much the same The governing coalition in Mongolia is facing potential collapse due to a threat from the Mongolian Peoples' Revolutionary Party (MPRP) that it intends to dissolve the government. While analysts suggest the move could cause some short-term instability for investors, they also see opportunity emerging from crisis.
The MPRP entrance to the coalition in July was surrounded by drama as founder Nambar Enkhbayar had been arrested on corruption charges – which he claimed were politically motivated – three months ahead of the hotly contested election. The party now says it will seek to dissolve the Justice Coalition (JC) – a coalition member formed with the Mongolian National Democratic Party (MNDP) – in protest against Enkhbayar's trial, which is due to start on December 7.
"Nambar Enkhbayar, chairman of the MPRP, has been illegally jailed for almost seven months as a result of political repression," Byambasuren told a press conference in Ulaan Baatar, according to Xinhua. "If the court considers the case of chairman Enkhbayar positively, we will review the withdrawal."
The MPRP may not have the weight to push through its threat, however. On the one hand, the MNDP is reported to oppose the move, meaning it has little intention of joining the pressure on the government. On the other, the Democratic Party, the senior coalition member, has the opportunity to increase its current 31 seats in the 76-seat parliament by five. Two of those seats are in the bag, while another three are pending. Alongside another seven seats from junior coalition members, the 43 seats it may soon control would allow it to easily survive the loss of support from MPRP's seven MP's.
"If the Mongolian government does fall, the country will be faced with several risks," admit analysts at Mongolian Investment Banking Group (MIBG). "These are mainly short-term issues that can be classified under the uncertainty that a change in government will bring to the business environment."
At the same time, they suggest that the short-term risks could be outweighed by longer-term benefits, particularly given the season. "While this process will present challenges in the short term... it could be a timely transition as the economic and environmental cycles both cause seasonal slowdowns across the country," MIBG says. "If a similar change was to take place during the summer months the impact could prove to be long lasting and would serve as a catalyst for further downside to market sentiment."
However, should the drama strengthen DP's hand, it would likely be doing a favour for foreign investment. The rising resource nationalism across Central Asia has made its presence felt in Mongolia, and was one of the hot issues in the election. DP, however, is notable for its strong pro-business and pro-foreign investment stance.
"We expect that a strengthening DP voice will favor the foreign investment community," MIBG posits. "Therefore, the short term instability in parliament may deliver a stronger and more cohesive message from the government that will support the attraction of foreign investment and provide greater clarity on key legislative and regulatory issues."