Ambassador Pays Initial Call on Prime Minister Bayar

UNCLAS SECTION 01 OF 03 ULAANBAATAR 000007

SIPDIS

SENSITIVE
SIPDIS

NSC FOR P. HANLE
STATE PASS USTR, OPIC, AND EXIMBANK
STATE PASS PEACE CORPS
STATE FOR EAP/CM, NEA/NGA, and INR/B
USAID FOR ANE FOR D. WINSTON

E.O. 12958: N/A
TAGS: PREL MARR ETRD SOCI MG
SUBJECT: Ambassador Pays Initial Call on Prime Minister Bayar

Ref: A) 07 White House 12110442, B) Ulaanbaatar 0005
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION


1. (SBU) SUMMARY: During the Ambassador's initial official courtesy
call January 4 on Prime Minister Bayar, Bayar said he hoped to make
already excellent U.S.-Mongolian relations even better. He
reiterated President Enkhbayar's invitation to President Bush to
visit Mongolia, and he reconfirmed Mongolia's commitment to send a
full 9th rotation of troops to Iraq. Bayar also expressed his
intentions to facilitate the speedy implementation of the Millennium
Challenge Account Compact and the Ambassador encouraged prompt
ratification of the Compact, passage of a cabinet resolution forming
MCA-Mongolia, and the early signing of procurement and fiscal agent
contracts. The Ambassador noted upcoming policy and trade talks set
for early February and the PM sought amplification of USTR's
transparency agreement proposal. The PM noted the "One Laptop Per
Child" program was moving forward. The Ambassador described USG
plans to provide technical advice on Mongolia's energy system as
well as to provide in March an energy crisis related emergency
preparedness exercise. END SUMMARY.


2. (SBU) The DCM and Acting E/P Chief (notetaker) also attended
the very cordial 40-minute January 4 meeting, along with Mr.
Jambaldorj, the PM's newly appointed Foreign Policy Advisor
(previously Ministry of Foreign Affairs (MFA) Director General for
Americas, Middle East and Africa Affairs Bureau and a former DCM at
the Mongolian Embassy in Washington),Mr. Batbaatar, the PM's
Spokesman, MFA Acting Director General for Americas, Middle East and
Africa Affairs Mounkhou and MFA Americas Desk Officer Chinuukhei.

PM's Goal: Make Excellent
Bilateral Relations Even Better
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3. (SBU) The Ambassador congratulated Prime Minister Bayar on
conveyed to him a congratulatory letter from President Bush (ref A).
Bayar responded that 2007, the 20th anniversary of US-Mongolia
diplomatic relations, had been a very successful one for bilateral
affairs and he was glad to be Prime Minister during such a high
point in our relations. He assured the Ambassador that he would
work hard to continue the momentum that had been gained over the
past year. President Enkhbayar's successful visit to the U.S. in
October was just one achievement in a year full of events designed
show how close our two countries had become. Bayar hoped President
Bush would accept President Enkhbayar's invitation to visit Mongolia
around the time of the Beijing Olympics. The PM said that political
relations between our two countries were now excellent and that it
was time to emphasizing the economic and trade relations. The
Ambassador said he fully concurred with Bayar's assessment of
bilateral relations.

9th Rotation
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4. (SBU) Bayar also reconfirmed to the Ambassador the GOM's decision
to send a full 9th rotation of troops to Iraq, noting it had been
formally conveyed by the Vice Foreign Minister the previous day (ref
B). The Ambassador said everyone from President Bush on down,
(including the Secretaries of Defense and State and Congress) were
grateful for this obviously difficult decision. He remarked that
even members of the U.S. Congress who were critical of U.S. policy
in Iraq thanked President Enkhbayar for Mongolia's support when he
visited Washington in October.


MCA Compact Implementation
--------------


5. (SBU) PM Bayar said that one of his administration's priorities
over the next few months would be taking the necessary steps to
implement the Millennium Challenge Account (MCA) compact. He

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expressed gratitude to the US for the generous grant of $285 million
and understood that the GOM needed to work in a timely manner to
ensure proper implementation. He noted that after the Compact's
recent submission to Parliament there was lively, opinionated debate
regarding the agreement, and said such was to be expected from
democracy like Mongolia (Note: MCC was favorably reported out of
Parliament's Foreign Affairs and Security Standing Committee later
that morning and will be taken up during a plenary session next week
for ratification.) He nevertheless assured the Ambassador that they
would do their home work to get the MCA Compact implemented.


6. (SBU) The Ambassador stressed the need to move quickly on
implementing the MCA Compact to get money flowing and necessary
goods procured and hoped that either the PM or the Minister of
Finance would sign the Procurement Agent Agreement and the Fiscal
Agent Agreement as first steps even before the MCA Mongolia Board
was officially formed and a CEO selected. The Ambassador then
pointed to a meeting he had earlier in the day in which Minister of
Roads Transportation and Tourism reiterated the rail road's
immediate need for five locomotives (under the MCC agreement) as a
good example of why it was important to move quickly.


Transparency Agreement
--------------


7. (SBU) The Ambassador said the MCC represented a high watermark in
bilateral relations but that the two countries now needed to more
fully develop commercial and economic relations, particularly in the
area of mining. He noted that annual TIFA talks were scheduled to
take place in Washington D.C. in February and encouraged the GOM to
give serious consideration to the Transparency Agreement (TA)
proposal to negotiate one element of an FTA offered by USTR after
last year's TIFA and as discussed at The White House Summit between
Presidents on October 22, 2007. Such a proposal was unique and had
never been made before by USTR. This piqued Bayar's interest and he
asked the Ambassador to expand. The Ambassador said that despite
repeated calls from the GOM for a Free Trade Agreement (FTA) with
the U.S., an FTA was not a possibility now and the best way forward
in our economic relationship would be to build towards one
incrementally. A Transparency Agreement, which is a component of
all FTAs, was achievable and would lay the groundwork that the
incoming US administration could pick up on. A Transparency
Agreement would help garner support for Mongolia's goal of an FTA in
the U.S. Congress, and the growth of our trade relationship would
create support for an FTA within the US business community that
would be needed before any talk of an FTA could begin. The
Ambassador spoke from his own experiences in Korea, where the
announcement of FTA negotiations followed years of preparatory work
between governments. PM Bayar agreed that an incremental approach
was wise and said he would discuss the matter further with the
Minister of Industry and Trade.

OLPC
--------------


8. (SBU) PM Bayar mentioned the One Laptop Per Child (OLPC) program,
which was set to debut in Mongolia in January with the distribution
of one thousand laptops to schools in Ulaanbaatar's outskirts. Part
of the donated laptops would come from President Enkhbayar's office
and part from the Prime Minister's office. The Ambassador said the
Embassy was happy to hear about the start of the OLPC program and,
while it was a private project, the Embassy would do what it could
to support the program, including seeing what role, if any, USAID or
the Peace Corps could play.

Consulting on Energy; Apprised of
March Emergency Preparedness Exercise
--------------


9. (SBU) Finally, the Ambassador mentioned that he and the USAID rep

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planned to meet with Minister of Fuel and Energy Khurelbaatar soon
to discuss with him, at his request, the possibilities of enlisting
USAID- funded consultants to advise on power plant and pollution
issues. The Ambassador also informed the PM of the emergency
preparedness exercise slated for March, which is being organized by
the Asia Pacific Center for Strategic Studies, working closely with
Mongolia's National Emergency Management Agency. The crisis
scenario involves the catastrophic failure of one of Ulaanbaatar's
power plants in the dead of winter. He sought the PM's cooperation
and support implementing this important joint project.

Minton