Relations between Mongolia and Russia continue to improve following a visit to Ulaanbaatar by Russian President Dmitry Medvedev. The cause to a meeting became events to commemorate the 70th anniversary of the Battle of Khalkh Gol, where Soviet and Mongolian forces defeated the invading Japanese Kwantung Army in August 1939.

“History is such a stubborn thing that can be neither forgotten nor changed,” Medvedev said. However, the deep closeness of Russian-Mongolian ties should not be overstated.
Today Mongolia is assuming a greater level of global economic importance - not so long ago strategically important raw materials like uranium have been found. According to the recent situation with oil prices, almost all developed countries have been searching for another form of energy less volatile than today’s fossil fuels. Nowadays, Canada and Australia account for 44% of all uranium mining in the world. Kazakhstan and Russia account for 16% and 8% respectfully. Mongolian estimates have put the level of uranium at around 1,3 million tons, so the country has the 3rd largest reserve of uranium in the world but zero is being extracted.

Wedged between Russia and China, Mongolia has always had to tread carefully in the realm of foreign policy. Not only has Mongolia cultivated ties with Russia and China but has reached out to the United States and Japan. While Mongolia is certainly interested in Russian investment, officials in Ulaanbaatar know that competition will keep prices at their highest.

During the last visit, Mongolia and Russia signed five strategic agreements:

• Agreement on establishment Dornod Uran company;
  
• Memorandum on cooperation between the Railway Agency of the Mongolian Government and the Railway and Road Agency of Russian Government;
  
• Memorandum on cooperation between Ulaanbaatar Railway, and Russian Railways and Transmash Holding of Russian Federation;
  
• Protocol between General Election Committee of Mongolia and Central Election Commission of Russia;
  
• Declaration on strategic partnership between Mongolia and Russian Federation.

Russian President Dmitry Medvedev and his Mongolian counterpart Tsakhia Elbegdorj, settled a dispute over an unpaid Mongolian debt of US$150 million in order to move ahead with joint investment projects. Back in March, Russia announced an agricultural credit of US$300 million. Mongolia expected to receive the initial US$150 million tranche by the end of 2009 from Russia’s Rosselkhozbank but the unpaid Mongolian debt had emerged as a stumbling block. “We ordered a resolution to the remaining debt in fairly short order. It is critical to resolve these small but upsetting issues in our relations in order to pursue strategic cooperation,” Russian President Dmitry Medvedev said.

Russia and Mongolia agreed to start a joint venture to mine the rich uranium deposit in Dornod, in northeastern Mongolia near the Russian border. According to the agreement, Dornod Uranium Company will be founded to exploit the “Mardai” uranium mine in Mongolia’s Dornod province. Perhaps due to its past diplomatic and economic ties, Russia has been the first country to approach Mongolia about its uranium. In 2008, Mongolia and Russia signed an agreement to cooperate in the production of uranium. The agreement comprises of a plan of joint actions whereby Russian specialists would assist in the uranium exploration, extraction and processing in Mongolia. In addition, Russia would help Mongolia construct its first nuclear power plant. Russia and Mongolia intend to build many new nuclear energy plants between 2009-2030. Rosatom State Corporation and Department of Atomic Energy of Mongolia have signed an agreement for intensification of cooperation in the field of peaceful use of nuclear energy.

Many other countries have also showed interest in mining the uranium. Mongolia and Japan signed an agreement on nuclear energy in May 2009, and that Ulaanbaatar also cooperates in the uranium sphere with France, Canada and China.

According to the new Mongolia-Russia agreements, the two will establish a new joint venture named “Infrastructure Development Company (IDC),” which would be a force for improving railway system in Ulaanbaatar. Russian Railways has pledged to modernize and build railways in Mongolia in return for development licenses for the Central Asian state’s largest deposits, the Tavan Tolgoi coal deposit and the Oyu Tolgoi gold and copper field. The Tavan Tolgoi coal mine, 180 kilometers from the Mongolia-China border, is one of the biggest in Mongolia with coal reserves of about 6,4 billion tons. It is necessary to notice that Ulaanbaatar Railway Company refused to take US$188 million of aid from the U.S. Millennium Challenge Account, a U.S. official foreign assistance program.
Mongolia was interested in a discussion of Siberian farm production and an increase in bilateral agricultural cooperation.

The presidents also discussed the possibility of a natural gas pipeline from Russia to Mongolia, and carried out a military exercise.

Mongolia trains with many foreign militaries, including those of the US, China and Russia, and Mongolian leaders are adept at using each foreign partner for what it can offer militarily. But the Mongolian military has found itself in the unusual position of participating in separate joint exercises involving US and Russian troops going on at the same time.

US-Mongolian exercise known as Khan Quest 2009 is the most visible form of US-Mongolian military cooperation, which, for Mongolia, has become an integral part of its “third neighbor” foreign policy strategy. Under that strategy, Ulaanbaatar strives to strengthen relations with nations beyond its two immediate neighbors, Russia and China. An 11-day Khan Quest 2009 concluded August 25 while Russian-Mongolian exercises Darkhan-2 began on August 23.

Russian officials have told Mongolian leaders to “reconsider” deepening military ties with the Washington. Russia has put military arms including armored personnel carriers, tanks and helicopters for the sum of US$60 million over the last two years. The number of Mongolian officers in Russian military academies rises year by year.
Of course, Mongolians welcome Russia’s increased interest in Mongolia. Russia plays an important role in Mongolia’s foreign policy, mainly in providing a counterbalance to China. Russia-Mongolia cooperation would contribute to the stability of the region and there was great potential to further boost Russia-Mongolia cooperation, said the Russian president.

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