Mongolia is an interesting and driven small nation, one that has in the last couple of decades transitioned from Soviet-modeled socialism to democracy, embraced a free-market economy and taken on a remarkable level of international commitment. Straddling East and Central Asia and geographical giants Russia and China, Mongolia holds special geographic relevance and is a model for the more autocratic ’Stans to the west and North Korea to the east. And yet, it faces many of the developmental challenges burdening the rest of Asia–a personality-driven and still-consolidating political system, rising inflation from the current economic crisis and a widening gap between a wealthy few and the poor. The past two decades of transitioning away from the Soviet era have not been easy for the people. Still, it can be said that many Mongolians do enjoy freedom of choice and a certain level of security thanks to the young population, high literacy rate and historic adaptability of their nation.

Furthermore, as challenging as political consolidation has been, Mongolia in 2009 ushered in its first president from the Democratic Party along with a pragmatic, business-oriented prime minister from the Mongolian People’s Revolutionary Party. With firmer political footing, Mongolia will prove increasingly attractive to private investment, as it has to development funds. The newly-elected president, Tsakhiagiin Elbegdorj, vowed in his summer 2009 inaugural to make transparency and good governance hallmarks for the coming decade–a significant goal.

Over the next ten years, Mongolia will face challenges in a few fundamental areas. The first is the enduring challenge of a need for strategic diversity. China’s economic juggernaut has been both a blessing and curse for Mongolia’s economy, for while it has been bringing investment, loans and economic viability to the country, it has burdened Mongolia with conditionalities–in particular surrounding the smaller nation’s vast mineral and energy wealth. Meanwhile Russia has, too, looked with some longing, both toward minerals and energy resources in Mongolia, as well as for expansion of its eastern political influence. The test for Mongolia’s leadership will be how to balance its two large neighbors while enhancing diplomatic ties and economic relationships internationally with states like Japan, the United States, Korea, Taiwan, the European Union and the rest of Asia. Its participation in international peacekeeping and hosting of the International Conference of New or Restored Democracies earlier this decade reflect a serious commitment on the multilateral front.

Also, to ensure a viable population and workforce growth, Mongolia must address the current significant needs of its education and public health. While private education initiatives have leapt considerably, public education still requires massive infusions of talent and resources, to be achieved by retaining its best and brightest through new initiatives. Early mortality rates, alcoholism and increased exposure to pandemics also remain public health issues, particularly with Mongolia’s geographical vulnerability, being located between China and Russia. This will require a national strategy and sharp improvement in its public health services.

Mongolia also needs to find ways to establish more effective management of its natural resource base, for both its minerals and other national assets and in terms of energy and environmental management. A comprehensive agenda or sovereign fund for its natural resources, as well as assistance in addressing the impact of global warming and increasing urban pollution are critical. With its vast natural beauty and rich historical legacy, eco- and cultural tourism will grow markedly as Mongolia approaches 2020, and protections need to be in place.

In the future, Mongolia can potentially play an important role in the region, enjoying political relations with both South Korea and North Korea while acting as a setting for dialog a potential model for economic and political reform and a nuclear weapons-free zone. After all, it is a nation that has come far in two decades of transition, which should earn it greater attention in the international arena moving towards 2020 in the Asia Pacific.

Dr. Stephen Noerper is an East Asia analyst and corporate Principal at seninternational.org. He holds Mongolia’s State Friendship Medal, is widely published and appears frequently in print and electronic media.