Seconds later, dozens of small children on horseback, many of them under ten years old and most without helmets, thunder past the crowd, now whooping wildly.

It's almost a millennium since the descendents of Genghis Khan ruled an empire stretching as far as Europe, but Mongolians are still fiercely proud of their ancient nomadic culture, and the annual Naadam festival is where they show it most - and pass it on to the next generation.

As the winning jockeys dismount, members of the audience jostle to scoop handfuls of sweat from the stocky Mongolian horses, wiping it on their own foreheads for good luck.

"Naadam is a tradition passed down from our ancestors to our parents," said Battulga Tsogbayar, a tiny 14-year-old boy who won Tuesday's horse race near the town of Zuunmod, Tuv province.

"Coming first in a horse race at Naadam makes my family happy, and for me that's the most important thing about the festival."

Naadam centres around the three "men's sports" of horse racing, wrestling and archery, which have been practiced for centuries as intrinsic parts of nomadic life.

Nearby, wrestlers in cloth underpants and jackets covering their arms and shoulders lumber into a small stadium, where, arms outstretched, they perform a slow, almost balletic dance to display their physical prowess.

The winner of each tussle collects a handful of boortsog, a type of fried wheat, some of which he throws to the sky as an offering to nature before sharing the rest with his friends.

Instead of gold, silver or bronze, the winner earns the rank of lion, while runners-up become elephants or hawks.

"I'm Mongolian, so of course I started wrestling from childhood," said Battungalag Chultempuntsag, an imposing figure with broad, slanting features and flattened ears who ranked as provincial elephant last year - the second-highest position.

"We Mongolians all grow up wrestling. It's an important tradition, and I'm pleased to carry it on."

NAADAM FAITH

The national festival on Wednesday in Ulan Bator, the country's heaving capital of over one million, hinted at the country's future as well as its past.

In a televised opening ceremony lead by the president, mass dances evoking shamanic ritual were followed by pop songs from the winners of the Mongolian equivalent of "American Idol" and a turn by the country's Olympic athletes, as banners advertising Pepsi and electronics brands fluttered overhead.

The wrestling and horse racing that followed have become big business, as the country's fast-developing mining industry brings in huge amounts of money, and victorious horses can fetch hundreds of thousands of U.S. dollars.

Mongolia's economy grew at 16.7 percent year-on-year in the first quarter of 2012, according to the World Bank, mostly due to foreign investment in the vast mineral resources lying beneath the steppe.

New opportunities are now tempting many of the country's three million people towards Ulan Bator's sprawling suburbs, far from the grasslands that fostered the sports of Naadam.

"Young people are moving to the city and using traditional ways of life less and less, and this certainly has an effect on our national culture," said S. Dulam, a professor of culture at the National University of Mongolia.

As a result, festivals like Naadam have taken on a greater significance, he said.

"There are two events through which we can pass on and preserve our traditional and national culture: Naadam, which is happening now, and traditional Mongolian lunar New Year."

For Enkhbayar, a local artist watching the "Shagai" - a popular sport in which competitors flick part of a sheep's ankle bone at a target also made of bone - the endurance of Naadam was a great comfort.

"Naadam is in Mongolian people's blood," he said. "It will continue forever. As long as you have Mongolians, no matter where they are, Naadam will still exist." (Editing by Elaine Lies)

• A Permanent Economic Emergency