The American Interest
Democracy, Development & the Rule of Law
Published on September 2, 2012
corruptionElbegdorjminingmongolia Mongolia, Mining, and Malfeasance


I recently returned from a trip to Mongolia and Myanmar. The linking of these countries on the same itinerary was accidental, though they both actually have a lot in common: they border China and much of their recent foreign policy has been driven by a desire to get out from under Chinese domination. It’s not fun to live with a neighbor like that. I’ll talk about Myanmar in a separate post and for now say something about Mongolia.
I visited Mongolia with my colleagues Larry Diamond and Steve Krasner from Stanford’s Center on Democracy, Development, and the Rule of Law (CCDRL), at the invitation of President Elbegdorj. The connection to CDDRL came about as a result of Mongolia’s position as chair this year of the Community of Democracies; the next meeting of the Community will be in Ulaan Baator in April of 2013. We spent a week teaching a condensed version of the CDDRL Draper-Hills Summer Fellows program to a group of young Mongolians under the auspices of the Mongolian Institute for Strategic Studies and its director, Damba Ganbat.
Mongolia is a country more than twice the size of Texas with a population of only 2.8 million people. In recent years it has been the fastest growing economy in the world, registering over 17 percent growth in 2011. All of this has been driven by mining: Mongolia has just about everything the world (and in particular, its neighbor China) needs, including coal, copper, uranium, gold, rare earths, and the like. It has recently started a wind energy project and hopes to export electricity to Japan. Much of its natural resource wealth has come from a long-standing Russian-Mongolian joint venture, Erdenet, but has recently been joined by two giant newcomers, the Oyu Tolgoi (OT) and Tavan Tolgoi (TT) mines in the Gobi desert that serve the Chinese market. This wealth is pouring into a country in which 30-40 percent of the population remain nomadic herders living off flocks of horses, sheep and goats amid winter temperatures that can reach -30 degrees Celsius. Mongolia’s current GDP per capita in PPP terms remains less than $5000, which masks increasing skew in distribution. (All figures courtesy of the terrific new World Bank dataBank resource).
All of this new mineral wealth poses a huge problem of corruption and other ills associated with the resource curse. Of all former Communist states, Mongolia has been by far the most successful as a democracy outside of European countries like the Baltic states, Poland, or the Czech Republic; unlike the Central Asian -stans it has maintained a competitive multiparty electoral democracy since the Russian withdrawal in the early 1990s. These institutions are being sorely tested, however, by the challenge of dealing with resource wealth.

We walked directly into a controversy surrounding the arrest and conviction of former President Enkhbayar on corruption charges. Enkhbayar and his supporters in the Mongolian People’s Revolutionary Party (MPRP) have charged that this was a completely political trial designed to remove the former president from the political scene before the legislative elections that took place earlier this year, and that led to Elbegdorj’s Democratic Party emerging as the largest bloc in the parliament. Under the constitution the President appoints the judiciary, and Enkhbayar’s supporters claim that the prosecutor general was the current president’s campaign manager. Enkhbayar has gotten a tremendous amount of favorable publicity in the foreign press, with articles in the Economist, Forbes, and Wall Street Journal suggesting that he has been unjustly prosecuted and that the rule of law is under serious threat in Mongolia.
Having talked to many people from the different parties in the week we were in Ulaan Baator, there seemed to be general agreement on several things. First, the former president was guilty of very serious corruption while in office; indeed, part of the problem with the prosecution was that the actual charges brought against him were fairly trivial and didn’t reflect the gravity of his crimes. Many people said that it was a good thing that so powerful an individual could be convicted. And second, the prosecution did seem to be politically motivated in its timing just before the election. There was also controversy about the manner in which Enkhbayar was arrested, with several hundred policemen surrounding his house and using what some regarded as excessive force.
I’m in no position to judge the degree to which the Mongolian judiciary has been politicized. It is important for the government to prosecute not just a single former president, but other officials from other parties guilty of corruption as well, including the current ruling party. However, it is important to put this issue in context. Since South Korea’s democratic transition, Korean presidents have launched politicized investigations of rivals on corruption charges. It’s a terrible practice to get into, but it also doesn’t mean that Korean democracy is failing or non-existent. So too in the case of Mongolia: judicial independence is something that needs to be built over time; if the system needs work, this should not detract from the country’s nonetheless impressive record of democratic institution-building over the past 20 years.  It was for this reason that Hillary Clinton recently visited Mongolia (and used it as a platform for criticizing China’s rights record). The resource curse will put tremendous strain on Mongolian democracy in the coming years. The country needs support from outside powers and particularly from the United States, which is in a position to help balance the pressures coming from the country’s two large authoritarian neighbors, Russia and China.

  • dan berg

    I have lived in China for 7 years; curious to know how China looks from the north

  • Anthony

    Building democracy is not completely exogenous to a country and often requires attitudes among populace that inure towards CCDRL tenets. However, the way Mongolia manages the resource curse going forward will help determine whether its developing democracy avoids internal disruption – whether international trade and international organizations help to counteract vulnerability of resource curse.

  • Shinee

    very well concluded: Since South Korea’s democratic transition, Korean presidents have launched politicized investigations of rivals on corruption charges. It’s a terrible practice to get into, BUT IT ALSO DOESN’T MEAN THAT KOREAN DEMOCRACY IS FAILING OR NON-EXISTENT. So too in the case of Mongolia: judicial independence is something that needs to be built over time; if the system needs work, this should not detract from the country’s nonetheless impressive record of democratic institution-building over the past 20 years.

  • Altansukh

    As a Mongolian who studied both in the UK and the US, I believe I can see the political situation in Mongolia from different perspectives.

    First of all, I think Mongolia and Myanmar have more things in common in addition to what you stated. I believe Mongolia and Myanmar are very similar politically, or becoming more and more similar. The reason why I say this is because from carefully taking note of what has happened in my country for the past three months is actually quite upsetting to me. My family (most of them still live in Mongolia) voted for Mr Elbegdorj during the 2009 presidential election. It was a BIG mistake. SInce then, Mr Elbegdorj has done nothing but lie and corrupt Mongolia. It is actually really frustrates me when foreigners visit Mongolia and make statements such as “Mongolia has been by far the most successful as a democracy…unlike the Central Asian -stans it has maintained a competitive multiparty electoral democracy since in the early 1990s”, I believe that statement no longer applies. Yes, we had a competitive multiparty electoral democracy when Mr Enkhbayar was in power, but I don’t think that is the case now. This year’s parliamentary elections proved that. It was full of cheating and scandals. Mr. Elbegdorj just managed to imprison his only major competitor right before this year’s parliamentary elections and also ahead of next year’s presidential election. Oh and let’s not forget how he couldn’t stop supporting his party during the elections when the president HAS to be neutral. In a way, he just secured his power for the next four years and I don’t think it is going to end then. I can just see Elbegdorj becoming the Nazarbayev of Mongolia.

    It seems to be that you have only been talking to people from the Democratic Party if you say “the former president was guilty of very serious corruption while in office”, while some people in Ulaanbaatar seem to agree that Mr Enkhbayar was involved in corruption, most people agree that his corruption is nothing compared to Mr Batbold (the ex prime minister, head of MPP) or Elbegdorj himself. From what I heard from my family, and from the comments on Mongolians news websites, 70-80 percent of people seem to support Enkhbayar. It is a widely known fact that they enriched themselves from Tavan Tolgoi mine. “part of the problem with the prosecution was that the actual charges brought against him were fairly trivial and didn’t reflect the gravity of his crimes”, I am sorry, but whoever gave you that impression is a very illogical person. WHY would that happen? I just don’t understand. If Enkhbayar was actually guilty of some MAJOR crimes, then why can’t the government or the judicial system state them?. From the way I see it, Mr Enkhbayar is actually quite clean but as he is a threat to Elbegdorj, number of “charges” were brought against him just to make him disappear. I am SURE that whatever Enkhbayar did was actually that SERIOUS then we would have heard them by now. No one in Mongolia can actually give you the details of what he did, the only statement people who are against Enkhbayar can make is “he is a corrupt guy”, yet, no where have I heard in UB of exactly what he did besides the funny charges he was imprisoned with. I think this just proves that Mr Enkhbayar’s case is a clearly a political repression at work.

    I do agree with you on one point though, South Korean way of launching corruption investigations to their rivals IS a terrible practice. A practice that Elbegdorj carefully studied and successfully carried out. Please don’t say “The country’s nonetheless impressive record of democratic institution-building over the past 20 years”, after all, Mongolia is ranked at 120 in the world for corruption (down from 80 when Enkhbayar was in office). I feel that there is very little hope for Mongolia to become like Norway and a BIG chance of it becoming like Nigeria. In the end, no external force would be altruistic enough to solely support Mongolian democracy, the US, European countries’ interest in Mongolian natural resources will surely cloud their support for Mongolian democracy.

    • Daniel Ehighalua

      Altansukh wrote ‘I feel that there is very little hope for Mongolia to become like Norway and a BIG chance of it becoming like Nigeria’. Given the magnitude and brazenness of corruption in Nigeria, those words understates the enormity of the problem. The Nigerian situation is simply, a cancerous epidemic!

  • bodon

    To Altansukh: You are upset because you are Enkhbayar-fan. That is fully understandable.
    To other readers: Don’t believe Altansukh’s nonsense.
    Enkhbayar has made Mongolia corrupt. 120th rank for Mongolia on corruption is the end result we achieved thanks to Enkhbayar’s reign in the past. And this is not something you can change overnight, even if the current President Elbegdorj and Mongolian people want it so bad.

    As an Anti-Elbegdorj fanatic, this Altansukh states that the recent parliamentary election was full of fraud and scandal. Yes, if he meant the cash-money-hand-out methods used by the Mongolian People’s Party (MPP) candidates. A party once led by Enkhbayar. Former commies, we say. Nevertheless, MPP could not win the majority of seats. Yep. The Mongolian people got tired of MPP-lies in the past 20 years of their ruling, including Enkhbayar’s.

    70-80% of Mongolians support Enkhbayar? Bullshit! Where did this Altansukh get this number? Oh yeah, from his family members and websites (give me the source!).
    Altansukh also called the charges against Enkhbayar “funny”. There is no such thing called “funny charges”. What is so “funny” about it?

    Taking possession of properties unlawfully by using his position as the President is funny? Well then, thanks to him Mongolia is full of funny things right now, but it will change, don’t worry. Just wait and see.

    p.s. I think the Kazakhs are better off with Nazarbaev in charge.

  • zlow

    Altansukh you’re such a Enkhbayar FAN! Cmon his hunger strike show raised all your feminine emotions ? The man committed fraud and he must pay for his crims big or small. Regarding others you named such as ex PM etc they should pay as well just because they were involved in bigger corruption cases does not mean we should let go MR Enkhbayar. So hop off Mr. Enkhbayars bandwagon.

    Regarding the article, excessive force ? Nope the guy used state appointed bodyguards to dodge arrests from the special agents and barracked himself in his apartment and surrounded it with 200 or so with his loyal supporters to protest the arrest. The excessive force was there to overnumber the supporters so things wouldt get out of hands and eventually somebody gets hurt.

  • M. Tuul.

    Altansuh. I like what he said. He is not the fan of Enhbayar. He is just expressing his opinion based on the information feeding by his family and news. Like me we are Mongolians who live in outside of the country and haven’ t been blinded by any political parties. We are able to see things from different angle and worry the country where we were born and our families live in.
     

  • Haliun

    It is impossible to reveal all the truths or may I call it “realities” as we can’t find any proof of bribery in such wide web of deliberate corruption in Mongolia. Hence, taking one side or supporting one party won’t solve the problem, but makes the dispute worse. Almost every politician or governor is involved in this deep corruption. That’s the only truth. There is no point for us to divide into groups and argue with each other. Wasting precious time.

  • Arslan

    Enkhbayar or Elbegdorj-they are two sides of a coin. But one is in jail while the other is the triumphant president (for now). I’d like to see both of them and many other deeply corrupt politicians (of whom many are empty-headed and dirty-handed businessmen) in jail and bring justice to the society. They’ve robbed the country and ordinary people to become filthy rich and they have no end to their greed….

  • victoria wilson – mn

    “All of this new mineral wealth poses a huge problem of corruption and other ills associated with the resource curse.” A resource is not a curse for a country – it is a wonderful thing.

    The curse comes knocking on their door, enormous bag of cash in hand, offering to liquidate the resource. What do these funds represent and how are they to be divided? How much of that wealth is the product of educating a workforce to work in the industry; developing measures to keep the public safe; a judicial system settling disputes along the way; environmentalists working to maintain other public property; a commerce department encouraging supporting industries? And perhaps more importantly would this country have made all the same tradeoffs?

    Democracy and capitalism are such fierce friends because they are (ideally) the culmination of everyone’s choices. When many individuals make the same choices again and again, there is a market for that choice. The public can depend on it, trust it, act on it and move on with their day.

    If more effort was directed at quantifying the activities that produce group benefits, than a structure could emerge that would help politicians with such conundrums. Presently this politician is faced with the pressure of a tremendous imbalance. On the one hand there is the fluid wealth of the resource but the other hand is lacking the claims, negotiated over generations, by a variety of social structures.

  • http://www.sea-atheists.org/indonesia/ Karl Karnadi

    Reading from early comments above from Mongolians, I got an impression that it is somehow well-known that all parties and presidents are corrupt, and the debate is about which one is less-corrupt. Seems Mr. Fukuyama is correct in stating the universality of the corruption problem in Mongolia.

  • Sana

    Generally, I agree with Altansukh! I can see that you can read between the lines. Not many in Mongolia can do that. I can see that Mr. Fukuyama met with only people who have supportive views of Elbegdorj. President Elbegdorj’s office that managed Fukuyama’s visit was strict and in full control of whom Fukyama should meet. I tried, but could not get any chance of meeting Fukyama. ” It is important for the government to prosecute not just a single former president, but other officials from other parties guilty of corruption as well, including the current ruling party.” this is not happening!!! Now the government has been taken over by Elbegdorj and his allies 100% and they can do anything want. Majority of the people expecting nothing good from what’s happening now in Mongolia. The rule of law has been applied unfairly now days. Both, former and current political leaders doing nothing good for Mongolia. They are just fighting for Mongolia’s mineral wealth and taking revenge on each other for “unfairly large share”. The previous government with full support of president Elbegdorj cheated Mongolians and gave away our biggest mineral deposit OyuTolgoi to Ivanhoe Mines for almost nothing. Politicians have been robbing ordinary Mongolians of their share of wealth. Extreme unequal income distribution is epidemic Mongolia. In fact, Mongolia’s worsening corruption, indexed from 80 in 2009 to 120 in 2011 happened during previous coalition government, under the presidency of
    Mr. Elbegdorj!!! Facts don’t lie!!

  • Bayar

    Resource curse has already fell upon Mongolia. The previous coalition government that consisted of both Democratic and People’s parties, under the blessings of president Elbegdorj signed OT contract that was insult to Mongolia. OT is the largest coking coal deposit in the world and our CORRUPT POLITICIANS cheated its people and gave away our wealth to Friedland, robber under saint’s coat. There is no doubt that president Elbegdorj conspired with so called investors–foreign thieves to steal away our wealth from us. Elbegdorj exposed his true by stating on BBC interview that Mongolian people don’t need to get 50% of OT mineral deposit.

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  • Chimgee

    I am not here to either defend Enkhbayar or Elbegdorj.

    President Enkhbayar is a very conspiracy oriented individual. For the 8 years he has been a President, i have seen how corruption can degrade a country. Many people know that NOT all his corruption cases were presented in front of the Judiciary, only few ones and he got 8 years of sentence. However, it at least gives me a hope for our democracy, a ray of justice (even if not fully realized) could exist. On the other hand, i wont deny there might have been a politcal timing from the other party during election time. This does not make me Elbegdorj fan as well, all i want for my country is not to fall under the influence of the evil minded leader.

    Regarding the mineral curse, it has started in early 2000s. There are many conspiracies who got what and how. I have heard from some important individuals that even Russia and America were political part of the dirty OT contract with Enkhbayar. Of course, such things are to be revealed in no near future.