By Julian Dierkes
A recent article in The Economist compares political contestation around the Kumtor mine in Kyrgyzstan and Oyu Tolgoi in Mongolia. There a number of aspects to that comparison that make it very interesting:
- Democratization: Kyrgyzstan has – at times – moved furthest toward democratization, from a similar starting point but on a different trajectory, as Mendee has shown in his dissertation, “Small Islands of Democracy in an Authoritarian Sea: Explaining Mongolian and Kyrgyz Democratic Development“
- At one point, we were quite involved in a project that explicitly aimed to capitalize on this comparison/some similarities in order to prompt discussions and learning about the governance of mining resources.
- In the context of the above project, I had an opportunity to visit Kyrgyzstan and Kumtor, something that I very much benefited from, but I’ve also had the chance to visit Oyu Tolgoi.
The Economist quoted me as saying, “Power in Mongolia is too fragmented to make bribery at scale an attractive option to foreign investors, says Julian Dierkes of the University of British Columbia—though what happens to revenues once they reach government coffers is another matter.”
I do think that fragmentation of power prevents grand corruption where foreign investors are involved in #Mongolia.https://t.co/pWOmi2zkFO
— Julian Dierkes (@jdierkes) November 5, 2021
As I was considering what I said, it seemed like this deserves a bit of an elaboration.
Political Fragmentation
This is not a term that is commonly applied to describe Mongolian politics. But perhaps it is worth considering more often as a description.
Centralization
Perhaps first, a word on how politics is not fragmented in Mongolia.
Two aspects come to mind very quickly: state structure and political parties.
Mongolia fundamentally remains a unitary state. That is, national legislation trumps all regional decisions and administrative units below the nation (aimag, soum, bag) implement decisions that are made at the centre. Unitary states are thus different in their structure from federal structures where some areas of policy-making are explicitly delegated to subnational units (for example, education in Germany or Canada).
While I have noted in the past that the distribution of revenues from resource projects to regions where those projects are located is hinting at some devolution of resources in Mongolia, it remains fundamentally unitary and thus not fragmented.
Stable Two-Party System
Fragmentation is also a term that is sometimes applied to party politics when voters are increasingly voting for a larger number of smaller parties, most famously, perhaps, in the case of the Weimar Republic, where that fragmentation is generally in part blamed for the rise of National Socialism. That is also not the case for Mongolia where the existence and occasional electoral success of the MPRP and, now, XYH, only seems to confirm the longterm stability of a two-party system dominated by the DP and the MPP.
Fragmentation
What I mean by fragmentation then is that power is divided across the Mongolian government in a way that there are many individuals who participate in decision-making and who potentially cancel each other out in disputes. That power is also generally fleeting when it comes to particular issues/policy areas.
I do not think that Mongolians often think about their government as fragmented in that way. Instead, public portrayals focus on the small number of individuals/families that seem to hold power. The terminology that crops up in that context is that of “oligarchs” and “30 families” who are portrayed as being all-powerful. I would certainly not deny that there is a small power elite that has a lot of influence over politics in Mongolia, but by referring to this elite as fragmented, I would emphasize that policies remain contested, even if the parties/individuals involved are limited in number. No single person/company/family holds enough power to overrule other members of the elite. In other words, the ruling elite is not unified in its action.
This fragmentation is also apparent in parliament. I have long lamented the absence of coherent party platforms. Every election confirms this absence when we have examined various election platforms. Yes, occasionally the MPP describes itself as social-democratic, suggesting a policy theme at least, if not an ideology, but it is hard to detect that theme in decisions or platforms. The same is true of the economic liberalism that is sometimes ascribed to the DP.
When we look at MPs, it is also apparent that legislative initiatives are often personal projects, rather than a policy direction that their party has embraced. Resources available to MPs are so limited that they can only pursue a small number of projects, but neither of the large parties has ever really stepped in by developing more centralized policy-making capacity. This then contributes further to fragmentation of decision-making.
So, while parliament may look like it is dominated by a stable two-party system, in terms of actual policy-making and legislative activities it appears to be highly fragmented.
It remains to be seen whether the 2019 constitutional changes that limit the number of MPs in cabinet will increase the power of the PM over fellow cabinet members, but also vis-a-vis parliament, or whether the substantive expertise that some of these ministers may have, might allow them to resist political pressures. That might change the fragmentation of power then.
Corruption and Fragmentation
How is this view of Mongolian politics as fragmented relevant to corruption?
Let’s consider legitimate attempts to influence political decisions first. Occasionally, I am approached by foreign investors who think they have some kind of “in” to some particular business sector in Mongolia and seek to exploit that to construct a business.
Often this hopeful investor then tells me that they’ve connected with SoAndSo who is currently Minister of ThisAndThat. In their mind, that means that they have approval or whatever it is that they’re seeking for this business venture. My response is always that a connection to an individual is a shaky basis for a venture. Even though that individual may seem powerful, they may only be in a specific position of power for a limited time and their power is likely tied closely to the position. Also, if that powerful individual champions a certain cause/policy/actor that may well prompt active opposition from other actors. I therefore always advise such investors to pursue a broad-based strategy of engagement with decision-makers that does not rely on some individual, but pursues coalitions instead. Another alternative – one that is also highly relevant for larger political decisions that involve public debate – is to turn to the public for support either through market success or by talking about possibilities that might generate public interest.
Similar challenges also hold for illegitimate/illegal forms of influence then. If I was a misguided investor who thought corruption was a legitimate business tool, I would still evaluate opportunities to pay a bribe by the likelihood of that bribe actually delivering the influence that I was hoping for.
Take the OT agreements (2009 original and 2015 Dubai agreement) as an example. Lots of corruption has been alleged around those agreements. But, imagine that an investor had paid a substantial bribe to prime ministers at the time, could those prime ministers have actually “delivered” an agreement? I would argue that not, because of fragmentation. No recent prime ministers has been powerful enough to make that kind of decision on their own and some of the others who would be involved might be opposed for a number of different reasons.
If you actually wanted to be certain of a political outcome, there would be multiple individuals involved, so bribing just one of those individuals would be unlikely to guarantee an outcome. But if you have to bribe many people to ensure an outcome, that would be so expensive a strategy that it is unlikely to survive some kind of calculation of expected pay-off for an investor, especially when that investor – like Turquoise Hill/Rio Tinto – also faces public scrutiny by markets but also by reporting requirements such as the Extractive Industries Transparency Initiative.
In my mind, this political fragmentation has always made some allegations of corruption in the Oyu Tolgoi context quite implausible. By the way, that would be a bit different for Erdenet or Erdenes Tavan Tolgoi, for example, where control over those assets is more internal to the government and power relations might thus be brought to bear more directly on decisions.
Conclusion: Talking about Fragmentation
As I was working on this post, it seems more and more appropriate to think of Mongolian politics as fragmented in the very specific sense that I discussed: political decisions are distributed across a small, but not unified elite who may often be in competition over the outcomes of such decisions, even when the state structure remains unitary and the party system suggests stability and durable preferences.
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