Former Prime Minister and Honored Economist D.Byambasuren gives his views on the current political and economic situation in a wide ranging interview.

What do you think of the Oyutolgoi issue?

It is becoming problematic. It violates the mineral deposit usage law in many ways. The agreement gives Oyutolgoi to Ivanhoe Mines and leaves Mongolia with a debt of USD 1.7 billion. The Mineral Council has now agreed to Ivanhoe not mining 30-60 percent of the deposit by approving the feasibility study. This is a classic example of irresponsibility on the part of Mongolia’s leaders. The working group led by the Minister of Minerals and Energy thought about themselves rather than the country’s interest. It will be a national catastrophe if we keep on giving away the treasures of Mongolia like this to foreigners. It is no secret that Ivanhoe has been lobbying Mongolian politicians and media for many years and this is the result.

What must be done then?

If there is a will, it is easy to solve the problem. There must be a graded tax and profits over MNT 100 billion must be taxed at 40 percent. This has to be included in the contract. Second, the contract should also indicate that all the coal must be semi-coked in Mongolia. Third, the Mineral Law should be amended and gold mine usage fees should be raised to 18 percent. If we do this, there is no need to own 34 percent. But the coal refinery must be fully owned by Mongolia. Its shares can be distributed to citizens.

Speaking of shares, there is going to be a public demonstration soon to demand the fulfillment of promises given by political parties. What do you think of this?

If we refine the coal from Oyutolgoi in Mongolia, it would be possible to give MNT1-2 million to every citizen every year. Not grabbing the chance means the Government policy is bad. The Government must build the refinery near Oyutolgoi itself. It is also a very bad decision to let Ivanhoe use so much water.

A proper and intelligent approach would have made it possible to fulfill the DP’s promise, maybe also the MPRP’s promise. Maybe not immediately, but surely it was possible. Both parties showed naïvete in their negotiations, and their irresponsibility means these promises will not be fulfilled. People are angry that they elected people who made false promises. Most of the herders took bank loans because they believed they would soon have the money to repay them. The deceived people have a right to seek an explanation. The corruption and arrogance of oligarchs have fueled people’s anger. I don’t think the present protest will turn violent as we were able to establish democracy without shedding blood. But there is no guessing what will happen if the present style of governance continues. There is no other country where the Government bribes MPs into submission with MNT1 billion to each.

How can you be so optimistic about the march being peaceful after what happened two years ago?

The Government was guilty for the July 1 violence. I am optimistic because I think they have learnt their lesson. I am not defending the oligarchs. I don’t think it would be that difficult to drag these people out of Government House.

Who are the oligarchs?

Oligarchy is a form of capitalism that combines industrial and financial capital. Everyone sees how the Mongolian system is allowing capitalists to suck the blood out of the economy. There is no hiding the fact that this financial capital has become one with the industrial capital. The main characteristic of Mongolian oligarchs is exhibited by the oligopolists. Parliament is controlled by groups owing allegiance to MCS and Energy Resource, who will now be joined by Ivanhoe.

Officials say inflation is under control; why then are the lives of middle or low income families getting more difficult?

The Government policy is to increase inflation. It is the Government which started the economic crisis in 2007 and 2008. Now it promises to give MNT120,000 this year as the first instalment of MNT1.5 million. This has caused price increase. GDP has increased fivefold since 2000, but minimum wages and pensions have not been raised. Instead, budgeted expenses have been raised by six times, centralizing the funds in the hands of power holders. More than 40 percent of bank funds is in foreign currency. All this shows that all the money since 2000 has gone into the pockets of the rich.

Apartment prices are up by 70 percent from two years ago…

This was very cleverly done by our government. In 2007, it announced a “great reconstruction” program and allowed construction material prices to rise. One third of the total money in the economy was locked in unfinished buildings and the economy entered a crisis. The banking system was in a difficult situation. Salaried sections cannot buy such expensive apartments but the Government is still talking about 100,000 apartments. The construction sector is where the money is laundered. We need radical changes in our politics and economy.

Mongolbank says the losses to livestock will impact the fundamental indicators of the economy. How bad will this be?

About 4 million or 10 percent of livestock have perished so far.  This will become more in April and May. Herders are losing their assets at a time when most of them are burdened with debt. People wait for bold and assertive measures from the Government. The disaster has its lessons. Regional administrations must assist herders’ lifestyle by developing pastures and watering systems. The Government must be prepared for the winter. Mongolia used to prepare 700,000 tons of animal feed previously, but last year, we prepared only half the amount.

Another big issue is the debt of herders. Khan Bank did not consider the risks and was dishonest in their valuation of livestock. If the Government wants to help, it should persuade Khan Bank to write off some part of the loans. Another lesson of this winter is that animal husbandry technology and system need to be changed.