Wednesday, June 27, 2012

[CPSI NewsWire: SouthGobi Falls to Historical Low, Production Halted]

CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, Western Australia based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.

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1878 fell 25.6% in last 2 days, SGQ fell 25.9% yesterday

SouthGobi curtails Mongolia coal output, suspends capex

JOHANNESBURG, June 26 ( – TSX-listed SouthGobi Resources (TSX:SGQ, HK:1878) has suspended uncommitted capital and exploration expenditure and reduced its mining activity at its flagship Ovoot Tolgoi coal mine, in Mongolia, to preserve the group's financial resources.

SouthGobi implemented these initiatives during the second quarter of the year to maintain efficient levels of working capital and to prevent the build-up of a significant unsold coal inventory, as deteriorating market conditions continued to impact on the exploration and development company.

The company, which is also listed in Hong Kong, said late on Monday it expected second-quarter production to reach between 200 000 t and 300 000 t. At the end of the quarter, production at Ovoot Tolgoi would be "entirely curtailed".

Considering the difficult conditions of the second quarter and uncertainty surrounding third-quarter development, SouthGobi warned that sales volumes, pricing and production volume outcomes for the full year of 2012 could not be estimated.

SouthGobi said that the past few weeks had seen customer sentiment deteriorate and prices fall, after holding steady for the past year.

"The reference price for one-third coking coal in Wuhai, Inner Mongolia, fell by RMB20/t on April 23, and then fell a further RMB30/t on June 18. Further east in Baotou, Inner Mongolia, the reference price for clean coking coal started falling in late May and has now fallen by RMB110/t," the company said in a statement.

Further, the junior pointed out that owing to a delay in the opening of expanded border-crossing capacity until May, holiday closure in the first quarter, and the closure of the export road for repair in April and May, production levels were impacted, which has made customers reluctant to enter new purchase commitments.

"It does appear that customers have robust volume appetite for the third quarter, particularly as SouthGobi's largest customer has now exhausted prepurchased coal inventory. However, achieving mutually agreeable contracts is difficult in the context of the regional coking coal market conditions," the company explained.

In addition, a lack of clarity over whether SouthGobi could receive a formal licence suspension at some stage had customers fearful that they would be unable to collect and export additional coal from Ovoot Tolgoi mine.

In April, Mongolia's Mineral Resources Authority publicly requested the suspension of exploration and mining activity on certain licences; however, to date, the company has received no official notification and continued operations.

On the back of this uncertainty, many government bodies and regulatory authorities were reluctant to provide approvals and permits, resulting in SouthGobi's Mongolian subsidiary's failure to obtain approval from the Ministry of Environment for a revision to its environmental-impact assessment for a dry coal handling facility.

Further, the company also appealed for clarification on a comment in May by the Mongolian Minister of Mineral Resources and Energy that "the temporary suspension has been lifted, but regarding the new law, the licence of Ovoot Tolgoi will be discussed by the Cabinet and Parliament".

Link to article

Link to SGQ release


SouthGobi Mine Halt Fuels Doubt on Chalco BidDow Jones Newswires, June 26


Aspire Mining Chairman Buys On Market

June 27 (Mogi) On June 26, Aspire Mining Limited (ASX:AKM) Non-Executive Chairman Mr. David McSweeney bought 500,000 shares on market for A$65,121.30 which translates to an average price of slightly over 13c.

Link to Change of Director's Interest Notice


UBS Becomes Substantial Holder in Guildford with 5.76%

June 27 (Mogi) On June 22, UBS AG became substantial holder (above 5%) in Guildford Coal Limited (ASX:GUF) at 5.76% and thus was notified on June 26.

Link to notice


Asia Pacific Investment Partners Appoints Chief Operating Officer

June 27 (APIP) Asia Pacific Investment Partners ("APIP"), a Mongolia focused operating group primarily engaged in property development and cement production, has today announced the appointment of its new Chief Operations Officer of Infrastructure and Construction, Joshua Haines

Joshua will be chiefly responsible for the day-to-day operations of APIP's current real estate developments and will also oversee Central Asian Cement's activities. 

Prior to joining APIP, Joshua worked with Technologists Inc. in Afghanistan. Here he reported directly to the company owner regarding the project status, managed day-to-day construction activities, and trained over 6,500 Afghans construction workers on modern day construction techniques, safety, quality control and scheduling. 

Lee Cashell, CEO Asia Pacific Investment Partners, commented: 

"Joshua will provide further strength to our rapidly growing executive team. His extensive experience in Afghanistan should translate well into some of the complexities that exist when operating in Mongolia. I am confident that he will be a very worthwhile hire and will have a significant impact on the rate at which we are capable of growing."

Link to release


BoM issues 130.3B 1-week 13.25% bills

June 27 (Bank of Mongolia) BoM issues 1 week bills worth MNT 130.300 billion at a weighted interest rate of 13.25 percent per annum. /For previous auctions click here/

Link to article


BoM sells $59m at 1339.84, ¥65.5m at 210.50 in FX auction

June 26, 2012 (Bank of Mongolia) – Forex auction: Meeting short term demand, the BoM sells USD 59 million /100% of bids/ at closing rate of MNT 1339.84 and CNY 65.5 million /88% of bids/ at closing rate of MNT 210.50.

Link to release


Mongolia poised to elect new parliament

June 27 (FT) Mongolians head to the polls on Thursday to elect a parliament that will have to make important choices about how to share the proceeds of the mining boom that has gripped the mineral-rich country of 2.8m people.

The election pits the Mongolian People's party, which has been in power for most of the past 60 years, against the Democratic party, its coalition partner until January. They also face a challenge from the Mongolian People's Revolutionary party, created in 2010 when former president Nambaryn Enkhbayar split from the MPP.

While the two main parties have similar election platforms – promising to diversify the economy and improve peoples' lives – the outcome will help determine how Mongolia divides the wealth from its vast mineral resources with its population and also with the foreign companies that have taken stakes in the mining projects.

Mongolia's location between China and Russia and its vast deposits of coal, copper and iron ore have made it a key focus for global mining companies including Rio TintoPeabody and China's Shenhua. Mining has helped catapult economic growth to a rate approaching 20 per cent annually, making the $10bn economy one of the fastest-growing in the world.

The parliamentary race has been dubbed the "quiet election" because Mongolia recently passed a campaign law that bans outdoor concerts, a prominent feature of previous elections. But voter interest is high, and more than 80 per cent of Mongolia's 1.5m registered voters are expected to cast their ballots. Many of the polling stations are in remote areas with roughly a third having no mobile phone coverage. Mongolia is also using a new electronic voting system in an effort to fight election fraud.

According to the latest figures from Sant Maral, a Mongolian polling group, 28.6 per cent of respondents back the Democratic party, 18.8 per cent support the MPP, while 15 per cent want the MPRP to win. Roughly 23 per cent were undecided.

The polls suggest that the Democratic party will win the most seats, but fall short of an outright majority, forcing it to form a coalition. Its position could also be bolstered by surging support for the Mongolian People's Revolutionary party, which threatens to take votes from the Mongolian People's party.

The MPRP has seen increased backing partly because it advocates national ownership of the country's mines, which plays well with Mongolians who feel they are not getting their fair share of the wealth being generated by the mining boom. It has also gained from people who believe that corruption charges levelled by the government at Mr Enkhbayar are politically motivated.

Analysts say the new government – regardless of who takes power – is likely to adopt policies that give the Mongolian people and state a greater stake in future projects than at present.

Since the last parliamentary election in 2008, public dissatisfaction towards mining has risen because of growing social inequality and environmental concerns.

Over the past four years, mining revenues have been distributed equally among the population, with each citizen receiving 21,000 tugriks ($16) a month, but the system will be replaced next month by a targeted welfare programme.

"The election platforms of both parties that are the most likely winners contain various elements of resource nationalism, such as larger state stakes in companies based on deposits," says Dale Choi, analyst with Frontier Securities in Ulan Bator, the country's capital.

L. Sumati, a pollster who heads Sant Maral, says dissatisfaction with politicians is high, and that "the population is interested to replace all of them".

Observers point out that the democratic process in Mongolia, which has held regular, peaceful polls since it severed ties with the Soviet Union, its former backer, in 1990, is remarkably stable.

"One should not underestimate the sophistication of the electorate," says Alphonse La Porta, former US ambassador to Ulan Bator. "Mongolians are very savvy."

Link to article

Election related:

Foreign Media and Election Observers in Place for ElectionUB Post, June 27

2012 Action Plan of All Political Parties: Other Field PoliciesUB Post, June 27


Resource nationalism to irk investors as Mongolia goes to polls

* Nationalist sentiment likely to increase after election

* Legislation to cut mining dependence on the agenda

* Foreign investment still crucial for economy

ULAN BATOR, June 27 (Reuters) - Resurgent nationalism in mineral-rich Mongolia, which will vote for a new government this week, will irk foreign investors, but it is unlikely to wreck sentiment, with politicians still desperate to keep the dollars flowing in.

Foreign investment in Mongolia's much coveted mines like the $7 billion Oyu Tolgoi copper project helped expand the economy at the fastest pace in all of Asia last year. But many of the country's 3 million voters say the bulk of the nation's nouveau wealth still lies in the hands of the political elite.

Thursday's parliamentary election will see politicians from two major parties - the Mongolian Democratic Party (MDP) and the Mongolian People's Party (MPP) - fight to appease the masses. Foreign firms such as Rio Tinto can expect a more turbulent ride in the years to come.

"We believe that (resource nationalism) is broadly bi-partisan and is to increase whichever party wins," said the Ulan Bator-based Frontier Securities in a note to clients.

A shift to the left could end up saddling investors with higher tax bills and make it harder to win approval for new projects. But the main players in the election remain broadly supportive of foreign capital, which has turned the dusty former Soviet outpost of Ulan Bator into a bustling boomtown.

"Even with popular voter support for resource nationalism, authorities are still realistic and will not push it too far, because obviously they need high economic growth," said Dale Choi, an Ulan Bator-based analyst with Frontier.

Mongolia's economy grew 17.3 percent in 2011, outpacing all in Asia and trailing only Qatar and Ghana globally.


For many voters, the seventh parliamentary election is another chance to try to redress an imbalance.

The end of Communism in 1990 left the economy devastated as old Soviet supply lines broke down. Since then, Ulan Bator's resource policies have been notoriously laissez-faire as it sought to attract foreign investment on whatever terms possible.

Expectations are rising that policies could swing too far in the opposite direction, imposing more controls to redistribute mining wealth in a way that pleases voters.

Mongolia has already imposed restrictions on mining in forest or river areas, a moratorium on new licenses and a new law designed to limit foreign ownership of "strategic" sectors.

President Tsakhia Elbegdorj, a former journalist and veteran campaigner from 1989, insisted Mongolia remains committed to the free-market approach to development.

"Open countries succeed in exploring for and using their mineral wealth, but closed societies fail," Elbegdorj, who holds a master's degree in public administration from Harvard, said in an interview last week.

But he conceded that the public were dissatisfied with the way the country's new wealth has been spread, and the emphasis of Mongolia's politics needed to change.

The government has sought to redistribute wealth by creating social funds using mining profits much like the way Norway has done with the money it generated from oil. But that has resulted in cash handouts that have made very little difference to underlying poverty.


While Mongolia's course of economic development has been set, there has been a shift in rhetoric, said Sumati Luvsandendev, a pollster with the Sant Maral Foundation.

"The social justice issue is now at the top of the agenda," he said. "The attitude of Mongolians towards mining is based on an expectation that it will solve many of Mongolia's problems, but there is a problem of confidence about decision makers."

The mining boom has not improved conditions in large parts of the countryside or in Ulan Bator's crowded migrant districts.

"I don't see any benefits (from mining)," said Altantsetseg Laagansuren, a 29-year old mother of three living in a crowded ger (tent) in one of the capital's sprawling makeshift suburbs. "I don't see anything changing. I think the people at the top are sharing and eating up the wealth," she said.

Amitan Ulam-Undrakh, a camel herder and former township governor in South Gobi province, is a direct beneficiary of the Oyu Tolgoi project. He has watched closely as Rio Tinto and Ivanhoe's billion-dollar investment transforms the region's once moribund subsistence economy. But even he has reservations.

"Livestock and traditional sectors used to be the biggest part of the economy, and we should choose a leader who can allow mining and the traditional ways of life to coexist," he said.

President Elbegdorj, from the nominally free-market MDP, is promising an end to mining overdependence. He has imposed a moratorium on new licenses and is preparing to approve a new mining law ahead of his own re-election campaign next year. He also hopes to raise taxes on miners to as much as 40 percent.

"We all agree (mining is an important part of the economy) but profits from mining should be invested in other sectors - infrastructure, human development and in the diversification of our economy," he said.

While the 76-member legislature (the Grand Khural) is sovereign with ultimate powers over laws, the 1992 constitution also gives equal executive powers to the president, which can lead to deadlock.


The latest polls suggest the MDP has now sneaked ahead of the centre-left Mongolian People's Party (MPP). Both parties formed a grand coalition after the 2008 election and ushered through the Oyu Tolgoi deal in 2009. The alliance ended in January.

But by hogging the middle ground, the big parties have left themselves vulnerable to a populist candidate prepared to exploit popular unease about income disparities. The biggest beneficiary has been Nambar Enkhbayar.

After his defeat in presidential elections in 2009, Enkhbayar fell out with the MPP and formed his own party using the MPP's old name, the Mongolian People's Revolutionary Party (MPRP). Many in the MPP's left wing jumped ship with him.

He expected to contest a seat in the parliamentary election and fight for the presidency in 2013, but he was arrested in April on corruption charges that he insists were fabricated.

Unbowed by his subsequent exclusion from the vote, the former president continues to campaign on a largely left-wing resource nationalist ticket, and his "justice coalition" could conceivably hold the balance of power in the new parliament.

After addressing a small but appreciative crowd near Ulan Bator's Russian-era State Department Store, Enkhbayar told Reuters that he was not opposed to foreign capital in industries like manufacturing, but resources required a different approach.

Foreign firms should be rewarded for their exploration and development efforts but given a strict timetable to hand mining properties back to the people, he said.

"With the foreign investment law coming in and other laws being threatened, we can't expect an easy ride anymore," said an executive with a foreign mining firm. "I worry a bit about Enkhbayar because despite the corruption scandal, he seems to be stronger than ever."

Pollster Sumati said Enkhbayar has become the "none-of-the-above" candidate for frustrated voters.

"He has become a protest leader, and he is representing the rebels in both major parties," he said.


Last year, a group of backbench MPs urged the government to renegotiate the landmark 2009 Oyu Tolgoi agreement that granted a 66 percent stake in the project to Canada's Ivanhoe Mines , now controlled by Rio Tinto. Many of the lawmakers were also behind a 2007 law to submit miners to a windfall tax.

Foreign investors were relieved when the bid to revise the Oyu Tolgoi deal failed, but there were more worries to come.

The same backbenchers responded furiously to an attempt by Ivanhoe to sell its majority stake in the coal miner SouthGobi Resources, and pushed through a foreign investment law designed to restrict overseas ownership in "strategic" sectors. The law was diluted and finally passed in May, but it still contains worrying ambiguities.

Cameron McRae, country manager for Rio Tinto and chief executive of Oyu Tolgoi, said that while there were still a number of "traditional politicians" campaigning against foreign investment, many more were stressing support.

The Oyu Tolgoi mine is scheduled to start delivering ore to market by the end of August and will go into full operation next year. On top of the $7 billion already invested, analysts estimate there is at least another $6 billion to come.

Sumati said most Mongolians were worried not about foreign ownership, but by the prospect of being left behind.

Rio Tinto is trying to repel the argument through a process of "community engagement." In the small town of Khanbogd, it is constructing gleaming new schools, roads and government buildings.

Eyes are also on the massive Tavan Tolgoi coal mine in the South Gobi region.

Decisions about the mine's development have been repeatedly delayed, with Mongolia unable to win the consent of all the parties involved - including Russia, China, Japan, South Korea and the United States. An investment accord was supposed to have materialised last year.

The election could have an impact if it increases the representation of resource nationalists like Enkhbayar who want to keep it in Mongolian hands and could make the fate of the project a condition of his party's participation in a coalition.

Link to article

Mongolia: wealth share in focusReuters Video, June 27 - Uneven distribution of the proceeds of Mongolia's booming mining industry takes centre stage in parliamentary election. Julie Noce reports



Ulaanbaatar, Mongolia, June 27 /MONTSAME/ Trade of alcoholic beverages in the city will be banned on June 28-29 when the elections of parliament and the Citizens' Representative Khural will run.

The order on this matter was made on Wednesday by G.Monkhbayar, the Mayor of Ulaanbaatar city in respect of the laws on the administrative units and their governance, on the parliamentary election, on the election of the Citizens' Representative Khural of Ulaanbaatar city and on the legal status of the capital city.

According to the order "Ulaanbaatar Electricity Distribution Network" company, the "Information and Communication" state-owned company, and the Public Transport Department were assigned also to take required measures so as to provide the city's administrative organizations, election constituencies and sub-committees with reliable conditions for running their activities and to carry out the public transport services in normal condition on the day of voting.

Link to article


Constitutional Court Denies Enkhbayar's Appeal

June 27 ( The Constitutional Court of Mongolia held a meeting yesterday and discussed former president N.Enkhbayar's appeal.

The General Election Commission refused to register former president N.Enkhbayar, who leading the Mongolian People's Revolutionary Party as candidate for the parliamentary election coming Thursday. And Mr. N.Enkhbayar sent an appeal to the Constitutional Court.

The Constitutional Court reviewed Enkhbayar's petition and decided not accept.

Link to article



By RoRy Briggs

June 27 (UB Post) Exclusive interview with N.Enkhbayar, former President and current Leader of the Mongolian People's Revolutionary Party discussing this election, corruption, his arrest and his trial.

-How do you feel the election campaigning is going?

-Well I think that this is a very unfair election campaign that is going on all over the country. The election vote was designed in a way that Mongolian People's Party and the Democratic Party will get a favorable election for themselves and they will try to use all their mechanisms and resources to evenly divide all the seats in the parliament between themselves and try to exclude other political parties and to come into parliament as a serious political force.  So I am quite unhappy with what is going on, I think it's a very unfair election campaign and I really doubt that the results of this election will reflect objectively the mood of the population, the reality.

-What do you think needs to be changed to make it a fair election?

-Well I think, first of all, these two political parties have to leave the political arena for a while, I'm not saying they should leave the political arena forever but the present leadership of these two parties are very corrupt and very irresponsible. If these two parties do not win in this election, I think ordinary members of these two political parties will have the chance to remove these oligarchs from the top positions and invite their own political parties according to the reality an then I think these two political parties afterwards would be able to play more responsible and positive role in the life of the society.  But if they will again succeed in cheating voters in making all the votes during this election campaign I think the system of oligarchs will stay on and the pressing issues of poverty, of corruption, of unemployment, of inequality, of the gap between the rich and the poor is still be here. Maybe it will get even worse.

-Do you feel that we could see similar scenes to 2008?

-We saw, I think 2008 was a very clear signal, that these two political parties area at a deep crisis and these two parties are not playing a positive role to develop the country further. In fact, on the contrary, they are playing a destructive role to the economy, to the justice system, to the development of the country and we have seen a lot of proof of of this observation for the last four years. They haven't delivered what they had promised. They didn't produce any mechanism according to which wealth coming out of mining projects didn't reach evenly the population of the country, only a few people and a few families got much richer than the ordinary families. They were not bargaining well when they were negotiating with foreign companies on the responsible participation of the Mongolian side in developing mining projects. For example Oyu Tolgoi. When I was the President I had a meeting with both Rio Tinto and Ivanhoe Mines companies and what I was telling, was let's try to follow a model which we have worked out with the Russians. Because when Ivanhoe Mines found this property or this mine during its geological survey I agreed that the Mongolian side should agree that for the initial phase, Ivanhoe Mines or its partner should own the majority of the shares in this project so let's start this project and using geology experts, investment and we guarantee that you own the majority of the shares for this project, but, there is one condition. It shouldn't be forever, it should be for twenty years or fifteen years, twenty-five years, I don't know. We have to sit together and try to calculate the real period of time for which you will be the majority shareholder of this project, that was exactly what was done with Erdenet copper mine. Erdenet copper mine was originally Russian owned and we agreed with the Russians that they would give it back after twenty-five years. So it started in 1978 and then in 2003 they gave it back so this is our model and we know it could be taken into account when negotiating on the Ivanhoe project. Mr Friedland said: "It sounds quite reasonable, but I am no longer a majority shareholder within the Ivanhoe-Rio Tinto partnership, Rio Tinto is the majority shareholder now so could you please talk about this project and your idea to Rio Tinto." At that time, Prince Andrew was a sort of lobbying person for foreign investors coming out of the UK and Australia and I tried to explain to Prince Andrew our position on this issue and he also said "It sounds quite reasonable", so I would say to the Rio Tinto people that this is a good model and example for other projects and let's begin this project on this condition. And then unfortunately, after the election of 2009 which I think and I have enough proof to show that 2009 election was also a fraudulent one. So unfortunately after this fraudulent election the negotiation was carried out and again it was reached based on the condition that Ivanhoe Mines and Rio Tinto will forever own 66% of this project and the Mongolian side will forever own 34%, no condition of the possibility of changing the status in the future after twenty or twenty five years of time. We, the Mongolian side, take 34% of this project on loan. So everybody is quite surprised here to learn that something that was found in Mongolian territory should be given as a loan and that there is no possibility for the Mongolian side to have the majority of the shares in the future, like the Russians did in 2003.

That's why people are not happy that's we think not the real sort of responsible Government. There are even suspicions among the population of this country that both foreigners and Mongolians when they were negotiating the deal there was a lot of corruption and a lot of misinformation was used and that deal made foreign investors not look very nice to the population of this country. Especially after the famous or notorious Bolor Gold project, that was also a big gold mine and according to the so-called stability unit that was concluded when the present President was the Prime Minister and the present Prime Minister was the license holder of this project during Mr. Elbegdorj's Government. The stability unit was concluded according to which the Mongolian side was promising that there would be zero taxing on this project and for a quite long period of time, foreign investor didn't pay any tax to the Mongolian side although it took just gold from the project. Then there was a lot of discussion on this project and finally they changed a bit and started paying tax but very limited taxes. And this whole project is widely accepted in this society that that was a very corrupt, very fraudulent project on which the Mongolian side didn't gain anything. But Mr. Batbold got a lot of things personally and Mr.Elbegdorj was wrong when he was the Prime Minister and what he did with this stability unit.

-So what was your reaction to being told you cannot run as a candidate?

-It is proof of what I was saying earlier. They have invented a case against me. They have charged me completely on groundless things. They are trying to use Law enforcement agencies and the justice system to remove their political opponents for the election campaign. Not many people did believe in my statement, now they have this proof. I was illegally put in prison and they violated all the Mongolian laws when they were keeping me in the prison. Now they are threatening me with a court sentence, they are removing me with the influence of the General Election Committee which comprises of members of these two main political parties. And they remove me and not only me but others from our political coalition.

-And how are they monitoring you?

-I don't know how they are doing that; maybe they are using secret service. But they told me don't go to the countryside. But I was telling them that I am the leader of the coalition and all the leaders of political parties or coalitions are going to the countryside and they are trying to bring out their messages to those voters, so it's up to the people to decide. Let's respect their freedom of electing. But unfortunately all this approving that all cases against me will be politically motivated and it will go on for a least one year until the next year's Presidential Election.

-Do you personally feel scared or worried?

-No I am not. The more they will punish me the bigger the support of the people will be towards me and our coalition.

-What did the officers say to you when you were arrested?

They didn't say anything to me and they didn't say anything to my family members. They were just keeping the silence about my whereabouts so my whole family and many people here were very worried. I think it was kidnapping, it wasn't really an arrest or any legal arrest; it was illegal kidnapping. They were deliberately hiding; only kidnappers do this, only those who abduct people do this sort of thing. So the whole family for three days were trying to find me, phoning, calling all the authorities and they had switched off their phones. And only on the Monday did they allow to inform about where I was taken to and then all the letters that I wrote to the ordinary people, to my party members, to the members of the parliament, they had been confiscated by my supervisors. I told them you don't have this right, in the law it is written down that the letters should be sent to the address to which it was written to. They said the law says this but unfortunately my chief is ordering another thing. So I was saying to him and the others, you should follow the law, not the orders of your chief because your chief is giving an illegal order to you. The officer's chief was violating Mongolian law. He was saying 'I cannot do anything but violating the law because otherwise I will dismissed or sacked from my position and you have to understand I have family, I have children' .

-Do you think he was taking your side?

-Yes, psychologically he was on my side. So this is the system that exists here, it is not the rule of law but the rule of chief's orders. So whatever the chief, or the minister, or the chairman tells you what to do. So I didn't have any law defending me, or any other means to defend my rights. My family members didn't have any laws to defend them. There was only one way of fighting with them, there was hunger strike, although it was very destructive of my health I knew that that was the only means to turn to, to fight this system and regime. So I put forward some demands. Let's investigate the elections of 2008 and 2009, then to try to show to the people what was wrong and who was wrong. I have demanded that we made the justice system here completely independent from the authorities, the law enforcement agencies independent. I have demanded also that all the officials who illegally nominated on those posts within this law enforcement agency should be removed from office. I demanded that they have to deliver all the promises they promised in the election of 2008 and 2009. I demanded they should stop repressing their political opponents and release all the political prisoners including me. So they have strange regulations within the system and one of the strange regulations says that all the people who are on the hunger strike should be shown a full set of breakfasts, full set of lunches and full set of dinners. I don't know if that happens in the west. So they would deliberately bring in these dishes, very nicely smelling set of Mongolian dishes. And then they would say we have brought you buuz, we have brought for you khushuur, would you like to eat this and I was replying 'no I'm on hunger strike, you know this so please don't do this it's psychological torture, which is prohibited by human rights conventions. They said 'no no, we have this regulation signed by the minister, by our chiefs, so we have to follow this and bring in three times a day all the food deliberately for you, but you have refused this, so voluntarily you have refused to take the food so you have to sign this. So this torture was going on for all these eleven days when I didn't have a drop of liquid and slice of bread. Then they said 'we will forcefully feed you' and I said according to human rights conventions you have to give me an answer from the demands I have put forward, only afterwards should we talk about stopping this hunger strike, you cannot do this'. So I asked them, 'what does it mean to forcefully feed me?' They said, 'we will tie you up to your bed so that you don't move'. So I said again that this is a violation of Mongolian law. It's torture. And then they said, 'we will bring in a stick which doesn't break and doesn't bind and to one end of this stick we will tie a container with some oil and other things and then we will forcefully put it into your anus so that it reaches your stomach and then we will release the container and then we will bring out the stick'.

-What was the oil?

-I don't know, they just said so that your stomach will be full with all this strange sort of things. I said this is again a violation of my rights, this is an attempt to kill me and this is an attempt to forcefully damage my health so I decided to fight back and I was quite angry and you can presume that when you don't eat for eleven days you could be quite angry.

-So what did you do?

-So they videotaped this and they said 'we have here Mr.Enkhbayar, we did not violate any law but he is such an angry person, today he even cursed us and he said bad words and made some gestures and we are very much offended'. That was the videotape they took when I was trying to protect my life and my health and then disclosed this information which is a violation of Mongolian law, a law enforcement agency cannot release all the footage of what they have videotaped when I was on hunger strike. That was only for interior use. So they made this deliberately so that the law enforcement agencies could participate in this PR campaign against me. So that's why we say that Mongolian democracy is under threat we try to keep this democracy and it's not only up to the people of Mongolia, it's up to also the friends of Mongolia. So I was happy when I learnt there are a lot of friends of Mongolia. In the United States, The UK and in the United Nations who were worried about the situation and they call the current President and they made statements about the conditions in which I am kept in. And then it was used again by present authorities as an excuse to attack me. They said that Enkhbayar is complaining to foreigners and that the reputation of Mongolia is being damaged, I was saying to this, that it is not me who is damaging the reputation of the country it is the authorities that are. The reputation of the country is very important for people of the country so let's try to restore this democracy and then get the better reputation back. And they started attacking those foreigners who supported me in my hunger strike: Senator Dianne Feinstein, General Secretary of the United Nations Mr. Ban Ki-Moon and other foreigners who were in support of Mongolian democracy, not really in support of me but in support of democracy. I am quite sure that if I were the President of the country and if I had done the same sort of wrong thing to someone else, to my political opponent the same person would be against me, so it's not about against me or against Elbegdorj, it's about being against an authoritarian regime and in support of democracy.

-Do you think there will be protests or even a riot on Thursday and the days following the results?

-Well it's difficult to say. But certainly according to the mood in the society, the general public is very much against the Mongolian People's Party especially and to some extent against the Mongolian Democratic Party, people are not going to vote for these two parties especially for MPP. So if MPP makes a lot of votes and succeeds in winning the election of course there will be a very unhappy mood in the society. If the Democratic Party wins this election there will be a very big doubt in the society. So I think except for these two political parties winning the election for the other parties, especially for our coalition would be considered a surprise but positive surprise. So it's difficult to say whether there will be riots but certainly there will be very unhappy or very doubting mood.

-So do you feel that the population is moving towards support for you?

-Well according to the reception they showed to us, a very warm, a very emotional reception, a very friendly reception. So this makes us think that people emotionally support us but we do understand that there a lot of other factors which do influence the outcome of the election. The present authorities are distributing a lot of cash, they are trying to remove us from the list of candidates, they are trying to register non-existing voters on the addresses where they do not live, they are trying to put as many as possible civil cards for doing votes, threatening, all these things are being used by the present authorities to influence the outcome of the election. But if they do not do this and leave it up to the people to decide on their future as it is supposed to be like any other free democratic society then I think our chances would be very good.

-If you did win, what would the reaction be from the MPP and Democratic Party?

-Well, I think they will do whatever they can do to prevent us from winning this election. They will try to use all the votes against us. So it's very difficult to expect that we will be able to win. But the general public's emotion and positive reaction towards us does show that the basis for our success is already here in this society. But again unfortunately because many democratic values have been rejected and laws are not being observed here. It's diffcult to expect that there will be a simple outcome to this election. It will be much dirtier, much more difficult and many more frauds. Because they are the owners, the hidden owners of these mining projects. If they lose they suspect that maybe also they will lose those mining projects. They are not fighting for their posts, they are fighting for their mining projects, they are the hidden shareholders. So they are fighting against us to keep their stolen money. This is not just about competing at a free election, it's much dirtier and much more serious for them, they are defending their property which they have stolen from the people and that's why they spend a lot of cash from those mining projects to steal this election. For the last week they have spent millions of Tugriks to buy the votes.

-And how do they actually do that?

-They just give cash usually at nightime to ordinary people saying take this cash and give me your vote.

-But have you ever done that?

No, no. We haven't that money. We aren't in mining projects so we cannot find that amount of money to give cash.

-So you think it's more an election of who has the most money?

-Unfortunately yes. It's not about the future of the country, it's about corruption money used for the outcome of this election.

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Mongolia's Coal Deposits Draw Neighbors' Attention

TAVAN TOLGOI, Mongolia, June 26 (New York Times) — "All you need to mine here is a shovel," said an awe-struck Indian investment manager as he stood behind a barrier, along with dozens of international mining industry executives and other eager investors, gazing at the immense coal pit gouged out of the rust-colored earth below.

Coal may have lured the foreigners to this stretch of the Gobi, but that is just part of the buried treasure to be found now that this nation of livestock herders has started digging in earnest. Mongolia has not only enough coal to fuel China's huge demand for the next 50 years, but also vast troves of copper, gold, uranium and other minerals the world covets.

While Mongolia may be blessed by geology, it is cursed by geography. Landlocked between China and Russia, its three million people face a geopolitical quandary: Every path to prosperity leads through their mighty neighbors' territory. And Moscow and Beijing intend to make Mongolia pay dearly for the privilege.

That reality is abundantly clear here at Tavan Tolgoi. Beneath the earth lies the world's largest untapped coal deposit, only 140 miles from the Chinese border. By one measure, the most practical solution would be to work exclusively with the Chinese, since nearly all the coal will be hauled there anyway.

Mongolia, however, has other ideas. Fearing that China may gain undue political influence, the government has spent years in a diplomatic tap dance over who will get to develop an estimated 900-million-ton portion of the deposit, much of it prized coking coal essential to making steel. The two main bidders are Shenhua Energy, a Chinese state-owned enterprise, and Peabody Energy, a multinational mining giant from St. Louis. Filling out the mix are a Russian-Mongolian consortium and companies from Japan and South Korea.

Long a major donor and prime diplomatic ally, the United States is pushing hard on behalf of Peabody, and observers say the future of Mongolian-American relations hinges in large part on what happens in the final deal. China, eyeing the maneuvering by the Obama administration, is increasing the diplomatic pressure as well.

But even as the scramble for resources underscores the growing rivalry between Washington and Beijing for influence in Asia, infighting in Mongolia's bare-knuckle democracy, expected to reach a boiling point in parliamentary elections on Thursday, has thrown into turmoil efforts to forge an international mining agreement over Tavan Tolgoi.

"We're a small country sandwiched between two elephants," said Puntsag Tsagaan, a presidential adviser on mining. "We can't go to war and fight, so we have to secure our economic growth through diplomacy."

That kind of approach, however, is a tough sell for Mongolia's rowdy nationalists, who have grown increasingly powerful in the two decades since the country broke free from the Soviet orbit. And they have much to complain about. The taint of corruption clings to every government deal with a world power or multinational corporation. Horror stories about pastureland fouled by mining are staples of the Mongolian press, alongside tales of herders abandoning their flocks to work the mines. Most Mongolians have enjoyed little of the riches extracted from their land.

Which is why foreign ownership of their country's mineral wealth most riles Mongolians. Many are still upset at a 2009 deal awarding Ivanhoe Mines of Canada a 66 percent share of Oyu Tolgoi, the world's largest untapped deposit of copper and gold. Ivanhoe, whose majority owner is Rio Tinto of Australia, is hoping to open the mine next year after spending more than $4 billion on its development.

Parliamentary candidates have made it a major campaign issue, vowing that much more of the profits will stay in Mongolia this time. Lawmakers have already announced that every Mongolian will receive shares of a multibillion-dollar initial public offering for the state-owned company that runs another part of the Tavan Tolgoi coal deposit.

But without more foreign help, the mines will remain untapped. Mongolian officials say the deal on Oyu Tolgoi — which took six years of painstaking negotiations with just one company — was simple compared with handling the hornet's nest of competing agendas over Tavan Tolgoi's coal.

Mongolians know they are vulnerable to Beijing's near monopoly over the country's exports, being forced to accept an average of 30 percent less than their commodities are worth on the open market, analysts say. "If China closed the borders, we would starve to death," said Zolboo Bataa, 34, an account manager for a multinational construction equipment company in Ulan Bator, the Mongolian capital.

Beijing has also wielded its clout to exact political vengeance. In 2002, China shut its borders with Mongolia during an official visit by the Dalai Lama, the Tibetan spiritual leader; last year, Beijing pressed the government to cut short another visit. Such tactics make Mongolians fear that China might swallow up not just their economy but also their sovereignty.

"Mongolians see what's happening in Tibet and Xinjiang," said a local banking executive, who asked not to be identified because he does business with China. "They know the Chinese don't have their best interest at heart."

That anxiety turned to panic in April, when news broke that Ivanhoe planned to sell its majority share of a coal mine to a Chinese state-owned aluminum manufacturer. Parliament finally passed long-languishing legislation that prohibits foreign state-owned enterprises from buying up a majority of Mongolia's "strategic" industries unless granted prior government approval.

That law marks the latest step in the complicated political choreography aimed at appeasing a rising nationalist fervor while encouraging foreign investment.

To offset its reliance on China, Mongolia has sought to expand cooperation with the United States, in what the government calls the "third neighbor" policy. The United States has provided hundreds of millions of dollars in aid to Mongolia, though the bilateral teamwork goes beyond the financial. Washington doles out thousands of visas to Mongolian students, and Mongolia has dutifully sent troops to Iraq, Afghanistan and even Alaska, where they train with the National Guard.

Last year, the Mongolian president, Tsakhia Elbegdorj, met with Mr. Obama at the White House and dined with the first lady. Later, Vice President Joseph R. Biden Jr. visited Mongolia, holding talks with the prime minister and calling his host country a "shining example" of democracy.

The Obama administration is also focusing on economic development. "We want to be a part of the balance of trade," the United States ambassador, Jonathan Addleton, said in an interview, noting that his country had significantly increased its exports to Mongolia.

But the United States is also looking for a bigger return. Those briefed on internal discussions say that Washington recognizes that Mongolia will dole out its resources among various interests but insists that Peabody receive the lead role in developing the new portion of the coal mine.

"Tavan Tolgoi is the only project in Mongolia in which the U.S. has a dog in the hunt," said one American executive based in Mongolia. "What the Americans are saying is, 'We can't be your best friend and primary third neighbor if all the goodies go to China.' "

One reason Ulan Bator may be procrastinating is that any decision will undoubtedly leave some of the players feeling shortchanged. When information about the negotiations leaked out last year, revealing that Peabody and China were destined to be the primary winners on Tavan Tolgoi, Russia, Japan and South Korea were outraged. As the complaints mounted, the Mongolian government, desperate to control the geopolitical damage, shut down negotiations until after the elections.

"We're trying to make a deal with world powers that's in line with our national interest," Mr. Elbegdorj said in an interview. "Reaching a consensus is complicated."

To further help break Beijing's grip, the government has embraced a $7 billion railroad expansion through Russia that will give Mongolia direct access to more customers.

"Mongolia is without a doubt getting more respect from world powers," said John Johnson, an executive based in Beijing with CRU, a mining consultancy. "Because it's got something everybody needs."

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What is at Stake in Mongolia's Election?

By Tuya Nyam-Osor, Visiting Fellow, Foreign Policy, Center for Northeast Asian Policy Studies

June 26 (Brookings Institute) Amid important elections and transitions taking place this year in different parts of the world, it is easy to overlook the parliamentary election to be held in Mongolia on June 28. On that day, the country will choose its next government in one of the most consequential elections in its recent history. Consequential because―in a country with a 30 percent poverty level―the new government will be asked to manage the unprecedented revenues expected from its mining wealth in such a way as to benefit the many, not the few. As experiences elsewhere have shown, bad governance and mining wealth have rarely been a good mix for the fortunes of a developing resource-rich country. In the coming years, the challenge for Mongolia's newly elected leaders and the country as a whole will be to rise to the occasion and not squander the opportunity presented to bring prosperity to its citizens, strengthen the economic underpinning for a sustainable democracy, and consolidate its international status.

The gravest danger to Mongolia's brighter prospects comes, sadly, from corruption. This threat to democracy did not suddenly emerge with the arrest of a former president (later charged with corruption) in April 2012. Already back in August 2005, an Assessment of Corruption in Mongolia, conducted on behalf of the United States Agency for International Development (USAID) noted "the blurring of the line between the public and private sector brought about by an endemic and systemic conflict of interests at nearly all levels." The report noted the existence of a spoils system, and limited political will and political leadership to implement reforms. This report was a comprehensive assessment with important recommendations that should have triggered alarms. But in the absence of political will subsequent attempts to tame corruption, such as the creation of an anti-corruption agency and passage of a relevant legislation, did not yield the desired results. Politics was allowed to be dominated by interests seeking to attain personal gains, and the culture of permissiveness toward corruption became the hallmark of the 2000s. Transparency International's Corruption Perception Index (CPI) for Mongolia stood at 4.3 in 1999, went down to 3.0 by 2004, and down further to 2.7 by 2009. It has stayed there since. (The CPI is measured on a scale of ten to one; the higher the score the cleaner the country. In 2011 the top scorer was New Zealand at 9.5, Somalia and North Korea shared the lowest score of 1).

Concerns in Mongolia for democratic erosion due to pervasive corruption have long predated the recent efforts by some Western media to portray Mongolia as a dictatorship in the making by linking the arrest and the pending trial of a former head of state to the fate of democracy in Mongolia. A number of studies, surveys, and monitoring activities have previously been conducted on corruption, but the public continues to ask: Are the leaders listening? Are they acting? Concerns about democracy were also raised in the wake of the excessive reaction, largely under-reported, to post-election protests in 2008 when―in a stark reminder of the years of communism―four people were shot dead, and hundreds were arrested and convicted in an unfortunate declaration of a state of emergency. If the new government does not address these concerns about democratic erosion and begin to uproot the long-seated culture of tolerance toward corruption, then it will be difficult to ensure economic equity for the population and lay the foundations for a stable and lasting democracy. The challenge for the next government will be to restore public trust in government and to focus on such serious issues as poverty and the income gap, environmental degradation, urban mismanagement, poor infrastructure, and corruption which have kept piling up while the incumbent government was talking up IPOs and growth figures, and handing out cash to the impoverished populace. The past four years could certainly have been put to better use by addressing the governance and infrastructure shortcomings that may hold back investors. The new government will therefore have work cut out for it to restore investor confidence as well.

The element of proportionality introduced last year into the electoral system (which previously was based on first-past-the-post voting) may result in more seats in parliament for smaller parties, but the contest will essentially be between the two major parties, the Democratic Party (DP) and the Mongolian People's Party (MPP). In the past four years, however, instead of developing solutions, these two parties have been a major part of the problems noted above.

The DP, once a force for change, has been losing its vitality through self-inflicted wounds, including joining in coalition governments with the Mongolian People's Revolutionary Party (MPRP, renamed as the MPP in 2011, after removing the word "revolutionary" from its name). The first such government, formed in 2004, was forced by an almost split election outcome and did not last long. The second, in 2008, has caused serious damage to the DP's reputation as the "democrats." The decision to form a coalition government was explained by the two parties as the result of a desire to "bring the country together" after the tragedy of 2008 and to create an enabling political environment for negotiations with foreign investors on important mining projects. What resulted, however, was an almost complete loss of government accountability, absence of political checks and balances, and further entrenchment of corruption. Instead of bringing the country together, this arrangement led to overlooked delays in investigating the 2008 killings which still remain an issue in the 2012 campaign. Investment agreements in the mining sector, hurriedly concluded by the coalition government, continue to provide fodder for political populism. The coalition government was conspicuously silent on corruption and government ineffectiveness, allowing serious governance deficiencies to accumulate and fester, unchecked. This made the two parties into easy targets for populist attacks.

The DP's anemic posture has recently been challenged by a number of its younger leaders who have fought to restore the party's original identity as a champion of political pluralism. They have initiated a Conflict of Interest Law which came into effect this past May and should be critical in addressing political corruption. Earlier this year the DP left the coalition government citing predictable tensions and disagreements but also acknowledging the reality of a coming election. It is to be hoped that the DP will finally get its act together and deliver on its promise to promote integrity within its ranks, and clean up the politics of corruption and the economics of blanket cash handouts.

The MPP built its electoral fortunes on name recognition after the demise of communism in the early 1990s; it had been the ruling party during Mongolia's one-party communist era (1921-1990). Even after removing the word "revolutionary" from its name, it continues to claim the year of the Bolshevik takeover in Mongolia as its birth year. The MPP's perceived electoral invincibility and the veneer of respectability conferred by its link to a 90-year old name have attracted some unscrupulous people who have used it as a vehicle for personal enrichment. The MPP's dependence on an ownership of history rather than on a political credibility built on its own merits remains its major vulnerability. This was highlighted last year when the party's old name, MPRP, was appropriated by a new party formed by its former chairman, thus causing infighting within the MPP's ranks amid competing loyalties and possibly splitting their votes in the coming election. It is to be hoped that the MPP will find the courage to address the ambiguity of its situation and attempt to forge a new identity for itself that is more in tune with the country's new realities. By doing so, it will have contributed in a major way to bringing closure to the country's communist past.

The two major parties both, therefore, have to take a long, hard look at their respective situations and shake off the fog in which they have been engulfed for the past four years. (Fittingly, the combination of their respective acronyms means "fog" in the Mongolian language.) If recent polls hold, the DP and MPP will probably win the largest share of seats in the next parliament, but they should be aware that the country cannot afford another four years of business as usual.

The other parties running in the election have been minor players. One of them, however, the Civic Will-Green Party, has been a pioneering voice on anti-corruption issues. A coalition of parties, broken away from the two larger parties and led by a former president of Mongolia, is running on a populist platform based on promises to revise the major mining deals and redistribute wealth. A recent poll has suggested an increase in the coalition's popularity.

In the early 1990s, Mongolia was frequently referred to as an "unlikely place" for democracy to emerge. Democracy prevailed in post-Cold War Mongolia because it was willed into reality despite the harsh economic environment faced by a formerly socialist economy devoid of its major partner. It also benefited from the generous support of developed democracies. It is now time for Mongolian leaders to once again demonstrate clear vision and strong will in order to consolidate the progress made so far and correct the existing deficiencies. The country's economic prospects look far more promising this time around, and should be propitious for building the economic foundations for a sustainable democracy.

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Rising Inequality to Dominate Mongolia Polls

June 26 (AFP) MONGOLIANS will vote on Thursday to elect a new parliament which will have the task of distributing the spoils of a mining boom that has brought rapid growth but also rising inequality to the resource-rich nation.

Mongolia's economy has exploded in recent years, as a relatively stable political environment has drawn in foreign investors keen to exploit its vast untapped reserves of coal, copper and gold.

Foreign investment quadrupled last year to nearly $US5 billion, according to government data, but little of that has trickled down to the poorest of Mongolia's 2.8 million people.

The ruling Mongolian People's Party (MPP) and the main opposition Democratic Party both say they want to ensure a fairer distribution of wealth in the vast and remote nation, although neither has given any detailed indication of how.

"The issue now is how the parties will use the further proceeds of mineral wealth coming into the country," said Jargalsaikhan Dambadarjaa, a Mongolian political commentator and television presenter.

"One thing that is for sure is that they will not be giving out any more cash payments to anyone. We are tired of the conflict of interests and using public money for their political purposes," he told AFP.

Before the last parliamentary elections in 2008, voters were offered cash payments of up to 1.5 million Mongolian tugrik ($US1,130) as the leading parties attempted to gain political capital from the economic boom.

That practice has been banned this year. But what politicians do with the proceeds of foreign investment has become a major election issue, with more than $US1 trillion worth of mineral deposits yet to be extracted.

The vast wealth pouring into Mongolia has also led to accusations of large-scale political graft -- including against former president Nambar Enkhbayar, who was charged with corruption earlier this year.

Enkhbayar, who broke away from the MPP last year to form his own party, has also been barred from standing for a seat in parliament -- a move he says is politically motivated.

He denies the corruption charges and opinion polls suggest his Mongolian People's Revolutionary Party (MPRP) will succeed in snatching a significant number of votes from the MPP.

One poll conducted this month by the independent Sant Maral Foundation showed the opposition Democratic Party in the lead with 42 per cent of the vote, while just 28 per cent said they would support the Mongolian People's Party.

A coalition of Enkhbayar's MPRP and the Mongolian National Democratic Party (MNDP) was close behind with 24 per cent -- double the support they achieved in an April opinion poll.

Luvsandendev Sumati, head of the Sant Maral Foundation, said many Mongolians believed the ruling party had mishandled Enkhbayar's case, costing it votes.

The MPP -- Mongolia's oldest party -- and the Democratic Party have spent much of the last decade in power together as part of a coalition. Some in Mongolia see both parties as serving their own interests at the expense of an adversarial political system.

"People really don't like the parties because they have been working together for years," said Bayanjargal Oyuntuya Khatgiin, a 27-year-old Mongolian student who is supporting an independent candidate at this year's polls.

"They say that both parties are too close and that everybody has become corrupt."

Landlocked Mongolia, wedged between China and Russia, shook off seven decades of communist rule in 1990 without a shot being fired, and held its first elections in 1992.

Since then, its transition to a democratic capitalist state has been largely peaceful, although accusations of vote-rigging in the 2008 parliamentary elections resulted in deadly riots.

A range of new measures have been introduced in this year's election to boost transparency, including an electronic voting system.

Whichever party comes first, Mongolia's parliament -- known as the Great Khural -- will be under intense pressure to ensure the country's wealth is equally distributed.

"Economically, it (Mongolia) is incredibly unequal," said Kirk Olson, an environmentalist who has worked in Mongolia for 12 years.

"You have guys renting the airport at night so they can drive their sports car up and down the runway ... but at the same time you have six-year-old street kids. You have all sectors of life, but all living on one street."

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MPRP Vote as Indication of Populism

June 26 (Julian Dierkes, University of BC) Some days ago, I considered whether we might take the share of the party vote achieved by the MPRP in tomorrow's election as an indication of (a rise of) populism in Mongolian politics. Having had the opportunity to speak to a few supporters of the MPRP in the past several days of visiting campaign offices and candidates, I do think that support for the party indicates the appeal of populist and simplistic interpretations of developments and proposals for policies.

The Mongolian People's Revolutionary Party was Mongolia's governing party for the entire state socialist period, of course, and managed to transform itself into a political force that continued to dominate democratic politics as well, as Morris Rossabi has described in his 2009 Pacific Affairs article, "The Transmogrification of a Communist Party". Since the publication of this article, the MPRP has been transmogrifying further.

In 2009 Enkhbayar lost his bid for re-election as Mongolia's president following a campaign that suggested that the MPRP was not fully behind their candidate. Partly to avoid any wrangling and unrest about the election results, then-PM Bayar conceded defeat in this election very quickly and Enkhbayar was further abandoned by the party. This clearly left him feeling very aggrieved. In 2010, party leader and prime minister Batbold received support from the party for his decision to rename the party Mongolian People's Party (MPP or МАН).

Enkhbayar at this point decided to spin off his own party and successfully fought a legal battle to be allowed to use MPRP as the name for this new party. The party has thus assumed the mantel of a 90-year history at least in part from the MPP which continues to control the party's resources, logo, etc.

In the current election the MPRP has formed a coalition with a minor party, but is really emerging as Enkhbayar's party, particularly given the saga of his arrest on corruption charges, and subsequent denial of his candidacy on the MPRP's party list.

In speaking to local campaign workers it is clear that their attachment to the MPRP is an attachment to Enkhbayar's leadership. Some of them even referred to the party as "Enkhbayar's Party" rather than MPRP.

It is also clear that the message that the party faithful have been given/are spinning out of Enkhbayar's arrest and subsequent trial is one of resistance to international and capitalist forces and a role for Enkhbayar as a champion for the common people and for the homeland. These are all the hallmarks of populism and elements of resource nationalism as well.

Most campaign offices that we visited were staffed by elderly Mongolians. While they were quick to assure us that the MPRP is a very young party, this was not at all evident in the campaign offices. A campaign rally we attended on June 25 on the western outskirts of Ulaanbaatar was also dominated by the elderly, though it included many younger campaign workers who were surely paid, as they are by other parties.

One campaign worker we met in the countryside was perhaps most eloquent in elaborating Enkhbayar's appeal when she spoke of the fascist regime and oligarchs that were after Enkhbayar and the need to restore ownership over mineral resources to the Mongolian people. While the party can hardly be held responsible for the statements of an individual campaign worker in a somewhat far-flung location, the sense we got from less explicit discussions with other campaign workers was also one of a simplistic understanding of ownership of mineral resources, due process of law, corruption and political leadership.

When the results of the election will be announced, I will thus be interpreting the share won by the MPRP as an indication of the appeal of populism. Other elements in the MPRP vote will of course also be some conservatism in the countryside where the MPRP brand will carry a lot of weight and some protest given Enkhbayar's role as a thorn in the established parties side.

If the MPRP emerges as the third largest party in the election and if this translates into a significant number of seats (most likely largely through proportional representation, rather than from first-past-the-post districts), the party will become a loud voice for populism and resource nationalism in the next parliament.

[I realize that this post will quickly generate a response from Enkhbayar's very efficient and professional PR squad, masquerading as an "ordinary Mongolia who has been a long-time supporter of the DP". Many colleagues and also numerous journalists have been receiving PR packages and reactions to things we write for some weeks now. I want to emphasize that I do not consider myself to be "anti-Enkhbayar" but that I am trying to describe my (limited) observations. The one time I met Enkhbayar when he was president he was certainly friendly and also gave a nice, though largely ceremonial (appropriate to the occasion) speech. I will approve comments on this post that make a substantive point, but not those that merely rant and accuse me of various sources of bias.]

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The Significance of the Ulaanbaatar City Council Election

June 26 (Byambajav The importance of the Ulaanbaatar City Council election was never as high as this year's. This is apparent from the extent of election campaigns, media coverage, and the number of parties and candidates.

The changes in the election procedures, namely the organization of the City Council election concurrently with the Ikh Khural election and the introduction of the party-list system, have important implications.

The Democratic Party and other opposition parties have never been a strong voice in the City Council. The same is true for the aimag and district councils. The Mongolian People's Party has held a majority in the City Council during the past twenty years. Nine of the current 45 members of the City Council are from the DP and the remaining from the MPP.

Recent public opinion polls indicate a strong likelihood that the DP will gain more seats in the Ikh Khural than other political parties. The DP is striving to gain much from this opportunity and win the City Council Election. E. Bat-Uul's decision to lead the DP in the City Council Election promises more votes for the DP. Bat-Uul who was elected from Selenge province in the 2008 Ikh Khural election has broad support among the electorate and the DP members. He competed for the nomination for the Presidential Election from the DP in 2009. Recent polls show that he is among the top ten politicians in Mongolia.

More importantly, Bat-Uul's ideas and activities on the land rights seems to be more appealing to the public and ger district settlers in particular. He has been a strong opponent of the policy to move ger district settlers into apartment buildings by either exchanging their land by rooms in those apartment buildings or buying their land directly. The DP's election campaign for the City Council is mainly framed by Bat-Uul's idea that building infrastructure (water and plumbing infrastructure etc.) for ger district settlers to allow them to build their own houses and apartments is a better way to deal with the problems of air pollution and overcrowding.

A 'leaked' survey done by the MPP's research institute in 2011 ranked the most urgent problems in Ulaanbaatar:

Smoke, air pollution 58.0
Drinking, alcoholism 51.7
Unemployment 42.2
Inflation 34.7
Poverty, street people 32.9
Crime, burglary 29.1
Building and fixing new roads 22.4
Street lighting, city planning 21.2
Transportation deficiency 17.6
Bureaucracy in the district and sub-district administration 17.2

D Munkhbayar, the mayor of Ulaanbaatar city and the chairman of the MPP of Ulaanbaatar city, is leading the MPP in the City Council Election. The MPP seems to be trying to send a message to the lectorate that Munkhbayar is an experienced manager who can handle the complex urban problems.

Last week the Mongolian National Broadcasting (the official, state-funded television channel) organized a debate among the political parties in the City Council election. It was the only official televised debate during this election campaign (either of the Ikh Khural and the City Council). Only 2 minutes were given the participants to answer to each question from the organizers. So it was not truly a debate. The impression that I had from the presentations and answers of the party leaders during the debate was that there were so much overlap among their ideas and promises and so little to draw a distinction except Bat-Uul's repeated message on the infrastructure for ger districts. An interesting message that some party leaders like Gankhuu from the CWGP was that Ulaanbaatar city is their 'local homeland'. Like Bat-Uul, Gankhuu's parents are those people who settled in Ulaanbaatar in the 1950s or earlier.

Being organized concurrently with the Ikh khural Election, the City Council Election is more likely to have a higher voter turnout this year than the previous elections. Electoral support for the MPP has been strong among the elderly and their relatively high levels of participation in the local council elections seemed to be have a crucial role in the MPP's wins. The DP seems to have relatively broader support among young people, but they seem to have little interest in the local elections. The CWGP seems to have the same problem. So, these parties may gain more from a higher voter turnout.

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MNMA Chairman: 'We do not need to involve uranium with war and the military'

June 27 (UB Post) The following is an interview with the President of Mongolian National Mining Association, D. Damba, on uranium reserves and its usage.

-When we think about uranium, war, military and nuclear power comes to mind. But from a geological perspective, what is uranium?

-It is just an ordinary mineral resource. It does not have any dangerous attributes. But once it is extracted and processed through chemical means, a highly radioactive compound named uranium-235 is created. But in its natural form, it is completely harmless.

-Does Mongolia have any experience with uranium exploration?

-During our socialist era, not much of our State money was dedicated to uranium explorations. Yet with Soviet funding, uranium located at the Mardain Mine in the Dornod Province was extracted and transported away. There used to be a village based on the mine. Mongolia did not give much attention or relevance to this mine and in the end forced all the Russians there to leave Mongolia. Afterwards, we never used that mine again, but we could have kept the village alive and mined the uranium there ourselves. The schools, apartments, hospitals and complexes in the village were completely looted in the end. The Russians took their belongings and left, and although there were guardsmen at the village, they were not effective in preventing looters from doing what they wanted to do. Since that time, foreign investment companies have been conducting explorations in that area.

-The total Mongolian uranium reserves have not been determined yet. Currently, how much of these reserves does Mongolia have?

-Private companies have been studying our uranium mines. According to them, approximately 140,000 tons of uranium is located in Mongolia. It is a small amount. Uranium is a mineral resource that is both economically and strategically beneficial, but this sector has been left alone, without any monitoring. Uranium was seen as an exclusive mineral, and there is a separate law dedicated to it – the Law on Nuclear Energy, rather than including it as a mineral in the Law on Mineral Resources. It was not the best thing to do, as the Law on Nuclear Energy is only very basic and not complete. Yet, we cannot create different laws for every mineral. Even during coal extractions, uranium veins have been found and what are the miners to do then? Stop extraction because there is a different law in effect for that mineral?

-How effective is uranium compared to coal in terms of generating energy?

-Uranium energy is very effective economically, and can produce several times more energy than coal. Its effectiveness can be proven by looking at many countries that use nuclear power plants today. In my opinion, the State should approve the total amount of uranium resources in the country and grant permission to extract it in an environmentally friendly way as soon as possible.

-There are people who oppose nuclear energy, what do you say to this?

-The Chernobyl explosion happened due to unsatisfactory safety procedures. The nuclear power plant accident in Japan was caused by a natural disaster. This does not mean that the whole world is against the use of nuclear power as energy. If safety requirements are properly met, nuclear energy will not directly pollute the environment. But if it is used wrong, it could be the most dangerous energy produced. Many countries use nuclear energy today with no major disagreements on its use. But there are some frustrations and criticisms regarding its usage as a nuclear weapon. For example, people do not believe Iran's assertions that it will only use its uranium in a peaceful way - most likely this is because Iran is an Islamic country. But for Mongolia, a country that is not so suspicious and with no modern history of harming anyone, we should be able to use it as a nuclear energy. It is not necessary to use uranium as a weapon or have it involved in the military.

-Mongolians tend to think that uranium mining could be environmentally harmful. Is this true?

-No, as I said uranium mining and its ore, in its natural condition, is completely harmless. We cannot blame our citizens for being cautious towards uranium mining and exploitation as this mineral is relatively new to us. Companies involved in uranium mining and processing need to be responsible for educating the public and giving more information to them about uranium, its safety, relevance, risks and its extraction process.

-Will there be a nuclear power plant built in Mongolia?

-As a professional in this sector, I would say that it would be the right thing to do, to build a nuclear power plant in Mongolia, but we must think about whether this is necessary. I speculate to myself over whether we are responsible enough to build a nuclear power plant. We are of course, completely new to this. The most important thing to keep in mind is safety and responsibility.

Additionally, Mongolian coal reserves are ranked very high among other countries, so for the time being energy from coal should suffice. Plus, there is quite a potential here in Mongolia to utilize energy from the sun and wind. Germany for example, supports 20 – 30 percent of its total energy supply with renewable energy. We have so much potential in other fields of energy production, so Mongolia does not need to rush to utilize a much more dangerous source of energy. Uranium exportation is fine for now.

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Mongolia seeks mining advice in WA

PERTH, June 27 ( - Western Australia's training providers was assisting a Mongolian delegation in government-industry relations to help meet the country's demand for trained miners.

Training and Workforce Development Minister Peter Collier said that West Australians could be proud that state training providers were recognised to be of a very high standard throughout the world, and could be used as a template for developing nations to structure their own vocational training platforms.

"With Western Australia's experience in mining and resources, we are uniquely positioned to offer the world's best skills training advice and assistance to Mongolia's training centres," Collier said.

He noted that Mongolia's skills sector was currently experiencing peak demand with the development of the Oyu Tolgoi mine, with more than 14 000 local Mongolians involved in the construction phase.

"Once completed, the massive project is expected to account for more than 30% of Mongolia's gross domestic product and is forecast to be one of the world's largest producers of copper and gold.

"On that basis alone, the Oyu Tolgoi mine presents great opportunities for Western Australia's vocational training sector to provide accredited skills expertise to our Mongolian counterparts," Collier said.

"Western Australia is a textbook example of how governments, when working collaboratively with industry and vocational training providers, can ensure that workers are highly skilled, highly motivated and job-ready to international standards."

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The Current Political Landscape of Mongolia

June 26 (Mongoliana) The parliamentary and provincial elections of 2012 are to be held on the 28th of June. In these upcoming elections, 28 candidates will be chosen from a closed list and 46 (Mogi: 48 seats) will be chosen through a majority vote. One of the main features of 2012 elections is the rights given to the Mongolian civilians who reside abroad. Mongolians living and studying abroad are able to register online and vote through 39 embassies and diplomatic consulates that operate overseas. According to 64.9% of those residing abroad had already voted (Mogi: I think the correct version was 64.9% of those REGISTERED to vote overseas), the votes are being sealed and the results will not be available until the general election day.

At the center of the current election news is the treatment of former president Nambariin Enkhbayar. According to the latest news, the General Election Commission declined former President Enkhbayar's request to participate. Public opinion has swung in favor of him and his party in light of recent his treatment. 

The new election law restricts candidates from buying votes, promising money or using any other means of gaining illegal votes, also the feature to count votes automatically. In the past 6 months, the General Election Commission has been busy setting up a limit for election campaigns and in early March the limit has been set up for 9063,7 million tugriks. Even so, people are still doubtful if the elections will be fair due to heavy campaigns ads on the streets of Ulaanbaatar and information bulletins being distributed to the general population. According to UB post:  In the elections of 2012 eleven parties and two coalitions are registered to the General Election Committee.

Overview of Political Structure

Politics of Mongolia takes place in a framework of a semi-presidential representative democratic republic, and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and parliament. The Judiciary is independent of the executive and the legislature. 

The President: The president of Mongolia is the head state of Mongolia. The President has the power to nominate a candidate for the office of Prime Minister (Mogi: I think the correct version is a candidate is proposed to the President by the ruling party/coalition, upon consent, President submits it to a simple majority vote. If consent not given, vote is submitted directly to parliament for a simple majority vote), veto the parliament's legislation, approve judicial appointments, appoint the Chief Judge of the Supreme Court of Mongolia, chair the national Security Council, act as commander in chief of the armed forces and nominate the Prosecutor General. Current President of Mongolia is Tsakhiagiin Elbegdorj. (As of June 14, 2012) (Mogi: Presidential elections are a year after Parliamentary)

Prime Minister: The highest member of the Mongolian government's executive arm, and heads the Mongolian cabinet. The Prime Minister is appointed by Parliament, and can be removed by a vote of no confidence. The Prime Minister appoints the governors of the 21 aimags (regions) of Mongolia, as well as the governor of the capital, Ulaanbaatar. (Mogi: Hmmm, not the real case, the local representative councils select a governor but needs PM's approval) Sukhbaataryn Batbold is the current Prime Minister of Mongolia.

State Great Assembly (Parliament): Mongolian State Great Assembly is the unicameral Parliament of Mongolia located in the Government Palace. It consists of 76 members, elected for a four year term in single-seat constituencies. (Mogi: the author already forgot what he wrote at the beginning. This year 28 is proportional, 48 is majority in 26 districts varying from 1-3 seats) The Assembly has the right to draw up new laws in conjunction with the government, approve the yearly budget, validate election of the president, confirm the prime minister and the other ministers and has the power to declare war.

1.    Mongolian People's Party (MPP)

a.    Leader – Sukhbaatryn Batbold

b.    Formerly called the Mongolian People's Revolutionary Party

2.    Democratic Party (DP) 

a.    Leader – Norovyn Altankhuyag

b.    Formerly called the Mongolian People's Revolutionary Party (Mogi: misplaced line)

3.    Civil Will-Green Party (CWGP) 

a.    Leaders – Dangaasurengiin Enkhbat, Sanjaasurengiin Oyuun (Mogi: there's a third CWGP leader Mr. Sambuu(giin) DEMBEREL, current chairman of Mongolia's chamber of commerce)

b.    Merged from the Civil Will Party and the Mongolian Green Party

(Mogi: perhaps should've mentioned the new MPRP here)

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The Impacts of Mongolia's "100,000 Homes Project"

June 26 (Mongolian Properties) Astronomical mortgage rates in Mongolia have made the prospect of owning a house unattainable for the majority of Mongolians in Ulaanbaatar. With commercial bank mortgage rates hovering around 16-19.2% APR as of early 2011, it is easy to see why only 9% of real estate transactions in Mongolia are currently mortgaged. In a country where the average age is 20-24, the availability of urban housing and infrastructure is critical for the Mongolian economy as well as to ensure sustainable capital growth yields for real estate investors.

On November 2011, the Mongolian Housing Finance Corporation announced it would provide first-time homebuyers with access to mortgages capped at an interest rate of 6% on a 25-year term for apartments of less than 50 square meters in size. This initiative, a part of the "100,000 Homes Project", seeks to help low-middle income Mongolians relocate out of the countryside and Ger Districts that currently house approximately 700,000 of Ulaanbaatar's 1.2 million citizens around the periphery of the city.

In a market dominated by cash transactions, Mongolian borrowers still tend to make large down payments, with commercial banks such as Khan BankBank of Mongolia (BoM) (Mogi: an innocent mistake?) and Trade Development Bank (TDB) requiring initial deposits of at least 30% of the total value of the property. In order to finance this project, the Mongolian government has asked the state owned Development Bank to raise MNT 200 billion, while commercial banks will also serve to facilitate some of the mortgage lending.

With currently only 116,000 total residential units in Ulaanbaatar, the 100,000 Homes project is destined to expand the market for low-middle income families seeking residential space in the city. However, only 2% of all mortgaged transactions in the country are nonperforming. As the requirements for down payments and credit requirements are lowered, commercial and government lending establishments will have to make adjustments to hedge against the increased risk of credit default and foreclosures.

Will Tindall, Chief Communications Officer of Asia Pacific Investment Partners, states, "The 100,000 homes project coupled with the increased penetration of the availability of mortgages, will fundamentally change the options available to nearly every Mongolian. The traditional three tiers of housing – ger/soviet block/western style apartments – will begin to reside as we see the ger communities on the periphery of Ulaanbaatar shrink". The 100,000 homes project will undoubtedly serve to augment the already increasing presence of the middle class in Ulaanbaatar, as well as push up capital growth in Mongolia's luxury real estate properties. With FDI totaling 5.3 billion and GDP growth at 17.3% in 2011, the success of the 100,000 homes project and subsequent emergence of the Mongolian middle class will be a true testament to the magnitude and sustainability of Mongolia's economic strength going into the future.

To learn more about how you about investing in Mongolian real estate, visit Mongolian Properties for more information. For all of your news and updates on current events in Mongolia, visit Mongoliana, a news portal that covers everything Mongolia.

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"Mogi" Munkhdul Badral

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