Mongolia in the 1990s: from Commissars to Capitalists?

by Morris Rossabi

The Mongols' natural environment has shaped their history. Their location in North Asia, with its extremes in temperature and resultant short growing season, precludes intensive agriculture. Grasslands in the central part of the country have traditionally sustained most of the Mongol population, who tended sheep, goats, yaks, horses, and camels. Mongol herdsmen traveled to seek water and grass for their animals. They migrated from two to as many as ten times a year to find sufficient pasturelands, and such frequent migrations dictated that the groups be relatively small and readily mobile. Similarly, the Mongols eking out their livelihood in the Gobi desert, south of the steppelands, or in the forest and lakes region, north of the steppes, journeyed around the countryside and were organized into small units.

Influence of the Past

Lack of Unity
A country three times as large as France with a population of a few hundred thousand in early days, Mongolia encountered great difficulties in fostering a country-wide identity and in accepting unified rule. The enormous size of Mongolia contributed to localism and local identity, as individual herders naturally identified with their own groups and not with a larger Mongol entity. Unity under these economic and political circumstances offered few benefits. Organization centered around specific tribes, with leadership provided by a chieftain and occasionally a shaman. Defense against bellicose neighbors, the Turkic rulers of Central Asia or the more expansionist Chinese dynasties, would prompt the inhabitants of Mongolia to join together to safeguard their pasturelands or their commercial interests. A belligerent Mongol tribe facing threats posed by ambitious rival chiefs would also cause other tribes to form a confederation for self-protection. Finally, a charismatic leader could persuade tribes to band together for forays designed to obtain booty. These alliances were temporary; once they achieved their immediate objectives, they disbanded. Unity proved elusive because no overarching ethnic or national loyalty to one leader and his descendants existed. Loyalty to one specific individual did not translate into support for any dynasty or hereditary principle he might seek to establish.

Thus, the rise of Chinggis Khan and the creation of a great Mongol confederation were aberrations. An ecological crisis, commercial conflicts with neighbors, and a reported belief or injunction from the Sky God to Chinggis to dominate the world probably prompted the Mongols' explosion from Mongolia early in the thirteenth century. A powerful cavalry, innovative military tactics, and the vaunted mobility they had cultivated as herders helped them to carve out the largest contiguous land empire in world history, stretching from Korea and Vietnam in the East to Russia and modern Syria in the West. Their confederation endured for at most two generations. Strong supratribal and ethnic identity and the allegiance to a dynasty or to an Imperial state, not one specific leader, simply did not develop. Transfer of power was not smooth, partly because the Mongols had not decided upon a regular, orderly system of succession. Moreover, many Mongols saw scant benefit in allegiance to a large empire or to a Khan. They had more parochial loyalties to a specific region or to a tribal leader. Thus, within two decades after Chinggis Khan's death, the Mongol empire had degenerated into wars of Khan against Khan, brother against brother, and cousin against cousin.

In turn, the elite who saw benefits in unity became increasingly estranged from ordinary Mongols. Seeking to rule rather than to plunder the vast domains they had subjugated, the elite recognized that adoption of and adaptation to some of the political institutions, rituals, and religions of the people the Mongols had vanquished were advantageous. They thus began to be Sinicized or "Persianized," settling in towns, oases, and cities and gradually abandoning their traditional nomadic pastoralism. Identifying with the sedentary local populations, they increasingly lost touch with their herder brothers and cousins, which led to divisions and battles among and the ultimate weakening of the Mongols. The elite also recognized that the Mongols lacked the technical and adminis-trative skills to rule the vast domains they had conquered and needed foreign advisers and managers. The recruitment of Chinese, Tibetans, Central Asian Turks, and Persians alienated traditional-minded Mongols, widening the gulf between the two groups.

Such internal divisions, rather than decisive defeats in battle, led to the collapse of the Mongol empire. Though the Pax Mongolica in Eurasia contributed to the first direct commercial, cultural, and scientific interchanges between Europe, West Asia, and East Asia, the indigenous peoples, capitalizing on the disunity among the Mongol rulers, began to rebel. By 1368, the Mongols had been compelled to withdraw from China, Central Asia, and West Asia, and by the fifteenth century their rule over Russia effectively ended.

Retreating to Mongolia, the Mongols confronted the same dilemmas. Unity continued to prove elusive, and the Mongols fragmented into different, often combative groups with no all-embracing Mongol identity. Late in the sixteenth century, one Khan sought to use religion as a unifying force. He invited what eventually turned out to be the Third Dalai Lama to Mongolia to instruct and perhaps to convert the Mongol elite to Tibetan Buddhism. The nobles as well as commoners converted virtually en masse, but religious homogeneity did not translate into political unity. Mongols remained in disparate and relatively weak re-gional groups.

The expansionism of both the Tsarist empires of Russia and the Qing dynasty of China threatened and eventually engulfed the vulnerable and disunited Mongol peoples. By 1634, China gained control over the Chahars of Inner Mongolia, and by 1691 it dominated the Khalkha or Eastern Mongols, currently the largest of the groups in Mongolia. The Khalkha Mongols were divided into at least four often-conflicting Khanates, preventing a unified challenge to Qing armies. Even the Bogdo Gegen, the leader of the Mongol Buddhists, could not coerce or cajole the Khans into an alliance. More divisions plagued the Zunghar or Western Mongols, as the Torghuud, Khoyid, and Khoshuud, among others, squabbled and fought over pasturelands, rights to water, and the political ambitions of rival leaders. In 1757, Qing forces overwhelmed most of the Western Mongols while Russia incorporated the rest into its eastern domains.

China dominated Mongolia until 1911. Seeking to rule, the Qing court initiated policies designed to transform Mongol society. It started by limiting the migrations of the herders, believing that restrictions on movement would facilitate control. It also encouraged the growth of towns as an additional means of regulating the mobility of the population. Towns and the attendant merchant class and bureaucracy undermined the power of the nomadic herdsmen. The court then tried to exacerbate the divisions among the Khalkhas by appointing new and more Khans, each with equivalent powers and with small groups to lead. Such fragmentation contributed to the disunity that had plagued the Mongols for centuries. The court also supported the Buddhist hierarchy, attempting to use Buddhism as a mechanism of control. Assuming that Buddhism's nonviolent message would foster a more docile Mongol population, it generally approved of the growing power of the Buddhist monasteries and of the Bogdo Gegen, the leader of the Buddhist community. With such support, the monasteries by 1900 dominated about one-fifth of the total wealth of the country. Some of the larger monasteries developed into small towns or cities and thus needed supplies. Chinese merchants increasingly became the main providers of such products to the monasteries and herders and simultaneously exploited Mongol herdsmen who needed goods throughout the year but whose primary assets of animal products could be marketed only in summer. Supplying the Mongols with credit at extremely high rates of interest, they rapidly forced the herdsmen into lifelong debt. The Chinese merchants contributed to poverty in the country and earned the hostility of most Mongols. Animosity toward the Chinese often erupted into attacks and riots in the late nineteenth century.

The Mongols achieved independence from Chinese control with the Chinese Revolution of 1911, but such autonomy proved to be temporary. Though Mongol leaders sought to capitalize on the disarray in China to liberate themselves, the legacy of disunity continued to hobble them. Power-hungry nobles, avaricious monks, and corrupt officials fought among themselves, preventing the development of unified leadership. The resulting instability permitted Chinese military commanders, White Russian soldiers, and Russian Communists to meddle in the country's affairs from 1911 to 1921. Finally, in 1921, a small group of Mongols, with the assistance of Lenin and the Russian Red Army, overwhelmed both Mongol and foreign contestants for power and founded the Mongolian People's Republic in 1924. The new leadership moved against the nobility and the Buddhist hierarchy while seeking to gain control over the herdsmen by restricting their mobility.

The Communist Legacy

For the next seventy years, the Mongol Communist leadership modeled its rule on that of the USSR. In the 1930s, Marshal Choibalsan, often referred to as Mongolia's Stalin, initiated a ruthless assault on Buddhism, which was facilitated by the lack of a Bogdo Gegen; the last such reincarnation had died in 1924, and the Communists did not permit the reinstallation of another "Living Buddha." The state expropriated much of the property, including land, art works, and animals, from the Buddhist lamaseries, ordered the destruction of most of the monasteries, and sanctioned the killing of recalcitrant monks. It suppressed several monastic rebellions that erupted in response to its anti-clerical and anti-religious policies. A flourishing religious establishment numbering over 100,000 monks dwindled to less than a thousand by the late 1980s. To be sure, the avariciousness, obscurantism, and oppressiveness of the Buddhist hierarchy in its heyday had alienated many Mongols and undermined potential support. The government proved to be right in its assertion of the "weak hold religion had on the people,"1 as fervent Buddhists did not rally behind the monasteries during their time of troubles.

The rest of the population was not spared. Like the victims of the Moscow purge trials of the 1930s, actual or potential dissidents and so-called anti-Party and anti-government activists suffered. One conservative source estimates that 35,800 were killed or imprisoned from 1930 to 1950; others contend that as many as 100,000 died during these purges. These figures do not include the deaths of herdsmen who resisted efforts to collectivize the pastoral economy.

Initiated in the 1930's shortly after the similar collectivization of agriculture in the USSR, the collectives met stiff resistance from the herders, many of whom killed their own animals instead of turning them over to the collectives. Great loss of life and a disastrous decline in the number of livestock prompted the government to call a halt to this effort. Two decades later the government resumed the policy of collectivization through the imposition of higher taxes on private herds, and by the late 1950's the vast majority of herders had been compelled to join negdels (or collectives). It turned out that they "enjoyed an amazing range of benefits from the socialist state,"2 or so official sources asserted. The government initiated compulsory education and provided free boarding schools for the herders' children. It also furnished the herders with medical care, maternity leave, and pensions. In addition, the new policy, ironically, did not deviate too sharply from traditional practices. Like the earlier system, collectivization also permitted no private ownership of grasslands but did not interfere with the herders' decisions about tending of the animals. Yet the herds did not increase dramatically, partly because of the natural catastrophes (droughts, heavy snowfalls, appallingly cold winters, etc.) that periodically afflicted the steppelands, the lack of incentives for nomads, and the state control over markets. The state converted herdsmen into wage-earners and continued to pay them regardless of performance, contributing to the lack of incentives.

The same inefficiencies plagued much of the rest of the economy. The Soviet Union and eventually the Eastern European Communist states subsidized the principal industries that began to be developed in the 1950's. Extractive and animal-related industries predominated. In 1976, a copper and molybdenum complex, the largest such development, opened in the new city of Erdenet. Cashmere, carpet, camel wool, and coat factories were established in the capital city of Ulaan Baatar and other small cities and towns. Urban growth, with Russian-style buildings, accompanied this industrialization. Ulaan Baatar, with several thousand residents in the 1920's, had a population close to 600,000 by the end of the Soviet period in 1990. With Soviet assistance, the Mongols built the industrial cities of Darkhan, with a population of 80,000, and Erdenet, with about 65,000 inhabitants. Soviet control manifested itself in commerce as well. More than 90% of Mongolia's trade until 1990 was with the Communist bloc. An unfavorable balance of trade for the Mongols, due to their need to import oil, heavy machinery, and such consumer goods as flour and sugar, resulted in Soviet subsidies and loans, offering the USSR great leverage over the Mongol economy. Russians advised, if not dominated, most of the large-scale industrial projects, many of which turned out to be poorly managed and inefficient. Faced with an enormous territory and a minuscule population, the Russian advisers did not propose substantial investments in infrastructure and built few roads, railroads, and bridges. Because Russia provided subsidies for 30% of Mongolia's gross domestic product and much of its technical expertise, Mongolia could not readily detach itself from Soviet influence.

Russian dominance over the Mongol economy facilitated control over the rest of society. In the mid-1960's, Russian troops were stationed in the country, reputedly to protect Mongolia from a hostile China but also to offer the USSR greater leverage. As more and more Mongol professional and technical personnel received their higher education in the USSR, the Soviets achieved even greater influence and began to manipulate Mongol culture. In 1941, it coerced or cajoled the Mongol government to adopt the Cyrillic alphabet and to discard the traditional Uyghur script for written Mongolian, separating the Mongols, in part, from their cultural heritage. The USSR launched an even greater assault on Mongol heritage by encouraging a reevaluation of Chinggis Khan and the Mongol empire. This new interpretation depicted the first unifier of the Mongols as a rapacious plunderer who represented the feudal ruling classes, whose invasions retarded the development of the vast territories he and his troops had subjugated. Mongol portrayal of Chinggis as a great national hero and deification of the founder of the Mongol empire were condemned. Chinggis was thus "banished from Mongolia's consciousness and history books by Mongol leaders [acquiescing] to Soviet allies who loathed the memory of 300 years of fierce Mongol subjugation."3

The Mongols' Russian orientation impinged upon relations with the People's Republic of China. Establishment in 1949 of another Communist state on Mongolia's borders appeared to be beneficial. China abundantly offered the labor and technical expertise that the Mongols lacked. Having suffered when the Soviets could provide scant assistance during the Second World War and in the immediate postwar period, the Mongols anticipated valuable gains from a new China. The two governments signed agreements by which China recognized the independence of Mongolia and offered economic assistance. The Chinese provided loans and workers and engineers for construction projects. Trade between the two neighbors expanded, and geographical propinquity seemed to portend even greater increases. However, because the Sino-Soviet conflict required the Mongols to choose between the two, they began in 1964 to expel Chinese professionals and laborers, accusing them of espionage and other crimes, and to sever diplomatic and commercial dealings with China. The Mongol government moved resolutely into the Soviet camp.

The break with China inevitably resulted in greater dependence on the USSR for the next twenty-five years. Y. Tsedenbal, the First Secretary of the Mongolian People's Revolutionary Party [MPRP], who remained in power from around 1952 until 1984, maintained close relations with Mongolia's northern neighbor, which his Russian wife also cemented. Mongol students continued to receive advanced training and education in the Soviet Union. The Mongol economy required substantial subsidies from the Soviet bloc. This command economy produced inefficient industries, few consumer goods, and scant increases in the size of the Mongol herds. The one-party system limited dissent and contributed to human rights abuses. On the other hand, the government provided extensive medical, educational, and welfare benefits to the young, women, the elderly, and indeed much of society. A growth in population, a longer life span, and a high rate of literacy were byproducts of such state policies. Yet the influence of the USSR was the most critical feature of this period.

Thus the changes in Soviet policy in the 1980s generated by glasnost and perestroika reverberated in Mongolia. In 1987, Mongolia initiated diplomatic relations with the U.S. and negotiated protocols for increased trade and scientific cooperation with China. Simultaneously, the USSR began to withdraw some of its troops. In 1988, government officials lambasted their previously all-powerful rulers Choibalsan and Tsedenbal for promoting a "bureaucratic centralism" that resulted in economic stagnation, low productivity, and shortages of goods, and for persecuting and purging tens of thousands of people. By late 1989, such criticisms spread throughout Mongol society. In December of that year, students and intellectuals demonstrated, seeking the abolition of the command economy and the one-party system in favor of a market economy and political pluralism. Their espousal of democracy and human rights also made its mark on the government. Within a few months, the General Secretary of the MPRP pledged to resign and to call for free multi-party elections. The new MPRP leadership criticized the Tsedenbal regime and portrayed itself as a supporter of reform, democracy, and human rights. Its efforts ulminated in victory in the first free elections in Mongolian history in July of 1990. The new Great Hural, the parliamentary body, elected P. Ochirbat as president and D. Byambasuren as prime minister. Both asserted that they would cooperate with the Asian Development Bank, the International Monetary Fund, and other international organizations to move toward a market economy and political pluralism.

Economic shock therapy, 1990-92

The new government, which remained in power for about two years, vigorously pursued reform but, partly due to factors beyond its control, became a scapegoat for the precipitous economic decline that afflicted the country. It tolerated other political parties and recruited opposition experts, specifically economists, for leading positions in the administration. It also prepared and enacted a new constitution that guaranteed human and economic rights and established a framework for truly representative institutions. Government controls on the media were relaxed, and the new leadership appointed a commission to investigate and report on the crimes committed during the period of purges. With the support of the young and somewhat inexperienced economists, the government launched a wide-ranging program of privatization. Appalled by the low productivity in the countryside, it sought to disband the negdels to provide the herders with their own animals and to develop a market economy. The herders initially balked, fearing that marketing their products could be cumbersome, that privatization would eliminate state-guaranteed incomes and would necessitate payment of taxes, and that the new system would jeopardize their social welfare benefits. They eventually formed shareholding companies, which managed sales and marketing and reputedly protected the herders' interests while permitting them ownership of animals. However, critics complained that the companies simply maintained the authority of the old officials. Similarly, privatization of industries did not proceed as smoothly as anticipated. The government issued vouchers to be used to purchase shares in previously state-owned enterprises, but the implementation of the plan was mismanaged, inefficient, and corrupt. In addition, because many families invested the vouchers in their own enterprises, the wide ownership of companies that the economic reformers had counted on did not materialize. The economic reformers themselves made a colossal error, engaging in speculation that resulted in the loss of more than 80% of the country's foreign currency reserves.

The Soviet withdrawal of economic and military aid truly undermined the government's efforts. The sudden cessation of such assistance, which amounted to more than 30% of the country's gross domestic product, exerted enormous pressure on the government and society. Severe fuel shortages idled factories, and unemployment rose dramatically while production declined. Consumer goods were in short supply, and the resulting inflation battered the native currency, the tughrik. The economic disarray led even to rationing of meat in the cities, as hoarding, poor distribution and transport, and scant incentives for herders to market their animals created these shortages.

Such dislocations alienated the Mongol population, which blamed the privatization, the market economy, and the attendant changes for the growing economic woes of the country. The old MPRP leadership fueled the criticism with attacks on the economic shock therapy engineered by the government. With the number of poor families increasing, real wages declining by more than 50%, successful enterprises evading taxes, government expenditures on public works and social services dropping, and output, imports, and exports all slumping, the government was vulnerable. Without the support of donor nations and international organizations, it would have faced even greater reversals.

The initial euphoria in both government and society about reaffirmation of the Mongol heritage began to fade as economic conditions worsened. Scholars and the general public had rehabilitated Chinggis Khan and had depicted him as a heroic figure and father of the Mongol empire. Films, plays, and even popular songs dealt with his life and significance, and his reputed portrait was ever present in a variety of milieu, from hotels to vodka labels to paper money. Once this deification of Chinggis had become pervasive, the consolation it provided in difficult times was limited. Officials also announced grandiose plans to restore the use of the Uyghur script and to abandon the Cyrillic alphabet, but the practical difficulties, including expenses and greater separation from the rest of the world, dampened the original popular enthusiasm. The ending of anti-religious propaganda led to the reopening of Buddhist monasteries, a slight increase in the number of young people assuming a religious vocation, and a rise in the total number of worshippers in temples, but no mass support for Buddhism arose, and a Buddhist political party founded during this time gained a scant following.

Attempts at stability, 1992-96

The economic crises and the unfulfilled expectations toppled the government in 1992 during the first parliamentary elections under the new constitution. Representing the critics of the new policies, the MPRP won 71 of the 76 places in the Hural, though it received only 60% of the popular vote. Nonetheless, the succeeding government slowed down the transition to a market economy and privatization. It curtailed the economic shock therapy of the previous regime and emphasized stability. Its principal economic goal was to compensate for the losses incurred as a result of the withdrawal of Soviet aid. Assisted over the next three years by rising prices for copper and cashmere, two principal exports, the government stabilized the economy. Inflation was reduced from 320% in 1992 to about 70% in 1994; the gross domestic product rebounded from losses in the period 1990-1992 to modest gains by 1994; consumer goods were more readily available, and most rationing of products was abandoned, though prices on such essentials as meat and flour increased; privatization of small-scale enterprises persisted, but privatization of large companies lagged somewhat; and entrepreneurial herders, aware of the high prices for cashmere, expanded the size of their herds from 25 million in 1991 to 27 million in 1994, with increases in the number of goats to satisfy the demand for cashmere. Grants of aid from Japan and the U.S. and credits from Russia also benefited the government.

The government's political policies appeared to be less draconian in this period than during the era of the one-party system. Government reaction to a hunger strike in April of 1994 revealed its toleration of differing opinions. Prime Minister Jasrai did not send troops to remove the strikers from the main square in the capital. Instead the government negotiated with the strikers and pledged to investigate cases of government corruption, to offer dissidents and other political parties more access to the media, and to amend the election law to make it truly reflect the popular vote. Similarly, the government sought to defuse, rather than to suppress, a teachers' strike in 1995. It granted a 40% raise to the teachers, ending what could have been an even more tumultuous crisis.

Yet the government did not cope effectively with several serious problems. Real wages had not kept up with inflation, and unemployment had continued to rise. Officials estimated unemployment at 7% of the labor force, but more realistic appraisals pegged the rate at 20% or more. Another critical problem was government revenue, which an International Monetary Fund report succinctly described: "growing private sector economic activity in agriculture, trade and services, and the informal sector largely escaped taxation."4 The resulting revenue shortfalls led to sharp reductions in budgetary allocations for educational, medical, and social services. These services, which had been the pride of the Communist era in Mongolia, declined. Medicines were in short supply, the rate of infant mortality rose, and at least 15% of children 8 to 15 years of age were not attending schools, partly because of inadequate classroom facilities and teachers and partly because of newly-imposed costs for enrollment. With declining government revenues, the social net for the elderly, the poor, widows, and orphans began to disintegrate. As one foreign observer noted early in 1995, "the country lacks a coherent and broad-based social policy to address these and other important issues such as health care and education."5 Corruption and a banking scandal in which nepotism and favoritism led bank officials to make unsecured loans damaged the image of the government.

By 1996, the government faced a grave crisis. Corruption, inefficiency, and mismanagement plagued the economy, and the government did not levy and collect sufficient revenue to fulfill its responsibilities. Erosion of social services, deterioration in the status of women, intellectuals, and students, and crumbling facilities for medical and scientific research also contributed to disillusionment with the MPRP. Unrest and social fragmentation, attested to by the growing numbers of abandoned children, a higher incidence of crime and prostitution, and a dramatic increase in unemployment, afflicted the towns and cities, which endured most of these hardships. Herders in the steppelands appear not to have been as devastated, though the disarray in the urban areas gradually filtered into the less settled regions as well.

Despite these manifold problems, most observers confidently predicted that the MPRP would emerge victorious in the June 1996 parliamentary election. However, a growing segment of the electorate had become disgruntled. The Sant Maral Foundation, a conductor of surveys, discovered a slippage of confidence in the MPRP. Only about 30-35% of those surveyed believed that the MPRP was the most competent of the parties to cope with unemployment and the decline in living standards and to bolster the economy and education. The survey concluded that "practically all the parties have lost a substantial part of their former electorate but in absolute figures MPRP has suffered the heaviest losses since 1992."6 Yet most leaders believed that the MPRP's victory was a foregone conclusion. The two principal opposition parties, lacking confidence in their ability to gain sufficient electoral support to defeat the MPRP, joined together in a Democratic Union to have greater leverage in dealing with the projected majority party.

The ouster of the MPRP, June 1996

The overwhelming victory of the Democratic Union in the election confounded observers and perhaps surprised the leaders of the coalition. The two parties and several minor ones wound up with 50 seats, while MPRP representation decreased from 71 to 25 seats. The Democratic Union's success may be attributed to the activities of domestic and foreign nongovernmental organizations, including the Konrad Adenauer Stiftung, which initiated a Voter Education Project and promoted efforts to get out the vote. The International Republican Institute, an agency in Washington, D.C., provided assistance in campaign strategy, "to convince squabbling oppostition forces to form a coalition"7 and to devise a "Contract with the Mongolian Voter," a document similar to the Republican Party's 1994 "Contract with America."

The transition from MPRP to Democratic Union proved to be peaceful and smooth, an important step toward democracy. The new government rapidly initiated its goal of moving toward a market economy, through shock therapy, if necessary. Privatization of enterprises, land, and housing would be among its principal objectives, and it would seek to enact laws to facilitate this shift in rights to property. Government leaders also emphasized the creation of a fairer and more broad-based tax structure and the rooting out of corruption in the tax system. R. Gonchigdorj, the Chairman of the Mongolian Social Democratic Party and the newly-elected Chairman of the Hural, asserted that the main task of the government was to generate a favorable environment for business; D. Ganbold, a member of the Hural and one of the architects of the policy of market economy, added that the government needed to focus on the economy, perhaps to the detriment of the social sector.8 The state ought to foster economic growth, which might mean temporary but substantial declines in expenditures on educational, health, and other social services.

Under the leadership of Prime Minister M. Enksaikhan, the government sought to implement its vision. It removed controls on energy prices, leading to a 50% rise in the cost of fuel and electricity. It closed down two of the several poorly-managed and possibly corruptly-run banks, which were among the largest in the country but which were associated with the MPRP opposition (giving rise to rumors that such closings were politically motivated). Accelerating the privatization of large state enterprises, it also enacted laws facilitating privatization of housing and lands in urban areas. It planned to adjust the levels of pensions and perhaps to reduce them. Yet the government faced daunting problems. Prices for cashmere and copper, two of the country's most important exports, declined; unemployment continued to soar; and by one estimate 36% of the population lived below the poverty line. Forest fires devastated northern Mongolia in Spring of 1996, and plague and cholera epidemics afflicted the country in summer. However, the government resolutely pursued its economic shock therapy and publicly acknowledged that its policies would cause considerable pain and dislocation. The May 1997 victory of the MPRP leader N. Bagabandi in the presidential elections may reflect some of the public's uneasiness with the effects of the Democratic Union policies.

Present conditions and prospects

It is difficult to foretell future prospects for the present government and for Mongolia in general. Like the earliest Mongol Khans, the present leadership still has to contend with unpredictable environmental conditions, which may undercut the best laid plans. In addition, Mongolia is increasingly tied to the regional and indeed world economy and will thus face the vicissitudes of the market demand for its exports of copper, cashmere, and, potentially, oil. Regional conditions, including relations with both Russia and China, add still other uncertainties to any predictions.

Bearing these vagaries in mind, a general assessment of Mongolia's future prospects which also acknowledges the uncertainties may be organized into the following categories:

  • Politics: The 1990 collapse of the one-party system resulted in the proliferation of almost a dozen parties, though only three major ones contended in the 1996 elections. The MPRP currently faces an identity crisis but proclaims itself rid of the authoritarian, Russian-dominated past and still remains a vibrant force, particularly in the countryside. The Mongolian National Democratic Party and the Mongolian Social Democratic Party are both composed of diverse constituencies, espousing democracy and a free-market economy, with the Social Democratic Party having a large following among the intelligentsia. Because the distinctions among the three are blurred, allegiance to a specific party appears to be fleeting. Such fleeting loyalties mirror the disunity that plagued and weakened the traditional Mongol Khanates. Judging from the previous history of the Mongols, the Democratic coalition forged in the 1996 elections may, in fact, not endure. Regional and kin loyalties, which have been powerful throughout Mongolian history and even in the Communist era, may continue to be more binding than allegiance to a political party. Leaders of each region, kin, or political group often accuse others of corruption and mismanagement, undermining the unity that may be essential for the country's future. Perhaps as critical, many of the current principal political figures, even in the groups promoting democracy, are the sons and daughters and grandsons and granddaughters of the leading personages of the Communist era, which arouses concern about continued dominance of an old elite. Has there been sufficient turnover in the political elite, or does it represent the same constituency as in the past? Has it expanded sufficiently to make itself more broadly representative of the Mongol population, including the herders and the countryside in general?

  • Foreign Relations: Mongolia's location between two of the largest countries in the world will affect the policies of the Democratic Union government. After 1990, Mongolia detached itself from Russian domination, though Russian influence persists. Russia remains Mongolia's major trading partner and arguably has the greatest cultural impact. However, its demand for the repayment of loans granted to Mongolia during the Soviet era complicates relations between the two countries. Mongolian officials respond that Russia has overstated the size of the debt and ought also to compensate Mongols for the damage Soviet policies inflicted on Mongolia. The issue of debt repayment will continue to inflame tensions between the two.

    Meanwhile, relations with China have expanded. Trade statistics show this growing involvement: in 1990, Mongolia sent less than 1% of its exports to China, but by 1996, it dispatched 17.1%; and in 1990, 2% of its imports derived from China, but by 1996 the figure had risen to 15.1%. Many Mongols, harking back to the oppressive rule of China through 1911, are concerned about China's leverage over their economy and fear that Chinese purchase of land and of shares in the newly-formed Mongolian Stock Exchange may offer them considerable influence.9 The Chinese are themselves apprehensive about the rise of nationalism in Mongolia and its effects on the Mongols of the Inner Mongolian Autonomous Region within China. They have repeatedly condemned and sometimes imprisoned so-called splittists in Inner Mon-golia for efforts to affirm Mongol ethnicity and to promote Pan-Mongol nationalism. Nonetheless, the true threat may stem from China's growing assertiveness in East Asia and its possible expansionist sentiments.

    To deflect this potential threat, the Mongol governments since 1990 have cultivated relations with countries beyond their two neighbors. They have increased trade and accepted assistance and established air links with the nearby East Asian states of Korea and Japan. Relations with Western European countries, including Germany and Denmark, supplement and sometimes substitute as trading partners and benefactors for the old Eastern European Communists. The U.S. has also provided aid and some limited investment. However, the Mongol government recognizes that its relations with Russia and China will be of paramount significance in the future.

  • Economy: The current government has committed itself to privatization and a free market as the solutions to Mongolia's economic problems and as the means for economic revitalization and growth. Officials responsible for oversight of the economy point to the lumbering state-run and state-owned industries as examples of waste, mismanagement, and inefficiency, and criticize them for their use of outdated technology, their cost overruns, and their poor service. The vast sums which previous governments allocated to the almost hopeless cause of repairing one of the outmoded power stations supplying heat and electricity to the inhabitants of Ulaan Baatar are, for these officials, particularly egregious instances of appalling state decision-making. Seeking to reduce the government role in the economy, these officials reiterate the mantra of privatization and a free market as a panacea for economic problems. To be sure, some of the state enterprises need to be revamped and perhaps privatized. Yet privatization in and of itself might generate other difficulties (e.g. unemployment) that could prove socially and economically disruptive.

    The government clearly faces the need to tackle economic problems beyond privatization. First, the inadequate infrastructure impedes development, impairs the fragile links between countryside and town, and imposes hurdles for the extraction, transport, and export of Mongolia's apparently abundant natural resources. Even with development of the infrastructure, the sheer size of the country precludes accessibility to vast stretches of the land, but economic growth will require improvements in and construction of roads, bridges, and railroads. Because privatization is not the answer in this case, the government will need to marshal its resources and to seek foreign investment to initiate such construction projects. Poor maintenance of existing infrastructure after 1990 impinges upon the herdsmen, as "the services on which the pastoral economy depends - bridge and road repair, well maintenance, veterinary service, fodder supply - have been cut to a minimum."10 Second, much of the economic development will be based on extractive industries, tapping Mongolia's natural resources, and will require vast, probably foreign, investment. Two U.S. oil companies have already begun to drill and have sent a small shipment of oil to China in late 1996 and early 1997. Success in enticing additional foreign investment will depend upon resolution of infrastructure problems, as well as continued ability to ship goods from landlocked Mongolia to the North Chinese port of Tianjin to the outside world. The government could face insuperable obstacles in enticing foreign companies that produce consumer goods because the 2.5 million population does not offer an attractive market. Third, the government may be required to scale back its vision concerning remarkable increases in the herds based on the transition from negdels to privatization. The available land limits such increases, and "economic incentives to increase livestock productivity must be realistic in regard to constraints imposed by environment and ecological limitation of grazingland eco-systems."11 Moreover, economic incentives may not be effective with nomadic herdsmen who traditionally favor immediate consumption and disdain savings.12

    The government will also need to cope with economic problems that have remained intractable since the development of a free market economy. Inflation, which was virtually nonexistent during the Communist era, has been endemic for the past seven years. When the Democratic Union government raised energy prices in September of 1996, the annual rate of inflation rose to 53%. The tughrik, the Mongol currency which had been artificially pegged at less than 10 to the dollar during the Communist period, reached a rate of approximately 450 to the dollar by 1996. The economic policies of the new government have resulted in an increase to about 800 tughrik to the dollar by the spring of 1997. Adding to Mongol fiscal woes is corruption. A recent State Property Commission survey revealed considerable misappropriation of state-owned and state-controlled assets.13 Rumors about bribery and graft in government have continued to surface even after the victory of the Democratic Union. Tax evasion is reputedly rampant, and many investors lack confidence in the fair and proper operation of the Stock Exchange. The new leadership will need to address such rumors if it expects to gain the confidence and loyalty of the population. Still another problem is the rate of unemployment, officially estimated at about 20% in the urban areas but which some observers believe to be as high as 50%. Greater privatization, particularly of state-run enterprises, could increase the figure and pose even more social welfare problems.

  • Social Policy: The new government has relegated social issues to a secondary position and has instead emphasized economic growth. Government funding for the social sector has declined. Education, from primary schools to universities, and health care have suffered as a result, but the government relies on privatization of some educational and medical facilities, as well as an expanding economy, eventually to restore these services. It has also reduced support for such social welfare functions as maternity leave and child support. Bountiful pensions have been jeopardized and, together with cuts in social welfare, have resulted in a higher incidence of poverty. Children whose parents have abandoned them or who have been abused at home live on the streets in the cities, a partial explanation for the rise in crime, lawlessness, and alcoholism. The official figures for these street children is less than 1,000, but unofficial estimates put the number at closer to 10,000. Women have borne the brunt of reductions in social services because subsidies for widows, single-parent families, and child-care centers have been reduced or eliminated. Since women constituted a substantial number of the teachers and medical personnel, the cutbacks in health and education have been particularly onerous. Finally, high unemployment and alcoholism have provided breeding grounds for domestic abuse. The government's dependence on privatization as a means of promoting better health, educational, and welfare facilities still needs to be tested.

  • Cultural Policy: The new government's revenue shortfalls have affected cultural organizations. Folk and classical theater, ballet, and opera have suffered because of lack of funding. Because private patronage appears to be an unlikely source of support, cultural performances have deteriorated and will probably continue to do so. Such cultural repositories as museums and libraries have scant resources for the conservation, preservation, and exhibition of the objects they supervise, and the general economic crisis and social breakdown have led to the theft and illegal export of beautiful works of art and ancient manuscripts. The reaffirmation of Mongol heritage, including the appeal of shamanism and the renewed interest in and display of the national costume, is a healthy sign of cultural development, but may be eclipsed in importance by the decline in education and in literacy. Thus, inadequate government funding may subvert the educational progress and cultural development of the Communist era. The Buddhist religion has revived after sixty to seventy years of persecution, but it has not attracted vast numbers who seek a religious vocation. Perhaps more important, because the monasteries are repositories of the great literary and artistic classics, the lack of government funding has resulted in deterioration and theft of some of these works.

  • Human Rights: Unlike neighboring lands in Russia, China, and Central Asia, Mongolia has not, since the establishment of a multi-party system, elected a government that condones gross human rights abuses. Because the successive governments have not used violence to crush dissent, hunger strikes by dissidents congregating in the main square in Ulaan Baatar and strikes by teachers and medical personnel have taken place and have frequently been effective. The Constitution of 1992 affirms freedom of speech, religion, travel, and political participation, and freedom of speech and freedom of assembly have generally been respected. A recent scandal in which the Mongolian "CIA" tapped the telephones of opposition politicians caused concern about the current government, but the incident seems to have been an aberration.

    The mass media have gradually charted a course of independence from government control. About 100 weekly newspapers, representing different constituencies and different political views, appear regularly, and 500 others are sporadically published. Though newspapers are required to register with the Ministry of Justice, they have not been censored or intimidated. Dissidents accuse those in power of seeking to influence the press and of occasionally denying them access to the media. The new government did close down two newspapers, accusing them of printing pornography. A Press Law, which would protect the rights of journalists and affirm the free flow of ideas and information and perhaps restrict government subsidies for any newspaper, would be desirable. Better training for journalists, to encourage independent and investigative journalism for a group which previously relied on government reports or handouts for news, is also essential. With support from a Danish foundation and from the Open Society Institute, the Press Institute of Mongolia has started to develop such programs. Radio and television, which have been gaining in importance, often represent the views of the government in power. In addition, dissidents and opponents of the successive governments have continued to complain about lack of fair access to the broadcast media, a problem that the Democratic Union government will need to address.

    Human rights activists in the country have a litany of other complaints. However, they have acknowledged that the smooth June 1996 transition from Communist rule to what aspires to be a democratic system is encouraging, Nonetheless, activists assert that the rule of law is not well-established, and critics often question the fairness of the system of justice. Rumors abound that judges favor relatives and support their native regions, are not well-versed in human rights, tend to maintain state rather than individual interests, often fail to respect individual property rights, and do not always mete out justice equitably. Critics point out that the high proportion of women in the judiciary (70% in the countryside and 50% in Ulaan Baatar) results in low prestige, as evidenced by the new government's recent transfer of administrative jurisdiction over the courts from the Supreme Court to the Ministry of Justice. Human rights activists also deplore abusive police treatment of the accused and horrendous prison conditions, which have resulted in a high incidence of deaths in prisons. Moreover, they have also been critical of abuses in the military, reporting that in October of 1996 about 60 servicemen had to retire because of health disorders prompted by "bullying in the army."14

    Noting that the Constitution of 1992 emphasized the social welfare obligations of the state, including guarantees of education, medical care, employment, a pension, and a clean environment for all citizens, activists have accused the new government of not fulfilling its responsibilities. They have criticized the government's increased reliance on privatization for constitutionally-mandated government tasks and have implied that the private sector cannot guarantee fine educational, medical, and social welfare facilities.

In sum, Mongolia confronts major challenges. Some, such as continuing disunity and regional and clique identification among its leaders, derive from its nomadic pastoral heritage. Others, such as economic mismanagement and an oppressive bureaucracy, stem from the Communist era. Dealing with these challenges, as well as resisting cultural and perhaps political encroachment from its neighbors, will not be easy. One recently-elected member of the Democratic Union recognized the difficulties, writing that "the transitional societies of Europe and Mongolia are now trying to achieve what has never been done anywhere in the world: to build a market economy and a democratic polity simultaneously."15


1. Ole Bruun and Ole Odgaard, "A Society and Economy in Transition," in Ole Bruun and Ole Odgaard, eds., Mongolia in Transition (Richmond: Curzon Press, 1996), p. 35.
2. Melvyn Goldstein and Cynthia Beall, The Changing World of Mongolia's Nomads (Berkeley: University of California Press, 1994), p. 68.
3. Alicia Campi, "The Rise of Nationalism in the Mongolian People's Republic," Central and Inner Asian Studies 6 (1992), 51.
4. International Monetary Fund, Economic Reviews: Mongolia, 1996 (Washington, D.C., 1996), p. 18.
5. Sheldon Severinghaus, "Mongolia, 1994: Strengthening Democracy," Asian Survey (January 1995), 73.
6. Bulletin of Sant Maral Foundation 1 (February 1996), 8.
7. Nate Thayer, "Contract Help," Far Eastern Economic Review (March 27, 1997), p. 19.
8. Interviews with R. Gonchigdorj and D. Ganbold, January 9, 1997.
9. Mongolbank, Monthly Statistical Bulletin (Ulaan Baatar, November 1996), "Trade Balance."
10. Ole Bruun, "The Herding Household: Economy and Organization" in Bruun and Odgaard, p. 87.
11. Dennis Sheehy, "Sustainable Livestock Use of Pastoral Resources" in Bruun and Odgaard, p. 57.
12. Alicia Campi, "Nomadic Cultural Values and Their Influence on Modernization" in Bruun and Odgaard, p. 101.
13., "E-mail Daily News" (April 4, 1997), 1.
14., "E-mail Daily News" (November 21, 1996), 1.
15. H. Hulan, "Mongolia's Political Transformation: Observations and Comparisons," The Mongolian Journal of International Affairs 1 (1994), 33.

About the author

Morris Rossabi, born in Alexandria, Egypt, is Professor of History at the City University of New York and Adjunct Professor of Mongolian History at Columbia University. A long-time visitor to Mongolia, he has written several books, including China and Inner Asia (1975), Voyager from Xanadu (1987), and Khubilai Khan: His Life and Times (1988), Professor Rossabi has also contributed to the Cambridge History of China (1992-97).