Alcohol Bans, Internet Blackouts Greet Election Day in Mongolia

(Bloomberg) -- Mongolia has suspended alcohol sales and internet hot spots to prevent negative campaigning and unrest as voters choose a new president after a contentious campaign marked by scandals and costly promises.

The unprecedented run-off comes less than two weeks after a populist message propelled Battulga Khaltmaa, 54, a businessman from the opposition party, to an unexpected first-place finish in the initial vote. He faces parliamentary speaker Enkhbold Miyegombo, 52, the ruling party chief who squeaked into the second round by a 0.1 percent margin.

Polls are open from 7 a.m. to 10 p.m., with results expected after midnight. If neither candidate secures more than 50 percent of the vote, a new election must be held.

The election follows a brief but bruising campaign and will determine the power Enkhbold’s Mongolian People’s Party has to carry out a recovery plan after the global commodity downturn battered the economy. The outcome could potentially provide a roadblock for efforts to open more mines and support a $5.5 billion International Monetary Fund-led bailout package announced in February.

While parliament controls the government in Mongolia, the president serves as commander-in-chief, can veto legislation and is responsible for appointing key officials. Incumbent Elbegdorj Tsakhia, a member of Battulga’s Democratic Party, is barred from seeking a third term in the landlocked nation of 3.1 million.

Surprise Result

Enkhbold’s party ousted the DP in a landslide last year and was considered the favorite, even after he was caught up in a scandal involving government jobs. Battulga’s surprisingly strong performance -- capturing 38 percent of the vote, compared to Enkhbold’s 30.3 percent -- sent the price of Mongolian bonds tumbling.

S&P Global Ratings projects the economy, which grew by an average of more than 10 percent annually before last year’s slowdown, will contract by 0.2 percent this year before stabilizing. The government is counting on mining projects, including the $5.4 billion Oyu Tolgoi site operated by Rio Tinto Group, to bring in new revenue.

Authorities are taking no chances nine years after disputed elections led to deadly riots in the capital, Ulaanbaatar. Public internet hot spots have been shut to curb negative campaigning, with alcohol sales banned for three days.

Enkhbold, a career politician who dabbles in horse breeding, has promised stability, arguing that government policies stand a better chance under an MPP presidency. Battulga, a former agriculture-and-industry minister and one-time judo star, said he would provide a check on the ruling party’s power.

With the candidates banned from campaigning between the votes, the parties have taken up the cause and announced a flurry of costly spending proposals.

The DP has, for instance, called for using mining revenue, including dividends from Erdenes Tavan Tolgoi’s facility, to relieve debt holders. The MPP-controlled cabinet, meanwhile, called for reinstating monthly handouts of $8.38 to all minors and ordered agencies to assume full control of the Erdenet Mining Corp.

Amid the campaigning, some voters are waging a social media campaign to encourage blank votes and deny either candidate a winning majority. They face a steep hurdle since such votes represented less than 2 percent of ballots cast in the first round.

To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net.

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Brendan Scott, Rosalind Mathieson