Boeing set for critical 737 Max flight tests www.bbc.com

Boeing's bid to see its 737 Max return to the skies faces a pivotal week with flight safety tests expected to begin.

Agreement reached on a preferred long-term power supply for Oyu Tolgoi www.montsame.mn

Ulaanbaatar /MONTSAME/. Rio Tinto, who owns 66 percent in Oyu Tolgoi through its 51-percent-owned Turquoise Hill Resources on June 28 issued a press release stating that Rio Tinto, Turquoise Hill and the Government of Mongolia have reached an agreement on the preferred domestic power solution for Oyu Tolgoi that paves the way for the Government to fund and construct a State Owned Power Plant at Tavan Tolgoi.

ADB: Sustained Reforms Crucial for Mongolia's Long-Term Growth www.montsame.mn

Ulaanbaatar /MONTSAME/. Mongolia can build a more inclusive and sustainable economy by improving macroeconomic management, strengthening human development, increasing international trade, and diversifying the economy by building on the country’s existing knowledge and expertise, including in the mining sector, says a new Asian Development Bank (ADB) Country Diagnostic Study.

Ethnic Kazakh MP to open first session of new Mongolian parliament www.news.mn

Newly elected members of the Mongolian parliament, or State Great Khural, received their temporary certificates from the General Electoral Committee of Mongolia. The Mongolian People’s Party, which is the country’s ruling party, won 62 seats in Wedensday’s parliamentary election, will form the new Cabinet.

Mongolia's economy is stuck between China, Russia and US www.asia.nikkei.com

Mongolia is famed for producing many of the globe's top contortionists, able to bend and twist their bodies into unbelievable shapes. You can count Prime Minister Ukhnaagiin Khurelsukh among them after his landslide reelection last week.

Khurelsukh's Mongolian People's Party retained a supermajority, grabbing 62 of 76 parliamentary seats. He now faces an even tougher feat: bending and twisting government policies into the impossible positions needed for Mongolia to thrive in the years ahead, as the coronavirus hits its economy and the country negotiates its uncomfortable position between three powers -- China, Russia and the U.S.

To the south, China buys roughly 90% of the iron ore, copper and gold that drives Mongolia's $13.5 billion economy. To the north, Russia, a patron since the Soviet era, is the source of virtually all Mongolia's energy. Far geographically, but close geopolitically, sits the U.S., a mentor for a nation often called an "oasis of democracy" in a decidedly autocratic neighborhood.

Donald Trump's reign has of course complicated this dynamic. The U.S. president's odd affection for Russia's President Vladimir Putin, his ambivalence toward China's President Xi Jinping and his trade war now extending to Europe have Mongolia on edge. Suddenly, this "third neighbor" -- as locals call major powers beyond China and Russia -- is just as erratic as the two directly on its border.

Khurelsukh's government must contend with yet another external force: mining giants agitating for bigger profits from Mongolia's underground treasure. The immediate flashpoint is arriving at a truce with Rio Tinto concerning Oyu Tolgoi, a joint gold and copper project in the Gobi Desert. How Ulaanbaatar handles the taxation of minerals and the terms of mining agreements will send a loud signal to foreign investors.

Oyu Tolgoi mine in the South Gobi region: how Ulaanbaatar handles the taxation of minerals and the terms of mining agreements will send a loud signal to foreign investors. © Reuters
Were that not balancing act enough, Khurelsukh must contend with Mongolian President Khaltmaagiin Battulga, a rival Democratic Party populist who has been called the "Trump of the Steppe." Since 2017, when both men came to power, they have engaged in an unlikely truce that worries international watchdog groups.

Legislative maneuvers in 2019 weakened the independence of the judiciary and anti-corruption officials. In the weeks before Thursday's election, at least five parliamentary candidates were arrested, fueling the biggest concerns in 30 years about Mongolia's democracy.

The decisions of the next several months will say much about Mongolia's trajectory. The key challenge is stabilizing a sputtering economy. The International Monetary Fund thinks Mongolia's gross domestic product will contract 1% in 2020. Though it has done a remarkable job managing COVID-19 risks -- zero deaths, officially -- Mongolia faces a "collapse in external demand," the IMF says. That is a far cry from the 6.7% growth in trade in 2019.

The reversal complicates Mongolia's situation. The government's $30 billion debt load is more than double its GDP. Nearly a third of the nation's 3.2 million people live below the poverty line. Corruption remains endemic. And government efforts in recent years to diversify the economy toward, say, garments are hitting a coronavirus wall.

Tourism is flatlining, too. In August 2019, Mongolia's nomadic culture and vast, rugged landscaped even lured one Donald Trump Jr. for a headline-grabbing sheep-hunting junket. Arrivals are now negligible in the COVID-19 era.

On May 28, Fitch Ratings warned of "significant downside risks." The good news, as Fitch put is, was that "Mongolia's strong structural factors combined with expected access to financing from multilateral and bilateral creditors provide support." It also may be a plus that Khurelsukh now has a mandate to choose a new -- and hopefully reform-minded -- cabinet.

The bad news: the rapid erosion in external growth engines. As China grows the slowest in 30 years, Mongolia's modern-day caravan of tanker trucks, exporting its natural resources, is putting in fewer miles. China risks a second COVID-19 wave, necessitating even broader lockdowns. Mainland construction sites, factories and shopping centers shutting down anew would add to Mongolia's risks heading into 2021.

Russia is hardly booming as oil prices fall either. Over the last year, Moscow's efforts to counter China's regional influence have increasingly run through Ulaanbaatar. These competing interests can work in Mongolia's favor, playing Xi's geopolitical reach off against Putin's desire for a big eastward pivot. In 2020, though, it is a precarious place for a fragile economy to be.

The November 3 U.S. election only adds to the drama. With Trump trailing in the polls and desperate to excite his base, China -- and Mongolia by extension -- has every reason to brace for new tariffs. Moscow, meantime, is in Capitol Hill's crosshairs for meddling in U.S. politics. Congress is almost sure to pounce with additional Russia sanctions.

Nor is U.S. stability assured. COVID-19 cases are flaring up around a nation that has already lost tens of millions of jobs to the pandemic.

Mongolia could be excused for not knowing where to turn. It will be fascinating indeed to see how Ulaanbaatar contorts itself -- just as long as it does not turn away from the democratic system that made Mongolia such a standout.

by William Pesek:

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

Ulaanbaatar prepares for winter www.news.mn

Air pollution in Ulaanbaatar city, where half the Mongolian population lives, decreased visibly last winter after the government halted the use of raw coal. Smoke from the shantytown ger districts, where over 220,000 families live has long been identified as the main culprit of Ulaanbaatar’s chronic air-pollution. In the light of the ban, the government has put an alternative product on the market made from semi-coke, a by-product of coal.

Rio Tinto reaches power supply deal with Mongolia for Oyu Tolgoi mine www.reuters.com

June 29 (Reuters) - Rio Tinto Ltd said on Monday it had reached an agreement with Mongolia to domestically supply power to its Oyu Tolgoi copper-gold mine through a state-owned coal-fired power plant at Tavan Tolgoi.

Russia Wants to Keep Mongolia in Its Place www.foreignpolicy.com

On June 24, Russia held a massive military parade, technically to mark the 75th anniversary of Victory in Europe (V-E) Day—delayed for over a month due to COVID-19—but also to provide a suitably militaristic backdrop for voting in the constitutional referendum that will conclude next week, paving the way for the extension of Vladimir Putin’s presidency until at least 2036.

On the same day, Mongolia held its regular, democratic parliamentary elections.

Now these two unrelated events have triggered an uncharacteristic diplomatic row between Moscow and Ulaanbaatar that highlights Russia’s self-defeating propensity to bully its neighbors and Mongolia’s rapidly shrinking room for maneuver as it faces pressure from both Moscow and Beijing. Mongolia, a robust democracy in a deeply authoritarian neighborhood, faces a difficult future as its two giant neighbors and former imperial overlords, China and Russia, seek to reorder Eurasia in their image.Mongolia, a robust democracy in a deeply authoritarian neighborhood, faces a difficult future as its two giant neighbors and former imperial overlords, China and Russia, seek to reorder Eurasia in their image.
The latest row erupted when the Mongolian National Broadcaster (MNB) scrapped plans to air the Russian parade in a live broadcast. It had originally planned to show the parade, partly because the Mongolian government resolved to send a small detachment of soldiers to march in the spectacle in a gesture of respect for Russia. But realizing that the rescheduled parade would coincide with the Mongolian election, MNB decided to pull the broadcast, citing concerns over perceptions of election day bias.

The Russian Embassy in Ulaanbaatar lashed out against this decision in a mean-tempered public post on its Facebook page, accusing MNB of an “aberration of vision” and even subservience to Western interests: “Perhaps the MNB board of directors inadvertently joined … a whole campaign of accusing Russia of electoral interference nearly everywhere in the world?”

The remarks caused a storm of controversy. In a letter sent to Russian Ambassador Iskander Azizov, MNB Director Luvsandashiin Ninjjamts called the embassy’s remarks “clearly insulting” and demanded an official apology. Former Mongolian Prime Minister Sanjaagiin Bayar, who had also served in Russia as Mongolia’s ambassador, likened the embassy’s outburst to the old practice of Soviet ambassadors dictating to their host governments what they should and should not do.

Mongolians know a thing or two about Soviet interference. The country became a Soviet satellite 20 years before the same fate befell the countries of Central and Eastern Europe. In the 1930s, the Soviets—and their Mongolian puppets, the Mongolian People’s Revolutionary Party—slaughtered tens of thousands of people in anti-religious campaigns and waves of political repression.In the 1930s, the Soviets—and their Mongolian puppets, the Mongolian People’s Revolutionary Party—slaughtered tens of thousands of people in anti-religious campaigns and waves of political repression.
Among the victims was Mongolian Prime Minister Peljidiin Genden, who had the nerve to quarrel with Joseph Stalin. (He is rumored to have smashed the Soviet dictator’s pipe to pieces in one nasty altercation.) He was sent to Moscow and executed by the Soviets in 1937. His successor, Anandyn Amar, suffered a similar fate. He was arrested, sent to the Soviet Union, and executed there in 1941.

This bloodbath led to the premiership of Khorloogiin Choibalsan, also known as Mongolia’s Stalin, who lent himself to serving Soviet aims in Asia and was closely supervised by Ivan Ivanov, the then-Soviet plenipotentiary in Mongolia. It was on Choibalsan’s and Ivanov’s watch that Mongolia got involved in the Soviet war effort during the 1940s, sending nearly half a million horses (which proved their resilience on the front line) and sponsoring a tank brigade. Mongolia also joined the Soviets in fighting the Japanese in Manchuria in August 1945.

Choibalsan’s successor, Yumjaagiin Tsedenbal, was even more anxious to endear himself to his Soviet overlords, repeatedly requesting Mongolia’s annexation by the Soviet Union. (To their credit, the Soviets refused.) Tsedenbal also fought Moscow’s case tirelessly during the unfolding Sino-Soviet split. In December 1962, his ardent defense of Soviet policies in a conversation with the Chinese Premier Zhou Enlai got so heated that the two nearly came to blows.

Ironically, it was the Soviets who ultimately decided to remove Tsedenbal from power in 1984, sending him to peaceful retirement in Moscow. The move was choreographed by then-up-and-coming Central Committee Secretary Mikhail Gorbachev (reportedly, in part because Tsedenbal’s anti-Chinese views undercut Moscow’s interest in improving relations with Beijing).

Mongolia only shed its status as a Soviet satellite in the late 1980s. Sandwiched uncomfortably between two former empires, the country embraced its so-called “third neighbor policy,” seeking actively to develop relations with the West as a counterbalance. Mongolia also developed a robust system of democratic governance, holding regular elections (in what has become largely a two-party system) and enjoying freedoms of speech, assembly, and association in stark contrast to its two authoritarian neighbors.

For years, Ulaanbaatar has played China against Russia, Russia against China, and both against the West in a skillful balancing act that is now becoming difficult to sustain.For years, Ulaanbaatar has played China against Russia, Russia against China, and both against the West in a skillful balancing act that is now becoming difficult to sustain. Closer relations between Beijing and Moscow in recent years have constrained Mongolia. The landlocked country’s utter economic dependence on its two larger neighbors accentuates its impossible dilemma.
Mongolia’s current president, Khaltmaagiin Battulga, campaigned on a Russia-friendly platform, projecting himself as Putin’s friend. He had also made overtures to China (most recently, by inexplicably donating 30,000 sheep as Mongolia’s contribution to China’s anti-coronavirus effort) and even floated the prospect of his country joining the Shanghai Cooperation Organisation, largely run by China and Russia.

When Tsakhiagiin Elbegdorj, Battulga’s predecessor as president, first agreed to contribute Mongolian troops to march in the V-E parade—in 2015, for the 70th anniversary—it served as an indicator of a careful pivot in Russia’s direction. It was a move that had some support in Mongolian policy circles: Better the Russians than the Chinese, their thinking went.

But, as the Russian Embassy’s intervention demonstrates, Mongolia’s independence is not yet fully accepted in Moscow. The expectation, clearly, is that the Mongolians ultimately have no recourse: They have to swallow their pride and do as they are told because, if they don’t, let them see if they can get better treatment with China.

The embassy’s outrageous Facebook post is a part of an emerging pattern. In recent years, the Russian Foreign Ministry has pursued a much more assertive social media policy. Russian embassies have played an active part in disgraceful propaganda and trolling, in particular related to the history of World War II. This includes, for instance, posts that blame Poland for the outbreak of the war (by the Russian Embassy in Warsaw) and posts by the Russian Embassy in Tallinn praising the joys of life in Soviet-occupied Estonia.

While the purpose of these aggressive and deliberately offensive social media campaigns is far from clear, its effects are obvious: enraging the populace of the target countries and helping to foster Russia’s image as an unrepentant, aggressive, neoimperialist power. That is certainly the image the Russian Embassy has projected in Mongolia.

Unfortunately, unlike the European countries that can laugh off Russia’s trolling or perhaps take it seriously and rally in defiance of Putin’s regime, Mongolia has limited options. Moscow senses this vulnerability and will, of course, exploit it. In the long term, the very existence of an open, democratic Mongolia poses a challenge to China and RussiaIn the long term, the very existence of an open, democratic Mongolia poses a challenge to China and Russia, and for this reason the survival of democracy in the country is an open question.
Despite the row over MNB’s refusal to broadcast the parade, Mongolian troops did march on Red Square, a sign of Ulaanbaatar’s commitment to keeping its difficult northern neighbor appeased. Whether or not the embassy apologizes for the scandalous post (and it won’t), the passions will probably fizzle out in the days ahead, leaving just the bitter aftertaste—a reminder for ordinary Mongolians that in Russia’s zero-sum world, you march in unison and never, ever smash Stalin’s pipe.

Candidates in Mongolian elections face Swiss charges www.swissinfo.ch

Mongolia held parliamentary elections on June 24. Two of the candidates are currently under investigation by Swiss prosecutors, who suspect corruption linked to the granting of rights for a massive copper and gold mine in the Asian country.

Politically, the two are running in different provinces. Sangajav Bayartsogt, the former minister of finance, is representing the Democratic Party in the north of the country. Borkhuu Delgersaikhan, a businessman active in the mining sector, is running in the Western Gobi province.

In their various appearances in the run up to the elections, both put themselves forward in the best possible light. But as the Swiss Office of the Attorney General (OAG) has confirmed to swissinfo.ch, a legal case in the works here suggest they share a tarnished track record.

Mysterious deals
Between December 2007 and July 2008, Delgersaikhan allegedly received some $45 million (CHF42.6 million) into his Zurich bank account, the money sent by a mysterious Chinese investor. From this amount, he then allegedly paid €8.2 million (CHF8.75 million) into a Credit Suisse account belonging to Bayartsogt.

What were the transactions about? A few days beforehand, Bayartsogt had taken up his position as minister of finance, and a few months after, he signed a huge contract with the British-Australian Rio Tinto group, handing them the rights to exploit the Oyu Tolgoi mine in the south Gobi Desert.

It was a good deal for the investors, who reckoned the mine would eventually become one of the world’s biggest reservoirs of copper and gold.

But: in 2013, the Offshore Leaks report revealed that Bayartsogt was the holder of Swiss bank accounts. Embarrassed, the politician was forced to publicly apologise; he then resigned from his job as vice president of the Mongolian parliament.

In an effort to play down the affair, he paid some CHF2.1 million to Delgersaikhan. But the move had an unexpected effect: it raised red flags at the latter’s Zurich bank, which reported the transaction to Swiss authorities.

Lawyer’s statement
Swiss courts take up the case
It wasn’t until 2016 that the Swiss justice system woke up. In June that year, a group of Mongolian lawyers launched a legal case in Switzerland against Bayartsogt and others – a case revealed by the SonntagsZeitung newspaper. In turn, Credit Suisse then became worried and reported Bayartsogt – its client – to the Money Laundering Reporting Office Switzerland (MROS).

In August 2016, federal prosecutors finally opened an investigation into money laundering and froze almost $1.85 million in Delgersaikhan’s accounts – suspecting him of acting as an intermediary in corrupting Bayartsogt in the lead-up to the allocation of rights to the Oyu Tolgoi mine.

Delgersaikhan contested the freezing of his accounts at the Federal Criminal Court, then at the Federal Supreme Court, before his appeal was rejected in 2018. For the judges, there was no question: “the fact that such a considerable sum is paid to the minister of a foreign country, immediately after he has taken up his position, is suspicious from the outset,” they wrote in their judgement. Such movements of money are “typical” of laundering schemes, they said.

Contacted by swissinfo.ch, federal prosecutors said that their investigation, originally brought against unknown subjects, has been widened to include the names of the two Mongolian parliamentary candidates – Bayartsogt and Delgersaikhan – as well as a third citizen from the Asian country.

And in April 2020, the prosecutors announced a “sentence order” – a type of criminal judgement – against Delgersaikhan, accusing him of falsifying documents. The businessman rejected this, and will take his case before the Federal Criminal Court.

“This sentence order is the last hope of the Attorney General to keep a case going against my client,” says Manuel Bader, the Zurich lawyer of Delgersaikhan. Until now, he says, all of the charges brought against his client have gone up in smoke.

Criminal investigations in Mongolia
In Mongolia, too, anti-corruption authorities have shown interest in the two politicians and their 2009 dealings. The OAG has confirmed that Mongolia filed a request for legal assistance from Switzerland, which federal prosecutors answered in 2019.

However, the status of investigations in Mongolia is unclear. Bayartsogt was arrested for the first time in 2018, released, then briefly detained again in 2019, according to Reuters. The Mongolian Independent Authority Against Corruption did not respond to our questions.

The only certainty is that throughout the election campaign, both candidates were keen to play down the affair. On May 30, Delgersaikhan allegedly told public television that the OAG’s investigation had been shelved and that he had been cleared by Swiss prosecutors – a claim that contradicts what the OAG says.

Responding to the statement of Delgersaikhan’s lawyer, the OAG has reaffirmed its position: “firstly, the evaluation of a document should be done on the basis of all the content, and not only ‘pieces’”, an OAG spokesperson told swissinfo.ch.

“The response of the OAG on June 16 remains valid, including the following declaration: ‘to date, and in this context, none of the criminal proceedings have been dropped’.”

A Mongolian citizen, meanwhile, who asked to remain anonymous, frets about the rule of law in his country: “Switzerland must help us to make the truth known, to the world and to our people. Otherwise our young democracy will die, and we will end up losing our sovereignty. If these people reach the upper echelons of politics, Mongolia will be in grave danger.”

* Karine Pfenniger works for Gotham City, a newsletter founded by investigative journalists Marie Maurisse and François Pilet. The newsletter specialises in economic crime.

Mongolia’s Ruling Party Keeps Big Majority After Covid-19 Success www.bloomberg.com

Mongolia’s ruling party retained a supermajority after parliamentary elections, as the government’s relative success against the coronavirus outbreak offset concerns about corruption and the erosion of democratic institutions.

The Mongolian People’s Party appeared poised to secure at least 62 of the 76 seats in the Great State Khural, according to preliminary results released Thursday by the General Election Commission in Ulaanbaatar. The result reaffirms Prime Minister Khurelsukh Ukhnaa’s grip on power, representing a loss of only one seat in parliament.

The main opposition Democratic Party -- led by former Prime Minister Amarjargal Rinchinnyam -- won 11 seats, while independents and coalition groups secured three others. More than 600 candidates competed in the election Wednesday, the first since the MPP’s landslide win four years ago.

“The MPP fully capitalized on the Covid-19 regime in the country,” said Suren Badral, a former ambassador-at-large and foreign policy adviser to Amarjargal. For example, the ruling party was able to leverage support from teachers, who had more free time due to school closures, he said.

The result could mean more strains between Mongolia and the Rio Tinto Group over their joint Oyu Tolgoi copper and gold mine in the Gobi Desert. Disputes include tax issues, criticism of the terms of the mining agreement and questions about the project’s power requirements.

“Mongolia’s relationship with Rio Tinto will continue to be ‘rocky,’” said Thomas Hugger, a fund manager at Asia Frontier Capital in Hong Kong.

Voting didn’t appear affected by the pandemic, with turnout at 68% nationwide and in line with past elections in Mongolia. The result was the latest -- after parliamentary elections in nearby South Korea in April -- to suggest that infection-control measures like glove and mask requirements might not have a big impact on voter participation.

Since taking the premier’s post in 2017, Khurelsukh, 52, has strengthened his political position through unlikely cooperation with President Battulga Khaltmaa, 57, of the rival DP. They pushed through a series of legislative changes last year including the removal of measures intended to protect the independence of the courts and anti-corruption investigators. Khurelsukh also secured new powers to select cabinet members and extended the length of the president’s term.

Corruption, Coronavirus
The shift has fueled concerns that Mongolia’s status as an “oasis of democracy” between Russia and China may be under threat three decades after the country’s first open election in 1990. Authorities took the unprecedented step in recent weeks of arresting five candidates, including three from the DP and two members of the MPP.

The MPP managed to not only overcome that criticism, but also the fallout from a Covid-driven economic downturn. A short-term ban on sending coal to China in February sent exports sliding 38.5% in the first five months of the year, and Mongolia reported a 10.7% economic contraction for the first quarter.

“The MPP has won public support, a clean reputation and a strong homeland,” Amarbayasgalan Dashzeveg, the ruling party’s secretary general, said after the result was confirmed.

Mongolia has managed to keep its coronavirus cases low by closing its borders, banning public gatherings and establishing curfews on restaurants and pubs, giving Khurelsukh a boost. The country had confirmed 216 cases and no deaths as of Thursday.

Still, Camille Barras, a politics and international studies researcher at the University of Cambridge who previously observed local governance in Mongolia for the United Nations Development Program, said the results will disappoint those seeking an alternative to the two main parties. Some 121 independent candidates and 4 coalitions of smaller parties had sought seats in the election.

“It is quite palpable how the election results might also feed into further political disillusionment of part of the electorate,” Barras said.

by Terrence Edwards