The Mongolian courts have sentenced former President Nambaryn Enkhbayar to seven years in jail – commuted to three years – stemming from political corruption during his tenure as leader from 2005-2009. Enkhbayar also served as Mongolia’s Prime Minister from 2000-2004. The scandal has destabilized Mongolia’s international reputation at a time when the Central Asian country is looking to court foreign investors to its burgeoning economy.

Mongolia has spent the last few years championing itself as a bastion of democracy in a region littered with corrupt autocrats. Mongolia also chairs the Community of Democracies, a global intergovernmental coalition of democratic countries promoting common rules, institutions, and norms. During its presidency, Ulan Bator has taken the opportunity to counsel other states in Central Asia, such as Kyrgyzstan, in about making the transition to accountable and transparent governance. Unfortunately, the Enkhbayar fiasco has eroded Mongolia’s mentor role in the region and has created a credibility deficit.

In the past few years, Mongolia has also been treated like a “golden child” by the Obama administration, with high level visits from senior officials like Vice President Joe Biden in 2011 and Secretary of State Hilary Clinton last month. Clinton lavished Ulan Bator with praise indicating that Mongolia’s democratic institutions helped to “dispel the myth that democracy is a Western value.” Clinton’s visit underscored American efforts to shore up its engagement with Mongolia for both economic and strategic reasons. With regards to the former, U.S.-based energy conglomerate Peabody Energy is a key player in the bidding for the development of TavanTolgoi – an area that is believed to hold the second largest coal deposits in the world. Washington has also invested capital into its strategic relationship with Mongolia through the annual Khaan Quest exercises and the promotion of Ulan Bator as an official NATO partner.

Mongolia’s international partners will likely keep a close eye on the aftermath of Enkhbayar’s conviction. There is a political drama brewing in Ulan Bator. The political party Enkhbayar founded, the Mongolian People’s Revolutionary Party (MPRP), is a small but integral part of the current governing coalition led by President Tsakhia Elbegdorj. Some MPRP officials have accused Elbegdorj of a political witch-hunt and threatened to bring down the coalition if Enkhbayar was convicted. The political landscape in Mongolia will be interesting to watch over the coming months.