Resource-rich Mongolia faces political uncertainty after the prime minister resigns

TAIPEI, Taiwan (AP) - Resource-rich Mongolia is facing political uncertainty following the resignation early on Tuesday of its prime minister in the wake of protests over endemic corruption in the landlocked Asian country, squeezed between China and Russia.

Before he lost the confidence vote in the parliament, Prime Minister Oyun-Erdene Luvsannamsrai warned that his removal could undermine Mongolia's fledgling democracy. The vote followed weeks of protests sparked by reports of lavish spending by his son and calls for him to step down.

The reports, which cited expensive jewelry and helicopter rides for the son’s female companion, underscored the vast gap between Mongolians who have grown extremely wealthy off the country’s exports and much of the rest of the population, mired in poverty.

Here is a look at why what is happening in Mongolia matters:

Mongolia, a country of about 3.5 million people, borders Russia to the north and China to the south. Its stunning alpine mountains interspersed with vast deserts hold an abundance of coal, copper and other natural resources used in high-tech manufacturing.

The question of who benefits from the wealth has been a key issue since Mongolia began negotiating with foreign mining giants - rumors of secret deals and under-the-table payments have circulated for years.

After Mongolia threw off Communism at the end of the Cold War, it lost generous Soviet Union aid packages. Since then, it has been slowly becoming a democracy but is struggling to avoid falling into debt while holding Chinese and Russian interests at bay.

China is a particularly important neighbor as its ruling Communist Party buys up 92% of Mongolia's exports.

Over the years, the capital of Ulaanbaataar transformed itself from a city of clunky Soviet-era buildings surrounded by traditional herders’ felt tents known as gers, into a metropolis of shopping malls and fancy hotels.

The protesters have said the country's mineral riches have benefited business interests and the wealthy, while many Mongolians still live in poverty.

Early on Tuesday morning, Oyun-Erdene only got 44 votes of support in the 126-seat legislature - the State Great Khural - well short of the 64 needed, according to the head of the counting commission, M. Narantuya-nara.

Oyun-Erdene accepted defeat, saying it had been an honor to serve the nation through the coronavirus pandemic, Russia’s war on Ukraine and the ongoing strife over U.S. tariffs.

But he also warned of the threat of a "spider's web" of special interests that he said are working to hold the Mongolian people back.

Oyun-Erdene, who ran a coalition government, will remain prime minister until his replacement is elected in parliament, most likely from the ranks of opposition lawmakers.

Those who pick his successor will likely also have to find a platform that will satisfy the demands of the largely young and well-educated class that has led the protests. That could include moving ahead with a national sovereignty fund introduced recently to better help spread the wealth.

In stepping down, Oyun-Erdene defended his integrity but said he had made the mistake of "paying insufficient attention to social and internal political matters."

He also warned of political instability ahead, saying it “could lead the public to lose faith in parliamentary rule and potentially put our democratic parliamentary system at risk of collapse."

Erin Murphy, deputy director and senior fellow of India and emerging Asian economics at the Center for Strategic and International Studies, said it’s not easy to “build that foundation for democracy" at a time when Mongolia also must tackle economic problems.

Julian Dierkes, a Mongolia expert at the University of Mannheim in Germany, said he doesn't expect any major policy changes, whoever becomes the next prime minister.

"They will be selected on the basis of personal networks and patronage," Dierkes said.

Many people on the street seemed worried for the future and some defended the outgoing prime minister on Tuesday.

Oyun-Erdene should not be responsible for his son’s failings, said Gansukh Batbayar, a military retiree in Ulaanbaatar who lauded what he described as Oyun-Erdene’s efforts to "confiscate illegally earned assets and money of corrupt officials" and distribute it more fairly.

"We barely survive in these chaotic times and our pensions are very small," said an older woman on a public bus in Ulaanbaataar, who declined to give her name to speak about the political developments.

She counts on her children “to have food to eat and a roof over my head," she said.