VZCZCXRO4184
RR RUEHLMC
DE RUEHUM #0827/01 3130753
ZNR UUUUU ZZH
R 090753Z NOV 06
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 0539
INFO RUEHMO/AMEMBASSY MOSCOW 1621
RUEHBJ/AMEMBASSY BEIJING 5305
RUEHUL/AMEMBASSY SEOUL 2529
RUEHKO/AMEMBASSY TOKYO 2288
RUEHOT/AMEMBASSY OTTAWA 0355
RUEHML/AMEMBASSY MANILA 1263
RUEHLO/AMEMBASSY LONDON 0062
RUEATRS/DEPT OF TREASURY WASHDC
RUCPODC/USDOC WASHDC 1122
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0391
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000827 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS DOC/ITA, USTR, USTDA, OPIC, AND EXIMBANK 
STATE FOR EAP/CM, EB/IFD, AND INR/B 
USAID FOR ANE D. WINSTON 
TREASURY PLEASE PASS USEDS TO IMF, WORLD BANK 
MANILA AND LONDON FOR USEDS TO ADB, EBRD 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV PINR MG
SUBJECT: New Mongolian Central Bank Governor Appointed 
 
 
Sensitive But Unclassified - Not for Internet distribution. 
 
¶1. (SBU) SUMMARY AND COMMENT: After what appears to have been a 
bruising internal struggle within the ruling Mongolian People's 
Revolutionary Party (MPRP), A. Batsukh has been appointed the Bank 
of Mongolia's new governor for a six-year term, replacing the 
controversial O. Chuluunbat.  Batsukh was previously the Deputy 
Governor of the bank, but appeared to have little substantive role 
in the bank.  Only time will tell whether Batsukh will pursue a more 
rigorous approach to banking supervision than his problematic 
predecessor.  A long-time civil servant with a Ph.D in Economics and 
a Master's degree from the University of Illinois, Batsukh appears 
free of the business entanglements that compromised his 
predecessor's tenure as bank head.  However, he is an MPRP stalwart 
whose low-key style deference to his party may make him easily 
susceptible to political pressures. END SUMMARY AND COMMENT. 
 
¶2. (U) Mongolia's parliament voted on November 2 to confirm Alagiin 
Batsukh as the new governor of Mongolia's central bank, or Bank of 
Mongolia (BOM).   Batsukh had previously served as the bank's deputy 
governor since 2000 under O. Chuluunbat, whom he now replaces. 
Chuluunbat's six-year term as bank governor expired at the end of 
September. 
 
¶3. (SBU) The 30 to 14 vote confirming Batsukh fell mostly along 
party lines of MPs present for the vote, with one MPRP member 
joining Democrats in voting against the appointment.  The vote 
followed weeks of contentious debate as opposition Democrats 
demanded a thorough accounting of the Bank's management under 
Chuluunbat before agreeing to a vote. While the MPRP put up a united 
front in public to thwart any meaningful investigation of 
Chuluunbat's management, intra-party strife erupted behind closed 
doors between those MPRP members who wanted the former governor 
re-appointed to a second term, and those who wanted him out.  The 
"outers" finally carried the day when Parliament Speaker N. Nyamdorj 
nominated Batsukh.  A senior MPRP official told emboff that Nyamdorj 
had strongly pushed for Batsukh within the party. 
 
¶4. (SBU) Chuluunbat reputedly earned the gratitude and loyalty of 
then MPRP head Enkhbayar for providing key financing for the party's 
2000 election campaign, which returned the MPRP to power and led to 
Enkhbayar becoming Prime Minister (Enkhbayar was elected President 
in 2005).  Appointing Chuluunbat as Mongolbank head was an early act 
of the new MPRP government.  Chuluunbat's controversial tenure as 
governor was marked by allegations of corruption, conflicts of 
interest, negligent oversight of Mongolia's banking sector and 
preferential treatment given to favored banks and businesses. 
Chuluunbat, it is widely believed, owns stock in several private 
banks.  Critics (including a past IMF representative) complained 
that he acted more like a venture capitalist, running the Central 
Bank as if it were a commercial bank.  His failure at enforcement of 
banking regulations is blamed for weakening the Mongolia banking 
system as a whole and, consequently, keeping interest rates high. 
 
Batsukh's CV 
------------ 
 
¶5. (U) Batsukh was born in Ulaanbaatar in 1962.  In 1984, he 
graduated from the State People's Economic Institute in Irkutsk, 
Russia with a degree in Construction Engineering. Between 1984 and 
2000, he worked in the State Planning Commission and the Central 
Economic Institution as a specialist, board deputy director and then 
director.  He went on to obtain a Master's Degree in Economics from 
the University of Illinois in 1998 (where he submitted his thesis on 
monetary policy), and then a Ph.D in Economics from the National 
State University of Mongolia in 2002.  In 1993, graduated from a 
"Tsog" private foreign language school in Monoglia as Interpreter of 
English.  He has been serving as Mongolbank Deputy Governor since 
¶2000. 
 
Batsukh: Light and Dark 
----------------------- 
 
¶6. (SBU) The banking sector views Batsukh as bit of an enigma. 
Although deputy governor for six years, he remained quiet and out of 
 
ULAANBAATA 00000827  002 OF 002 
 
 
the way.   Most observers believe that he had little influence at 
the bank.  He is by reputation a very partisan MPRP man, 
historically an ally of Former Minister of Finance and current MP 
Ulaan, but it is hard to say to whom or to what group in the MPRP he 
is aligned now.  The senior MPRP official confirmed to emboff that 
Batsukh has strong ties to Nyamdorj, but refused to be drawn on what 
these are; rumors suggest a financial tie between the two men.  He 
appears less tainted by the corruption's brush, but the local press 
has reported rumors that he was involved in the misappropriation of 
Asian Development Bank funds.  One bank confided to us that he tried 
to strong-arm them into hiring an unqualified relative several years 
back. 
 
¶7.  (SBU) On the brighter side, some younger, fairly well-respected 
MPRP cadres think he is an honest broker who has changed his "old 
commie" stripes.  He recently headed up the working group drafting 
anti-money laundering legislation which was passed by the Parliament 
this summer.  One big plus: He is not Chuluunbat.  Batsukh holds a 
Ph.D in economics and comes from a strong civil service background. 
Chuluunbat, on the other hand, is a businessman with a grab bag of 
investments, including banking ones.  Batsukh seems to be free of 
most of the commercial complication that caused his predecessor to 
protect cronies.  On the other hand, he may not be able to withstand 
the political pressures which could be deflected by the Chuluunbat, 
who was strong-willed and had the benefit of his personal links to 
Enkhbayar. 
 
Minton