No quick end in sight to Mongolia political turmoil

By Lindsay Beck

ULAN BATOR, July 6 (Reuters) - Private television was back on the air, alcohol on sale and restaurants open after the end of Mongolia's emergency rule, but a week after a disputed election the country's political problems were still far from resolved.

Prime Minister Sanjaagiin Bayar urged citizens to avoid a repeat of last week's riot, sparked by allegations of election fraud.

That violence left the headquarters of Bayar's Mongolian People's Revolutionary Party (MPRP) in flames and brought four days of emergency rule.

"This is not easy. The dust has not settled after the election and people are still upset," Bayar said in an address on state television.

"The parties are determined to solve the issues in a peaceful way and according to law," he said.

Preliminary results show the MPRP took a clear majority in the parliament, or Great Hural, but the opposition Democratic Party and several smaller parties dispute the outcome and are demanding recounts and possible re-election in some districts.

The political uncertainty will delay formation of a government that would be tasked with passing agreements to allow Mongolia's vast mining wealth to finally be exploited and tackling inflation running in the double-digits.

The past week has been a test for the young, Central Asian democracy which shook off Soviet influence in 1990 and whose residents were shocked by the rioting last Tuesday which left five dead and troops in the streets to enforce the state of emergency.

"I followed the events through television broadcasts. Especially for our image abroad, this is very damaging," said Ulan Bator resident Hosbayar, out with his daughter for a stroll.

"It's a very uncomfortable feeling."

Some 200 people remained in detention in connection with the riot, though another 500 have been released. Responding to criticism in local newspapers, Bayar said those detained would have access to lawyers and human rights groups.

Private television was once again on the air after a four-day ban, and in the streets of Ulan Bator, the only urban hub in the country of windswept grasslands populated by nomadic herders, life carried on as usual.

But there was no early end in sight to the uncertainty that will be closely followed by foreign investors, including Ivanhoe Mines (IVN.TO) and Rio Tinto (RIO.AX) (RIO.L) who are keen to sign a production agreement and move forward with a massive Gobi desert copper and gold project.

Bayar said it was too early to discuss the formation of a new cabinet until Mongolia's election commission announces a final result in the vote, a move that could come by Monday.

He also said it was still unclear that whether new elections in some areas were necessary, but that his party was not opposed to the idea.