Guest Post: A quick reaction to the on-going Facebook conversations on Oyu Tolgoi agreement and the role of Mr Bayartsogt in signing it

By Undariya Tumursukh

The news that the Swiss are investigating the possible corruption case involving the former Finance Minister S. Bayartsogt (DP) and Rio Tinto has triggered some agitated discussion, including on Facebook, about Mr. Bayartsogt’s central role in concluding the Oyu Tolgoi (OT) agreement in 2009.


Mr. Bayartsogt was re-elected to the parliament in 2012 despite the controversy surrounding this investment deal and even appointed as a Vice-Speaker of the Parliament. However, he was forced to resign from this post in 2013 when his unreported offshore company with one million USD in a Swiss bank account surfaced through the Offshore Leaks Database of the International Consortium of Investigative Journalists . Mr. Bayartsogt claimed he simply forgot to include these assets in his legally required declaration of income and property when assuming his public office. He reportedly added that “one million USD is not such a large amount” (link).

Now, Mr. Bayartsogt’s offshore accounts have resurfaced as a result of Swiss authorities’ investigations into the source of not one but ten million USD transferred to Mr. Bayartsogt soon after he was appointed a Finance Minister. Reuters reported that the said accounts have been frozen and the Swiss court is investigating whether funds are likely to have been a bribe to the former Finance Minister in exchange for signing an investment agreement disadvantageous to Mongolia (link). As a number of other compromised politicians, Mr. Bayartsogt had been living in luxury abroad since his defeat in the 2016 parliamentary elections. He has recently come home and held a press conference at which he claimed that the funds in question have nothing to do with his role as a Finance Minister or Oyu Tolgoi agreement as he had simply borrowed that money from a friend. The said friend remains unidentified.

Social Media Discussions Defending Bayartsogt

My purpose here, however, is not to prove or disprove Mr. Bayartsogt’s guilt or argue the pros and cons of the OT agreement. My purpose is more modest: to reflect on a few arguments I encountered, to my initial surprise, in an ardent defense of our former Minister of Finance and the OT agreement. Among the proponents are people considered well educated and informed and concerned about Mongolia’s development. That initial surprise is what triggered this reflection.

What concerns me is the logic of arguments that defend powerful and privileged men whom we have sufficient reason to suspect of corruption and even treason in so far as they allegedly colluded with transnational and domestic private interests to cheat the Mongolian people of their public assets. That Mr. Bayartsogt figures here is of little importance. The limelight could have shone on any other politician such as, say, Mr. S. Bayar, former Prime Minister (MPP), also deeply implicated in corruption charges and also living abroad in luxury. Instead of OT, it could have been Erdenet or any other significant source of national wealth (and sadly they have been too) that is privatized through a non-transparent process, with Mongolia’s national interests poorly guarded (or easily sold?) and with the neoliberal ideology of the free market, private property and limited government serving both as legitimation and a smokescreen.

Argument 1: Innocent Until Proven Guilty

The first line of defense is, predictably, that Mr. Bayartsogt’s crime has not been established by the court. Indeed, a core principle of a humane and democratic system is the presumption of innocence until proven guilty. Whilst in this particular case, there is hope that the Swiss judicial system will prove trustworthy and effective, it is important to reflect on this defensive argument in the Mongolian context as it surfaces every time there is some effort to demand accountability from a powerful politician. Very simply, we cannot trust our legal and judicial institutions to systematically work fairly and competently. Both our lived experiences and corruption perception surveys indicate they are plagued with significant corruption. Recent revelations about the private wealth accumulated by some judges confirm these suspicions. If the courts themselves are a part of the corruption network, a corrupt politician may never be proven guilty through the formal processes. In such a situation, should we continue to believe men like Mr. Bayartsogt to be innocent since never proven guilty?

Then there is the issue of the difference between law and justice. Laws are a product of political processes in which those with more power often dictate their will onto those with less. Hence, if laws are designed to protect the interests of the wealthy and the powerful, even if the courts work effectively according to the law, we cannot expect justice. Nevertheless, for those of us committed to democracy and, hence, the goal of fostering an independent and fair judiciary, we have little choice but to wait for the courts to run their course as a matter of an ethical principle. So that is that.

Argument 2: Western Companies Are Intrinsically Good

The other pro-Bayartsogt arguments I have seen are a bit more perplexing. One states that since Rio Tinto is not a Mongolian or Chinese but a western company and one that operates on a global scale, it would never do such a dirty thing as bribing a public official. In this view, foreign, especially western and large, transnational companies are ethical, socially responsible, accountable, transparent, i.e. “nice and clean” in a presumed contradistinction to domestic and non-western companies. This absolutely unfounded and extremely naïve view is mind-boggling! A simple google search would show reports of Rio Tinto charged for fraud in US, imposed a fine in UK and facing investigation in Australia in relation to a coal reserves deal in Mozambique (link); investigated by UK authorities for corruption in relation to an iron ore project in Guinea; and implicated in human rights violations and environmental degradation in Papua New Guinea (link), etc. I strongly wish my compatriots, especially those who consider themselves intellectuals, would read up on the empirical history of western capitalism. To clarify, I do not mean reading, once again, the ideological treatises of the likes of Hayek and Friedman but critical studies grounded in the historical, material and social realities of countries and people.

Argument 3: Be Happy with the Leftovers

Another argument was that we should award rather than prosecute Mr. Bayartsogt as he at least made OT operate. In this view, whether or not the former Finance Minister colluded with transnational corporate interests to sell Mongolia short is irrelevant so long as the deal brought some income for some Mongolians. This argument is not as naïve as the previous ones. It expresses a worldview that has made peace with corruption and injustice. If we adhere to it, there is no need to hold accountable corrupt officials and businesses so long as they let some revenues to trickle down to Mongolians and we, as Mongolians, are to be grateful to the “big guys” for the opportunity to scramble for their leftovers. This view is not just defeatist, it is devoid of any morality.

Argument 4: The REAL Costs of Oyu Tolgoi

And then, in all of this, there remains a side to the OT agreement or any other similar arrangement that is still largely left out of the public discussions: the REAL COST of the mining in the fragile Gobi ecosystem. Once the minerals have been depleted and the wealth extracted and channeled abroad not only through the gains made by transnationals but also through Mongolia’s capital flight and imports, we shall face more than a loss of revenue. We will be left to face a devastated environment, severe water shortage and desertification, deterioration of public health, destruction of traditional livelihoods, massive social dislocation and exacerbation of inequalities and violence. When Mr. Bayartsogt bedazzled Mr. S. Ganbaatar during their televised debate by his now infamous reference to the twenty thousand variables included in the “highly complex” theoretical model underpinning the OT agreement, no word was said about the non-market costs to be borne by Mongolia. Mr. Ganbaatar had no wherewithal to challenge the limitations of the model as he himself had come to that debate as a neoliberal believer with a typically myopic vision of discarding the social and environmental costs as extraneous to economic relations.

Argument 5: The Bigger Picture

I believe the various positions (and omissions) on the matter of Mr. Bayartsogt‘s role in the OT agreement reveal much broader issues related to the post-socialist attitudes of Mongolians to economy, politics, public good, social values, and ethics. In the end, it is not just Bayartsogt. At the very least, two other ministers who represented Mongolia in the OT agreement negotiations and signing are implicated: Mr. L. Gansukh, then Minister of Environment, who allegedly bought a million USD house soon afterwards, and Mr. D. Zorigt, then Minister of Energy and Mining, whose private portfolio has reportedly reached 30 companies since then. A deal of this magnitude had to involve more people from both MDP and MPP. However, the issue is not just that corruption is institutionalized in post-socialist Mongolia. The challenge is that it is facilitated by neoliberal ideologies that have become hegemonic.

About the Author

Undariya Tumursukh is a PhD Candidate in Public Policy at the Auckland University of Technology and former National Coordinator of the MONFEMNET National Network.

Note: The initial, briefer, reaction was posted on Facebook on March 21.

Posted in Corruption, Foreign Investment, International Agreements, Mining, Oyu Tolgoi, Undariya Tumursukh | 1 Comment

Mongolia’s Role in Engaging North Korea

By Julian Dierkes

Kim Jong-il Kindergarten in Darkhan City

North Korea has long been an important element in Mongolia’s foreign relations. With the surprise announcement of plans for a meeting between Pres. Donald Trump and Chairman of the Worker’s Party of Korea Kim Jong-un, we tried to stoke discussions about a possible involvement for Mongolia in the lead-up, hosting and follow-up to any meeting.

Recent Writing

Here are some of the articles we’ve published on this topic in late March:

  1. Dierkes, Julian and MENDEE Jargalsaikhan. 2018. “8 Reasons Why Mongolia’s Capital, Ulaanbaatar, Might Be the Place for a Trump-Kim Summit“, The Diplomat.
  2. Dierkes, Julian and MENDEE Jargalsaikhan. 2018. “ТҮҮХЭН БОЛОМЖИЙГ БҮҮ АЛДААСАЙ“, MongolTV.
  3. Dierkes, Julian and MENDEE Jargalsaikhan. 2018. “What Mongolia Gains by Playing Host to a Historic Trump-Kim Summit“, The Diplomat.
  4. Dierkes, Julian. 2018. “Trump, Kim … und die Mongolei?“, Internationale Politik und Gesellschaft. (EnglishНа русском)
  5. Dierkes, Julian and MENDEE Jargalsaikhan . 2018. “Location, location, location: Ulaanbaatar still in the running to host Trump-Kim summit“, The Diplomat.
  6. MENDEE Jargalsaikhan and Julian Dierkes. 2018 “UB Dialogue Initiatives from the 1970s to 1990s“, Mongolia Focus.
  7. Dierkes, Julian. 2018. “Some Thoughts about Logistics of a Steppe Summit“, Mongolia Focus.
  8. Dierkes, Julian and MENDEE Jargalsaikhan. 2018. “Elevate Ulaanbaatar Dialogue“, Mongolia Focus.
  9. Dierkes, Julian. 2018. “What to Call a Trump-Kim Summit?“, Mongolia Focus.
  10. Dierkes, Julian and MENDEE Jargalsaikhan. 2018. “In Discussing North Korea, Recall Mongolia’s Peaceful Revolution and End to One-Party Rule“. The Diplomat.

There was also some interest around engaging North Korea via Mongolia around the time plans for the “Vancouver Group” meeting were announced in late 2017. Together with Chimguundari N, I wrote a piece for Policy Options: “Mongolia as a Canada-North Korea Intermediary“.

Long-Standing Interest

But, obviously, North Korea did not just suddenly show up on Mongolia’s radar this year. Quite the contrary, the long-standing engagement is one of the elements that make Mongolian involvement in 2018 plausible.

In Spring 2017, I thus wrote a post that looked at some of the turmoil Mongolia could be facing in foreign relations during a Trump presidency, explicitly speculating about what developments in the US stance toward North Korea might mean for Mongolia, though I didn’t include a summit as a possible development.

For other North Korea-related posts, see

Posted in China, Foreign Policy, Japan, Mongolia and ..., North Korea, South Korea, Ulaanbaatar Dialogue, UN, United States | Tagged | Leave a comment

Mongolian Mining Forum at PDAC 2018

By Bulgan B

Mongolia has made a tradition of sending a delegation to PDAC every year in the last 8 years (at least this is as far as I recall).  Although, the odds of the same minister of mining attending the conference might have been very slim given the changes in Mongolian Government. Regardless of the changes of faces, the objective of the event is to attract investment to Mongolia. So, hitting the right notes is important in an environment like PDAC where many countries are making a concerted effort in attracting the same investment. This year Chile, Peru, and Ecuador sponsored PDAC – showing that the event has become the international thing.

Unlocking Mongolia’s Potential

The Mongolian Mining Forum’s agenda was named “Unlocking Mongolia’s potential for investors and developing partnerships for economic development.” Although, given that it was the first day of the official opening of PDAC and there were many other events simultaneously taking place, the function hall was full. I take that a good sign and an interest because it was not easy to find any program agenda on the internet except the Xanadu mining’ tweet came in handy although might have been the draft version of the program as there are changes to the program at the actual event.

Government Perspective

In terms of content (skipping the pleasantries of opening remarks) Mr. Munkhbileg Namsrai, Mineral Resources, and Petroleum Agency of Mongolia showed geoscience mapping of Mongolian resources. He also shared that the Agency’s website is hosting geoinformation database which includes over 1300 state-funded geological reports and their intention to start private funded exploration.

The presentations by OT Country Director Munkhtushig Dul and Erdenes Mongol LLC CEO Tumentsogt were rich in information on where they are, and where they plan to go. Erdenes Mongol LLC shares that it is fated to manage the Mongolian Sovereign Wealth Fund. There were discussions of what this meant in the wider circle of Mongolian audience.

Mongolia and Canada

Moving on to the presentation by the Mining Suppliers Trade Association of Canada, Mr. Ryan McEchearn spoke on the mining cluster approach and stimulated a lot of interest in the Mongolian audience. Member of Parliament, Dr. Undraa Agvaanluvsan requested to learn how the cluster approach would match Mongolia’s development pursuit based on its mining industry.

The following session on Improving mining industry performance was moderated by  Mr. Jargalsaikhan Dambadarjaa. His panel included the Minister of Mining, Member of Parliament, Canadian Ambassador, CEO of the Mongolian Stock Exchange and Business Council of Mongolia. Mr. Jargalsaikhan touched upon a variety of questions ranging from “trust” to “tax”. The Canadian Ambassador, Mr. David Sproule shared that transparency and consultation were important for not only attracting but also maintaining the flow of investment in the country, making reference to the recent change to the income tax in Mongolia. The undercurrent of the panel was the issue of changes to the taxation in Mongolia. The Minister of Mining, however, was well grounded in his response on this hot topic of taxation. He reflected upon the process of policy making and budget making and how the budget making is not a consultation process at the parliament but rather a binary process either to approve or reject. He also mentioned that on January 5, 2018, the government passed legislation to stream the 30% of the royalty to the local governments which could change the nature of the industry’s engagement with the local governments. Minister D. Sumiyabazar did handle the hard questions with ease. It is an interesting comparison to Marissa Smith’s post covering the World Economic Forum in January 2018.

The event concluded with Altan gadas (polar star) medal to Mr. Matthew Wood, Executive Chairman of Steppe Gold Ltd for his contribution to the development of Mongolia. In the audience, there was another foreigner who holds the “Friendship” medal amidst longtime friends of Mongolia. These are the descriptive accounts of Mongolian Mining Forum 2018 at PDAC.

“Welcome Back” to Mongolia, Particularly for Junior Mining Companies

The mining industry is picking itself up from the ground and dusting itself off. It is a good sign for Mongolia to join the marathon and improve itself. Mining is a package deal, we can not separate its positive impacts from the negative ones. However, Mongolia can mitigate those negative ones and catalyze the long-term development through the benefits from the industry. First and foremost, to optimize the country in mining, we need to start taking the junior mining companies seriously. Those strategic deposits and megaprojects are in their own bubbles of complications, however, without a serious relationship with junior companies, we will not move forward.

In summary, the key message of the event was “welcome back” to Mongolia. The Mongolian government has presented a progress through legislative reform in mining, an openness of geoscience data and economic (and political of course) interest to welcome investment. Although, like any maturing democracy, it has and do not hide its challenges with policymaking, such as the case of a recent change in taxation.  However, both mining industry and government of Mongolia should and could work to get the best out of this “boom” ride.



Posted in Canada, Erdenes Mongol, Mining, Mining | Tagged | 1 Comment

Cars in Mongolia

By Julian Dierkes

Our image of Mongolia may be dominated by horses as a part of the landscape, but also as a mode of transport. But, of course, motorized transport is very common place today.

Development Stages and Motorization

I imagine that there’s some kind of impressionistic literature out there that classifies development stages by the kind of vehicles that predominate in urban traffic. Whether it is the tiny Hondas of the 1960s in Japan, the bicycles of pre-1980 Beijing, or the motor scooters so common across SE Asia, the predominant forms of transportation provide a measure of the funds that are available for urban transport, but also for luxury purchases.

Types of Cars


When I first started visiting Mongolia very regularly in the mid-2000s, I thought of Ulaanbaatar as the place that Hyundais went to die. This was an extension of my own experience in Alaska which around that time was the place where Subarus went to die. In both cases a brand that was enormously common and seemed well-suited to local conditions. In the case of Hyundai Accents, these were largely used imports from Korea that were affordable and possible to maintain. They thus dominated the Ulaanbaatar car-scape until Prius started arriving in numbers (see below).

Arrival of Prius

In 2016, the Beijing correspondent of the Globe & Mail, Nathan Vanderklippe, noted the preponderance of hybrid cars in Mongolia, but the growth of this sector had been going on for some years. Is it that Mongolians have seen the eco-light and want to save gas? Is it that this is an individual decision to alleviate a collective winter-time evil, air pollution? No, it’s mostly that most cars in Mongolia are imports from Japan (or Korea). Given Japan’s very strict safety inspections, cars are discarded in Japan strangely quickly and the used market for older cars is totally underdeveloped. So, roughly five years after hybrids, and especially the Toyota Prius, started being more popular in Japan, they “naturally” started showing up in Mongolia. Of course, drivers will be delighted by the gas-savings, but the market share of the hybrids is probably more due to push factors related to Japanese exports than any other decisions.

By 2017, Prius seem to be the most common car in Ulaanbaatar. They are the workhorse of modern Mongolian living. They seem to be approved to carry at least 11 people.

If you follow the secret-code-on-how-to-shut-off-hybrid-mode instructions, you can even drive through rivers with them. I can only imagine what the Toyota engineers who designed these would think when they see how their hi-tech hybrids are out through the ringer of life on the steppes, and how well they seem to handle that.

Resurgence of right-hand drive

The shift from Hyundai Accents to Toyota Prius also brought a resurgence of right-hand drive cars, imported from Japan. Today, Mongolia is a mix of right-hand drive and left-hand drive cars, even though traffic is on the right side of the street, of course. Given the high quality, low mileage, and technological advances in the domestic Japanese car market, it seems unlikely that this will decline as a major source of cars in Mongolia for some time. The main threat to the dominance of used cars from Japan, may be new cars from China, especially if electrification there really takes off. It would seem that the domestic market for used cars in China itself is so large that few cars might emerge from this to be imported into Mongolia, but new cars seem more likely, especially as Mongolia becomes more affluent.

Why no Subaru?

I have often wondered why there are no more Subarus in Mongolia. Again (as above) given my Alaska experience, Subarus seem ideal for Mongolia. A bit of ground-clearance, 4-wheel-drive, utilitarian, plenty of them in the Japanese used market…

So what keeps them from showing up in bigger numbers here? Do Japanese owners hang on to Subarus longer than other makes? Are the Boxer engines more complicated to maintain? Do they guzzle too much gas for Mongolian tastes?


Mongolians probably like the utility of pick-ups, especially for the countryside. They have sporadically started appearing. Mostly, they are bigger US models, it seems, that rely on a differential tax rate as trucks rather than passenger cars.

However, no nation nearby has significant numbers of these and since large parts of the Mongolian automobile market continue to be used cars from Japan and Korea, pick-us are probably unlikely to disappear in big numbers.

Cars are such an obvious element in the central Ulaanbaatar streetscape that I will continue to note changes as they occur over the years.

Car Language

One of the interesting features of car life in Mongolia is that model years are designated by numbers that I’ve never heard in Canada. Do you know what a Prius 20 is vs a Prius 30? What about all those numbers that designate generations of Landcruisers?

Fortunately, Hummer Craze Waning

Some years ago, Hummers seemed to be proliferating. The whole off-road, weird macho image with Schwarzenegger and all seemed like they would be a thing in Mongolia. Fortunately for the world, that trend never quite became a craze and the few Hummers that are around now look like the dinosaurs they are.

Posted in Change, Change, Countryside, Curios, Development, Social Change, Social Issues, Ulaanbaatar | Tagged | Leave a comment

SOMO Report “Mining Taxes”

By Julian Dierkes

The Dutch Centre for Research on Multinational Corporations (SOMO) published a report focused on a whole list of issues related to financial and governance structures for the Oyu Tolgoi project. The report was written by SOMO’s Vincent Kiezebrink and Rhodante Ahlers, and Mongolian NGO Oyu Tolgoi Watch’s D Sukhgerel.

The report is nearly 50 pages long and covers many different aspects of financial and governance arrangements around OT.

The most significant and novel information centres around the tax arrangements that Rio Tinto has made to move profits from OT production around the globe in order to minimize the taxes that are paid on these profits. In the report, these are chapters 4 and 5. But despite the best efforts of the authors, including some nice representations of ownership structures, these tax structures remain fundamentally obscure even to someone like me who is well-informed about the political context in Mongolia. And, perhaps, this is the biggest conclusion to take away from this investigation into tax structures, namely that they are inscrutable and deliberately so.

I think this report is a pretty significant contribution to discussions of the OT project in Mongolia and my guess is that it will receive significant attention. The report therefore deserves our closer attention for more detailed comments, and I hope that we’ll be able to write more posts to focus on specific aspects of the report.

Below are some of the issues mentioned in or questioned raised by the report that I hope we’ll be able to comment on:

  1. A lot of the discussion of Oyu Tolgoi, including the SOMO report, gloss over some assumptions that evaluations are based on. It would be better if these were explicit.
  2. Can we think of the relationship between Rio Tinto and the Government of Mongolia in wrestling terms?
  3. Expectations of Rio Tinto and of the government of Mongolia are very high when it comes to governance structures and the provision of maximum benefits to Mongolians. That is appropriate, but it is also unrealistic (from both perspectives, the investor’s and the government’s) that perfection will be achieved. After all, we are not all Norwegian.
  4. None of the tax schemes described in the report appear to be illegal. But isn’t it ironic that the EU initially black-listed Mongolia as a tax heaven, but that in this case Luxemburg appears to be very much in the business of corporate registration for the sole purpose of tax reduction. Hello, EU pot, meet a Mongolian kettle!
  5. What role do OECD governments play in enabling these kinds of schemes to minimize taxes? Given our location in Canada, what role has EDC financing played, and what about investment in TRQ by public pension funds?
  6. Some calculations that are made by Rio Tinto (and many other investors) appear fundamentally flawed. The OT project is expected to be productive for many decades. Does it really make sense for Rio Tinto to save x% on taxes by engaging in the schemes described in the report and not really addressed in the Rio Tinto response, when the deliberate obfuscation that is an element in all of these schemes clearly raises political risks associated with OT significantly? Yes, from an investor perspective, there have always been complaints about repeated efforts by individual Mongolian politicians or by governments to re-open discussions about the Investment Agreement, but a lack of transparency breeds mistrust which forces responsible Mongolian politicians into a continued examination of the relationship. Corporations would point to their obligation to maximize shareholder value, but should they not nudge shareholders into understanding long-term benefits vs. short-term tax savings? Should public funds that invest in TRQ and similar projects not be aware of that?
Posted in Canada, Corruption, EU, Foreign Investment, International Agreements, International Relations, Mining, Mining, Mining Governance, Oyu Tolgoi, Policy, Public Policy, Taxes | Tagged | Leave a comment

SOMO Report Preamble: Assumptions

By Julian Dierkes

It struck me while reading the SOMO report on Oyu Tolgoi governance and tax structures that there are a number of big assumptions and elements in the Mongolian context that are not discussed explicitly, but that are fundamental to the project. This includes technical requirements, political pressures, and the ownership of mineral resources.

The perspective that the SOMO report takes is one that I also find common in the investor community, namely an expectation of perfection in governance. Not surprisingly, I would argue that such perfection is unlikely to be achieved and that this expectation is somewhat detrimental to discussions of resource projects.

This is thus the “meta comment” in a series of posts reacting to the SOMO report.

Big Assumptions

There are a number of features of the Oyu Tolgoi project that some readers of the SOMO report may be unaware of. They relate to the nature of the mineral deposit, but also of Mongolian politics. For background, readers might also be interested in Byambajav’s summary of the history of the Oyu Tolgoi discovery.

Economic Development

Most fundamentally, Mongolians decided after the democratic revolution that they wanted to pursue economic development in a market context. Yes, they were surely nudged in that decision by international advice and one might debate to what extent this decision was made based on free and prior informed consent at the level of the nation, but by the time decisions about Oyu Tolgoi were being made, the pursuit of economic development in a global capital context was a foregone conclusion. Following on that discussion, Mongolians did not consider the option not to develop OT. Decisions about OT were also being made more than 15 years after the 1990 revolution, a period that had left Mongolia poor. Again, one might debate the role of international advice in bringing about this poverty, but it was a given by 2005 and led to a desire to see economic development sooner rather than later, thus precluding a number of development paths that would have required patience and a slow build-up of expertise and capacities.

So, even prior to making any specific decisions about Oyu Tolgoi, the fundamental direction of policy had been set: let’s have economic development within a global capitalistic system and the sooner, the better.

Ownership of Minerals

Mongolians own their mineral resources and thus have control over what happens to those resources.

That is not “resource nationalism“, it is constitutional and really any other kind of fact.

Comments from the investor perspective very often try to slap the “resource nationalism” label on any discussions about the level of taxation or other aspects of mining governance. But it is important to remember that Mongolians and the government that represents them are perfectly free and justified in doing anything they want with their mineral resources. If they want to develop these resources with partners, they would probably like to be responsive to these partners, but, fundamentally, it is the duty of the Mongolian government to be stewards of resources and to maximize benefits for the population from these resources.

The Deposit

The OT deposit is BIG. The SOMO report contains some nice maps of the surroundings of the project in the context of various other companies that Rio Tinto also has shares in in Chapter 2. The ore body is also quite deep. Currently, all production comes from the open pit mine that is the earliest phase of the project, but ultimately this will be replaced by production from underground mining.

Most relevant to decisions about ownership and governance structures is the fact that this deposit is best developed through block caving. While I am not a mining engineer myself, I have not heard any engineers or industry representatives dispute that fundamental perspective on the OT project.

As Priyadarshi Hem and  Jack Caldwell write in their overview of block caving as a method: “Block cave mining is a mass mining method that allows for the bulk mining of large, relatively lower grade, orebodies.” It is also a method that requires very complex calculations to predict subsistence as material is extracted underground. That expertise is rare. The method also requires very high investment costs in constructing the underground facilities that allow for block caving while production costs are relatively lower than for other methods.

In the case of Oyu Tolgoi this means that Mongolian mining companies, including long-time copper miner Erdenet did not posses the expertise/technology to develop the deposit when it was moving from exploration to development roughly around the time Rio Tinto bought into the project by acquiring a stake in Turqoise Hill.

So, given that development in a global capitalist context was a foregone conclusion (and is not really under debate in Mongolia currently), the nature of the OT deposit demanded some kind of cooperation with an international mining company that had the technical know-how and financial wherewithal to undertake this project. In the set of companies that fulfill these criteria, there are some but very few alternatives to Rio Tinto.

The Investment Agreement

Given the desire for economic development and the nature of the OT deposit, was the Government of Mongolia bullied into a disadvantageous investment agreement as the SOMO report asserts in several places?

This questions assumes that we have a standard for judging what “(dis)advantageous” is in this context. But there is no standard for what a nation should expect in terms of a return on development of its resources. If such an agreement ultimately produces any kind of positive return, (dis)advantageous is a judgement of relative benefits that might come, but those benefits are very difficult to estimate on the basis of an investment agreement alone.

Posted in Foreign Investment, International Agreements, Mining, Mining Governance, Oyu Tolgoi, Policy, Public Policy, Taxes | Tagged | Leave a comment

How Are We To Think About Rio’s Balancing of Political Risk and Taxation in Light of SOMO Report?

By Julian Dierkes

Rio Tinto’s response to the SOMO report claims that the convoluted corporate structure that has been created for Oyu Tolgoi is not aimed at saving taxes, but rather at reducing investment risk.

For as long as Rio Tinto has been involved in Oyu Tolgoi, it has struck me that management is fundamentally not willing to engage Mongolia on Mongolians’ terms to commit to the project in the very long term. Instead management seems to be operating with a remote-controlled spreadsheet constructed by tax lawyers. This continues to raise political risk at Rio Tinto’s peril.

Whether or not the details discussed in the SOMO report suggest tax avoidance or a reduction of investment risk (I can’t tell the difference, to be honest), I see a corporation that seems to have decided that a lack of transparency is an acceptable price to pay for a (seemingly small) reduction in taxes or in investment risk. What that decision seems to disregard is that a lack of transparency on part of the investor is a significant contribution to political risk.

Blaming Mongolians

In the past, when Mongolian officials have raised questions about Oyu Tolgoi and Rio Tinto’s management thereof (most recently, with a large tax claim), much of the international response has focused on blaming such questions for destabilizing the relationship and thus hurting the longterm relationship. In those moments, Rio is portrayed as a committed longterm investor.

Rio Tinto’s Longterm Commitment

Yet, the convoluted and seemingly deliberately obscure ownership structures detailed by the SOMO report make me question that longterm commitment, or at least the wisdom of Rio Tinto executives in how they choose to express that commitment.

The size of the OT deposit suggests that it will be in production for many decades. Obviously, this depends on the rate of production and there are some imaginable, but far-fetched scenarios where the project is abandoned (apocalypse, an artificial, cheap substitute for copper, perhaps others). Barring those unlikely developments, this mine will be in production into the late 21st century if not beyond. For a business investment, that is a longterm investment, I would say.

Given the substantial up-front cost of developing the underground production at OT, all broad indications suggest that Rio Tinto is in the project for the, er, long haul. So, how are these broad indications translated into specific business decisions that continue to seem to squeeze dollars out of the project by accepting an increased political risk?

Political Risk

There are two classes of political risks that the OT project is facing:

  1. Catastrophic risk
  2. Incremental risk

Exogenous Shocks

Catastrophic risks means that Rio Tinto’s investment in the project is lost entirely. Generally, the scenario that is considered in bringing this about is a some kind of full-scale nationalization. For OT, it is primarily exogenous (i.e. separate from the project itself) shocks that might represent such a catastrophic risks. Examples would be some kind of authoritarian government in Mongolia that nationalized the project (preferably after completion of construction though the operation of a block caving mine is very cheap, but also very complex in terms of calculating/planning subsistence). Currently, the possibility of such a scenario strikes me as very remote, perhaps <5% over 50 years.

Another example might be a foreign invasion. That also appears very unlikely, unless there were extreme events/changes in either Russia or in China. Both of those are not unimaginable (an even more authoritarian turn in Russia, environmental catastrophe in China that turns into social unrest…), but very unlikely. And it these scenarios unfolded, lost investments in OT might be among the least of the world’s worries.

Of course, the very size of the OT project may inspire a kleptocratic  take-over domestically and internationally, i.e. someone (person or country) might actively try to seize the project as a target all on its own, but if that happens, again, it would spell so many problems that this represents catastrophic, but very small risk.

Endogenous Dynamics

While catastrophic risk would largely stem from dynamics that are not directly related to OT, the project itself does represent some political risks to itself, so to say. But, OT and Rio Tinto do play a very prominent role within Mongolian political deliberations, so they are actors that do contribute to political risk to themselves. To me, the SOMO report strongly suggests that Rio Tinto continues to make decisions that raise the incremental political risks on the project.

Incremental risks stem from changes in the taxation and regulatory environment. Essentially they are the risk that the profitability of the project is reduced, possibly even so far to be no longer economically viable.

Most of the questions that Mongolians and others are asking about the project stem from uncertainty about the information regarding the project.

This is in part because this is only the second mega-project that the Mongolian state is involved in. Erdenet Mine was structured in a very different, post-state socialist context where decisions were made on a very different basis and the “corporation” was in fact part of the state, not a separate entity.

So, Mongolian policy-makers and regulators simply do not have past experience with this kind of project to rely on. Yes, they could hire foreign advice to stand in for their own experience, but that only goes so far. All along in the negotiations, there has thus been a fundamental information asymmetry. There are very many aspects of the project that cannot be known to policy-makers. Are there any aspects that cannot be known to managers, other than those that are subject to the negotiations themselves?

It thus seems to me that in order to minimize the political risk of regulatory uncertainty and also of uncertainty in taxation – the very risk that the Investment Agreement is supposed to mitigate against – it would behoove Rio Tinto to minimize information and experience imbalances wherever is possible without compromising negotiation positions. Overcharging Oyu Tolgoi on management fees (the focus of many discussions between Rio Tinto and the Government in 2013, ultimately reduced from 6% to 3% of capital costs), or the elaborate constructs explored by the SOMO report, do not reduce information imbalances. Other elements of these imbalances have been explored by analysts in the past, see for example the 2015 note by NRGI’s Amir Shafaie.

Rio Tinto Engaging Mongolia

Rio Tinto’s past decisions and an apparent preference for listening to lawyers and accountings over country experts to me suggests that management has made a calculation that higher political risks are small enough a price to pay compared to tax and other savings, that they are willing to pay that price, as they must believe that they will come out on top in the end.

That is unfortunate, as it is a recipe for ongoing turmoil in coming decades. It also undermines Mongolian democracy and attempts (however lamentably feeble they appear at times) to build capacity in Mongolia to address information and experience imbalances. This conclusion does make me rather impatient with oft-repeated claims by voices from the investment community, including financial journalists, that prefer to try to shame the Mongolian government with vacuous terms like “resource nationalist”, rather than examining the decisions that investors like Rio Tinto seem to be making that contribute to political turmoil and uncertainty.

I think that Rio Tinto would be better advised to engage Mongolians more fully by which I don’t mean that management try to lobby or become friends with government officials who are currently mired in a stand-off of mutual accusations of corruption. Instead, Mongolians very real and relevant questions should be taken very seriously rather than being dismissed as money-grabbery (which is absurd given Mongolian ownership resources in any case). There are many more contributions (not even predominantly financial) that Rio Tinto could be making toward building Mongolian capacities and reducing information imbalances than have been undertaken in the past.

Yes, Mongolian employees are rising into management ranks which is important. B Bold’s membership in Rio Tinto’s executive committee is the pinnacle of that approach so far.

Much of the local engagement (Byamba knows much more about this) does seem genuine and community-focused in many aspects.

But I have seen relatively little of that kind of engagement at the national level in areas like mining education, support for Mongolian analytical capacity, etc. To me, some dedication of resources in these areas coupled with greater transparency in all dealings, including corporate structure, would go a long way in reducing political risk that is currently exacerbated by corporate decisions reflected in the SOMO report.

Posted in International Agreements, Mining, Mining Governance, Oyu Tolgoi, Public Policy, Taxes | Tagged | Leave a comment

Unequal Match: Mongolia versus Rio Tinto

By Mendee Jargalsaikhan

If one describes the bargaining game between Mongolia, a small and isolated resource-rich state, and Rio Tinto, a giant multinational corporation, through the Mongolian national pastime sport – wrestling, it is truly an unequal match between the дархан аварга  (invincible titan) and залуу бөх (unknown young wrestler). Unlike the young wrestler with one or two supporters, the invincible titan knows the game and even has the power and prestige to influence the game. However, when the invincible titan acts that way, he starts losing his fans and weakening the very spirit of the game – fairness.  At the same time, such arrogant behaviour emboldens many young and junior wrestlers for fearless competition.

Source: The UB Post, By Dulguun Bayarsaikhan, July 11, 2017

Mongolian National Wrestling (The UB Post)


Multiple Encounters Between United Rio Tinto Club, Dis-United Mongolia Club

Mongolia has wrestled with Rio Tinto over the last decade in multiple matches over an untapped copper and gold deposit – Oyu Tolgoi. The project has potential economic spillovers by connecting the country’s isolated economy to global financial and commodity markets.  But, without any doubts, it would negatively alter the ecosystem of the Gobi – a large desert region with dozens of scenic oases and non-renewable underground water reservoir.

In spite of the successful negotiation of the initial investment agreement, the young wrestler has failed to challenge the invincible titan – who is backed up by a resourceful, supportive wrestling club under influential investors and with a broad spectrum of fans.  Mongolia repealed its windfall profit tax law, lost its hopes of selling electricity, building a smelter, and offering its banking, and received less in the local tax dispute.

Unlike Rio’s wrestling club, the Mongolian state (if we consider it a poorly-run, ill-funded wrestling club) hasn’t been united in its support of the young wrestler even though all young wrestlers did their best given their lack of expertise and multiple disadvantages (e.g., political, economic, and social constraints).  The MPP-led governments of 2004 and 2008 did their best of completing the initial investment agreement whereas the DP-led governments of 2012 and 2016 had their fights and completed the agreement to begin the construction of the underground mine.  Now another young wrestler (Khurelsukh’s cabinet) is about to wrestle (to settle the second local taxation dispute).

The key difference here – the invincible titan, although constrained by demands of the club financiers, could predict and steer the game for its continuous victory whereas the young wrestler has too many challenges. One, all other Mongolian young wrestlers think that they can do better.  Second, even though they can’t provide sufficient resources, the Mongolian club financiers have no patience and strategy.  Finally, most of the Mongolian club fans are hopeless. Above all, the audiences are increasingly becoming unhappy with the game.

Why – Lack of Transparency

The key challenge is the lack of transparency or academics call it ‘information asymmetry’ – thus easily trigger the conspiracy theory (see Julian’s post on conspiracy in Mongolia).  If any wrestler gives up easily, rumours about the potential of match fixing (or the round) or unfair pressures of the famous wrestler would spread with the speed of the light.  Since it is hard to learn to what’s being whispered between two wrestlers at the centre of the stadium, any rumours can be easily self-reinforced.

Particularly, when those – who were in the wrestling club boards or happened to be near wrestlers – talk about the unfair match or hidden deals, it is logical for the audience begin to suspect and lose the interest in the game and trust in referees.

If all matches between young wrestlers (Mongolian governments) and invincible titans (Rio Tinto) had been fought transparently, why would people (esp., former Presidents, Prime Ministers, Cabinet Members, MPs, and economists – who were closer to the negotiation and deal-making process) keep broaching facts and engaging in a blame-game?  Regrettably, all these allegations and claims were simply dismissed for political gains rather than providing the rational reasons and hard evidence.  But, these facts would continue to be leaked and questions would be raised and re-visited time to time as the country is not run by autocrats.

Therefore, it would be harder and more challenging for wrestlers to continue until both sides make efforts to increase the transparency to raise the level of trust of the audiences.

Strategies for a Young Wrestler (?)

The best strategy for a small state, Mongolia, to deal with a multinational giant, Rio Tinto, would be ‘having one voice and one stance.’  In our wrestling analogy, the Mongolian Club needs to make a long-term investment in its young wrestlers – instead of just criticizing and replacing rookies. But, it seems not possible for a country with an electoral democracy and weak institutions (esp., rule of law).  As a fate, the Mongolian Club Board is run with ambitious, short-sighted, and competitive entrepreneurs – who are mostly after their own parochial objectives and restrained by their narrow patronage networks.  In contrast, the Rio Tinto club has a long-term strategy for the ultimate victory and ability to test multiple moves and tactics in support of its big objective.  It possesses invaluable expertise in commodity market, hires high-caliber experts (e.g., PR, media, lawyers), collaborates with the International Financial Institutions, and secures the advocacy from the powerful governments.

So, what would be the ‘weapons of the weak’ then?

For one, Mongolia continues to pursue its dreams of establishing the Mongolian type of Temasek (Singapore) and Statoil (Norway). In other words, it needs to invest into Erdenes Mongol – as the young wrestler with the most potential – and must insulate it from the competition between political and economic factions.  But, Erdenes Mongol operations and funding must be transparent and its officials/experts must be held accountable for their work – to the public rather than their political factions.  Even though governments did make such attempts in the past, Erdenes Mongol’s operations and funding were not transparent.  Regrettably, those who hold senior posts in the Erdenes Mongol in recent past were not barred from pursuing their personal/factional interests afterwards.

Second, Mongolia, a new wrestling club, should network with other junior clubs to train its wrestlers and also to increase its leverages for the fair game to compete against powerful, global wrestling clubs.  Like hosting of the ‘think tank of land-locked countries,’ Mongolia is the most-suited site for leading the Centre of Excellence for Emerging Resource-Based Economies.  With its experience of a complete ‘bust and boom’ cycle, try-outs of multiple mining projects, and costly, ill-thought ‘mining rush,’ it should advance the peer-learning  by sharing its experiences with emerging ones, learning from its peers (e.g., successful ones – Botswana, Chile, struggling ones like Zambia, closer ones – Kazakhstan), and learning from international experts, those are fairly neutral and/or critical side of the commodity business.  Like its promotion of international learning platforms, starting from democracy to peacekeeping and to judo, Mongolia is an ideal training ground for all new wrestlers.  If the Mongolian club couldn’t hire good coaches (lawyers, PR experts), all clubs could do it together or simply sharing their past and current experience to develop their own expertise.

Finally, Mongolian civil society activists, academics, and investigative journalists – who are concerned with corruption, environment, corporate social responsibility, taxation – continue to make all possible attempts to link with their like-minded counterparts in the Western capitals, OECD, and EU.  The SOMO report is just one example to disclose the potential avenues, which increase unfair competition. In this way, the Mongolian project should not be hidden from the radar of other critical audience – who like to see the fair game – such as principled politicians, investigative journalists, concerned activists, critical academics, and even ordinary citizen (who might be a voter and an investor).

Like any other spectator sports, Mongols support fair matches.  They respect the аварга (esp., invincible titan) who commits to the rules and wrestles without any bad behaviors.  Otherwise, the аварга would be booed as he bullies the young wrestlers and manipulates the game.  Thus increases supports for young wrestlers – and by any chance if he manages to take down the titan even in a single match – the audience award him with the standing ovation.  Let’s hope the OT project would be fair match – both wrestlers learn together and gain respects of the audience.  But, the only saver for the unbalanced match between Mongolia and Rio Tinto is the transparency.

Posted in Economics, Foreign Investment, International Agreements, Mendee Jargalsaikhan, Mining, Mongolia and ..., Oyu Tolgoi | Tagged | Leave a comment

Mongolia at Davos 2018: Party like it’s 2009?

By Marissa Smith

In recent years, Mongolia has regularly sent a delegation to the World Economic Forum at Davos. This year was somewhat less eventful than some years, when President Elbegdorj himself attended and presided over a “Mongolia Night” and negotiations with the IMF were underway. However, major international events like these are a good time to check in and see if there have been any major changes in direction. None are really evident, and the ideas expressed by the attendees reflect familiar ideas with no new (or apparently revised or further developed) strategies indicated.

D. Sumiyabazar (Minister of Mining and Heavy Industry, professional wrestler and brother of Asashoryu) gave a six and a half minute long “interview” (it was more of a series of statements, as the interviewer only asked one question referring back to the scope of the interview, “what is interesting here at Davos… what directions are there”) with Bloomberg (Mongolia ?). In addition to vague references to “business culture” and “management,” he outlined a series of now familiar ideas about development through mining, specifically the construction of a metallurgical processing plant (gesturing to the “clean environmental surroundings” of Davos, he assured viewers that there must be ways to do this in an environmentally friendly way) and putting government mining companies (including Erdenes as well as Erdenet and Oyu Tolgoi shares) on the Hong Kong stock exchange for profits to reinvest domestically. Also hearkening back to 2011, Dubai and Kazakhstan were specified as worthy models, Kazakhstan particularly due to “nomadism.” (Now, however, Nazarbaev was named as driving force.) Perhaps to temper too much association with countries viewed by many as undemocratic, Norway was then mentioned as a model.

D. Tsogtbaatar (Minister of Foreign Affairs) attended a meeting on the One Belt One Road initiative organized by the UNCTAD (UN Commission on Trade and Development) that was also attended by the Foreign Ministers of South Korea and Qatar. Tsogtbaatar also shared a clip on facebook (tweeted by Sumiyabazar) of Emmanuel Macron’s speech, praising Macron’s comments about France as part of Europe and his speaking in English as well as French as demonstrative of commitment to multilateral development.

To summarize, while Sumiyabazar outlined familiar vague ideas about generating income from state-owned mining companies being listed on the Hong Kong stock exchange (a strategy that has been attempted and failed, and very likely is not in sync with initiatives of international financial and development institutions like the IMF), Tsogtbaatar reiterated commitments to international cooperation, but specifically the One Belt One Road initiative, which is in as much doubt now as ever as a viable plan for financing and constructing the kinds of large infrastructure projects that Mongolians want and need.

Addendum, 2/2/2018

As I have seen through a tweet by Allyson Seaborn D. Tsogtbaatar was also interviewed by Bloomberg Mongolia. It was posted on the Bloomberg Mongolia site on January 31. He speaks about international collaboration with India and China specifically, using language similar to the facebook comments on the Macron clip about cooperative (даяаршин хамтаа) versus dominating, monopolized (дангаараа) globalization and also of small/large states (after the interview used this framework in a question). Modi did attend and give a speech this year at Davos, which Tsogtbaatar comments in the first half of the interview. The second half has to do with One Belt One Road and how large and small states should “align” (жагсах); the issue of financing is highlighted.

This interview does suggest to me that D. Tsogtbaatar is passionate about and very engaged with issues of One Belt One Road and I will be following his moves in this direction.

Tsogtbaatar was interviewed by the same journalist as Sumiyabazar, but he asks more questions here — it’s a shame that the same isn’t seen in that interview.

Posted in China, Development, Economics, Environment, Environment, Erdenet, Foreign Policy, Infrastructure, International Cooperation Fund, International Relations, Mining, Mining, Mining Governance, Mongolia and ..., Oyu Tolgoi, Policy, Politics, South Korea | Tagged | Leave a comment

Where did the Conspiracy Conspiracy Come From?

By Julian Dierkes

Mongolia is not unique in the presence of conspiracy theories, nor in the presence of events and factors in those events that may lend themselves to conspiracy theories. Yet, in my experience, conspiracy theories have become dominant as a form of interpersonal (though not public as much) political discourse in Mongolia. I won’t scratch the surface on why that may be, but want to think about it at least.

Note that this thinking was inspired by a long-ago airplane conversation with Lauren Bonilla who continues to work on Mongolia as a geographer with a strong interest in Western Mongolia, but also in mining, and who was involved in Rebecca Empson’s “Emerging Subjects” project whose blog readers should keep a keen eye on.

Conspiracy Theories and other Political Explanations

A conspiracy theory is an explanatory hypothesis that suggests that two or more persons, a group, or an organization of having caused or covered up, through secret planning and deliberate action, an event or situation which is typically taken to be illegal or harmful. [Wikipedia]

Conspiracy theories tend to see a secret design and intent behind all political events. Professed explanations, including those offered by actors involved directly, are never what they claim. Evidence is always an opportunity to prove a conspiracy through more far-fetched theorizing, rather than as an opportunity to disconfirm any explanation offered.

A Genealogy of Conspiracies

A close competitor to the conspiracy instinct is the “we’re nomads” explanation of life and the universe, though I get the sense that its dominance may be waning. Either way, If you think that the instinct toward suspecting conspiracies comes from a nomadic lifestyle, go right ahead and spin that story.

I tend to see contemporary Mongolia far removed from state socialism, not least because half of its population was born after the Democratic Revolution. Yet, I am perfectly willing to acknowledge that some state-socialist legacies in patterns of discourse and also, possibly, of understanding the world, persist, transmitted intergenerationally and through institutionalization in schools, etc. Given how prevalent the conspiracy theory has become, it is not unreasonable to look for its state-socialist roots.

En bref, I think those roots are shallow.

Yes, the Mongolian People’s Republic was governed by a conspiracy, of course. It was the self-confessed conspiracy of a Leninist party that saw the state under siege from enemies (an important element in motivating more or less violent purges), but pursuing a grander, long-term goal. Much knowledge about state activities was deemed secret (as it continues to be in the few remaining state-socialist countries and in other authoritarian contexts), as were discussions among the Party elite and decision-makers. So if Mongolians, say, in the 1980s, would have sought an explanation of a state action, the appropriate explanation would have, yes, been a conspiracy theory. They would have been right and justified in pointing to this conspiracy.

Yet, I don’t think that this veracity of conspiracy theories of state-socialist political events is the grounds on which the contemporary affliction with conspiracyology-omniexplanations is based. Why? Well, if it is a self-acknowledged conspiracy, what’s the fun in explaining it? “Ooohh, have you heard, what’s really behind the decision to issue an additional 5,000 residency permits for Ulaanbaatar … is MAXH!” “You don’t say”, said no one ever in the 1980s.

But perhaps it is an assumption of decision, including decisions with great significance for the whole population, made in secret that has carried over?

Democratic Conspiracies

I cannot recall hearing conspiracy theories about political events when I started coming regularly to Mongolia in 2005 (note that I’m well into my second decade as a Mongolist now!).

Unfortunately, I didn’t start taking notes or blogging about such trivialities as the one way most Mongolians explain political events until later (note this blog is in its 6th year with more than 500 posts published), but as I learned more about Mongolian democracy, I was always surprised that there wasn’t any kind of conspiracy theory spun about the 1990 revolution. The seemingly inevitable foreign agitators or string-pullers have largely been absent from understandings of the events from the Fall of 1989 through the proclamation of the new constitution in 1992.

If there was a historical event that would be rife for conspiracy theories, I think, it would have to be a revolution that changed a country in very significant ways. And in some ways, we recently have seen the arrival of some conspiracy theories. In English, an example might be the recent attempt at revisionist historiography making a capitalist conspiracy responsible for the 1996 merger of the DP and election victory [I link to this article without endorsing its perspective.].

Also, in hindsight now, most explanations of the July 1 2008 post-election riots are also relatively limited in the depth at which they locate the conspiracy. That the demonstrations were deliberately instigated to question election results seems fairly clear, as is the fact that it was mostly DP officials who would have to be seen as the likely instigators. So, the conspiracy theorist is forced to speculate about the apparently premeditated or, God forbid, coincidental availability of alcohol in fueling the riots, an aspect of the sequence of events that seems neither a necessary nor a sufficient ingredient.

So, for my first give years of experience in Mongolia, I remember conspiracy theories as being fairly rarely offered. The one exception to that would be the murder of Zorig, and various attributions to DP rivals, dark mafia forces, or elements in the MPRP. Appropriately, that murder remains stuck in conspiracy limbo, note the recent interrogation of Zorig’s widow as a case in point.

Whence Conspiracies?

Below, I try to list some factors that may be suspected in the prevalence of conspiracy theories.

Is there a conspiracy of the guilty?

So, why do conspiracy theories seem to occupy so much of public discussion in Mongolia today. Well, just like even paranoids have enemies, even conspiracy theorists sometimes might be right. Maybe Mongolian decision-makers have become more prone to conspire to bring about situations that are otherwise illegal (echoing the Wikipedia definition). There is a sense that corruption has really taken root in the political class and many Mongolians seem to be hesitant when asked to identify politicians whom they assume not to be corrupt. This has led to a stand-off of mutual accusations that are never investigated. For me, developments in 2017 have reinforced this sense of endemic corruption. When everyone is accused, but no one if found guilt, that easily looks like a conspiracy of criminals sworn to secrecy.


But the rapid development of social media and various forms of the press have brought about a proliferation of media views that is out of step with reporting ethics and standards. Many observers have lamented the close ties between political actors and media outlets in particular and these ties that are often not publicized or acknowledged give rise to suspicions about the veracity of reporting. While there are several efforts underway such as the Press Institute, investigative reporting is still developing and has likely not built up the credibility to effectively combat conspiracy suspicions.

Along with underdeveloped reporting standards, there are perhaps also underdeveloped information consumption habits. This leads to outlandish sums being proffered in allegations of conspiracies that are not questioned by large parts of the public. In the context of the 2017 presidential election, I’ve written about the prima facie plausibility (or lack thereof) of allegations against presidential candidates. Allegations about foreign conspiracies (most often Russian or Chinese) also often assume an inordinate amount of interest in Mongolia that is a bit out of step with the importance that Mongolian might hold in foreign decisions.

A Power Elite

There is also a widespread and perhaps growing perception that the group of people effectively “running” the country is relatively small. In the Fall of 2017 the talk was all about “the 30 families”. While there are arguments about how big this group should be and who is part of it, there is a definite sense that there is a power elite that is an overlap between political and business decision-making. As many of those ties are also not acknowledged openly, more opportunities to speculate about such ties arise.

Yet, the small size of the Mongolian population should also inoculate discourse against conspiracy theories. One of the aspects of conspiracy theories that I find least plausible is that any conspiracies can remain secret. In the Mongolian context, there may be a small power elite, but around that “inner circle” there is a wider circle of Mongolians, many of whom know each other well. Is it really plausible that conspiracies could be kept secret from that wider group? Not to me.

Rising Stakes

Of course, as Mongolia’s economy has grown over the past 10 years, the stakes have risen. The economic pie that is being divided is now much bigger, but that also raises suspicions about the size of the pieces that different individuals and groups are claiming.

As stakes have risen, more and more transparency mechanisms have been put in place (form the EITI to parliamentary reporting requirements and the Glass Account laws). These mechanisms along with revelations such as the Panama Papers have heightened awareness of corruption whether or not it is on the rise.

Ad hoc Political Decisions

Political decisions in Mongolia are hard to predict and thus their interpretation is open to speculation and suspicion. The parties do not have coherent ideological stances or perspectives so that every larger decision appears to be negotiated in a pragmatic fashion. In choosing between three presidential candidates in 2017, for example, voters had very little of an opportunity to think about decisions that a candidate might make if faced with some specific situation. For example, if a new mineral mega-project was discovered, could you predict what position Pres. Battulga would take on the development of such a project as opposed to the stance that M Enkhbold or S Ganbaatar might have taken? Could you predict how the MPP would react to a new project as opposed to the DP? I think not. That means that when decisions are made, they are not explainable in terms of a party platform, are fundamentally tied to the configuration or political actors, and the lack of transparency about political and business connections among actors means that all decisions become subjects of speculation and inference.

The Future of Conspiracies – Am I bullish on conspiracies?

For the moment, I am afraid that conspiracy theories are more likely to become more rather than less prominent in political discourse. The main countermeasure to such theories would be more information and a desire to have and use more information to interpret or explain decisions. But the current mutual-accusation-corruption-stand-off does not bode well for more and better information becoming available. More information would likely result from a popular anti-corruption movement, but the rise of such a movement may well depend on not just the availability of more information, but also the public’s interest in basing more of its political discourse on information  rather than on rumour and speculation.

Posted in Corruption, Curios, History, Party Politics, Politics, Pop Culture, Social Issues, Social Media | Tagged | 1 Comment

Gender and Age in Voter Turnout

By Julian Dierkes

Via a freedom of information request submitted my Mongol TV’s E Lkhagva, I have obtained information on the gender and age breakdown of voters in last year’s presidential election.

As frequently described in election observation, Mongolian election procedures inside the polling stations are quite advanced in the information they offer to voters, including continuous TV coverage of inside-the-polling-station images displayed outside of the station, but also including a breakdown of voters by time they voted, by gender, and by age brackets. Given that the General Election Commission clearly has this information, it has been unfortunate that this is not made public immediately with other information about elections.

There are some challenges with the data in that it is not reported relative to the demographic breakdown in the population of eligible voters, nevertheless there are some observations to make.


This past summer, I once again observed the extent to which Mongolian elections are run by women. This pertained not only to staffing in polling stations, but also to the sense that the polling stations I visited as an observer all showed more than half of the voters being women. Since that was such a consistent pattern, it’s terrific to have aimag-by-aimag data on shares among valid voters at least.

In the June 26 first round of the presidential election, there was thus only a single aimag where fewer than half the valid votes were cast by women, that is Bayan-Olgii where women constituted 49.5% of voters. To be clear, this does not mean that 49.5% of women voted, but that 49.5% of the valid votes were cast by women. In the Mongolian census, gender ratios are close to 50% at birth, but women outnumber men in older age cohorts given the shorter life expectancy of men. A share of the vote under 49.5% of women thus suggests that women are noticeably less likely to vote than men, but later posts will perhaps look at voter registration data or aimag-by-aimag demographics to get a better sense of how unusual women’s share among voters is.

While Bayan-Olgii was the only aimag with a female share of the vote under 50%, the national average is 54.1% with the Ulaanbaatar districts reporting a female share of 55.4% and aimags reporting on average 53%.

Among the aimags, only Darkhan-Uul (55.9%) and Orkhon (54.5%) report averages that are close to Ulaanbatar. This suggests a clear rural-urban difference, begging for further information on shares in the population of eligible voters.

The very highest share of women voters was reported in Ulaanbaatar’s Bayangol district with 57%.

This observations also hold for the 2016 parliamentary election where Bayan-Olgii reported the lowest female voter share (51%) and Bayangol the highest (57.3%). The average was 53.8% nationwide with Ulaanbaatar reporting 55.7% and the aimags 52.5%.

For the second round of the presidential election, these observations all hold as well. Bayan-Olgii (49.6%), Bayangol (56.9%), Ulaanbaatar (55.5%), aimags (53.5%).

It thus appears at a very superficial level, that women are voting in greater numbers than men, though it remains unclear how big this difference is. In absolute terms, women are clearly casting more ballots however.

Differences in absolute numbers of ballots cast are:

  • 2016 parliamentary 768,681 women vs. 659,712 men (a difference of 108,969 votes)
  • 2017 1st round presidential 732,320 women vs. 620,951 men (111,369)
  • 2017 2nd round presidential 656,547 women vs. 549,789 men (106,758)

As it would be surprising to see such consistency in gender voting patterns, a conclusion will have to wait until I can compare these figures to aimag population statistics or, even better, to voter registration.

Age Cohorts

The General Election Commission groups age cohorts into four brackets: 18-25, 26-40, 41-55, 56 and more years old. Obviously, these are not even brackets, so we are not expecting even 25% shares even if voters of ages voted at constant shares of the population.

For the age cohorts it may be even more important to compare the reported numbers to district/aimag demographics and/or voter registration to get a sense of patterns, but here, absolute numbers also tell a story.

Reversing the order of the above discussion, let’s look at these overall absolute numbers first:

  • 2016 parliamentary 18-25 244,592, 26-40 535,659, 41-55 412,359, 56- 235,783
  • 2017 presidential 1st round 18-25 211,537, 26-40 508,542 41-55 395,736 56- 237,456
  • 2017 presidential 2nd round 18-25 189,092, 26-40 451,040, 41-55 352,336, 56- 213,851

In the first round of the presidential election  these absolute numbers work out to the following percentage shares: 18-25 15.6%, 26-40 37.6%, 41-55 29.2%, 56- 17.5%.

As with gender, the numbers are more meaningful as absolute numbers then with percentage shares until compared to voter registration data. The absolute numbers mean that the 26-40 age cohort wants in great numbers.

There is also some regional variance with younger voters generally a smaller share of the overall number in Ulaanbaatar compared to the countryside. The highest percentage for the 18-25 group is again in Bayan-Olgii (21.2% in first round presidential), but that could well be a function of the overall demographic composition of the aimag population not of a higher level of voter turnout.

Preliminary Conclusions

There is a good chance that there is something interesting going on with voter participation, particularly voting by women, though the absolute numbers and percentage of valid votes only indicates that and does not actually point to anything in particular. Another round of data that would include voter registration demographics (at best) or at least aimag demographics would move analysis further.

The age breakdown of voter turnout also seems potentially interesting, as does a rural vs urban comparison and perhaps a closer look at Bayan-Olgii.

Posted in Demography, Elections, Ikh Khural 2016, Presidential 2017 | Leave a comment

Parliament Challenged

By Julian Dierkes

This fall has brought a series of political tussles over ambassadorships that have hinted at one of the great rising challenges in Mongolia’s governance, corruption seemingly becoming a systemic block rather than simply a surtax upon transactions involving the state.

Some of these tussles seem to have been of a partisan nature with Pres. Battulga rejecting ambassadorial appointments finalized before his win of the presidency.

The greater challenge arose from the nomination of B Khurts, former head of the General Intelligence Agency and Deputy Chief of the Independent Authority Against Corruption and also former hindrance to the visit of German Chancellor Merkel in 2011.

This nomination in November led to a series of exchanges in parliament that were shocking in the extent to which Khurts felt at liberty to threaten parliamentarians. These threats took the form of a stand-off with Khurts implying knowledge of misdeeds perpetrated by various politicians who in turn responded with hints at Khurts’ crimes. None of these allegations seem to lead to serious investigations (with the possible exception of the documents collected by the parliamentary committee around Lu Bold against Khurts) suggesting the paralyzing nature of these stand-offs where mutual accusations reinforce the popular sense that all politicians are corrupt to some extent, but that they are not held accountable for these actions.

Since the Khurts process was not reported on in media outside of Mongolia but does seem to present a very real challenge to parliamentary democracy, we’ve offered the timeline below to document developments in the past two months.


October 26, 2017 

Khurts, Chief of the General Intelligence Agency, made a press conference – (allegations about (1) Nyamdorj’s Chinese spy case; (2) his interest group – Altankhuyag (ex prime minister) and Dorligjav (ex Minister of Justice) – all from Uvs province; (3) Nyamdorj’s past influence on bidding/procurement for the Erdenet factory; (4) Nyamdorj’s continued strong interests in Zorig’s assassination case)  

Nyamdorj, MP, Minister of Justice and Internal Affairs, – denied all allegation, Khurts fears of the disclosure of number of wrongdoings – (1) the trial of the Zorig’s case and (2) Erdenet privatization

November 1, 2017 

The Government cabinet appointed D. Gerel as a Chief of the General Intelligence Agency. He was a chief in 2012-2013, but fired by Prime Minister Altankhuyag, who appointed a DP-affiliated non-professional to the post.  

The Cabinet submitted Khurts’ nomination as an Ambassador to South Korea to the President.  

November 6, 2017

MP Batzandan opposed Khurts’ nomination and called for a open hearing on four major complaints – as he received when he was the Complaints’ Standing Committee of the parliament. He started to the petition to collect 19 MPs’ endorsement.

Batzandan proposed the open hearing on 4 points: (1) the detention and prosecution of Enkhbat in connection with the Zorig’s case, (2) the trial of the Zorig’s assassination case, (3) Khurts’ involvement of the privatization of the 49 percent share of the Erdenet; and (4) complaints received by the Complaints’ Standing Committee about the abuse of power.  

A few days later, 21 MPs submitted their support for holding an open hearing on Khurts’ misuse of authority to the Speaker and asked to delay his nomination hearing until the public hearing occurs.

November 8, 2017

Presidential office submitted Khurts’ nomination to the parliament. 

November 15, 2017 

During the ambassadorial nomination hearings at the Standing Committee on Security and Foreign Policy, Khurts made several allegations about MP Lu Bold.  Lu Bold strongly opposed the nomination and pledged to reveal the truth.

November 20, 2017 

Khurts participated in the Non-Censored Talk Show – to explain (or to defend) himself

November 27, 2017 

Nyamdorj participated in the Non-Censored Talk Show – to respond Khurts’ allegation.

December 15, 2017 

The Speaker organized a closed session, with a request of MP Baasankhuu, on Khurts’ nomination and endorsed his nomination (69 percent).

At the exact same time, J. Batzandan, Lu Bold organized the public hearing in the government house.  MPs A. Sukhbat, M. Oyunchimeg, L. Oyun-Erdene and Nyamdorj joined.  Nyamdorj also expressed his concern of the conflict of interests (as a Minister of Justice and Internal Affairs) and didn’t sign the minute.

December 19, 2017 

MPs submitted the minute the public hearing to Speaker and President – to reconsider their decisions of nominating Khurts for ambassadorial posting and to conduct further investigations based on complaints (public).  

December 22, 2017

President Battulga postponed the presidential endorsement for Khurts’ ambassadorial posting to South Korea until all allegations and issues to be cleared while asking the government to reconsider its nominees for ambassadorial posting in Japan, US, and Canada.

Posted in Corruption, Democracy, Party Politics, Politics, Security Apparatus | Tagged | Leave a comment

Guest Post: Agreement between Canada and Mongolia for the Promotion and Protection of Investments – a Glance at Its Nature, Significance and Features

By Bajar Scharaw

On 8 September 2016, Canada and Mongolia signed an international Agreement for the Promotion and Protection of Investments (the Canada-Mongolia Investment Agreement). The Agreement entered into force on 24 February 2017 and created legally-binding obligations for both countries that can be enforced by investors of either country against the other country before an international arbitral tribunal. This blog post provides an overview of the nature and significance of the Canada-Mongolia Investment Agreement and briefly outlines some of its features compared with other international agreements of this kind.

Nature of international investment agreements

The Canada-Mongolia Investment Agreement forms part of a worldwide web of similar international investment agreements (IIAs) that have been entered into between two States (the parties) to promote and protect foreign investments. It is estimated that countries worldwide have concluded more than 2,900 of such bilateral IIAs. Currently, Germany is leading with a total of 133 concluded IIAs, followed by China which created 129 IIAs. While Canada is a party to 32 IIAs, Mongolia entered into no less than 43 IIAs with countries from all over the world. In East Asia and the Pacific, Mongolia is a frontrunner with respect to the conclusion of IIAs. According to a survey, Mongolia took the seventh place among 24 economies in that region in 2015: only China (129), South Korea (90), Malaysia (68), Vietnam (60), Indonesia (51), and Singapore (45) had more bilateral IIAs than Mongolia.

Countries conclude IIAs such as the Canada-Mongolia Investment Agreement to attract foreign investments into the country or to protect foreign investments of their nationals abroad. IIAs seek to promote in- and outbound foreign investments by providing international rules that protect investments (property and other assets) made by investors of one party to the IIA within the territory of the other party (the host State). For example, IIAs require that expropriations of investors from the other party may only occur in the public interest, under due process of law, on a non-discriminatory basis and against compensation. IIAs stipulate that investors from the other party may freely transfer their funds and capital out of the host State. Furthermore, they require the host State to treat investors from the other party “fairly and equitably” and often to accord such investors a treatment no less favourable than that accorded to own nationals in the same situation (principle of national treatment). The rules in IIAs are of international nature, which means that they cannot be modified unilaterally by one party or through national legislation.

In the case of a dispute, IIAs allow investors from one party to file a suit against the other party (the host State) if the latter has treated such an investor in its territory in a way that violates the above mentioned IIA protection rules. To this end, the IIA entitles an investor to initiate an international arbitration outside the host State. IIAs provide a (State-independent) international arbitral tribunal with seat in Washington D.C., Geneva or elsewhere with the legal power to render a binding decision on whether the host State has indeed violated rules in the IIA and to award compensation to the investor for any damages suffered.

Significance of the Canada-Mongolia Investment Agreement

Traditionally, Mongolia’s extractive industries receive the lion share of foreign investments in the country. According to the UN’s Investment Policy Review on Mongolia, Canada (with Vancouver as the world’s “mining capital”) held an 8% share in Mongolia’s total foreign-investment inflows in 1990-2012. While China was by far the largest source of such inflows with a 32% share during the same period, Canada represented thus one of the most significant sources for foreign investments in Mongolia.

Despite this fact, Canada (and its investors) lacked an IIA with Mongolia for a long time (both countries started to conclude IIAs in the 1990s). Furthermore, unlike Mongolia, Canada is no party to the Energy Charter Treaty as a multilateral international agreement with IIA-similar protection rules. In view of the foregoing, the Canada-Mongolia Investment Agreement is of high relevance as it fills a protection gap. With the Agreement’s ratification in February 2017, Canadian investors are entitled to rely on special international rules for the protection of their investments in Mongolia.

Features of the Canada-Mongolia Investment Agreement

The Canada-Mongolia Investment Agreement provides those protection rules that are characteristic for virtually all IIAs (see above). In addition, the two countries (the Parties) agreed on various further rules that let the Agreement clearly stand out against the vast majority of current IIAs. Particularly noteworthy are the following additional rules:

Article 12 (entitled “Transparency”) requires the Parties to promptly publish investment-relevant laws and regulations, to publish in advance such proposed measures and to provide “interested persons” a “reasonable opportunity” to comment. Importantly, Article 14 (“Corporate Social Responsibility”) requires the Parties to encourage investors to voluntarily incorporate internationally recognized social standards in their practices and internal policies, and to address human rights, labour issues, the environment, community relations and anti-corruption (see also the UN Guiding Principles on Business and Human Rights). According to Article 15 (“Health, Safety and Environmental Measures”), the Parties recognize that it is inappropriate to encourage investment inflows by relaxing domestic health, safety or environmental measures.

The Agreement seeks to secure the Parties’ regulatory leeway in areas that are of particular concern to them, including cultural aspects. For this purpose, Article 16 provides special “reservations and exceptions” relating to the application of certain investment protection rules of the Agreement. For example, Mongolia’s obligation to treat Canadian investors no less favourably than own citizens (Article 4) does not apply with respect to nationality requirements for the ownership of land. This reflects Mongolia’s strong commitment to the traditional nomadic way of life. Furthermore, Article 17 provides “general exceptions” and states, for instance, that nothing in the Agreement shall prevent a Party from adopting measures necessary for (i) the protection of human, animal or plant life or health and (ii) the conservation of living or non-living exhaustible natural resources.

Lastly, the procedural rules (see above) for the enforcement of the Agreement by international arbitration are strikingly detailed to increase legal certainty. For example, Article 25 requires the disputing parties (i.e. an investor from one Party and the other Party) to select arbitrators with expertise and/or experience in public international law, international investment or trade law, or in resolving disputes arising under IIAs. It is especially worth mentioning that Article 30 requires the Parties to publish an arbitral tribunal’s decision and that oral hearings are open to the public. This is exceptional for IIAs and in line with the UN’s recent general initiative to increase transparency in international arbitrations between investors and States (see here). So far, no dispute has arisen under the Canada-Mongolia Investment Agreement.

About the Author

Dr. iur. Bajar Scharaw, LL.M. (UQ) is the author of the book The Protection of Foreign Investments in Mongolia: Treaties, Domestic Law, and Contracts on Investments in International Comparison and Arbitral Practice (Springer 2017). He is a German lawyer admitted to the bar in Frankfurt am Main and practicing in the public international law/ international arbitration group of a US law firm. This contribution is written in the author’s private capacity and does not express the views of his law firm or its clients.

Posted in Bajar Scharaw, Canada, Foreign Investment, Foreign Policy, International Agreements, Law, Trade | 2 Comments

False Dzud Alarms

By Julian Dierkes

Periodically, parts of the Mongolian countryside experience heavy snowfall at the end of a long, cold winter. These conditions combine to deny animals access to any kind of grass under the masses of snow when they are already weakened by winter conditions. This is what is referred to as dzud [зуд]. When dzud conditions extend beyond a region to the nation, this can be catastrophic leading to massive deaths of animals. Since conditions tend to be locally concentrated, it is not a proportional cull, but entire herds often perish.

Dzud can be devastating for herders in the Mongolian countryside. They have clearly been exacerbated in their impact by a struggle around how to prevent the massive death of animals in the absence of any kind of institutionalized provision of fodder. Cambridge’s David Sneath has done some very convincing research that compares feudal institutions, the state-socialist negdel, and today’s individualistic, market-based organization to explain the impact that dzud have had.

Dzud may also be exacerbated by the impact of climate change, especially as it contributes to overall grassland degredation..

Dzud are common at the regional level, though they only extend to a national catastrophe every dozen years or so, at least in the past.


Unfortunately, it is relatively difficult to tell when and how much dzud conditions spread. It is the end of winter that is most dangerous, but conditions in January, for example, do not necessarily seem to be a good predictor of the likelihood of dzud conditions in March.

The National Agency Meteorology and the Environmental Monitoring does provide updates and climate information, of course, but in the past this has not been detailed enough to allow a casual observer to get a sense of the severity or spread of local or regional dzud conditions. While a new SMS service for reporting, but also receiving weather information appears to be up and running (see below), I have been unable to find a WWW interface that would offer this information. If someone is aware of such a service, please do mention it in the comments below.

Exaggerations by Aid Agencies and Journalists

During the past two winters, a number of aid agencies have frequently raised the alarm over dzud conditions. This is unfortunate. Just like crying “wolf!” will ultimately lead to a lack of vigilance, so will repeated claims of catastrophes make a response less likely when a real catastrophe hits.

Journalists, of course, have been eager to amplify these calls for action and attention to an unfolding catastrophe, presumably because humanitarian crises make for news.

One article at the end of February 2017 appeared under the headline “Severe winter killing off livestock in Mongolia“. If anyone read past the first several paragraphs, readers learned that “The current dzud has killed more than 40,000 animals so far, but experts say the worst is yet to come.” 40,000 animals dead? That would be an extremely mild dzud for any year. The statement that the “worst is yet to come” may be true, but is entirely speculative. This journalist, reporting from Beijing though he had previously travelled to Mongolia, most likely did not write the headline that appeared here. Given the headline, however, this is an article that is the journalistic equivalent to crying “wolf!” in my eyes.

Yet, no one really wants to come out and say that a dzud is not in progress. Who wants to claim that the wolf is really a sheep, after all, as there is some chance that it is a wolf and if animals are killed, the person questioning the cry of alarm would be partly to blame.

And it is not just journalists that respond.

By contrast, aid agencies should be much more responsible in raising these kind of alarms.

Look at this Feb 28 2017 screenshot of the Mongolian Red Cross Society:

As we are heading into winter 2017-18, some alarm bells are being run already. In a conversation in Ulaanbaatar, I was told that this winter would be especially hard. When I asked what that prediction was based on, I was expecting some “farmers’ almanach”-like herder wisdom, or some astrological insight, but the explanation I got was, “From the internet”. Hm…

While MercyCorps project of SMS weather forecasts for herders seems a worthwhile initiative (at the glance that I’ve cast at it), the release of information about the initiative does seem somewhat tied to a look ahead at the winter that may bring disaster, again.

I certainly hope that more and better information will become available over time to allow careful observers to double-check alarmist news against indications of real crises. I also hope that some of the journalists and aid agencies involved will consider the long-term impact of their writing/appeals on this topic.

Posted in Countryside, Grassland, Health, Policy | Tagged | 2 Comments

Risking Foreign Relations out of (Partisan) Pettiness

By Julian Dierkes

November is shaping up to be a very busy month of diplomacy across Asia, at least from a North American perspective. It is an odd time for the Mongolian president to seemingly hold some of Mongolia’s most prominent ambassadorial appointments hostage to partisanship, especially at a time when his own foreign policy remains somewhat undefined.

International Relations Across Asia in November 2017

Pres. Trump’s visit across the region is nervously watched everywhere, especially at a time when U.S. foreign policy seems no more coherent than it was earlier in the year, but is facing a “hot-spot” in North Korean that is of particular significance to Mongolian foreign policy as well. While the highlights of the month are the APEC CEO Summit and the East Asia Summit where Mongolia is not represented in any case, these events will focus more diplomatic attention on the region as other leaders, including Canada’s PM Trudeau, are travelling to Asia.

Pres. Battulga’s Foreign Policy

While the Minister of Foreign Affairs is the specific official charged with carrying out Mongolia’s foreign policy, this is an area of policy making that the president is most directly involved in. So far, we do not really have a sense of any kind of substantive emphases that Pres. Battulga brings to foreign policy. He has met with leaders in an East Asian context, but he declined to travel to the UN General Assembly in September, a trip that former Pres. Elbegdorj inevitably made. Pres. Battulga’s decision to skip the UNGA is especially surprising as Mongolia is continuing to pursue its candidacy for a UN Security Council seat in the 2022 election.

Blocking Ambassadorial Appointments

The only concrete action Pres. Battulga seems to have taken in foreign policy so far is to block the appointments of three ambassadors that have already been approved by parliament and even have received their agrément from the countries they are to be posted to.

The appointment of the ambassadors listed below was unusual already in that they were nominated by outgoing Pres. Elbegdorj in his last months in office, possibly under the assumption that he would be succeeded by M Enkhbold as president and that these appointments suited Enkhbold. But apparently, these are appointments that Pres Battulga is not happy with to represent him in key countries.

That means that Mongolia currently does not have ambassadors in Canada, Japan and the USA, three countries that are high on the list of Mongolia’s “third neighbours”.

On May 26, parliament approved

Of these, only Amb Ganbat has taken up his post in Berlin with the official presentation of his credentials on Sept 21.

L Purevsuren for now seems to continue to serve in Pres. Battulga’s office.

Amb Battur, also a former advisor to Pres. Elbegdorj, appears to have been approved.

The other three approved ambassadors have all received the agreement of the countries they are to be posted to (Amb Chimguundari on July 22, Amb Tenger on July 7, Amb Otgonbayar on August 31).

So far, Pres. Battulga apparently has not signed the letter of credence that these ambassadors would receive to present to the head of state of the countries they would be posted to.

There is no official statement on why this letter of credence has not been signed, but partisan reasons to seem to be at play here.

While Amb Ganbat has long been associated with former Pres. Elbegdorj and the office of the president, serving as the director of the Institute for Strategic Studies, Amb Chimguundari’s sister, N Oyundari, is an MPP MP, and Amb Otgonbayar is a former MPP MP. Since both have previous foreign policy experience (Amb Chimguundari having served in Mongolia’s embassy to France most recently, and Amb Otgonbayar with his doctorate from the Diplomatic Academy of the Russian Ministry for Foreign Affairs, and his previous service in the Ministry of Foreign Affairs, and as foreign policy advisor to former Pres. Enkhbayar when he was prime minister), their formal qualifications do not seem to be in doubt.

The impression that much of this is due to partisanship or the attempt to use ambassadorial appointments as bargaining chips is reinforced by the sudden nomination of then-Director of the General Intelligence Agency, B Khurts just days after he publicly accused Justice Minister Ts Nyamdorj of all kinds of malfeasance, as ambassador to South Korea.

Khurts is well-known, nay notorious, to Mongolia-watchers as the “super spy”. He ended up tangling with the German criminal justice system after allegedly kidnapping alleged Zorig murder suspect D Enkhbat in Paris in 2003, hiding him in the basement of the Mongolian embassy in Berlin, and spiriting him – unconscious – onto a MIAT flight out of Berlin. Enkhbat later died in a Mongolian jail. Khurts ended up in German jails after having been arrested in Britain, then extradited to Germany, just as Chancellor Merkel was getting ready to visit Mongolia and his case proved to be quite an irritant. Clearly, Khurts’ credentials as director of Mongolia’s spy agency are beyond doubt, but his diplomatic career has been a little less stellar.

If Khurts’ appointment as ambassador to South Korea were to be approved while the other ambassadorships are still held hostage, this would be a bad sign for any pragmatic collaboration or at least coexistence between Pres. Battulga and the MPP government, and also for the direction of Mongolian foreign policy more generally.

Timely Turnover at Canadian Embassy

By contrast to the absence of a Mongolian ambassador to Canada, the Canadian embassy to Mongolia is fully staffed and the usual turnover of personnel there this summer was completed in a much more timely manner than had been the case in the past.

At least the Canadian side of this bilateral relationship is thus in a strong position roughly one year before the 45th anniversary of the establishment of diplomatic relations on Nov 30 1973.

By contrast, the U.S. embassy may also face a protracted period of limbo after Amb. Galt leaves on November 10 and until her successor arrives.

Posted in Canada, Foreign Policy, Germany, Japan, Mongolia and ..., Security Apparatus, South Korea, United States | Tagged | Leave a comment