From Communism to Neoliberalism

In 1996, Mongolia was a six-year-old democracy embarking on its third ever parliamentary election. Until 1990, Mongolia had been a communist, one-party state closely aligned with the neighboring Soviet Union and led by the Mongolia’s communist party, the Mongolian People’s Revolutionary Party (MPRP). Tiananmen Square-like street protests that year forced a peaceful transition to democracy, while Russia’s subsequent cutting off of subsidies to the country devastated its economy.

The MPRP’s political dominance continued even after the fall of one-party rule, thanks largely to its huge head start in party building after seven decades in power. It won a comfortable majority in the 1990 elections and in 1992 won seventy of the Mongolian parliament’s seventy-six seats, thanks in part to the country’s flawed first-past-the-post electoral system. (The election was judged free and fair, however).

The new MPRP weren’t your grandfather’s communists. Despite campaigning on a platform of “humanitarian democratic socialism” and a “state-controlled market economy,” the MPRP turned to international donors and organizations like the IMF for money instead of looking to its historical nemesis, China, to deal with its new financial woes. It largely went along with the economically liberalizing agenda these donors demanded in return. That meant ending herd collectives, selling off state-owned enterprises, relaxing price controls, and reining in spending, particularly on social welfare. The result was the typical combination of human misery and ruling-class profiteering that accompanies such shock therapy.

Still, the post-1992 MPRP weren’t ideal free marketers, resisting the pace of neoliberalization even as they accepted the basic approach. And why be content with a reluctantly market-supporting government when you can have a fully neoliberal one calling the shots? That seemed to be the logic of a plucky gang of Republican operatives who determined to get the party out of power.

Mr. McCain Goes to Ulaanbaatar

It’s not surprising US policymakers would turn their attention to Mongolia. As Alphonse La Porta, US ambassador to Mongolia from 1997 to 2000, told Congress: “We have geopolitical interests in Mongolia. Mongolia occupies a strategic location between Russia and China.” As a regional buffer, it was all the more important now that the Soviet Union had collapsed and China had become the world’s most powerful communist state. Given its historical antipathy to China, it made sense to court Mongolia as an ally. There was also the matter of Mongolia’s vast mineral reserves, with more than a thousand mineral deposits and some of the world’s largest gold and copper reserves.

Enter the International Republican Institute (IRI). Founded in 1984 as the National Republican Institute for International Affairs, the IRI today describes itself as “the premier international democracy-development organization.” Perhaps more accurate was its 1995-era description, that it “advances democracy, the rule of law, and free-market economics.”

The IRI insists that it’s both “nonpartisan” and “nongovernmental.” This is arguable. For one, the IRI was and is funded by the American taxpayer, receiving much of its money through grants from the Agency for International Development (AID) and the National Endowment for Democracy (NED), both of which — particularly the latter — have storied histories of meddling in other countries’ political processes. The IRI is one of the NED’s four “core grantees,” which receive approximately 70 percent of its regular funding. So while the IRI may not technically be a government organization, it does its work at the behest of the taxpayer.

Its nonpartisan status is even more dubious, as its name suggests. Lorne Craner, the organization’s president from 1995 to 2001 and vice president from 1992 to 1995, served in both Bush administrations. The IRI’s “Cuban Transition Committee” in the ‘90s was chaired by Jeb Bush. It counted as members of its board of directors at the time names like Dan Coats, the Indiana Republican currently serving as Trump’s director of national intelligence, and Brent Scowcroft, Ford and Bush Sr.’s national security adviser. Among its list of “supporters” were the Heritage Foundation, the Family Research Council, the Dick and Betsy DeVos Foundation, and the Bradley Foundation. Ronald Reagan won its 1997 Freedom Award. And since 1993, the organization has been chaired by Arizona Sen. John McCain.

McCain’s role in the IRI is particularly ironic given his recent rhetoric on Russia’s alleged involvement in the 2016 election. McCain has called it “an act of war,” warned that it could “destroy democracy,” and described it as a “new form of warfare” for which Russia would have to “pay the price.” In an op-ed for USA Today, McCain cited this and Russia’s nonexistent interference in the French election as evidence that Russia was “on the offensive against Western democracy.”

Yet two decades earlier, upon taking over the IRI chairmanship and its $139,000 a year salary — abruptly ousting Newt Gingrich’s deputy whip from the position a year before his contract had expired — McCain led the IRI as it prepared to engage in election interference of its own.

“Our Boys Won Big Time”

The IRI’s supposedly nonpartisan status is meant to extend to its work in other countries. Rather than openly backing one or more particular parties, the IRI is meant to provide democratic and electoral training to all parties equally. In mid-90s Mongolia, however, it decidedly did not follow that approach.

According to Nate Thayer, writing at the time for the now defunct Far Eastern Economic Review, the IRI’s involvement began after George H. W. Bush’s secretary of state James Baker returned from Mongolia in 1991. He phoned the IRI, telling them, “I think you need to do something there to help the democratization process.”

In subsequent years, the IRI appears to have tried to downplay its role in the victory. In 2000, its assistant program officer in Asia told the Daily Yomiuri, a Japanese newspaper, that the IRI simply “instructed all parties in the basic necessary techniques” so that Mongolian voters would “be able to select their own parliament without our help.” Present-day overviews of its operations in Mongolia entirely omit its work with political parties.

The IRI itself was less reserved.

“After a devastating defeat in 1992, when democrats won a meager five seats, IRI began party organization and communications training for eight democratic parties and movements,” it wrote in its 1996 annual report. As the report explains, under the IRI’s advice, these squabbling parties — labelled a “merry band of free marketers” by one diplomat — consolidated into two parties and formed a legislative caucus.

Strategists sent by the IRI to Mongolia taught the parties about membership recruitment, campaign messaging, and grassroots party building. At the start of 1996, they convinced the opposition to form a united coalition — the Democratic Union Coalition (DUC) — and advised the candidates to personally tour their message around the country, routine practice in most Western democracies but a new concept in Mongolia at the time.

Under the IRI’s advice, the DUC also drew up a “Contract with the Mongolian Voter.” The contract called for such things as a free press and independent judiciary, but its chief focus was free market reforms: privatizing 65 percent of state assets by 2000, cutting government spending, reducing inflation, joining the WTO, and instituting a 20-30 percent tax cut, to name a few. Around 350,000 copies of the contract were distributed around the country to even its remotest parts, turning it into the most widely distributed document in the country’s history.

If the title and content of the coalition’s platform bears more than a passing resemblance to the Republicans’ own “Contract with America” — the linchpin of the GOP’s 1994 Congressional election triumph — it’s because Gingrich sent that document’s authors to Ulaanbaatar, the capital, to help draft the Mongolian version.

“As Mongolia tackles critical issues, it will be important for its political parties to have effective campaign and communication skills at their disposal,” read a letter by Gingrich to the democrats at the time, according to Thayer. “I believe that the IRI’s cooperation in providing ‘Contract with America’ experts will be most useful to you as you conduct your work.”

The strategy was a success, ending seventy-five years of rule by the communist party and its successor, and bringing the coalition to power with fifty of seventy parliamentary seats. Those in the know acknowledge the importance of the IRI’s role.

“The victory is as much IRI’s victory as it is ours,” said Tsakhiagiin Elbegdorj, chairman of the coalition, in a quote prominently displayed on the IRI’s 1996 annual report. “Their continued support for the democratic coalition is what made this democratic revolution possible.”

“I am happy to say that the International Republican Institute played a major role in this victory by showing these parties how to mobilize their supporters and work toward victory,” McCain told Congress in 1997.

“Our boys won big time,” one IRI program assistant remarked.

The new prime minister reportedly faxed a message to the IRI, telling them that the coalition “would not have been able to manage to win a majority of seats in this election” without their assistance. Both parties continued to pay tribute to each other. A year later, McCain and the IRI were celebrated at a feast held by the now-ruling coalition, complete with a roasted goat. A year after that, the speaker of the Mongolian parliament visited Washington and attended a luncheon hosted by McCain, where he presented Gingrich with a framed original copy of the Contract with the Mongolian Voter. He was also handed a velvet and gold ceremonial Mongolian hat.

“They made me promise not to wear this,” Gingrich said

It’s doubtful all this could’ve happened without the large sums of US taxpayer money being lavished on the coalition. According to the NED’s annual reports at the time, between 1992 and 1996 it gave a total of $480,520 to the IRI for expressly partisan purposes — to help the free market opposition “develop strategies to make them a more effective force within the legislature,” and to help them “solidify their platforms and develop comprehensive and viable communications strategies for the parliamentary elections.”

To put that into perspective, the total cost of Mongolia’s 2000 parliamentary elections was $333,000. In 1996 alone, the NED gave the IRI $158,327 to assist the coalition in that year’s election, nearly half that total.

And that’s not even to mention the other streams of US government money flowing into the country at the time. AID, whose budget for Mongolia was $12 million in 1995, gave grants to both the IRI and the Asia Foundation. The latter not only pushed for neoliberal reforms in the country, but fourteen of the seventy-six candidates in the 1996 elections had been trained by the organization.

For IRI officials and US policymakers, the effort was justified: the election result, they repeatedly stressed, showed Mongolia had “embraced democracy.” But that made little sense, given that the country had already held two free elections with markedly high (over 90 percent) voter turnout.

What they were really saying was that while Mongolian voters may have voted previously, they hadn’t voted the way they were supposed to.

Triumph of Austerity

The 1996 election was a triumph for the Right, both Mongolian and American. But whatever popular goodwill the coalition had earned was quickly erased: within a little over a year, the MPRP had won back the presidency, retaken most provincial and local governments, and triumphed in a by-election that undermined the DUC’s majority in parliament. In 2000, the MPRP came back to power in a landslide, and has continued to dominate the country’s politics ever since.

But the damage was already done. Driven partly by a collapse in world copper prices, the economy quickly fell apart after the DUC’s victory. Unemployment ballooned over 20 percent, helped along by the purging of government departments and the decline of domestic industries. Close to four hundred children were estimated as living permanently on the streets. The United Nations Food and Agriculture Organization determined that one-third of the population was below nutritional-starvation levels. Even the founding chairman of one of the parties in the DUC admitted that average real incomes had dropped by 30 percent in the year they were in power.

Meanwhile, in keeping with their “contract,” the new DUC-led parliament immediately set about implementing free market reforms. It dropped price controls, cut pension rolls, halved the number of government ministries, removed tariff protections from domestic products, slashed taxes, kept up the march of privatization, and proposed a 30 percent flat tax and a regressive value-added tax. And in 1997, the coalition passed a new mining and foreign investment law to attract foreign companies, particularly for mineral resource exploration and development.

But it left out one crucial promise: passing an anti-corruption law. The absence of such rules allowed unscrupulous politicians to profit handsomely from the stripping of public assets they hastened along. As politicians drove around in expensive cars and limousines, and nightclubs, bars, and restaurants proliferated for the enjoyment of a new business elite, human misery multiplied.

As for the IRI, it was no bystander in the coalition’s free market reforms. According to a 1999 Globe and Mail report, the IRI closely advised the government. In fact, Bradley Broadwell, an IRI representative in Mongolia at the time, today describes himself as having been an “adviser to the Mongolian parliament” between 1997 and 2000. His role, in his own words, involved providing the government with “technical assistance” for a market development program, advising the Prime Minister on “inviting foreign direct investment and managing attractive foreign commercial opportunities,” and “working with the international media in creating new business opportunity [sic] and brand for this new democracy and market economy.”

That work surely interested the IRI’s donors, composed of virtually every corporate giant one can think of. At different points in the mid-90s, Chevron, Ford, Philip Morris, and Texaco occupied positions in its “chairman’s circle,” Other companies — Boeing, Coca-Cola, Eli Lilly, Exxon, Goldman Sachs, Halliburton, Lockheed  Martin, Mobil, and Pfizer to name only a few — were counted among its “fellows,” “sponsors,” “supporters,” “patrons,” and “friends,” along with Mineral Associates Inc. and the American Petroleum Institute. Even former Trump campaign manager and accused felon Paul Manafort’s despot-courting lobbying firm Black, Manafort, Stone, and Kelly made it into the IRI’s orbit.

It’s not hard to see why these multinationals would want to pay the IRI to advise Mongolia on “inviting foreign direct investment and managing attractive foreign commercial opportunities.”

The Way It Has Always Been

As hysteria over Russian meddling in the US election dominates media headlines, it’s worth revisiting the case of the IRI and Mongolia. The story may not have attracted much attention at the time, but today, when stated plainly, the facts make for stark reading: from 1991 onward, the US government and multinational corporations dispatched a team of political operatives to engineer the electoral victory of free market forces in a foreign country and then guide those forces as they threw the country’s economy open to multinational investment and presided over a devastating economic collapse.

Russian interference in the US election should of course be taken seriously. But when figures like John McCain feign shock that a powerful state would attempt such meddling, they don’t have a leg to stand on.