With large resource
projects set to go live in the near future, the new Mongolian government is to
oversee the most crucial period in Mongolia’s post-communist history.
After winning 31 out of 76
seats in the Mongolian parliamentary elections on June 28, the Democratic Party
has announced that it has successfully formed a majority coalition with a
number of smaller parties. The Democratic Party was formed as a unification of
many pro-democracy factions in the early 1990s, after the fall of the Soviet
influenced socialist state. Despite this recent election triumph, the
Democratic Party is historically seen as the weaker of the two major parties
with its pro-business ideology.
The next biggest party in
the coalition is the controversial Mongolian People's Revolutionary Party
(MPRP), a splinter group from the old communist party, led by Nambaryn
Enkhbayar. Enkhbayar was arrested before the election on corruption charges and
is scheduled to be tried at the end of July, although this date has already
been subject to a series of delays. In contrast to the Democratic Party, the
MPRP holds an aggressive stance on Mongolia’s resource ownership, believing that
deposits should be nationalised. This will undoubtedly worry investors that the
new government will not be as welcoming to foreign investment especially as,
according to analyst forecasts, the MRPR are set to take control of four or
five of the eighteen ministries on offer, most notably the Finance Ministry,
which would see them overseeing the country’s investment agenda.
Although these two parties seem an unlikely fit
for collective rule, the Democratic Party has made it clear that the coalition
partners must follow their lead. Despite this statement of intent to make the
new government their own, much heated debated can still be expected on how to
govern the country over the coming years. Most of this will be centred on
managing the country’s vast mineral wealth and appropriately investing the
money that comes in as the deposits are extracted.
As with all coalitions,
there is a threat that the decision-making process will be fragmented. The Democratic
Party itself is comprised of many different factions, some more radical than
others, and the coalition partners could pose problems. The opposition Mongolian
People’s Party (MPP), on the other hand, enjoys a consolidated, experienced
group of political veterans ready to pounce on the Democratic Party should they
falter over the next four years.
At present, Mongolia is
still heavily dependent on foreign investment however, when the mining projects
at Tavan Tolgoi and Oyu Tolgoi are running at capacity, it is thought that they
will be able to run independently. The next four years will undoubtedly set the
precedent for the coming decades and thus determine the success of the transition
to financial independence. In order to achieve success, the Democratic Party
must prove that they can spend mining revenues responsibly in order to address
important campaign issues such as education, infrastructure and wealth
distribution.
The new prime minister, Norov Altanhuyag, an
ex-physics professor-turned-revolutionary in 1989, speaks calmly and
confidently with well-rehearsed words; "In the last four years we have
just started to use our mining resources, but the coming four years is a
tipping point," says Altankhuyag. "We have huge discussions on how to
use the mining wealth."
Strong, pragmatic
decision making from the coalition will be crucial in securing a period of
sustained growth and a bright future for Mongolia.
If you’d like to learn more about
news in Mongolia, visit Mongoliana, Mongolia’s premier news source for all
things Mongolia. If you’re interested in investing in real estate in Mongolia,
check out Mongolian Properties, Mongolia’s leading property developer and real
estate agency.
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