Mongolia 2013

Presidential elections were held in Mongolia on June 26, 2013. The President of Mongolia (Монгол Улсын Ерөнхийлөгч) is elected by direct popular vote to a four-year term, renewable once. Only parties which hold seats in Mongolia’s unicameral legislature, the State Great Khural (Улсын Их Хурал) may nominate candidates. Mongolia is a semi-presidential republic, in which the Prime Minister, who is responsible to the legislature, is traditionally more powerful than the President. Nevertheless, the President may veto legislation (which can be overridden with a two-thirds majority), he approves judicial appointments, nominates the Chief Justice of the Supreme Court, nominates the Prosecutor General who is confirmed by the legislature, serves as commander-in-chief of the armed forces and chairs the country’s national security council.

Background

Outer Mongolia regained independence as a modern state from the moribund Qing Chinese Empire in 1911, a reaction to the Qing’s sinification policies which threatened Mongol society. Taking advantage of the Xinhai Revolution in China in October 1911, Outer Mongolia declared independence in December 1911 as a theocracy under the Bogd Khaan.

Mongolia is strategically surrounded by two superpowers – Russia to the north and China to the south. Since 1911, Mongolia has been pulled between either Russia and China and it has often been caught up in broader geopolitical currents between its two giant neighbours.

China did not recognize Mongolia’s self-proclaimed independence in 1911, and continued to claim Outer Mongolia as an integral part of its territory (along with Tuva, today part of Russia). China would only come to recognize Mongolian independence following an agreement with the Soviet Union in 1946, and after the Kuomintang’s defeat and escape to Taiwan, the rump Kuomintang government on Taiwan rescinded recognition of Mongolia and Taiwan did not recognize Mongolian independence until 2002! At the outset, the Russian Empire conceded to China that Mongolia was part of China, but wanted the maximum autonomy for Mongolia within the Chinese state. The newly independent Mongolian state was trapped between these two superpowers, both of which quickly became unstable. In 1919, fearing a Bolshevik invasion and later a White Russian general stirring up pan-Mongolism with the rival Buryats, Mongolian nobles called on China to step in and abolish Mongolia’s de-facto independence, which they did in 1919. However, within a year, a slightly insane White Russian general, Baron Roman von Ungern-Sternberg, invaded Mongolia and chased out the Chinese military, restoring the Bogd Khaan. This new development hardly pleased the Bolsheviks and the Red Army, who, in tandem with Mongolian communists and nationalists, invaded Mongolia in the summer 1921 and eventually captured (and executed) von Ungern-Sternberg.

The end result was not immediately a communist Soviet satellite state, given that the new government retained the Bogd Khaan as nominal head of state, but Soviet influence grew enormously after 1921. In 1924, when the Bogd Khaan, the Mongolian People’s Republic was proclaimed. Several Prime Ministers and leaders of the new single party, the Mongolian People’s Revolutionary Party (MPRP), unsuccessfully tried to resist Soviet encroachment. Between 1928 and 1932, the MPRP pushed for rapid and compulsory collectivization, abolition of private enterprises and confiscation of religious (Buddhist) properties. An armed uprising led by lamas in 1932 temporarily halted the ‘leftist deviation’ and Prime Minister Peljidiin Genden, on orders from Moscow, led more liberal policies similar to Lenin’s NEP while Moscow ordered the purges of those behind the ‘leftist deviation’. However, it was only a tactical retreat by Stalin, who returned with a vengeance in 1936-1937, purging Genden (who had become quite independent and confrontational against Stalin).

Khorloogiin Choibalsan, who ruled the country between 1939 and 1952, became Stalin’s man in Mongolia. Like Stalin (and aided by the NKVD), Choibalsan began bloody purges targeting party rivals and opponents, the military, the remnants of the Mongolian nobility and the Buddhist clergy. About 30,000 persons lost their lives in Stalinist purges in Mongolia between 1937 and 1939. The Mongolian People’s Republic turned into a Soviet/Stalinist satellite state – after 1941, Mongolia’s economy was directed towards the Soviet Union’s war efforts, Choibalsan established himself as the local Stalin, he adopted the Cyrillic alphabet in replacement of the old Mongolian script (which is awesome, written vertically) and the country was modernized in line with Soviet policies. However, Choibalsan had a bit of a falling out with Stalin after 1945, when Stalin angrily rebuked Choibalsan’s attempts to use Japan’s defeat as a way to establish a pan-Mongolian state, uniting Outer Mongolia with Inner Mongolia (which, to this day, is a part of China). Stalin pressured China and the Eastern Bloc into recognizing Mongolia as an independent state, but he was also unwilling to back Choibalsan’s irredentist attempts.

Unlike Hoxhaist Albania which remained a holdout of Stalinist nostalgia after 1953, Mongolia – once again in lockstep with developments in Moscow – had its own de-Stalinization process with Yumjaagiin Tsedenbal, the more moderate ruler of the country between 1952 and 1984. Throughout this era, Mongolia remained an extremely close ally – a satellite state – of the Soviet Union. Tsedenbal actively pushed for Mongolia’s annexation to the Soviet Union, but many MPRP members resisted this and the idea was abandoned. With the Sino-Soviet split in the 1960s, Tsedenbal enthusiastically sided with the Soviet Union over China. Soviet troops were stationed in Mongolia, and the Kremlin retained extraordinary influence over Mongolian domestic policies – for example, Leonid Brezhnev forced Tsedenbal out of office in 1984, because Tsedenbal had been opposing Brezhnev’s rapprochement with China. His successor, Jambyn Batmönkh (1984-1990), promoted reforms similar to Gorbachev’s perestroika and glasnost.

Between December 1989 and May 1990, Mongolia’s communist regime faced large student-led protests which pressured the MPRR into amending the constitution to allow for multi-party democracy and organize free elections in June 1990. The MPRP won the elections with around 60% of the vote, but took 358 out of 450 seats in the lower house. The transition to multi-party democracy and a market economy, along with the collapse of the Soviet Union, proved difficult for Mongolia. The country went through a severe recession (food and energy shortages, high inflation) between 1990 and 1994. Punsalmaagiin Ochirbat, a reformist MPRP dissident who split with his party, won the first direct presidential elections in 1993 and was a thorn in the side of MPRP governments, pressuring them to speed up privatizations, economic liberalization and protecting the rights of minority parties.

In 1996, the centre-right opposition Democratic Union won the elections, winning 50 seats to the MPRP’s 25 seats and ended 75 years of MPRP rule in Mongolia. In close collaboration with the World Bank and IMF, the Democrats pushed aggressive economic reforms, including privatizations, liberalization of price controls, closure of insolvent banks and the elimination of import duties. Inflation was down and growth picked up,The rapid pace of economic reforms, economically disastrous climatic conditions in 1999-2000 and divisions in the ruling coalition allowed the MPRP, led by Nambaryn Enkhbayar, to return to power in 2000 – taking 72 out of 76 seats. The MPRP, by now committed to the market economy and economic reforms, largely continued similar policies. The mining industry – Mongolia has rich gold, copper ore, coal and other mineral reserves – has become the main industrial activity in Mongolia and successive governments have been handing out mining licenses to foreign companies. Between 2000 and 2004, Mongolia’s economy grew steadily and rapidly. The 2004 legislative elections ended in deadlock between the MPRP and the Democratic Party, leading to a grand coalition (until 2006) between the two parties under Prime Minister Tsakhiagiin Elbegdorj from the Democratic Party.

In 2008, the MPRP was reelected with an expanded majority, winning 45 seats to the DP’s 28 seats. The opposition did not accept the results, denouncing rigging and irregularities. There were large protests on July 1, with protesters setting the MPRP’s headquarters on fire. In response, President Nambaryn Enkhbayar, elected in 2005, declared a state of emergency at midnight and cracked down on the protests. Five civilian protesters were killed during the riots.

Less than a year later, DP candidate Tsakhiagiin Elbegdorj defeated President Nambaryn Enkhbayar (MPRP) in presidential elections. In the 2012 legislative elections, the DP narrowly defeated the Mongolian People’s Party (MPP, the rechristened MPRP) and former President Nambaryn Enkhbayar’s Justice Coalition, a more left-wing slate including a rump MPRP. Corruption related to the avalanche of mining concessions was a major issue in the campaign, with the opposition and many voters claiming that foreign mining interests held too much power and not enough of the proceeds from Mongolia’s mineral wealth were going to Mongolians.

Mongolia has one of the world’s fastest growing economies. The country went in recession in 2009, after a fall in commodity prices, but the country’s GDP grew by no less than 17.5% in 2011, 12.3% in 2012 and is projected to grow by 14% this year. With Sierra Leone, post-civil war Libya and newly independent South Sudan, Mongolia will have the highest GDP growth in 2013. Mining, of course, has been behind this economic  boom. In 2010, the government signed a deal with Canada’s Turquoise Hill Resources and Australia’s Rio Tinto to develop a profitable gold-copper ore mining site at Oyu Tolgoi in the Gobi Desert. Construction on the mine is nearly over, and it is scheduled to begin production and shipments this year. Oyu Tolgoi is a massive project, expected to account for more than 30% of the country’s GDP. 450,000 tonnes of copper could be produced annually.

However, Oyu Tolgoi and the mineral boom in general has been a subject of hot political debate in Mongolia, in the 2012 election and this year’s election. Late last year, the Great Khural approved a law increasing royalties to be paid by foreign corporations at the Oyu Tolgoi mine. That new law alarmed Rio Tinto, because the threat of higher royalties to the Mongolian government might make the project less economically lucrative for the Australian mining giant. Already in May 2012, the previous MPP government had passed the Strategic Entities Foreign Investment Law, which originally stated that Parliament needed to approve foreign takeovers of assets in strategic sectors such as mining and banking. That law was passed to prevent China’s state-owned mining company, Chalco, from taking over SouthGobi Resources, a coal mining subsidiary of Rio Tinto. But the law worried foreign investors, leading to a sharp fall in foreign investments in 2012. However, the new DP government amended the contentious law in April this year, exempting private foreign firms from investment restrictions although it tightened existing restrictions on state-owned foreign firms.

While foreign investors are worried about “resource nationalism” in Ulaanbaatar, Mongolians are concerned about getting a fair share of the profits from the mineral boom, as well as the environmental impact on the mining projects. The lightening-fast economic development threatens the old nomadic culture and brings with it new concerns such as pollution.

Candidates

Incumbent President Tsakhiagjin Elbegdorj (Democratic Party, DP) ran for a second term. Since June last year, his party now also controls the legislative branch and with it, the Prime ministerial office. Mongolia’s President usually plays a more symbolic and reserved role in the country’s daily politics, but tends to champion certain causes or initiatives. Elbegdorj has advocated for democracy and human rights (notably in Myanmar/Burma), he has championed Mongolia’s nuclear-free status, promoted women’s rights and the political participation of women and led the charge to abolish the death penalty – as President he announced a moratorium on the death penalty in 2010 and it was legally abolished in January 2012. Elbegdorj’s other major initiative is fighting corruption, which he had started promoting while he served as Prime Minister. He also wants to actively target high-level political corruption, rather than petty corruption. In April 2012, his predecessor, Nambaryn Enkhbayar, was arrested on charges of illegal privatization. In May 2012, he was released on bail. He was finally convicted to seven years in jail, but his sentence was later commuted to two years in jail without fine.

Elbegdorj’s campaign focused on promises of a fairer redistribution of profits from the mineral boom and reducing corruption.

The Mongolian People’s Party (MPP) candidate was Badmaanyambuugiin Bat-Erdene, a former pro wrestler who has been a legislator since 2004. His campaign, more critical of the mineral boom, focused on environmental issues and alleviating socioeconomic inequalities.

The Mongolian People’s Revolutionary Party (MPRP) candidate was Natsagiin Udval, the incumbent minister of health (the government appears to be a DP-Justice Coalition coalition government) and secretary-general of Enkhbayar’s rump MPRP since 2010. Udval’s campaign was also critical of the mineral boom and the Oyu Tolgoi deal, and denounced an increase in socioeconomic inequalities as a result of the economic boom.

Results

Turnout was 66.5%.

Tsakhiagiin Elbegdorj (Democratic Party) 50.23%
Badmaanyambuugiin Bat-Erdene (MPP) 41.97%
Natsagiin Udval (MPRP) 6.5%

The results should probably be read as an endorsement of the incumbent President and his party’s government, buoyed by record-high economic growth from the mineral boom. Although the issue remains contentious for many, and there remains a lot of unresolved questions on both sides, a majority of voters seem to support the incumbent’s generally “pro-growth” policies. Although all three candidates appealed to resource nationalism in some way or another, the incumbent president was seen by foreign investors as the most ‘moderate’ voice out of the three.

I can’t make out much from the map. The incumbent performed best in the major cities – Ulaanbaatar, where he won over 50% in all districts with the exception of the two exclaves which Bat-Erdene carried; but also the smaller regional centres of Erdenet and Darkhan, two towns built in the 1970s and 1960s respectively with Soviet assistance. In 2009, Elbegdorj had performed best in the cities as well. However, if there was a rural-urban divide at work in either 2009 or this year, it is not readily obvious at the provincial (aimag) level.

Elbegdorj’s best aimag was Khovd, an ethnically diverse province in mountainous western Mongolia which is also his native province. He won 61.2% of the vote in Khovd. Similarly, Bat-Erdene’s best result came from his native province, Khentii, in eastern Mongolia, where he won 62.5% of the vote against only 33.4% for the incumbent, who had won 47% there in 2009. Bat-Erdene’s support was concentrated in several provinces in eastern Mongolia, most of which border his native province. I can’t tell if this is some kind of personal favourite-son support extending outside regional boundaries, or if it is a traditional stronghold of the left. In 2009, Enkhbayar, who is from Ulaanbaatar, had also won some of his best result in those provinces. From some basic research, it appears as if these aimags might have more mining going on than some of the other aimags which voted for Elbegdorj (who seems to have carried the more agricultural parts of northern Mongolia). That being said, Elbegdorj carried Ömnögovi, the arid southern desert province which includes Oyu Tolgoi, by a close margin (45.9% to 44.6%). Finally, I’m not sure if there’s any ethnic element going on. Elbegdorj carried Bayan-Ölgii, which has a big Kazakh majority, with 53.3% against 37.7% for the incumbent, but Elbegdorj had lost Bayan-Ölgii in 2009. One would probably need to look at a more micro level to find any incidences of ethnic voting – if such a thing exists.

The Economist mentioned that Elbegdorj and the DP have proposed to decentralize budgeting decisions to local authorities, something which, according to the news weekly, was very popular in rural areas and might have served to boost his support there.

Foreign investors are relieved by Elbegdorj’s victory. Fitch Ratings said that his victory “creates space for the authorities to reduce policy uncertainty”. Indeed, his victory cements the DP’s dominance of Mongolian politics – it controls the presidency, the legislature (with the speakership) and the prime minister’s chair. The DP has rarely held so much power in Mongolia since 1990, and both the DP and foreign investors are optimistic that its control of all major levers of power will allow it to break some of the deadlock and have an unprecedented opportunity to implement its platform. Fitch continued saying that “a period of political stability could allow the Mongolian authorities to clarify their plans for the country’s mining regime through a new mining law, and its foreign investment regime through amendments to existing laws”. Because of the election, among other things, the inaugural copper exports from the much-heralded Oyu Tolgoi mine has been delayed several times. With Elbegdorj’s reelection, Rio Tinto is hoping that it will finally be able to kick off production.

With the DP controlling all levers of government, a fairly rare incidence since 1990, it will face high expectations. Its first challenge will be to manage the economic boom, treading the thin line between foreign investors’ demands and popular expectations and demands. Despite the economic boom, poverty remains high in the country – around 29% of the population lives under the poverty line, and Mongolia’s HDI is 0.675, ranking 108th out of 186 countries (although its HDI has been consistently increasing since 2000). The government will have to ensure that proceeds from Mongolia’s mineral wealth are able to ‘trickle down’ to Mongolians, and that the mineral wealth enriches all Mongolia and alleviates social inequalities, rather than enriching a select few and worsening income disparities.