National Agenda : A Winter of Discontent May Snarl Reforms in Mongolia : The government wants a market economy, but the people are growing restive and want food. Can the move toward democratic reform survive the frost?

The labor union activists rallying in a downtown square clearly enjoyed new freedoms, but that did nothing to tone down their angry rhetoric.

A string of speakers denounced Mongolia’s reformist government for failing to cope with spiraling prices that threaten a sharp fall in living standards during the long cold months that lie ahead.

“Senior citizens are beginning to starve,” declared one protest placard. “The children in the cradles are crying,” read another.

Mongolia faces a critical test this winter for its ambitious attempt to dismantle a Communist dictatorship and privatize a planned economy while preserving an atmosphere of social peace and broad national consensus. Much has already been accomplished. But the economic dislocations of this transition threaten individual suffering and potential political upheaval.

At stake may be the future of democracy and free-market economics in this vast but sparsely populated land of 2.2 million people wedged between China and the Soviet Union. Success could make Mongolia a key model for change in China’s deep interior or in Soviet Central Asia and Siberia. Failure would be a setback for the ideals of political and economic freedom in this part of the world.

“There is a common pessimistic spirit among the masses,” said Deputy Prime Minister D. Dorligjav, 32, who is a leader of the Mongolian Democratic Party, created last year by dissidents and now playing a minority role in government. “People are saying there is no use for so many parties. ‘They talk a lot, but everything is getting worse,’ they say. We are in a very difficult situation. Every political force can play on the emotions of the people now.”

While he sees no immediate threat to Mongolia’s fledgling democracy, Dorligjav added that “if such a situation lasts, maybe it will be more dangerous.”

While Mongolia faces daunting challenges, it has some grounds for optimism.

Western nations and multilateral organizations, motivated by both strategic and humanitarian concerns, have pledged $243 million in grants and low-interest loans to help Mongolia through the crisis. With a relatively small population and extensive natural resources, this is a place where the per-capita impact of aid can be dramatic and where long-term development prospects are good.

Mongolia also benefits from the unifying force of resurgent nationalism. The country is still dominated by the Mongolian People’s Revolutionary Party (MPRP), which until this year called itself Communist. But the MPRP has allowed parties committed to democracy and a market economy to join the government, and the former Communists now say they share these goals. The patriotic feelings that help glue together this unusual political coalition arise in part from a shared determination to end the country’s long dependence on the Soviet Union, which in 1921 helped make this the world’s second Communist state.

Even many protesters basically support the government.

Damdindorzh, a truck driver at the labor union rally, who like most Mongolians routinely uses just one name, said he is upset about rising prices but respects much of what the government is trying to do.

“We’re not against free prices,” he said. “We think the government’s desire to move to a free-market economy is basically correct. It’s right that Mongolia should have a market economy and rise up to the level of the world. But we want wages to be raised too. That is our demand.”

Damdindorzh said that along with most other people, he is worried about an especially harsh winter ahead. Even during an ordinary year, nighttime winter temperatures here can drop to minus 50 degrees Fahrenheit.

“This coming year is the year of the monkey (on the traditional East Asian calendar),” he explained. “Monkey years generally have a lot of snow disasters and are very cold. So people think this will be a hard winter.”

The inauspicious calendar contributes to a widespread sense of foreboding. But there are many more concrete concerns that stoke fear.

Budragchagyn Dashyondon, 45, chairman of the ruling MPRP, said in an interview that the country’s biggest problem is a shortage of energy, especially electric power. “There are many associated problems: coal, gasoline, the normal activities of mining,” he said.

Dashyondon noted that Mongolia’s economic ties with Eastern Europe and the Soviet Union, from which it traditionally received almost all of its imports, have been disrupted by political upheaval and economic change. Problems are aggravated, he said, by a lack of hard currency to buy gasoline and spare parts from the Soviet Union, which is trying to shift the basis of its bilateral trade from the barter system. These difficulties have made assistance from the United States and the United Nations very important, the Mongolian party official added.

Ordinary people, at least in Ulan Bator, are deeply worried about wintertime energy shortages.

“We think probably the worst thing this year will be the electric power,” said Damdindorzh, the truck driver, who lives with his wife and four children in a yurt permanently pitched in a wood-fenced compound. Most residents of the capital live in apartment buildings, but many others still live in such traditional felt tents.

“We’ve been collecting as much coal and wood as we can,” Damdindorzh said. “That’s the preparation we’ve made for the winter.” If things go badly, he said, “we’ll just be snowmen.”

The capital has already been hit by food shortages and empty shelves, although the biggest problem seems to be uneven distribution rather than any real threat of widespread starvation.

Mongolians also have adjusted to making do with what is available.

A well-dressed elderly man in a blue jacket and hat noticed a foreigner eyeing a butcher’s counter and offered what were meant to be reassuring words. “There’s heart, liver, stomach and other entrails,” he explained. “It’s really tasty. It’s very fatty. It’s really good.”

Rural people, never far from sheep or other livestock that could be slaughtered if necessary, generally face no fear of starvation. But they too are affected by other shortages.

“The herdsmen are not worried about food, because we can produce food ourselves,” said Tsevegmed, a middle-aged herding woman interviewed in her felt yurt on the rolling grasslands of central Mongolia, west of Ulan Bator. “But of course we lack materials for robes and trousers. And now there’s difficulty getting petrol for the generator.” Tsevegmed’s family, like many rural Mongolians, owns a tiny gasoline-powered Honda electric generator, which permits them to watch a small black-and-white television.

“Since June, when we go to the village, we can’t buy as much gasoline as before,” Tsevegmed said. “Mongolia doesn’t have its own place to produce gasoline, and the Soviet Union also faces difficulties and has stopped sending us so much. Everyone is talking about it.”

Despite all the difficulties, the government is trying to press forward with a radical transition to a market economy.

The country is throwing its doors open to foreign investment and trade. “As you know, it’s very difficult to use a table with only two legs,” explained Jagvaral Hanibal, head of the Foreign Ministry’s department of Soviet and Chinese affairs, in a metaphorical reference to Mongolia’s ties with its giant neighbors. “Therefore, we aim to develop a relationship with the United States, Japan, England and all countries.”

Central to the domestic reform effort is a plan to privatize most of the nation’s state-owned assets, including livestock herds, small businesses and large enterprises, by distributing property vouchers to every citizen. These vouchers or coupons can then be turned back in to the government to buy animals, businesses or shares of stock.

Privatization of small businesses and livestock has already begun, though other aspects of the program are running into problems and delays.

Dashyondon, leader of the former Communists, said that Mongolia must concentrate simply on getting through the current crisis. To do this, he said, it must press forward with reforms in both the economy and politics.

Noting that the Soviet Union moved first with political reform and that China has instead focused on economic reform, Dashyondon said that “a third path, which is Mongolian, is better. I think that we must perform democratization in the economic and political fields simultaneously.”

Dashyondon acknowledged that some in his party oppose this approach.

“There is no organized hard-line force in the party,” he said. “There are some people who have some nostalgia for the past, because of these economic difficulties. But day by day, they are coming to understand that there is no way back.”

Batuul, the Mongolian Democratic Party chairman, also predicted that “democracy will survive all of this.”

“Now there is no power that can kill democratic policies,” he said. “And the main thing necessary to get out from economic difficulties is that we develop democracy. If democracy develops properly, then international society will help us.”