One day after the elections, E.Bat-Uul, Mayor of Ulaanbaatar and Leader of Ulaanbaatar’s Democratic Party, said that the 2016 parliamentary elections and Ulaanbaatar City Council elections turned out to be a “tsunami” for Democratic Party (DP) as a whole, and especially for Ulaanbaatar’s Democratic Party. A tsunami is a phenomenon where a large volume of water is displaced due to an earthquakes, resulting in high ocean waves that do unpredictable damage to coastal areas.
A total of 498 candidates – including 68 independents – ran for 76 parliament seats in this election. Besides the independents, there were 12 political parties and three political alliances represented. The Mongolian People’s Party (MPP) had a landslide victory, winning 65 seats. The DP, which was in power, won only nine seats compared to the Mongolian People’s Revolutionary Party’s (MPRP) one seat and one independent candidate being elected. No one had foreseen these results.
This outcome was greatly influenced by a press conference held by Prime Minister Ch.Saikhanbileg on the day before the elections. He announced that Russia’s Rostec Corporation, which owned 49 percent of the Mongolian-Russian joint venture Erdenet Mining Corporation, completed the sale of their full stake to Mongol Zes (Mongolian Copper). He noted that the sale gave Mongolia full ownership of the Erdenet mine.
The announcement raised alarms for people because Mongolia’s biggest public asset had been secretly sold by the government to an unknown company without any notification to its owners (the people). It is still unclear how the company found such a huge amount of capital to make the purchase. This information started a political tsunami and made undecided voters turn against the DP and vote for the MPP.
This tsunami revealed the facade of Mongolia’s political structure and the reality of our public governance, letting the public see who is who. From another perspective, this election brought about the opportunity to strengthen our political institutions, and challenged the country’s politicians to get out of the economic crisis and revive the economy.
In a democratic country, a “soft coup” is only possible with a fair election. The 2016 parliamentary elections completely changes the landscape of Mongolia’s politics, as the ruling power fully transfers from the DP to the MPP. The election system was changed just before election day from the mixed system of 2012 to a majoritarian system. This change had an impact on the election’s outcome as well.
The majoritarian voting system increases the likelihood of a two-party system and gives more opportunity for either dominant party to win the majority of seats and form a cabinet on their own, while creating room for opposition. As the constituencies are clearly designated, this system also provides a strong platform for members of parliament to work closely with their voters, which tends to remove the distinctions between the individual and political party factors. However, the majoritarian system leads to increased factions, making members of parliament work outside of their electoral districts and give promises of a populist nature.
For these exact reasons, the voting system was changed to a mixed system in the 2012 elections. Nevertheless, it allowed people who were not so popular among the public to get a seat in Parliament due to their political affiliations. It was one of the reasons why the system was changed back to a majoritarian one.
With their policy to develop the economy, the DP acquired internal and external loans and implemented unsustainable projects, such as providing housing mortgages with an interest rate three times lower than the market rate and a price stabilization program carried out by the government. The voters were unhappy that the DP never mentioned anything about repaying the national debt, which has grown to be as large as 220% of our GDP.
The Prime Minister’s statement on the Russians selling their stake in Erdenet Mining Corporation to a private company unsettled voters and shook their trust. It clearly showed how the authorities treat the public’s interests.
The DP now has an opportunity to reflect on the path they have been on, to make changes, and to make party reforms. I believe that the DP will grow into a major political force that will develop and strengthen Mongolia’s political and economic institutions, deliver equal services to every citizen, and establish the rule of law in 2020.
In order to achieve this, the DP needs to develop into an exemplary political institution based on strong principles, where political party financing is transparent. On the other hand, people expect the MPP to not repeat mistakes made in the past, abstain from stealing public property and land, and implement everything included in their 2016 election platform.
If our two major political parties accomplish these tasks, a great opportunity will open up for Mongolia to bring our democracy to the next stage.
MAJOR ECONOMIC CHALLENGE
The MPP has been handed a nation strangled by debt and an economy where major commodity prices are falling and the budget deficit has reached 20 percent of GDP. It is the public’s expectation that the MPP forms a professional government consisting of cabinet members who are highly capable, who put the public’s interests above theirs, and take an ethical approach to their job. There should not be many members of parliament who will wear a “double deel” (holding a ministerial office while serving as a member of parliament).
There is a need to attest whether the Erdenet deal was done within legal boundaries, if it change the company into a shareholding company, if the company will offer shares on an international stock exchange, and if the public will be allowed to own shares. In the first phase, the focus needs to be on supporting import substitution and creating highly profitable export products.
Also, a fund for repaying the Chinggis Bond’s principal payment of 500 million USD at the end of next year needs to be established now. In order to attract foreign investment, public governance has to be transparent with its long term outlook clear and predictable. Large infrastructure projects must go forward.
Tax pressures should be relieved, and VAT needs to be reduced and imposed on all companies. Furthermore, fair and free economic competition should be encouraged while state-owned companies need to be changed to shareholding companies. Shares should be sold on the domestic stock exchange so that oversight from shareholders can be achieved.
It is time for the capital city to have a zoning plan; a register of properties under the public domain with disclosed details such as area, owner, coordinates, and valuation; and introduce a smarter approach to using real estate properties.
The location of future highways to the new airport needs to be determined first. The auction for land use licenses should only take place afterwards. When implementing programs to provide apartments to ger district residents, a regulation should be made so that the land owners benefit from the properties that have been built on their land.
We – the citizens – are waiting for the new government to get the country out of its economic crisis and to establish the rule of law in society.