AMBASSADOR DISCUSSES BILATERAL AGENDA WITH

C O N F I D E N T I A L ULAANBAATAR 000258


STATE FOR EAP/CM
NSC FOR EVAN MEDEIVOS

E.O. 12958: DECL: 09/03/2034
TAGS: PGOV PREL ECON EAID ENRG MG
SUBJECT: AMBASSADOR DISCUSSES BILATERAL AGENDA WITH
MONGOLIA'S PRESIDENT AND FM

Classified By: AMBASSADOR MARK C. MINTON FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY. In a series of pre-departure encounters over
the past week, Ambassador Minton discussed a wide range of
U.S.-Mongolia bilateral issues with President Elbegdorj and
Foreign Minister Batbold. Ambassador Minton and DCM Hill
spent nearly all of Saturday, August 30, with Elbegdorj and
his Foreign Policy Advisor (and Ambassador-designate to
China) Sukhbaatar, and also hosted Elbegdorj for lunch on
September 3. In addition, the Ambassador hosted FM Batbold
and Americas Desk staff for lunch on September 1.


2. (C) During all three discussions, the key topics were
foreign trade and investment, enhancing educational
exchanges, the Millennium Challenge Compact, and continued
defense cooperation. These priorities appear highly
consistent with Washington reporting on messaging from
Mongolian Ambassador to the U.S. Bekhbat in recent meetings,
indicating broad GOM agreement on the most pressing current
issues and a commitment to enhancing further our joint
agenda. END SUMMARY.

TRADE, INVESTMENT, AND THE THIRD NEIGHBOR POLICY
-------------- ---


3. (C) Elbegdorj and Batbold highlighted the importance of
balance in the trade relationship. Central to Mongolia's
"Third Neighbor" policy, they both acknowledged the
importance of having many countries represented in
Mongolia's economy to balance pressure from Russia and
China. Elbegdorj stated that the "Third Neighbor Policy
should have an economic dimension," and that "We need
strategic support from the U.S. when dealing with all of
these parties; we need America to balance power in this
region." He noted specifically that Russian President
Medvedev's visit to Ulaanbaatar two weeks ago included an
entourage of roughly 160 officials, of which about 100
focused on economic and commercial business. Similar
commercial pressure is expected when Chinese PM Wen visits in
October.


4. (C) Elbegdorj would like to see more aggressive high-level
engagement from the U.S., through meetings in Washington and
visits to Mongolia. Two Congressional delegations this
summer were a very good step in our relationship, and
demonstrated growing high-level interest in Mongolia. He
also hopes to make a summit visit to Washington if not in the
spring, then within "a year" and would like to invite the
President, Vice President, and Secretary to visit Mongolia.


5. (C) Batbold also discussed the Third Neighbor Policy in
the context of trade and investment, noting that Mongolia,s
commitment to balance is evident in the continuing debate
over Oyu Tolgoi, the huge copper and gold deposit to be
developed by Rio Tinto in the Gobi. He said that Mongolia
could have received much more favorable advance payments and
ownership terms from China, but realized that it was more
important to ensure that Western firms operate major projects
in Mongolia. In his meeting, Elbegdorj noted that, with Oyu
Tolgoi moving forward, development of the huge Tavan Tolgoi
coal deposit in the Gobi is next. He hopes Peabody can make
a strong case for participation to provide again American
balance. He said that, once launched, the Oyu Tolgoi copper
and gold mine could bring in nearly USD one billion almost
immediately, but he is not sure the system is prepared to
"digest" that quickly. He noted that much reform is needed
to make the system "less bureaucratic and more transparent."


6. (C) The Ambassador commented that, in the case of Tavan
Tolgoi, the government might be better served not by thinking
about how to split up the pie among strategic partners, but
rather about the key principles by which it wants the mines
to be operated (best technology, environmental soundness,
etc.). Keeping the discussions and negotiations on these
points of principle would allow the government to avoid
describing decisions as politically-determined.


7. (C) The Ambassador explained that we had tried, for
example, to use an appeal to principle to defuse political
problems with Russia and China associated with U.S. defense
cooperation in Mongolia. By ensuring all parties understand
that our cooperation is focused solely on building global
peacekeeping capacity, the two neighbors are essentially
prevented from arguing that we are trying unduly to influence
the country,s military counter to Russian and Chinese
interests.

HOPE FOR BALANCE EXTENDS TO URANIUM
--------------


8. (C) Batbold raised the difficult question of uranium. He
said that, despite recent announcements of partnerships with
Russia, Mongolia is very much committed to balance in this
sector as well. The GOM is in active talks with several
countries regarding the development of the sector, both mine
production and power generation. Uranium was an important
topic during PM Bayar,s visit to Tokyo in July. Japan is
particularly interested, but so too are France and India.
Uranium and nuclear power are expected to be a major
discussion topic during President Elbegdorj,s first overseas
trip, to India, from September 13 to 16.

EDUCATIONAL EXCHANGES
--------------


9. (SBU) In both meetings with the Ambassador, President
Elbegdorj devoted considerable time to discussing expanding
exchanges, in particular scholarships for Mongolians to study
in the U.S. The Harvard-educated president was pleased to
learn that the U.S. is nominating six Mongolians for
Fulbright scholarships this year, and hopes for continued
growth. Foreign Minister Batbold indicated that the GOM is
still considering action on the proposed joint funding of
Fulbright and other programs. Batbold added that both Russia
and China fully fund several hundred scholarships each year
for Mongolians, and it is important to balance that with
educational opportunities in the West. In doing so, he noted
that Mongolia still relies heavily on
government-to-government partnerships to promote these kinds
of opportunities for its youth.


10. (SBU) The Ambassador added that beyond
government-to-government options, there are many ways to
engage the private educational sector as well. For example,
both the Embassy and GOM can work to encourage Mongolian
alumni of U.S. universities to reach out to their alma maters
for support, develop university-to-university partnerships
that include an exchange element, promote Mongolian studies
in the U.S., and encourage U.S. businesses to support
education of Mongolians in the U.S. Since the U.S.
educational system is decentralized, much work would have to
occur at the state level, with states such as Alaska already
showing leadership in this area.


11. (SBU) COMMENT: Post,s Public Affairs Section (PAS) is
actively working on these options already, and will shortly
add a new Alumni Coordinator to our staff as a contractor,
funded by the State,s Bureau of Education and Cultural
Affairs, Office of Alumni Programs. Through grants, PAS
also supports a non-profit Education Advising Resource
Center, which is planning new activities to reach out to a
wider range of Mongolians. Elbegdorj,s Human Rights
Advisor, Ms. Oyungerel, was also at the lunch and noted that,
as a Stanford graduate, she is active in the private
association U.S. Alumni in Mongolia (USAM). She expressed an
interest in working with Post to generate activities with
USAM to reach out to U.S. universities as the Ambassador
suggested. END COMMENT.

MCC
---


12. (SBU) Both Elbegdorj and Batbold expressed strong
interest in moving ahead with re-programmed MCC funds.
Elbegdorj noted specifically that a strong MCC is important
to demonstrate to the public the importance of the
U.S.-Mongolia relationship, and that MCC should be seen as an
"American footprint in Mongolia." The Ambassador explained
that we hope for some answers following the September 9 MCC
Board meeting, particularly in expanding the property rights,
vocational education, and health projects. Funding for new
projects using money originally dedicated to the old rail
project, however, may take slightly longer to decide.

DEFENSE AND OTHER ISSUES
--------------


13. (SBU) The Ambassador discussed U.S. defense cooperation
with both Elbegdorj and Batbold. Both leaders acknowledged
the importance of this aspect of our bilateral relationship.
They expressed a continued commitment to Mongolia,s growing
role in global peacekeeping operations.


MINTON