Mongolia's Conflict of Interest with Democracy

Mongolia’s conflict of interest dilemma

This of course presents an interesting dilemma in the form of the most profound of conflicts of interest; why would the very people who benefit from the system be inclined to change it?

Even if they do realize that this system will lead to the detriment of the same citizens who elected them in the first instance. This is a dilemma similar to the one faced by the Soviet Politburo towards the end of the cold war. They knew that the statistics they were fed were fabricated, they knew the state was heading towards its own demise and that the system was intrinsically flawed, but to acknowledge this fact would lead to their own instant downfall from power and favour. Unlike the Soviet Union which was heading for collapse, Mongolia is heading towards unparalleled riches, thus removing any incentives from the elite to change the system.

This same political elite has already started pushing the country down the slippery and blurry slope of too much power concentrated amongst too few people. Russia has preceded Mongolia down this very same slope with the result that the country is now ruled by the oligarchs who have made a farce of the democratic process. This slow journey downwards is reflected in Mongolia’s constant slip in international indicators such as the respected Fraser Institute study where Mongolia ranks further towards the bottom with each passing year.

Is a tsunami of international financing is about to decent on Mongolia, the eyes of the world are aimed at this huge landlocked nation to see what decisions will be made. Will the astronomic growth in the economy strengthen or rather weaken what is now considered to be one of Asia’s most promising democracies?

Mongolia is setting itself up as the fascinating stage for a contemporary experiment in social and economical behavior on a grand scale.

The stage is set and the curtain has just been raised.

While Mongolia’s democracy is still young, it has made gigantic progress in the 20 short years of its existence, it has risen from the ashes of the failed Soviet experiment to become a respected player in the geo-political scene of Central Asia, it has retained its independence from neighboring countries and built a solid parliamentary led democracy, this despite the many opportunities and temptation to abandon this system in favor of an easier and more authoritarian option.

While a casual observer of Mongolia’s current political system might be forgiven for considering it progressive, just and fair, another side to the coin is becoming increasingly apparent for those who dig just beneath the surface. It is a story of corruption, abuse of power and public scandals.
The importance of symbolism

Sukhbaatar square, in the center of Ulaanbaatar, is filled with interesting elements of representation. The parliament building in Ulaanbaatar is probably one of the few buildings in the world that has a giant statue of the renowned and ruthless leader of the largest land empire, someone not known for his democratic penchants while the original leader of the democratic movement of Mongolia is commemorated by a small statue that sits, largely unloved, in a quiet little park opposite the post office.

Along the same line of thought concerning symbolism, as an old man pointed out to this author recently: “which other capital in the world allows its main square and parliament to be surrounded by much taller and more impressive commercial structures than its own parliament building”. This sends a clear message to visitors and investors about the power struggles within the country.

Absolute Power Corrupts Absolutely

It is now clear that rampant levels of corruption are prevalent at all levels of the state apparatus; this corruption is not always illegal but is certainly immoral. Corruption in Mongolia as concluded by the latest USAID Assessment of Corruption in Mongolia is enabled by the following weaknesses in the public administration system:

A profound blurring of the lines between the public and private sector brought about by endemic and systemic conflict of interest at nearly all levels;

A lack of transparency and access to information that surrounds many government functions and undermines nearly all aspects of accountability by contributing to an ineffective media and hindering citizen participation in policy discussions and government oversight;

An inadequate civil service system that gives rise to a highly politicized public administration and the existence of a “spoils system”;

Limited political will and leadership to actually implement required reforms in accordance with the law, complicated by conflictive and overlapping laws that further inhibit effective policy implementation; and
Weak government control institutions, including the Central Bank, National Audit Office, and Parliamentary standing committees, Prosecutor General, State Professional Inspection Agency, State Property Committee, and departments within the Ministry of Finance.

Mongolia is ill provisioned in conflict of interest laws or prepared in their enforcement. Abuse of power by the top tier public officials in procurement-related tender and in appointing Government officials is all too common to be considered an exceptional event.

The vast majority of cabinet ministers appointed by the Parliament after the 2008 parliamentary elections are businessmen, who hold key business positions and interests in the sectors which they lead (energy, construction, tourism and transportation, etc.) The media reports on a daily basis on major cases of conflict of interest decisions made by these ministers, which violate laws of regulating all spheres of public administration, including key areas such as procurement of goods and services, tender rules, release from and appointment to public office, delegation of decision-making authority but this is having little effect on the actions of those parliament members.

It quickly becomes apparent to even the most casual of observers that for Mongolia to continue to develop itself along the lines of equal opportunities and democracy it must take seriously the most basic of issues such as conflicts of interest amongst its elected officials. Conflict of interest laws are essential for the development of a true rule of law, they are grounded on the notion that government officials owe paramount loyalty to the public, and that personal or private financial considerations on the part of government officials should not be allowed to enter the decision making process.

Of course, this story of abuse of power is a common one amongst emerging countries throughout the world but no other country has the potential for development that Mongolia has. It therefore cannot afford to be ruled by its most influential businessmen, a clear and distinct separation must be made between those at the service to the people of Mongolia and their business interest. This is of course challenging in any circumstances but made even more so by the small size of the active political and business population in Ulaanbaatar.

Is democracy the most appropriate system for Mongolia?

It could further be argued that democracy is possibly not the most logical or best adapted political system for Mongolia; must its principles therefore be saved at any and all costs?

Democracy is, as was Communism, nothing but a utopian concept that governments use and adapt to their own needs and circumstances. No country in the world can be truly considered democratic, just as no two people can be considered equal.

Britain, the acclaimed inventor of modern democracy is constantly plagued with political scandals of all types as well as a morbid economy that seems to be beyond reanimation; France, thanks in large part to its brilliant representative democratic system of giving power to the people, suffers from endemic strikes, loss of productivity and high worker privileges, thus disabling the economy and making it uncompetitive in the global market place.

India, often described as the world’s largest democracy is still ruled by a cast system that excludes large tranches of the population from the benefits of economic growth while America, the supposed defender of the principles of democracy throughout the world is effectively constrained in its leadership by the political power of large multinational corporations, this to the detriment of the people on the street.

The lack of a real democratic system will in no way hinder foreign investments or trade with other countries, neighboring Kazakhstan, China and Russia are all examples of this. Foreign investors are pragmatic above all else and seek political stability, regardless of the political system chosen. This means that international money will flood Mongolia, despite its political system, not because of it. It is for the distribution of that revenue amongst the people of Mongolia that the chosen political system is of paramount importance.

A socialist system sounds great on paper but doesn’t work in practice as proven by many other countries; a dictatorship doesn’t achieve much in terms of income distribution either, this leaves Mongolia with a democratic system as its best chance to achieve economic growth across all sectors of the society. Democratic principles, however flawed they may be, must therefore be pursued for the sake of the citizen’s of Mongolia themselves.

For democracy to function and be successful, it requires an educated population, a population able to criticize and understand choices that are offered. The levels of education in Mongolia use to be amongst the highest in the world but due to government inaction, those standards are now slipping.

Avoiding the "Animal Farm" Syndrome

Just as in the dystopian allegorical novella by George Orwell, the environment now exists for those holding the reins of power in Mongolia to amass sufficient power over both the political and economical spheres of the country to become effective oligarchs to the detriment of the citizens.

Similar to the secret additions made to the 7 commandments by Napoleon and his pigs as they are corrupted by the absolute power they hold over the Animal Farm, a similar scandal exploded in Mongolia in 2007 as the Speaker of the Parliament was found to have made additions to the charter of the Anti-Corruption Agency to annul its status as an independent agency to one that reports to parliament and to give immunity from the agency to top tier government officials. When this was exposed to the public, scandal ensued and the Speaker was simply allowed to resign from his post without criminal prosecution. (Source: ADB anti corruption project)

This scandal was exposed by a tiny project directed by the WSP and funded through the ADB entitled anti-corruption and transparency initiative regulation of conflict of interest in Mongolia.” This project, with its minuscule $21,396 in funds was a great catalyst for general public discussion about the problem amongst the public and the media. It also led to the creation of the “Managing Conflict of Interest: A Toolkit”.
Endgame

While the press is generally considered free, journalists are themselves known to lack ethics and are often more than happy to print stories based on rumours rather than factual basis. This leads to considerable misinterpretation amongst the public but at least the issue is on the table and politicians cannot act with complete impunity. Growing discontent amongst the populace is also forcing politicians to address the issue publicly and make renewed promises to halt corruption. This issue was brought to the forefront during the last presidential election and is likely to be further promoted in the next parliamentary elections. This public discontent has also led to the creation of a number of civic movements to protests against growing abuses on the part of civil servants. The prevalence and availability of the internet and its social networks is having an enormous impact as it is improving communications and allows all of the citizens of Mongolia to make their voices heard.

Furthermore as Mongolia becomes the focus of international critics; it also receives aid, guidance and assistance from foreign countries. Mongolia is further fortunate in having a few strong politicians that are attempting to erect a damn in an effort to stem the tide of corruption. This new wave of politicians, led in greater part by Mrs Oyun from the Civil Will party appears to have the genuine wish to lead Mongolia for the benefits of its citizenry.

The cornerstone any anti-corruption and conflict of interest initiative must be to improve the integrity and powers of the judicial system of the country, at the moment the judicial system in Mongolia is entirely controlled and financed by the State Great Hural (parliament), this undermines the principle of checks and balances and creates a critical financial dependence on the judiciary. Such a system is completely outside the realm of transparency and creates a precedent for the corruption of the judiciary by executive authorities.

Praise must be given where it is due, Mongolia is currently a fully functioning democracy supported by a free press and a politically active population. The country has achieved enormous progress in an extremely short period of time and is now set to reach new levels in geopolitical power and influence.

It must never the less be pointed out that drastic action must be taken now while it is still possible to stem the growth of corruption, conflict of interest and rampant protectionism. It is the people of Mongolia who stand to lose the most, expats will come and go, foreign nations will exert their influence and the wealthy Mongolians will be able to leave the country at a moment’s notice. It is those who rely on their government for support that stand to risk the most.

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