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Putin visits Mongolia to boost trade ties

Russian president vows to increase trade with his country's eastern neighbour as sanctions war with west begins to bite.

Last updated: 03 Sep 2014 15:20
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Ulaanbaatar, Mongolia -  With the crisis in Ukraine hanging over his head, Russian President Vladimir Putin touched down in Mongolia on a trip that could prove key to Russian-Mongolian trade ties.

It was a flying visit – a mere six hours from start to finish - but with the fluctuating situation in Ukraine and the resulting sanctions war threatening to erode the domestic popularity Putin won with his clinical amputation of Crimea, the question for many is why he bothered at all.

But it is thought to be precisely this pressure that has prompted Putin to look to his seemingly insignificant neighbour.

"Because of the emerging situation [in Ukraine] Russia is paying more attention to its immediate neighbour," Altai Dulbaa, professor in Russian studies from the International Studies Institute of the Mongolian Academy of Sciences told Al Jazeera.

What was agreed?
  • Trade between Mongolia and Russia to reach $10bn by 2020
  • Negotiations to begin on Mongolian exports to Russia without tax or customs for the next 20 years
  • Mongolians and Russians can now travel between the nations without visas
  • Mongolia needs to begin developing border ports to international standards
  • An agreement was signed to develop Ulaanbaatar Railways
  • Schools and training centres will be developed to expand cultural, sports, arts, media cooperation
  • Russia will provide a military-technical grant to Mongolia

"Sanctions from the west mean it falls under Russian interests to look to the east. Now Russia is no longer importing meat from Australia, Mongolia wants to fill that gap – we have 60 million animals in Mongolia," she said.

Mongolian President Tsakhiagiin Elbegdorj has said that Mongolia will not take part in any trade sanctions against its neighbour to the north.

"We just want to have a mutually beneficial relationship with Russia," he told Russian media.

Speaking to journalists in Mongolia’s capital Ulaanbaatar on Wednesday, Putin said that there was the "potential for Russia to import Mongolian meat", providing the country could meet international export standards.

At a press conference with Elbegdorj, Putin also emphasised the strong "military and cultural ties" between the two nations and agreed to increasing trade from its current level of $1.6bn per year to $10bn by 2020.

Brothers-in-arms

Mongolia’s historical and cultural ties to Russia run deep. A recent government survey showed 60 percent of Mongolia’s three million citizens want closer ties with Russia.

The pretense for Putin’s visit, his third since 2000, was the 75th   anniversary of the two nations expelling Japan from eastern Mongolia, but the relationship is built on more than shared wartime victories.

"There is a saying that if you scratch the skin of a Russian person you will find the Mongolian underneath," Dulbaa said. "There are many ethnic Mongolians living in Russia and Russia has always acted as a guarantor of Mongolia’s independence.

"Our partnership in military, culture and education have always been implemented in the past, but trade and economic relations have always been lagging behind."

Up until 1990, the Soviets had a strong presence in Mongolia, but the collapse of the Soviet Union meant the two countries became more distant.

Putin has long sought to close that gap, and in 2003 eradicated 98 percent of Mongolia’s debt to Russia – much of it a legacy from the Soviet era.

This burgeoning trade relationship, though, has wider implications for Mongolia's foreign relations.

The so-called third neighbour policy is designed to increase Mongolia's ties with countries such as the US and UK in a bid to secure its economic, and therefore its political freedom from its two domineering neighbours - Russia and China.

The policy’s results, however, has not given Mongolia enough incentive to stop relying on the two superpowers that share its borders. China, for example, still takes 90 percent of Mongolia’s exports.

Russia and China both want to work closely with Mongolia since they are working together. Any cooperation needs to touch Mongolia in some way

Altai Dulbaa, professor, Mongolian Academy of Sciences.

Distant ‘neighbours’

Mongolian Member of Parliament and former Prime Minister Amarjargal Rinchinnyam said Mongolia had been disappointed by the "visibility" of its third neighbours over the past decades.

"It would have been nice to see more of our third neighbours – but we cannot have everything," he said at a conference on Tuesday.

Mongolia's open desire not only to continue, but increase economic links with Russia is further evidence of its lack of satisfaction with these "third neighbours".

"Mongolian-Russian trade ties are very small, and there is a very unbalanced trade between the two countries. First we need to try to balance it to a certain level. We're always interested in trade with Russia," Rinchinnyam said.

Mongolia’s lack of capability when it comes to mass production means that any increased trade ties must be matched with investment in the country’s infrastructure and along with the pledge of increased trade, came the promise of a new railway.

"[We] also signed an agreement on the reform and development of a strategic partnership for Ulaanbaatar Railways and agreed on key principles of cooperation on railway sector reform," President Elbegdorj said in a statement.

It is no coincidence that Putin’s visit and trade promises come just weeks after a state visit to Ulaanbaatar from Chinese President Xi Jinping.

"Russia and China both want to work closely with Mongolia since they are working together. Any cooperation needs to touch Mongolia in some way," Dulbaa said.

Follow Philippa H. Stewart on Twitter

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Al Jazeera
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