Mongolia's top election issue: how to spend new riches

Mongolians vote for a new parliament today that will have to decide how the landlocked, still poor country should spend the expected windfall from its mining boom.

Mongolians went to the polls Thursday as their remote but resource-rich country faces the possibility of economic triumph or disaster.

Mongolia's nearly 3 million people live atop $3 trillion worth of gold, copper, and coal. As foreign mining companies begin to extract this wealth, the resources could turn Mongolia – a former Soviet satellite state – into a new Qatar. But if the boom is badly handled, it might instead make the country into another Nigeria, plagued by corruption and poverty.

“The challenge for Mongolia’s newly elected leaders … will be to rise to the occasion and not squander the opportunity presented to bring prosperity to its citizens,” wrote former Mongolian Foreign Minister Nyamosor Tuya in a recent article for the Brookings Institution in Washington.

The government that emerges from today’s parliamentary elections will have to decide both how much of the national wealth it is ready to offer to foreign mining companies to attract their investment and how to share mining proceeds among the populace.

Left by the breakup of the Soviet Union with a devastated economy, Mongolian governments have been keen to encourage foreign investment, and they have offered generous terms to international mining giants such as Rio Tinto, Peabody, and China’s Shenhua.

Investment in projects such as the $7 billion Oyu Tolgoi copper mine, slated to come on line this summer, drove a GDP growth of 17 percent last year, the highest rate in Asia.

Both the leading political parties, however – the Mongolia People’s Party and the Democratic Party – have struck a tougher, more nationalist, stance during the election campaign, pledging to ensure that the state takes a larger share of future projects.

They are also promising to hand out more of the spoils to the citizenry, in a bid to appease growing popular resentment against an increasingly flagrant wealth gap.

Many Mongolians are nomadic yak and goat herders; hundreds of thousands of them have recently abandoned that lifestyle in the face of murderous winters and moved into slums around the capital Ulaanbataar. One third of the population lives below the poverty line. Yet Gucci, Prada, and Burberry, among other luxury brands, suffer no shortage of customers at their recently opened flagship stores.

“I don’t see any benefits” from mining, Altansetseg Laagansuren, a 20-something mother of three living in a ger (yurt) outside the capital told Reuters news agency recently. “I think the people at the top are sharing and eating up the wealth.”

Indeed, Transparency International, the anticorruption watchdog, ranks Mongolia 120  out of 183 nations.

The MPP and DP, which ruled in a coalition until last January “haven’t delivered what they promised,” former President Enkhbayar Nambar told the Ulan Bator Times last week. “Only a few people and a few families got much richer than ordinary families.”

Mr. Enkhbayar himself was arrested recently on corruption charges, which he says were fabricated in order to prevent him from running in today’s elections. His Mongolia People’s Revolutionary Party has mounted a strong challenge to the dominant centrist parties by pressing for national ownership of strategic resources.

Mongolian democracy has proved resilient since Ulaanbataar moved out of Moscow’s orbit in 1990; Thursday’s parliamentary elections will be the seventh of such polls. But the vote in 2008 was marred by riots following allegations of fraud, the declaration of a state of emergency, and the deaths of four protesters at the hands of police.

Politicians are anxious to avoid any repetition of such events; this time, the electoral authorities will be using, for the first time, an automated voting system designed to minimize the possibility of vote rigging.