Wednesday, May 21, 2014

Mongolia Brief May 20, 2014 Part III



Who are the secret owners of political parties?

May 20 (UB Post) Who is the most influential person in Mongolia? For whom exactly does the authority make decisions for? In order to answer these questions fully and accurately, we, the citizens, must at least be aware of who exactly is funding political parties that are producing authorities. In other words, we must know where political parties get their financing from.

Without investigating who donated how much, to which political parties, under whose names, and whether those who made donations or their relatives have been given senior positions inside the government, and without disclosing such information to the public, Mongolia can never stop corruption and remove the biased influence that wealthy individuals and companies have on the decisions that are coming from the government.
Given that they are keeping the financial information of political parties undisclosed to the public, it sounds like a bad joke when the government announces that they will become a “smart government” and have a “glass purse” (meaning their financing will become transparent). The financing of political parties have been increasing after every election, reaching dozens of billions of MNT and there is no transparency in where or from whom political parties get their campaign finance and how they are paying it back.
If a country cannot stop its government policy from serving only few wealthy individuals, people lose their trust in the government and a dictatorship gradually sets in. When that happens, democracy, human rights, and an increase in the living standards of ordinary people become nothing more than a dream.
The life of political parties in Mongolia has two seasons: election season and non-election season. During an election season, financing of political parties is regulated by the election law. If it is a non-election season, the Law on Political Parties governs the funding of political parties.
It is stated by the law that political parties must submit their campaign finance reports to the General Election Committee within a month after the conclusion of an election. According to the General Election Committee, the Democratic Party spent 11.2 billion MNT while the Mongolian People’s Party spent 10.1 billion MNT for the 2012 parliamentary elections. The total expenditure of all political parties was 35.7 billion MNT that year. The committee’s report states that a total of 2,525 people donated up to one million MNT, the maximum amount allowed by law, to the Mongolian People’s party (MPP) whereas the Democratic Party (DP) and Justice Coalition had 3,000 and 1,300 individual donators respectively. If you exclude the donations that came from individuals, the remaining financing of political parties is made up by donations offered by companies. Legally, a company can make a donation of up to 10 million MNT to a political party. However, there should have been independent audits performed on those reports.
The 2012 parliamentary election, the first ever majoritarian and proportional mixed one, had 76 electoral districts and a total of 544 candidates, including 354 candidates by political parties, 190 nominees listed by political parties and 26 independent candidates. If we take these numbers into account, the campaign finance report suggests that each candidate spent 65 million MNT (approximately 50,000 USD) on average. However, the election campaign costs were much higher in reality. The report obviously did not include the hundreds of millions of MNT that the political parties charged their members for nominating them in the party lists.
The finance reports of political parties from a non-election season are never made public. The actual numbers are not even known to ordinary members of political parties. The only glimpse we can have in those finance reports is when such information is sometimes leaked to the media due to internal conflicts within a political party. For example, Ts.Shinebayar, a former member of Parliament, stated in March 2012 that “During the 26th Conference of the Mongolian People’s Revolutionary Party (currently Mongolian People’s Party) U.Khurelsukh, who was the general secretary of the party at the time, said that MAK (Mongolyn Alt Corporation) and NIC (Petrovis) companies each made donations of one billion MNT to the party while members of Parliament Sh.Saikhansambuu, B.Choijilsuren, and Ts.Sodbileg also donated one billion MNT each. D.Damba-Ochir donated 500 million MNT.” The non-election season financing of the Democratic Party is also undisclosed and the total amount of donations they received would presumable be not less than that of the Mongolian People’s Party.
This secrecy surrounding political finance makes people doubt whether the current authorities received some benefits lawfully, by providing cheaper loans to banks and companies, in which they had vested interests, when allocating the proceeds of 1.5 billion USD acquired by the issuance of government bonds. The government needs to have an independent audit carried out on itself, and inform the public of the results.
Viewed as “questionable” by the current Parliament, 130 of the total 260 projects that are funded by the public budget were commenced in 2012, which was an election year. It shows how greatly campaign finance has become dependent on public budget.
At any rate, there is a huge amount of undisclosed financing in Mongolia’s politics. This secret political finance include money collected from state-owned companies’ income rather than profits, all kinds of formal and informal fees charged from large infrastructure projects, under the table dealings for the issuance of government permits, and other donations.
As the real income of the people decreases every year due to weaker MNT rates, the wealth of our senior state officials keeps growing. Therefore, transparency in political finance is one way to achieve justice. A great hope lies in the belief that the new bill on the transparency of financing of political parties will not go up in smoke in Parliament.
We see the need for our country to develop and implement specific laws to regulate the cash flow that is coming in and out of political parties. If there is transparency in political finance, people will be able to oversee the flow of huge amounts of cash found in our political sphere today. It will be great contribution to letting people make informed decisions and boosting their trust in democracy as well as politicians.
Healthy competition in politics is clearly dependent on economic sources. However, there should be a good regulation that allows the oversight on the acquisition of economic sources and their use. A timely report to the public should also be ensured.
In Mongolia, the public budget provides a certain amount of funding to political parties. Ten million MNT for each seat in Parliament was allocated to political parties from the public budget. It was provided once a year and half the money was spent on the electoral districts by the relevant members of Parliament. However, the money given to members of Parliament has been increased to one billion MNT each, which drew a lot of criticisms from the public. The State Fund informed that a total of six trillion MNT were provided as financial assistance to political parties who had seats in Parliament from 2009-2012. Since they are receiving funding from the public budget, political parties are supposed to produce their financial reports on a regular basis as state funded organizations do. However, they seem to have “forgotten” to do this.
International practices show that there are three main components in the expenditures of political parties. These include non-election expenditures (costs associated with structure, organization, and routine operations of political parties), election expenditures (campaign finance), and independent expenditures (when a candidate raises funds independently from the political party). Independent audits are performed on each of these expenditures and detailed reports are released.
It is viewed by policy researchers that the public funding for political parties encourages transparency in public governance, supports healthy political competition, and contributes to the establishment of strong and responsible political institutions. Laws alone will not be enough to ensure transparency in political party funding. In order to make sure that laws are fully implemented, all related stakeholders including political parties, government organizations, media and civil society must work together in harmony.
Every support should be given to government organizations that ensure the implementation of the law on political party finance and to the media, political oppositions, universities, and research organizations that contribute to transparency.
Strengthening democracy is like nurturing a tree. When you plant a tree in the ground, you cannot leave it as if it is a 100-year-old oak, but nurture the tree regularly by watering and protecting it. In a democratic society, the ruling power goes to the political party that has won the public election. The winning political party assumes a great power, which is accompanied by a great responsibility. This responsibility of theirs must start from being able to provide their financial reports on time and make it available to the public. Just as we must constantly nurture the trees, we, the voters, must always make such demands to the political party and start providing regular oversight. This way, our democracy can be strengthened. As our tree grows bigger, there will be more reliable guarantees for less corruption, stronger democracy, and better protection of our rights.
Translated by B.AMAR


Thought’s Track

May 20 (UB Post) Thought’s Track, a joint exhibition by B.Bayartsengel and T.Soyol-Erdene, opened on May 15.
The artists strived to show that all things have their own features and beauty in life and the main idea of their work is based on the simplicity of life. But it would be quite one-sided if we just judged the artists by their work, as these works are the current impressions and expressions of the artists.
In my opinion, these talented artists have expressed the truth of today’s society through their artwork, such as “Nomadic Movement”, which shows the important historical generations of Mongolia.
The exhibition will continued through May 26, and is available for viewing from 10:00 a.m. to 7:00 p.m. at Red Ger Art Gallery, located on the first floor of Central Khan Bank.


D.Byambasuren: We cannot complete a work we’ve tried to do for two years in 100 days

May 20 (UB Post) The following is an interview with former Prime Minister D.Byambasuren about current economic issues.
Inflation was supposed to be kept at a single digit rate but it wasn’t. Will inflation decrease in the future?
The Mongolian economy absorbs inflation increase in June. Before the 2012 election, it was decreasing but for the last two years, the economy wasn’t able to absorb it. This is connected to adverse government policies. We’re unable to detect the main cause of inflation. Inflation continues to rise and the current situation isn’t good. Since government policies are stimulating major issues, instead of grasping them, inflation will not decrease.
Inflation increase is connected to deficit in balance of payment and foreign trade as well as decrease in currency reserves. Parliament approved the state budget taking into account that one USD will cost 1,380 MNT when its rate was 1,700 USD. It’s wrong for them to approve official rate for USD at 1,400 MNT when the recent budget reports estimates show that it was at 1,800 MNT. This sort of pathetic conduct prevents inflation from dropping. Reducing inflation is not a child’s play.
The “100 day plan to stimulate the economy” was approved. How realistic do you think this idea is?
How can they achieve something that they weren’t able to do for two years in just 100 days? It’s just a cheap deceit created by the government who are running out of options to temporarily maintain current situations.
It seems that if we can find the correct baseline now, we can get a huge advantage for stimulating the economy?
When we can’t straighten the policies for stabilization, it’s impossible. The government isn’t grasping the main problem of the economy. They need to become aware of the fact that they’re going in the wrong direction. There isn’t any guarantee that situations will become better.
One part of economic recovery is the budget report. What’s your opinion on this?
The main aspect the government is interested in is to discover something that can make up 70 percent of the GDP by itself. This is absurd. Budget reports used to be made rather late but now, they are about to make it when not even half of the year has passed. They’ll probably discuss this again in autumn. They’re taking this issue very lightly.
In the first half of the year, the GDP growth decreased to 7.4 percent. More decrease is expected in the future. What is your thought on the matter?
The capacity of the Mongolian economy itself can only sustain five to seven percent growth. Other factors affect in artificial growth. It’s unnecessary to run after extremely high growth. It’s better to develop programs to stabilize it while we have it.
Many buildings with zero budgets were included in the state budget report. The deadline for their commissioning is approaching. What’s your assessment for this?
It’s true that the little amount of money Mongolia has is being used for new buildings. This is worsening the economy. Internal balance of the economy is being lost. We’re unable to put it back into balance through policies. Evidently, the aftermath of incorrect policies is giving negative effects to the economy.
What is causing USD rates to near 2,000 MNT in your opinion?
Propaganda about Mongolian economic crisis from the decreasing foreign investments has continued for over a year. The majority of foreign investments are owned by Oyu Tolgoi. Investments for open pit and underground mines will progress in precise stages. You’re daydreaming if you think large amounts of investments will come flooding in billions of MNT each year.
USD exchange rate reaching 2,000 MNT is a conspiracy of those interested in using the current situations to their own profit and stay in power at the government. From export level and profit, two trends can be observed. Although export levels are increasing, foreign trade is losing its balance even more rapidly. Behind the increasing quantity, many challenges are emerging. Prices of products exported from Mongolia are falling. For instance, in 2010, a ton of coal used to be sold for 101 USD. Now, it only costs 39 USD. This shows that Mongolia is getting two to three times less profit even with the increase in quantity. Revenues from goods which were supposed to be exported in 2011 and at the beginning of 2012 was taken out in advance and wasted. Although export levels and evaluations are being reviewed, the 350 million USD from CHALCO, 100 million USD from Erdenet and 250 million USD from Oyu Tolgoi was wasted away so we will not get any profit. Exports may seem to be rising but there’ll be no currency inflow. More economic crisis and expense are inevitable for Mongolia.
Another factor affecting the economic crisis is said to be inconsistent government decision related to the monetary policy. What’s your opinion on this?
It’s true that we’re weak on money supply. The index for economic growth is completely different from the reality. The amount of coal sold increased but the price has halved. Furthermore, revenues are taken in advance and wasted. Even though we’re exporting coal, we need to rationally consider that money isn’t coming in. Mongolians have talked about exporting goods and saving money abroad. This is related to the underground economy. With customs registration, we can calculate how much each company is exporting. Mongolia doesn’t have a bank monitoring system to indicate how much revenue is coming in.
Economists reported that information from customs registration and statistical data don’t match. What’s your take on the matter?
Goods coming in and out of the customs can be verified through data. For example, Oyu Tolgoi started exporting copper concentrate, from which some 20 tons of gold and some 100 tons of silver are extracted each year. Mongolia doesn’t have laboratories to analyze this. The customs sector will become powerless someday. On the other hand, we can calculate how much iron ore was exported. In any case, issues to equip customs with high capacity technologies and personnel issues must be urgently resolved. The current capacity must also monitor everything very well. Notably, it’s stated in article 9.13 of the Oyu Tolgoi contract that revenue from exported goods will not come to Mongolia. The two presidents should take responsibility. During contract verification, specialists informed about this article plenty of times. I don’t understand these people who are causing so much panic when they’ve signed the contract in this format.
Lately, there’s been a talk of developing national industries and establishing Mongolian brands. The Mongolian Economic Forum was also held under the motto “Let’s create in Mongolia.” Will this objective of the forum be able to become the bridge to escaping the economic crisis?
We’re interpreting the economic forum as nothing but an advertisement bogus. Since the autumn session begun last year, the Investment Promotion Law was adopted. This doesn’t support small and medium factories. The government gave a law to ensure stability to major investors with several billions and put up a big white banner to support small and medium factories; yet, they’re running policies for stock domination and strengthen their position. While major investors have contracts for 30 years of stability, small producers constantly fear tax increase. Soon small and medium producers will be driven into a corner to give up their entity to larger producers. I see this as an indication of adverse government policy.
For the economy to recover, does the proper consumption of the people give any significant effects?
That’s not something an economist would say. It’s too primitive. To narrow economy is the same as saying that Mongolian poverty is a good thing. When there’s economic crisis, all countries go into economizing mode. This isn’t appraisable. During crises, savings need to be accumulated. The government should reduce budget expenditures and the people should reduce inefficient spending. Presently, Mongolia doesn’t have such programs. In 2008 and 2009, Mongolia became the laughing stock of the world. A resolution with five provisions to overcome the crisis was submitted to Parliament including provisions about getting a 500 million USD loan and building a 21 km long power line to Govi-Altai Province.
For Mongolia, government policies are the main factors for economic crisis. The current economic crisis is the result of distributing cash handouts, being unable to implement the policy to stabilize internal economy and giving excessive attention to mining and construction sectors in 2011 and 2012. Without noticing this and talking about shrinking Mongolian internal economy is too ignorant.


Seven gilded Buddhist deity stolen from Erdenezuu Museum

May 20 (UB Post) Seven gilded Buddhist deity and several other religious artifacts were stolen on Monday night from the Museum of Erdenezuu Monastery in Kharkhorin soum of Uvurkhangai Province.
Police inspectors, inspection agencies, and the Ministry of Culture, Sport and Tourism are currently working at the museum after receiving a report from the General Police Department.
Erdenezuu Museum has an alarm installed at every glass display and a 24/7 security guards, reported officials.
Three of the deity are masterpieces of finest handicrafts dating back to the 17th century and are considered unparalleled artifacts of Mongolia.
A source from the museum said, “Gilded Manjusri, Duinhor, Jugdernamjil and four gilded Maitreya were stolen. We are not sure how the thieves sneaked through and got out of the museum without being noticed by the guards.”
All law enforcement organizations including border and customs departments were notified of the case, and are working to find the stolen artifacts.

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