Is Mongolia Fighting or Preparing to Fight Corruption?

Posted on March 21, 2012 by mendee

By Mendee Jargalsaikhan

Mongolia seems succeeding to create the legal environment to tame the corruption by institutionalizing its efforts.  But, these laws and any agencies will be powerless in the absence of political will and interest to clean up the Mongolian public service before massive mining revenues appear from 2013.

The Transparency International’s corruption perception index of Mongolia again regressed from 116 to 120 in 2011.  It was 43 in 1999. Of course, we can argue there might be some deficiencies in the measurements or analysis of the Transparency International.  Because some may argue, Mongolia is doing so well in eradicating the corruption – joined all international endeavors, passed laws, established a special organization to deal with it.  In January, Mongolia adds another new bill on preventing conflict of interests into the collection of laws to tame the corruption.

It seems these laws powerless without political will and commitments.  Or just, attempts by shrewd politicians to ease the public outcry domestically and international pressures, if there is any.  Many politicians (not all) seem to be concerned about slices of larger pies, which will be generated from the mining revenues.  Therefore, they are not ready to fight against corruption, but ready, albeit reluctantly, to approve the laws with lesser penalty and potentiality of execution.   Two examples could be the laws on anti-corruption and conflict of interests.  Both laws were passed by the parliament, but only a handful members of the parliament pushed for passage with strong public support.  These pressures created an atmosphere for legislators that they can not oppose these laws.

The Law on Anti-Corruption established the Anti-Corruption Agency.  The international and particularly domestic audience perceived this agency as the frontline law enforcement agency in fight against corruption.  But, one looks carefully the law, it will be clear that legislators did not want to give law enforcement powers to this organization.  It looks like a corruption study think tank to develop corruption index, policies, programs, and to do analysis.  Or, an educational institution to increase public awareness of corruption and to teach public servants to compile their incomes. Maybe an archive to collect income reports of public servants. And, a little investigative power is given to the agency.  Can a small agency fulfill all of these tasks – which are certainly belong to other government agencies?  Civil Service Commissions can do compiling of income reports of public servants.  The Ministry of Education can do enlightenment tasks.  Any non-governmental organization do the research and indexing.  So, let this agency just conduct independent criminal investigation and eradicate corrupted officials from the public services.  Because they haven’t given this important power and politicians (un)intentionally crowded their “to do list,” now they are easy target for the “blame game.”  The first chief of the agency died in Australia – the case remain unsolved.  The second director ousted for doing surveillance, although the parliament never endorses the Prosecutor’s Office’s decision.  Now a new team is in position.  In addition, it has a 15 member board appointed by the President advises the Agency.  Although any judiciary and Presidential posts should be apolitical, but the President is nominated by the political party and then gets power to nominate the Prosecutor General, who has enormous power over the Anti-Corruption Agency.

The second law was indeed a success – because this was the first time Mongolia succeeded at least on the paper to disconnect business and political interests.  Politicians are now aware of the existence of the conflict of interest law.  If we get lucky to have many politicians with political will and interest, the law is ready although the punishment is soft.  Because it was just before the upcoming parliamentary election, members approved the law; otherwise, there will be consequences.  The initial bill was intended to be valid from July 15, 2012 – which means people who get elected in the parliament or public posts would not dodge from this bill.  However, the President veto-d that date and suggested to implement the law before the upcoming parliamentary election in June.  Now, again, parliament members reluctantly received the Presidential veto – agreed to accept its implementation before the election.  The law also changed the term for public servants.  The public servants were legally labeled as “state servants,” but they will be called as “public servants” who are serving for “public interests.”  One would see it as a conceptual change, but only a few members of the parliament like Temujin explains the essence.

These are indications of tightening, if not at least, setting the trap, for corrupted officials to survive and misuse public money.  However, enforcement is not coming alone.  The Parliament Member Kh. Battulga, a former member of the coalition government, reported on several occasions about domination of the major business groups.   A former President N. Enkhbayar and incumbent Member of Parliament and Minister of the Justice and Internal Affairs Ts. Nyamdorj engaged in dyad recalling each other’s connections in corruption through several media interviews. [Also, there is a new dyad between Kh. Battulga and Ts. Nyamdorj in regards with infrastructure projects and the growing MCS’s influence in politics.]  A Korean newspaper reported the current government officials sold a land to Korea, but reported in Mongolia as leased.  Japanese and Mongolian media are disclosing about secret negotiation involving the Mongolian, Japanese, and the US governments on creating nuclear waste dump in Mongolia.   None of these issues explained properly to public, except Mongolia’s stance on non-nuclear principles.

The positive note is that Mongolians freely criticize the government, but the sad note is the public officials are not responsive and reactive to public inquiry and for their actions.  Some politicians may be just waiting for the good time to bust his/her opponents – so they need to get a hold of key government institutions, which could serve for their purposes.  Only way ahead is to give more power to government law enforcement agencies and judiciary rather than politicizing them.  Professionalism must succeed the populism and corruption.

Posted in Corruption, Democracy, Global Indices, Governance, Law | Tagged | 2 Comments

Survival of New Defense Minister and Other Issues of Controling the Security Forces

Posted on March 12, 2012 by mendee

One of the youngest cabinet members, J. Enkhbayar, has survived a “no-confidence” vote in parliament on March 9, 2012 after filling the Defense Minister’s seat in the post-Coalition government.  At a quick glance, it could be easily interpreted as an election campaign tactic by the Democratic Party – raising accusations over the newly-appointed Defense Minister’s careless statement about the possibility of using the military during a state emergency.   A senior member of parliament of the Democratic Party, R. Gonchigdorj, and other key Democratic Party members called for the resignation of the Defense Minister, but it was clearly impossible for the Democratic Party to succeed with this motion considering the majority of the Mongolian People’s Party in parliament.

At the same time, the Civil Service Commission intervened in the Defense Minister’s attempt to influence in appointing the State Secretary of the Ministry of Defense – the highest professional military and bureaucratic post at the Ministry of Defense. The Civil Service Commission appointed the new State Secretary from the short-listed four potential applicants.  This closes ongoing attempts to bring a party-affiliated officials to the Ministry’s important bureaucratic post.  Surprisingly, it happened in the military first – which indicates the growing influence of the Civil Service Commission.

The recurring trial of police chiefs related to July 1 (2008) event has now been postponed in order to call all high-ranking officials, including the former President, Prime Minister, and Minister of Internal Affairs and Justice in 2008 as witnesses. Upon request, former President N. Enkhbayar officially asked the Chairman of the Parliament to change the status of government materials to unclassified on March 9, 2012, so that he could attend as a witness in an open (live) trial.  [On July 1, 2008, five people were allegedly shot to death by the police during the post-election demonstration.]

Related to Mongolian security institutions, the Government’s proposal to amalgamate three different schools – the Border Troops Academy, the National Intelligence Academy, and the Police Academy under the name of the Internal Security Academy caused a round of criticisms from the public.  The most outspoken criticism came from the President’s national security advisor, Batchimeg.  She warned the Government to re-consider this decision and opposed to empower the Ministry of Internal Affairs and Justice as same as the Internal Security Ministry during the communist regime.  Although the government’s logic may be in line with the its attempt to reduce the number of universities and to improve efficiency and effectiveness.

Although these events might be explained in the context of heated political campaigning toward elections, they also tell us the different story.  The trial of the police officials of the July 1 event, no-confidence vote over the newly-elected Defense Minister, appointment of the State Secretary of the Ministry of Defense, and backlash against empowerment of the Ministry of the Internal Affairs and Justice are signs of healthy democratic society, where the public and politicians are concerned over the use of and politicization of the security institutions.  Like many post-communist states in Eastern and Central Europe, Mongolian security institutions played a quite constructive roles toward democratization process – none opposed or challenged the democratically-elected public officials.  However, there are always been attempts by political parties in power to insert their influences in those institutions for their short term political goals.  These events revealed attempts of political parties – certainly calling for more clear-cut institutionalization of the security forces – away from the political influence.

 

 

Posted in Civil Society, Democracy, Security Apparatus | Tagged | Leave a comment

Mongolia – Without Vodka, Cheers With Milk

Posted on March 9, 2012 by mendee

By Mendee J

Having lived through a two-decade democratic transition, people now recognize behaviours of politicians and distinguish the false promises from the practical ones.  Therefore, it is also becoming difficult for political entrepreneurs to find something achievable in highly competitive political environment.  But, they are always good in engaging in the “blame game”.

One successful and touching initiative is the fight against the vodka, a drink inherited from the Soviet past that has dominated Mongolia during the economic transition of the 1990s because the only successful light industry and business was the distilling business and vodka was included in the family ratio.  President Elbegdorj proposed a toast with milk in the New Year’s eve (December, 2010) live to the country and initiated the Vodka Free Mongolia campaign.  He asked Province Governors not to serve vodka in any activities where he is present and encouraged the public to join in the campaigns.  Now people are beginning to embrace the “Vodka Free Wedding”, “Vodka Free Graduation Ceremonies”, “Vodka Free Women’s Day Celebration of March 8”.  This campaign has received support from the public and seems to be gaining momentum.

Although this might be linked to political ambition, an influential Member of Parliament, “Jenko” Battulga, has pushed a draft bill to prohibit alcohol and cigarette manufacturers and people connected with drug (narcotics)-related crimes from running in parliamentary elections.  He submitted his draft for the third time for consideration of the parliament.

These are the most practical initiatives to reduce the impact of vodka on Mongolian society.  According to the Police Department statistics, about 70 percent of crimes were perpetrated by unemployed people and 20-30 percent involved intoxication (Reports of the General Police Department of Mongolia).

The military has been successful in strengthening anti-alcohol policies; for instance, any alcohol-related incident during deployment will now result in discharge or severe demotion.  Now these initiatives need to be endorsed by the government and reflected in the legislation rather being used/perceived as political legacies of Elbegdorj or Battulga.  Can the state prohibit the parliament and government to use taxpayers’ dollars to procure and to serve alcohol?  The State of Alaska has done it, why not Mongolia – public officials can pay for their alcoholic treat from their own pocket if needed, but not from ours.  Then, Mongolia can present its official disconnect  from the detrimental Soviet practice – shine as an example for many others.

Posted in Social Issues | Tagged | 2 Comments

Guest Post: A Young Democracy Seeks Investors

Posted on March 9, 2012 by JDierkes

Adam Simpson is a Master’s student in the Human Security and Peacebuilding program at Royal Roads University. As a change management specialist and project manager with the Aga Khan Foundation, he is currently overseeing the development of a healthcare infrastructure programme in northern Afghanistan.

This post is based on a policy update to the Canadian Defence & Foreign Affairs Institute which also covered the regulatory framework of resource management for Afghanistan.

Mine-golia: A Young Democracy Seeks Investors

Mongolia has vast and largely untapped mineral deposits of copper, gold and coal, but until recently, has remained largely impoverished. With several big mining projects on the horizon, however, there is promise of an economic boom that will present the government with a very real challenge: how do you manage to successfully exploit these resources without further destabilizing the economy? And how will their proximity to China factor into the equation?

The International Monetary Fund foresees a double-digit annual-growth rate in Mongolia for the next several years, and a quadrupling of GDP per head – from a mere $2,000 – by 2018 (Anonymous, 2010). Two mines in Mongolia’s southern Gobi region – Oyu Tolgoi, a copper and gold deposit, and Tavan Tolgoi, a coal mine – are expected to provide much of the new wealth, both of which will include road and rail links to Mongolia’s hungriest customer: China (Anonymous, 2010).

Legal Constructs

Currently, the Mongolian government stands to profit handsomely from Oyu Tolgoi, of which they own one third (Anonymous, 2010). But in a country where politics is based on patronage, such a windfall could spell disaster. With swollen government coffers, vote-buying and corruption could thrive, and even “virtuous public spending” could push up inflation (Anonymous, 2010). Further, if their economy becomes too dependent on mining, Mongolia becomes highly vulnerable to price shocks and market fluctuations. One recent construct is the adoption of fiscal stability law that sets indices for commodity prices for budgeting purposes. When prices go above the index, excess revenue will be stored in a “stability fund”. If prices fall, the government can tap the fund to cover its costs (Anonymous, 2010).

Other measures are also being implemented to curb the risks, including the passing of new anti-corruption legislation, as well as promises to help boost investments in non-mining sectors, including tourism, finance and outsourcing so that the country does not become dependent on a single industry.

Proximity to China

Mongolia’s neighbour China is one of the largest global consumers of coal and rare earth minerals (Anonymous, 2010). With healthy diplomatic ties established between the two countries, Mongolia is uniquely positioned to start undercutting China’s existing coal suppliers such as Australia and Indonesia, pending the development of appropriate infrastructure.

Analysts estimate that when the Tavan Tolgoi mine opens, Mongolia could deliver coal to China for under $100/tonne, less than half of the $220/tonne for Australian coal (Anonymous, 2010). The main concern, however, is whether or not Mongolia can avoid becoming too economically dependent on China and their insatiable appetite for resources, and grow their mining industry in a sustainable way. To date, they have not been able to establish a solid foundation to achieve this.

Foreign Direct Investment: Shifting Frameworks

Mongolian mining frameworks have historically been poorly defined, shifting dramatically between a keen focus on FDI and a state-protectionist model. After the fall of the Soviet Union – its primary trading partner until the early 1990’s – Mongolia recognized the need to attract new investors (Anonymous, 2011).

Mongolia’s 1997 Minerals Law aimed to attract FDI by reducing investment taxes, strengthening land tenure rights, and increasing transparency, and in 2002, the government further lowered royalty payments on all minerals to 2.5% (Anonymous, 2011). As a result, FDI in Mongolia grew 2,200% to an annual total of $344m in 2006. This economic boom was highlighted by the discovery of the world’s largest copper and gold deposit at Oyu Tolgoi in the south Gobi Desert (Anonymous, 2011), but the government was starting to get nervous about the increasing foreign dominance in the mining sector.

A 2006 revision of the Minerals Law shifted the country to a significantly more protectionist model (Anonymous, 2011). The new regulation doubled royalty rates, imposed a Windfall Profits Tax of up to 68% on copper and gold, and reserved the right for the government to claim ownership of “strategically important” deposits (Anonymous, 2011). It also allowed the state to take up to a 50% equity stake in deposits discovered with government assistance or 34% for privately explored deposits (Anonymous, 2011). But investor backlash, coupled with the spread of the 2008 global financial crisis drove down demand and prices for Mongolian commodities, and in 2009 legislators repealed the Windfall Profits Tax and replaced it with a sliding scale of royalties, effective early 2011 (Anonymous, 2011).

The Role of China: What Should it Be?

The extent of China’s role in the context of growing Mongolia’s national mining industry is far too complex to be intimately addressed in the scope of this paper, but by using China at a high level to illustrate the influence foreign direct investors will have in the future of this emerging economy was worthy of a brief analysis. As Mongolia will continue to rely heavily (if not almost entirely) on FDI to exploit its mineral wealth, regulatory reforms and governance will largely revolve around the relationships with these foreign actors, whether they be private consortiums or state-run companies. Systemically, it is the question of to what extent will FDI govern the future of this industry, and can Mongolia grow and open their mining opportunities to an internationally diverse group of investors?

Mongolia’s Mining Future

Mongolia’s current mining regulatory framework is still a work in progress. While the Mineral Law allows 100% foreign ownership of businesses, only individual Mongolian citizens can own the real estate under mineral deposits to be exploited (Anonymous, 2011). The current tax code is an improvement over its predecessor and provides more opportunities for capital investment deductions, but in a country that is expanding at such a frenetic pace, not only must foreign companies ensure they are well informed of planned regulatory changes before they become law to ensure the viability and long-term stability of their projects (Anonymous, 2011). Perhaps most importantly though, Mongolians themselves must ensure that they keep their mining industry and reliance on China in check by establishing equally viable markets in other industries such as tourism, finance, and outsourcing.

References:

Anonymous (2011). Mongolia rocks. Industrial Minerals, http://proquest.umi.com/pqdlink?did=2259607981&Fmt=2&rqt=309

Anonymous (2010). Nomads no more; Mongolia’s mining boom. The Economist, 397(8705), 52.

Posted in Adam Simpson, Development, Mining, Research on Mongolia | Leave a comment

Call for Proposals: 2012 Central Eurasian Studies Conference

Posted on March 7, 2012 by JDierkes

Central Eurasian Studies Society (CESS)

Annual Conference

Bloomington, IN: Oct 18-21, 2012

Deadline for Submission of Proposals: Apr 1, 2012

Posted in Conferences | Leave a comment

The Effect of Mongolia’s Mining Boom on the Tourism Industry

Posted on February 9, 2012 by JDierkes

Guest Post by Tye Ebel

Tye Ebel is a member of the 2010/2011 cohort in the Master of Arts Asia Pacific Policy Studies at the University of British Columbia. While at the University of British Columbia, he focused heavily on sustainable tourism development and promotion, with a secondary focus on international trade. As the capstone requirement for his degree, Tye spent 10 weeks working at the Mongolian Ministry of Nature, Environment and Tourism, where, among other things, he produced a report on the state of sustainable tourism in the country. tyeebel [at] gmail com

The Effect of Mongolia’s Mining Boom on the Tourism Industry

While I was completing my practicum with the Tourism Department at the Ministry of Nature, Environment and Tourism, I had the opportunity to meet with many of the major stakeholders in the industry. On several occasions, the relationship between the country’s rapidly expanding mining sector and the tourism sector came up in the conversation.

Without question, the recent mining boom has strained the tourism industry. Attention has been diverted from tourism, making it harder to mobilize the political will and donor funds needed to implement significant improvements. Meanwhile, the promise of more lucrative and stable contracts with mining companies has lured away many of the tourism industry’s best drivers, cooks and guides. This has particularly been the case in the Gobi region, which, in addition to being a top tourist attraction, is also the site of the country’s largest mining project. As a result, tour operators have had to increase wages in order to retain top talent. These wage increases are in turn recouped through higher tour prices. The problem is further amplified because speculation has driven up the value of the national currency, thus reducing the attractiveness of Mongolia as an international tourist destination by significantly raising the cost of travel. In addition, expansion in the mining sector threatens to degrade the country’s top tourist attractions, namely its nomadic culture and vast, unbroken terrain.

However the tourism industry can mitigate these problems. First, it can position itself as a training ground where students can improve their communication and language skills and hence, improve their chances of securing lucrative mining jobs in the future. While many young people seem to recognize the beneficial training that work in the tourism sector can provide, this link between tourism and mining does not appear to be well marketed within the industry. That is a shame, because this approach could increase the pool, and hence quality, of the student staff during the industry’s high season. Second, the anticipated mining boom in Mongolia has resulted in increasing numbers of expats and business travelers and has created a small upper class in the country. While little has been done to study and target these new markets, they could prove to be a real asset, particularly when it comes to increasing revenue during the shoulder and low seasons. And third, the increasing buzz over Mongolia’s mining boom has expanded international awareness of the country. The industry should find ways to use this awareness to highlight Mongolia’s attributes as a tourist destination.

While the country’s mining boom has created several new threats for the tourism industry, these threats can be mitigated by a forward looking tourism policy. However, first stakeholders need to recognize that the industry cannot grow by maintaining the status quo. They need to work together to find solutions to the human resource drain, inflation, and cultural transformation that the mining boom is creating. Fortunately, many stakeholders recognize the need to adapt, and have already begun looking for solutions.

Posted in Mining, Tourism, Tye Ebel | Leave a comment

Mongolia Lecture Series: Christa Hasenkopf “Clearing the air: The story of the pollution crisis in Ulaanbaatar, Mongolia”

Posted on February 2, 2012 by JDierkes

Mongolia Lecture Series

Program on Inner Asia
Institute of Asian Research
University of British Columbia

Friday, February 17, 15:30-17h

Room 129
CK Choi Bldg for the Institute of Asian Research

1855 West Mall
UBC Campus

Dr. Christa Hasenkopf
University of Colorado

“Clearing the air: The story of the pollution crisis in Ulaanbaatar, Mongolia”

For the first time in human history, we now live in a world where over half of the population resides in urban areas. The urbanization rate is highest in developing nations, in which over three-quarters of humanity lives. Over the last 30 years, Asia has seen its population double and, accordingly, its cheap energy needs skyrocket and air quality plummet. Ulaanbaatar, the engine of Mongolia’s rapidly developing economy, is a prime example of an Asian city that is experiencing rapid population and economic growth but is suffering negative environmental consequences. Due to this growth as well as its geography and climate, Ulaanbaatar has some of the world’s most polluted air in terms of particulate matter (PM) levels. This talk will describe the current air pollution crisis and its impacts in Ulaanbaatar, how it got that way, and current and future mitigation methods.

Christa Hasenkopf received her PhD in Atmospheric and Oceanic Sciences from the University of Colorado. She is on a two-year postdoctoral study of particulate matter emissions in Ulaanbaatar, as well as performing atmospheric science outreach activities at universities and local secondary schools. Her research is done in collaboration with the National University of Mongolia and the University of Colorado and is funded by a National Science Foundation International Research Fellowship and a U.S. Fulbright grant.

Powerpoint Presentation

Posted in Air Pollution, Environment, Events, Research on Mongolia, UBC Mongolia Lecture Series, Ulaanbaatar | Tagged | 2 Comments

Mongolia Presentation at AAAS: Christa Hasenkopf “Science Communication on a Shoestring”

Posted on February 1, 2012 by JDierkes

American Association for the Advancement of Science

Sunday, February 19, 2012

Christa A. Hasenkopf, CIRES, University of Colorado, Boulder

“Science Communication on a Shoestring: Some Simple (and Cheap) Ways for an Individual To Expand Science Communication in a Developing Nation”

Many compelling areas of science revolve around research in developing countries.  Yet, it can be difficult for scientists within developing countries to access and share existing, up-to-date information in their field. It can also be difficult for scientists elsewhere to access data and find colleagues within the country with whom to collaborate.  This lack of science communication may result in fewer projects explored and international collaborations formed in developing countries. I outline a low investment, simple set of ways in which science communication can be improved on a topic relevant to a developing country, both within that country and globally, and can be initiated, in large part, by one individual’s efforts. Although there is no one set of solutions that will fit every field or country, the aim is to outline a few key points one could enact in a developing country in which they live, work, or have colleagues. These ideas have been implemented during a 2-year air quality study and outreach program I am conducting in Mongolia’s capital city of Ulaanbaatar.  In addition to discussing a general set of guidelines for creating a stronger infrastructure for science communication, I also show concrete examples of them performed in Ulaanbaatar over the past year on a shoestring outreach budget.

Methods & Results: Suggested methods for an individual to (cheaply) improve the infrastructure for science communication in a developing country (with results of the applied methods given as examples): (1)  Create an online resource with up-to-date information on a subject in your field related to the developing country. Make it something which others can edit and update. Ex: I have created UBAirPollution.org, a wiki that coalesces all information related to Ulaanbaatar air pollution. It has been accessed more than 6000 times by over 100 cities in 31 countries within the first 6 months of its creation. Ulaanbaatar is the city that most accesses and edits the site.(2) Create a flyer describing your research area to the general public, and, if applicable, get it translated into the developing country’s primary language. Post it online, give the file to any relevant outreach groups, and have copies available for any talks you or colleagues might give. Ex: “Ulaanbaatar Air Pollution: A fact sheet” has been created, translated into Mongolian by a university student, posted online, distributed to colleagues, and handed out at outreach functions.(3) Blog about your work, and invite your collaborators to do guest posts or interviews. Ex: I maintain “Pollution Studies in Mongolia’s Capital City,” a blog on the University of Colorado CIRES website. There, I post information on air quality issues relevant to Ulaanbaatar, describe my research activities, and interview local scientists in a “Meet Mongolia’s Scientists” series. 

Conclusion: I present concrete, budget-friendly ways with specific examples that have been successful in expanding science communication on a topic relevant to a developing country.

Posted in Air Pollution, Environment, Research on Mongolia, Ulaanbaatar | Leave a comment

Canadian Bilateral Aid for Mongolia?

Posted on January 29, 2012 by JDierkes

The question of whether Canada should offer bilateral development aid or not has been looming large since Canada first posted a resident ambassador in Mongolia in 2008.

I firmly believe not only that bilateral aid can continue to make a constructive contribution to Mongolian development, but also that Canada should consider where it may have particular expertise and experience to offer when selecting areas that such bilateral aid might focus on.

An article in the Globe and Mail, “CIDA funds seen to be subsidizing mining firms” on January 29 examines the apparent policy of the Conservative government to focus development aid on activities related to mining and resource extraction. This policy is seen by some to be self-serving and, worse, corporate welfare in disguise. I might generally sympathize with such criticism, but would disagree with the argument and logic in the case of Mongolia.

Development aid is being re-examined from many angles. Ian Smillie, “a long-time foreign aid watcher and critic” recently made an argument quite similar to those referenced by the G&M in a post for the Canadian International Council, esp. in its reference to the mining industry. The G&M has been examining similar arguments in its New Humanitarians series.

A brief general argument for expertise-based development aid

Yet, I believe that there is a reasonable case to be made for development projects that are focused on resource extraction and funded with (my) taxpayer’s money, namely when this is an area where particular expertise exists.

A significant mining industry and significant public expertise on the regulation of resource extraction do not co-exist in Canada by any accident, but because the mining industry is long-established and plays an important role in provincial as well as federal politics.

NGOs, government offices, academics, as well as corporations have thus developed extensive expertise on mining in Canada, expertise that would be much less prominent in donor countries with a less prominent mining sector, say The Netherlands or Denmark.

While it should be clear for what purposes (not private/corporate gain) bilateral development aid might be deployed, I believe that such aid could be offered to Mongolia and have a positive impact.

Disclosure
If bilateral aid were to be extended to Mongolia, I would have a reasonable chance at participating in aid-projects in the future, as one of the few academics in Canada who specializes in contemporary Mongolia to some extent.
I do not knowingly own any mining stock.
I am not currently a member of any political party.

Beyond the general argument for an expertise/experience-based aid program, let’s turn to the argument on Mongolia specifically.

What “Canadian” projects could benefit from aid to Mongolia?

Canada is often mentioned as the second-largest foreign direct investor in Canada. Virtually all of this investment is private investment in mining ventures. The lion’s share of this investment is tied to Ivanhoe Mines share in the giant Oyu Tolgoi project. This project and Ivanhoe’s role in it has led to a perception among many Mongolian’s that foreign investment in mining is Canadian investment in mining.

However, Ivanhoe Mines appears to be on its way out of the Oyu Tolgoi project. Rio Tinto recently acquired a majority of Ivanhoe Mines shares and is clearly calling the shots on the Oyu Tolgoi project (see Mining Weekly for an update on this topic). While Rio Tinto is linked to Canada through its Alcan aluminum venture, it is an Anglo-Australian corporation.

Even in its heyday as an investor in Mongolia, it would be a stretch to call Ivanhoe Mines a Canadian company in any aspect other than its mailing address and the location for its corporate headquarters. Ivanhoe’s driving force, Robert Friedland, is a Canadian citizen, but does not appear to spend much time in Canada, nor does he play a big role in any meaningful Canadian community nationally or locally in BC/Vancouver. In fact, for a company of its size (largely linked to the Mongolian project) Ivanhoe has virtually no public or community profile in Vancouver and has not contributed to any Canadian-Mongolian activities, projects or efforts that I am aware of.

Despite perceptions and portrayals, I thus think it’s a stretch to consider Ivanhoe Mines to be a Canadian company in any qualitatively meaningful way.

Mind you, they sure could use some help with their public profile in Mongolia which is not good.

What about other Canadian mining activities in Mongolia?

Two Ivanhoe Mines satellites, South Gobi Resources and Entrée Gold have active exploration programs and, in the case of South Gobi, are producing coal. These companies are no more meaningfully Canadian than the Ivanhoe mothership.

Uranium exploration has ground to a standstill following the difficult case of Khan Resources and its turbulent relationship with Mongolian regulatory authorities.

Centerra Gold’s Mongolian Boroo Gold unit has finished production at its Boroo mine and is not yet producing at its Gatsuurt site.

Prophecy Coal runs an operating coal mine on the Russian-Mongolian border and is developing a further coal mine that would be coupled in a very interesting way with an on-site powerplant to feed electricity into the Mongolian grid.

Beyond that I am only aware of exploration projects by junior miners. [See my list of foreign mining projects in Mongolia.]

While Canada-based activities in Mongolia are thus quite significant in terms of their overall volume, the vast majority is tied to a single project that is not likely to be “Canadian” in the longterm (and never really was). If the Harper government had a plan to use aid to indirectly benefit Canadian mining companies, Mongolia would not be a very good place to carry this plan out as there are few companies that could benefit. I doubt that even the most crass of business-interest driven policy-makers would be eager to develop a policy that would primarily benefit Robert Friedland, perhaps one of Canada’s internationally least-popular offshore citizens.

The positive case for bilateral aid to Mongolia is thus in my mind based on a) expertise, and b) a need to counteract and balance some of the activities of a single actor, Ivanhoe Mines, which is perceived to represent Canada in Mongolia even though it is not meaningfully a Canadian company.

Posted in Bilateral Aid, Canada, Development, Media and Press, Mining, Oyu Tolgoi | Tagged | 3 Comments

UBC Lecture: Simon Wickham-Smith “Spiritual Ecology in Contemporary Mongolian Literature”

Posted on January 25, 2012 by JDierkes

On January 26, 2012 Simon Wickham-Smith will be presenting a lecture on “Spiritual Ecology in Contemporary Mongolian Literature” at the University of British Columbia in UBC’s Buddhism and Contemporary Society Program.

Lecture Announcement

Posted in Environment, Literature, Religion, UBC Mongolia Lecture Series | Tagged | Leave a comment

Economist: “Booming Mongolia – Mine, all Mine”

Posted on January 20, 2012 by JDierkes

By Julian Dierkes

An article in the January 21 2012 edition of The Economist vividly describes Ulaanbaatar and Oyu Tolgoi in the winter of 2012. The story that some have been telling for some years, “Mongolia is the next Eldorado” is repeated here with only some cautionary notes on Dutch disease, inflation and the like.

Some of the usual suspects when it comes to foreign views of Mongolian development, turn up in this article, like Munhkbayar of the Ongi River Movement and the Hon. Oyun. Ms Oyun especially is a wonderful interlocutor when it comes to understanding contemporary Mongolia, of course.

What I find missing in the article is the extent to which the promise of a mining boom is skewing and distorting all aspects of Mongolian development – economic, political and social.

This is the point I made when I presented at a symposium at Hokkaido University yesterday.

The Central Role of Resource Policy for Mongolian Development in the Past and Coming 10 Years on Prezi

Take the political populism that the Economist article refers to. This is a product – in my mind – of the on-going discussion about what to do with coming mining riches in the 2000s. While political development was focused on democratization and the construction of the attendant institutions in the 1990s, the 2000s were the decade where patronage politics established itself as a product of politicians desire to join in the decision-making (and, apparently, spoils) about mining policy. Rewards for supporters and clinging to power (note the long duration of the grand DP and MPP coalition) have become the political modus operandi.

The Economist article is quite right to ask whether Mongolia will be able to “handle” the revenue streams that will be growing steadily, especially with the beginning of production at Oyu Tolgoi. Elsewhere, I’ve written and spoken about the long-term stability of democracy in Mongolia. One of the main concerns beyond Dutch disease and related macroeconomic threats is rising inequality. Currently, while the poor are not getting poorer, they are also not getting significantly less poor through the increased economic activity related to mining. Ultimately, even in a small population, not everyone will be able to work at OT, TT or any other large and small projects that might still develop. So far, the Mongolian government has primarily headed for an emphasis on transfer payments (to children, to the old, etc.) and financial stakes in mining projects (whether that is the government stake in OT or the stakes in TT that are to be distributed). Whether that will be a successful strategy in the long term to avoid unrest and to begin to think about a diversification of the Mongolian economy will remain to be seen.

 

Posted in Democracy, Economics, Media and Press, Mining, Oyu Tolgoi, Policy, Politics, Research on Mongolia | Tagged | Leave a comment

Symposium Presentations: Nature, People, and Mining in Contemporary Mongolia

Posted on January 17, 2012 by D.Byambajav

Symposium on

Nature, People, and Mining in Contemporary Mongolia

Hokkaido University

Sapporo, Japan

January 20, 2012

Julian Dierkes
“The Central Role of Resource Policy for Mongolian Development in the Past and Coming Ten Years”

The economic, political and social development of Mongolia has come to revolve around mining policy. Decisions that are made about mining – especially the selection of partners, structure of royalty, taxation and ownership regimes, and the use and distribution of income streams – will continue to dominate political discourse and have a determinant impact on virtually all areas of social relations. In this presentation, I discuss the development of democracy, mobile pastoralism, and inequality in terms of their relationship with resource policy.

Mikiya Nishimura
“The Rhapsody of the Taiga in Mongolia: Gold and Money”

Tsaatans, the reindeer herders, have been thought to be very poor people by Mongolians. However, they are getting wealthier than Mongolian nomads. Tsaatans have started to derive income from foreign visitors and mine workers (because of having reindeers). Today, Tsaatan people are in the rhapsodic situation of much money and gold. But to make more money, they have to change the way of their living in Taiga. In this presentation, I will report some changes in the purpose of keeping reindeers and the way of seasonal migration and discuss the impact of money and gold on the livelihood of Tsaatan people.

Dalaibuyan Byambajav
“Gold Mining and the Origins and Consequences of Social Mobilization in Mongolia”

While the extensive discovery and extraction of mineral resources in Mongolia have come to dominate the national development discourse, there is an increasing public concern over the environmental and social effects of mineral extraction. Over the past decade, we have seen an apparent increase of the local conflicts over land, water sources, and the livelihood of local people and protest actions in the country. Both academic and popular writing have failed to present a nuanced understanding of the emergence and trajectories of these conflicts. By tracing the trajectory of a local protest movement (road blockade) in the Tsenkher district of Arkhangai province, I will examine the origins and consequences of anti-gold mining social mobilization in Mongolia.

Namiko Abe
“The Expansion of Insect Damage and Regeneration in the Mongolian Larch Forest Considered from Dendrochronology”

In recent years, the large-scale insect damage has become a major problem in Mongolian forests. It could be considered that the factors such as climate change and the surrounding environment facilitate the insect damage. Tree-ring analysis is used to examine the process of the decline and recovery of the Mongolian larch forests affected by the insect damage.

Ryo Takiguchi
“The Environmental Problems in Contemporary Ulaanbaatar: A Movement for the Improvement of Living Conditions in Ger-district”

Ulaanbaatar, the capital city of Mongolia, has experienced great changes since 1990. Examples of these changes include the population growth, the rapid rise in the market of real property, and the environmental issues such as air pollution. Ulaanbaatar has become one of the worst city of the environmental pollution in the world. This presentation focuses on a ger-district in Ulaanbaatar where a movement for the improvement of living conditions and the solutions for the environmental problems has been facilitated by the Government of Mongolia and international aid organizations.

Chifumi Ono
“Land Use and Contemporary Pastoralists in Northern Mongolia”

Both settled-pastoralists and mobile-pastoralists have used a valley as their common land throughout the year in a village located in the north of Ulaanbaatar. However, little is known about how these pastoralists manage their common land. We conducted interviews among the pastoralists in August, 2011. In this presentation, I will discuss the actual situation of land-use in the valley and the problems resulting from the interaction between settled-pastoralists and mobile-pastoralists.

Shin Miyazaki
“Long-term Hydrometeorological, Ecological and Dendrochronological Monitoring over the Larch Forests on the Permafrost in Northern Mongolia”

To clarify the heat, water carbon exchange process and dynamics by comprehensive approach, we started long term monitoring of the eddy-correlation based flux observations, the hydro-climatic observations, the phonological camera monitoring and sap flow measurement at the 25-m height tower and forest around the tower in the Udleg (48 15’43.7” N, 106 50’56.6”E, altitude: 1264m) over the larch forest in Research Forest of NUM in northern Mongolia since 2009. We’ve also carried out the tree-ring observation to get the stand history (age, growth rate, fire, drought etc.) and dendrometer observation to get the diameter growth of larch trees.

Mamoru Ishikawa
“Representing and Enhancing Environmental Literacy to Share Knowledge – The Changing Environment of Mongolia”

Environmental literacy means the ability to appropriately read and utilize environmental information, to anticipate rebound effects, and to adapt according to information about environmental resources and system and their dynamics. This would be a key concept to share knowledge between societies and scientists in the context of potential human-environmental system to function and evolve in a sustainable manner. Under this framework I would like to provide the matter of arguments for sustainable Mongolian socio-natural environments.

Posted in Conferences, Events, Research on Mongolia, Symposium Hokkaido University Jan 20 2012 | Tagged | 1 Comment

Guest Post: The Mongolian Tourism Industry and Obstacles to Maximizing Its Potential

Posted on January 14, 2012 by JDierkes

Guest Post by Tye Ebel

Tye Ebel is a member of the 2010/2011 cohort in the Master of Arts Asia Pacific Policy Studies at the University of British Columbia. While at the University of British Columbia, he focused heavily on sustainable tourism development and promotion, with a secondary focus on international trade. As the capstone requirement for his degree, Tye spent 10 weeks working at the Mongolian Ministry of Nature, Environment and Tourism, where, among other things, he produced a report on the state of sustainable tourism in the country.

An Overview of the Mongolian Tourism Industry and Obstacles to Maximizing Its Potential

The Mongolian tourism industry has undergone significant changes in the past few decades. Throughout the socialist period the industry was controlled by the state owned Juulchin, which catered almost exclusively to tourists from the former Soviet Bloc. Following the political transformation in the early 1990s, a variety of new industry stakeholders began to emerge while changes to the country’s immigration policy in 1998 saw a spike in international visitors. Western Europeans, North Americans, Japanese and Koreans quickly emerged as the primary leisure tourists and the government began to advocate a policy focusing on high quality and low volume. Meanwhile, numerous international development agencies began to address tourism, hoping to transform it into one of Mongolia’s major growth industries.

Unfortunately, despite attempts by countless hard-working individuals both in Mongolia and internationally, the tourism industry has failed to realize its potential. International recognition of Mongolia as an attractive tourism destination remains low and accurate data on tourist numbers, expenditures, expectations and impressions that could be crucial to improving the industry is lacking. Additionally, the country suffers from significant seasonality resulting in an influx of visitors during the summer months that place strain on the country’s infrastructure and a dearth of visitors during the cold winter months. This in turn increases the cost of tourism products and reduces the attractiveness of careers in tourism. As a result, the industry is suffering from a significant lack of well-trained human resources.

A unified effort by the industry’s stakeholders could significantly improve the country’s international recognition, the quality industry data, the degree of seasonality, and the shortfall in human resources. Sadly, there is a lack of communication and cooperation between the various public, semi-public, and private organizations that have been created to develop and promote the industry. The public sector, represented by the Ministry of Nature, Environment and Tourism has focused most of its attention on supporting Mongolian participation in international trade conventions while advocating for the development of large, capital intensive tourism complexes. Although the ministry has attempted to better engage the private sector, it has not been overly successful. The publicly owned Mongolian National Tourism Center and a variety of private organizations, meanwhile, raise a mixture of public and private funds to pursue individual and often redundant projects. This inefficient duplicity of effort seems to be driven by a lack of communication and trust amongst stakeholders. The result has been that the industry lumbers forward without an efficient and unified plan or objective. At the same time, international development agencies such as USAID are beginning to distance themselves from the tourism industry as they focus more and more on the mining sector.

The situation is not entirely bleak though. Individual companies and small-scale development projects have made significant strides toward creating high value added products that promote environmental and socially sustainable tourism development. If the industry can build off of these success stories and unite behind a single brand image while reducing the duplicity of effort that currently holds it back, then it has real potential for significant, high value growth.

Posted in Countryside, Environment, Tourism, Tye Ebel | Leave a comment

Symposium Program: Nature, People, and Mining in Contemporary Mongolia

Posted on January 13, 2012 by D.Byambajav

An inter-disciplinary symposium on Nature, Human, and Mining in Contemporary Mongolia will be held at Hokkaido University in Sapporo, Japan on January 20, 2012. This symposium will bring together scholars from diverse areas of expertise (both natural and social scientists) to promote sharing of knowledge and expertise from the field study on the human-nature relationship in contemporary Mongolia.

The guest speakers for the symposium are Julian Dierkes and Mikiya Nishimura. Proffessor Julian Dierkes will talk about the central role of resource policy for Mongolian development in the past and next 10 years. Mr. Mikiya Nishimura, the president of North Asian Culture Exchange Center-SHAGAA, a nonprofit organization, will talk about his field research among the Tsaatans, reindeer herders in Huvsgul, and the impact of gold mining on the livelihood of the local people.

Program of the symposium

Date: 13:00-17:00, January 20, 2012

Place: D102, Faculty of Environmental Earth Science, Hokkaido University

Co-hosts: Research Community of History and Culture in Hokkaido, Faculty of Environmental Earth Science, Hokkaido University and IFES-GCOE Global COE Program “Establishment of Center for Integrated Field Environmental Science”, Hokkaido University

Language: Japanese and English

Presentation Abstracts

—————————————-
13：00～13：10 Opening speech Ryo Takiguchi

13：10～14：20 Part 1： Mining

Julian Dierkes (Associate Professor and Coordinator, Program on Inner Asia, University of British Columbia）
“The Central Role of Resource Policy for Mongolian Development in the Past and Coming 10 Years”

Mikiya Nishimura (President, North Asian Culture Exchange Center – SHAGAA)
“The Rhapsody of the Taiga in Mongolia: Gold and Money”

Dalaibuyan Byambajav （PhD Candidate, Sociology, Hokkaido University）
“Gold Mining and Origins and Consequences of Social Mobilization in Mongolia”

Discussion
14：20～14：30 Coffee Break

14：30～15：30 Part 2： City and Suburbs

Namiko Abe (Graduate student, Environmental Science, Hokkaido University)
“The Expansion of Forest Pest Damage and Regeneration in the Mongolian Larch Forest Considered from Dendrochronology”

Ryo Takiguchi (Part-time lecturer, Hokusei Gakuen University)
“The Environmental Problems in Contemporary Ulaanbaatar: A Movement for the Improvement of Living Conditions in Ger-district”

Chifumi Ono (PhD student, Environmental Science, Hokkaido University)
“Land Use and Contemporary Pastoralists in Northern Mongolia”

Discussion
15：30～15：40 Coffee Break

15：40～16：30 Part 3：Nature

Shin Miyazaki (GCOE Assistant Professor, Faculty of Environmental Earth Science, Hokkaido University)
“Long-term Hydrometeorological, Ecological and Dendrochronological Monitoring over the Larch Forests on the Permafrost in Northern Mongolia”

Mamoru Ishikawa (Associate Professor, Faculty of Environmental Earth Science, Hokkaido University)
“Representing and Enhancing Environmental Literacy to Share Knowledge – The Changing Environment of Mongolia”

Discussion
Closing remarks: Julian Dierkes

Posted in Conferences, Environment, Events, Mining, Symposium Hokkaido University Jan 20 2012 | Tagged | 1 Comment

End of “Non-Standard” Government

Posted on January 12, 2012 by mendee

By Mendee J

The Democratic Party (DP) left the Coalition Government, now the Mongolian People’s Party will remain in power until the parliamentary elections in June.  The DP’s decision is connected to its preparation for the election, but it indicates power struggle within the DP, decay of the government bureaucracy, and new patterns of Mongolian politics.

The National Governing Committee of the Democratic Party officially declared the end of the Coalition Government with the Mongolian People’s Party yesterday, January 11, 2012.  This decision was expected by many, but the coalition had survived until MP Kh. Battulga’s candid interview, which revealed the true internal dynamics of the coalition government.

At the National Governing Committee meeting, while DP Chairman Altankhuyag, who served as the #2 in the coalition government and other DP cabinet ministers boasted the 82 percent of the Coalition Government Action Plan, MP Kh. Battulga again criticized the false statements by the DP Chairman and other ministers.  Battulga served as the Cabinet Minister for Road, Transportation, Construction and Urban Development and wholeheartedly pushed the industrialization plan by capitalizing on mineral exploitation. Although Battulga’s frustration with the inefficiency and ineffectiveness of the Coalition Government and criticism of the DP Chairman could be explained as political tactics toward upcoming election or a move for the DP Chairman post, he seems to be pointing out the institutional deficiencies of today’s Mongolian  bureaucracy.

Even though the DP Chairman Altankhuyag stated in his speech that the DP fulfilled its historic tasks for the nation while collaborating with the MPP, one could  hardly see any decision beyond the Oyu Tolgoi mining deal with Ivanhoe and Rio Tinto.  The government again passed the most inefficient budget, which allotted several million tugrugs for MPs to spend on their electoral districts and failed to finalize the Tavan Tolgoi mining deal.  The government had not done much on many other plans of the Coalition Government.  Just a month ago, the DP Chairman was declaring his firm stance on the Coalition Government until the election, but within one week, he gave up. This demonstrates how internal power rivalries in the DP have intensified as the election nears.

The disintegration of the DP and MPP, two major political forces, potentially provides opportunities for other political parties to compete in the upcoming election.  Apparently, the DP will not oppose the continuation of the MPP government – even promised to pass their nominees replacing the DP cabinet members quickly. The MPP will now certainly use its advantage of running the government until the parliamentary election in June, 2012.  All failed programs of the Coalition Government will be subject to a political ‘blame game’ between the two parties.  Although the revised election law could be certainly considered the best, its effectiveness will depend on the enforcement.

Although the parties are not making ‘cash transfer’ promises under the revised Election law, now they are promoting “Mongolian Person – 2020” by DP and “2030” dream plans.  Will they be false promises as many earlier political party slogans?

Above all, the end of the ‘non-standard’ coalition will come again – may become a familiar pattern of Mongolian politics because the political institutions, which set under the 1992 Constitution, have many flaws. One of which is inefficient decision-making mechanism and disintegrated political institutions that will never be fully accountable for the people.  Rather the system will consolidate more web-like informal networks among politicians and business entrepreneurs.  Because the formal institutions face frequent “no-go”, only charismatic political entrepreneurs like Bayar and now likely Battulga (as would-be) introduce the political innovations (as we, Mongolians, coin ‘non-standard’ decisions) using the informal networks. This ‘non-standard’ pattern of integration and disintegration of the Mongolian political forces seem to continue until the formal institutions are fixed and followed.

Posted in Democracy, Elections, Governance, Politics | Tagged | Leave a comment