2025 was a tumultuous year for Mongolia’s politics and economic endeavors. With increasing numbers of intermittent protests in the nation’s capital, Ulaanbaatar, Mongolia saw political instability, corruption, and social distress. In the upcoming  year, it will be pivotal for the Mongolian government to tackle these issues to avoid further hindrance of the country’s economic potential. 
Increasing Political Instability and Social Distress 
Mongolia experienced several moments of political and social distress in 2025. In May, the collective action of Mongolia’s youth succeeded in ousting the coalition government led by Oyun-Erdene Luvsannamsrai, citing corruption, lavish lifestyles, and failure of transparency. The fall of the coalition government then created a deeper political spat within the Mongolian People’s Party (MPP) and incited a constitutional crisis. 
Following the ousting of Oyun-Erdene’s coalition government, the incumbent Prime Minister Zandanshatar Gombojav, too, was removed from office by a parliamentary vote. Mongolia’s newly assembled 126 members of the State Great Khural were propelled to cope with the outcome of an unstable executive branch. 
Finally, after weeks of political shenanigans within the MPP, the Zandanshatar government was reinstated in late October. The State Great Khural then reviewed new state budget proposals and new ministers. In mid-December, the Office of the Prime Minister announced 16 new deputy ministers. The Democratic Party (DP), opposing such a large government, has demanded that the appointments be revoked, threatening to push for a dismissal of the government.
The combined effect of all this political movement obfuscates the very fabric of Mongolia’s good governance, political stability, and social and economic progress. 
Since early fall, Mongolia has experienced several workers strikes and protests. Educators and medical workers have protested intermittently throughout the political fiasco. Between September and November, approximately 59,000 people protested regarding a diverse array of social issues.
In the last decade, Mongolia has experienced regular strikes and protests. While this showcases the country’s democratic assembly, it also demonstrates that corruption, air pollution, and the other social issues which drive people into the streets have become a solid part of modern Mongolia’s society. 
In an effort to win the hearts and minds of the Mongolian populace, in November, the newly (re)established Zandanshatar government announced its 2026-2030 Five-Year Development Plan for Mongolia. The five-year plan to aims boost the country’s economy, tackle corruption, increase and improve Mongolia’s investment portfolio. Domestically, the Zandanshatar government aims to focus on investing in human capital, education, and science and technology. On the economic front and foreign engagements, the government aligned its development plans with Vision 2050, Mongolia’s long-term development document, authored by the previous Oyun-Erdene Luvsannamsrai administration. 
On December 22, 2025, Mongolian citizens gathered outside the Mongolian Parliament building demanding action on the worsening fuel shortage and rising living costs. There have been reports that Orkhon and Bulgan province residents are traveling to Khuvsgul to get fuel. The protest came at a time when the Zandanshatar government has appointment deputy ministers despite its promise to reduce government spending. Local media reported that the protest leaders demanded the government to make progress within a week. 
Strengthening Mongolia’s Foreign Relations Regionally and Globally
Despite domestic political squabbling, the Zandanshatar government’s economic strategy looks to expand economic links with its two neighbors — Russia and China — while attracting diverse, but sectoral investments from third neighbor partners. 
In November, after being newly reinstated by the Parliament, Zandanshatar attended the Shanghai Cooperation Organization (SCO) Heads of Government Council meeting in Moscow, Russia. 
Zandanshatar’s attendance was an important step in prioritizing regional partnership, starting with its two neighbors. Ulaanbaatar’s comprehensive strategic partnership with both Beijing and Moscow strives for a strengthened economic engagement, unlocking potential cooperation mechanisms vis-à-vis SCO member states as well as at a bilateral and trilateral level. Zandanshatar held separate bilateral meeting with the Russian President Vladimir Putin and Chinese State Council Premier Li Qiang.
During the Zandanshatar-Putin meeting, the two leaders focused on an economic integration, including Mongolia’s temporary three-year Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU). On December 19, the Federal Council ratified Mongolia’s FTA with EAEU. 
In the fall of 2025, Ulaanbaatar experienced intermittent fuel shortages despite the government’s claim to have a guaranteed supply from Russia. One of Zandanshatar government’s priorities with his Russian counterpart was ensuring a continued supply of diesel fuel. During the recent 27th Mongolia-Russia Intergovernmental Commission meeting that took place in Ulaanbaatar, Russia committed to doubling fuel supplies to Mongolia starting January 2026, after acknowledging implementation challenges. 
While Mongolia-Russia’s energy relations have a long history, the fact that Mongolia continues to experience fuel shortage as well as having only a 30-day guarantee is a major vulnerability. These experiences once again demonstrate the dire need for energy diversification, so Mongolia can secure its own supply in the event Russia decides to prioritize domestic usage.
During the SCO meeting, Zandanshatar also held bilateral meeting with Chinese Premier Li Qiang. During those talks, Mongolia proposed increasing coal exports from Mongolia to China to 100 million tonnes. In 2024, Mongolia’s coal export to China reached all-time high, 83.7 million tonnes of coal. 
Since the Oyun-Erdene government, Mongolia has been implementing what is called a parallel approach to Beijing’s development vis-à-vis Belt and Road Initiative and other projects. The parallel approach — in essence — aims to better connect Mongolia-China investment and trade in a particular sector that can be beneficial for both countries. 
During the meeting Li stated, “China is willing to strengthen the alignment of development strategies and enhance cooperation in traditional fields such as mineral and energy resources, infrastructure, and connectivity to forge more drivers for interest convergence and cooperation.” 
Mongolia and China both emphasized the importance of “mutually aligning the development and construction plans, such as the cross-border railway at Shiveekhuren-Sekhee, Khangi-Madal, and Bichigt-Zuunkhatavch.” In the upcoming years, the two governments plan to boost cooperation in green energy and digital economy. 
Moreover, within the scope of the SCO and Mongolia-Russia-China trilateral relations, Power of Siberia 2 is a major cooperation mechanism currently pending. During the November SCO meeting, the parties endorsed the 2026-2030 Action Plan, which included the Power of Siberia 2 gas pipeline. 
Alongside Mongolia’s strong commitment and desire to accelerate comprehensive strategic partnerships with its only two neighbors, Ulaanbaatar’s third neighbor partnerships and cooperation mechanisms continue to expand. It will be pivotal for the Zandanshatar government to strengthen these links politically, economically, and culturally. 
From a regional standpoint, Mongolia’s third neighbor relations with South Korea and Japan are likely to expand in the next few years. Both Japan and South Korea have shown immense interest in cooperating in Mongolia’s rare earth minerals. Mongolia’s vast natural resources will become an economic incentive for its partners, but it also serves as a strategic significance for Ulaanbaatar’s foreign policy. 
The Zandanshatar government will need to prioritize democratic and technologically advanced “third neighbors” such as Japan, South Korea, the United States, India, Germany, France, and Australia. These partnerships are crucial and will play an increasingly important role in diversifying Mongolia’s energy sector and improving green economy. 
For example, in 2025, Mongolia and South Korea held  a strategic forum to expand cooperation in critical minerals and research. In a significant move to secure supply chains for its high-tech industries and manufacturing, South Korea launched the Korea-Mongolia Rare Metals Cooperation Center in Ulaanbaatar on December 12, 2025. 
Navigating Emerging Challenges: Mining, Corruption, and Foreign Influence
In December, the Mongolian Parliament launched its first-ever investigative public hearing on Oyu Tolgoi (Mongolia’s largest copper mining site) headed by MP Batnairamdal Otgonshar. The three-day public-hearing examined Mongolia’s interests regarding the ongoing lawsuits with the mining conglomerate Rio Tinto. 
The investigation involved state ownership and licenses, loan interest rates, management fees, and benefit distribution. Mongolia’s Oyu Tolgoi mining will be the world’s fourth largest copper mine when completed in 2030. The government has been under domestic pressure to ensure that all agreements and deals reflect and protect Mongolia’s national interest. That does not mean a populist cash handout with the financial gains that come from Oyu Tolgoi; the benefits must be translated into a tangible asset that the Mongolian populace can utilize. 
2024 research indicated that “in 2024, 26.0 percent of Mongolia’s population experienced multidimensional poverty, with deprived individuals lacking, on average, 36.8 percent of the 15 selected indicators. The most common challenges facing the multidimensionally poor relate to sanitation, internet access, health insurance and housing conditions, whereas school attendance and years of schooling are less prevalent.” 
The benefits from Mongolia’s natural resources need to help solve these challenges. 
In order for the Zandanshatar government to attract foreign direct investment, the government will need to tackle corruption. Despite’s Mongolia’s efforts, the country’s position in the Corruption Perception Index has not improved since 2019. Unless the Zandanshatar government takes a bold step and solves major cases such as the 2022 coal thief case, the green bus embezzlement, and other publicly known civil cases, the capabilities and independence of Mongolia’s judiciary will be increasingly questioned. 
2026 will be a pivotal year for Mongolia’s international relations. It has been 15 years since Mongolia’s National Security Concept (2010) was adopted, followed by the Foreign Policy Concept (2011). Since then, the regional and global geopolitical landscape have shifted and as a result, Mongolia must update its concepts and the ways in which it tackles emerging issues. Given Mongolia’s digital society, disinformation and cybersecurity have become a challenge as the country strives to become a digital nation. 
On December 18, research was released on Russia’s disinformation campaign in Mongolia and how that impacts the social media space. What the research showed at large was that Mongolia’s open society has become a victim of disinformation. The research also showed that because of Mongolia’s digital presence, it has become a hub for foreign influence and information gathering. The Mongolian government will need to address these issues while delicately balancing foreign influence on Mongolian soil. This goes without saying, but the Mongolian government will need to establish a working mechanism that protects the Mongolian people’s right to expression and perspective on all foreign and domestic matters. 
By Bolor Lkhaajav

Published Date:2025-12-30