BERAL, INC.  
Andrew G. Racz  
Director of Research  
300 East 54 Street, Suite 26C  
New York, New York 10022  
Telephone: (212) 319-6949  
Fax: (212) 753-1944  

 E-mail: mlikar@aol.com   

December 27, 2007

Sir, as the year 2008 is opening to us, there is no question that your administration is facing monumental decisions. Mongolia is likely to become not only a rich, but a superrich country. Your cabinet and your parliament will have to make decisions of billions of income coming 90 percent from mineral resources. The sociological, political state of 2.5 million Mongolians together with your relationship with the rest of the world is going to be decided in the coming year.

You cannot abdicate your responsibilities, nor can you rewrite three years from now the agreements and the decisions you are about to make.

Sir, do not abdicate.

In 1936, Winston Churchill advised the young King Edward – later to become the Prince of Wales – referred to the Monarch’s responsibilities. In fact, he referred to a whole generation of aristocratic leadership. The House of Windsor – just as the Mongolian leadership in 2007 – is 1,000 years old. None of them should abdicate responsibilities.

In the 20th century, many small countries were born. Some are fabulously rich like the Arab Sheikdoms, like Saudi Arabia, Kuwait, and Qatar. Some had geographic importance like North Korea and North Vietnam. All of these countries had questionable political security but had internal fiction and were covered internally with intrigues and externally by wars or conspiracies.

Their respective leaders failed to exercise historical responsibilities. A small country, however rich, must exercise the real politic of being “Good Neighbors”, must fit into geographical reality and international economic partnerships. Lasting prosperity needs lasting partners and lasting geographic boundaries.

Sir, do not abdicate.

Do not nationalize. Think of Venezuela and think of Cuba. Your government has clear alternatives.

Sir, do not nationalize. Speed up your energy development. Sir, do not abdicate.

It is the first edition of my Mongolian newsletter. In writing to you, I cannot forget the economic collapse of Hungary which began in 1949. A leftwing Hungarian government abdicated its responsibilities to the Hungarian people and created an economic chaos despite the highly sought intellectual abilities of the Hungarian people.

In this ruthlessly competing global economy, you undoubtedly have an opportunity to accumulate billions of dollars. Small and very rich countries are usually subject to outside pressure.

Mongolia, under your administration, has the opportunity to tie its fortunes to well-supported commercial contracts. You will avoid all the pitfalls if you move towards internationally recognized market economy.

By all means, use the stock markets in Mongolia and in overseas to monetize Mongolia’s growing wealth and use the international stock markets to raise additional capital to create more wealth. This is how you deliver to the current and future generation. You have the power to render Mongolia and oasis in Eastern Asia. Fighting for extra percentages of mineral wealth and deferring its development is exactly what past policies represented. Make commercial contracts and float multibillion dollar companies overseas like a copper and gold indexed entity, engage the international financial community to carry out your program.

Sir, make the international stock market the cornerstone of your policy. This is the 21st century. Everything else is the abdication of your historical responsibilities. You are probably advised of shortcuts. Take larger and larger equity interest in your mining reserves. This is not policy, this is politics.

If Winston Churchill visited Mongolia, he would have a simple advice to you like he advised the Prince of Whales, Sir, do not abdicate.

He referred to Spain, he referred to Germany. Today, thinking of Mongolia, he would refer to the fate of Kuwait in 1990 and Venezuela in 2007.

It is the cost of a parliamentary democracy to fight out the daily work – day by day.

You will have to educate the Mongol people, its Parliament, and indeed your own party. You have to preside over one of history’s greatest mineral wealth. Don’t be the Prime Minister who will preside over a historic fight for the disintegration of history’s greatest blessing to Mongolia. You have to balance between national interest, private interest, foreign interest. You must measure the cost of foreign capital.

Sir Cecil Rhodes, the British entrepreneur who built Southern Africa about 100 years ago said,

“So little time, so much to do.”     

Sir, do not abdicate.

Andrew Racz