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There seems to be a lot of positive sentiments regarding an OT (Oyu Tolgoi) Investment Agreement. But should we really be that optimistic? Chris de Gruben , the Accidental Entrepeneur, puts our feet back on the ground.
by Chris de Gruben
The current session of parliament is closing soon, Naadam is in less than 2 weeks.The parliament still has to officially confirm the equity based deal, a democratic president is trying to influence an MPRP majority parliament into action, political parties have to voice objections, create endless committees and special review groups. And of course, the investors have to find an agreement that they can sign.
I see no quick resolution to this dilema.
In the meantime, Mongolia is at the mercy of the goodwill of foreign nations for ever increasing grants and loans. Every week brings new multimillion dollar loans to Mongolia while it does not seem the country has a clear strategy on how it will pay it back. It is spending money today that it hopes it will make tomorrow, a flawed strategy which sadly puts Mongolia in a weak negotiating position.
Even if, by some miracle, the agreement was to be signed this summer, it will probably be too late for Ivanhoe and Rio Tinto to start real, large scale investments and construction at the OT site and building its infrastructure in UB before the onset of winter.
This means that they will have to wait until next spring to start the heavy investments, thus yet another winter of discontent.
Furthermore, I believe that the OT investment has been blown out of proportion, it is not a magical key that will suddenly resolve all of Mongolia's financial and foreign investment problems, it is only part of a complex solution.
There is more to the recovery than OT, TT is also important but most important of all is what the Mongolian Government will do with the money.
There is constant discussion and clamouring from parliament stating that they want an agreement which brings in as much revenue to the Mongolian people as possible.
Fair enough, but I never hear discussions or strategies being made as to how those revenues will be distributed to the people? The motherland gift is a perfect example of a populist promise made with no thought as to how it will be done, who will pay for it and how it will be fairly distributed.
Will be people get a voice in how the revenues are distributed, will its allocation be transparent or will a major part of revenues be wasted on corruption, useless populist projects, all with the aim of improving the condition of the few against the many? This is what I am interested in, how will the money be allocated, spent and so forth.
I hope the agreement is signed soon, if only to improve the image of Mongolia as a serious country worthy of investments, but sadly it seems that too much time is spent by parliamentarians fighting for personal gains instead of fighting for the good of the people.
It is my strong believe that a democracy which allows its members of parliament to own, manage and have financial interests in the private sector is a flawed system. Public servants should serve the public above and beyond their own financial and personal interests. Providing the temptation to serve their own needs is dangerous as it changes the perspectives of their functions. As Oscar Wilde said: I find that I can resist almost anything except temptation...
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