Mongolia's new wealth and rising corruption is tearing the nation apart

Mongolia's parliamentary elections are scheduled for Thursday, and its capital city is awash with politics. The faces of candidates fill the newspapers, peer out of TV sets and stare down from billboards.

A few miles away from the parliament building – a shiny glass edifice guarded by a giant statue of Genghis Khan – the 54-year-old former president Nambaryn Enkhbayar lies in a hospital suite hooked up to an intravenous drip. Enkhbayar was arrested under suspicion of corruption in April and staged a 10-day hunger strike in detention. He resumed eating when the authorities agreed to release him on bail.

"They launched a politically motivated campaign against me," Enkhbayar said on a warm afternoon in early June, his face gaunt, his nightstand stacked with Buddhist texts. "A hunger strike is, I think, a very proper way of fighting."

The elections will be Mongolia's sixth since it shed its Soviet-controlled communist system in early 1990, and the stakes are high. The country'srecent discovery of massive copper, gold, coal, uranium and rare earth deposits have opened the floodgates to foreign investment and kicked its economy into overdrive. Mongolia's GDP grew by 17.3% last year and shows no signs of slowing down.

Enkhbayar's case – the highest-level corruption drama in Mongolia's history – embodies the young democracy's soaring ambitions and underscores the risk that political infighting, opacity and graft could send them crashing down to earth. Analysts say that if Mongolia's new leaders are transparent, equitable and just, they could use the country's mineral wealth to forge a stable middle-class society like Qatar. Yet Mongolia could just as likely become another Nigeria, where an oil boom in the 1970s led to environmental degradation and conflict, the country's wealth frittered away by corrupt officials, its average citizens left mired in poverty.

"Our society worries that things are not going that well in terms of social justice, that there is a growing gap between rich and poor, and that there is an oligarchic class," said Sumati Luvsandendev, the director of Sant Maral, a polling organisation in Ulan Bator.

For many Mongolians, high-level corruption is one issue that underpins the rest. They have few doubts about its existence. Although winning a seat in parliament costs around $2m (£1.27m), its members make about $800 a month. Mongolia was ranked 120 out of 183 countries onTransparency International's 2011 corruption perceptions index, tied with Bangladesh and Iran.

Symptoms of sudden wealth are ubiquitous in Ulan Bator, where high-end restaurants flank rubble-strewn alleyways and brand-new Landcruisers tie up traffic on crumbling roads. More than half of the city's 1.2 million residents live in "ger districts" named after traditional Mongolian felt-lined tents, which stretch up the hillsides around the central city. As brutal winters and few prospects send herders surging into the city to look for work, they have become slum-like sprawls of hastily partitioned properties that lack running water and heating.

Residents of ger districts have been hit hard in recent years by encroaching inflation and unemployment. Altan Jay, a 39-year-old single mother in one of the poorest areas, has not had a steady job in years. When she can't afford coal in the winter, she heats her home with discarded boxes. "Some people are getting richer and richer," she said, "and all I can think about is food."

Mongolia's rural population, on the other hand, is chiefly concerned by the environmental effects of mining. Nomads in the Gobi desert say that the dust kicked up by truck convoys is turning their livestock black. Rivers are running dry. Herders have been arrested for shooting up mining equipment with old Soviet rifles, outraged by the government's unwillingness to enforce its own environmental laws.

"People used to ask: 'When are you going to increase my salary and pension?'" said Oyungerel Tsedevdamba, a parliamentary candidate and former human rights adviser to the president. "Now it's: 'How are you going to clean this water?'"

Enkhbayar's case has shed light on a violent, corrupt, and profoundly personal streak in Mongolian politics. His arrest on 13 April was broadcast live on state TV. Policemen burst into the ex-president's house, carried him outside shoeless and threw him into the back of a van.

Enkhbayar and his lawyers argue that the current president, Tsakhiagiin Elbegdorj, who took office in 2009, engineered the corruption case to keep him from running in the coming elections. They claim that the court gave them insufficient time to review the prosecutors' evidence and witness statements.

The election authorities' denial of Enkhbayar's candidacy on 6 June, they say, violates his constitutional right to be considered innocent until proven guilty.

"What I see are huge violations, fundamental violations of his right to a fair trial at this point," said Jim Hodes, a US-based independent trial observer. Hodes added that the five charges levelled against Enkhbayar seem overblown and unsubstantiated. One accuses him of misappropriating TV equipment that was intended for a Buddhist monastery. Another alleges that he illegally shipped eight copies of his autobiography to South Korea on a government plane.

Yet others paint a picture of Enkhbayar as a bankrupt politician, flagrantly corrupt and apt to silence journalists and activists who opposed his rule. Unzarya Tumursukh, a 39-year-old political scientist in Ulan Bator, said that even if the case is politically motivated, the high-level friction itself could prove a healthy step in the development of Mongolian democracy.

"Conflict among the elites is very good," she said, "because only then will they bring up information that they've agreed to hide from the public."

Current MPs are focused on preventing a recurrence of the violence that gripped Ulan Bator after the 2008 elections, when thousands of Mongolians gathered in a central square to protest alleged voter fraud. They stole weapons from police stations and set fire to political offices. Five people were killed, and the government declared a four-day state of emergency.

Richard Messick, a corruption expert and World Bank consultant, said that Mongolian politicians are remarkably determined to learn from past mistakes. These elections will be the first in Mongolia's history to use an automated voting system, making widespread fraud unlikely. In January, parliament approved a sweeping conflict of interest law that will restrict abuses of official power.

"I've worked in 10 to 20 countries previously, and this is the most favourable country I've ever seen," he said. "It's really exciting to be in a place like this."

Few Mongolians feel the same way. Tserem Buted, 58, a retired seamstress living in a ger district, said that politicians bombard her year after year with empty promises of an apartment, street lamps and running water. She doubts that the new guard will be much different than the old.

Yet like most of her neighbours, she plans on voting anyway, and refuses to believe that their lives will not eventually improve. "In Mongolia, they say that if you say negative things, they'll all come true," she said. "Good things can come true, too. Maybe not for me, but at least for my children."

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