OT: In Danger of Becoming A Hostage in Domestic Politics, Again

In 2005, Ivanhoe’s Robert Friedland’s infamous statement about the huge profits to be made in Mongolia at an investor conference in Florida delayed his deal with the Government of Mongolia over one of the biggest copper deposits in the world, Oyu Tolgoi (OT).

Like many other democracies, political parties and politicians attempt to build up their profiles for upcoming elections in Mongolia – they often attempt to distinguish themselves from the ruling government.  The next parliamentary election is scheduled in June, 2012.  Following this logic, 20 members of the Mongolian Parliament issued a petition to the Prime Minister to demand the implementation of the parliamentary resolution that allowed the government to conclude the stability agreement with Ivanhoe and Rio Tinto. [Unuudur Newspaper, September 28, 2011]

However, Rio Tinto’s country director and chief executive Cameron McRae’s statement in the Australian on September 12, 2011 provided a golden opportunity for Mongolian parliamentarians to rally publicly.  Although the piece was originally titled “Rio Tinto Warns Mongolian Politicians Not To Be Greedy,” it seems that the newspaper then reworded the title as “Warning on Mongolia’s Minerals Regimes” as the investors demanded corrections. The original title can be found in several Mongolian blogs, for example, Business Mongolia.

Following this news article, several parliamentarians representing the 20 Mongolian MPs, who issued a petition to the Prime Minister, made statements that Cameron McRae intervened in an internal matter (politics of sovereign nations, rights of Mongolian parliamentarians) and even threatened  OT to disclose any hidden deals with other Mongolian politicians.

In response to MPs call, A. Munkhbat, an OT Vice President, denied Mr. McRae’s statement and stressed that the journalist of the Australian acknowledged his mistake of disseminating wrong information at a press conference on September 29, 2011. [OT Media Release, September 29, 2011].

If one ignores this bickering, the Mongolian government is in negotiation with  Rio Tinto and Ivanhoe  following the petitions of the 20 parliamentarians and directives of the Standing Committee of Foreign Affairs and Security of the Parliament, according to Minister of Mineral Resources, Zorigt [Press Release, Government of Mongolia, September 21, 2011].   And, Ivanhoe and Rio Tinto expressed their unwillingness to re-negotiate  the terms of the 2009 agreement.

Obviously, the Prime Minister would respond to the petition of the 20 members after their negotiation with the Rio Tinto and Ivanhoe.  But, Mongolian politicians and the media apparently over-reacted to a presumed news item in the Australian – which almost made  local politics global and OT a hostage of domestic politics as in the past – when Friedland’s casual comments in Florida resonated in Mongolian politics.


About mendee

Jargalsaikhan Mendee is a Deputy Director of the Institute for Defense Studies of Mongolia. He holds a PhD in Political Science from the University of British Columbia, and MAs in International Relations from the US Naval Postgraduate School and in Asia-Pacific Policy Studies from the Institute of Asian Research of the University of British Columbia.
This entry was posted in Mining, Oyu Tolgoi, Politics and tagged . Bookmark the permalink.

4 Responses to OT: In Danger of Becoming A Hostage in Domestic Politics, Again

  1. Mark Weiss says:

    isn’t this all boiling down to the government realizing they could’ve got a better deal out of foreign companies? personally i think they’re right.

  2. The deal the government got was in large part of their own making/design. E.g., the 1/3 ownership in OT was what they demanded. I personally think that was a bad deal too (cash, i.e. tax/royalties revenue streams) seems much better to me as it would have allowed the government to diversify/save, but ownership is what Mongolian demands settled on, and ownership is what they got.
    Also, when you say “realizing they could’ve got a better deal” that suggests a pretty deliberate and careful weighing of the options. Given how politicized all discussions surround OT have been, I’m not sure that such a careful analysis forms much of the opinion/demands of Mongolian MPs.

  3. The Citizens of Mongolia could argue just as some Greeks and other Citizens of the PIIGS are arguing that the governments have entered into loans (contracts in this case) that do not fully benefit the people. The concept of “odious debt” is explained by a Greek economist in the movie: debtocracy (on youtube with English subtitles).

    RF as suggested in the above first paragraph gets over-exhuberant. He is an interesting person who seems to genuinely admire Mongolia and Mongolians, however he may be taking a few too many personal perks and a bit for granted.

    His land dispute with the Pritzkers in Aspen (which he may no longer own) may give some insight into his character.

    http://www.aspentimes.com/article/20090716/NEWS/907159977 and http://groups.google.com/group/landinterests/browse_thread/thread/4561f9db969be78b?pli=1.

    The gist of the story seems to be that the Pritzkers stood up to him. He or his successor were told sorry: you can’t build a 15,000 sf home by an Aspen City Hearing Officer, you can only build an 8,250 sf home.

    At some point as the author of this blog seems to suggest a force may rise up to challenge RF and company. RF’s friend (or college age friend) Steve Jobs just died at a very young age. It has been suggested that had he sought complementary cancer treatments and stopped using “unhealthy” wireless technology that he might have lived longer.

    What ever Tiger RF is riding it may do him some good to get off for a while and ponder why he and Ivanhoe and RT need so much. Is it really healthy for RF, Ivanhoe and RT to push everything to the limit.

    You would think once you were burned in effigy (sourcewatch.org/index.php?title=Robert_Freidland) you might take a step back and think about your life and actions.

    RF may want to consult Coloradan Ken Wilber’s Integral Life Practice guide (http://www.amazon.com/Integral-Life-Practice-21st-Century-Blueprint/dp/1590304675).

    RF has the ability to create a brighter future for himself, Mongolia, Ivanhoe RT and ultimately the world. Let’s hope that he does it 🙂

  4. Pingback: “Mongolia Today” in 2011 | Mongolia Today

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