Mongolia has experienced some turmoil in its relationship with international investors generally and with Rio Tinto over the Oyu Tolgoi project more specifically in the first five months of this year.
Notable events have been a February speech by President Ts Elbegdorj on some of the shortcomings in the management of the Oyu Tolgoi project that he saw in February.
This was followed by a series of meetings and negotiations with Oyu Tolgoi representatives to resolve any disagreements between Turquoise Hill Resources as the majority and the government of Mongolia as the minority shareholder in Oyu Tolgoi.
Discussions of revisions to the foreign direct investment law and the mining law have also been significant in providing a context for foreign investment in the country’s rapidly growing economy.
This turmoil sets the stage for the June 26 presidential election. President Elbegdorj will likely be nominated this coming weekend for a re-election campaign by his Democratic Party which currently also holds the posts of prime minister (though in a coalition), chairman of parliament, and mayor of the capital, Ulaanbaatar.
The opposition Mongolian People’s Party just selected B Bat-Erdene as its nominee. Bat-Erdene has been a three-term Member of Parliament and continues to be personally famous for his status as one of the most dominant Mongolian wrestlers. While he has not been a very active legislator, his most prominent initiative was the 2009 “Law with the Long Name” (Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas).
This law was intended to restrict mining licenses in areas of ecological fragility. While clearly important and well-intentioned, the law has caused controversy for the implied expropriation of previously-granted licenses (for areas that fall within the coverage of the law) and for the risk or perceived reality of an uneven application of restrictions that gives rise to corruption.
Bat-Erdene will likely use his role in the passage of this law to bolster his appeal to Mongolian values and personal integrity as a potential president.
While Elbegdorj has been active as a DP politician for much longer than Bat-Erdene’s membership in the Ikh Khural, including two stints as prime minister, there are few specific policies that are directly associated with him.
Appropriately, given the above-the-fray role of the president in addition to responsibilities for national security foreign policy, and the judicial system, Elbegdorj is thus likely to emphasize his personal charisma and lay claim to the DP’s clean government credentials that have been tarnished recently by the publication of information about offshore accounts held by S Bayartsogt, a DP member of parliament who has recently resigned his vice-chairmanship of the Ikh Khural. Bat-Erdene and Elbegdorj thus look set to square off largely over personality rather than specific policy proposals.
Scandals that may erupt over both candidates might still re-configure the campaign in regards to a personality contest.
The Justice Coalition, junior partner in the current government, may nominate M Enkhsaikhan who preceded Elbegdorj as prime minister in the mid-1990s. It is not clear what leverage the Justice Coalition might expect from this candidacy and the threat of a nomination might also be a bargaining chip in negotiations with the DP, but Enkhsaikhan would be likely to try to appeal to voters who continue to be somewhat loyal to former president N Enkhbayar who is serving a corruption sentence in jail. Part of that appeal may be accusations against Elbegdorj and the DP that they are not claiming enough benefits (i.e. profits) for Mongolians under the Oyu Tolgoi investment agreement.
The other partner in the Justice Coalition, Enkhbayar’s Mongolian People’s Revolutionary Party may not nominate a candidate and throw their support behind the MPP’s Bat-Erdene, though a decision has not been announced.
Parties have until May 12 to nominate candidates and until May 17 to submit supporting documents. The final announcement of candidates by the General Election Commission will come on May 23.
Given the stipulation that only parties represented in the Ikh Khural may nominate candidates for president, the election may turn out to be a three-way race. At this early point, it is unclear whether an Enkhsaikhan candidacy is likely to have a disproportionate impact on potential Elbegdorj or Bat-Erdene voters and thus lead to a more contested election than is expected now. If no candidate wins more than 50% of the votes, a run-off election between the top two vote-getters will be held two weeks after the initial election.
Julian Dierkes is an associate professor and the co-ordinator of the program on Inner Asia at the University of British Columbia’s Institute of Asian Research. He is one of the principal authors of the Mongolia Today blog. Follow him @jdierkes.
