US Trade official and mining giants visit Mongolia

Ruth Allerstorfer

On September 25. the Assistant Secretary for Trade Promotion and Director General of the US and Foreign Commercial Service. MR.S.Kumar. and American Ambassador MR. Jonathan Addleton held a press conference at the ambassador's Residence in Ulaanbaatar, marking the end of MR.Kumar's two and a half day visit to Mongolia.

Mr.Kumar was accompanied to Mongolia by a delegation of US mining companies including Rio Tinto, Peabody Energy, General electric, and the Appalachian Regional Commission among other prominent companies in a visit which sought to promote the US-Mongolian business partnership.

The visit itself was a follow-up to US Vice President Joe Biden's official visit earlier this year, and included meetings with the President's office, various government ministries, and with Mongolia's business community.

These meetings centred on the opportunities and challenges facing Mongolia's mining sector,with the conversations aiming to establish concrete ways of moving beyond bilateral negotiations to engage companies and bring in investment, the "foundation for deepening ties" between Mongolia and the US.

Bilateral relations are already strong and growing, and Mr.Kumar's visit hopes to be a stepping stone in taking these relations to the next level by encouraging the private sectors of the two countries to work together.

Mr.Kumar stressed the assistance American companies can give to Mongolia in terms of technologies and services in all sectors of its ongoing development, iterating his strong belief that American companies have both the skills and the willingness to help Mongolia along the path it aspires to. Indeed "these are exciting times in the life of Mongolia and in the economy of Mongolia" He went on to note that it is this wealth of potential in Mongolia that is "really exciting" and that the "opportunities in the Mongolian sector are immense". The mining sector is just becoming a large-scale enterprise and the government still havs the opportunity to lay the right foundations to ensure its successful development.

However Mr.Kumar also stressed the importance of promoting transparency with regard to mining contracts and project specifications so that all parties know where they stand. In line with this, he went on to compliment the government for its decision to stick with the agreed-upon contract for the OT (Oyu Tolgoi) agreement. A factor of huge significance for potential investors.

He further lauded the government's "foresight" in making environmental concerns. Safety standards and good technology a central issue with regard to mining developments and encouraged the advocacy of sustainable and safe practices in future mineral-related projects so these take care of ecological and geological considerations and employ local people.

Ambassador Addleton was in the US for the majority of Mr.Kumar's visit with the two men working on opposite sides of the same coin with regard to strengthening bilateral relations.

While Mr.Kumar's visit focused exclusively on developments in the mining sector the Ambassadors work featured elements related to other sectors of the economy including a visit to Boeing (manufacturer of MIAT's new aircraft) and a meeting with Mongolian students in Alaska who are in the position of making an important contribution to Mongolia's development in the years ahead.

10 Wi-Fi zones open in UB

In collaboration with Mobinet Company, the Governor's Office of Ulaanbaatar is working to bring Wi-Fi wireless internet services to 10 public areas on Ulaanbaatar Day. The opening ceremony for the Wi-Fi zones was held at Liberty Square in front of Tengis Cinema on October 7.
Wi-Fi zones will be available near the Buddha Statue in Zaisan, in front of the Ulaanbaatar hotel, the Art Cinema, the Drama Theatre, Railway Station, Railway College, Garden of Yavuukhulan, Sansar Service Center, Liberty Square, and on Tserendorj Street.

A Budget of political promises

By D.Munkhchimeg

Today, when the Greek government has to cut budget deficit to avoid default and the rest of the world worries about economic recession, Mongolia's fiscal situation is one to envy, GDP is experiencing rapid growth this year: The second quarter saw the economy growing at a whopping 17.3 percent and thanks to high mineral prices the government continues to have a huge income, Next year, it will increase the number of cash handouts promised after the 2008 elections distributed to citizens and raise wages for civil servants, as elections loom.

While it is undeniable that budget of 2012 has put some positivity into the lives of Mongolians, it might be more difficult to question the viability of the governments inflation target and economic growth projections.

An Election Ploy

The two major parties have committed to not promising cash handouts ahead of the 2012 elections, in addition to discontinuing the program thereafter. Even though the government plans to raise the salaries and pensions for civil servants by 53 percent next year. The proposed budget also maintains the monthly allowance of MNT 21'000 that every citizen receives, at least through the first half of the year, while pensioners and disabled people would receive payments of MNT 1 million. Moreover, the government would pay students MNT 500'000 each towards tuition fees and issue all students with MNT 70'000 stipends each month.

Finally, the budget of 2012 has become the largest one in Mongolian history. It has established a record by planning to produce expenses of MNT 7.1 trillion (39.5 percent of GDP), while the government revenue is expected to be MNT 6.4 trillion (35.4 percent of GDP). The projected deficit is 4.1 percent of GDP.

"This is obviously an election budget," says D.Byambasuren, former prime minister. "According to the Fiscal Stability Law the budget deficit cannot be set at 2 percent from 2013. However, the government already had huge deficits in 2010 and 2011 in order to fulfill the political promises. The budget of 2012 is clearly an election ploy and it might destroy a country's economy".

At the 2008 parliamentary elections, the Mongolian Democratic Party offered MNT 1 million for every citizen, while the Mongolian People's Revolutionary Party offered an even higher MNT 1.5 million. But we should keep in mind that this idea of policy wasn't new for Mongolians. In 2007, the ruling power decided to impose 68 percent windfall profit tax on copper and gold mines, as politicians sought to raise the cash needed to meet promises made to voters in 2004.

"The distribution of cash handouts is not effective in the long term, and it can only succeed in increasing the inflation rate", Stevem Barmett, chief of the IMF working group says, "Ont the other hand, investment into the health and infrastructure can bring benefits in the long term". Mongolia imports the majority of its foods and consumer goods from China and is totally reliant on the imports of petrol from Russia. Such a situation clearly shows that cash handouts distributed by the government will be put into the economies of our two neighboring countries.

Down With Optimism

According to the Ministry of Finance, GDP will expand 19.4 percent next year. Can Mongolia save its rapid economic development in spite of the cash handouts and pay raises? In fact, the country's budget capability depends on coal, copper and gold prices. According to the draft budget, copper price is expected to be at USD 9760 per ton next year, while gold price is estimated at USD 1723 per ounce. It is unclear how the Ministry of Finance has made such optimistic forecasts. Analysts have revised down their base metals price forecasts for next year as the global economic outlook remains fragile, a recent Reuter's poll showed. The survey of 23 analysts averaged copper at USD 8950 a ton next year; down 10,5 percent from a forecast price in a July poll

So, we have a generous handout underbudget of 2012. But the declining prices for copper, which have sunk around 30 percent since early August, might put at risk the 2011 spending proposed in the governments budget bill experts warned. If the world economy growth remains weak, the risk is that the budget deficit and growth will be worse than the government is expecting.

"Mongolia's economic outlook depends heavily on global macroeconomic factors: the current uncertainty and poor growth prospects for the global economy are cause for concern. If there is another global recession, Mongolia's small, open economy will be affected," the World Bank pointed out in its Mongolia Quarterly Economic Update, August 2011.

"I is too risky that the 2012 budget established record government expenses at a time when the Mongolian economy is overheating and the global economic outlook is worsening. Should international commodity prices fall sharply Mongolia's exports and budget revenues would both be budget revenues would both be hit hard," said Steven Barnett. "The policies to address both high and rising inflation and to lessen vulnerabilities are clear: restrain fiscal "spending and tighten monetary policy".

His view is that Mongolia's Central bank will continue to tighter policy is playing out following the bank's 25 basis point hike to 11.75percent in August. It is highly unlikely that times of high interest rate loans will foresee an expansion of domestic production in Mongolia."

The budget spending must be low and stable, D.Jargalsaikhan pointed out in his article. "We should not forget that the budget growth is caused by the growth of price of some minerals in the international market, which means we did not create this growth ourselves"

54 Fake Diplomas Discovered

The Ministry of Education, Culture and Science, Mongolian Agency of Standardization and Metrology (MASM), Police Department, Council of Civil Service Union and Mongolian Department of Corruption verified 3840 diplomas and certificates of education of 3201 employees of 42 government organizations and re-verified 422 diplomas. In their investigation they found 54 employees with fake diplomas in 17 organizations. 33 of this people were working in government organizations and 21 of them were working in economic entities.

At a press conference the Council of Civil Service Unions chief D.Zumberellham said, "We implemented a program to prevent and intercept fake diplomas with the Police Department, Ministry of Education, Culture and Science and Mongolian Department of Corruption. Due to this program we organized, we were able to verify agents and detected 54 agents with fake diplomas. Two rules have been added to 76th session of law. The first is to establish a Reserve Primary Fund to detect fake diplomas and verify the diplomas checking the information in The Reserve Primary Fund. The second is to immediately lay the agents off if they has caught and claim all the salary and bonuses that they have earned. In case of non-payment the administration of that organization will be convened to court".

Ailments Preventing Mongolian Youth Joining the Military Treated

Up to 30 percent of Mongolian youths who didn't pass military health checks were able to be treated. The following interview is with colonel B.Gotovdorj about the youths and treatment.

Q: What kind of illnesses prevented young people from being admitted to the military?

A: Over 6000 young men were involved in the medical examination in one district per year and about 2000 of them are sick. Around 23 percent have poor sight, 24 percent have injuries from surgery related mishaps and other general injuries and 12 percent are underweight.

Q: How are you working towards improving hygiene?

A: We deliver the names and diagnosis to their household hospital and invite youths to an unofficial seminar on tow to improve basic things like hygiene. Results include 30 Percent who didn't pass military health tests have been treated with marked health improvements.

Q: What is the main reason for not passing these tests?

A: The main reason is tattooing and leaving scars and damage from the removal of tattoos. Another major reason is people with bad eyesight cannot enlist. This regulation must be changed; if there is a war, everyone should be allowed to go.

President Ts.Elbegdorj visits Italy

On October 17, President Ts.Elbegdorj started an official visit to Italy, at the invitation of his counterpart of Italy, Giorgio Napolitano. A ceremony took place to welcome the Mongolian President in the Quirinal Palace, Rome. After the ceremony, President Ts.Elbegdorj and Italian President Giorgio Napolitano held expanded talks. To begin the talks. the Mongolian President said he believes that his meetings with Italy's President and other high-level officials will contribute to widening the bilateral relations, reaching important agreements.

"Mongolia and Italy have ancient relations and we have a similar history in founding great empires. There are historical facts that Roman Catholics had ties with Mongolians during the seventh century. Our museums have rare valuable documents relating to Roman envoys. Today our countries are going to sign important documents within frames of my official visit. I wish the cooperation between our countries to develop in all sectors; especially, in the fields of agriculture, productions of leather wool and cashmere" said Ts.Elbegdorj. "Mongolia is interested in supplying cashmere, wool and leather products to the world market with help of Italian technology" he added.

President Elbegdorj emphasized the importance of creating a permanent mechanism for the connection of businessmen with an aim to develop collaboration to exploit all opportunities of the two sides. Then, he informed that a Mongolia-Italy business forum will take place during his visit.

In turn, the Italian President Giorgio Napolitano wish success for the visit of the Mongolian President, and pointed out that this visit opens a new chapter for bilateral ties. Mentioning that Italy has gained achievements in developing small and medium-sized production, President Napolitano expressed readiness to share specialists and to train Mongolian experts with the latest technologies. It is possible to exchange specialists on cashmere and wool productions, he said.

During the talks, the Presidents discussed bilateral cooperation in the educational sector. The Mongolian side requested Italy to render support for preparing specialists for small and medium-sized productions and mining. The two Presidents also underlined that opening of the Mongolian Embassy in Italy has become one of the most important events for the both countries.

Mr. Napolitano congratulated Mongolia on chairing the Community of Democracies (CD) and wished success for works during the presidency. The sides then shared views on bilateral relations and international and regional issues.

Ts.Elbegdorj pointed out that developing relations and cooperation with Italy is one of the priorities of Mongolia's foreign policy and then said he is ready to collaborate with the Italian President in enhancing bilateral friendly relations.

The prize for Abolitionist of the Year 2011 was awarded to Presiedent Ts.Elbegdorj by the Hands Off Cain World Coalition against capital punishment. for having introduced a moratorium on capital punishment in 2010. The prize recognizes the person with the strongest commitment to the movement for a moratorium on capital punishment and the abolition of the death penalty.

Presidents Ts.Elbegdorj also visited Vatican City where he met with Pope Benedict XVI on October 17. The President appreciated the cause of Pope Benedict for peace and humanity and underlined that inter-religious dialogue is an important tool for collaboration dedicated to common interests of humankind.

Pope Benedict expressed thanks to the President Ts.Elbegdorj for visiting Vatican City and congratulated him on initiatives for human rights protection. President Ts.Elbegdorj and Pope Benedict shared views on combating global climate change preserving the environment reducing poverty and food shortage and tackling conflicts with peaceful ways.

Ts.Elbegdorj expressed willingness to study documents and historical items together that are related to Mongolian history and cultural heritage and preserved in libraries and archives of the Vatican In addition. Mongolia and Vatican City agreed to cooperate in preparing researchers on Latin language.

The same day the President met with Tarcisio Bertone the Cardinal Secretary of State of Vatican City Ts.Elbegdorj expressed thanks to Vatican City for rendering humanitarian assistance to Mongolia for overcoming difficulties of natural disasters and supporting vulnerable groups. During this meeting the President invited Pope Benedict to visit Mongolia.

During the Presidential visit to Italy the TsElbegdorj attended a ceremony to open the Embassy of Mongolia in Rome on October 18.

There was a growing need for Mongolia to have its Embassy in Italy because relations and collaboration in agriculture, sciences,education, culture and arts have been developing rapidly along with an increase in the number of Mongolian students and Mongolians staying there.

It is believed that opeing a Mongolian Embassy will strengthen bilateral relations and cooperation and create an opportunity to widen ties with the Rome-based UN Food and Agriculture Organization. World Food Program. International Fund for Agricultural Development and other international organizations.

Franco Frattini, Foreign affairs Minister of Italy told his Mongolian counterpart G.Zandanshatar, that he will support activities of Mongolia's Embassy in all possible ways.

Within frames of the visit the sides signed the following cooperation documents. with the attendance of President Ts.Elbegdorj:

-a memorandum on cooperation in the agricultural sector was signed by T.Badamjunai, Minister of Food, Agriculture and Light Industry, and by Paolo Romani, Italy's Minister of Economic Development.

-a memorandum on investment and financing by M.Bayarmagnai. Director of the Mongolian Foundation for Development of Small and Medium-Sized Productions. and by M.D Auto, Executive Director of the Simest organization.

-a memorandum on supplying food equipment by L.Ganpurev, President of Mongolia's Association of Meat and E.M.Arosio, President of the Assefoodtech company.

-a memorandum of cooperation by the Mongolian University of Science and Technology (MUST) and the University of Turin.

During the ceremony held at the Ministry of Economic Development. Minister Paolo Romani said that the countries are possible to cooperate in the fields of mining, infrastructure and agriculture.

On October 19, President Ts.Elbegdorj met Dr Jacques Diouf Director-General Food and Agriculture Organization of the United Nations (FAO) at its central office in Rome. In the beginning of the meeting. Dr Jacques Diouf recalled his visit to Mongolia and said he was very much impressed with Mongolia.

The President underlined that cooperation between Mongolia and the FAO is effective. "The issue of food reserves is attracting much attention worldwide. We are fully potential to become a food exporter from a country that receives food aid. Mongolia has vast territory and millions of livestock. We can fully provide ourselves with wheat. potato and vegetables. With the support of FAO. we want to be a country with reserves and a model base of wheat and animal-originated products in the Aia and Pacific region. Also, we have a request to organize next regular regional meeting of UN FAO in Ulaanbaatr. We believe that organizing the meeting can be significant to introduce features of Mongolia's agricultural sector, food reserve and the sector's cooperation. Today, managing a fishery is one way to resolve food shortage in the world. Mongolia is a country with much pure water resource. We want to cooperate in establishing a fishery in Mongolia," said President Ts.Elbegdorj.

Dr Diouf expressed his support for initiatives made by the President Elbegdorj and decided to scrutinize the issues.

In the course of his official visit to Italy, the President got a fiat with the library and archives of the Vatican. In the Vatican Secret Archive, one of biggest archives in the world, historical documents and letters dated back to the Great Mongolian Empire are preserved.

There is a letter sent in 1246 by Mongolia's Great Khaan Guyug to Pope Innocent IV, a decree by llkhan Aba (in 1267 or 1279), a letter sent in 1290 by llkhan Arghun to Pope Nicolas IV and a letter sent in 1302 by llkan Ghazan to Pope Boniface VIII.

The original 800 year-old letters are being preserved in the Vatican Secret Archive.

After seeing the archive, the archive staff presented copies of some of historical documents to President Ts.Elbegdorj for preservation.