...sounds like you'd be better served for a nation like that to teach all its citizens the art of improvised guerilla warfare: making weapons from farm implements and everyday tools (think north vietnamese VC planting punji stick traps everywhere) to making improvised explosives and IED out of whatever's available.

Teach them the history of how European resistance movements in WW2 helped hinder the Axis nations, etc).

 

What nation on earth would willingly invade and indefinitely occupy a nation full of potential terrorists?

 

Oh wait, let me rescind that... 

 

 

yes ppl, that was sarcasm.

 

 

 

...but the tactics obviously work: look how much expense it's taken the economically and militarily mighty US to stem the tide of violence in Iraq and Afghanistan (in manpower and materiel), let alone any other nation having to contend with scattered hordes of troublesome rebels. All that's needed is a wealthy foreign presence intent on destabilizing the occupying nation's credibility: think Russia's role during both the Korean and Vietnam conflicts, the US in A-stan during the Russians' incursion, and certainly several other instances in far off corners.

It works even better today when you also can manipulate the media to favor your side of the cause.

 

Although they are nice luxuries to have, combat jets and AFVs aren't always necessary to achieve enough victories to deter a foreign occupier altogether.

either of mongolia's neighbours totally outclass any conceivable military mongolia could manage to build.  given this mongolia's future will depend on adroit diplomacy not military strength.

I agree that our country can't afford new MBTs or Grippens.
I even wonder whether a conventionally oriented military is worth the expense. May be a peacekeeping oriented one? or if it is conventional, we should totally restructure and reequip the army. To answer your question murabit:
We have some 400 t-55s, t-62s on paper. But right now half of them was not in good condition.
The BMP-1 s are in better shape and the count is somewhere between 200-250.
BTR-60s are also still running around. mig-21s are grounded. Friend of mine in the squadron says at least 3 is airworthy.
2 out of total 4 Hinds are flyable.
Overall, all the equipments are just targets for modern weapons. the total strength is like 15,000-16,000 depending on that years' conscription success.
The professional soldiers number around 8000.
Trying to re-organize into brigades. (seems like successfully.)
In my opinion we should dump the old soviet armor or try to sell it to someone who needs it.(like the way we sold artillery munitions to afghans 2 years ago.) May be buy some modern wheeled stuff.
Invest into SAMs rather than fighters??

1. Grippen fighters for speed and manuerverability, helicopters can't protect you from high altitude attack.
2. Wheeled light and medium armor to take advantage of Mongolia's flat terrain.  
3. Self propelled artillery/rockets, but not much.
4. Transports for paratroopers and moving gear.
5. Alot of light infantry/paratroopers, until the Mongolian economy can generate enough jobs in mining, industry and solar, all of those young men and women would make a great reservist corps for public works and defence.
6. Have a significant corps of troops trained in moutain fighting.  
7. IEDs.  Great, cheap defence and only the US and UK have any real experience countering this technology and strategy. We certainly aren't going to share with the PLA.  Have a special division of the Mongolian DF dedicated to IED building and deployment in urban and rural areas.