07/08/2008, 00.00
MONGOLIA
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With the state of emergency over Mongolia ponders its future

Tensions remain high even though unrest is over. Mongolian Prime Minister calls for respect of the rule of law. The main issue now is how to exploit the country’s rich mineral wealth.
Ulaan Baatar (AsiaNews/Agencies) – Calm reigns in Ulaan Baatar. The state of emergency imposed by Mongolian President Nambariin Enkhbayar was lifted on Sunday. The clampdown came in the wake of violent street protests against early election results. Tensions remain high though.

Prime Minister Sanjagiin Bayar appeared on TV where he said that the “parties are determined to solve the issues in a peaceful way and according to the law.”

Some 200 people are still in detention in connection with the riot, but another 500 have been released.

Early indications suggest that the ruling Mongolian People's Revolutionary Party (MPRP) won a majority of seats, but the Democratic Party (DP) and other smaller parties want new elections. By contrast, international observers reported that the election was free and fair.

The new government will have a lot on its place if it wants to tap the country’s rich mineral wealth like uranium, coal, copper, gold and zinc.

Ordinary Mongolians are for their part tired of promises made by political parties about good times just around which never materialise whilst prices and unemployment go up.

During the election campaign the MPRP promised 1.5 million tugrik (US$ 1,250) per citizen when mineral development gets underway; the DP pledged a million.

The existing law gives the state either a 34 per cent stake or a controlling 51 per cent holding in mining projects. But foreign investors are not likely to go for such conditions.

For experts Mongolia would be better served by taxing its mineral wealth, rather than seeking direct government ownership in large-scale mines.

Partial ownership by the government, rather than taxation or royalties, also leaves it more vulnerable to dips in production, said D. Ganbold, president of the Mongolian National Mining Association.

Ownership would also create a conflict of interest for the government between its role as representative of the people and as a shareholder in a company.

Furthermore, Mongolia does not have the resources or capital required to undertake mine development on the massive scale.

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