Mongolians set to return incumbent in presidential elections

By bne IntelliNews June 25, 2013

bne -

Mongolians go to the polls on June 26, to decide a presidential race between incumbent - and favourite - Tsakhia Elbegdorj and former wrestling champion Badmaanyambuu Bat-Erdene. The election has important implications for investors, with the race pitched as pitting the investor-friendly Elbegdorj against the threat of rising resource nationalism.

In addition to Elbegdorj and Bat-Erdene - leader of the opposition Mongolian People's Party's (MPP) - Health Minister Natsag Udval has thrown her hat into the ring as Mongolia's first female candidate for head of state. A member of the Mongolian People's Revolutionary Party (MPRP), she is seen as a proxy for party leader and former president Nambar Enkhbayar, who was arrested on corruption charges in March 2012. Udval is also seen as investor friendly.

Such a stance goes to the heart of the big debate in Mongolian politics. The exploitation of the country's immense resources of copper, coal and other minerals, and the distribution of wealth generated from the sector to the population, is an emotive hot topic.

Illustrating choice voters are facing, the launch of exports from the giant Oyu Tolgoi copper-gold mine to China have been delayed until after the election. Elbegdorj's government has been pushing for a larger slice of the asset, and the vote is set to determine the government's stance on this and other foreign-operated investments.

The weight of the mining sector's exports to the east makes the debate vital to Mongolia's macro-economic health. The country has seen a sharp slowdown in growth in the first half of 2013, mainly related to the slowdown in the Chinese economy. However, reflecting similar trends in other Central Asian states. Mongolia has seen an increase in resource nationalism, affecting politicians of all stripes.

Although Elbegdorj's government amended the 2012 Strategic Entities Foreign Investment Law (SEFIL) recently, to make it more lenient towards foreign investors, it has taken an increasingly tough stance in its negotiations with British-Australian multinational Rio Tinto, developer of the $10bn Oyu Tolgoi. Meanwhile, the prospect of a victory for Bat-Erdene - initiator of a 2009 law restricting mineral exploration and mining in environmentally sensitive areas - is viewed with alarm by international investors.

Elbegdorj is expected to retain his post, according to opinion polls. A survey by the Sant Maral foundation revealed that 54% of voters said they would vote for the incumbent. The giant former-wrestler Bat-Erdene followed with 37%, whilst Udval lagged behind with just 9% of those surveyed pledging their support. If none of the candidates wins more than 50% of the vote, a runoff will be held on 10 July.

According to a June 19 report from the Organisation for Security and Cooperation in Europe/Office for Democratic Institutions and Human Rights (OSCE/ODIHR) the campaign has been "active but low-key". That reflects the parliamentary bias in Mongolia's political system, alongside rules that forbid candidates campaigning on issues outside the remit of the office.

However, with the incumbent apparently closing in on victory, opposition candidates have voiced a lack of trust in the electronic vote count system. The OSCE report notes that in the run up to the election, Bat-Erdene has demanded manual vote counts in some key constituencies, resulting in an official warning for violating the Presidential Election Law. Elbegdorj has also been criticised for breaching the code by making "pledges of a financial nature".

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