Governing Party Flexes Muscles, Sacks Health Minister

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000019

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SENSITIVE
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E.O 12958: N/A
TAGS: PGOV PREL ECON MG
SUBJECT: Governing Party Flexes Muscles, Sacks Health Minister

REF: Ulaanbaatar 461

SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: The Mongolian People's Revolutionary Party
(MPRP)'s victory in a by-election last September gave them an
absolute parliamentary majority. Pundits said it was only a matter
of time before less cooperative, non-MPRP members of the coalition
government, in place since January 2006, were shown the door. Last
week, the MPRP made its first example out of Minister of Health L.
Gundalai, who was squeezed out ostensibly for refusing to follow
cabinet policy. Gundalai, generally popular but strongly disliked by
members of the health profession and international organizations,
had long topped the list of those expected to be tossed after the
MPRP's victory, the only question was when. There is some
speculation that now that he is gone, others may follow. END
SUMMARY

Parliament Pulls the Plug
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2. (U) On January 4, Mongolia's State Great Hural (parliament)
voted by a wide margin to sack Minister of Health L. Gundalai. The
vote came after Prime Minister Enkhbold, with President Enkhbayar's
consent, asked lawmakers to remove the Gundalai from his post,
citing Gundalai's failure to work as a team player in the coalition
cabinet, refusing to follow cabinet policy and his inability to
properly manage the health sector.


3. (U) Gundalai was appointed Minister of Health in January 2006 as
a reward for his support to the MPRP in bringing down the Democratic
Party-led (DP) coalition government. While still a DP MP, Gundalai
cast the deciding vote against his party's rule, defected from the
DP to create his own political party, the Mongolian Popular Party
(MPP),and was subsequently given the job as Health Minister under
the MPRP-led coalition.


4. (U) MPRP reps now argue the MPRP is under no obligation to
replace Gundalai with another member from the MPP as Gundalai's
actions have invalidated any agreements that might have been reached
between them when he was originally given the job. The erstwhile
minister's sacking comes as no surprise to political observers in
Ulaanbaatar, who fully expected the MPRP to rid itself of its more
troublesome coalition government elements after MPRP gained an
outright parliamentary majority in a by-election victory in Hovsgol
Aimag this past September.


5. (SBU) Health professionals and international aid organizations
have long been critical of Gundalai. Earlier this year he
reportedly fired the heads of key hospitals, accusing them of
corruption for renting out hospital space to private businesses and
pocketing the rent. He removed the Mongolia Millennium Challenge
Account Health Project Working Group head allegedly because she
refused to agree to design and channel projects to match Gundalai's
own corporate interests. (Note: She also happens to be the spouse
of the President's Foreign Policy Advisor.) Apparently seeking to
capitalize on popular sentiment against foreign miners, Gundalai
also led an unsuccessful "occupation" of Boroo Gold's (a Canadian
firm) mine seeking "Mongolia's share" of the US$40 million in "good
will" listed in Boroo's prospectus. The MPRP recalled then Minister
Gundalai to UB and distanced itself from his actions. These various
moves were seen as political blunders that tarnished the
government's image.


6. (SBU) Gundalai also forced Mongolia's health care system and
professionals to hold "open clinics" on weekends, a move generally
well received by the public but castigated by health care
professionals as largely a waste of time in terms of delivering
needed health care.


7. (SBU) Since his dismissal, Gundalai has aligned himself with the
anti-corruption lobby group Healthy Society-Citizen's movement and
is reshaping himself as a crusader against corruption, a platform he
intends to run with in the 2008 parliamentary elections. To prevent
Gundalai from becoming a political martyr, the MPRP appears to have
cranked up its political hit squad, launching a smear campaign
against him in the country's media.

COMMENT: Alright! Who's next?!?
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8. (SBU) It appears that the MPRP, with its one-vote majority, has
so far maintained the fagade of a "National Solidarity Government,"

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as several coalition minority partner members are still part of the
government. But now that the ruling MPRP is no longer dependent on
their support, it is free to dispose of less supportive coalition
cabinet members. By firing Gundalai, the MPRP sent a strong message
to its coalition partners, "Play ball or else."


9. (SBU) Several non-MPRP ministers are now seen as potentially
vulnerable to future purges. Chief among them is the Minister of
Industry and Trade B. Jargalsaikhan. Dogged by rumors of
corruption, he has angered many in the international business
community, especially the mining sector, by making grand,
un-deliverable promises and claiming to have the authority to revoke
mining license when he clearly doesn't. His US$18 million (USD)
debt to the Japanese company Marubeni is viewed as a major conflict
of interest. Only his populist appeal has thus far shielded him
from MPRP action.


9. (SBU) Some say Minister of and Energy Erdenebat of the Motherland
Party is also accused of conflict of interest because of his
ownership of the Erel Mining Company. His manufactured political
base consists mostly of his company's 3,000 or so employees.


10. (SBU) For its part, the DPR and other opposition parties are
flummoxed that only non-MPRP members of the coalition are being
targeted for house-cleaning in what the ruling party says is a
campaign to force ministers to become more responsible in their
positions. Calls for the resignation of Minister of Transport Ts.
Tsengel last year after a rail accident killed three rail employees

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and more recently for the Minister of Social Welfare and Labor after
he was accused of misappropriating close to US$4 million were
apparently blocked when their MPRP comrades closed ranks around
them.

Minton