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Corruption, Collusion or Collision Course: Mongolia’s long struggle for democracy

On January 29, a majority of the members of Mongolia’s parliamentary body, the State Great Khural, voted to expel House Speaker Miyegombyn Enkhbold in an unprecedented move rounding a turbulent two months in the country’s political environment. The ousting of Enkhbold, formerly the Prime Minister and Chairman of the majority Mongolian People’s Party (MPP) is the most recent chapter in an enduring political crisis, following months of corruption scandals, large scale public demonstrations and the factionalisation of the MPP.

A series of mass public demonstrations had been ongoing in the capital’s Sukhbaatar Square since November 2018. Tens of thousands of demonstrators gathered on the scenes of parliament to protest both corruption against Enkhbold specifically, and the fragmentation of the country’s democracy more generally. The public pressure has assisted in the introduction of a new law, which now requires a simple majority of MP’s to remove the speaker - the new legislation has granted parliament extensive new constitutional powers which were enacted in order to force Enkhbold out.

It is alleged that Enkhbold had sold cabinet positions in future MPP administrations in exchange for campaign funds amounting to 60 billion Mongolian Tugrik - MNT (approximately $22 million). Since November, protesters had targeted Enkhbold due to his connections to a number of high-profile corruption scandals. Most notably, Mongolia’s anti-corruption agency is continuing to investigate Enkhbold in relation to ongoing allegations to his involvement in the 2016 parliamentary campaigns.

At the heart of the series of corruption allegations has been known locally as the ‘SME Scandal’. The scandal relates to a fund that was set up in the early period of the century, to offer loans at 3% interest to owners of small to medium enterprises (SME). The additional loan scheme proposed by the government was a welcomed initiative, given that most banks and financial institutions offered loans at rates between 10-30% interest. 

The main calls for concern were over reports that top officials in the government had been using the fund to grant loans to their own family businesses, or transferring money into high interest yielding bank accounts. Among the accused are fourteen parliamentarians, two cabinet ministers and other high ranking officials for embezzling more than 2.6 billion MNT (approximately $1.3 million). 

Amid the investigations conducted by the anti-corruption authority, the scandal has divided the ruling MPP, which holds an 85% majority in parliament. The fracture triggered a vote of no-confidence in the Prime Minister, Ukhnaagiin Khurelsukh, with members demanding accountability for the corruption allegations. Kurelsukh narrowly survived the vote with 40 members supporting him and 33 voting against. 

However, the survival of the Prime Minister did not mean the end of the ongoing tensions. Khurelsukh urged those involved in the scandal to return the funds and subsequently pleaded for public forgiveness. The calculated error on the part of the Prime Minister led to a public backlash, amid frustrations towards the lack of democratic accountability and the stagnating economy.

The decline in democratic accountability manifested itself in Khurelsukh demanding for Enkhbold’s resignation, with Enkhbold creating what he calls, a new shadow oligarchy through supporting their own business interests. Enkhbold’s known affiliation with corruption and the ongoing SME scandal has thus engineered the conditions for the Prime Minister to slowly phase Enkhbold out of parliament.

The economic dimension has come off Mongolia’s heavy reliance on both agriculture and the mining of copper and coal for economic growth. SME’s original purpose was to diversify the economy by promoting entrepreneurship. In 2017, SMEs contributed about 17% to Mongolia’s GDP and 2.3% to the country’s exports, but have consistently struggled with high profit taxes and a fluctuating local currency.

The new precedent in balancing the economic reality with political corruption has left the new legislation introduced the previous year to be politically expedient. Although the intention was to strengthen Mongolia’s democratic legitimacy, its unintended consequence could be to set an unorthodox precedent for Mongolian parliamentary stability. By shifting more power to the legislative branch, it places the checks and balances of the executive branch into question.

Since the turn of the year, the Mongolian public has steadily increased their understanding of corruption, with the rise in optimism of strengthening their democracy since the ousting of Enkhbold. However, it would be a mistake to dismiss the significance of the withdrawal, based on one individual that is now excluded. What remains pertinent and continues to be so is that the nature of Mongolian democracy remains in a crisis state. The democratic foundations have been chipped away over the course of two decades and as such, Mongolia must be committed to overarching political reform. Like a candle that burns  brightly, it burns quickly, yet in Mongolia, democracy’s candle can be reignited.


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