Is Mongolia's New Minister of Industry and Trade His Own

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000265

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TAGS: ETRD PGOV EAID ECON EFIN PREL PINR MG
SUBJECT: Is Mongolia's New Minister of Industry and Trade His Own
Man or a Puppet?

Ref: Ulaanbaatar 085

SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION


1. (SBU)SUMMARY: New Minister of Industry and Trade (MOIT) Ts.
Davaadorj's low-key, if sometimes eccentric demeanor is a welcome
relief compared to the sometimes disastrous tenure of the frenetic,
flamboyant and feckless B. Jargalsaikhan, who reportedly spared no
opportunity to exploit his position to enrich himself. Opinions
vary widely as to whether Davaadorj will, at this very important
time for Mongolia's mining industry, chart a responsible and
conscientious course as minister, or will simply be a "mini-me,"
doing his former minister and master Jargalsaikhan's bidding. This
cable provides background, context, initial gleanings and
assessments of the new MOIT from embassy contacts, and provides a
bio sketch (see final para). END SUMMARY.

"My Man at the Ministry"
--------------


2. (SBU) Davaadorj was selected by the Mongolian People's
Revolutionary Party- (MPRP, the evolved successor to Mongolia's
pre-1990's Communist party)-led government on April 20, filling the
ministerial seat left vacant by B. Jargalsaikhan, who had been
ousted by parliament at the end of January (reftel). Jargalsaikhan
fought hard to have his fellow Republican Party politico installed
in the job. Jargalsaikhan felt the ministry should remain with his
Republican party per his agreement with the MPRP which gained his
support of the coalition government formed in January 2006.


3. (SBU) Earlier this year the MPRP fired another coalition member
as Minister of Health and replaced him with an MPRP MP, and then
followed this up by expelling the former minister's party from the
governing coalition. However, MPRP sources state that party leaders
were concerned that expelling Jargalsaikhan's Republican Party from
the coalition might raise legal issues. This concern was premised
on the fact that, of parliament's 76 MPs, all but 38 MPRP MPs and
Jargalsaikhan are technically "independents," since they were
elected in 2004 under the banner of the subsequently-dissolved
opposition coalition. In addition, having Jargalsaikhan keep one
foot in the coalition enabled the MPRP to pursue a "keep your
enemies closer" strategy.

Deconstructing Davaadorj
--------------


4. (SBU) While not explicitly associated with Jargalsaikhan's more
outlandish and corrupt attempts to profit financially and
politically from his ministerial position, Davaadorj is known to be
loyal to his former minister. He also shares some of his former
boss' ideas on the course that mining should take, including
impractical plans to group all of Mongolia's coal assets into some
sort of GOM-led mega consortium which would then attract scores of
billions of investment dollars.
for portioning out


5. (SBU) Since his appointment, Davaadorj has been working the
press, opining that he is "no clone of Jargalsaikhan." "[He] and I
were called two sides of the same coin, like appointing me is
similar to appointing B. Jargalsaikhan." Davaadorj recently told the
UB Post, "I want to stress ... everyone is different."


6. (SBU) Davaadorj's actual independence from Jargalsaikhan is as
yet unclear. The opinions of foreign and domestic business
communities range from concern that Davaadorj is nothing but
Jargalsaikhan's puppet to statements that he will be an independent

ULAANBAATA 00000265 002 OF 002


if somewhat eccentric voice on developing Mongolia's mineral
resources. Mongolian commentators involved in coal mining projects
told Commoff that they felt they could work with a Davaadorj
administration and that the relationship between Jargalsaikhan and
his replacement was not a slavish one, as some have portrayed it,
but more that of an admiring personal friend, who is protective but
not afraid to criticize the other and even take a different path
when appropriate.


7. (SBU) Representatives of one U.S. company say they find Davaadorj
eccentric in the extreme. They note he often uses principles of
quantum physics to explain and justify specific coal policies
involving the mining of over a billion metric tons a year. However,
he seldom mentions the principle of market forces when talking about
how Mongolian coal will be developed. The U.S. firms' reps describe
their relations with Davaadorj as cordial and point out that he has
stated an interest in an American firm helping Mongolia develop its
coal resources.


8. (SBU) Representatives from Canadian gold miner Boroo Gold
originally felt that Davaadorj was nothing more than ex-Minister
Jargalsaikhan's "gofer," but later observed that when Minister
Jargalsaikhan was absent, Davaadorj acted with some free will on
their mining arrangements. They believe Minister Jargalsaikhan kept
him out of most his "dirtier" dealings that involved soliciting
bribes from some foreign companies. Boroo reps stated that he
represented MIT and himself well in direct negotiations with Boroo
in public and behind scenes and that, overall, he is a pretty good
bureaucrat. Looking ahead, Boroo's reps suggest that although he is
a political appointment to keep Jargalsaikhan happy, Davaadorj will
try to be his own man in spite of relationship with Jargalsaikhan.



9. (SBU) Finally, a respected American CEO of a local bank told
Commoff that he is concerned "that a political crony, with no
national reputation or political stature, who by general opinion is
an eccentric thinker and orator, has been put in this key job at a
very important time solely because he is from Jargalsaikhan's
Republican Party." He went on to say that, "At this very juncture
for Mongolian in the mining world, with key deals on the table, this
is not the guy to be out front for another year."

Bio Notes:
--------------

10 (U) Davaadorj, born in 1960, has worked at MoIT under
Jargalsaikhan since January 2006, first as an advisor then later as
director of the Geology, Mining and Heavy Industry. Before that, he
was involved in several Mongolian-German tourist-related business
ventures. In 1982, Davaadorj obtained his undergraduate degree in
International Relations and Economics from the Pedagogical
University in Orel, Soviet Union and then in 1991 received his
Master's Degree in Physics and Mathematics from the University of
Massarik in Brno, Czech Republic. He has lectured at Ulaanbaatar's
State Pedagogical University and was trainee at the Darmstad and
Dresden University, Institute of Physics at the Max Planck Complex,
Germany. He is Founder of the Mongolian Society on Nonlinear
Science and, since 2005 as Vice President, of the Mongolian
Bio-Physics Association. His English is good and his official bio
notes he also speaks Russian, German, Czech, and Polish.

Goldbeck