Sep 25 2012

Mongolia's Next Challenge - Wall Street Journal

The country has come far, but should now turn to combating corruption.

American commentators have the unfortunate tendency to view democratizing countries, even those emerging from decades of repression and dictatorship, through an idealized lens that would leave even the United States out of focus. Mongolia is a case in point.

The country has been in the news lately with the conviction of former Prime Minister and President Nambaryn Enkhbayar for corruption, a development that has led some to worry that mineral-rich Mongolia is already succumbing to the "resource curse." But some perspective is necessary. Freedom House has consistently ranked Mongolia as a "free" country—the only former Communist country outside of Europe to have done so since 1991.

This performance is particularly impressive given that Mongolia is surrounded by Russia and China, and that it had no prior experience of democracy. Its economy collapsed during the transition from Communism in the early 1990s.

Yet Mongolia has developed and sustained a competitive democracy in which parties have rotated in and out of power. Today it has a robust press, an independent civil society, and a spirit of freedom among its citizens. These are not small achievements.

Major mineral discoveries over the last decade have confronted Mongolia with new challenges. Per capita income is expected to rise at more than 10% per year for the coming decade and possibly well beyond that. Used well, the new revenue will be a boon for Mongolia's small population of nearly three million. Used badly, the new revenue could bring Mongolia high inflation, lawlessness, debilitating populism, low growth, high income inequality and billions of dollars in secret overseas accounts.

That's why corruption is a first-order concern in the country today. The public trial of Mr. Enkhbayar bitterly divided the country. Opposing perspectives on the trial and conviction were evident in the many conversations that we had with Mongolians on a recent 10-day trip we took at the invitation of the sitting President Tsakhiagiin Elbegdorj, Mr. Enkhbayar's main rival.

We spoke with many people in and out of politics. Most of them, with the exception of members of Mr. Enkhbayar's own party, supported the conviction. Many—most compellingly, a group of young Western-educated Mongolians in the private sector—believed that Mr. Enkhbayar was guilty of crimes more serious than those he was convicted of. Some stated that absent the conviction of high-level politicians, corruption on a massive scale could wreck the country's future.

At the same time, almost everyone we spoke to was critical of the trial's procedures and the fact that Mr. Enkhbayar was convicted of relatively minor charges. Constitutionally, the president appoints many judicial officials, including the chief prosecutor. Most of our interlocutors believed that the timing of the arrest, 10 weeks before the June 28 parliamentary election, was influenced by politics.

Mr. Enkhbayar's trial and conviction have been roundly criticized internationally, including by California Senator Dianne Feinstein and John L. Thornton, chairman of the Board of the Brookings Institution. Members of Mr. Enkhbayar's Mongolian People's Revolutionary Party, or MPRP, insist he has been wronged. Yet this did not prevent the MPRP from entering into a coalition in August with Mr. Elbegdorj's allies in the Democratic Party.

Neither we nor the public critics of the trial in the West are well positioned to judge Mr. Enkhbayar's guilt. Still, many billions of dollars from Russian and Chinese mining investments have flowed into the country in recent years, and the officers of these companies are not constrained by any equivalent to the U.S. Foreign Corrupt Practices Act.

From 1997, Mr. Enkhbayar led the Communist successor party (now called the Mongolian People's Party), and he served as prime minister from 2000 to 2004 and president from 2005 to 2009. He has been as well positioned as anyone in the country to benefit from corruption, and many people we spoke with (including many outside the rival Democratic Party) consider him the "Godfather of Corruption" in Mongolia.

A recent Brookings Institution commentary noted that corruption began to spiral out of control during Mr. Enkhbayar's time in office. A 2005 report for the U.S. Agency for International Development condemned "the blurring of the line between the public and private sector brought about by an endemic and systemic conflict of interests at nearly all levels." The author noted, "Politics was allowed to be dominated by interests seeking to attain personal gains, and the culture of permissiveness toward corruption became the hallmark of the 2000s."

All this shows that Mongolia should vigorously prosecute grave acts of corruption by leaders from all political parties, while strengthening guarantees for due process. Given the current controversy about judicial independence, now would also be a good time for constitutional reforms that would increase the independence of the courts.

In addition, civil society should launch a more comprehensive audit of the state of democracy in Mongolia. International friends of Mongolia can best help by aiding this process of critical reflection and institutional reform.

Mr. Diamond is a professor of political science and Messrs. Fukuyama and Krasner are fellows at Stanford University.