Identifier
Created
Classification
Origin
09ULAANBAATAR161
2009-06-04 10:29:00
CONFIDENTIAL
Embassy Ulaanbaatar
Cable title:  

MONGOLIA'S MANAGEMENT OF A RESURGENT RUSSIA

Tags:  PREL PGOV MARR MOPS ECON EINV EMIN MG 
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P 041029Z JUN 09
FM AMEMBASSY ULAANBAATAR
TO SECSTATE WASHDC PRIORITY 2882
INFO AMEMBASSY BEIJING PRIORITY 
AMEMBASSY CANBERRA PRIORITY 
AMEMBASSY MOSCOW PRIORITY 
AMEMBASSY SEOUL PRIORITY 
AMEMBASSY TOKYO PRIORITY 
USMISSION USNATO PRIORITY 
HQ USPACOM HONOLULU HI PRIORITY
NSC WASHINGTON DC PRIORITY
SECDEF WASHINGTON DC PRIORITY
C O N F I D E N T I A L ULAANBAATAR 000161 


STATE FOR EAP/CM,
NSC FOR JEFF BADER,
PACOM FOR POLAD,
OSD FOR ASD GREGSON AND SUZANNE ROSS

E.O. 12958: DECL: 06/04/2034
TAGS: PREL PGOV MARR MOPS ECON EINV EMIN MG
SUBJECT: MONGOLIA'S MANAGEMENT OF A RESURGENT RUSSIA

REF: A. IIR 6 909 0062 09

B. ULAANBAATAR 86

C. IIR 6 909 0060 09

D. ULAANBAATAR 132

Classified By: Political Chief Andrew Covington,
Reasons 1.4 (a),(b) and(d)

C O N F I D E N T I A L ULAANBAATAR 000161


STATE FOR EAP/CM,
NSC FOR JEFF BADER,
PACOM FOR POLAD,
OSD FOR ASD GREGSON AND SUZANNE ROSS

E.O. 12958: DECL: 06/04/2034
TAGS: PREL PGOV MARR MOPS ECON EINV EMIN MG
SUBJECT: MONGOLIA'S MANAGEMENT OF A RESURGENT RUSSIA

REF: A. IIR 6 909 0062 09

B. ULAANBAATAR 86

C. IIR 6 909 0060 09

D. ULAANBAATAR 132

Classified By: Political Chief Andrew Covington,
Reasons 1.4 (a),(b) and(d)


1. (C) Summary. Landlocked Mongolia is compelled by
geography and motivated by history to seek pragmatic and
workable relations with its two giant neighbors. For 15
years following Mongolia's democratic revolution in 1990,
Russia maintained a low profile as it underwent its own
political changes and economic crises. However, in recent
years Russia has ramped up efforts to rebuild ties with
Mongolia that were cut after 1990. These efforts include
military exercises and exchanges, increasing numbers of
high-level visits, offers of budgetary assistance, a
commercial push for a significant share of Mongolia's
undeveloped mineral resources, and pressure to have Mongolia
step up its level of participation in international
organizations to Moscow's liking such as the Shanghai
Cooperation Organization. In response to this campaign,
especially in the present period of post-Georgia Russian
assertiveness toward its near abroad, Mongolia will seek to
maintain a pragmatic and workable relationship with Russia
while pursuing additional breathing room through its policy
of engaging regional and international organizations and
"third neighbors" such as the United States, Japan, and
Europe. End Summary.

--------------
RUSSIAN DOMINANCE IN THE 20TH CENTURY
--------------


2. (SBU) Mongolia edged toward independence with the end of
the Qing Dynasty in China in 1911. Attempts by successive
Chinese power holders and even an unstable White Russian
baron to retake Mongolia in the decade that followed
convinced Mongolian leaders of the need to seek an outside
guarantee of its sovereignty. The result was the
establishment of the Mongolian People's Republic in 1924, an

independent country that was second Communist nation to be
founded. Due in large part to this early loyalty, subsequent
Soviet governments did not absorb Mongolia into the Soviet
Union, and Mongolia remained nominally independent, albeit
subservient in foreign policy and domestic politics to
Moscow.


3. (SBU) Soviet-Mongolian ties experienced their strongest
boost after the Battle of Khalkhiin Gol in 1939, in which a
combined force of Soviet and Mongolian troops repulsed a
Japanese offensive over a border dispute launched from
Manchuria (then the Japanese puppet state of Manchukuo) into
far eastern Mongolia. The battle lasted for months, included
air support and artillery, and resulted in tens of thousands
of casualties. The Japanese lost the battle and turned their
attention to the south toward China, southeast Asia, and
eventually Pearl Harbor. The battle is still today a
lynchpin of Russian-Mongolian relations and a source of pride
for Mongolians. (See paras 11 and 19 for more on the
battle.)


4. (SBU) After the Sino-Soviet split in the 1960s, Mongolia's
role as a buffer between the PRC and the USSR intensified.
The number of Soviet troops stationed on the territory
reached nearly 100,000 ) approximately 1 Soviet soldier per
20 Mongolians. The Soviet garrisons grew in size until the
dissolution of the Soviet Union in 1990 caused the troops to
withdraw almost overnight, taking much of their advanced
weapons, equipment and expertise with them. The Russians
also left behind the Cyrillic alphabet, which is still in
general use today, despite occasional calls to return to the
traditional Mongolian script used until the 1940s (still used
in Inner Mongolia, China) or to switch to the Latin alphabet.
Due to the cost, Cyrillic still reigns, though perhaps half
the population can read the old script.

--------------
THE DEMOCRATIC REVOLUTION
--------------


5. (SBU) When the decline and imminent demise of the Soviet
Union became apparent and Eastern Europe headed its own way,
democratic agitators took the initiative and, through a
series of largely peaceful demonstrations in central
Ulaanbaatar in 1990, forced the Mongolian People's
Revolutionary Party (MPRP) to open to multi-party elections
and, in turn, motivated the MPRP to reinvent itself to the
point where today many of Mongolia's leading business people
are MPRP members.


6. (C) The early 1990s were a period of unique opportunity
for Mongolia. Although membership in the Commonwealth of
Independent States (CIS) was an option, Mongolia, which had
remained nominally independent since the 1920s, chose to take
advantage of the breathing room it was afforded on both sides
of the border. China at the time was particularly focused on
internal stability in the wake of Tiananmen and had not
actively made any serious overtures to bring Mongolia back
into Chinese sphere for decades, in particular because the
Sino-Soviet split had militarized the border between Outer
and Inner Mongolia.

-------------- --------------
PARTICIPATION IN INTERNATIONAL ORGANIZATIONS AS A WEDGE
-------------- --------------


7. (C) Since the democratic revolution, successive Mongolian
governments have sought to bolster international awareness of
the political uniqueness of Mongolia in the region. No
Mongolian will pretend the Mongolian Armed Forces (MAF) could
repulse an attack from either the north or the south, but
Mongolian foreign policy has not relied on superior military
force since the Fourteenth Century. Mongolian leaders have
recognized since their political experiment of the early
1990s that a robust program of engagement with the
international community is required to bolster sovereignty;
Mongolians have been pragmatic and cautious enough not to
assume the breathing room they were afforded on both borders
after the collapse of the Soviet Union would necessarily
last.


8. (C) As a result, we have seen an increasing tendency on
the part of the GOM to coordinate UN votes with its "third
neighbors" and other like-minded countries, a request for
U.S. support for Mongolian chairmanship of the Community of
Democracies in upcoming years, teams of Mongolian experts
sent abroad to participate in crisis simulation and disaster
relief exercises, the hosting by Mongolia of meetings between
Japan and the DPRK in Ulaanbaatar in parallel with the Six
Party Talks to discuss regularization of their bilateral
relationship, a recent conference on regional security in
which the Mongolian organizers promoted their country as a
potential "new Helsinki" to act as arbiter for protracted
regional conflicts, and the sending of multiple rotations of
Mongolian peacekeeping troops to Iraq, Afghanistan, Sierra
Leone, Kosovo, and elsewhere. The MAF has prioritized
participation in and now the hosting of international
military exercises as noted below.


9. (C) Increased Mongolian participation in such
international activities is not lost on Russia, which has in
turn encouraged Mongolia to shift its status in the Shanghai
Cooperation Organization (SCO) from observer to full
participant. (Note: MFAT officials have told poloff that
Mongolia has no desire to become a full member. End Note.)
Russia has also countered Western military engagement with
its own exercises with the Mongolians as detailed below. The
Russians know they have the advantage of the MAF's desire to
maintain a positive relationship with the country that
manufactured most of the MAF's military hardware and still
provides the vast majority of critical maintenance and spare
parts.

-------------- -
RUSSIA,S RESPONSE TO U.S. MILITARY COOPERATION
-------------- -


10. (C) U.S. military cooperation with Mongolia is evident in
the multiple iterations of military exercises such as Khaan
Quest that have taken place since 2000 and which have grown
in scope to include far-flung participants such as Qatar.
Mongolian participation in international operations in Iraq
and Afghanistan since 2003 and the GOM's recent commitment to
send additional troops to Afghanistan have not gone unnoticed
by the Russians. Furthermore, in February 2009, the MAF
initiated a shift in the organization of its General Staff
from a Russian model to a Western model, provoking Russian
concern (see reftel A).


11. (C) Russia has sought to match growing U.S. cooperation
and influence in Mongolia by offering its own military
exercises here, the first of which, Darkhan I, took place in
November 2008. The exercise brought 450 Russian maintenance
troops onto Mongolian territory to provide sorely needed
maintenance to many of the MAF's Soviet- and Russian-built
transport vehicles as well as training on such maintenance
for their Mongolian counterparts. This was the first time
since the withdrawal of Soviet troops that Russian soldiers
were present in Mongolia in such numbers. The exercise was
followed by a ceremony in which President Enkhbayar awarded
medals to Russian and Mongolian participants. Darkhan II is
planned for late August 2009 to coincide with the 70th
anniversary of the Battle of Khalkhiin Gol. (Note: Darkhan I
was referred to with the "I" from the beginning, implying
that the Russians were planning future iterations of the
exercise from the get go. End Note.)


12. (SBU) Russia's response to Mongolia's extensive defense
cooperation with the United States also includes a surge in
military assistance, with a $120 million assistance program
currently underway that includes promises of two MiG-29s,
tanks, and armored personnel carriers. However, to date,
only two MI-171 helicopters and some Russian military and
utility trucks have been delivered. (See reftel B.)


13. (SBU) Russian-Mongolian exchanges of military personnel
are also on the rise. The Russian Defense Attache to
Mongolia, Colonel Verba, recently told the Mongolian press
that the years of stagnation in Mongolian-Russian military
relations have passed. Verba also noted that approximately
150 Mongolian servicemen are studying in military education
institutions of the Russian Ministry of Defense (see reftel
C). Senior Mongolian and Russian military officials have
engaged in high-level exchanges during the past year,
including the visit to Mongolia of Chief of the General Staff
of the Russian Federation Makarov.


14. (C) Although Mongolia may have felt comfortable in the
past with the balance of military cooperation and exercises
squarely on the Western side of the ledger in the absence of
an assertive Russia, a tendency toward something closer to
parity, at least in appearances, is emerging as Russia
presses the role it can play that stems from history and
geography: Russia enjoys a certain comparative advantage in
this regard, as the MAF almost exclusively uses Russian
equipment and weaponry, and Russia can make use of a direct,
low-cost rail connection into Mongolia.

--------------
SPEAKING OF THE RAILROAD: MCC CHALLENGES
--------------


15. (C) Recent events related to the Millennium Challenge
Corporation (MCC) activities in Mongolia offer another lens
to examine the Russian resurgence in Mongolian affairs. In
October 2007, President Enkhbayar signed a $285 million MCC
compact in the Oval Office ) the only foreign leader to have
done so. The largest of the four component projects was to
be a $188 million investment into the Mongolian rail system,
which is 50 percent Russian owned. Despite Mongolian
assertions that they could handle any objections from the
Russian half, the Russians - likely with encouragement from
Moscow - refused to allow a required audit of the rail
company, effectively vetoing the project.


16. (C) Soon after the loss of the MCC rail project became
public, the Russians offered their own $250 million aid
package to improve the rail network. Although the other
three components of the original MCC compact are moving
forward and the GOM is working with the USG to detail optimal
ways to attempt to reprogram the $188 million, the Russian
veto of the MCC rail project and its prompt, subsequent
investment into the Mongolian rail sector smack of the
staking out of turf. The Mongolian public in general has
assigned blame to the Russians for the MCC fiasco, perhaps
motivating the Russians quickly to provide their own rail
upgrade package.

--------------
EYES ON THE PRIZE: MINING
--------------


17. (C) Russian firms have come out more aggressively in the
past two years with the backing of Moscow to seek contracts
(exclusive or otherwise) to extract coal from the massive
Tavan Tolgoi deposit, copper from the equally impressive Oyu
Tolgoi site, and uranium from deposits in Dornod Province and
elsewhere. During meetings in Moscow and Ulaanbaatar in
March and May, 2009, respectively, Prime Ministers Bayar and
Putin discussed the creation of a joint venture to develop
uranium deposits. Although the Mongolian Parliament has not
yet passed mining legislation despite the establishment of a
coalition government in September 2008 that brought in 72 of
the 76 seats in the legislature, Parliament also has resisted
any temptation of simply assigning the exploitation of these
revenues without a transparent and fair process. Rumors
circulated in the press in early 2009 that Oyu Tolgoi had
been "given to the Russians," but these were soon discredited
and the Parliamentary indecision continued. (Note:
Currently, Parliament has referred the mining legislation
back to the GOM working group for retooling as recommended by
the MPs. End Note.)

--------------
RUSSIAN BUDGETARY SUPPORT
--------------


18. (C) During the visit last month of Russian PM Putin to
Mongolia (see para 19),the two sides signed a memorandum of
understaning in response to a Russian offer of $300 million
in budgetary assistance loans to help Mongolia through the
current financial crisis. According to the Ministry of
Agriculture, an initial shipment of tractors worth $25
million was received for the spring wheat planting season in
Mongolia, despite the terms of the loan not yet being
finalized at the time. The same Ag contact could not provide
data on the terms of the loan or even if the terms have yet
been finalized but did confirm that $140 million of the loan
is intended for agricultural purposes.

--------------
HIGH-LEVEL VISITS CONTINUE APACE
--------------


19. (C) High-level Russian-Mongolian visits in both
directions have picked up in recent years. Putin visited
Mongolia on May 13 for the first time as Prime Minister, just
11 days before the Mongolian presidential election, sparking
concerns of foreign meddling that may have harmed incumbent
candidate Enkhbayar of the MPRP. Regardless of his
intentions, the Mongolian public reacted to the 2009 Putin
visit with markedly less enthusiasm than when he visited nine
years earlier as president (reftel D). Russian President
Medvedev is expected to come to Mongolia to commemorate the
70th anniversary of the Battle of Khalkhiin Gol in late
August. The recent visit of Chief of the General Staff
Makarov is noted above in para 13. Mongolian Defense
Minister Lu. Bold (of the Democratic Party) visited Russia in
December 2008.


20. (C) The Mongolians for their part have reciprocated, with
PM Bayar making so many visits to Russia in the second half
of 2008 (three) in addition to a meeting with Putin in Moscow
in March 2009, that he was criticized in the press for a lack
of balance. Although some observers - particularly those
with Democratic Party (DP) connections ) have accused Bayar
of having overly close ties to Moscow stemming from his days
there as Ambassador (2001-2005),post has found the
English-speaking Bayar to be an earnest and open
interlocutor.

--------------
COMMENT
--------------


21. (C) Mongolia faces a resurgent Russia vying for greater
influence in the post-Georgia period, especially along its
borders. Mongolia's only other neighbor is a growing China
that has diluted the Mongolian population of Inner Mongolia
to the point of marginalization. Although some might find
this cause for alarm, the Mongolians are arguably Asia's most
successful managers of Russian influence. Never did Mongolia
lose its independence during the socialist era despite Soviet
pushes for integration and Chinese claims to all its
territory. Since the democratic revolution, Mongolia has
aggressively pursued a policy of engaging the global
community as a constructive, energetic, and increasingly
visible partner. Mongolia's "third neighbor" relationship
with the United States and other like-minded states will
remain crucial to the Mongolian policy of outward engagement
as a counterpoint to its relationship with Russia for the
foreseeable future.


MINTON