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UNCLAS SECTION 01 OF 02 ULAANBAATAR 000019 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O 12958: N/A 
TAGS: PGOV PREL ECON MG
SUBJECT: Governing Party Flexes Muscles, Sacks Health Minister 
 
REF:  Ulaanbaatar 461 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (SBU) SUMMARY: The Mongolian People's Revolutionary Party 
(MPRP)'s victory in a by-election last September gave them an 
absolute parliamentary majority.  Pundits said it was only a matter 
of time before less cooperative, non-MPRP members of the coalition 
government, in place since January 2006, were shown the door. Last 
week, the MPRP made its first example out of Minister of Health L. 
Gundalai, who was squeezed out ostensibly for refusing to follow 
cabinet policy. Gundalai, generally popular but strongly disliked by 
members of the health profession and international organizations, 
had long topped the list of those expected to be tossed after the 
MPRP's victory, the only question was when.  There is some 
speculation that now that he is gone, others may follow. END 
SUMMARY 
 
Parliament Pulls the Plug 
-------------------------- 
¶2. (U) On January 4, Mongolia's State Great Hural (parliament) 
voted by a wide margin to sack Minister of Health L. Gundalai.  The 
vote came after Prime Minister Enkhbold, with President Enkhbayar's 
consent, asked lawmakers to remove the Gundalai from his post, 
citing Gundalai's failure to work as a team player in the coalition 
cabinet, refusing to follow cabinet policy and his inability to 
properly manage the health sector. 
 
¶3.  (U) Gundalai was appointed Minister of Health in January 2006 as 
a reward for his support to the MPRP in bringing down the Democratic 
Party-led (DP) coalition government. While still a DP MP, Gundalai 
cast the deciding vote against his party's rule, defected from the 
DP to create his own political party, the Mongolian Popular Party 
(MPP), and was subsequently given the job as Health Minister under 
the MPRP-led coalition. 
 
¶4. (U) MPRP reps now argue the MPRP is under no obligation to 
replace Gundalai with another member from the MPP as Gundalai's 
actions have invalidated any agreements that might have been reached 
between them when he was originally given the job.  The erstwhile 
minister's sacking comes as no surprise to political observers in 
Ulaanbaatar, who fully expected the MPRP to rid itself of its more 
troublesome coalition government elements after MPRP gained an 
outright parliamentary majority in a by-election victory in Hovsgol 
Aimag this past September. 
 
¶5. (SBU) Health professionals and international aid organizations 
have long been critical of Gundalai.  Earlier this year he 
reportedly fired the heads of key hospitals, accusing them of 
corruption for renting out hospital space to private businesses and 
pocketing the rent.  He removed the Mongolia Millennium Challenge 
Account Health Project Working Group head allegedly because she 
refused to agree to design and channel projects to match Gundalai's 
own corporate interests.  (Note:  She also happens to be the spouse 
of the President's Foreign Policy Advisor.)  Apparently seeking to 
capitalize on popular sentiment against foreign miners, Gundalai 
also led an unsuccessful "occupation" of Boroo Gold's (a Canadian 
firm) mine seeking "Mongolia's share" of the US$40 million in "good 
will" listed in Boroo's prospectus.  The MPRP recalled then Minister 
Gundalai to UB and distanced itself from his actions. These various 
moves were seen as political blunders that tarnished the 
government's image. 
 
¶6. (SBU) Gundalai also forced Mongolia's health care system and 
professionals to hold "open clinics" on weekends, a move generally 
well received by the public but castigated by health care 
professionals as largely a waste of time in terms of delivering 
needed health care. 
 
¶7. (SBU) Since his dismissal, Gundalai has aligned himself with the 
anti-corruption lobby group Healthy Society-Citizen's movement and 
is reshaping himself as a crusader against corruption, a platform he 
intends to run with in the 2008 parliamentary elections.  To prevent 
Gundalai from becoming a political martyr, the MPRP appears to have 
cranked up its political hit squad, launching a smear campaign 
against him in the country's media. 
 
COMMENT:  Alright!  Who's next?!? 
---------------------------------- 
 
¶8. (SBU) It appears that the MPRP, with its one-vote majority, has 
so far maintained the fagade of a "National Solidarity Government," 
 
ULAANBAATA 00000019  002 OF 002 
 
 
as several coalition minority partner members are still part of the 
government. But now that the ruling MPRP is no longer dependent on 
their support, it is free to dispose of less supportive coalition 
cabinet members.  By firing Gundalai, the MPRP sent a strong message 
to its coalition partners, "Play ball or else." 
 
¶9. (SBU) Several non-MPRP ministers are now seen as potentially 
vulnerable to future purges.  Chief among them is the Minister of 
Industry and Trade B. Jargalsaikhan.  Dogged by rumors of 
corruption, he has angered many in the international business 
community, especially the mining sector, by making grand, 
un-deliverable promises and claiming to have the authority to revoke 
mining license when he clearly doesn't.  His US$18 million (USD) 
debt to the Japanese company Marubeni is viewed as a major conflict 
of interest.  Only his populist appeal has thus far shielded him 
from MPRP action. 
 
¶9. (SBU) Some say Minister of and Energy Erdenebat of the Motherland 
Party is also accused of conflict of interest because of his 
ownership of the Erel Mining Company.  His manufactured political 
base consists mostly of his company's 3,000 or so employees. 
 
¶10. (SBU) For its part, the DPR and other opposition parties are 
flummoxed that only non-MPRP members of the coalition are being 
targeted for house-cleaning in what the ruling party says is a 
campaign to force ministers to become more responsible in their 
positions.  Calls for the resignation of Minister of Transport Ts. 
Tsengel last year after a rail accident killed three rail employees 
 
SIPDIS 
and more recently for the Minister of Social Welfare and Labor after 
he was accused of misappropriating close to US$4 million were 
apparently blocked when their MPRP comrades closed ranks around 
them. 
 
Minton