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DE RUEHUM #0308/01 2990947
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O 260947Z OCT 09
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3076
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 6525
RUEHMO/AMEMBASSY MOSCOW PRIORITY 2617
RUEHUL/AMEMBASSY SEOUL PRIORITY 3804
RUEHKO/AMEMBASSY TOKYO PRIORITY 3452
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY

C O N F I D E N T I A L ULAANBAATAR 000308 
 
SIPDIS 
 
STATE FOR EAP/CM AND S/ES 
 
E.O. 12958: DECL: 2029 OCT 26 
TAGS: PGOV PREL MG
SUBJECT: PRIME MINISTER BAYAR STEPS DOWN, CITING HEALTH 
 
REF: Ulaanbaatar 293 
 
CLASSIFICATION DRV DSCG 2005-1. REASONS 1.4 (B)(D) 
 
¶1. (C) Summary: On October 26, Prime Minister Bayar announced 
his resignation for health reasons.  Because Bayar is 
resigning for health reasons, he may be able to return to his 
position once he has recovered, as long as his party 
leadership and the government agree.  Some observers are 
terming this resignation a "leave of absence" in anticipation 
of Bayar's eventual return.  His resignation is unlikely to 
change the composition of the coalition government that his 
party shares with the Democratic Party (DP).  Bayar's 
politically astute ex-wife, Khulan, told us that excessive 
pressure from the Russians related to a potential future 
investment agreement for the world-class deposits of coal at 
Tavan Tolgoi in far southern Mongolia also led Bayar to step 
down, in light of his health condition.  End Summary. 
 
¶2. (SBU) On October 26, General Secretary Khurelsukh of the 
Mongolian People's Revolutionary Party (MPRP) held a press 
conference to announce the resignation of Prime Minister 
Bayar.  The resignation may take effect as early as Wednesday, 
when the MPRP convenes to determine who the new PM will be and 
whether to maintain a coalition government with the Democratic 
Party (DP).  The MPRP caucus is meeting informally at the time 
of drafting to discuss the succession.  GOM officials are not 
yet certain if the new PM will carry the term "Interim" or 
similar. 
 
¶3. (SBU) Khurelsukh stated at the press conference that Bayar 
sent a letter to the MPRP leadership requesting to resign for 
health reasons.  (Note: Press reports have speculated in 
recent weeks that Bayar's recent medical treatments in Korea 
have been for hepatitis C.)  Because the Prime Minister is 
resigning for health reasons, his resignation can be 
considered a leave of absence, which opens the door to his 
return as prime minister, so long as his successor and the 
government agree to his return.  After the press conference, 
Khurelsukh told local news outlets that the MPRP Steering 
Council is in favor of allowing the current coalition 
government to stay in place beyond Bayar's resignation. 
 
¶4. (SBU) No clear successor has yet emerged, but six names 
have already surfaced from the MPRP's ongoing informal 
discussions.  They are: 
 
- Sukhbaataryn BATBOLD, Foreign Minister and MP 
- Nyamaa ENKHBOLD, Deputy Speaker and MP 
- Miyegombo ENKHBOLD, Second Deputy Prime Minister and MP 
- Chimed KHURELBAATAR, Budget and Standing Committee Chair and MP 
- Tsend MUNKH-ORGIL, MP and former Justice Minister 
- Nambaryn ENKHBAYAR, former President of Mongolia 
 
¶5. (SBU) Of the six, Foreign Minister Batbold appears to have 
the greatest support at this early stage.  Certain members of 
the Cabinet have suggested that the new PM should be selected 
from among the remaining MPRP ministers, implying also that 
the coalition government with the DP - and their own jobs - 
should be preserved.  Since Bayar has resigned for health 
reasons, there is no requirement in the law that the Cabinet 
resign.  Moreover, if Batbold takes the PM position and Bayar 
later wishes to return as the PM after a "leave of absence" 
period, Batbold could return to the foreign minister position. 
Furthermore, Vice Foreign Minister Bolor suddenly stood in for 
FM Batbold at the recent UNGA meetings at a time when Bayar 
was in Korea for medical treatment, indicating that the MPRP 
may have been considering Batbold as a successor or fill-in 
for Bayar as early as a month ago. 
 
¶6. (SBU) BayarQs resignation comes after his two extended 
visits to Seoul this summer and fall for medical treatment and 
on the heels of the signing of the Oyu Tolgoi Investment 
Agreement (OTIA); Ivanhoe Mines paid the initial allotment of 
USD 100 million to the GOM per the investment agreement just 
last week (see reftel). Post does not anticipate that this 
change in leadership will affect the OTIA, which will be a 
central element of BayarQs legacy as PM.  Moreover, Bayar will 
retain his position as Chairman of the MPRP and as a Member of 
Parliament. 
 
---------------------------------- 
Future of the Coalition Government 
---------------------------------- 
¶7. (SBU) Of the six potential successors, Enkhbayar or Munkh- 
Orgil would be more likely to dispense with the DP coalition 
and establish his own all MPRP-team, which would be possible 
since the MPRP enjoys an absolute majority in Parliament with 
46 of 76 seats.  Enkhbayar has much personal political 
rebuilding to do after his loss in the May presidential 
election, and Munkh-Orgil is inclined to install a cadre of 
technocrats from the younger wing of the MPRP.  M. Enkhbold 
owes his current position as Second Deputy Prime Minister to 
the establishment of the coalition government and as such is 
in a weak position to disassemble the coalition.  The 
remaining three contenders are favorably disposed toward the 
coalition government. 
 
------------------------ 
Another Option for Bayar 
------------------------ 
 
¶8. (SBU) Because Bayar will maintain his party chairmanship 
and his seat in Parliament, he would be well positioned to 
replace Speaker Demberel, who is the oldest MP and unlikely to 
resist if the politically stronger Bayar insists.  The Speaker 
position requires a much less strenuous pace than that of 
prime minister.  Moreover, the Speaker position is in best way 
for Bayar to maintain both power and visibility in 
anticipation of his next opportunity to become prime minister 
after the 2012 parliamentary elections, as well as to run for 
president in 2013, assuming his health improves. 
 
------------------------------ 
Russian Pressure also a Factor 
------------------------------ 
 
¶9. (C) Post has learned from Bayar's politically astute ex- 
wife, Khulan, that Russian pressure, on top of Bayar's poor 
health, was also a significant factor in his decision to 
resign.  Khulan said the Russians' pressure on Bayar has 
increased significantly since the OTIA signing (she did not 
specify what type of pressure this was), and that the Russians 
were keen to position themselves well for any future 
investment agreement related to the world-class deposits of 
coal at the separate Tavan Tolgoi deposit in far southern 
Mongolia.  Moreover, Bayar would be challenged to cope with 
such pressure because he will need to return to Korea once 
every two months over the next year for additional medical 
treatment.  Bayar was Ambassador to Russia from 2001 to 2005. 
 
¶10. (U) Post will report additional developments septel. 
HILL