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July 10, 2008

"The Mongolian Revolution"

The 20th Century has seen many revolutions. I have seen fighting three times; The Second World War, the Hungarian Revolution and the war in the Belgian Congo in 1961. None of them led to positive change.

However, revolutions always make a previous system unstable. It requires a great leader to assemble the positive elements for the future. It is exactly the turbulence of a revolution that opens up not only for a change, but a solid and bright future.

The Mongolian Revolution of 2008 is about money. It is fought to readjust social values. It is, however, a standout in history as the greatest monetary dislocation in national imagination. It may be Mongolia's finest hour. It is vision against dreams, it is fought in poverty for billions, and what is most important, a solution is the greatest readjustment of monetary wealth in history. With no experience in counting for tens of billions of dollars, it is fought on the streets, as well as in parliament, for numbers that would be meaningful in Switzerland, but it is fought when the average Mongolian has barely enough to eat.

I saw the Mongolian Revolution on the television. Frankly, it reminded me the of the grown up version of the Watts riots of 1966. Revolutions usually usher in some important change. The confusion, the antagonism, combined with physical violence which usually breaks up windows and doors either leads to some up trend, or down trend.

I learned plenty about revolutions. Napoleon was an upstart revolutionary. Without the French Revolution, there would have been no Napoleon.

Yeltsin stood on a tank, asked for Western help, and subsequently he broke up the Soviet Union. He became President of Russia. He was an up trend.

In 1917 Lenin occupied the Kremlin. His subordinate Josef Stalin industrialized Russia and ushered in a financial and industrial super power, the current Republic of Russia.

Take Mongolian Prime Minister Sanj Bayar has been reelected by parliamentary vote, a majority, and immediately challenged by the rival Democratic party, and that incited the revolution. Thus, the summer of 2008 acquainted the Mongolian people on the street and the world in the media. The Mongolian version of a revolution.

Let us reflect of the parts of the some of the past revolutionaries history for success, they each had a platform.

Prime Minister Sanj Bayar has good intentions, has vision, but has to create a solid as well as popular platform. Undoubtedly he has a task no human being, no leader, has ever experienced. His desire to raise Mongolia among the ten richest nations in the world is being colored by the different sources of envy and fear. I cannot help but remember the somewhat questionable integrity of Bernie Cornfeld whose famous sentence "Do you sincerely want to be rich?" He brought ruin to those who believed in him. No such duplicity exists for Sanj Bayar, but he is facing an opposition who wants to make it more and more difficult for the government of Mr. Bayar to make the Mongolian people rich. In fact, make them very rich.

The Prime Minister wants to be the Yeltsin of Mongolia, except he has no tank to climb, and no white flag to get his countrymen behind him.

There is a need for something solid and stable to which he could tie his future. He is an Einstein and not a Napoleon. Einstein was looking for a solid base to move the world and made us live through his world of the theory of relativity.

But the Prime Minister has not yet a three-million strong audience for the Mongolian version of the theory of relativity. Nor, has he found the tank in the middle of Ulaanbaatar to stand and speak to the three million Mongolians, his electorate, and his parliamentary colleagues.

The West must help. The West must organize its own G-8 meeting to help the Prime Minister to bring about a fair, but expeditious settlement for what is called the Mineral Agreement.

The West must apply itself to a selling job of the century. The West must convince the Mongolian people Banj Sayar's government, and the Prime Minister himself that doing business in the mineral world of Mongolia is not to be done in exploitation, but participation.

The West must help the Prime Minister, Banj Sayar, and together they will explain it to the Parliament, to the opposition, to the Mongolian people that they want to participate in the development of the Tenth Richest Country in the World, and work together for at least a generation.

The Mongolian minerals are not valued in a static world. Just as an example, if the price of oil goes above $200 and the price of gold to $2,000 it will still be a relationship. Consequently, if the price of oil drops to $100 and gold to $500, it will still be a relationship. That is why set figures like 51 percent or 34 percent are meaningless in the abstract. There must be a flexible agreement that survives a $2,000 gold price. Greed will never disappear from the language of bankers, cabinet ministers and ordinary citizens. That is why an agreement must be negotiated, which is not broken if gold hits $2,000. After all, 1,000,000 ounces of yearly production of gold at a price of $2,000 represents a $2 billion production. This is roughly $1,000 for every Mongolian. It is in a country where not many people have $200 in liquid assets. Such potential dislocation requires an international agreement that cannot be broken up by another revolution.

Let me address a controversial issue. Robert Friedland is not the "Ugly American." His Polish and German parents were in concentration camps. At the age of 18 I hardly believe that he had $1,000 savings and like the writer of this article, he came up the hard way. Almost everybody in the picture are self-made men, a role every Mongolian must copy, follow, and respect. My own father, a Hungarian businessman died in Auschwitz. I was educated at Cambridge University in England on British scholarship.

Accordingly, I want to suggest the following,

We must eliminate the possibility that an overseas company being formed may lay claim to some Mongolian assets, raise money in any western stock exchange, without Mongolian participation and board representation.

Violating this principle would permit any individual to create a uranium company, issue himself any stock, raise money, and end up unsuccessful. The western owner can sell stock, and make money, the cash raised is dissipated and the reputation of Mongolian mineral assets are destroyed.

We live in a world of total financial interdependence.

Let us not forget that in 1938 Maxim Litvinoff, the foreign minister of the Soviet Union said in Geneva,

Let me paraphrase this famous event.