Poll Results – Direct and Indirect

By Julian Dierkes

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

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

Results

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

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

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

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

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

Why Disappointing Participation?

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

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

The Big Results

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

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

It appears that this interpretation may have been right.

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

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

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

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

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

What’s Next

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

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

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

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

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