The U.S. established diplomatic relations with Mongolia in 1987. Bordered exclusively by Russia and China, Mongolia describes the U.S. as its most important “third neighbor.” Mongolia adopted democracy in 1990 and has since conducted six presidential and seven legislative elections. The U.S. has sought to assist Mongolia's market-oriented reforms and to expand political, cultural, educational, and defense cooperation. The two countries have signed a cultural accord, a Peace Corps accord, and a consular convention. English has been compulsory in Mongolian schools since 2005, and interest among Mongolians in learning English and in studying in the U.S. increases every year. Since 2011, the government of Mongolia has committed $600,000 annually to co-fund the Fulbright masters program, tripling the number of Mongolians who study in the U.S. under this initiative. In addition, over 1,500 Mongolian students study at American colleges and universities, some via private scholarships. Approximately 90 Mongolians travel to the United States every year on U.S. government-funded educational, professional, and cultural exchange programs, and the launch in 2017 of a new exchange program for high school students will further increase this number. U.S. and Mongolian legislators also participate in exchanges in which they share information and experiences about democracy and institutional reform. Mongolia deployed troops to Iraq from 2003 through October 2008 and now has 233 troops in Afghanistan supporting Coalition operations.
U.S. Assistance to Mongolia
After enjoying one of the highest levels of economic growth in the world in the early 2010s, Mongolia’s economy has cooled off dramatically in the past few years due to a drop in commodities prices, the cooling Chinese economy, and government missteps. Mongolia’s medium- and long-term prospects nevertheless remain promising, with strong growth expected to resume once several large projects come online and commodities prices recover. Increased income for both the Mongolian government and the private sector, primarily from mining, is expected to usher in expanded opportunities for economic diversification and improvements in education, infrastructure, and social programs. Targeted U.S. government assistance seeks to promote good governance and the rule of law; foster the next generation of democratic leaders; support private sector-led growth, economic diversification, and long-term capital investment; and combat domestic violence and transnational crime, including trafficking in persons. Training and equipment provided by the U.S. government support the professionalization of Mongolia’s defense forces and their continued support for United Nations peacekeeping operations. Because of Mongolia’s long and highly porous borders, U.S. assistance also aims to support nonproliferation activities.
Bilateral Economic Relations
Just over a decade ago, the Mongolian economy barely exceeded $1 billion. By contrast, nominal 2015 GDP was over $11 billion. Foreign direct investment has fueled most of the growth, peaking at almost $5 billion in 2011, although it dropped to almost zero by 2015. Businesses have been a part of the story of Mongolia’s economic expansion. U.S. exports to Mongolia grew from just over $40 million in 2009 to over $650 million in 2012, although they declined to $69 million by 2015 due to the conditions previously cited. Major exports include machinery, vehicles, rubber, optical and medical instruments, agricultural products, and electrical machinery. U.S. imports from Mongolia include salt, sulfur, earths, and stone; ores, slag, and ash; cereals; art and antiques; and knit apparel. The United States and Mongolia have signed a Bilateral Transparency Agreement (scheduled to come into force on March 20, 2017), an Investment Incentive Agreement, a Bilateral Investment Treaty, and a Trade and Investment Framework Agreement.