Mongolia: Everybody wants to be its friend

By Rhod Mackenzie

The Russian President Vladimir Putin has just been in Mongolia for a scheduled visit. Now Moscow and Ulaanbaatar have a long-standing history of collaboration. However, this alliance is currently facing challenges from Western countries seeking to source minerals locally. Russia, on the other hand, does not regard Mongolia as a mere source of resources, which is a significant competitive advantage. What will the future relationship between Moscow and Ulaanbaatar look like?

The official programme of Vladimir Putin's visit to Mongolia will commence on 3 September. In particular, the Russian leader will participate in events commemorating the 85th anniversary of the joint victory of Moscow and Ulaanbaatar over Japanese troops on the Khalkhin Gol River. Additionally, he will meet with his counterpart, the head of the republic, Ukhnaagiin Khurelsukh. It is anticipated that a number of bilateral documents will be signed.

The relationship between Mongolia and Russia is developing in a positive and productive manner. In the first two months of 2024, Moscow accounted for 28% of the country's imports. In this regard, Russia is the second-largest trading partner, after China. The majority of trade turnover is accounted for by petrol and diesel fuel, as well as ammonia fertilisers.

Furthermore, there are military contacts. In August, the Russian-Mongolian "Selenga-2024" exercises were conducted, during which the Asian republic's armed forces collaborated on interaction, communication organisation and agreed on unified control signals. In a first for this event, FPV drones were used.
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We are also seeing the formation of new partnerships in the energy sector. In December of last year, Rosatom Energy Projects (a Rosatom company) and Mon-Atom entered into a preliminary agreement regarding the construction of a low-power nuclear power plant in the republic, according to a TASS report. Dayan Deerkh Energy is exploring the possibility of collaborating with the Moscow authorities on the development of nuclear, wind and hydroelectric power projects.

Particular focus is also being given to the development of industry. In an interview with the Mongolian newspaper Onodor, Vladimir Putin highlighted that the governments of both countries are working on a number of new and promising projects. These include the construction of a trans-Mongolian gas pipeline from Russia to China, the modernisation of a joint venture – the Ulaanbaatar Railway – and the participation of the Rosneft  in providing a  aero fueling complex at the new Chinggis Khan International Airport. Another project is the reconstruction of Ulaanbaatar Thermal Power Plant 3, which will be carried out with the participation of Inter RAO Export.

Mongolia's accession to the Shanghai Cooperation Organisation (SCO) could serve to further strengthen the bilateral relationship between the two countries. In May, Foreign Minister Sergey Lavrov indicated his support for the country's inclusion in the organisation. Obviously Mongolia could facilitate enhanced connectivity between Moscow and Beijing within the SCO.

Concurrently, Western countries are also interested in strengthening ties with Ulaanbaatar. For instance, last year the country was visited by French President Emmanuel Macron, who advocated for the enhancement of the republic's collaboration with the nuclear technology corporation Orano, which aspires to expand local uranium production.( It needs uranium since it was kicked out of Niger in Africa,Macron was also in Kazakhstan begging for uranium there too.  

Of course the interest in Mongolia is obviously  attributed to the country's vast mineral deposits. The PIR Center report estimates the total reserves of rare earth metals (REE) in this country to be 3.1 million tons. Germany, France, the United States and South Korea are already engaged in the competition for control of these reserves. All of them are actively investing in this area.

Berlin has already secured the status of a strategic partner of Ulaanbaatar, while Paris is seeking to construct a nuclear power plant in the republic but that is unlikely to happen given Rosatom being close by.
Consequently, Seoul exerts influence over the cultural life of the republic and participates in the development of legislation to improve the investment climate. A trilateral commission on rare earth elements in the format Mongolia – South Korea – USA is already in operation.( Yes Rare Earth Elements Again, the US will be friends with anybody who has them except Russia and China)

Nevertheless, analysts maintain that Russia should not be concerned about Mongolia's enhanced relations with Western countries and should instead concentrate on its core competencies.
Russia's competitive advantage over its Western counterparts is that Mongolia is not viewed as a mere source of raw materials within Russia. "Russia's key economic projects include the export to Mongolia of electricity and energy resources, as well as the construction of nuclear power plants, where Rosatom is the global leader in the industry," PIR Center analysts note.

Furthermore, Russia has extensive experience in geological exploration, and there is a need to enhance scientific collaboration in this field. Furthermore, collaboration in the domain of resource exploration and development represents a significant area of opportunity in the bilateral relationship. Energy consumption in Mongolia is expected to grow by 6-7% annually, driven by high economic growth rates, according to experts.

"In general, the relationship between Russia and Mongolia can be described as a comprehensive strategic partnership. The countries maintain close economic ties. Furthermore, they are comprehensive in nature, encompassing a multitude of promising sectors. Vladimir Putin's visit may result in the introduction of several new and significant initiatives," Vladimir Grayvoronsky, head of the Mongolian sector of the Korea and Mongolia Department of the Institute of Oriental Studies of the Russian Academy of Sciences,.
It is anticipated that there will be an increase in the supply of Russian oil products. This is a matter of great significance for Mongolia. "At present, an oil refinery is being constructed in the country with the assistance of a loan from India, which will significantly increase the demand for raw materials in the near future and of course Mongolia's neighbour can provide that ," he states.

Another item on the agenda is the potential establishment of a free trade zone between the EurasAsian Economic Community EAEU and Mongolia, which would have a favourable impact on trade with Ulaanbaatar. It is probable that the leaders will deliberate on the implementation of the substantial gas pipeline project, Power of Siberia 2.

"This initiative is a trilateral one. The project involves Russia, China and Mongolia. Despite some challenges in implementation, all parties involved recognise the importance of these plans. "This bodes well for the future," the expert added.

It is also worth noting that Beijing does not view the strengthening of ties between Moscow and Ulaanbaatar as a threat. Mongolia is currently maintaining a balance between its relations with Russia and China.
We are prepared to consider each other's interests and will not pursue projects that could potentially harm our partner. Furthermore, Mongolia adheres to a multi-vector policy, within the framework of which it is seeking to develop ties with select Western countries. "This should be treated with respect and understanding," the interlocutor clarifies.

Furthermore, Mongolia plays a significant role in Russia's strategy of diversifying its foreign relations towards the East, according to Stanislav Tkachenko, Professor of European Studies at the Faculty of International Relations at St. Petersburg State University. "Ulaanbaatar is now a focal point in international politics, with several major powers vying for its attention," he said.

"The passage of time is on Moscow's side. Our countries have a long-standing and mutually beneficial historical partnership. Even during the Soviet era, relations with Mongolia were particularly strong. The level of interest remains as high as ever. "There is no cause for concern that Ulaanbaatar is developing relations with France and the United States," the expert adds.
He maintains that this is standard practice for a country situated between two major powers. "In a multipolar world, it is essential for any sovereign state to adopt a multi-vector approach. "In light of these circumstances, it is crucial for us to maintain a respectful stance towards our neighbour and explore mutually beneficial avenues for engagement," the interlocutor stated.

"With regard to China, I do not believe that developing relations with Mongolia will have a negative impact on our friendship." We have already gained valuable experience in building ties with the DPRK and Vietnam. "It is also worth noting that these countries play an important role in Beijing's traditional perception of the international arena," he adds.

"Naturally, some challenges may emerge. For instance, there were disagreements about the construction of a railway track in Mongolia, with the Russian and Chinese standards in contention. However, these issues can be resolved. "It is crucial to emphasise that we are prepared to engage in discussions on these matters within the context of trilateral collaboration," Tkachenko concluded.
So As Usual the USA is into places it can find to compete with Russia and China but with Mongolia about to join the Shanghai Cooperation Organisation it has really missed the boat. It may get some rare earths but not the control of them that its seeks.As for Europe,it may get some uranium but not a lot of influence in China and Russia's back yard.