On paper, the Mongolian state is becoming richer, with record exports, higher budget revenues, and decent rates of growth. Yet in daily life, it feels absent. Six years after winter protests that fused discontent over air pollution and corruption into a single story about trust or the lack of it, that story has only thickened.
Since then, Mongolia has moved from outrage over theft of public resources to open constitutional crisis. In October of last year, parliament voted to remove Prime Minister Zandanshatar Gombojav barely four months into his term.
Three days later, the president vetoed the dismissal on constitutional grounds. Tsets, Mongolia’s constitutional court, deemed the president’s veto lawful, ruling that a parliamentary motion passed by the State Great Khural to dismiss the PM violated several procedural and constitutional principles.
If Western media outlets notice any of this, they tend to reach for the easy frame. Earlier in 2025, Britain’s Times ran a breathless piece about a “Putin-aligned” President who had supposedly orchestrated a coup of sorts against a US-educated reformist prime minister, Oyun-Erdene Luvsannamsrai. That story missed the point.
Mongolians themselves didn’t read the crisis that way. They watched as food, fuel, and rent grew more expensive while politicians flaunted imported SUVs and designer-brand watches. They saw “anti-corruption” hearings that always seemed to stop just short of the people who designed the schemes.
If there was a coup, it didn’t take place over a single night in Ulaanbaatar. It was a much slower takeover, organized through coal contracts, logistics queues, and parliamentary lists.
From Party-State to Ponzi Investment Scheme
In theory, Mongolia is a parliamentary democracy with a democratic constitution, the separation of powers, and institutions that look very familiar to anyone raised on the liberal textbook: parliament, president, cabinet, anti-corruption agency, independent central bank. In practice, politics has settled into what many people now call nam–tör: a party-state hybrid where the ruling (MPP) controls most levers of power.
Mongolia has moved from outrage over theft of public resources to open constitutional crisis.
Getting onto the party list or into a key ministry is understood — quite openly at this point — as a form of höröngö oruulalt, an investment. You finance the campaign, you prove your loyalty, you tsunh barih (“carry the bag”) for a faction leader. In return, you gain access to procurement, licenses, appointments, a slice of a mega project. The formal rule book still exists: civil service law, budget law, procurement procedures. But next to it sits an unwritten code of factional obligations and side deals.
This is why so many Mongolians have stopped using the word “corruption” in the narrow sense. Corruption suggests a deviation from a basically sound system. What they see instead is a system where rent-seeking is the organizing principle and patron-client networks penetrate bureaucracies and political parties while fragmenting and undermining formal authority.
Cleaner Prices, Dirtier Deals
Nowhere does this manifest itself more starkly than when it comes to coal and related offtake agreements. In a typical offtake contract, a buyer agrees to purchase a specified amount of a future product (coal, in this instance) before it is produced. These contracts are extremely attractive for resource-rich developing countries like Mongolia, as it means guaranteed revenue streams.
However, recent revelations show that millions of tons of coal have been sold through these types of agreements to Chinese companies. These were opaque deals, mostly done with Erdenes Tavan Tolgoi (ETT) and signed with a small circle of traders and logistics firms. ETT is a state-owned enterprise (SOE) that manages the Tavan Tolgoi coal deposit, one of the world’s largest. It is a key contributor to the nation’s economy through its mining, exporting, and infrastructure projects.
After mass protests in winter 2022 over what people called the “coal theft,” the government scrambled to show it was cleaning up the sector. The solution looked simple enough: push exports through an open auction platform at the Mongolian Stock Exchange and let the market set transparent prices.
After mass protests in winter 2022 over what people called the ‘coal theft,’ the government scrambled to show it was cleaning up the mining sector.
To an extent, it worked. Prices on the exchange moved closer to what Chinese buyers actually pay at the border. A new Mining Products Exchange law was passed. Officials proudly presented this as a leap forward for transparency.
However, if you scratch the surface, most of the coal never touches that exchange. According to Zoljargal, a member of the Mongolian parliament, roughly four-fifths of coal still leaves the country via long-term offtake contracts.
The transparency-oriented auctions at MSE mostly receive the leftovers in terms of lower-grade coal with unpredictable volumes. The public sees a visible price, but the real bargain happens out of sight.
The Aggregator as Switchboard
Offtake contracts, especially those tied to infrastructure or prepayments, help preserve strategic discretion. One company, Bodi International, sits at the heart of many of these arrangements. When you look at a large batch of contracts related to Bodi International and ETT that was recently released to the public, you can start to see the picture.
Many politicians and experts claim that these deals through aggregators like Bodi allowed coal to be sold at undervalued prices, with intermediaries capturing some of the value on transport and resale. Some contracts include options to convert debt into equity stakes.
The public sees a visible price, but the real bargain happens out of sight.
If the state or SOE cannot fully deliver coal later, the lender can swap the unpaid amount for shares in the project company or infrastructure. This allows the buyer (offtaker) to gain stakes in infrastructures, effectively collateralizing the state’s assets.
Other SOEs and related clientelist networks compete to export as much coal as possible. The trend reached its apogee when one faction started lobbying for a railroad and another for a border port. It is a downward spiral that traps value.
Layer on top of this barter‑style financing of infrastructure deals repaid in coal, and we can start to see the main contours of the “coal theft” or “coal mafia.”
Clientelism as Infrastructural Power
During the COVID-19 pandemic, exports collapsed, and the difference between shipping first and waiting two weeks meant real gains in terms of cash and leverage. ETT’s delivery prioritization effectively handed faction leaders and clientelist networks leverage over the logistics queue.
Choosing which ton got through which border gate and when was the hardest form of currency. Reports confirm that border customs, military officials, and provincial administrators extracted rents or favored their cronies. Trucking firms tied to political elites thrived, while ordinary truckers and businesses had to wait with their vehicles standing still.
The state doesn’t disappear, but it fractures. Authority is still there, chopped up into tradable fragments.
Sociologists like Michael Mann talk about infrastructural power — the state’s ability to “get into” territory and everyday life through roads, rails, and electricity. In Mongolia, that power has been sliced up and rented out or, in other words, captured.
A rail line or a border port like Gashuun Sukhait becomes not just a public utility but a bargaining chip. A power struggle ensues around which faction gets the lucrative bit to build, which firm gets priority access, or which official gets to hand out permits.
In this state of things, the state doesn’t disappear, but it fractures. Authority is still there, chopped up into tradable fragments.
Two Budgets, One Shadow
To “get things done,” the Mongolian government pushes delivery through a hundred or so SOEs like ETT that circumvent the bureaucracy. Offtake contracts pledge future coal deliveries in exchange for upfront cash. Infrastructure loans are backed not by general tax revenues but by specific streams of export earnings.
There are escrow accounts abroad where export proceeds sit before they are swept (or not) into the national treasury. Oil-exporting countries often have dual fiscal systems that feature substantial distortions between their resource and nonresource tax regimes, and Mongolia is no exception to this rule.
Citizens sense that the budget is growing, yet crucial services are still undelivered.
In public finance terms, this reallocates power away from the budget, producing parallel fiscal structures. The formal one looks normal, rule‑bound, and slow, while the informal one seems flexible, politicized, and largely off the books.
When global prices spike, the second set of channels becomes very tempting. You can borrow against tomorrow’s coal to cover today’s political needs. You can fund that new railway or engage in “populist” cash transfers just before an election without going through a messy, contested budget process.
The promise of long-term revenues etched in offtake contracts can make unaccountable governments persevere by promising spoils to clientelist factions, expanding the state budget, and effectively buying votes. Citizens sense that the budget is growing, yet crucial services are still undelivered.
Every new scandal proves the unfortunate state of things. Political scientists refer to this as the erosion of output legitimacy that derives from a polity’s capacity to solve collective problems. Citizens would say the state no longer makes any moral sense.
Slow Violence, Not Sudden Collapse
This is where the idea of slow violence helps. Rob Nixon’s concept refers to gradual, often invisible harm that unfolds over the course of years, wrought by pollution, climate change, and resource depletion.
In Mongolia, the coal economy has created exactly this sort of damage: dust and diesel in border towns, fragile ecosystems around mines, and the deaths of people from coal burning. As Nixon notes, environmental devastation often happens on “time scales that exceed human perception,” making it hard for communities to rally against diffuse, long-term threats.
The violence is political and emotional as well as ecological. The state promises universal education but crams classrooms with fifty children because schools are the last in line for wage increases. Anti-corruption hearings are broadcast throughout the country, but investigations routinely stall when they get too close to the inner circle.
Laws change, cabinets shift, and new anti-corruption bodies appear, yet the basic pattern remains the same.
People stop believing in the possibility of fairness long before they stop voting. Crucially, the victims of slow violence are often poor and marginalized, lacking influence in Ulaanbaatar’s halls of power.
On the ground, citizens experience this not as a democratic consolidation but as a strange kind of institutional gaslighting. Everything is “reforming,” everything is being “strengthened,” yet nothing quite works. The gust remained the same: weakening the presidency here, strengthening a prime-ministerial system there, always making sure the dominant party and related factions could consolidate.
Laws change, cabinets shift, and new anti-corruption bodies appear, yet the basic pattern remains the same. “If justice were applied consistently tomorrow,” people joke, “there would be no one left in politics.”
Protests as Democratic Memory
Despite all this, people haven’t gone quiet. In 2019, Ulaanbaatar saw the winter protests over suffocating smog and unending scandals. In 2022, younger protesters camped out again, demanding answers on coal theft. Over the last two years, further demonstrations erupted around the latest government reshuffles, the lavish spending of political circles, and coal theft.
Critics dismissed these protests as either the product of manipulation by some rival faction or as the product of naive idealism on the part of some young slackers. Both dismissive perspectives miss the core function of such protests.
Each protest, even when it fails or succeeds to change the personnel at the top, acts as a kind of democratic memory. It reminds everyone that the point of having a state at all is to deliver public goods and basic fairness. It keeps alive the expectation that something better is possible and that institutions could be inclusive rather than extractive.
Elite Brokerage Amid Global Uncertainty
Under these conditions, Mongolia’s political economy functions through elite brokerage. This is a system in which those with political power act as intermediaries between national wealth and global markets, skimming rents at each step.
Such brokerage is not limited to coal. In the copper sector, Mongolia’s Erdenet mine was previously involved in scandals where trading companies received sweetheart deals for copper concentrate, allowing the diversion of profits.
The state behaves like a brokerage house, instead of being a regulator and shareholder ensuring maximum public benefit.
Even the giant Oyu Tolgoi copper-gold mine, operated by Rio Tinto, saw disputes over cost overruns that Mongolian observers suspect benefited contractors connected to the elite. In all these cases, the state behaves like a brokerage house, instead of being a regulator and shareholder ensuring maximum public benefit.
This state of affairs obviously has grave implications for democracy and development in Mongolia. In the June 2024 parliamentary elections, the opposition galvanized “anger over corruption and the state of the economy,” making significant gains in the legislature. Voter turnout remained high at nearly 70 percent, indicating that Mongolians have not become apathetic. Clearly, the electorate connected the dots between unchecked one-party rule, corruption, and the erosion of democratic accountability.
Hollowing Out Democracy
All these threads tie back to a worrisome trajectory that Peter Mair outlined more than a decade ago: the hollowing out of democracy. This has happened not through the outright abolition of elections but by a gradual erosion of their substance.
Mongolia’s situation exemplifies what happens when a resource-rich economy’s development model centers on extraction without “inclusive” institutions. However, it is easy, from a distance, to say that Mongolia just needs to strengthen its institutions. While intuitively this sounds right, it doesn’t get us very far. The harder question is always: Which institutions, in what order, and strengthened against whom?
Sustained pressures for reform will only last if people can see something actually shifting. That is the cruel paradox at the heart of slow violence: not only does it damage lungs, it also erodes patience. Year after year of scandals with no real consequences conditions people to expect nothing.
In that void, many ills arise: conspiracy theories, nationalist groups, and online, troll-based politicization among others. Yet the current crisis creates an opportunity for the masses to step into the void and demand a new voice. Whether ordinary Mongolians can successfully take advantage of this opportunity will define the nation’s journey toward genuine accountability and democracy.
By
Sanchir Jargalsaikhan

Published Date:2026-02-06