Exim's First Visit to Mongolia: Transactions in Aircraft

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000572 SIPDIS SENSITIVE SIPDIS STATE PLEASE PASS TO OPIC AND EXIMBANK TALAAT RAHMAN E.O. 12958: N/A TAGS: EFIN EAID PGOV PREL KMCA MG SUBJECT: Exim's First Visit to Mongolia: Transactions in Aircraft and Rail Likely SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION. ¶1. (SBU) SUMMARY: Export-Import Bank of the United States (Ex-Im Bank) Export Finance Group Senior Vice President (SVP) John McAdams visited Mongolia July 6 to 11 to explain Ex-Im Bank's programs. Prime Minister Enkhbold gave McAdams an overview of the Mongolian situation and desired projects, while McAdams encouraged the PM to prioritize these possibilities. Minister for Industry and Trade Jargalsaikhan had his preferred bank for transactions and urged excluding the U.S. Embassy from communications; McAdams pushed back on both points. The Ministry of Roads, Transportation and Tourism brought together an unprecedented group of stakeholders in the sectors of rail and air to explain future plans and learn of Ex-Im opportunities. Ex-Im met with a wide array of Mongolian businesses which do not currently import much product from the U.S. due to transportation costs, but were greatly interested in increasing U.S.-sourced purchases. In addition, McAdams attended opening events celebrating Naadam and Mongolia's 800th Anniversary. End summary. Comment -------------- ¶2. (SBU) This first trip by Ex-Im to Mongolia was an important educational opportunity for both the GOM and private sector, as there has been no presence in Mongolia by any of the similar major export import banks. The Chinese export import bank has been active here and they offer soft loans, something Ex-Im does not do. There was great local interest in utilizing Ex-Im's financing opportunities for some short-term goods exports, while major projects may not develop for a few years, there is a bright future here for Ex-Im involvement as Mongolia's economy continues to grow. The visit was also covered widely in the media. END COMMENT. Mongolian Government Meetings -------------- ¶3. (SBU) Ex-Im's meetings with the Government of Mongolia (GOM) were primarily to introduce how Ex-Im functions and to look for possible projects idea for financing. Ms. Talaat Rahman, Ex-Im Bank's Regional Director for Asia and the Middle East accompanied McAdams during his visit. Prime Minister Enkhbold gave an overview of the Mongolian situation and desired projects, while McAdams encouraged the PM to prioritize these different project possibilities. While no immediate projects are on tap, there are strong possibilities in the next few years exist for U.S exports, particularly in the transportation sector. Although Ex-Im met with Minister of Health Gundalai, who is interested in acquiring large amounts of U.S. equipment, there appears to be no funding available for health sector U.S. exports at this time. If the health diagnostic center proposed by the GOM to the Millennium Challenge Corporation (MCC) comes to fruition, there may be increased opportunities. ¶4. (SBU) Of particular interest was the meeting with Minister of Industry and Trade Jargalsaikhan, who invited McAdams to Mongolia while in Washington earlier this spring. Jargalsaikhan included Commerz Bank representatives in his meeting with McAdams. Jargalsaikhan has designated Commerz Bank as his intermediary to deal with Ex-Im. McAdams explained Ex-Im operations, including that they will work with any qualified bank, not just Commerz Bank. Jargalsaikhan did not have any immediate projects, although he suggested that several large mining projects (including properties now in private hands) might be proposed by the GOM. Jargalsaikhan expressed concern over the role of the U.S. Embassy as an intermediary as he and Ex-Im should "talk straight business" and avoid politics. McAdams reiterated that the U.S. Embassy is Ex-Im's intermediary in Mongolia and that communication should flow through post. ¶5. (SBU) The Ministry of Roads, Transportation and Tourism's (MRTT) new State Secretary Bat-Enkh brought together an unprecedented group of stakeholders in the sectors of rail and air to explain future plans and learn of Ex-Im opportunities. (NOTE: The different agencies responsible for these two sectors experience frequent infighting so the expression of solidarity indicates growing strength on the part of the MRTT in its oversight role) The most likely U.S. exports in the next several years would include a purchase of Boeing planes, ADS Mode B radar and General Electric rail kits. None of these projects are certain at this time, but McAdams encouraged the GOM to contact Ex-Im for possible financing if the projects come to fruition. McAdams also encouraged the MRTT to explore USTDA assistance in learning more about how to attract ULAANBAATA 00000572 002 OF 002 U.S. companies to tenders for roads projects. Mongolian and U.S. Private Sector Interests -------------- ¶6. (SBU) Ex-Im met with a wide array of Mongolian businesses which do not currently import much product from the U.S. due to transportation costs. However, there is great interest in the possibility of increasing their U.S.-sourced purchases in the future through financing assistance from Ex-Im. Larger Mongolian conglomerates that already purchase some U.S. exports provided a more focused picture of projects, both small and large scale that could qualify for Ex-Im financing. For example, a Mongolian company entering the domestic aviation market is looking at purchasing Bell helicopters and a meat importer would like to bring in frozen chicken several times a year. Participation in 800th Anniversary Celebrations -------------- -- ¶7. (SBU) The Ex-Im delegation represented the USG at several of the opening events for Mongolia's 800th anniversary celebrations, including the dedication of a new statue Chinggis Khan memorial hall on the main square and a wreath-laying at the Sukhbaatar statue. The GOM greatly appreciated the presence of this VIP delegation as an expression of the continued strengthening of bilateral relations. ¶8. (U) The Ex-Im delegation cleared this cable. SLUTZ