Mining wealth distribution key issue in Mongolia polls

Mongolia goes to the polls Wednesday to elect a new president as the country's mining boom raises questions over the role of foreign investors and the distribution of new found wealth.

Observers expect President Tsakhia Elbegdorj to win a second term and continue his policy of using foreign cash to help drive the rapid development of Mongolia's economy, which grew by 17.5 percent in 2011 and 12.3 percent last year.

The expansion has been achieved following the arrival of overseas mining giants such as Rio Tinto, which have moved in to exploit huge and largely untapped reserves of coal, copper and gold.

The Anglo-Australian miner and Canada's Turquoise Hill Resources have jointly led construction of the $6.2 billion Oyu Tolgoi mine, which is expected to produce 450,000 tonnes of copper concentrate a year and generate up to one-third of government revenue by 2019.

Against the background of intense inward investment, the landscape of Mongolia's capital city Ulan Bator is changing rapidly with plush new department stores opening amid a high-rise frenzy.

But concerns over rising inequality and environmental damage to the largely rural country are likely to be used by Elbegdorj's opponents in a campaign dominated by the resource nationalism issue.

"This is the issue, and because of that people will prefer the current president who is more foreign investment-friendly," Jargalsaikhan Dambadarjaa, a Mongolian political commentator and television presenter told AFP.

"Mongolians now more and more understand the importance of foreign investment."

Elbegdorj's main challenger is likely to be Badmaanyambuu Bat-Erdene, a champion wrestler and candidate from the Mongolian People's Party (MPP).

The MPP and Elbegdorj's Democratic Party have spent much of the last decade in power together as part of a coalition in Mongolia's parliament, the State Great Khural. However, the Democratic Party took control as a coalition leader at last year's parliamentary elections.

The third candidate, Natsag Udval, from the Mongolian People's Revolutionary Party (MPRP), is a supporter of former president Nambar Enkhbayar, who is now serving two-and-half years in prison on corruption charges.

Bat-Erdene helped draw up a new environmental protection law amid concerns that the country's breathtaking landscape was being damaged by industry.

And both of Elbergdorj's challengers have policies aimed at amending Oyu Tolgoi's contract, Jargalsaikhan said, amid concern that profits generated by foreign companies were not trickling down to the poorest Mongolians.

"But equality is most closely connected to the issue of corruption. Where there is money, there is the corruption issue," the political commentator said.

Fraud allegations against the president have surfaced, but are largely considered by the electorate to be a late smear tactic. Bat-Erdene has placed great stress during the campaign on his "clean hands".

A run-off will be held between the two leading candidates on July 10 if no-one attracts more than 50 percent of the votes.

However, polls suggest that Elbegdorj should beat his opponents at the first hurdle.

A survey carried out on June 14-16 by the Ulan Bator-based Sant Maral Foundation in the capital -- a traditional Democratic Party stronghold -- suggests 54 percent of people would vote for Elbegdorj.

"According to our poll, 71 per cent of the urban population said they would actively participate in the electoral voting," Sant Maral official Sergelen Tsogt-Ochir said.

However Julian Dierkes, an associate professor at the Institute of Asian Research, University of British Colombia, said on his online blog Thursday that "the assumption that Elbegdorj will win" could lead to voter apathy.

"The kind of consensus that I'm hearing here makes me a bit suspicious as to the impact it might have on voters," the election observer wrote, two days after arriving in Ulan Bator.

Landlocked Mongolia, wedged between China and Russia, shook off seven decades of communist rule as a satellite of the Soviet Union without a shot being fired in 1990, and held its first elections two years later.

Since then, its transition to a democratic capitalist state has been largely peaceful, although accusations of vote-rigging in the 2008 parliamentary elections resulted in deadly riots.

A range of new measures were introduced at last year's parliamentary election to boost transparency, including an electronic voting system.

Despite some allegations that the electronic system was faulty, the elections were largely successful.