Tuesday, March 15, 2011

Mining Mania

Ub Post
March 15, 2011

A regular Mongolia Economic Forum closed few days ago. There is almost no developing and democratic country in the world, except Argentina of President Perona’s time, who satisfactorily managed to use rich mineral resources to make the country develop properly. Almost every state who managed to develop its country based on mineral resources, had totalitarian regimes. Chris Devonshire, who attended the Forum, wrote that the rest of the world closely watches how Mongolia that cannot no longer exercise democracy properly and pass non-democratic decisions, would deal with a challenge to make its natural resources a fundamental for development.

Mining mania mentioned several times during the forum by attendees, including President Elbegdorj, has already started to happen in all government and socio-economic levels of our country. Today, all affairs that the country faces, are connected to future mining income and any work or business not related to mining is no longer go further.

The government’s size and spending is getting bigger and bigger and the government’s budget expenditure accounts for 2/3 of the country’s economy. The government’s expenses boosted by rumors of mining income even exceed expected high income and its difference is about to reach to rate equivalent to 11% of the country’s economy.

As the next parliamentary elections get closer, political parties and authorities only talk about how to distribute shares of Tavan Tolgoi and whom to give it to or whom not. The authorities are spending sleepless days to look like they fulfilled their pre-election promises by distributing shares to the people. It has started to count chickens before they are hatched.
They say that shares are not available for children who would be born after the last day of this year. It appears it is the fault of these children that they are born not in right time. They also state that only those with incorporated company can buy shares cheaply and those without a company can blame themselves. According to authorities, all city problems including smoke, traffic and water, will be settled by the money to come from mining. And no one talk about how they are spending existing money.

Everyone knows that high school principals in ‘close cooperation with politicians’ have been stealing open sport-grounds inside the school yard to build residential buildings for their own wallet, but no one dares to say it loud. Everyone is expecting big money. Those who exenterated funds of social care, pension and health, are also hungry waiting for next bait to come from natural resources. I do not think that current social insurance system that cannot function properly, would suddenly begin to work well even there is more income to come.

A person in mania gets separated from reality and normal standards and sometimes does shameful things. Exactly the same acts are happening in all government levels. Press and media also suffer from this disease, writing only about mining income and issues surrounding Tavan Tolgoi shares. An expectation that Mongolia will develop and each citizen will get rich thanks to massive income soon to come from Oyu Tolgoi and Tavan Tolgoi, is spreading across the society. In order to manage this expectation properly, we need no efficiently marry and co-ordinate mining industry with the rest of economic fields.

Every company needs to find their place and supply their goods and services to accumulate capital, based on fair competition by undertaking the above co-ordination effectively. Besides, such a big expectation can lead to inflation only if there would be no increased economic productivity and final victims would be consumers, especially those with low income. If mining income cannot support and increase economic productivity at all and produce only inflation, then economic growth can become a castle in the air.

Only the economic growth that is capable of making a particular industry competitive in international market can ensure a real and long-term development only. Thus, I demand politicians and the government stop their mining mania and carry out realistic activities.

Translated by Shinebayar

1 comment:

  1. You're spot-on regarding expectations. Mongolian society could experience big upheavals if rising expectations are not met. I also noted what you said about school headmasters stealing land. The Children's Park seems to have gone through a similar process only on a larger scale.