Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
The Mongol Prime Minister resigned after losing his vote of confidence amid the public’s rage over his son’s gorgeous spending, promoting the political uncertainty of the Central Asian economy with vast mineral wealth.
Loubusannamslain Oyunerden, a Harvard-educated reformist who has led Mongolia since 2021, only 44 of the 64 votes needed from lawmakers in a vote held early on Tuesday. Oyun Elden protested last week when he called for the vote amid his party split, protesting against his son’s lavish lifestyle.
His Mongol People’s Party has been involved in a coalition government with two other political parties since the election a year ago, but is expected to form a government in the coming days.
Political turmoil emerged from a single-party political system under socialist control in the 1990s, and has now become a number of crisis for Mongolia, which only expanded its parliament last year.
Oyun-Erdene has long been seeking investment from Western mining groups and may also give Ulaanbaatar to Beijing and Moscow a buffer, taking advantage of the vast sediments of copper, uranium and other important minerals.
Crowds gathered in Ulaanbaatar last month in protest of the prime minister’s son’s gorgeous lifestyle © Byambasuren Byamba-Chir/AFP/Getty Images
He led a plan to halve the country’s poverty rate of 3.5 million people by the end of the decade by 15%. Supporting that effort, it was a long-term direct investment in resource extraction and processing, targeting GDP of between $203 billion and $203 billion.
However, demands for Oyun Elden to resign in recent weeks have increased as hundreds of young Mongols have taken him to Sukhbaatah Square in the capital after social media posts appeared to show his son was lavishly spending his partner. The post, reported by local media, appears to have since been removed from social media.
The gifts included a black Dior handbag, an SMEG appliance and a MIU MIU jacket, according to a photo shown on local news site ikon.mn.
The protest appears to have sparked divisions between the prime minister and the rival camps of the government’s fragile coalition, including the president Krersk Uknaa.
Prior to the Mongol’s parliamentary vote, Oyun Elden tried to protect his record in the face of a “political attack” and a “convergence of major visible, hidden profits.”
He developed the uranium mine, pointing to recent economic achievements, including increased export revenue and increased GDP, as well as a series of mega projects, including a $1.6 billion investment contract with the French Orano Group.
However, Oyun Elden said he “has not paid inadequate attention to social and internal political issues.” In the second half of 2022, protests erupted over corruption in the coal sector.
Oyun Elden supported the expansion of the Oyutlgoi mine in Rio Tinto, southern Mongolia.
Oyu Tolgoi, one of the world’s largest copper mines, costs are overrun. Mining companies and the Mongolian government are also opposed to the remaining tax. This month, the Mongol government filed a new lawsuit in the UK claiming corruption. The company says it “strongly rejects” such allegations.
Recommended
Oyun-Erdene’s economic growth plan, coupled with government progress in debt repayment and reforms in the energy sector, supported investors’ desire for a period of sustainable economic and governance stability in Mongolia.
Credit institution Fitch in September upgraded the country’s long-term foreign currency rating to B Plus with a stable outlook. At the time, Fitch noted that the country was projecting actual GDP growth to an average of around 6% over the two years leading up to 2026, thanks to the expansion of the mining sector and “solid” activities in other parts of the economy.
Bayanjalgar Baymbasaikan, vice-chairman of Mongolia’s Business Council and clean energy investor, said that while many capital projects are “going well”, the next government has a full plate of challenges amid fears of high inflation and a decline in export revenue.
“Union politics are never easy,” he said. “Mongolia is an effortless democracy. Therefore, political change is something investors should expect when making decisions.”
The Prime Minister’s office did not immediately comment.
