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Notes from Mongolia Presidential Advisory Board meeting 
Davos, 24 January 2014 
The inaugural meeting of the Mongolia Presidential Advisory Board was held in Davos on 24 
January. 
Taking part in person were: 
• 
Tsakhiagiin Elbegdorj, President of Mongolia 
• 
Lundeg Purevsuren, National Security and Foreign Policy Advisor to the President of 
Mongolia 
• 
Larry Summers, former Secretary of the US Treasury, former President of Harvard 
University, Charles W. Eliot University Professor, Harvard University 
• 
Terje Roed-Larsen, former Deputy Prime Minister of Norway, President of the 
International Peace Institute (IPI) 
Joining via telephone were: 
• 
Ehud Barak, former Prime Minister of Israel 
• 
Kjell Magne Bondevik, former Prime Minister of Norway, President of the Oslo Center 
for Peace and Human Rights 
• 
Jeffrey Epstein, Financier 
• 
Kevin Rudd, former Prime Minister of Australia 
The Board was supported by a Secretariat comprised of Andrea Pfanzelter, Director of the IPI 
Vienna Office, and Walter Kemp, IPI Director for Europe and Central Asia. 
The President began by thanking all members of the Board for agreeing to take part in this 
initiative, and to provide the President, and by extension Mongolia, with expertise to develop 
his country in a sustainable, stable and democratic way. 
He observed that there is a tendency for people to think of Mongolia's past (particularly 
Genghis Khan) rather than its future. The President underlined the country's peaceful 
transformation from dictatorship to democracy over the past twenty years. He noted that he 
wants to create a new image for his country, and to develop opportunities for the future. 
Mr. Bondevik highlighted the "Scandinavian welfare model", including the comprehensive 
public responsibility for all facets of life, a strong role for the state in all policy areas, the active 
engage of civil society, strong organizations of employees and employers, and respect for the 
equal rights of all citizens. He underlined the safety of income (including employer-provided 
or public insurance), relatively low differences in income level, gender equality, and high 
participation rates in elections. Other elements of the Scandinavian model are: equal 
opportunity; social solidarity; security for all; job security; economic growth; innovation; and 
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flexibility to meet new challenges. He mentioned the sovereign equity fund that is saving 
revenue from North Sea oil and gas for future generations. 
The President noted that a law on creating future/sovereign wealth fund is currently going 
through parliament. He said that he would arrange for the law to be translated into English 
and shared with interested members of the Board. 
Mr. Summers commented on fiscal policies and macro-economic tools. He noted that 
Mongolia currently has a relatively low credit rating and that the cost of borrowing is 5% (500 
basis points) higher than for the US Treasury. This suggests a perception of high risk. Therefore 
it is important to bring the credit spread down. He noted that investor confidence could be 
increased by resolving issues between Rio Tinto and the Government of Mongolia in relation 
to the Oyu Tolgoi mine. A solution should be found in line with international obligations and 
honouring contracts that have been signed. The government should make it clear that it 
expects others to do the same. Such a negotiated solution would improve Mongolia's credit 
worthiness and bring down interest costs. 
In terms of the "future fund", he advised to draw on best world practices to use proceeds from 
commodity exports. He advised the President to invest more aggressively than some other 
sovereign funds, i.e. in equities and not just government debt. 
Mr. Epstein noted that it is important to look at all of the country's financial structures and 
institutions — the sovereign wealth fund is only one part of it. 
Mr. Rudd noted that Australia is a long-standing friend of Mongolia and, like Mongolia, is a big 
country with a small population. He recalled how a century ago Australia's economy was based 
on agriculture and mining. Mining is the largest pillar in Australia's economy, responsible for 
ten percent of the country's wealth. Managing this non-renewable resource effectively is vital 
for the future. He underlined the importance of diversifying the economy. 
He stressed the importance of honouring contracts for the sake of the country's international 
reputation, particularly for attracting FDI. He noted the sometimes ruthless approach of 
mining companies, and underlined the importance of effective legislation. He suggested that 
the Mongolian government engage 2-3 experts to provide advice on best practices in the 
mining industry (like regulation, environmental protection). 
On the issue of the pension fund in Norway, Mr. Bondevik stressed the need to resist the 
temptation to spend money from the sovereign equity fund for state projects, since that could 
overheat the economy and deplete resources for future generations. 
Mr. Barak noted that he knows Mongolia well from several visits, and is familiar with its 
security situation and armed forces. He stressed that there is no threat of invasion from 
Mongolia's neighbours. Therefore, the country's limited armed forces should focus on internal 
security issues and making democracy safe. They should be versatile, agile and mobile and 
should be able to shift their centre of gravity quickly from one side of the country to the other. 
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Because of the large size of the country and the small size of the security services, he stressed 
the need for good intelligence. He also stressed the need for a quick-deployment hospital unit, 
i.a. for disaster response. 
Concerning next steps, the President expressed his desire for expert advice on the specific 
issue areas. He suggested that this could be done both through meetings of the Advisory 
Board, as well as consultations with, and visits by, individual members of the Board. 
Mr. Roed-Larsen said that IPI would develop a concept paper containing proposals on 
democracy, stability, social welfare, and security in Mongolia. Areas to be taken into 
consideration would include: 
• 
The public profile of Mongolia; 
• 
Mongolia's social welfare programs, to the benefit of the people; 
• 
Mongolia's fiscal policies and macroeconomic tools, including the structure and 
functions of the sovereign fund and its investment portfolio; 
• 
Mongolia's "Third Neighbors" policy and suggestions for how to further develop this 
cornerstone in the country's foreign policy; 
• 
Recommendations on how to further promote democracy in Mongolia as well as 
regional security context, based on further development of Mongolia's democratic 
and human rights agenda for the people's well-being and security. 
The concept paper will be produced within the next 4 months, with the aim of the 
development and implementation of a comprehensive and operational plan within the next 3 
years. 
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