Mongolia’s domestic party politics, international relations and economy faced challenges in 2022. The Mongolian People’s Party (MPP) wrestled with how to govern despite having a supermajority in Mongolia’s parliament, the State Great Khural, and how to position itself vis-a-vis Moscow following Russia’s invasion of Ukraine. The government staked its fiscal fortunes on reviving coal exports to China but faced protests on corruption allegations linked to a state-owned coal mining company.

The difficulties of governing with a supermajority in Mongolia appear to be an open question. The electoral triumph of the MPP in Mongolia’s parliamentary and presidential elections in 2020 and 2021 respectively, raised concerns about the potential for democratic backsliding.

There were questions about whether the MPP would revert to its former single-party ruling status and threaten Mongolia’s democracy. Yet developments in 2022 suggest that the party is unexpectedly struggling with how to make a supermajority work. The party discipline that once made the MPP a powerful force seems to have dissipated, with MPs largely reverting to ad hoc alliances to get pet projects passed in parliament.

Mongolia’s Prime Minister, Luvsannamsrain Oyun-Erdene, grappled with a constitutional amendment introduced in 2019 that restricted the number of members of parliament that could serve in the cabinet. While the amendment was intended to strengthen parliamentary oversight and subject matter expertise in cabinet appointments, it seems to have led to perceptions of weak minsters. Mongolia’s constitutional court threw out the amendment in August 2022, leading to a cabinet reshuffle. This brought more politicians into the cabinet in the hopes of shoring up PM Oyun-Erdene’s power. Another reshuffle in January 2023 further increased the number of politicians in the cabinet.

There were also questions around whether Mongolian foreign policy could adapt to the shifting geopolitical landscape in 2022. In response to Russia’s war of aggression against Ukraine, Mongolian society has been divided between largely older Russophiles and younger internationalists who express their solidarity with Ukraine. Mongolia’s government remained silent on the war for much of the northern-hemisphere spring, abstaining from votes censuring Russia at the UN General Assembly.

There was a perception that Moscow’s cosying up to Beijing would further reduce the degrees of foreign policy-making freedom available to Mongolia, as well as a realisation that a resurgently imperialist Russia — on whom Mongolia is entirely dependent for fuels and for electricity in its western regions — was waging an energy war on Europe. Plans for a trans-Mongolian gas pipeline from Siberia to China and proposed hydropower projects that would likely need Chinese funding ostensibly impact Mongolia’s relations with Russia and China too.

Yet Mongolia’s government embraced three internationalist initiatives in 2022. These are the Ulaanbaatar Dialogue (a regional security conference), a conference focussed on ‘strengthening the role of women in peacekeeping’ and UN Secretary-General Antonio Guterres’ visit to Ulaanbaatar in August.

In a speech to the UN General Assembly in September 2022, Mongolian President Ukhnaagiin Khurelsukh discussed the need to find peaceful solutions to conflict, clearly pointing at Russia without mentioning its invasion of Ukraine explicitly. This marked a decisive turn towards the formulation of a more nuanced position on relations with Russia. Prime Minister Oyun-Erdene also visited Germany and President Khurelsukh visited China and Japan in the second half of 2022 to bolster Mongolia’s international relations.

Still, whether Mongolia can find other sources of income beyond coal exports for fiscal stability remains uncertain.

On 5 December 2022, protests erupted in Ulaanbaatar after Mongolia’s government acknowledged suspicions of corruption at the state-owned coal miner, Erdenes-Tavantolgoi JSC. Young people initially dominated the protests, as had been the case with a series of similar protests in April. Corruption allegations sparked the protests, but protestors were also frustrated with the government’s lack of follow-through on promises for improved social support following the COVID-19 pandemic, economic woes linked to the closure of China’s border adjacent to Mongolia and rampant inflation.

While many Mongolians initially suspected that internal MPP machinations were behind the protests, they appeared to be unorganised and spontaneous. During the second week of protests in December, some protesters were camping out on Sukhbaatar Square in cold temperatures to demonstrate their determination. In response, Mongolia’s government promised to investigate the corruption allegations.

Mongolia’s government has staked its fiscal fortunes for 2023 on coal sales to China to pay its sovereign debt, making allegations of corruption in a state coal miner particularly poignant. This occurs at a time when interest in Mongolia’s ‘third neighbour policy’ — strengthening ties with countries besides Russia and China — has been revived in the face of Russian and Chinese authoritarianism.

The protests also reveal a desire in Mongolian society to reduce dependence on coal for energy supplies. This will be met with fierce opposition from the domestic coal industry. A small flurry of Australian-invested methane fracking projects in the country is likely to be inadequate ‘bridge fuels’.

The government’s precarious fiscal position, coupled with domestic dissatisfaction, make it unlikely that the Oyun-Erdene administration will survive until the next parliamentary elections in June 2024.

BY:

Julian Dierkes is Associate Professor at the University of British Columbia’s School of Public Policy and Global Affairs. He is one of the principal authors of the Mongolia Focus blog.

Mongolian President Ukhnaagiin Khurelsukh has announced ambitious plans to rebuild the historical capital city of Kharkhorum in the Orkhon Valley. As a world heritage site and former capital of the Mongolian empire founded by Chinggis Khaan, the reconstruction of Kharkhorum holds great significance for the country's economic and spiritual development.

The President emphasized the need for cooperation among the government, private sector, and citizens to complete this long-term construction project.

While the reconstruction of Kharkhorum may bring new economic opportunities and preserve cultural heritage, it's worth noting that the country's resources and potential environmental and social consequences must be taken into account.

In addition to rebuilding Kharkhorum, Prime Minister Luvsannamsrain Oyun-Erdene plans to build a new city in the Khushigt Valley near the new international airport. Minister Tserenpiliin Davaasuren will oversee the construction plans for these cities. However, the groundwork for the new Kharkhorin city will not likely start until the late 2020s.

It's important to note that successful new cities often have a clear vision, strong leadership, and a well-planned strategy for economic development and sustainability. As the government and other stakeholders move forward with these projects, they'll need to carefully assess and address potential impacts.

Karakorum, also known as Kharkhorum, Qaraqorum, or Harhorin, was a significant city in the history of Mongolia. It served as the capital of the Mongol Empire between 1235 and 1260 and of the Northern Yuan dynasty in the 14th and 15th centuries. The ruins of the city can be found in the Övörkhangai Province of modern-day Mongolia, close to the town of Kharkhorin and the Erdene Zuu Monastery. These ruins are located in the upper part of the Orkhon Valley, which is a World Heritage Site.

BY Amar Adiya

Amar Adiya is Editor-in-Chief of Mongolia Weekly, an English newsletter on political analysis and business intelligence every week. He is also a regional director at Washington-based strategic advisory firm BowerGroupAsia and helps Fortune 500 companies understand and shape policies in the Asia Pacific region.

The National Statistics Office (NSO) gave a briefing on the social and economic statistics of Mongolia in 2022.

The money supply (M2) reached MNT 29.7 trillion at the end of December 2022, which increased by MNT 1.8 (6.4%) trillion compared to the same period of previous year. The main reasons for this increase were MNT 2.6 (2.1 times more) trillion increase in the current account in foreign currency and MNT 936.9 (23.6%) billion increase in time deposits in foreign currency.

At the end of December 2022, the money supply (M1) amounted to MNT 7.2 trillion, increased by MNT 1.3 (21.6%) trillion from the previous month and increased by MNT 691.9 (10.6%) billion from same period of the previous year. In money supply (M1), MNT 6.4 (88.5%) trillion was demand deposits and MNT 831.1 (11.5%) billion was the currency outside depository corporations.

At the end of December 2022, the quasi money amounted to MNT 22.5 trillion, increased by MNT 1.0 (4.8%) trillion from the previous month and increased by MNT 1.1 (5.1%) trillion from same period of the previous year. In the quasi money, MNT 12.6 (56.1%) trillion was time deposits in domestic currency, MNT 4.9 (21.9%) trillion was time deposits in foreign currency, and MNT 4.9 (22.0%) trillion was current accounts in foreign currency.

The national currency in circulation reached MNT 1.1 trillion at the end of December 2022, increased by MNT 96.1 (9.7%) billion from the previous month while decreasing by MNT 16.3 (1.5%) billion from same period of the previous year.

At the end of December 2022, the net foreign assets amounted to MNT 2.5 trillion, increased by MNT 1.8 (3.5 times more) trillion from the previous month which decreased by MNT 1.3 (34.6%) trillion from same period of the previous year. The net domestic assets amounted to MNT 27.2 trillion, which increased by MNT 504.3 (1.9%) billion from the previous month and increased by MNT 3.1 (12.9%) trillion from same period of the previous year. Net domestic assets have been composed of the annual growth of the money supply.

Source: National Statistics Office

When Vladimir Putin on December 22 announced his plan to expand the size of the Russian Army by around a third, Mongolia braced for the next wave of Russians fleeing conscription and the prospect of fighting in Ukraine.

Putin’s war has driven large numbers of Russians, particularly those of military age, to flee to the handful of countries where Russians do not need visas. Those countries include Mongolia. Once there, however, those who have sought sanctuary find that it is not only the predictable issues of language and culture that pose difficulties. For a start, they find that their Russian bank cards do not work. Then there’s the not so small matter of earning a living. Most of the Russians are unable to find jobs in Mongolia, a small, developing nation, with an average salary of around $400 per month.

Many of the arrivals, however, are simply intent on using Mongolia as a temporary stopover on their way to Vietnam or Thailand, where at least the weather is better. Currently, daily temperatures in Ulaanbaatar, the nation’s capital, are hovering around -23 Celsius.

Regardless of whether they remain in Mongolia or travel on to sunnier climes, the Russians’ futures are, of course, uncertain. They do not know when or if they will be able to return to their homes.

Some of the Russians in Ulaanbaatar are prepared to discuss the hurdles they have to overcome and the senselessness of the war that has forced them to give up all that they knew.

“I don’t know if we’ll have an opportunity to go back to Russia, because … my dad can just be taken away into the army,” said 15-year-old Valeria, from St Petersburg, one of tens of thousands of Russians who have fled to Mongolia since the beginning of the Ukraine war.

They have left everything behind, and are now living in Ulaanbaatar, facing an uncertain future. “To me, it feels like going back is still a big risk,” said Valeria.

Last September 21, Vladimir Putin issued his mobilisation order. Those whose names were called became legally obliged to serve in the Russian Army, ostensibly, to fight in Ukraine. The State Duma, the Russian Federation’s legislature, announced that it had amended the Criminal Code. Severe punishments were outlined for surrender, desertion, or refusing conscription. The penalty now stands at 15 years in prison.

Immediately after the mobilisation announcement, Russian citizens began to exit their country. Since the war began, an estimated 1.4mn have left, either because of the impact of economic sanctions, or to avoid being drafted into the war. Many of the Russians arriving in Mongolia are of Mongolic ethnicity, being Buryat, Kalmyk, or Tuvan.

There have also been smaller numbers of Yakut and Slavic people turning up in Mongolia. So far, 22,540 Russian citizens have entered the country. Most transited through, travelling on to one of the few other countries that offer visa-free entry to Russians, such as the Central Asian republics, Vietnam, Thailand and Israel. Around 98% of those who have remained in Mongolia are in the capital city.

Fled Russians in Mongolia use social media to communicate and establish new lives. A Telegram group called “Mongolia/Adaptation 03” has 7,638 members, “Apartments for Rent in Mongolia” has 1,457, while “Jobs in Mongolia” has 2,562. In addition to these new arrivals, many of the Russians who were already in Mongolia have been extending their visas, and seeking legal advice on immigration.

Ivan Sergeevich, a 47-year-old businessman from Irkutsk who has been in Mongolia for five years, said that lots of Russians have arrived since the beginning of the war. “The situation in Russia isn’t the most optimal. The economic situation is worsening. Russia’s automotive industry used to be one of the best in the world. But it has suffered great losses … almost no one is still in business. After the war started, people started to get called up to go to Ukraine.”

He said that the number of Russians arriving increased significantly during September and October, because of the mobilisation. “Nobody wants to kill someone on the battleground, nobody wants someone’s life on their hands. They don’t want to lose their family members or their own lives at war. That’s why they started leaving their country,” he added.

Mongolia’s position on the map between Russia and China has always been problematic, with the two larger countries exerting political and economic pressure. In general, the majority of Mongolian politicians are more pro-Russia than they are pro-China. It therefore surprised many when the Mongolian Immigration Agency announced that it would issue residency permits to the Russians, rather than sending them back home. Across the former Soviet satellites, including Mongolia and the Central Asian ‘stans’, there seems to have been a pivot towards China in the wake of the Ukraine invasion.

The first influx of Russians, who arrived soon after the war started, came to exchange rubles for US dollars, eventually causing a shortage of dollars in the country. The banks have since imposed very strict limits on the amount of dollars that can be purchased. But this only affects the cash people carried with them. Unfortunately, Russians trying to survive in Mongolia, have no access to their money back home.

Valeria told how Russian bank cards do not work. “They have all been blocked. You can’t withdraw or deposit money, you can’t do anything.”

Speaking from Vietnam, where he travelled to from Mongolia, 28-year-old Vladislav said: “Russian cards are blocked worldwide, with a few exceptions. In Vietnam, we’re still able to withdraw money from ATMs at the Vietnam Russian Bank.” For that reason, he relocated to Vietnam, where at least he has access to his money.

Valeria’s family also want to leave, but it is not easy for Russians. “Actually, I want to go to another country, but I think it’s too late to go somewhere else now, because everywhere is closed. You can’t go to Europe, and you can’t go to the US, of course. There are still countries where Russian people can go, but that remains in question.”

Until they find a way to move on, Valeria’s family are facing a tough time. “My parents lost their jobs. Here in Mongolia, they haven’t found work yet. Currently, we’re surviving off our savings,” she added. “My parents have been saving their whole lives. Then we came to Mongolia and honestly I feel like we’ll soon end up homeless.”

Ivan Sergeevich explained the huge problems obtaining employment faced by Russians coming to Mongolia, such as the language barrier. Mongolians in their fifties or older generally speak some Russian, but most young people speak only Mongolian and English. Said Ivan: “Most Russians can’t find a stable income, and working as a part-timer for a minimum-wage job isn’t easy. I try to help them find somewhere to at least work and earn a living.”

Vladislav used to work in the Irkutsk Regional State Universal Scientific Library of Molchanov-Sibirskiy, until he fled Russia to avoid military conscription. “I arrived in Mongolia with friends and I’ve also met many other Russians forced to leave the country for the same reason.” He said that the Ukraine invasion changed his life completely. “I was planning my life in Russia and didn’t plan to go anywhere at this time. I had to change all my plans.”

Vladislav said he believed that the trend of Russians coming to Mongolia would continue, if the war did not end: “Most people left the country in the first week after September 21, because of the mobilisation. Right now, the flow of Russians into Mongolia has tailed off, but still there are people who are going to leave Russia soon.”

Asked if he had any final words about the situation, Vladislav said, “The whole situation about the war is nonsense and it’s the most dark and shameful part in Russian contemporary history. Free Ukraine. Putin is a criminal.”

In a similar vein, Ivan Sergeevich reflected: “I think it’s about time the war ends. In the long run, no matter what, Russia will suffer a big loss. It’s a pointless war that should never have happened. I feel like Ukraine will keep its land. But Russia, no matter what, is on the losing side. It’s a war that should never have started and it’s a war that’s destroying both sides.”

Article compiled with research and translation assistance from Tengis, Temuulen Khaliunbat and B. Khuslen.

BY:

Antonio Graceffo, PhD, China-MBA, is an economist and China analyst. He has spent over 20 years living in Asia, including seven years in China, two and a half in Taiwan and three in Mongolia. He conducted post-doctoral studies in international trade at the School of Economics, Shanghai University, holds a PhD. from Shanghai University of Sport, and a China-MBA from Shanghai Jiaotong University. Antonio is the author of seven books about Asia, three of which are about the Chinese economy. For the past 10 years, he has been reporting on the Chinese economy, the US-China trade war, investment, geopolitics and defence. In recent years, he has written a diverse range of articles on Mongolian economics and society.

3 new COVID-19 cases were registered in Mongolia in past 24 hours.

3 of them were contacts in Ulaanbaatar. No imported cases were found. 10 patients were sent to hospitals in Ulaanbaatar and 5 provinces.

The death toll remained 2,136.

The opening ceremony of the Lexus brand, which is the luxury vehicle division of the Japanese automaker Toyota, in Mongolia was held successfully on January 19 at the Zaisan Hill Complex.

“Lexus is a choice of customers who prefer luxury with high quality and workmanship and hold value and heritage in high regard,” said Akio Toyoda, Founder of Lexus.

The Lexus brand is sold in more than 100 countries worldwide. Thus, the company expanded its scope and selected Mongolia as the next dealership country. From now on, Mongolian customers can buy cars and spare parts, and get maintenance services through Lexus official dealer.

During the opening ceremony, noting their commitment to making every customer's moment with the Lexus brand valuable and memorable, Executive Director of “Toyota Sales Mongolia” LLC Yasuo Ouchi expressed his excitement about the opportunity to make Lexus even closer to Mongolians.

Mitsuhiro Amo, East Asia & Oceania Div. (General Manager) of Toyota Motor Corporation, Hiroo Togashi, the general manager of Lexus Global Brand Management, Kikuma Shigeru, Deputy Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia took part in the opening ceremony.