How protests over designer handbags threw Mongolia into political crisis and sparked a prime minister’s resignation

Protestors gather at a rally calling for the Prime Minister's resignation at the Sukhbaatar Square in Ulaanbaatar, Mongolia, Thursday, May 22, 2025. (AP Photo/Ganbat Namjilsangarav)

Mongolia has been thrown into fresh political crisis with the country’s prime minister announcing his resignation following weeks of protests sparked by his family’s lavish displays of wealth.

Young Mongolians had taken to the streets of the capital putting pressure on Prime Minister Oyun-Erdene Luvsannamsrai, who lost a vote of confidence in his government on Monday, before stepping down.

Democratic Mongolia is a landlocked nation of just 3.5 million people sandwiched between authoritarian giants China and Russia, and the latest political crisis has put renewed scrutiny on the stability of the country’s democracy.

Here’s what to know:

Luxury car, designer handbags

The protests were triggered by social media posts that went viral showing the prime minister’s 23-year-old son’s lavish engagement proposal and their apparent extravagant lifestyle including helicopter-rides, an expensive ring, designer handbags and a luxury car.

Suspicion grew over how the son accumulated such wealth – especially as Prime Minister Oyun-Erdene campaigned on being from a rural, not wealthy family.

“With no visible sources of income, their display of luxury bags, private travel, and high-end living was a blatant slap in the face to the average Mongolian citizen,” said Anima, 28, a member of protest group Ogtsroh Amarhan (Resigning is Easy).

Anima, who wanted to go by one name for security reasons, said the protests go beyond the social media posts flaunting wealth, which she said were symptomatic of a widening disconnect between the ruling elite and everyday people.

Deepening the anger is the rising cost of living, soaring inflation in the wake of Russia’s war in Ukraine, and choking pollution in the capital that’s home to half the population.

“The cost of living in Mongolia has skyrocketed — many people are paying nearly half of their monthly income in taxes while barely making enough to cover food, rent, or utilities. Most are not living paycheck to paycheck anymore — they’re living loan to loan, debt to debt,” she said.

Protesters have gathered in the capital Ulaanbaatar’s central Sükhbaatar Square, in front of the Government Palace, almost daily for two weeks, calling for Oyun-Erdene to release his finances and resign.

The Prime Minister’s office called the allegations of financial impropriety “completely unfounded.”

“The prime minister makes regular financial declarations annually in line with Mongolian law,” the office said in a statement to CNN.

Corruption

For decades, Mongolia has struggled with endemic graft and protests often break out over allegations that corrupt officials and business leaders were enriching themselves with public funds.

Mass protests erupted in 2022 over a corruption scandal involving the alleged embezzlement of billions of dollars’ worth of coal destined for China.

Though analysts say there is no evidence of corruption by Oyun-Erdene, his son’s social media posts deepened the frustration of a public long wary of their elected officials misusing public resources.

“I want a fair society where ordinary people have a voice, and where government officials are held accountable. Seeing so much inequality, injustice, and arrogance from those in power pushed me to speak up,” said Ariunzaya Khajidmaa, 23, a resident of Ulaanbaatar who joined the protests with her 2-month-old baby.

Part of public frustration is that even when corruption cases are prosecuted, they are slow to work their way through the judicial system, leading some to question the independence of the judiciary.

The 2024 Freedom House index said “corruption and political influence in the daily work of judges remain concerns.”

“If you look at the corruption index, it has gone down. And one explanation is that, even though the Prime Minister has exposed a lot of the corruption cases, nothing has been done. So now everybody’s looking at the judiciary,” said Bolor Lkhaajav, a Mongolian political analyst and commentator.

What’s the Prime Minister’s position?

The Prime Minister had tried to save his coalition government and parliament, called the State Great Khural, held a vote of confidence on Monday.

Oyun-Erdene failed to secure enough votes and a parliamentary statement later announced in a statement that he had resigned. He will continue to serve in an interim capacity until a new party leader is appointed, his office said in a statement.

Oyun-Erdene and his son have submitted themselves to Mongolia’s anti-corruption agency and the prime minister said he would resign if the investigation uncovered any irregularities.

“It has been an honor to serve my country and people during this challenging time marked by a global pandemic, war, and economic turmoil such as tariffs,” he said.

‘Tip of the iceberg’

The protests are just “the tip of the iceberg,” said Jargalsaikhan Dambadarjaa, a Mongolian broadcaster and political commentator, who pointed to some of the major economic shifts in the country.

Oyun-Erdene, who was re-elected to a second term in 2024, had promised to diversify the country’s economy, which is dependent on the mining industry accounting for about a quarter of GDP.

Mongolia has huge deposits of coal, copper, gold and phosphorite, and about 90% of Mongolia’s coal exports go to China.

Oyun-Erdene’s coalition government last year announced 14 new mega projects to boost economic growth, including cross-border railway connections and a major expansion of renewable energy.

And one of Oyun-Erdene’s signature policy centerpieces was establishing a national wealth fund, which the government said aimed to redistribute the country’s assets to the people.

The Sovereign Wealth Fund law, approved by parliament in April, allows the government to take a 34% stake in mines considered to have strategic mineral deposits, meaning they are vital for the country’s economy and development.

There are currently 16 such sites and the profits will go into the fund, with portions allocated to benefitting Mongolian people including through financial assistance, healthcare, education, and housing, according to public broadcaster Montsame.

The move has not sat well with the country’s wealthy and powerful mining elite.

“These people, they are now at the edge of losing their power - huge money - which created huge inequality in the country. So they are fighting to the death against this government,” said Jargalsaikhan.

A democracy between two autocratic giants

Mongolia has been a parliamentary democracy since its democratic revolution in 1991. But the years since have seen multiple governments toppled, or leaders shuffled.

This instability has led some Mongolians to believe the powers of President Khurelsukh Ukhnaa, who is head of state, should be extended. Currently, the president can only serve one six-year term.

“In this mosaic, those who are supporting presidential power argue that, look at Russia and China, they are one-man presidential powers and they are very stable. They say, we tried this parliamentarian system and it looks like it doesn’t work. That’s their idea,” Jargalsaikhan said.

Khurelsukh has repeatedly said he does not want to change Mongolia’s parliamentary democracy. However, some believe amending the constitution to extend presidential term limits is on the table.

“It’s a very crucial time, a very delicate time, and it’s another test to our democracy,” said Jargalsaikhan. “Freedom comes only with the parliamentary system… If we don’t do that, we will be another failed economy, a failed nation.”

In a statement, the prime minister’s office said, “there has been a deliberate attempt to undermine” the reforms of the coalition government by a “hostile campaign” that would “turn Mongolia away from a parliamentary democracy and return power and wealth to a small group driven by self-interest.”

Analysts say Mongolia needs to show it can have stable governance so it can attract broader foreign investment and reduce its economic dependence on China and Russia.

Khurelsukh last year welcomed Russian President Vladimir Putin for an official visit to Mongolia, a trip condemened by Ukraine. The visit was Putin’s first to a member country of the International Criminal Court which had issued an arrest warrant for Putin on charges on war crimes.

“A lot of the governments that are looking at Mongolia as an oasis of democracy between Russia and China, so they want to trust us, but at the same time, you have to show some accountability and stability for other governments to say, okay, Mongolia is getting better,” said Bolor.

Those on the streets say they are tired of political games and want to see tangible improvements to their daily lives.

“We want stronger anti-corruption measures, public officials who are held to ethical standards, and a system that ensures no one is above the law,” said Ariunzaya.

“It’s time for the government to listen to its citizens and take meaningful, lasting action—not just offer words.”