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Mongolia Limps towards a Free Market

Catherine Sampson writes from Beijing
****The Central Asian state of Mongolia is described as having "unlimited potential." It has vast mineral reserves and a literate population, yet now it could not, as a senior politician says, manufacture even a sweet. The country has been chronically dependent on the Soviet Union and much of its trade has been barter. But Mongolia recently held its first multi-party elections and has embarked on a path of radical free market reform.****
There arc 12 head of livestock per person tn Mongolia, but the grocery shops of Ulan Bator are sorry places. In one. >2 while enamelled trays for meat lie empty. There arc a few bottles of yoghurt on the shelves, no bread, but a lot of salt and some rationed flour, rice and cooking oil.
"Wc might have some meat tomorrow." says the shop assistant
Even when meal gels to the store, it is rationed, and shop pers have to queue for up to three hours. With the move to a market economy, nomads arc unwilling to sell their privately-owned animals to the slate for a paltry sum.
Meat is nol the only necessity tn short supply At Ulan Bator's open-air free market, one vendor has a single Item for sale, a syringe.
"Fifty tugriks,' 10 per cent of the minimum wage, he asks, unwrapping the valuable object for the scrutiny of a potential customer.
Among the pitifully small range of goods on sale, the few pills and ampoules and other pharmaceuticals arc the most sought after. "Wc go to the doctor, he prescribes a drug, then we go to the pharmacy and there is nothing there," said one market-goer, "so we have to come here and buy medicine from each other."
Last year, Mongolia held its first free, multi-party elections. The communist were returned to power, but the opposition gained a loud voice in parliament, and were given Impor-
lant ministerial positions.
Mongolia's fledgling democracy has adopted a series of radical economic reforms, with the intention of creating a market economy. Al Ihc same time. It has broken away from decades of dependence on the Soviet Union and tried to go It atone
However, with the loss of Soviet financial support, as one diplomat based In Ulan Bator says. The Mongolians arc in desperate shape." Foreign economists calculate that by the end of the year Mongolia will face 20 per cent urban unemployment. 200 per cent inflation and a 20 per cent drop in GNP.
Despite having vowed never again to look to foreign powers or lo heaven for help, the Mongolians arc now forced lo took lo the West for emergency aid.
With a population of only two million. Ihc amounts Mongolia needs arc not huge-. Economists estimate they need US8200 million tn aid, 830 million of that before Ihc winter comes. Mongolian officials are optimistic that they will get the aid, but nol Ihal they will get ft fast enough.
US Secretary of State. James
Baker, on an Ideological mission to promote democracy and the free market In Asia, has been putting pressure on western allies lo come up with cash for Mongolia. The West docs nol see ihc country as a bottomless Cbut as a land of almost hmll-
is potential once II gels through ihc next few months of economic reform.
Mongolia boasts a literacy rate of more than 90 per cent, and vast reserves of minerals.
Shortage of medicine la probably Its most acute problem. Itooplc may be eating less, but they arc not dying of starvation. The Minister of Health suggests, however, that people arc dying from a shortage of basic medicines. He points to a 10 per cent rise 1n infant mortality In the first six months of this year as proof.
There Is one pharmaceutical plan in Mongolia, and It produces Just 10 per cent of the country's requirements. Traditionally, the other 90 per cent, like everything else in Mongolia, was Imported from the Soviet Unton.
With the collapse of the so clahsl trading bloc, hard currency has taken the place of barter trade. Deep In Its own
the Soviet Union has not paid one cent for the copper Mongolia has exported this year. Without hard currency from Its copper sales, Mongolia cannot buy medicines or the Soviet-made spare parts which keep Us Sovtel-bullt factories working.
The country's six _ major power stations frequently have to close down, and there may be up to 10 power failures a day in the capital, lasting anything between two minutes and 10 hours. Five to six per cent of industries have closed down completely, and the rest arc working at between 30 and 50 per cent of capacity
To add insult to injury. Moscow has imposed a customs duty of 1000 per cent on Mongolia exports to the Soviet Union. Recently, the two countries negotiated new barter deals, implicitly acknowledging the Impossibility of hard currency trade.
Mongolia hopes to get drugs In return for leather and wool, and spare parts In return for copper, but so far nobody is placing beta on the deals working.
Mongolia Is paralysed by Its
past dependence on the Soviet Union. Take a sweet, wc can't even manufacture that ourselves." says the Minister of Trade and Industry, despairingly "We import the wrapper, wc Import the sugar, we import the chocolate dye."
The radical privatization plan which is seen in some quarters of Mongolia as the one hope Sw the country's economy, is aB ' ready facing probtea.
The state is beginning to auction off Its shops and restaurants. handing out vouchers worth ten thousand tugriks to workers so that in theory at least, they can club together and buy an enterprise. Factories and other large concerns will be next, according to the country's privatization agenda.
So far, only eight shops and restaurants have been sold to private owners, generally companies rather than Individuals. One such shop, sold for 7.4 million tugriks, looks much Hke a state-run store — half Its floor space is empty, and a tiny display of shoes, string. T-shirts ■nd sweaters does little to fill the rest
The owner of this shop is looking abroad for help. too. What he needs, he says, is a Western partner — GEMINI NEWS
CATHERINE SAMPSON la a British freelance Journalist u>htV larttes /or The Times neurspa per and other publications from Bef/lng