Mongolia Heads to the Polls

Economic Discontent and the Presidential Vote

Gers, traditional Mongolian tents, are seen on a hill in an area known as a ger district in Ulan Bator June 28, 2013. Approximately 60 percent of the population of Ulan Bator live in settlements known as ger districts and in many cases residents have limited access to basic services such as water and sanitation. Carlos Barria / Reuters

Mongolia’s presidential election on June 26 comes amid economic turmoil, and the corruption, inequality, and poverty that have plagued the country since 1990 will significantly influence how the public votes. Just two weeks ago, a parliamentary working group charged that the Mongol Bank had lost approximately $1.5 billion, or about 50 percent of the government budget, within four years. Its reserves declined from $4.1 billion in 2012 to $1.3 billion in 2016. Nonperforming commercial loans to 45 companies that did not spend the funds on their specific projects, a tight monetary policy aimed at price stability, and outright fraud appear to explain the deficit.

It is no surprise, then, that the euphoria associated with past growth and earlier optimistic economic forecasts has disappeared. The 17.3 percent increase in GDP in 2011 has come and gone, and the inaccurate International Monetary Fund (IMF) projections of  15.7 percent in 2013 turned out to be 11.7 percent; by 2015, the rate of growth had slipped to 2.3 percent, and the estimate for 2017 is now negative 0.2 percent growth. As I’ve previously written in Foreign Affairs, the astonishing increase in GDP back then was largely based on the export of coal, copper, and gold, “making Mongolia highly dependent on the vagaries of global demand for minerals and ores and, perhaps even more important, increasingly reliant on China.” Over the past five years, China’s rapid economic growth has stalled and its demand for minerals has declined, precipitating an economic crisis in Mongolia.

Even the earlier 17.3 percent GDP growth was illusory because most of the profits accrued to foreign mining companies and to a small Mongol elite. Since the communist system’s collapse in 1990, economic inequality has continued to increase. The capital city of Ulaanbaatar now boasts a Shangri-La Hotel, Louis Vuitton and other luxury stores, high-rise office buildings, and expensive condominiums. Yet it is surrounded by so-called ger districts, where residents live in traditional Mongolian tents, or occasionally in sheds, without paved roads or streets, sufficient access to running water, regular sanitation pickups, or electricity. The residents of these communities

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