By Jason Subler
ULAN BATOR (Reuters) - Mongolia's opposition Democratic Party (DP) candidate Tsakhiagiin Elbegdorj won the presidential election, both sides in the campaign said, an outcome analysts said could complicate a pivotal mining deal.
Incumbent Nambariin Enkhbayar, of the ruling Mongolian People's Revolutionary Party (MPRP), said he would respect Elbegdorj's win based on preliminary results compiled by the two parties.
"Those results show that a majority of votes went to the candidate from the Democratic Party, Mr Elbegdorj," Enkhbayar said in a statement. "So first of all, I'd like to tell you that I respect those results. Secondly, I would like to thank the many thousands of people who supported me."
Although the General Election Committee has yet to declare the race officially, Elbegdorj and his supporters marched to the capital's main square, where they celebrated at the foot of a huge statue of Genghis Khan, who ruled an empire that extended as far west as Hungary.
Elbegdorj ran for the largely ceremonial post of president on promises of change and stamping out corruption. While the MPRP is the reincarnation of the party that ruled Mongolia as a Soviet satellite for much of the last century, it is seen by many as a source of consistency and stability.
Elbegdorj is expected to be more open to Western ties in foreign policy, as part of a "third neighbour" strategy to counter the influence of Russia and China, but analysts say his populist support could make policy-making related to foreign involvement in the economy unpredictable.
Even so, a win by Elbegdorj, who previously served two brief terms as prime minister, could raise hopes that the young Central Asian democracy will be able to avoid the kind of unrest that followed last year's parliamentary elections.
Opposition allegations of cheating by the MPRP after the previous election led stone-throwing mobs to set the MPRP headquarters on fire, triggering a night of violence that prompted an unprecedented four-day state of emergency.
Analysts say Elbegdorj's populist leanings could complicate the formation of rules aimed at defining the role of foreign investors who want to develop mining projects.
The most immediate question is whether a draft investment agreement on the $3 billion (1.8 billion pounds) Oyu Tolgoi project, set to be developed by Canadian-based Ivanhoe Mines and Australia's Rio Tinto, will be held up further after years of negotiations over terms, including what stake the government will hold.
"If it's all finalised, and it's completely confirmed that he's the decisive winner, then I think it does not bode too well for the proceedings over Oyu Tolgoi," said Damien Ma with political risk consultancy Eurasia Group.
An Elbegdorj win could not only further delay the current renegotiation process, but also see Mongolia push harder on some of its positions in the talks, Ma said.
Failure to seal the deal quickly could hamper Mongolia's ambitions of becoming a mining powerhouse and using its deposits of copper, gold, uranium, lead, zinc, and coal to help pull its nearly 3 million people out of poverty.
That poverty itself is what prompted many to vote for Elbegdorj. Many saw his ticket as a way out of the current economic difficulties, which have been caused in large part by a sharp drop in the price of its main export, copper.
"I hope that the new president will improve the people's lives in this hard economic situation and bring us out of the financial slump. The people are going through a tough time," Tsedeviin Tsetsegmaa, 42, a food safety inspector, said after Elbegdorj's claim of victory.
(Additional reporting by Jargal Byambasuren and Reuters Television; Editing by Nick Macfie and Bill Tarrant)
