Mongolia’s Elbegdorj Seeks Re-Election on Anti-Graft Drive

Mongolia President Tsakhia Elbegdorj is positioned to cement his party’s hold on the mineral-rich country, with a poll showing he is front-runner to win re-election after campaigning on his anti-corruption credentials.

A win by Elbegdorj over Badmaanyambuu Bat-Erdene of the Mongolian People’s Party in today’s vote would give his Democratic Party sweeping powers until 2016, as it controls the positions of prime minister and parliament speaker and has a majority in parliament. It could ease legislative bottlenecks, with Elbegdorj calling for more foreign investment.

Having Elbegdorj remain at the helm “will bring more economic growth,” said Bayanjargal Byambasaikhan, chairman of the Business Council of Mongolia, with business “not having to worry about politics.”

The Mongolian leader, president since 2009, has promised to revive foreign investment that fell 37 percent in the first four months of the year after parliament, controlled by Bat-Erdene’s MPP at the time, passed a law restricting investment in mining, media and banking. Gross domestic product growth reached 17.5 percent in 2011 -- the fastest rate in the world -- before slipping to an estimated 12.3 percent last year, according to data from the International Monetary Fund.

Polls will close at 10 p.m. local time and are being monitored by 400 foreign observers from 35 countries. At a handful of polling stations electronic voting machines had to be reset following complaints they weren’t operating properly, according to the head of the General Election Commission, Choinzon Sodnomtseren.

Must Unite

Casting her vote in the capital of Ulaanbaatar, Tsevegjav Tuya, a 47-year-old businesswoman and Elbegdorj supporter, said lowering energy tariffs, fighting corruption and promoting national unity should top the agenda for the next president.

“A reliable source of power and low energy costs will determine economic conditions,” Tuya said. “Politicians need to unite instead of standing in each other’s way and just speaking on behalf of their own party.”

The 2012 foreign investment law has been amended once and the Democratic Party has talked of replacing it. Fresh investment is also waiting on a new minerals law proposed by the president’s office, which has been held up by the election.

Sant Maral

A poll by non-profit group Sant Maral Foundation on June 14-16 showed that 54 percent of voters favor Elbegdorj and 37 percent support Bat-Erdene. A third candidate, Natsag Udval, received 9 percent. Almost 43 percent of respondents said they back the policies of the Democratic Party and 16.5 percent support the MPP. The poll of 1,480 people was conducted in Ulaanbaatar, home to half Mongolia’s 2.9 million people, and had a margin of error of 2 percent.

“Most probably Elbegdorj will cross through in the first round,” Sant Maral Foundation director Luvsandendev Sumati said by phone. According to election rules, a run-off is held within two weeks if no candidate wins more than 50 percent of the vote.

Elbegdorj has pledged to battle corruption by giving more power to communities to decide how money is spent. Communities will get 270 billion tugrik ($187 million) to spend at their discretion, he said in an interview with Bloomberg TV Mongolia on June 14, with the government requiring all agencies to report their finances on the Internet to foster transparency.

Corruption Campaign

The MPP ruled on its own or was part of a coalition government for all but four years from 1921 to 2012, and has come under criticism over corruption.

Since the Democratic Party took power in July 2012 there have been a number of high-profile arrests. In August 2012, former President Nambar Enkhbayar of the Mongolian People’s Revolutionary Party was sentenced to four years in jail for corruption, later reduced to two and a half years. The former chairman of the Mineral Resource Authority, Dorjpurev Batkhuyag, is serving a three and a half year sentence for selling more than 100 illegal mining licenses.

Combating corruption “has emerged as one of the hallmarks of the Democratic Party and Elbegdorj is continuing with a theme that has worked well in the past,” said Julian Dierkes, associate professor at the University of British Columbia’s Institute of Asian Research. The campaign makes Elbegdorj look like “an underdog fighting against the entrenched structures within the state associated with the MPP.”

Business Climate

Elbegdorj’s Democrats have emerged unscathed from the anti-corruption campaign, Bat-Erdene said. “If one wants to fight corruption, then the strict rules of the law should be applied to every corrupt official irrespective of their party membership,” he said in an e-mail.

Disputes over wealth-sharing have delayed progress on some projects. Last year, Bat-Erdene backed an unsuccessful bid to scale back the 2009 Oyu Tolgoi Investment Agreement, which guarantees 30 years of stability for investors in one of the world’s largest untapped copper and gold deposits, including Anglo-Australian miner Rio Tinto Group.

“I am still critical of the agreement, there is room for improvement,” said Bat-Erdene.

The MPRP has in the past advocated term limits on mining operations owned by foreign entities. In a June 4 interview, the party’s candidate Udval said she welcomes foreign investment that’s “socially responsible and environmentally friendly.”

Some investors say the business climate will not improve substantially after the election, even with an Elbegdorj win.

“The problem is Elbegdorj was already in power and nothing happened with him after the parliament elections” a year ago, said Oscar Mendoza, the managing partner for Mongolia Asset Management, an Ulaanbaatar-based advisory group. “Nothing will have changed.”

To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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