KARAKORUM, Mongolia -- In a quiet valley at the end of a rutted road, a few stone and ceramic fragments have been piled on top of each other in memory of the past. The beheaded stone lions and smashed tiles are about all that remain above ground of ancient Karakorum, once the capital of the world's largest empire.
Now, 790 years after Genghis Khan founded the Mongol Empire, his descendants are trying to establish themselves in the modern world, breaking out of centuries of isolation and foreign occupation to build an open, prosperous nation.
This past week, Mongolia took a giant step toward that goal, voting out of power the Mongolian People's Revolutionary Party, which had run the country as a Soviet colony for 70 years. And after several years of hyperinflation and catastrophic economic decline, the economy is on the mend.
But like Genghis Khan's empire, which rose and fell in a matter of decades, modern-day Mongolia is a fragile country, flanked by two great powers: China and Russia, each one having bitten off a chunk of what used to be greater Mongolia.
"We must be the only country in the world that has two nuclear superpowers as its only neighbors," said Hulan, one of the leaders of the newly elected Democratic Union Coalition. "We're in a precarious position."
In a country the size of Western Europe with a population of just 2.3 million, it is possible to travel for hours across the steppes and see no motor vehicles. Most Mongolians are nomadic herders who spend most of their lives on horseback, driving their 28 million cattle to fresh grazing areas.
Mongolia hopes its cattle and underground mineral wealth will make it another Australia, a "lucky country" where a small population lives well in a big, rich land. Mongolia has a relatively well-educated population. But apart from that, it more closely resembles the world's least-developed countries, relying on foreign aid and the export of a few unprocessed natural resources -- copper, cattle and cashmere -- to make ends meet.
Questions of Mongolia's survival are not new.
When explorers arrived in what was then called Outer Mongolia in the last century, they found the region exploited by centuries of Chinese colonial rule and doubted the nomadic herders would last into the 20th century.
The population had declined to less than a half-million, many of them deeply in debt to traders from China.
The temporary collapse of the Chinese empire in 1911 allowed Outer Mongolia to become independent. Inner Mongolia, however, remained part of China, while two other Mongolian provinces, Tuva and Buryiata, had already been snatched up by Russia. For most of the next 80 years, Mongolia was a puppet state of Russia, and when the Soviet Union collapsed in 1991, the outlook was gloomy.
The economy contracted 35 percent; fuel was so scarce that many people almost froze to death. But even before the political breakthrough signaled by last week's election of pro-democratic forces, the country had begun bold economic changes.
Reform of the central bank has slashed inflation to 46.8 percent this year from 420 percent in 1993. Privatization helped the economy grow 6.8 percent last year, the second straight year of growth after three years of sharp contraction. The costs of this transition have been staggering: Between 1990 and 1996, Mongolia fell to 112th place from 60th in the World Bank's Human Development Report, putting it behind developing countries such as India and Laos.
More than a quarter of the population lives in absolute poverty, defined by the government as an income of $100 per year. Yet even those earning above the average income of $300 a year live in relative poverty.
Take, for example, Chinbat, a 54-year-old harp player in the national orchestra who makes the equivalent of $43 a month. Once able to travel to Moscow to study and perform, she now lives in an apartment in Ulan Bator and doubts her 12-year-old son will be able to finish high school.
"The system has broken down for us," Chinbat said, pressing her fingers to her eyes to stop crying. "We have no hope."
Few Mongolians, however, resist the realization that reforms must take place if they are to avoid falling back into servitude to one of their neighbors.
"They realize the reforms are their ticket to nationhood," said Jan Swietering, the head of the United Nations Development Program in Mongolia. "Without reforms, they won't make it in the world."
In their battle to survive, Mongolians have consulted more than economists; they have also turned to Genghis Khan, the fiery military genius whose recipe for dealing with troublesome neighbors was simply to destroy them.
Images of Genghis Khan now adorn everything in Mongolia, from vodka to lapel pins.
In a cavernous office strewn with Chinese-language magazines on politics and strategy, Dalai, a noted Mongolian historian and member of the ultra-nationalist Group of 281, explains why Genghis Khan is a splendid role model for modern-day Mongolians.