2021 marks the 100th anniversary of the People’s Revolution and the 30th anniversary of the Democratic Revolution for Mongolians. Mongolians lived under a one-party ideology with a planned economy for seventy years of this period, whereas in the remaining thirty years, the market economy, democracy, and multilateralism dominated.
Thirty years ago, the economic and political system, entirely dependent on our northern neighbor, collapsed. The whole country relied on food stamps. Citizens started to conduct trade increasingly after having the right to travel abroad. The first democratic government was created, and the legislation was changed entirely to cherish human rights and freedoms, justice, and national unity and building a humane, civil, democratic society. The state will pursue a principle of democracy, equality, and respect for the law. Additionally, the state declared its recognition of all forms of both public and private property and the legal protection of the right to ownership. (The Constitution of Mongolia)
After three decades of pursuing the path of democracy, where are we now? How well have we built the pillars of personal and economic freedom and the rule of law that guarantees them?
Personal freedom
Democracy begins with freedom of speech. Without this freedom, there is no freedom to publish, to associate, or to be elected. Not to mention the freedom to choose where to live, where to go, and what to do. Until 1990, Mongolians were punished, fired, imprisoned, and made disappear if they expressed views other than communist ideology or criticized the government policy. Russian communists executed several Mongolian heads of state. When leaving aimags or cities, everyone had to obtain a permit from their office (assignment) or khoroo administration (trip pass).
In this age, the presence of freedom of expression is irrevocable in Mongolia. As of 2020, there are 502 media outlets in the country (Mongolian Press Institute estimate). However, 75% of them are owned or controlled by politicians.
The ‘Law on NGOs’ was passed in 1997 to ensure the freedom of association. As of 2018, 17,685 NGOs have been registered with 8578 actively operating (State Registration census). However, the title ‘NGO’ is carelessly used by political parties, religious organizations, and even for-profit legal entities (MOJHA news).
The right to vote and to be elected exists but is eroding. No independent runner will be able to compete fairly with the ruling political parties due to the siding of the ruling parties with oligarchs who fund them and the media owners. Elections are now a competition of money, not ideology. There is a practice of secretly and blatantly buying votes. The representative democracy that we aspired for has become a democratic dictatorship. It is believed that machine counting of votes is faster and easier than manual counting, but there is a growing debate on whether it is hacked.
In order to regain our freedom, we need to ban political officials from directly or indirectly owning media outlets, prohibit the practice of running NGOs within political parties, and conduct elections using blockchain technology. It is also necessary to make the funding of political parties transparent and to stop the use of public funds and civil servants for election campaigns.
Economic freedom
Economic freedom begins with free markets and free prices. Only free prices enable free competition and serve consumers most fairly. Elimination of free competition promotes monopolies in the long term and leads to decreasing supply channels, size, and quality. Obviously, all businesses must run in a way that is safe for people’s health, security, and the environment.
However, the Mongolian government continues to control the prices of essential commodities. The government regulates the price of flour by supporting wheat farmers with soft loans and the price of meat by stocking it. Prices for fuel, water, public transportation, and electricity are also limited and regulated. Household consumers are supplied with 1 kWh of electricity (9.2 cents), 30% below the actual rate (6.4 cents). After many years of this pricing, the domestic energy production capacity still has not increased. In 2020, 7.1 billion kilowatt hours of electricity were produced domestically while importing an additional 1.7-billion-kilowatt hours from our two neighbors. (ERC data)
The increasing involvement of the state in the economy hinders growth. It has been normalized that state or local public enterprises build factories what private enterprises could do. According to the latest census from 2016, there are 43 state-owned and locally-owned public factories, 3 banks, 49 joint-stock (nominally) companies, 9 partially state-owned companies, and 13 LLCs with total assets of 30 trillion tugriks (Cabinet Secretariat data) – the equivalent of the GDP for the same year. As of 2019, 30% of them operated with losses. The ones with profitable operations contributed 155 billion tugriks to the state budget through dividends. The average salary at the managing level of an SOE is 50% higher than the national average.
Another main reason for the limitation of fair competition in the economy is that the government was always penetrated by wealthy individuals and business owners who passed laws for themselves and created a monopoly. What’s more, although state procurement is done through tenders, the sales (copper, coal, and gold) do not require tenders. This leads to the creation of a system where officials set a monopoly and enjoy profit from each tonne of sales.
The overly abundant welfare has decreased the will to work among low-income citizens. Being given 500 thousand tugriks through child benefits, medal salary and other bonuses is better than going to work and riding the public transport in the traffic back and forth to earn 600 thousand tugriks, according to some.
It has become a habit to slowly increase all kinds of taxes as government spending increases and the state budget has a deficit. As taxes increase, the private sector is less interested in expanding their business. Social insurance premiums are 12.5% of an individual’s salary and 13.5% from the employer. In addition, the ever-increasing minimum wage (currently at 420,000 tugriks per month) has discouraged many employers from hiring. Moreover, the social insurance system is crippled by debt to the point of bankruptcy. Of Mongolia’s 1.1 million employed people, 48% do not pay social security tax. As of 2020, 98,000 of the 132,000 companies registered in Mongolia file X reports which means there’s no operation. Despite unemployment falling by 4.5% in the first quarter of 2020, unemployment insurance spending has doubled over the same period. The reason for the declining labor force in the labor market is the small number of people who meet job requirements, low wages, and widespread welfare.
The rule of law
The legislative organs are serving certain groups, and the court is now following orders. Since the judiciary is being weaponized to hunt down political opponents, the society as a whole is now familiar with the term “injustice tunnel.” Hundreds of corruption cases are investigated and transferred to court from the IAAC (The Independent Authority Against Corruption); the prosecutor dismisses or sends it back and forth until the investigation period ends. Also, the so-called amnesty law has vindicated many criminals.
Judges have been appointed by the President with more say in it, but the recent constitutional reform has led to the criticism that the increased participation of the Parliament, judges, and the public, gave the winning party greater power.
Nobody was held responsible for the 2016 leaked conversation between the Prime Minister and the party leader about the ruling MPP’s leaders’ plan to make 60 billion tugriks through selling government posts at different rates. Government posts, tender and diplomatic mission appointments are all sold for money now.
The 3% interest loan for SMEs (bank loan interest is 20%) was taken by 30 Parliament members or over half of the MPP representation in the Parliament to their affiliated companies. Despite that, nobody except three Parliament members was held responsible. Some of them were even re-elected to the Parliament.
Briefly put, instead of the rule of law, the rule of a person and a party above the law dominate Mongolia now. As a result, corruption is rampant and the citizens trust their government less, which leads to many people settling abroad for employment and a better life.
Let us remember that the Nobel Peace Prize laureate Aung San Suu Kyi once said that “a pretentious democracy is worse than a dictatorship” when she visited Mongolia in 2013. We, Mongolians, who have gone through the just but bumpy road of democracy for three decades, can build a real democracy, not a pretentious one.
2021.05.27
Trans. by Riya.T and Munkh-Erdene.D