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BTI 2020 Country Report — Mongolia

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BTI 2020 Country Report — Mongolia BTI 2020 Country Report Mongolia This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2020. It covers the period from February 1, 2017 to January 31, 2019. The BTI assesses the transformation toward democracy and a market economy as well as the quality of governance in 137 countries. More on the BTI at https://www.bti-project.org. Please cite as follows: Bertelsmann Stiftung, BTI 2020 Country Report — Mongolia. Gütersloh: Bertelsmann Stiftung, 2020. This work is licensed under a Creative Commons Attribution 4.0 International License. Contact Bertelsmann Stiftung Carl-Bertelsmann-Strasse 256 33111 Gütersloh Germany Sabine Donner Phone +49 5241 81 81501 [email protected] Hauke Hartmann Phone +49 5241 81 81389 [email protected] Robert Schwarz Phone +49 5241 81 81402 [email protected] Sabine Steinkamp Phone +49 5241 81 81507 [email protected] BTI 2020 | Mongolia 3 Key Indicators Population M 3.2 HDI 0.735 GDP p.c., PPP $ 13735 Pop. growth1 % p.a. 1.8 HDI rank of 189 92 Gini Index 32.3 Life expectancy years 69.5 UN Education Index 0.734 Poverty3 % 6.9 Urban population % 68.4 Gender inequality2 0.322 Aid per capita $ 245.3 Sources (as of December 2019): The World Bank, World Development Indicators 2019 | UNDP, Human Development Report 2019. Footnotes: (1) Average annual growth rate. (2) Gender Inequality Index (GII). (3) Percentage of population living on less than $3.20 a day at 2011 international prices. Executive Summary In July 2017, Democratic Party candidate Khaltmaa Battulga was elected Mongolia’s new president with 50.61% of the vote, defeating his rival Miyegombo Enkhbold from the ruling Mongolian People’s Party (MPP) who received 41.16% of the vote. Importantly, 8.23% of the voters in the second round chose the none-of-the-above option, the so-called blank ballot. Mongolians believe in democracy as a guiding general principle and vision, but they have less trust in the fairness and effectiveness of political institutions. The State Great Khural was paralyzed several times due to an escalation in frictions between major factions within the ruling MPP. Political scandals, such as some 20 members of parliament having allegedly benefited from the state-run SME fund and sexual misconduct allegations against of some members of parliament led to parliament having the lowest public approval of any state institution. In this context, debates over the effectiveness of parliamentary and presidential systems intensified. A number of prominent politicians, columnists and researchers called for establishing a strong presidential system. The prevalence of clientelistic networks, a lack of opportunities for the younger generation and a lack of financial transparency in major political parties are all serious threats to the country’s democratic transformation. There is increasing public dissatisfaction and frustration regarding the lack of democracy and accountability within political parties. Public opinion surveys have continuously confirmed that the majority of Mongolians do not trust political parties. Mongolia’s economic performance improved dramatically in 2017 and 2018 with the GDP growing by 6.4% in 2018. Copper and coal production and exports increased significantly in 2018. Under an IMF program, the government made significant improvements in fiscal performance, mainly through stricter control of public spending. However, poverty remains one of Mongolia’s biggest issues. The poverty rate in Mongolia declined from 38.7% in 2010 to 21.6% in 2014 and rose again to 29.6% in 2016. Furthermore, there are serious income disparities across regions and localities. Poverty in rural areas remains higher than in the main urban centers. Urban poverty increased, especially among people residing on the outskirts of the ger/yurt districts of the capital city where access to clean air, water and sanitation remains problematic. BTI 2020 | Mongolia 4 History and Characteristics of Transformation In 1992, the first democratically elected parliament of Mongolia, the State Great Khural, adopted a new constitution, confirming the nation’s aspiration to become a democratic and prosperous country. Mongolia’s dual transition from nearly 70 years of centrally planned economy and single- party authoritarian system to a free market economy and multiparty parliamentary system provided a great opportunity for the country to strengthen its independence and achieve its development goals. Mongolia faced dramatic economic difficulties in the first decade of the transition in the 1990s. The country has taken considerable steps forward in establishing a more modern and vibrant economy, with a booming mining sector in the 2000s, driving double-digit economic growth. However, the end of mining boom in 2013 put the natural resource-dependent country in a challenging situation. Spread out across 1.54 million square kilometers, Mongolia is the world’s 19th largest country, but has a population of just three million, making it the least densely populated country in the world. Slightly more than half (54.2%) of the population is Buddhist. The country boasts a high degree of religious freedom and a very high literacy rate of 98.3%. Traditionally, Mongolia has been a country of nomadic pastoralists with a heavy reliance on agriculture; at least 25% of the population still depends on animal husbandry. The head of the state is the directly elected president. The prime minister is the head of government, and all legislative power is vested in the State Great Khural, Mongolia’s unicameral parliament, which has 76 members elected by popular vote to terms of four years. The last parliamentary election (June 29, 2016) yielded the following results: the Mongolian People’s Party (MPP) won 65 of the 76 seats, the incumbent Democratic Party (DP) won nine seats, and the Mongolian People’s Revolutionary Party (MPRP) won one seat. Only one independent candidate was elected into parliament. The MPP’s landslide was followed by its dominance in local elections in November 2016. Elections are regularly conducted on the national and local levels, with consistently successful transfers of power from one ruling party to another – as shown by the landslide shift of power from the Democratic Party (DP) to Mongolian People’s Party (MPP). The voter turnout in the parliamentary election increased from 65.2% in 2012 to 73.7% in 2016. On July 9, 2017, Democratic Party candidate Khaltmaa Battulga was elected Mongolia’s new president with 50.61% of the vote, defeating his rival Miyegombo Enkhbold from the ruling MPP, who received 41.16% of the vote. The “blank ballot,” a none-of-the-above option introduced into election law in 2015, was chosen by 8.23% of voters. Mongolia enjoyed unprecedented growth rates in 2011 and 2012 and became one of the fastest growing economies in the world. Driving this growth was a booming mining sector. Mongolia holds significant copper, gold, coking-coal and uranium deposits with a combined value of more than $1.2 trillion. Mongolia has a major competitive advantage in being located next to China, the largest commodity consumer in the world. However, given that more than 90% of the landlocked BTI 2020 | Mongolia 5 country’s exports go to China, the Mongolian economy is also heavily dependent on China’s growth. China’s economic slowdown seriously hampered Mongolia’s economy, as did commodity price shocks beginning in 2013. The economy contracted in 2016 for the first time in eight years. In 2017, the International Monetary Fund helped Mongolia avoid default on its large public debt with a comprehensive $5.5 billion package, the sixth IMF program since 1990. Mongolia has often been praised as an “island or oasis of democracy” in the heart of Asia by international observers for its achievement in democratic stability. After 25 years of transformation, entrenched corruption and cronyism in government and political parties have become increasingly threatening, eroding the rule of law and trust in political institutions. BTI 2020 | Mongolia 6 The BTI combines text analysis and numerical assessments. The score for each question is provided below its respective title. The scale ranges from 1 (worst) to 10 (best). Transformation Status I. Political Transformation Question 1 | Stateness Score The state’s monopoly on the use of force throughout the entire territory has not been Monopoly on the challenged since the onset of the democratic transition. Political and social protest use of force movements against corruption in government and specific public policies have been 10 mobilized, but there have been no organized groups strong enough to challenge the state’s existence and monopoly on the use of force. The entirety of the Mongolian population accepts the nation-state as legitimate. State identity Ethnically, Mongolia is fairly homogeneous with the majority of the population 10 comprised of the same ethnicity. There is a Kazakh-speaking Muslim minority (3.9%, according to the 2015 Population and Housing by-census), the majority of which live in Bayan-Ulgii province in western Mongolia. Mongolian Kazakhs enjoy significant cultural, linguistic and political minority rights. Allowing Mongolian citizens to hold dual citizenship has been recently debated in the public domain, but no government decisions have been announced. The Mongolian constitution explicitly recognizes the separation of church and state. No interference of Religion was repressed during the communist era and Mongolia witnessed a revival religious dogmas of religion, especially Buddhism and traditional shamanism, after the transition in 10 1990. According to the national census of 2010, 53% individuals aged 15 and above self-identified as Buddhist, with 3.9% self-identifying as Muslim, 2.9% as shamanist, 2.1% as Christian, and 38.6% as nonreligious believers. While some high-level officials are known to have deep religious beliefs and attend religious ceremonies, there are no religious groups that have substantial influence on national politics and its decision-making process.
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