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Mongolia Democratic Party Confident of Victory After Voting

Mongolia’s Democrats expressed confidence they will form the next ruling party after elections for parliament, even as officials ordered another vote in two districts and early results showed no group won a majority.

The Democratic Party said it won 36 of 76 seats in the State Great Khural, according to a statement posted on its website yesterday. The election commission, which confirmed that the party won more seats than any other group, ordered new polls in two districts June 30 after winning candidates failed to garner enough ballots.

“The DP is definitely going to be the ruling party,” it said in the statement. “The main indicator of a democratic country is free elections. The people gave us their trust. It means that Mongolians want to live and develop as in other countries.”

The Democrats and the Mongolian People’s Party are grappling for control of a legislature that will have a say over how the country uses the profits from an estimated $1.3 trillion in gold, copper and coal reserves. Mining companies led by Rio Tinto Group (RIO) have invested billions of dollars in the nation of about three million people.

Mongolia’s next parliament will need to help reform the judicial system, fight corruption and pass a set of new laws on mining and land use that seek greater protection for the environment among other measures, President Tsakhia Elbegdorj said in a June 29 interview.

Sharing Wealth

One government plan to share Mongolia’s wealth is to give each citizen one preferred share of Erdenes MGL, a state holding company that owns more than a dozen of the nation’s biggest mineral deposits.

The distribution of Erdenes MGL shares has been approved by parliament and at the cabinet level, Elbegdorj said. He said he is “cautious” about the plan and wants it to involve only one of Mongolia’s major deposits, the 6-billion-ton Tavan Tolgoi coal field.

Mongolia doubled state spending in real terms to 6.3 trillion tugriks ($4.7 billion) last year as the government offered cash handouts to the population to meet previous election pledges and added more public sector jobs, the International Monetary Fund said in December. The cash caused food prices to jump 31 percent in April from a year earlier.

Lost Faith

The handouts haven’t had a lasting impact, said Puruvdorj, a 73-year-old pensioner in Nalaikh, a coal mining town close to Ulan Bator. The number of new bars and karaoke salons has surged in the town, where Mongolia’s coal exploration began in the 20th century, he said.

“There are rivers of alcohol, it is flourishing, but there’s nothing concrete,” Puruvdorj said. “I’ve lost faith in the government and parliament.”

The next government will narrow the cash payments to five “most needy” groups, Elbegdorj said -- the elderly, children, the disabled, students and young mothers. The government may also give tax exemptions to small and medium-sized businesses, he said.

Even as the Democratic Party declared victory, the Mongolian People’s Party could also seek to team up with other partners. The two could, as in the previous government, join together for a larger coalition, though the Democrats appear reluctant to do that for now, according to Jackson Cox, chief executive of the Ulan Bator-based consultancy Woodmont International.

Final Results

“While Mongolian election officials are close to resolving the final election results, the process of Mongolia’s political leaders to cobble together a coalition so that a new government can be formed is just beginning,” Cox said.

The Democrats have several choices to reach the 39-seat threshold, and the MPP “has options of its own to form a formidable bloc in the new parliament,” Cox said.

The results from the June 28 vote are preliminary until each election district approves them, the General Election Commission said yesterday. At the moment, the Democrats won 22 seats and the MPP took 19 of the 48 being contested in the direct elections, according to the commission. Twenty-eight seats are awarded via proportional representation.

The Justice Coalition, which includes former President Nambaryn Enkhbayar’s party, won four seats and the last three went to independents, he said.

To contact the reporter on this story: Yuriy Humber in Ulan Bator at yhumber@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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