Publication: Eurasia Daily Monitor Volume: 5 Issue: 170

On June 29 Mongolia held its fifth round of parliamentary elections for the Ulsyn Ikh Khural (State Great Hural, or Parliament) since the country abandoned Communism in 1990 and held its first multiparty elections. Opposition parties cried foul; two days later the country’s capital erupted in rioting, leading the president to declare four days of martial law and the opposition parties to boycott taking their seats in parliament for two months (Montsame News Agency, June 29-July 2).

The investment community watched the contest with keen interest, as political bickering had stalled legislation intended to produce a definitive national mining law, which would open the country’s vast mineralogical resources to foreign investment.

In a signal development for newly elected democratic governments throughout the post-Soviet space, however, Mongolia’s governing and opposition parties have compromised, breaking the electoral deadlock to swear in the country’s fifth parliament since the collapse of Communism.

In common with its compatriots in Central and Eastern Europe and the former USSR, Mongols take their participatory democracy seriously, but power has seesawed between the former Communist Party, which transformed itself after 1992 into the Ardyn Khuv’sgalt Nam (Mongolian People’s Revolutionary Party, MPRP) and the Ardchilsan Nam (Democratic Party, or DP), a loose confederation of centrist and progressive parties. The MPRP retained power for six years, until the DP headed a governing coalition in 1996. In 2000 the MPRP returned to power until 2004, when it was forced to form a coalition with the Ekh Oron-Ardchilsan (Motherland Democratic Coalition, or MDC). In May 2005 MPRP candidate and former party chairman Nambaryn Enkhbayar won the presidential elections.

Enkhbayar’s political experience included serving as the country’s Prime Minister from 2000 to 2004 and as Speaker of Parliament from 2004 to 2005. Fellow MPRP member and party chairman Sanjaagiin Bayar joined Enkhbayar in November 2007, following a vote in Parliament electing him Prime Minister with 67 votes in favor and two against. When Bayar formed a 16-member coalition cabinet, which included members of three parties, 13 of the positions went to MPRP members, leaving the DP complaining loudly about cronyism and influence peddling (Olloo News Agency, December 6, 2007). In the six months before the parliamentary elections partisan politics effectively gridlocked the legislature as both parties concentrated on winning over the electorate.

While 13 parties contested the parliamentary seats in the June elections, the two main contenders were the ruling MPRP and the DP. On July 1 voter resentment over perceived electoral irregularities resulted in rioting in Ulaan Baatar. During the tumult the MPRP headquarters was burnt, five people were killed and 300 injured, and more than 700 were arrested; and Enkhbayar announced a four-day state of emergency, the first in the history of the country.

The Central Electoral Commission subsequently reported that in the voting for the 76-seat Parliament the MPRP had received 42 seats and the DP 25. However, at the July 23 opening of Parliament, the DP, citing its concerns over electoral fraud, walked out and refused to take its seats.

The MPRP and the DP then engaged in protracted negotiations, and on August 28 the DP legislators returned to parliament, which resumed its interrupted first session and swore in legislators (Olloo News Agency, August 26).

The new legislature faces a heavy agenda, including battling rising inflation, drought, and soaring energy import costs; but the issue towering over them all is finalizing the long-delayed definitive draft amendments to the country’s 1997 Mineral Law. At issue is whether the government can claim a minimum of 51 percent and 34 percent of strategically “significant” mineral deposits explored by state and private funding, respectively.

Breaking the legislative deadlock is the single most important issue facing Mongolia’s future prosperity, as the government believes that once the investment laws are codified foreign investors will quickly pump more than $10 billion into Mongolia’s mining sector.

According to government data, mining already accounts for 30 percent of Mongolia’s gross domestic product and 78 percent of its exports. A single development, the $3 billion Ivanhoe Mines and Rio Tinto Oyu Tolgoi (“Turquoise Hill”) concession, discovered in 2001, has the potential to produce 440,000 tons of copper and 320,000 ounces of gold annually over the next 35 years, according to its developers. This single development has the potential to increase Mongolia’s GDP by more than a third.

Mongolia’s mood of political compromise is all the more remarkable given its geographic position, sandwiched between Russia and China, neither of which is noted for a political culture of give and take. In two other countries of increasing interest and concern to the U.S. and European Union, Ukraine’s coalition government is splintering, while the opposition in Azerbaijan, which is scheduled to hold a presidential election next month, is already projecting that the results will be fixed. In such a tumultuous atmosphere, Mongolia is providing an example that young democracies can still achieve electoral compromise, and at the moment any lesson of political moderation in the post-Soviet space is a most welcome symbol for Eurasia’s other “at risk” democratic experiments.