Inner Asia, Russia has acquiesced to cooperation with China on infrastructure development projects in Mongolia, and even presented no objections to using Chinese standard rail gauges for railroad expansion in Mongolia. And Russia now supports strengthening the SCO by the inclusion of Mongolia, whose presence is vital to fill the awkward hole in the SCO’s map for regional legitimacy. These changes are transforming Mongolia from a buffer zone to a zone of Sino-Russian convergence.

Note: re-posted with the permission of the Asia Pacific Memo of the Institute of Asian Research, for the original memo, Memo #318 (2014/11/28).

Posted in Asia Pacific Memo, China, Foreign Policy, Mongolia and ..., Russia | Tagged | Leave a comment