Jonathan Addleton, US Abassador to Mongolia

1. REMARKS AT BUSINESS COUNCIL OF MONGOLIA MEETING
Jonathan Addleton
(January 25, 2009)
Many thanks – I am delighted to be back in Mongolia after more than five years
away; I also much appreciate the invitation to participate in today’s meeting.
Given the full schedule, I will try to be relatively brief.
However, I do want to provide a quick survey of some of the major ways in which
the activities of our Embassy address and can be supportive of the broader business
environment here in Mongolia.
As I will freely acknowledge, I do come with some biases.
Having spent most of my career with USAID, that includes a strong bias for
entrepreneurship, for business development and for private sector growth.
This approach is reflected in my early tenure in Mongolia, when I served as country
director for the USAID program in Mongolia.
The program at that time included several programs aimed at promoting private
sector development in both rural and peri-urban Mongolia.
It also included a strong policy component aimed at improving the business
climate.
And it included a strong emphasis on the financial sector.
I won’t go into details in this forum – but will simply say that in those years USAID
had a hands-on involvement in establishing Xac Bank and revitalizing Khan Bank.
Although that involvement ended a number of years ago, I do acknowledge some
pride USAID’s historic involvement in these notable private sector success stories.
Moving forward, it is gratifying to return to Mongolia after several years away and
see that, while significant challenges remain, there has indeed been notable
progress.
Part of that progress is reflected in the Oyu Tolgoi agreement – but there are other
positive indications as well.

2. Every new ambassador will no doubt claim that they arrive at a “historically”
important moment for the country to which they have been assigned.
In this case, I do believe that there is some truth to that claim.
Certainly, decisions that Mongolia makes now will shape the economic and political
future of the country for years to come.
Mongolia should and will make those decisions.
However, foreign embassies, foreign donors and you and your businesses can make
a useful contribution in the extent to which we highlight international experience
and provide “lessons learned” in other countries and contexts around the world.
The fact is, the challenges facing resource rich economies with relatively small
populations are huge.
But Mongolia can and is benefitting from an increasing familiarity with prior
international experiences and “lessons learned,” both positive and negative.
As an Embassy, we have a number of “tools” available to enrich the discussion and
bring this international development experience to bear, much of which has a
direct relation to private sector growth and expansion in Mongolia.
As I mentioned, while taking an interest in the development dimensions of our
program, I would be the first to argue that in the best of all possible worlds, work
at the development end becomes simply a foundation or platform for bringing
about the kind of change that truly brings about lasting economic change –
specifically, the promotion of entrepreneurship and the establishment of
enterprises that are needed to generate employment, promote economic diversity
and generate the revenues needed to advance Mongolia’s other objectives,
including those related to health, education and cultural development.
On the development front, we have several mechanisms, including programs
funded by USAID, USDA and MCC.
The USAID program has already been mentioned.
At more than $20 million, the USAID program in 2009 was the largest in years – and,
in fact, the largest ever.
Among other things, it included a special “supplemental” to assist Mongolia during
the financial crisis, including through $10 million in budget support and more than
$2 million for technical assistance related to banking and the financial sector as
well as a loan guarantee program implemented through Xac Bank and Khan Bank.

3. As an old USAID officer, I can say it was very unusual to be able to provide $10
million in budget support for Mongolia – but we signed up that agreement only a
couple of weeks ago.
Looking ahead to this year, the strong USAID emphasis on economic policy reform
and support will certainly continue.
Although often operating below the radar screen, US Department of Agriculture
programs have been a factor for years and continue to be useful.
Most recently, USDA monetization programs have helped extend prior USAID
initiatives related to business development in both rural and peri urban Mongolia,
involving among other institutions CHF and Mercy Corps.
I would argue that other US embassy programs, including Fulbright scholarships as
well as Peace Corps and even the Ambassador’s fund for cultural preservation, also
have an important development dimension with business implications.
But by far the largest current development program involving direct USG support is
the Millennium Challenge Corporation/Account, often referred to as the MCC or
MCA initiative.
Again, I am happy to say that progress on this front is positive.
Most notably, all that remains is for the Ikh Hural to ratify an Amended MCC
compact that ensures that the $285 million originally intended for Mongolia goes to
Mongolia and is not reprogrammed to another country for other purposes.
By my lights, the MCC “package” does indeed focus strategically on programs vital
for Mongolia’s future: infrastructure, education, environment, health and land
titling.
In financial terms, it represents a significant grant contribution to Mongolia’s
future.
By way of comparison, all of the USAID development funds channeled to Mongolia
since 1991 total approximately $200 million.
In contrast, the MCC allocation is for $285 million over only five years.
In my view, that five year period will be critical for Mongolia, serving as a sort of
“bridge” between expectations of future income streams brought about by mining
initiatives and the time it will take for those income streams to actually
materialize.

4. The clock is already ticking on those five years and at this point there are less than
four years left.
Now is the time for things to happen; for contracts to be issued and finalized; and
for the program to move forward.
Indeed, it might be said that there are three main priorities for the MCC program
right now: implementation, implementation and implementation.
Tender and contracting possibilities are routinely advertised on the MCA website:
www.mca.mn
As most of you know, all MCC programs are completely untied. Indeed, the MCC
track record from around the world shows that companies from many countries
have bid successfully for MCA contracts.
As an American Ambassador, I want American firms to participate in a big way; but
I also want to affirm to this audience that the intent of MCC is to procure the best
possible contractors and technical advisors from around the world, wherever they
may be found.
As I mentioned, the MCC program is quite heavily focused on a few areas.
That includes $80 million for infrastructure, including the bridge and road to
Nailakh and the road south from Choir to Sainshand.
It also includes some $50 million for energy and the environment; nearly $50
million for vocational training; nearly $40 million for health; and more than $23
million for land titling and leasing in urban and peri urban Mongolia.
As I think you will agree, these programs have significant implications for your
businesses as well.
Beyond that, of course, we have an active and strong economics and commercial
section, one that actively follows and promotes private sector development in
Mongolia.
Some of that work is reflected in the very recent investment climate statement
produced by this Embassy, one that is publicly available and must rank among the
most detailed and comprehensive offered up by any Embassy anywhere.
In this presentation, I have simply tried to highlight some of the major ways in
which USG funded programs relate to business development in Mongolia.

5. I am pleased to also note that there are real people and potential sources of
information behind these programs.
Most notably, our embassy has real institutional depth as well as a historic
“memory” of our past areas of involvement.
For example, many of you will already know Michael Richmond, our Commercial
Officer, who has followed Mongolia closely for many years.
Our “new” USAID Mission Director, Chuck Howell, isn’t exactly new to Mongolia –
during the 1990s, he first served as Country Director for Peace Corps and then as
Country Director for USAID. The historical sense that comes with that long-term
involvement is invaluable.
He in turn is assisted by other individuals and resources, including two individuals
that arrived during my previous tenure in Mongolia – Jeff Goodson, who provides an
important measure of historical continuity; and Fernando Bertoli, who heads up the
USAID-funded Economic Policy Reform Program.
As I mentioned earlier, MCC represents by far the biggest USG investment in
Mongolia so far. Here, too, Robert Reid as well as Burak Inanc who is here today
can be an invaluable source of information – along with their colleagues at the
Mongolian organized and run MCA, which is the focal point for the planning,
contracting and implementation associated with the Millennium Challenge program
in Mongolia.
Other officers at the Embassy, including DCM Nick Hill, head of economic section
Vinny Spera and myself will also want to be helpful and supportive.
When it comes to specific questions or further follow-up, by all means contact this
network of people.
As it happens, we are a big enough embassy to have some considerable technical
and sectoral depth – but small enough to ensure that we also talk to each other, re-
enforcing and strengthening the overall message that we certainly want to extend
to a broader audience: that the business side of what we do is important; that
expanded trade and investment lend depth and credibility to any bilateral
relationship; and that Mongolia stands to benefit enormously when business
relationships are deepened and strengthened with any number of international
partners, including the United States.
Thanks again for the opportunity to provide these remarks; now, I would be happy
to answer any questions, either now or informally afterwards.