* President Battulga seeking to make changes to constitution
* Frustration grows over lack of progress despite resource riches
* Most Mongolians support democracy but unhappy with current system - poll
By David Stanway
ERDENE, Mongolia, June 27 (Reuters) - An hour’s drive from Mongolia’s capital Ulaanbaatar, a lavish monument to national hero Genghis Khan could provide a salutary lesson to the man who built it a decade ago: champion wrestler, businessman and current president, Battulga Khaltmaa.
Beneath a giant stainless steel statue, portraits of the 13th century warlord’s successors line the corridors of a museum. Nearly all of them saw their lives cut short during vicious fights for supremacy in medieval Mongolia’s royal courts.
Mongolia is at a political crossroads as public frustration mounts over disputes holding back vital mining and infrastructure projects, and President Battulga is preparing for a power struggle.
Following a 1990 revolution, the former Soviet satellite has been regarded as an “oasis of democracy” sandwiched between the authoritarian regimes of Russia and China.
But power sharing between an elected president and a government appointed by parliament has left the country in near-permanent deadlock, unable to make progress on major projects or tackle chronic problems including choking air pollution.
Battulga said last year Mongolia was incapable of solving what he described as a “systemic crisis”. He is now trying to change the constitution, raising fears he is trying to usher in an era of “strongman” politics.
Battulga says he is not seeking to erode Mongolia’s 29-year old democracy.
“More than a quarter of a century has passed, but we still haven’t been able to achieve all the expectations we had in 1990,” Battulga told Reuters in his office in the State Great Khural, Mongolia’s parliament.
“What we all know is that change is inevitable,” he said. “All we need to resolve right now is how to carry it out.”
Sumati Luvsandendev, a political analyst and head of the Sant Maral Foundation, a polling group, said Mongolians were crying out for a “strong” leader like Kazakhstan’s Nazarbayev or Russia’s Putin. But with parliament likely to resist any erosion of democracy and its role, Battulga would struggle to make changes, he said.
“Battulga is desperately trying to play this role but definitely he cannot,” Sumati said. “I don’t think that there is anyone in Mongolia to play this role.”
Mongolia’s rich mineral deposits dominate its political discourse. Many citizens have grown increasingly frustrated by the country’s inability to convert resources into concrete gains for anyone but the privileged few.
With polls showing strong support for the public ownership of strategic assets, Mongolia’s mines have long served as political weapons, and Battulga is one of many politicians accused of using suspicions about foreign investment to win votes.
Distrust towards foreign miners was reinforced last year after a military operation to strip Chinese investors of a silver mine in Salkhit in northern Mongolia after they were accused of corrupting local courts. Attempts to reach the investors were unsuccessful and the site remains under government control.
The government has also been involved in a legal dispute concerning the nationalisation of a 49% stake in the massive Erdenet copper project, sold to a private company by the Russian government.
With 2020 elections looming, some politicians are also questioning the benefits of the country’s biggest foreign investment project, the giant Oyu Tolgoi copper-gold project run by Anglo-Australian mining conglomerate Rio Tinto .
A parliamentary working group has made fresh calls to change the terms of the deal behind Oyu Tolgoi, which is 66% owned by the Rio Tinto-controlled Turquoise Hill Resources and 34% by the Mongolian government.
In May, some legislators complained the mine had brought nothing but debt, with Mongolia only scheduled to receive dividends after 2039.
Rio did not respond to requests to comment.
Battulga told Reuters he fully supported foreign firms which complied with local laws, but said the constitution was clear that strategic assets discovered using Mongolian capital - including the coveted Tavan Tolgoi coal deposit - should remain in Mongolian hands.
Battulga was elected in 2017 on a populist platform, warning about threats from China and Mongolia’s economic dependence on its giant neighbour, earning comparisons along the way to U.S. President Donald Trump.
But he has been unable to reduce Mongolia’s vulnerability to Chinese pressure.
Shortly after his election victory, a slowdown in customs clearances at the Chinese border created a tailback of coal trucks stretching more than 100km (60 miles), slashing export earnings. China’s customs authority said it was upgrading its monitoring equipment. Battulga did not comment on the issue.
“We are close to two dictatorships and their influence is huge,” said Erdene Sodnomzundui, the leader of the opposition Democratic Party, referring to China and Russia. “Neither country likes democracy. It is in their interest to break (Mongolia’s) democratic system. They both want to increase their economic influence over Mongolia as well.”
China’s foreign ministry said in a statement that China respected Mongolia’s sovereignty, independence and territorial integrity, and urged both sides to be on “high alert” against any attempt to disrupt the bilateral relationship. Russia’s foreign ministry did not respond.
Near the dust-blown township of Yaarmag on the outskirts of Ulaanbaatar, an unpaved road connects dozens of small brick houses to a highway lined with luxury apartment complexes where well-off Mongolians escape the capital’s asphyxiating winter smog. Nearby is a Porsche dealership.
In ramshackle Yaarmag itself, Battulga’s childhood home, angry residents say politicians have failed to keep promises.
In a tenement insulated with thick red carpet, Erdenebulgan Badarch, 56, blamed the government for soaring meat prices, high interest rates, poor housing and worsening pollution.
“Nothing has changed for the better,” said Erdenebulgan, whose husband was a classmate of the president. “We had very big expectations when Battulga was elected, but in two years we haven’t seen anything. It is not about whether he is good or bad, or what he could or should have done, but he is alone.”
A recent poll by Sumati’s Sant Maral shows more than 70% of Mongolians would prefer a “strong leader who does not have to bother with the parliament or elections”.
While three quarters of respondees said they still supported “democracy”, more than half disapproved of the existing system.
“I think it will be better if we have a presidential rule. The other countries with powerful presidents are actually doing better,” said local resident Amarzaya Batbayar, 34, during an anti-government protest in Sukhbaatar Square in late May.
Battulga said ordinary people “have suffered the most from the model we have chosen”. He also said he would seek public approval for any proposed constitutional changes, rather than leave it to parliament to decide.
But the president is not necessarily going to benefit from any changes.
Constitutional reforms aimed at breaking the deadlock are under discussion, and one option is to turn the presidency into a figurehead and strengthen the position of the prime minister instead, according to a lawyer familiar with the plans.
“Because parliament is in position to control the situation in the country, what we are observing is still the same struggle for power, but usually in most cases the president is losing,” said Sumati, the political analyst.
At the Genghis museum built by Battulga’s company, Sumati said the president should take note of how long Mongolia’s old Khans lasted in power.
“It was two or three years and then they were killed or poisoned,” he said. “There was only one guy who managed to sit on his throne for close to 20 years, but it was a miracle.” (Additional reporting by Munkhchimeg Davaasharav in ULAANBAATAR. Editing by Lincoln Feast.)