Identifier
Created
Classification
Origin
08ULAANBAATAR11
2008-01-08 06:58:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ulaanbaatar
Cable title:  

Trains, Planes and Congressional Exchanges: Ambassador

Tags:  ELTN EAIR PREL ETRD SOCI MG 
pdf how-to read a cable
VZCZCXRO6575
RR RUEHLMC
DE RUEHUM #0011/01 0080658
ZNR UUUUU ZZH
R 080658Z JAN 08
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 1793
INFO RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEHBJ/AMEMBASSY BEIJING 5934
RUEHMO/AMEMBASSY MOSCOW 2052
RUEHKO/AMEMBASSY TOKYO 2818
RUEHUL/AMEMBASSY SEOUL 3123
RHMFIUU/FAA NATIONAL HQ LONGMONT WASHINGTON DC
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
UNCLAS SECTION 01 OF 02 ULAANBAATAR 000011 

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR, OPIC, AND EXIMBANK
STATE FOR EAP/CM AND and INR/B
USAID FOR ANE FOR D. WINSTON
TOKYO AND BEIJING FOR FAA REP

E.O. 12958: N/A
TAGS: ELTN EAIR PREL ETRD SOCI MG
SUBJECT: Trains, Planes and Congressional Exchanges: Ambassador
Calls on Minister for Roads, Transport and Tourism R. Rash

SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000011

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR, OPIC, AND EXIMBANK
STATE FOR EAP/CM AND and INR/B
USAID FOR ANE FOR D. WINSTON
TOKYO AND BEIJING FOR FAA REP

E.O. 12958: N/A
TAGS: ELTN EAIR PREL ETRD SOCI MG
SUBJECT: Trains, Planes and Congressional Exchanges: Ambassador
Calls on Minister for Roads, Transport and Tourism R. Rash

SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: On January 4, the Ambassador paid an initial
courtesy call on new Minister of Roads, Transportation and Tourism

R. Rash. During the cordial hour-long meeting, Rash emphasized the
importance of the rail sector to the country's economy and the
Millennium Challenge Account (MCA) Compact's vital contribution to
revivifying it. Rash praised the superior quality of General
Electric (GE) locomotives over their Russian counterparts while
underscoring the railroad's urgent need to receive five locomotives
as part of an agreement under the MCC compact. The Ambassador stood
ready to assist and encouraged the GOM to expedite MCA
implementation, particularly to sign key Procurement and Fiscal
Agent Agreements that would enable preliminary funding to facilitate
preparations to secure essential items like the much needed
locomotives. The Ambassador also noted that bilateral relations were
turning towards expansion of commercial ties, especially in the area
of mining, where the USG was supporting the efforts of Rio Tinto and
Peabody Energy to develop world class copper and coal deposits in
the south Gobi. Rash also effusively reminisced about his
participation in a parliamentary exchange delegation to Washington
D.C. and Hawaii last year (House Democracy Action Commission, HDAC)
and noted the Ministry plans to obtain Boeing aircraft for the
Mongolian's national carrier MIAT, and to develop tourism in the
South Gobi and Huvsgol Provinces. END SUMMARY

Workin' on the Railroad
--------------


2. (SBU) On January 4, the Ambassador paid an initial courtesy call
on the newly appointed Minister of Roads, Transportation and
Tourism, R. Dash. In addition to his ministerial duties, Rash's
portfolio also includes positions on MCA-Mongolia Board and the
parliamentary working group on mining issues, both key areas of U.S.
engagement with Mongolia. During the meeting, Rash noted that he

headed the Mongolian Rail Road (Mongolian acronym: MTZ) for over 15
years and believed his current assignment was a show of trust by
parliament for him to continue his oversight of a sector that is key
to Mongolia's economic health. He reported that opinion within the
railway was that American locomotive products were far superior to
Russian ones. The railway's purchase of two (Dash -7 series)
locomotives from GE was a good decision, he said, albeit a
controversial one, because it meant rejecting equipment built by the
railroad's Russian co-owners. MTZ was now working to complete the
purchase 20 GE locomotive kits, with 10 already procured. (Note: GE
reps reported to post that it would like to finish the existing
contract to which Rash referred, by selling six additional
modernization kits during 4th quarter of 2008. Preliminarily, the
railway has agreed to buy, but GE believes that Russians want to
stop the contract. In addition, GE revealed that it is working to
improve the technical conditions of modernized locomotives fleet by
introducing service arrangement for the railway. Specifically, GE
has proposed a 10-year deal that will cover scheduled maintenance
activities and overhaul components supply. End Note.)


3. (SBU) Rash was grateful for the MCA contribution to the railroad
(Note: the MCC Compact will provide US$188 million to upgrading the
rail system, the lifeline of Mongolia's international trade). He
pledged that, as a member of the MCA-Mongolia Board, implementation
of the MCA rail project will be a priority for his ministry. He also
said at least 30 locomotives would be needed to realize the rail
sector's full potential but that the railroad urgently needed to
obtain five locomotives right away under an agreement reached with
MCC.

Need for Speed: Equipment Purchases Depends
on Rapid Formation of MCA-Mongolia
--------------


4. (SBU) The Ambassador thanked Rash for his efforts in helping
Mongolia reach the MCA Compact, and he said that as a member of the
MCA-Mongolia board, Rash's leadership could help press for needed
organizational efforts to speed up MCA implementation. The

ULAANBAATA 00000011 002 OF 002


Ambassador agreed with Rash's assessment that five locomotives were
urgently needed, not only because of the onset of the summer
construction season, but also because it was important to show early
and concrete results of the compact's implementation. The Embassy
would do all it could, he said, to push for delivery of the
locomotives in the early part of 2008 but warned that progress
depended on timely completion of the necessary Procurement and
Fiscal Agent agreements, the absence of which would impede timely
delivery. He also noted that inflation risks eroding buying power.
The Ambassador noted that Parliament still needed to ratify compact
(expected later this week),the MCA board needed to be formed and a
CEO chosen; he urged this be done quickly. He added that an
independent audit of MTZ's books was required to get funds moving.


Parliamentary Exchange
--------------


5. (SBU) Rash recounted some of his experiences on his recent
parliamentary exchange trip (House Democracy Action Commission or
HDAC) to the U.S. that he said taught him a lot about the American
political system. He was particularly impressed by how the two-party
system was so well balanced. The success of the Library of
Congress' Congressional Research Service had encouraged the
delegation to invest more resources for their own parliamentary
research service. The Ambassador said he was grateful for the kind
words about the congressional exchange program, noted that relations
between our two countries had deepened over the past year thanks in
part to such exchange programs and he looked forward to
strengthening ties further through additional parliamentary
exchanges. Mongolia is highly respected in the U.S. as a true
democracy with a functioning parliamentary system, he added.

Mining Issues
--------------


6. (SBU) When Rash reminded the Ambassador that he was also a member
of the parliamentary working group on mining issues, the Ambassador
remarked that the signing of the MCC compact was certainly a high
point in bilateral relations, but that it was now important to focus
on the development of our commercial relations, particularly in the
area of mining. He then noted that the Embassy was currently
supporting Rio Tinto and Peabody Energy in their efforts to develop
world class copper and coal deposits in the south Gobi.

Interest in Boeing Aircraft
--------------


7. (SBU) Rash revealed that the GOM was planning on obtaining new
Boeing aircraft to enhance MIAT's fleet. (Note: MIAT, the national
carrier, has been working to secure one Boeing 737 and maybe a 767
as a replacement for the Airbus 310 it currently has under a lease
that expires in 2010.) He also said they were aiming to develop
tourism in the southern Omnogovi and western Husvgol provinces, but
admitted the major obstacle was the need to improve infrastructure.


GOLDBECK