Former Speaker of Parliament chimes in on the cause of economic decline

Former Speaker of Parliament D.Demberel in the foreground and MP D.Khayankhyrvaa in the background

The following is an interview with former Speaker of Parliament D.Demberel about issues related to Erdenet Mining Corporation (EMC) and the cause of the current economic crisis in the country.

When you were the Speaker of Parliament from 2008 to 2012, Mongolia’s annual growth was over 17 percent, but now the Mongolian economy is at a weak point. Please tell us about what it was like when you came into office?

The Mongolian People’s Party (MPP) and the Democratic Party (DP) worked together for four years, and a lot of money was scattered before the 2012 elections because they both promised to distribute one million to 1.5 million MNT to all citizens during the 2008 parliamentary election campaigns. As a result, several banks went bankrupt.

Do you want to say that policy failures of the two parties and incompetency of the Cabinet and Mongol Bank have caused the current economic difficulties?

Yes. I agree with that. We focused on budget, financial and monetary policies from 2008 to 2012 and approved the Law on Budget Stability, but previous cabinets of this past four years
increased the debt ceiling, issued bonds, and spent much without control by making changes to laws and regulations. We overcame financial challenges facing Mongolia from 2008 to 2010 by collaborating with the International Monetary Fund, the World Bank, and the Asian Development Bank. I think Mongolia should accept conditions proposed by international financial organizations. In my opinion, Parliament and the Cabinet need to push the Ministry of Finance and Mongol Bank to own up to their responsibilities.

You said that there is a chance to turn difficulty into opportunity. How could we turn economic challenges into opportunity?

It depends on government policies. MPs are responsible for doing this and they have to figure out how to do it. I mean that the Cabinet and Parliament have boundaries.

That is true but boundaries have become vague in recent years. Can you comment on this?

Former Prime Minister N.Altankhuyag violated financial discipline from the day he got into office. Besides the allocated money in the Prime Minister’s budget, he has no right to spend more. For example, after investigation on the operations of the Development Bank, many financial violations and unprofitable investments of the Chinggis Bonds were unraveled. The economic and financial challenges were caused by state authorities who are not following the laws. During the MPP-led Cabinet, Prime Minister S.Bayar never asked MPP’s legislators why they didn’t vote for the Cabinet’s bills when Parliament dismissed some proposals concerning the Oyu Tolgoi Project put forward by Bayar’s Cabinet. This showed that state authorities had boundaries. Bayar’s successor S.Batbold showed the same tendency while in office.

What should we do right now to address the economic crisis?

I think the ways that we dealt with economic crisis and high inflation from 2008 to 2012 don’t apply to the current economic challenges. There should be a big focus on figuring out which policies we should pursue during challenging economic times. Making a to-do-list is not important to dealing with economic challenges. The Cabinet’s performance and Parliament’s oversight are important. If the cause of the issue is identified, there will be clear steps to dealing with the challenges. I think that the first thing to address is to identify who put us in difficulty. If we prosecute them, we will see a better outcome in 2018 or 2019. If we do not, the bad habits and tendencies will happen to us over and over again.

After winning majority in Parliament, the ruling political party seems to always investigate rival parties and seek revenge. Is this the correct way to move forward?

We cannot tolerate corruption, we must fight it. Every country fights corruption. Corruption will destroy the Mongolian economy and financial system unless we keep fighting it.

Corruption has become the cancer of Mongolian society. What is responsibility of Parliament in the fight against corruption?

Parliament has a very big role and responsibility in fighting corruption. Parliament has been trying to take control of it in recent years by approving the Law on Conflict of Interest and requiring income statements from government officials. MPs have made the
responsibilities and duties of the Independent Authority Against Corruption clear.

Foreign investments in Mongolia have frozen up. What must we do to attract investment, especially in the agricultural sector?

We need to increase the use of innovative technology in agriculture and promote intellectual investment. Developing Mongolia-Russia-China transit trade is of great importance for improving the Mongolian economy. We also need to make clear policies for developing the mining sector and promote cost-effective manufacturing. Collaboration with investors to seek fruitful cooperation is important.

There are a number of young people in Prime Minister J.Erdenebat’s Cabinet. What is your opinion about the new government?

The Cabinet needs to work in effective and fast ways. A government that includes seniors and youth is great. I support having experienced as well as eager representatives from the young generation work for the state. If they sincerely work for the state by adhering to the law, we will see great outcomes. If they don’t adhere to the law and become corrupt, the state will be in trouble.

After winning 65 seats in Parliament, the MPP can now do anything they want. Which laws do you want Parliament to approve?

There should be changes made in the laws concerning the selection process and evaluation of state employees working in public sectors. I think that a good legal and regulatory environment has to be created for appointing state officials by basing it on their qualifications, experience, and other essential requirements.

I hope you have noticed that the public is critical of many appointments in the new Cabinet and Parliament?

President Ts.Elbegdorj once said that only applicants who have over 15 years of experience in a particular field should be considered for the position of state secretaries. But this guideline isn’t followed at all. As a Member of Parliament, I never asked anyone to appoint anyone. I totally disagree with political appointments. Changes should be made to the Law on Political Party because political parties are very involved in investments and businesses. Financing political parties through the state budget is important, by at least allocating money to parties which have seats in Parliament. If their finances are resolved, they won’t work for rich people.

The public has been critical of the 49 percent of EMC shares sold by Russia to the Trade and Development Bank of Mongolia. You have been appointed as one of the board of directors of EMC recently. Please tell us about the situation?

Everybody is interested in knowing about this matter because there is a critical thing related to the ownership of 49 percent of EMC. The former Prime Minister and ministers are at fault for this issue. After investigation, the issue will be clear to the public. If the privatizing operation violated the laws, the state will redo the privatization of the 49 percent.

If the state does this, Mongolia will need to pay a fine to the company that purchased 49 percent of EMC. Won’t this present more financial burden on the state when it is already facing economic challenges?

100 million USD in fines is okay if it resolves the bigger issue. The people who violated the law should own up to their responsibilities. If it is found that they violated the law in the selling of 49 percent of EMC, the state will not pay any fines.