As part of the Grimshaw Society’s student delegation trip to Mongolia, Jack August McEachern, an MSc International Political Economy (Research) student at LSE, offers their opinion on the international context of Mongolia.

Photo of Mongolia by Jack August McEachern

Since its democratic revolution, Mongolia has carved out its identity as an independent nation amidst neighbouring superpowers Russia and China. However, as an emerging economy, its energy and raw materials sectors are heavily influenced by foreign capital, fostering a dependency on international markets and geopolitical dynamics. Mongolia’s self-development hinges on genuine independence in the global economy, starting with control over its own resource economy.

Mongolia’s self-development hinges on genuine independence in the global economy, starting with control over its own resource economy.

As a landlocked country in East Asia, bordered by Russia and China, Mongolia is abundant in critical minerals, coal, and oil. Yet, these resources are largely underexploited, and its production capacity remains stagnant. Like many developing nations, Mongolia is rich in resources but poor in wealth, reliant on foreign capital and expertise to develop its industry. Mongolia must navigate the tension between independence and self-development while being dependent on economic partners.

Like many developing nations, Mongolia is rich in resources but poor in wealth, reliant on foreign capital and expertise to develop its industry.

The Mongolian-Chinese relationship exemplifies this. The Chinese economy is a gravitational force in the region, pulling Mongolia into its orbit. Approximately 82% of all Mongolian trade is with China. With nearly exclusive market power over the Mongolian economy, Chinese policy dictates economic downturns, strategic decisions, and the speed of industrialisation. The Mongolian economy must rely on China for continuous demand of coal and copper, exposing itself to significant fluctuations in commodity prices, sectoral shifts, and global crises.

This trend deepens with the deployment of the Belt and Road Initiative (BRI). The Steppe Road programme, Siberia 2 pipeline, and the China-Mongolia-Russian Economic Corridor enhance the development prospects of the Mongolian economy. However, this comes at the expense of interdependence and significant debt accumulation, posing risks to Mongolia’s long-term financial stability.

Economic power translates neatly into political leverage. Mongolian interactions with the Dalai Lama and other Tibetan religious leaders have led to direct diplomatic pressure from China, eventually culminating to the closure of a key border crossing. Moreover, it prevents the fostering of relationships with Western powers; limiting military operations, strategic partnerships, and trade.

As if Mongolia were a gameboard, neighbouring nations play for power and wealth. The placement of economic projects, their structure, and ultimately who benefits from them are determined by foreign capital.

Similarly, Russia maintains a firm economic grip on Mongolia. Supplying nearly all the gas consumed and providing essential technology for electricity, Russia’s influence is pervasive. The Russian invasion of Ukraine disrupted oil markets, forcing Mongolia to accept increases in oil prices and, at one point, leading to daily electricity cuts in the capital and other regions. Russia has consistently obstructed Mongolia’s energy production development, boycotting a planned hydropower plant over environmental concerns for Baikal Lake. Additionally, Russia lobbied for the Nuclear Energy Law, blocking a Canadian firm from developing a uranium mine in Mongolia.

As if Mongolia were a gameboard, neighbouring nations play for power and wealth. The placement of economic projects, their structure, and ultimately who benefits from them are determined by foreign capital. These dynamics only increase the temperature of internal politics, where corruption, weak institutions, and wealth inequality set the foundation for an increasingly authoritarian government.

The democratisation of the early 1990s and market liberalisation promised Mongolia a future of hope and prosperity. Yet, as the nation integrates deeper into the global economic system, it faces a starkly different reality. Mongolia must strategically reclaim control over its resources and resist the encroachment of foreign interests. The nation’s development and true independence depend on this critical endeavour.

Mongolia must strategically reclaim control over its resources and resist the encroachment of foreign interests. The nation’s development and true independence depend on this critical endeavour.

This article represents the views of the author, and not the position of the Department of International Relations, nor of the London School of Economics.