MONGOLIA'S OPPOSITION PARTY LEADER EVALUATES

C O N F I D E N T I A L SECTION 01 OF 03 ULAANBAATAR 000150

SIPDIS

SIPDIS

STATE FOR EAP/CM AND INR/EAP

E.O. 12958: DECL: 04/02/2018
TAGS: PREL PGOV EMIN ECON MG
SUBJECT: MONGOLIA'S OPPOSITION PARTY LEADER EVALUATES
MINING, ELECTION PROSPECTS

REF: ULAANBAATAR 00136

Classified By: Ambassador Mark C. Minton for Reason 1.4 (d).


1. (C) SUMMARY: Democratic Party Chairman Ts. Elbegdorj, the
head of Mongolia's biggest opposition force, told the
Ambassador on April 1 that differences remain within his
party over how best to develop Mongolia's mineral resources,
despite a March 12 announcement by Elbegdorj and Prime
Minister S. Bayar, head of the ruling Mongolian People's
Revolutionary Party (MPRP),that they had reached a
bipartisan consensus on the concept of a draft mining law.
Elbegdorj indicated that the Democratic Party (DP) was trying
to balance popular desire for state majority ownership of key
mining deposits against the recognition that state ownership
was undesirable, because the GOM lacks large-scale mining
experience. Elbegdorj said now is the time to "get the job
started" on mining, but declined to explain how the March 25
stalling of debate by DP Members of Parliament moved the
issue forward. Elbegdorj said the Russians and Chinese are
paying greater attention to Mongolia's mining industry,
adding that it is difficult for Western mining firms to
compete, "given the way the Russians and Chinese do
business." Regarding June 29 Parliamentary elections,
Elbegdorj said he believed that the DP has "a fair or good
chance to win"; that it is difficult to predict the impact of
the new multi-member-district system; and that of the 76
seats up for grabs in Parliament, the DP and MPRP will each
likely immediately capture 26 seats (one for each electoral
district),and fight over the remaining 24. He said the DP
and the Civil Will Party were discussing cooperation on
election strategy, but that the DP had "ruled out" a
coalition. He said the DP will likely field six or seven
women candidates. END SUMMARY.

DP VIEWS ON MINING
--------------


2. (C) Over lunch hosted by the Ambassador on April 1, the
Chairman of Mongolia's dominant opposition Democratic Party
and former Prime Minister, Ts. Elbegdorj, acknowledged that
differences remain within his party over how best to develop
mineral deposits, despite a March 12 announcement by
Elbegdorj and Prime Minister S. Bayar, who heads the ruling
MPRP, that they had reached a bipartisan consensus on the
concept of a draft mining law. Elbegdorj indicated that the
DP was trying to balance popular desires for state majority
ownership of key mining deposits against the recognition that
state ownership was undesirable, because the GOM lacks
experience in carrying out large-scale mining. The DP
concluded, he said, that private Mongolian companies should
hold shares in "strategic" mining projects, and that these
holdings should constitute the Mongolian "state" share of 51%
of such deposits. However, Elbegdorj noted that several DP
Members of Parliament (MPs) had joined with MPRP MPs to draft
amendments that favor state ownership of large-scale
deposits. Looking at the big picture of mining in Mongolia,
Elbegdorj said, "Now what is important is to get the job
started"; that Parliament should pass a mining law that will
allow for the large-scale exploitation of Mongolia's enormous
and largely untapped reserves of coal, copper, gold and
uranium. He added that both the DP and the MPRP "would like
very much to get the mining issue resolved before the
elections." However, he did not explain how the March 25
stalling of debate by DP MPs moved this issue forward, or
how, for that matter, the Democrats would benefit at the
polls if the ruling MPRP were able to claim credit, before
the election, for the adoption of a popular mining law.

"THE WAY THE RUSSIANS AND CHINESE DO BUSINESS"
-------------- -


3. (C) Elbegdorj, who survived a serious car wreck in the
second half of 2007, told the Ambassador that "the Russians
and Chinese are paying much more attention to our mining

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industry than before." Elbegdorj said he was aware that
"given the way the Russians and Chinese do business, it is
difficult for Western firms to compete." But he said the DP
is cognizant of the need to bring in third-party investment.
"We need to attract internationally recognized Western
investors with high-tech standards... If all of the Western
firms pull out, who will come to Mongolia? It'll be our two
neighbors, who say they will invest well in Mongolia, but I
have my doubts." The former Prime Minister also accused
Russians of attempting to influence Mongolian policymaking,
adding without elaboration that "campaign money" could be
made available to pro-Russia candidates. "Western countries
that support democracy in Mongolia should closely follow
these issues," he added.

PROSPECTS FOR VICTORY IN JUNE
--------------


4. (C) Regarding the Democrats' prospects for victory in the
June elections, Elbegdorj was typically low-key, stating
merely that "We have a fair or good chance to win." But he
said the DP had one fundamental fear: vote-rigging. In the
2004 elections, Elbegdorj said, "170,000 registered voters
were not here. They were dead, or working in Korea, or
traveling or living in other foreign countries." Elbegdorj
also accused the MPRP of "controlling" local election
authorities in Ulaanbaatar, adding that polling stations in
UB, and in provincial capitals, would have to be closely
monitored.

MULTI-MEMBER DISTRICTS
--------------


5. (C) Elbegdorj said that because the upcoming elections
will feature multi-member districts, the elections will be
more complicated than previous ones. "It is hard to know how
this new system will affect the outcome of the election,"
Elbegdorj said, noting that while party faithful will likely
vote the DP or MPRP straight-ticket, swing voters could be
particularly important. He said that while swing voters cast
20 percent of the votes in 2004, the percentage could rise to
40 this time around, due in part to the growth in civil
society.

"NO" TO A COALITION, "YES" TO COOPERATION
--------------


6. (C) Elbegdorj said he expected that, of the 76 seats in
Parliament, the DP and MPRP would immediately capture 26
seats apiece (one for each electoral district),and that the
two major parties would duke it out over the remaining 24
seats. He added that he had offered to Ms. S. Oyun (of the
Civil Will Party, currently part of the three-party ruling
coalition and currently Foreign Minister) "three districts,
but she said, 'We want five'." (Note: Post believes this to
mean that the DP would limit the number of candidates it runs
in those districts. End Note.) Elbegdorj said that although
the DP "has ruled out a coalition," it agreed to consider the
five-district request. Elbegdorj also said Oyun expected
ministerial seats in return for accommodating DP election
requests, a demand that Elbegdorj said he refused to discuss.

ON QUOTA FOR WOMEN CANDIDATES
--------------


7. (C) On Parliament's controversial December 26, 2007,
scrapping of a quota on women candidates for political
office, Elbegdorj said the DP is committed to having women in
senior positions, but that "while Mongolian culture is
dominated by (civil) rights, Parliament is dominated by men."
He pointed out that if the overwhelmingly male MPs had
upheld the 30-percent quota, many would have effectively
voted themselves out of a job. Elbegdorj also said the
reality is that it is sometimes difficult for women to raise
the necessary campaign funding. He added that he expected

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the DP to field six or seven women candidates. He also said
that at the county and province level, the DP was seeing an
increase in the number of women candidates.
MINTON