President Donald Trump began his second term in the Oval Office by making abrupt shifts in U.S. foreign policy, including halting all foreign aid for 90 days. In addition, Trump’s decision to gut the United States Agency for International Development (USAID) and the realignment of U.S. priorities in international development will directly impact Mongolia-U.S. cooperative programs, although it ultimately will not strain the Mongolia-U.S. strategic partnership.
On January 26, 2025, Trump signed an Executive Order on Reevaluating and Realigning United States Foreign Aid. The U.S. State Department press statement on implementing the order emphasized, “The United States is no longer going to blindly dole out money with no return for the American people.” The 90-day review will likely be a multistage process that will trim down specific programs and projects that are not aligning with the Trump administration’s international goals. What this means for Mongolia is that many of the U.S.-funded projects that support gender equity, environmental and wildlife protection, as well as academic and research funding are likely to be on the chopping block.
Since the dawn of Mongolia’s democratization in the 1990s, USAID has been a major supporter of Mongolia’s development. The agency supported Mongolia in strengthening democratic governance, civil society and financial institutions, as well as bolstering its economy and private sector competitiveness. According to U.S. government data, over $20.4 million in foreign assistance has been provided to Mongolia since 2001, with $6.6 million of that coming from USAID.
According to a summary from the U.S. embassy in Mongolia:
USAID assistance has spanned a variety of priority areas, including developing the energy sector, helping to establish and strengthen major banking institutions, providing humanitarian assistance, promoting small businesses and diversifying income in rural areas, and spurring inclusive participation in the democratic process.
Moreover, USAID funds academic and scholarly communities both in the United States and Mongolia. These activities ultimately strengthen cultural and people-to-people relations between Americans and Mongolians. Cutting USAID funds will have direct impact on anthropology, archaeology, and other research-based programs and projects.
U.S.-funded projects not only help with Mongolia’s overall development, but directly impact ordinary’s people’s lives.
Jonathan Addleton, who served as the U.S. ambassador to Mongolia from 2009 to 2012, pointed to the outsized impact of USAID in Mongolia particularly. “I would maintain that both USAID and Mongolia have ‘punched well above their weight’ during the last two decades,” he told The Diplomat, pointing to Mongolia’s success “in applying foreign assistance from all sources to move a better place with respect to GDP, per capita income, and the amount of revenue generated internally to finance a ‘real’ budget as compared to the tiny national budgets of the 1990s.”
Commenting on the recent development, Michael Klecheski, who served as the U.S. ambassador to Mongolia during the first Trump administration, stated, “Curtailing U.S. assistance work throughout the world will have an impact on our international image, but I believe the U.S.-Mongolia relationship will remain strong, as we continue to have important shared interests.”
Klecheski added, “Given Mongolia’s geostrategic position, good ties with the U.S. and other ‘third neighbors’ are vital to it. And after all, when Trump was president last time, he had a terrific visit from Mongolia’s then-President Battulga Khaltmaa. I trust that remains significant to this White House.”
Mongolia and the United States became strategic partners in 2019, during Trump’s first term as president. While the strategic partnership implied economic cooperation, U.S. aid to Mongolia dropped significantly during the Trump administration, from $46 million in 2018 to $12 million in 2020. At the same time, it is important to highlight that the United States did provide approximately 24.8 billion Mongolian tugrik ($8 million) to Mongolia to support its effort to combat COVID-19.
During the Biden administration, U.S. aid continued to flow to Mongolia’s developmental projects. In 2023, USAID announced a five-year strategy for Mongolia, particularly targeting the energy sector, banking institutions, and strengthening democratic values within the framework of sustainable development. As the Trump administration reviews the USAID five-year strategic framework for Mongolia (2023-2028), Ulaanbaatar should expect projects in gender equality, environmental issues, as well as public health sectors will likely be impacted.
Moreover, with recent actions, there is a worry that the Millennium Challenge Corporation (MCC) Mongolia Water Compact may be impacted, despite the fact that the project is almost complete. The MCC project is a joint program between Mongolia and the United States, with both committing large sums to address Mongolia’s critical water supply challenges in Ulaanbaatar. The MCC’s $462 million pledge – $350 million from the MCC, and $112 million from Mongolia – will go toward the improvement of water infrastructure in Ulaanbaatar, including new wells, a water purification plant, and a wastewater treatment plant. As of September 2024, $305.5 million or 87.3 percent of the U.S. grant has been committed to projects; of that $214.8 million (61.4 percent) has already been disbursed.
The latest allocation of USAID to Mongolia was $13 million, just before Biden left office.
In the face of increasing uncertainty over Trump’s foreign policy and international outreach, policymakers in Ulaanbaatar are paying attention. The United States’ relationship with Mongolia has focused on what is known as the the “3D” approach: defense, diplomacy, and development. To some degree, if the development element gets dropped, Mongolia would still have defense and diplomacy to pursue cooperation with the United States. Of the U.S. assistance to Mongolia since 2001, 37 percent was aimed at military goals.
On February 7, Mongolian Defense Minister Byambatsogt Sandag visited the U.S. Indo-Pacific Command in Hawaii. During a meeting between Byambatsogt and the U.S. Army Lt. Gen. Joshua M. Rudd, deputy commander of U.S. Indo-Pacific Command, Mongolia focused on welcoming the new Trump administration. The two sides discussed defense ties and how the Mongolia-U.S. cooperation mechanism should continue and uphold its strategic significance.
According to the Mongolia’s embassy in the United States during the meeting, Mongolia highlighted its commitment and goal to triple the number of peacekeepers, with an eye toward the technical assistance and human resources needed to achieve this goal.
As the Mongolia-U.S. strategic partnership comes to a new starting point, Ulaanbaatar does have an opportunity to push Washington to pass the long-anticipated Third-Neighbor Trade Act, while accelerating U.S. investment in Mongolia’s critical minerals, tourism, technology, and science sectors.
Trump’s decision to either abolish USAID or drastically reduce funding will impact projects and programs in Mongolia. His actions are also a wakeup call for the Mongolian government not to solely depend on foreign aid for its development.
That said, it is also important note that one of the strengths of Mongolia’s multi-pillared foreign policy is that it has a number of different partners helping to support the country’s democracy, civil society, gender equity, public health, and business environment. Multilateral mechanisms and organizations such as the United Nations Development Program, UNICEF, and to some degree, the American Chamber of Commerce could serve as alternative funding sources within this multi-donor system.