RUSSIAN PRIME MINISTER VISITS MONGOLIA

UNCLAS ULAANBAATAR 000132


STATE FOR EAP/CM, EAP/PD, DRL, IO AND INR/EAP

E.O. 12958: N/A
TAGS: PGOV PREL ECON PHUM KCOR KMCA SOCI MG
SUBJECT: RUSSIAN PRIME MINISTER VISITS MONGOLIA

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SUMMARY
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1. (SBU) SUMMARY: Russian Prime Minister Vladimir Putin arrived in
Ulaanbaatar on the afternoon of May 13 for a half-day of meetings
with Mongolian government officials. In addition to Putin's
hour-long private meeting with Mongolian Prime Minister S. Bayar,
Mongolian and Russian officials held a series of separate
consultations that resulted in agreements on railroad modernization,
agriculture, and nuclear energy. Some Democratic Party (DP) members
were concerned that Putin's visit - just a week and a half before
Mongolia's presidential election - would boost President Enkhbayar's
re-election bid, but the public reaction to Putin's visit was mild;
neither significant excitement nor protest was observed.

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PUTIN ARRIVES IN MONGOLIA; PMS MEET PRIVATELY
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2. (SBU) Russian Prime Minister Vladimir Putin arrived in
Ulaanbaatar on the afternoon of May 13 for a half-day of meetings
with counterpart S. Bayar and other Mongolian government officials.
An hour-long private meeting between Bayar and Putin was conducted
in Russian without translators, unusual for high-level meetings
(NOTE: Bayar, who studied in Russia and served as Ambassador to the
country from 2001-2005, is fluent in Russian. END NOTE). In a joint
press conference with Bayar afterward, Putin emphasized
collaboration on issues including mining, military cooperation,
railway expansion, education, nuclear technology and uranium. The
two prime ministers agreed to expand cooperation along the
Russian-Mongolian border and discussed cooperation in the
agriculture sector; Russia also agreed to supply Mongolia with
agricultural machinery as part of a previously-proposed $300 million
loan and to expand its import of Mongolian meat products.


3. (SBU) Putin also had a courtesy call with President Enkhbayar;
during their public meeting, Enkhbayar presented Putin with the
order of Erdeniin Ochir (Precious Thunderbold),which is presented
to foreign officials who pursue stronger ties with Mongolia and
adhere to the principles of justice and democracy. Enkhbayar also
met with Russian Railways Chief Vladimir Yakunin.

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BILATERAL MEETINGS
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4. (SBU) Putin, Bayar, and their ministers held a number of other
meetings Wednesday afternoon, many of which resulted in bilateral
agreements. Russian Railways Chief Vladimir Yakunin told reporters
the joint projects agreed upon during the meetings were worth an
estimated seven billion dollars.


5. (SBU) Minister of Roads, Transportation, Construction, and Urban
Development Kh. Battulga met with Russian railway officials in a
closed meeting. Mongolian-owned Ulaanbaatar Railway received 1000
cargo train cars as part of a bilateral agreement signed by Vladimir
Yakunin, head of the state-run Russian Railways Company and Kh.
Battulga; the trains were purchased by Mongolian Trans Logistic from
the Russian Railways Association at the discounted price of $7
million. In a memorandum of understanding, Russia agreed to invest
a total of $250 million in railway modernization; in a separate
agreement, representatives of the countries' state-run railway
industries agreed to set up a joint venture intended to upgrade
railway infrastructure. When a Mongolian journalist asked Yakunin
about the rejection of the MCC railway grant, he said "We Russians
have a saying that you only find free cheese in a mousetrap. Things
that are free come with a higher price...I personally never get free
presents."


6. (SBU) In Putin's meeting with Parliamentary Speaker D. Demberel,
Demberel advocated continued cooperation at border checkpoints and
requested that the Russian Government lower taxes on Mongolian
imports. Putin stressed the importance of strengthening ties
between Mongolia and Russia, including more interaction between the
political parties of the two countries.


7. (SBU) Prime Minister Bayar and Russian Agriculture Minister
Yelena Skrynnik exchanged views on bilateral cooperation in the
agriculture sector. Skrynnik also met with T. Badamjunai,
Mongolia's Minister of Food, Agriculture, and Light Industry; the
two issued a joint statement renewing the 1992 cooperation
agreement. A contact at the Ministry of Food, Agriculture, and
Light Industry told us that the ministries also signed a memorandum
of understanding clarifying the terms of the proposed $300 million
agricultural loan, including interest rates, implementation, and
disbursement mechanisms, but the contact was unable to provide
further details.


8. (SBU) Bayar told reporters that Mongolia hopes to speed up the
creation of a joint venture in uranium mining and increase military
cooperation with Russia, and Putin said the joint venture would be
created within a few weeks. Russian Energy Minister Sergei Shmatko
said separately that the two countries had agreed on the documents
"in principle" and that "there are no issues."


9. (SBU) A memorandum of understanding was signed by Mongolia's
Nuclear Energy Agency and Russia's Rosatom State Nuclear Energy
Corporation; the two sides agreed to arrange for ten Mongolian
students and five experts to study in Russia. Russia and Mongolia
also inked other deals, including preliminary cooperation agreements
between Aeroflot and Mongolian Airlines that will increase the
number of flights between Mongolia and Russia and standardize ticket
prices.


10. (SBU) After three and a half hours of meetings in the
Government House, the two Prime Ministers walked out onto Sukhbaatar
Square, where they spent a few minutes talking to journalists and
examining Russian-made farm machinery that symbolized the
agricultural agreements made between the two Prime Ministers. Putin
then made stops at the local Russian Orthodox Church and a monument
for Russian Marshal Zhukov before an official dinner hosted by Prime
Minister Bayar at Ikh Tenger, the leadership complex outside
Ulaanbaatar where the Prime Minister, President, and Speaker
reside.


11. (SBU) Throughout the visit, Mongolian and Russian officials
emphasized the importance of key anniversaries in Mongolian-Russian
relations, including the 70th anniversary of the Battle of Khalkhin
Gol in August, which provided a decisive victory against the
Japanese on the Mongolian-Manchurian border.

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LOCALS UNFAZED BY VISIT; DP QUESTIONS TIMING
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12. (SBU) Aside from short road closures and blocked access to the
north end of Sukhbaatar Square, life went on as usual in Ulaanbaatar
during Putin's visit. Public reaction to Putin's visit was markedly
different from his previous visit to Mongolia in 2000, early in his
tenure as Russia's president. His first visit, which focused on
restoring friendly relations between Russia and Mongolia, was
greeted with enthusiasm by Ulaanbaatar residents who came in large
numbers to see the Russian president. Poloff observed about 1500
people on the south side of Suhkhbaatar Square when the Prime
Ministers exited the government building around 7:40 pm on May 13,
but the onlookers were calm and did not cheer for Putin as they did
nearly a decade ago. Several had cameras, but no flags or signs
were observed.


13. (SBU) Many Democratic Party (DP) activists have questioned the
timing of Putin's visit, which fell just eleven days before
Mongolia's presidential election. DP campaign representatives said
publically prior to the visit that they were concerned that Prime
Minister Putin might try to assist President Enkhbayar in his
re-election campaign, but the DP told us on May 13 that the DP had
tried to prevent protests, since Russia is an important neighbor and
the two Mongolian political parties share a common approach to
foreign policy. A senior DP campaign official, however, told us he
was annoyed with the fact that Putin praised Enkhbayar during the
visit for strengthening Mongolia's foreign policy.

MINTON