Mongolia Shuffles PMs to Address Self-Inflicted Economic Crisis

Mongolia Shuffles PMs to Address Self-Inflicted Economic Crisis
November 25 02:24 2014 Print This Article

Last week, Mongolia’s parliament appointed Chimed Saikhanbileg prime minister, two weeks after Norov Altankhuyag lost a no-confidence vote. In an email interview, Julian Dierkes, associate professor at the University of British Columbia, discussed Mongolian politics.

WPR: What factors explain the recent no-confidence vote against former Prime Minister Norov Altankhuyag?

Julian Dierkes: Surprisingly, Norov Altankhuyag was the longest-serving prime minister from the Democratic Party (DP). However, during the two and a half years that he was in office, Mongolia came to face an economic crisis that was largely government-made through strict foreign investment regulation and poor fiscal decisions. Altankhuyag did not show any indications that he had a particular policy goal in mind for his government. Yet he was evidently skillful at keeping his coalition with the Justice Coalition and the Civil Will Green Party intact.

While there had been simmering accusations of corruption, what sunk Altankhuyag was the long-term electoral alliance he announced with the Justice Coalition on Oct. 18. He was joined on stage for the announcement by former President Nambaryn Enkhbayar of the Mongolian People’s Revolutionary Party, a nemesis to the DP and only pardoned last year from his jail sentence for corruption. The announcement sent the DP into a self-destructive spiral that led to eight DP members voting against Altankhuyag when a no-confidence vote was forced on Nov. 5 by the Mongolian People’s Party (MPP).

Note that during this time, the state budget for 2015 was quietly passed, so the presence of a caretaker government seems not to have slowed things down much.

WPR: What led the opposition MPP to boycott the vote for the new PM?

Dierkes: The absence of MPP MPs from the vote was not necessarily a form of protest. To the contrary, it might have been intended to make the election of a new prime minister easier. The ouster of Altankhuyag broke open some cleavages in the DP and led to a curious back-and-forth between the DP parliamentary caucus and the party’s National Consultative Council, which endorsed rival candidates. The election of the prime minister requires a 50 percent plus one vote majority among the members present for the vote at the State Great Khural, Mongolia’s parliament. With the absence of the MPP, only 44 of the 76 MPs were present for the vote. That meant that only 23 votes, rather than 39, would have constituted a majority, a number that Chimed Saikhanbileg was sure to muster even if the DP had split.

The absence of the MPP and its announcement that it would not go into a coalition with the DP under Saikhanbileg may also be part of the bargaining process that the parties are engaged in over the formation of the next government. Saikhanbileg’s Cabinet nominations will be voted on in the next 14 days, and coalition discussions are ongoing. The MPP might thus have been angling for a strengthened bargaining position in such discussions.

WPR: What are Mongolia’s principle domestic political priorities, and how is the recent turbulence likely to affect addressing them?

Dierkes: The main goal for any current government would have to be to get the economy back on the record-breaking growth track that prevailed only two years ago, as well as to fund some of the populist measures adopted in the meantime and repay outstanding loans.

The main piece of the puzzle to get growth on track again are the discussions with Rio Tinto, the majority-owner—via Canadian Turquoise Hill Resources—of the giant Oyu Tolgoi copper and gold project. The strip-mining portion of the project is underway, while the underground portion remains on hold pending an agreement on the $5 billion required for the development of the next phase.

Since Saikhanbileg served as Cabinet secretary in the Altankhuyag cabinet, it is not clear that his government will be able to further discussions with Rio Tinto. If Saikhanbileg follows the current political winds, however, and appoints a technocratic Cabinet, this might actually lead to a more focused attempt to engage Rio Tinto, but also a rethink of government ownership of the Tavan Tolgoi coal project.

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