Friday, January 29, 2010

Double Zud

It has been a troublesome and challenging week of double zud – a mixture, or combination of natural disaster and the disaster of unaccountability.

Natural calamity-dzud is currently at its peak, almost the whole territory of the country is covered with snow and the temperature has fallen to below -40 degrees. Nearly 1.5 million heads of livestock have frozen and starved to death due to the freezing weather and heavy snowfall, which makes traveling on many roads and mountain passes extremely difficult, cutting off herders from necessary supplies. Independent boards of local communities operating in Ulaanbaatar are arranging donation campaigns and are making big efforts to raise money to help zud-struck herders. Unfortunately, there is no news or information available about what the provinces and soums did on their own to stockpile sufficient stocks of forage and supplies to prepare for winter. Because since zud can happen at anytime; it’s not dependent on human factors, we have no choice but to try to prevent potential Winter calamities each and every year, by always preparing for winter during the warm times of the summer season.

Another form of zud I’d like to mention here, is the disaster of unaccountability which, conversely, does directly depend on human factors.

These are the consequences which have evolved naturally from a bunch of problems that continued to remain unsolved for long periods of time. Also it’s the beginning of a major (zud) crisis, or depression, likely to impact all sectors in the near future. It is the end-result of the fact that a group of people embezzled public property for many years in the name of their political party, by dipping into all administrative units and selling lands and estates that rightfully belonged to hospitals and schools, for their own ‘wallets’. It created an unplanned burden on the existing capacity of the city’s infrastructure. A recent example of this is the deaths of four newly-born innocent infants at the Central Maternity Hospital, where umbilical infection disease broke out because of a lack of hygienic care in the delivery service. Another fifteen newborn babies are now under intensive treatment at other hospitals due to being stricken with the same infection at the same hospital, four of whom are in critical condition. Had the necessary funds been there to maintain sufficient hygienic care, this tragedy probably could’ve been avoided.

According to responsible ministries, agencies and officials, a room devoted and equipped for the care of ten pregnant mothers is currently accommodating over thirty pregnant women. And authorities in the health-care system are not able to offer disinfectants because of municipal and district level red-tape, in which the authorities do not approve the budget funds necessary in a timely manner, and when it is approved, they trim from this budget for their own purposes.

The question is not a matter of having enough funds. It is possible to build a new maternity hospital with the money spent for buying luxurious BMW-7 and a Lexus for the Parliament speaker and the City Mayor, respectively. If we collect and sell all the vehicles used by other municipal and districts’ officials, we can build one more maternity hospital.
The money spent for the half-completed construction of the ruling MPRP’s headquarters building and the just-started new-construction of the Democratic Party’s headquarters building, is sufficient for building new maternity hospitals in all 21 provinces of the country. Government officials do not want to see the reality because they do not care about it. It’s like they’re having a party during the disaster, while asking for “aid” from outside sources every time a calamity occurs. Then if other countries, or organizations do not step forward with enough aid (to mend problems resulting from their own corruption and greed), they vigorously complain.

The Zud of unaccountability is basically caused by the fact that our law-making governance has completely eliminated the executive governance. The current governance, in which nearly 1/3 of all law-makers almost became cabinet ministers, is the creator of this kind of disaster. It is obvious that parliament members cannot impose any responsibility on MP-cabinet members. The replacement of six health ministers in the last eight years is a problem that not only exists in the health system, but also in all sectors. It is exactly like how the fish begins to stink from the head, first.

The guys in power apparently do not know that the country may see instability if they continue to not impose any responsibility on the relevant members, when people have already expressed their anxiousness about current situations, openly. Since there is no longer justice, economic relationships suffer deformation, unemployment is increasing, and the number of poor people now accounts for 35 percent of the country’s overall population. It is evidenced by the fact that the number of property plundering crime went up by 40 percent and contraband-related crime increased by nearly 90 percent in 2009.

Do politicians really fail to understand that if the government; fraught with conflict of interests, and corruption, continues to embezzle the astronomic amounts of capital that they’re expecting to come from the mining sector, that government officials will strengthen their wealth, while ordinary people will become poorer, finally resulting in a critical situation in the future?

Friday, January 22, 2010

New Thinking

It is almost impossible not to highlight three important statements made last week that suggest that we are living in a truly democratic country with a market economy.

“The three heights of the state,” that Mongolians incorrectly refer to; i.e., the state power: include the Speaker of the Ikh Khural (Parliament), the Prime Minister, (who is the head of the government), and the President. In a real democracy, these “heights” are part of a state power that makes laws, executes the power to implement those laws, and adjudicates the power that makes sure that the other two do what they are supposed to do. It is not a big surprise for us that our judiciary “height” is not at its own proper level because our legislative power replaces the executive power. Our “parliamentarians” are also the Ministers of executive Government. But heights and levels aside, let us focus on the three statements.

First, Prime Minister S.Batbold introduced his plan of action for further development of the economy by leveraging the future large mining resources of the country, and handed-over related legal drafts to the Ikh Khural to consider, bearing in mind the expected boom in the local economy during the next decade. The government is going to create three public companies: “Mongol Ded Butets” (in the infrastructure sector); “Mongol Erchim” (in the energy sector) and “Mongol Erdes” (in the mining sector), in order to operate state-owned enterprises in those industries. This time, however, these state companies will be publicly listed on international and domestic stock exchanges in order to raise capital needed for development of relevant big projects. He also suggested that the state should invite foreign professional companies to manage the Mongolian Stock Exchange operation. Already existing large state-owned enterprises will be sold thru international capital markets at fair-market values, and thus will not repeat the previous mistakes of selling everything to one individual.

Mongolia must use a new method for this new stage of economic development. The famous A. Einstein once said something like, “A problem can be solved by using only one degree higher in approach, compared to the method used at the time of its creation.” We can successfully manage the rapidly growing economic development with the methods that make international capital market operations possible. As of now, if we keep going on with our old ways of economic management, there will still be only a very select group of people who will benefit from all the mining wealth (exactly mimicking the ills that afflicted other developing countries with bountiful resources and greedy leaders in the past, like Iraq, and long ago, Bolivia). The remaining majority will be a victim of “caring and distributing” political propaganda. Then 20 years from now, all Mongolians will be artisan miners (we call them Ninjas) digging in the remaining empty holes of the previous mines dug all around the country.

For the open “public companies”, certain parts of shares are initially sold on the international stock markets (IPO’s), and the initial start-up funding is raised to start up new businesses. Then the rest of the shares are only first offered after the company is already doing well (flushed with plenty of operating capital) and is subsequently more valuable. Then that way, the state earns more profit. The basic conditions of the capital market’s existence and its normal functioning, is the belief of the shareholders in the degree of truth regarding the public financial information published about the company. Consequently, if the people do not trust the information, they will then sell (dump) their shares, prices of the shares will subsequently plummet, and the company’s overall value will decrease. If there is no trust in listed companies, neither foreign bosses, nor domestic management can help much.

The three new proposed companies we discussed above, once they’re listed on international stock markets, will have to provide the public with complete and transparent financial reports on their operation. If the classical method of political parties placing their own members in the top executive positions of state-owned enterprises prevails, and they nominate their own people (friends) to the board, hence taking away the real assets from those companies, either directly or indirectly, the market will immediately react to such attempts, and it will be reflected in share prices. This capital market approach is exactly the one and only way of management needed for Mongolian society today. Then there is more of a chance of getting all the financial documents with true information, if board members of public companies are independently appointed and truly represent the shareholders.

The current crisis of (a lack of) infrastructure in Mongolia is mainly due to the secretive operations of related companies, and that no reliable information has been made available to the public. This is because top executives, who are also political nominees, never are required to take responsibility for their own actions. This mismanagement is further propagated by a chain reaction of not paying debts between state-owned companies: coal is received but not paid for by power stations; electricity and heat is produced and supplied but not paid for by state owned large enterprises and the companies are directly tied to the political powers for many years.

If there was someone inside the infrastructure companies monitoring their operations, administration costs, revenue accounts and managing the interest at which balances are kept, or those who receive the interests, the picture would change dramatically. This is exactly what S.Ganbaatar of “Trade Union” demands the government to report on before acquiescing to another increase in utility prices.

One of the many reasons why the Mongolian Stock Exchange is not operating properly is that citizens do not trust the financial information of their listed companies. This is linked to the Securities Coordinating Committee, who is unable to confirm any of the information. And as well as the confirmation of truth, public listed companies’ operations and products should meet technical and quality standards as well as not harming either consumers, or the environment. These standards should be verified by independent professional inspection agencies. This is another job that we do not perform well in Mongolia.

The second important statement in the last week was regarding the views of the Mongolian society regarding the state. The Speaker of the Parliament, D.Demberel, correctly said on the Day of the Constitution: “Unethical behavior of public executives fueled by a conflict of interests, corruption, moral descent and government bureaucracy, are making the public angry.” This accurate statement from the highest head of the state gives us hope that the situation will change.

The third important statement was made by President Ts. Elbegdorj who suggested imposing a moratorium on the death penalty. A country that follows the civilized world in terms of protecting human rights, will certainly follow (in theory) the same standard in terms of protecting foreign properties. It was a positive message to foreign ministers and possible future shareholders of Mongolian state-owned publicly listed companies.

The idea of shareholders and their true transparent representation via the board in the state-owned public companies for better control is truly a new way of economic thinking in Mongolia.

Only under such controls will there be no chance to plunder common properties in the interests of those who take over other people’s properties. Once that happens, political parties will be freed from exploiters of political positions and material gain.

Then the formation of political parties will reflect a certain real progress, and Mongolia will become a country whose citizens will not run away, but rather, settle in.

Friday, January 15, 2010

Rule of The Jungle

A democratic society is governed by rule of law, not politics. In a society that lacks this rule, people do not trust each other, and so comes into play, the rule of the jungle. In the “jungle,” everyone can do whatever they want, provided that their power is stronger than the rest; one rule of jungle can replace the other as long as those in power continue to impose their will on the less powerful.

The objective of a democratic government is to enforce the rule of law. Its state is the creator of laws on behalf of the people and enforces and guarantees enforcement of these laws. That is why legislators are the fundamental source of rule of law; and from top to bottom, legislators of all levels must perform their duties, each at their own stage.

By ways through which the state of any given country protects private and common properties, one can deduce the rules of law and rules of the jungle the country stands and toward which direction it is shifting. In applying this approach to Mongolia, one can see where this nation stands today and where it is going in the future.

Since the 1990 democratic revolution, when all properties were common, we observed an attempt at the creation of private property. As a result of our efforts toward establishing market economic relations, the basic conditions of existence of private property, Mongolians began to own properties. Thousands of Mongolians became wealthy as a result of hard work, entrepreneurship and innovation. As a consequence our nation is getting wealthier.

There remain properties for the protection and enhancement of values of which the state is responsible. These are properties in society that remain public by nature, as we cannot distribute them to everyone, equally. They include parks, gardens, roads, buildings, monuments, the air we breathe, the water we drink etc. Yet, many public officers instead of looking after these properties, rob and plunder them directly and indirectly. A small group of individuals seize state power in the name of political parties, acquire common properties and install their rule. Such actions reinforce the rule of jungle instead of rule of law. The leaders of both ruling political parties, equally encourage plundering of state properties in unison. They reach mutual agreement on who takes what and behave like a few famished wolves in a yard full of sheep.

Although once the citizens see this and demand for them to stop while the state pretends to listen and change the situation, it all closely resembles a conversation between a deaf-mute and a blind man, or a new fashion of social games called “on the two sides of a thick, glass wall.”

All media instruments: newspapers, radio and TV channels have come to the hands of those in power in the jungle. The media becomes active only when there is war between the property “owners” and turns into a brain washing machine in the name of the Mongolian people. Public officials themselves became tools not for protecting common properties and public interests, but for taking them into their own possession.

(However, this “media instrument” still manages to voice itself without much restriction, hence the article you’re reading) In any case, this process goes on intensively in the state from top to bottom, strengthening its unstable bases. At the parliamentary level, common properties were re-named as state properties and privatized, the cream going directly or indirectly to the government official’s own kitchen.

Those who got the most gradually increased their power in all areas of social and economic life. The next wave of new rule was in Ulaanbaatar city, where land was soon evaluated. It was time for the city’s executive office and city representatives’ khural to take their share of “common” properties. It is almost impossible to identify any member of Khural or public executive who has not taken ownership of a public land. These are mostly a school’s sport yard, a kindergarten’s play-ground or a former state-owned manufacturing enterprise taken in the name of someone else. Obtained for just the value if peanuts and sold at fair market values, the lands now belong to today’s “billionaires from the state,” a name coined by the public.

The organized plundering of common properties has become so aggressive that the process has spilled over the walls of our gray house and the city mayor’s palace, reaching city, district and aimag levels.

As of today, the demand for resignation of Khentii aimag governor has been slowed, but the one in Bayan Ulgii aimag is at the level of sitting protest. The district khural’s representatives demand the resignation of district governors (two at the moment: Khan Uul and Songino Khaikhan districts of Ulaanbaatar city at the same time) are making a large noise in media today. Without that, the citizens of that district would not have known about this common land plundering. But the other district governor (Bayaongol district) being “smarter” and in giving a land slot for a summer house to each representative of district Khural miscalculated a human error. Everything was smooth until one odd member said to the media that he refuses the land just like another parliament member D. Enkhbat did refused his 1 billion tugrugs entitled to each of the 76 members to spend for their constituencies.

Unfortunately, the protests or refusals from shares of their own pie will not change anything substantial in this mismanagement. None of the district representatives will return the land. At best they will sell the land at a fair market value and finance all their campaign expenses making even more profit for themselves. Those in the political parties or parliament who grew divine “wings” in their group, will soon be bought out with executive positions in the government. There never was a single removal from a government position after all these years of media reflections on pubic mismanagement and mishandling of common properties. The same officials, who are caught under the spotlight of blame, continue to climb up the power ladder as they did before because replacement of one will break the long chain revealing even more plunderers and thieves. That is why no one in the country is being punished for plundering common property yet.

Acceptance of “nothing can be done once the damage is done” is the acceptance of rule of the jungle. There is only one law in a jungle: divvy up and possess. This looks like the only principle of public governance in Mongolia today.

Friday, January 8, 2010

State pride

On the eve of the New Year, the head of the Tax Authority, Mr. Ts. Oyunbaatar, announced with pride, that in the year of ”deepening economic and financial crisis”, or 2009, the state collected “700 billion tugrogs into the state budget and the Mongolia Development Fund, which is 60 billion turgrogs more than what was planned.

” He saluted all the taxpayers of the country with “a spark of warm greeting.” “It is a result of sincere, patriotic efforts from all of you, taxpayers, for Mongolia,” as he continued with the brain wash. The government is an outstanding master of tax and fee collection from citizens.
Our economy greeted the new year without any growth, almost 60% of its over 48,000 companies performed with a loss (by Oct.1). Yet the state tax revenue managed to collect a sum that surpassed their plan. This is super. Paying taxes became a much easier process thanks to the introduction of the online payment system in the last year. As a result, 65% of the taxpayers were able to pay taxes via the internet. This is an excellent performance index.

When it comes to taking, our government fills us with pride. So now how about giving some of it back?

Reporting on the specific expenditures from the collected money and the results of its actual spending, evoke quite the opposite response. At best, we can read a few sentences on the amount of money spent for projects here and there. No mention about the actual outcomes, or the factual information has ever been published. If there were a head of a department responsible for spending tax revenues, who could announce the results with a better “sparkling warm greeting,” than we, the taxpayers, who could really see the fruits of our “sincere, patriotic efforts.”
The government forcefully collects taxes from taxpayers, ignores other more viable and less intrusive forms of taxation, and clumsily grows in size. Our state constructs palaces for political parties, travels extensively abroad and does not let a month go by without extravagant celebrations. With this in mind, one question always rises: what would happen with our state if we stopped paying taxes?

There will be less interest to work for the state and government if the society, the taxpayers first and foremost, started to monitor the careless spending of tax revenues. When the number of public employees decreases, productivity per employee will increase, so will his salary. If the team of a ministry collectively controlled all the expenses of its public service, there would be more innovation, which would increase efficiency; communication and technology, which would in turn, improve and make all government services available online. Public services will be carried out by technocrats, instead of politocrats.

If the state and government operations were as transparent as a fish tank, thousands of people would shift from distribution of values, to their creation. They would create more and live better. The source of their wealth could not be corruption or plundering, but their labor and aptitude instead.

Thousands of university graduates would aim not for public offices, but for the private sector instead. They would not rely on “back door” arrangements, but only on themselves. Ulaanbaatar city would finally get rid of the terrible smog and would instead have many trees lining wonderful roads. Everyone would live in apartment buildings and the Mongolian economy would become competitive, encouraging Mongolians not to leave the country, but to come back.
When all this happens, the government could really be proud. Today’s “pride” is an entirely different matter.

Tuesday, January 5, 2010

Mongolian Democratic Revolutionary Party

A new political party is emerging in Mongolia.

The two current ruling political parties (MPRP and MDP) are merging into one since the creation of a coalition government, as there is now no longer a substantial difference in their policies. The political opposition has disappeared in Mongolia and the Mongolian Revolutionary Party has successfully absorbed the Mongolian Democratic Party.

The Mongolian government is not doing what it is supposed to do, but rather doing very well, the things that it is not supposed to be doing at all. In a democratic nation, the main duty of the government is to protect its citizens’ lives, liberties and properties. However, the properties should not be acquired by force, fraud or theft. The government should not in any way, condone this.

But our state is not only not forbidding this from happening, it is actually encouraging all types of plundering of properties. This has become so clear to the people that some have come to accept and even support these sorts of state act ions. Many executives of state owned enterprises and other entities that are either directly or indirectly connected with public properties, and their political allies, are making larger and larger incomes. More and more billionaires are “born from the state” and their names and the photos of their large real estate holdings and houses are openly flaunted in the media.

The people who have been “public servants” all their lives have become owners of the biggest homes in the best locations, and drive expensive cars and race the fastest horses joining a small group of the richest families in the country.

The two largest parties were supported and financed by their own business circles and in return, the companies were winning government tenders and nominations to important political positions. This procedure took a further step: The businesses have “cut costs” and became political entities themselves, making decisions on behalf of the government on what they want and when they want it.

The main principle of the coalition government is that an action is only permitted so long as it benefits both parties and their allies equally, and mutually.

Under the guise of equal distribution of political power or state budget, each Parliament member received a one billion tugrik spending allowance to use for his or her own “constituency”, which is generally being used in preparation for their re-election, at the cost of taxpayers, and of the poor.

There was almost no principal difference in these two political parties’ political programs in the last election campaign. Both parties have promised to give to the people their own money in cash, thus both parties literally bought their votes. The only difference was in the amount of cash: one promised one million togrogs, the other ¬- one and half million tugrogs. Recently, they reached a compromise for fulfilling their political “promises” and created a fund called “The human development fund” and agreed to give 10 times less cash than promised, in 4 payments.
The small group of individuals, who promised to voters at democratic elections to take over the political power and rule the country, is now getting very busy in possessing the natural resources of the country and sharing its future income among themselves. Very soon, they will get even richer with the upcoming growing flow of foreign direct investment into the mining sector.

At the moment, both political parties are also very busy in planning and constructing two grand and pompous towers next to each other in the center of the city. It would be better if both parties move into the one which will be completed first, since they may as well merge because either palace will easily accommodate them both. Or else one should create another construction that eventually connects both towers.
In Mongolia, most of the people are getting poorer, but the state is getting richer, a lot richer, and political parties are constructing grand palaces. Half of the capital city’s population is living under minimal living conditions, struggling with the disaster of smog, and looking for masks to cope with the problem, but the Parliament is busy constructing its own palace in the only public garden north of the “Gray” house, while the Khural has already erected its own, and moved in.

The top is busy with building palaces for itself. None of them ever speaks about how many low income family houses, schools or kindergartens could be built or how many of our broken roads could be repaired with these funds.

At the same time, the cheating of the poor with all kinds of hollow prizes and medals has not changed under any president. Mongolia may be the leading nation in the world in the number of generals and state prized individuals per capita; the other field being production and consumption of alcohol per capita. All prizes and awards and their celebrations combined with all kinds of holidays make the alcohol industry the number one leader in the Mongolian economy.

How about creating a special prize for a “Super government” for its great contribution to achieving such leading positions in the world with very thoughtful and exact “plans”?

For the new political party, the only thing remaining is to register its new name, “Mongolian Democratic Revolutionary Party,” with the Ministry of Justice. It is but a small technical job.

For us, the citizens of Mongolia however, the only option left is to look for a real political opposition power and find new political leaders before the election. We still have a couple of years to go.