Updated October 26, 2022
Mongolia
Overview
majority held by different parties. That changed in 2021,
Mongolia is a landlocked country that shares borders with
when the MPP won the presidency after having secured a
two powerful neighbors, Russia and China. With a
supermajority in parliament in 2020. Mongolia’s June 2021
population of about 3.3 million and a land area slightly
presidential election delivered a decisive victory for MPP
smaller than Alaska, Mongolia is the most sparsely
candidate Ukhnaagiin Khurelsukh, who had served as prime
inhabited country in the world. About half of the country’s
minister until he resigned from that post in January 2021
population lives in the capital, Ulaanbaatar. While
amid protests over his government’s handling of the
Mongolians were traditionally nomadic pastoralists, the
COVID-19 pandemic.
country’s economy is now highly dependent on its
extensive mineral resources, with extractive industries
The State Department characterizes Mongolia’s
accounting for the vast majority of Mongolian exports.
achievements in terms of democratization and market
reforms “considerable,” but describes institutional
For almost 70 years after it declared independence from
weakness and widespread corruption as enduring
China in 1921, Mongolia was a satellite state of the Soviet
challenges. According to the State Department and other
Union, under the one-party rule of the communist
observers, corruption remains widespread at all levels of
Mongolian People’s Revolutionary Party (MPRP).
government, and the politicization of anticorruption efforts
Following a peaceful revolution in 1990, Mongolia
hampers their effectiveness. That said, Mongolia has passed
embarked on a successful democratic transition. Mongolia’s
the Millennium Challenge Corporation’s scorecard on
foreign relations are driven by a desire to balance Chinese
control of corruption and democratic rights every year since
and Russian influence by engaging with a range of partners,
2018. Mongolia is the only formerly communist country in
including the United States and other countries such as
Asia classified as “free” by the U.S. nongovernmental
South Korea and Japan. Some Members of Congress have
organization Freedom House. According to Freedom
expressed support for expanding U.S. engagement with
House, political rights and civil liberties in Mongolia “have
Mongolia.
been firmly institutionalized.” While observers have
generally considered elections in Mongolia to be free and
Figure 1. Mongolia at a Glance
fair, the Economist Intelligence Unit categorizes the
country as a “flawed democracy,” citing corruption and
political volatility.
Economy
Mongolia’s economy is highly dependent on extractive
industries, and the country sends most of its exports to
China, rendering it vulnerable to fluctuations in commodity
prices and developments in the Chinese economy.
Mongolia has extensive deposits of minerals including
Sources: Central Intel igence Agency, The World Factbook, 2022. Map
copper, gold, coal, molybdenum, uranium, tin, and
created by CRS.
tungsten. While Mongolia’s economy traditionally was
based on herding and agriculture, the mining sector now
Political Background
accounts for over 25% of the country’s gross domestic
Mongolia’s political system is “semi-presidential,” with a
product (GDP).
parliament and prime minister as well as a popularly elected
president. The Mongolian prime minister is the head of
The World Bank calculates that Mongolia’s GDP
government with primary responsibility for executive
contracted by 4.4% in 2020 as a consequence of the
ministries, while the president plays a primary role in
COVID-19 pandemic, with a weak recovery of 1.4%
foreign policy, chairs the National Security Council, and
growth in 2021. The World Bank projects that Mongolia’s
serves as the commander in chief of the armed forces.
GDP will grow by a modest 2.5% in 2022, hampered by
border closures due to China’s zero-COVID policy and the
Although Mongolia has a multiparty system, since the
impact of the war in Ukraine through higher prices of
country’s democratization in 1990 political power has
imported food, fuel, and fertilizers. The World Bank
alternated between the two major parties, the Mongolian
forecasts that economic growth will accelerate and exceed
People’s Party (MPP, the successor to the MPRP) and the
6% annually in 2023-2025.
Democratic Party (DP). The DP and the MPP have
established a track record of peaceful transitions of power.
Mongolia remains economically dependent on Russia and
For most of its democratic history, Mongolia had a divided
China. China accounts for 89% of Mongolian exports and
government, with the presidency and the parliamentary
33% of Mongolian imports. Russia is Mongolia’s second-
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Mongolia
largest source of imports, accounting for 28% of the total,
to favor neutrality, while some express pro-Russian or pro-
and provides over 90% of Mongolia’s energy imports.
Ukrainian sentiments.
As Mongolia has developed economically, Ulaanbaatar has
U.S. Assistance
become one of the world’s cities with the highest levels of
U.S. assistance to Mongolia supports a range of programs
air pollution, fueled by coal-heated dwellings (gers or
whose aims include modernizing the country’s energy
yurts), coal-fired power plants, and automotive exhaust.
sector, promoting economic diversification, building the
The growing number of cashmere goats, coupled with
capacity of law enforcement agencies, supporting
persistent drought, has contributed to overgrazing and the
Mongolia’s border security capabilities, and furthering
degradation or reduction of Mongolia’s grasslands.
military professionalization. According to the State
Department, approximately 120 Mongolians travel to the
Mongolia’s International Relations
United States every year on U.S. government-funded
Mongolia has long sought to maintain good relations with
educational, professional, and cultural exchange programs.
Russia and China, while pursuing a “third neighbor” policy
The State Department regards Mongolia as a “priority”
that emphasizes developing relationships outside of its
recipient in East Asia for Foreign Military Financing and
immediate neighborhood. Mongolia describes the United
International Military Education Training programs. The
States as its most important “third neighbor.” The United
Biden Administration’s budget request for FY2023 includes
States and Mongolia upgraded their bilateral relationship to
$13 million in total assistance to Mongolia, compared to an
a Strategic Partnership in 2019. The House of
estimated $13.3 million allocated in FY2022.
Representatives and the Senate passed resolutions
reaffirming the strategic partnership between the United
Between 2008 and 2013, the Millennium Challenge
States and Mongolia in the 116th (H.Res. 1100) and 117th
Corporation implemented a five-year, $285 million
(S.Res. 36) Congresses. The United States was the fifth
compact with Mongolia targeting property rights,
country with which Mongolia established a strategic
transportation, energy, education, and health. A second,
partnership, following Russia (2006), Japan (2010), China
five-year $350 million compact to build critical water
(2014), and India (2015). The U.S. State Department
infrastructure in Ulaanbaatar entered into force in 2021.
describes Mongolia as “a steadfast U.S. partner,” citing
Mongolia’s military deployments with the United States to
Mongolia is one of 21 countries whose legislatures
Afghanistan and Iraq, and terms Mongolia “an important
participate in the House Democracy Partnership, a
partner in upholding a free, open, and inclusive Indo-
bipartisan commission of the U.S. House of Representatives
Pacific.”
that seeks to support the development of effective,
independent, and responsive legislative institutions.
Mongolia’s foreign military relations complement the
country’s “third neighbor” policy, and participation in
U.S.-Mongolia Trade
global peacekeeping operations is part of the country’s
U.S. trade in goods with Mongolia totaled $168.1 million in
multilateral diplomacy. Mongolia actively cooperates with
2021, including $19.6 million in Mongolian exports to the
NATO on issues including counterterrorism, non-
United States. Mongolia is a beneficiary of the U.S.
proliferation, and cybersecurity through an Individual
Generalized System of Preferences (GSP) program, which
Partnership and Cooperation Programme. Mongolia is also
expired on December 31, 2020, and is currently pending
an observer in the Russia- and China-led Shanghai
reauthorization. Major Mongolia exports that are eligible
Cooperation Organization. Since 2003, Mongolia has
for GSP benefits include tungsten, one of Mongolia’s top
hosted the annual Khaan Quest multinational military
export items to the United States; certain handmade or
exercise, co-sponsored by U.S. Indo-Pacific Command and
handicraft textile products; and some nonapparel items that
designed to promote regional peace and security in
use cashmere or furs.
Northeast Asia. After a two-year hiatus due to the COVID-
19 pandemic, the most recent iteration of Khaan Quest took
The U.S. government seeks to assist Mongolia in
place in June 2022, with 15 countries participating.
diversifying its economy in order to decrease dependence
on China. The Mongolia Third Neighbor Trade Act, first
According to the State Department, the growing military
introduced in the 115th Congress in 2018 and reintroduced
cooperation between the United States and Mongolia
in the 116th and 117th Congresses in 2019 and 2021,
“centers on further developing Mongolia’s already
respectively, would facilitate the export of cashmere from
impressive capacity to contribute to U.N. peacekeeping
Mongolia to the United States, enabling Mongolia to
operations.” Since 2002, Mongolia has sent more than
diversify its exports. While Mongolia is the world’s second-
18,000 troops to U.N. peacekeeping operations around the
largest cashmere producer after China, most of its cashmere
world, a contribution the United Nations terms
is exported in raw form and processed in, and then re-
“significant.” As of 2021, Mongolia was the 23rd largest
exported from, China. Mongolia’s Ministry of Foreign
contributor of troops to U.N. peacekeeping operations.
Affairs states that, if passed, the bill would “support the
Mongolian economy by creating jobs, diversifying export,
Analysts see Russia’s ongoing war against Ukraine as
and contribute to expanding trade and economic
placing Mongolia in a difficult diplomatic position.
cooperation between Mongolia and the United States.”
Mongolia’s government has been largely silent on the
conflict, and has continued to pursue multilateralism. Public
Maria A. Blackwood, Analyst in Asian Policy
opinion appears divided, with many Mongolians appearing
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Mongolia


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https://crsreports.congress.gov | IF10926 · VERSION 10 · UPDATED

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