$285 Million US Aid for Mongolia is Wrong, Watchdog Group Says

from Crosswalk

Lois Owen

The U.S. government is projected to distribute $34 billion in foreign aid in 2008, with at least $6.5 million going to Mongolia and an additional $285 million to be distributed there over the next five years.

That taxpayer-funded aid is conditioned on Mongolia becoming a freer society with stronger laws to protect the rights and property of its people, but indications are that Mongolia is slipping back into communism and should not receive more U.S. aid, according to a congressional watchdog group.

"The Mongolian government has acted to undermine the development of market institutions," according to Tony Schatz, president of Citizens Against Government Waste (CAGW). "It has assaulted the foundations of the private property system."

Schatz made his concerns known in a March 27 letter to John Danilovich, chief executive officer of the Millenium Challenge Corporation (MCC), the government entity that arranged the $285 million deal which was signed by President Bush in October 2007. (The $6.5 million for Mongolia in 2008 is separate and is being allocated through the U.S. Agency for International Development.)

The MCC was launched in 2004 to provide aid to some of the world's poorest countries. Countries can qualify for aid by "governing justly, investing in their citizens, and encouraging economic freedom," states the corporation's Web site.

In his same March 27 letter, Schatz further wrote that the MCC's own "Indicator Scorecard" showed that Mongolia is apparently not in accordance with all the rules to receive U.S. aid. The scorecard "shows deterioration in several areas, such as controlling corruption and respecting the rule of law," said Schatz.

The MCC scorecard rates each country's performance in such categories as "civil liberties, rule of law, immunization rates, primary education expenditures, business start-up and fiscal policy." The information is provided by the World Bank Institute.

Davy Kong, a press officer for MCC, does not believe that Mongolia's low scores are a strong indicator of corruption.

"Country performance is measured against other countries in the same income group, not against absolute standards," she said. "Mongolia scores well compared to these countries."

Landlocked between Russia and China, Mongolia is a parliamentary republic. Currently, the Mongolian People's Revolutionary Party (MPRP), a communist political party, holds a majority in the parliament. The country's land mass totals 1,564,116 square km, making it a little smaller than Alaska, and it has a population just under 3 million.

Dr. J. Peter Pham, director of the Nelson Institute for International and Public Affairs at James Madison University, told Cybercast News Service , "Mongolia is at a tipping point. There is extreme poverty there, but with the resources that have been discovered and the high commodity prices, they have a wonderful opportunity to engage in economic growth."

Schatz and the CAGW protested the $285 million for Mongolia and, in particular, the $183.38 million slated for a railway, which is co-owned by a Russian company. They are also concerned about threats made by the MPRP to revoke contracts with private firms by imposing a 68 percent tax.

"We are concerned about the Russians getting more involved with some of their activities," Elizabeth Wright, vice president of government affairs at CAGW, told Cybercast News Service.

"We were hopeful with the break-up of the Soviet Union and the peaceful revolution in Mongolia, that you would see them promote more democratic interests," said Wright, "but our sense is that they are going back to their old ways, and we are concerned that our tax dollars are being used to support this."

Sambuu Dawadash, a political secretary from the Mongolian embassy in Washington D.C., objected to allegations that Mongolia is reverting to communism, saying, "Mongolia is a very successful democracy. You can talk to people everywhere who have been to Mongolia, and they would say that Mongolia is a democracy."

Dr. Stephen Noerper, a senior associate at the Nautilus Institute for Security and Sustainable Development, said that the CAGW's concerns are not unfounded, but he believes the trouble might have been avoided had the funds been granted several years ago when Mongolia was showing signs of tremendous democratic progress.

"Had they been implemented and provided to the former transitional government, which seemed to not have had as many concerns about issues such as corruption and transparency, then the funds could have been executed to continue to support the democratic consolidation of Mongolia," said Noerper.

Pham claimed the Mongolian government was to blame for not completing documentation promptly.

"I agree that this aid would have gone further earlier, but I think it would have been irresponsible to hand out taxpayer dollars without the plan in place," said Pham.

Mongolia was named eligible for Millennium Challenge Compact assistance on May 6, 2004.