US Becomes Mongolia’s 5th Strategic Partner www.thediplomat.com

Mongolian President Battulga Khaltmaa paid state visit to the United States last week, aiming to bolster the two countries’ political and economic relations into a new strategic partnership. While this is Battulga’s first state visit to the United States, the two sides held a number of high-level diplomatic exchanges preparing the groundwork, including the September 2018 Roadmap for Expanded Economic Partnership, Mongolian National Security Council Secretary Gansukh Amarjargal’s visit to Washington in November 2018, and U.S. National Security Advisor John Bolton’s visit to Ulaanbaatar in June 2019. Each diplomatic engagement forged stronger and closer ties between the two governments.

Thus, on July 31, after the meeting between Battulga and U.S. President Donald J. Trump, the U.S. Department of State released the Declaration on the Strategic Partnership Between the United States and Mongolia. This declaration indicates Mongolia’s successful utilization of the third-neighbor policy and makes the United States the fifth country to ink a strategic partnership with Mongolia.

The Declaration on the Strategic Partnership between the United States and Mongolia is built on mutual understanding and a shared pursuit of global and regional peace and security, protecting human rights, freedom of speech, and national independence and territorial integrity. The declaration acknowledges that U.S.-Mongolia ties “have grown stronger and closer based on common strategic interests, shared democratic values, good governance, principles of sovereignty, and respect for human rights” and “that the United States of America and Mongolia have a mutual interest in cooperating more closely to ensure peace, security, and stability in the region.”

Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Following the signing ceremony, National Security Council Secretary Gansukh Amarjargal told The Diplomat that “Mongolia has established a strategic partnership with four other nations: Russia (2006), Japan (2010), China (2014), and India (2015). The U.S. [is] the fifth nation to sign a strategic partnership agreement with Mongolia. This declaration will create innovation, development, and diversified job markets.”

Two aspects of the declaration are critical in answering how the United States and Mongolia will boost economic cooperation through trade, investment, and development. First, the declaration calls for the utilization of the U.S. Overseas Private Investment Corporation (OPIC) to help solve critical development challenges in Mongolia. In addition, the strategic partnership ultimately aims to strengthen Mongolia’s economic security by increasing the flow of foreign direct investment, supporting small and medium enterprises (SMEs), involving state-owned enterprises, and further exploring emerging new markets such as technology, science, and space exploration.

The impetus to pursue a strategic partnership with Mongolia is also heavily supported by policymakers in Washington. As Anthony Kim from the Heritage Foundation wrote in an article published the day before Battulga’s arrival:

Mongolia is a strategic U.S. ally in the Indo-Pacific. Policymakers should recognize Mongolia’s unique potential to anchor a strong U.S. presence in the region. Washington should upgrade the current economic relationship from one based largely on aid to a partnership based on private-sector-driven trade and investment. Washington should build on John Bolton’s recent visit to Mongolia. Further Cabinet-level visits would reinforce the U.S.-Mongolian strategic security relationship.

Moreover, the U.S. Department of Defense’s Indo-Pacific Strategy report included Mongolia as one of the “democracies in Indo-Pacific,” that are “reliable, capable, and natural partners of the United States.” The report but also emphasized the burgeoning security relationship based on Mongolia’s unswerving contribution to U.S.-led operations in Afghanistan, and UN peacekeeping missions in Africa. Mongolia was mentioned 17 times in the report, compared to 15 for New Zealand, 18 for Singapore 18, and 31 for Taiwan. The state visit of the Mongolian delegation has reinforced Mongolia’s status in the Indo-Pacific Strategy.

Mongolia holds an increasingly special place in the U.S. strategy toward Asia, being the first country to embrace the Millennium Challenge Corporation. In addition, Mongolian policymakers are working together with U.S. representatives in Congress such as Ted Yoho (R-Florida) and Dan Sullivan (R-Arkansas) on advancing Mongolia’s economic relations with the United States to a new, strategic level. Part of Mongolia’s economic strategy, the Third-Neighbor Trade Act (S.1188) was re-introduced in Congress and is expected to have a positive outcome in September.

Economic cooperation and economic security were a top priority during Battulga’s trip to the United States, and science, technology, and entrepreneurial opportunities were raised during other official meetings. Battulga’s state visit also explored cooperation opportunities in space-related projects. The president paid a courtesy visit to NASA headquarters in Washington that remembered historical accomplishments, such as Major General Gurragchaa Jugderdemid’s Soviet-led Soyuz 39 mission to space in 1981. Jim Bridenstine, the administrator of NASA, tweeted, “I was honored to host Mongolia’s President Khaltmaagiin Battulga today as our countries work to enhance our strategic partnership. President Battulga shares our excitement for sending humans to Marks & we welcome future discussions on cooperation in space exploration.”

On July 30, the day before his White House visit, Battulga spoke at the Center for Strategic and International Studies’ (CSIS) Global Leaders Forum on the future of U.S.-Mongolia relations. The conference was attended by the Mongolian delegation, including Foreign Minister Tsogtbaatar Damdin and Mongolian Ambassador to the U.S. Otgonbayar Yondon, as well as U.S. Ambassador to Mongolia Michael Klecheski. During the conference, the Mongolian president received several questions about Mongolia’s position toward global issues like the denuclearization of North Korea, relations with China, and poverty reduction. In his response, Battulga said that Mongolia has never considered itself a “small” country. He added that the strength of Mongolia’s contemporary foreign policy is based on three factors: continuing good neighbor relations with Russia and China; gaining a strategic place in the Asia-Pacific by contributing to security and peace dialogues; and being an active member of both global and regional economic groupings, particularly the U.S. Indo-Pacific Strategy.

Erdenebat Tseveendorj, economic and industrial policy advisor to Battulga, told The Diplomat, “The meeting between the two leaders, Battulga Khaltmaa and Donald J. Trump has been in the spirit of the times. The 32 years of diplomatic relations and the newly established strategic partnership between two governments are expected to grow in a very positive direction.”

Bolor Lkhaajav received an M.A. in Asia-Pacific Studies from the University of San Francisco. She is a Nonresident Research Fellow at The Institute of Strategic Studies and currently writing a book on Mongolia’s foreign policy and security apparatus.

Two Oyu Tolgoi supplier-factories open in Manlai soum www.ot.mn

Ulaanbaatar /MONTSAME/ Two factories that will supply concentrate bags and single use coveralls to Oyu Tolgoi opened their doors on August 1 in Manlai soum, creating 64 jobs.

OECD Anti-corruption Network: High level corruption is pervasive in Mongolia www.montsame.mn

Ulaanbaatar /MONTSAME/ Petty corruption has been gradually declining in Mongolia, but overall, corruption is still widespread and high level corruption is pervasive in Mongolia, a report of the Anti-Corruption Network for Eastern Europe and Central Asia says, warning to take substantial measures to increase public servants’ accountability and ethics. The importance of confirmation of the officials’ tax returns and the absence of the system of whistleblower protection is also emphasized in the report.

On July 30, the Anti-Corruption Network for Eastern Europe and Central Asia (ACN) of the Organisation for Economic Co-operation and Development held a briefing about the report of 4th round of monitoring of Mongolia under the Istanbul Anti-Corruption Action Plan.

Launched in 2003, the Istanbul Action Plan supports anti-corruption reforms in regional countries through country reviews and continuous monitoring of participating countries’ implementation of recommendations to assist in the implementation of the UN Convention against Corruption and other international standards and best practice. Mongolia joined the Istanbul Action Plan in September 2012. The 4th round of monitoring of Mongolia was launched in August 2018. The experts gathered information from representatives of governmental and nongovernmental organizations and bisunesspeople. The report was adopted at the ACN/Istanbul Action Plan Plenary Meeting in Paris on March 21, 2019.

The report covers three main topics: Anti-corruption policy, Prevention of corruption, Enforcement of criminal responsibility for corruption and specifically raises the issue regarding political party financing. It also features 29 recommendations for the government of Mongolia. It was reported that only one of the 19 third round monitoring recommendations made in 2015 was fully implemented. The recommendation regarding public financial control and audit has been fully compliant with, five of the 19 has not been addressed, and the rest have been partially dealt with, the report shows.

The Criminal Code entered into force in 2017 introduced improvements in regulating bribery and illicit enrichment offences. However, a number of international standards have not yet been reflected in the Criminal Code, the report says. In general, it is noted that leniency of the sanctions is giving an opportunity to avoid conviction.

Independent Expert Vitalii Kasko told which drew attention were the short statute of limitations and too broad scope of immunities applied to extensive list of public officials.

ACN Consultant Andrii Kukharuk underlined that Mongolia has ensured the involvement of civil society organisations in the development and implementation of national anti-corruption policy and measures, however, disregarded the policy implementation period and result evaluation. Also, even though it conducts numerous corruption surveys and provides anti-corruption information, the relevant organization does not ensure effective use of the results and include those in its action plan, he said.

The Independent Authority Against Corruption has continued and somewhat stepped up its policy coordination and prevention work, however it lacked independence, resources, and necessary support from state bodies to fully exercise its mandate, the report says.

It also notes that politicization of appointments is still there even with the new Law on Civil Service, suggesting to give emphasis to competitiveness of civil service salaries and ensure transparent and fair remuneration.

The experts commended the launch of e-procurement system, however, cited that the applicability of the public procurement law has not been widened, but instead, further public sector entities have been excluded from the law. The contract value with those selected from open competition has been receded and the Government has not prioritized business integrity measures.

Mr. Vitalii Kasko reported the independence of judges is not ensured and warned that political bodies, especially the president, are involved and have significant discretion in it. The report highlights shortcomings in the procedure of the selection of judges and calls on Mongolia to ensure merit-based appointment to judicial posts. Ensuring both external autonomy of the Prosecutor’s Office and internal independence of prosecutors are the most challenging issues for the Mongolian prosecution service, it says.

The report recommends establishing a separate disciplinary body and consider establishing an independent system of prosecutorial self-governance.

In the conclusion of the briefing, it was underscored that the financing of political parties remains to be poorly regulated, encouraging Mongolia to adopt a comprehensive legal framework on political party financing.

Mongolia launches project to improve English skills of youth www.xinhuanet.com

ULAN BATOR, Aug.1 (Xinhua) -- Mongolia on Thursday launched a project that will help the country's youth improve their English language skills.

Rio Tinto Rains Cash on Investors Even as It Digs Out of Hole in Mongolia www.wsj.com

SYDNEY— Rio Tinto RIO -4.47% PLC said it would pay a special dividend and raise its midyear payout, even as its first-half net profit fell because of a write-down of the value of a major copper investment in Mongolia.

Rio Tinto said it would pay a $1.0 billion special dividend and raise its interim dividend to $1.51 a share from $1.27 a share a year ago, continuing a cash windfall for mining investors as the price of iron ore surges to its highest in more than five years.

The world’s second-biggest mining company by market value on Thursday reported a 12% rise in its first-half underlying earnings to $4.93 billion, missing the $5.16 billion median forecast of seven analysts polled by The Wall Street Journal. It was the miner’s highest first-half earnings since 2014.

“It is a very strong set of results,” Chief Executive Jean-Sébastien Jacques said, adding that profit margins were at their highest in a decade.

However, net profit fell 6% to $4.13 billion after the company wrote down its investment in the Oyu Tolgoi copper deposit in Mongolia by $800 million. Rio Tinto said last month it will take longer and cost more to finish building an underground mine at Oyu Tolgoi after early engineering work pointed to a heightened risk of rockfalls.

“Right now we have a lot of uncertainty about the project,” Chief Financial Officer Jakob Stausholm told The Wall Street Journal.

The Oyu Tolgoi operation—one of the few big mine developments globally—will be the world’s third-largest copper mine once it is completed, according to the company’s projections.

Miners have become much more focused on investor returns after several deals clinched at the top of the last mining cycle were much less profitable than hoped. Some investors are pressing companies to explain how they will grow production as reserves of copper to iron ore get used up.

Last month, Anglo American PLC said it would buy back $1 billion in stock and raised its interim dividend by 27% as it reported a jump in half-year earnings. Rivals including BHP Group Ltd. are also expected to report bumper profits and returns this month.

Cash flows have been bolstered by a boom in the global iron-ore market, as exports from the major hubs of Brazil and Australia have faced disruptions and China’s steel production surged to fresh records. The price of iron ore has jumped by more than 60% since the start of 2019.

Rio Tinto said its net debt totaled $4.86 billion at the end of June, down from $12.90 billion three years ago.

Still, the Anglo-Australian miner hasn’t been able to capitalize fully on the increase in iron-ore prices after production was hurt by bad weather in Australia’s arid Pilbara region, which accounts for 60% of the world’s iron ore traded by sea. Mr. Jacques said the company was struggling to maintain premium iron-ore grades for its customers after running its mines hard in recent years, and delaying some new investments.

“We have operational issues, but this is mining,” he said.

Mr. Jacques was upbeat about the global outlook, despite U.S.-China trade frictions remaining unresolved. Beijing is responding to a slowdown in its economy with stimulus measures and that should buoy demand for iron ore and other commodities, he said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

Iron ore prices help Rio Tinto fork out $1bn dividend, despite Oyu Tolgoi setback www.mining.com

Rio Tinto (ASX, LON, NYSE: RIO) surprised investors on Thursday with a $1 billion special dividend on the back of strong iron ore prices and despite an $800 million write-down on its massive Oyu Tolgoi underground copper project in Mongolia.

Declaration on the Strategic Partnership between the United States of America and Mongolia www.state.gov

The text of the following statement was released by the Governments of the United States of America and Mongolia on the occasion of the visit of His Excellency Khaltmaagiin Battulga, President of Mongolia, to the United States of America, and the meeting between President Battulga and Donald J. Trump, President of the United States of America.

Begin Text:

RECOGNIZING that the basic principles set forth in the 2007 Declaration of Principles for Closer Cooperation, and supported by the 2004, 2005, 2011, and 2018 Mongolia-United States Joint Statements, have provided a firm foundation for the development of the bilateral relationship;

ACKNOWLEDGING that relations between the United States of America and Mongolia have grown stronger and closer based on common strategic interests, shared democratic values, good governance, principles of sovereignty, and respect for human rights;

RECOGNIZING the Joint Statement and the Roadmap for Expanded Economic Partnership between Mongolia and the United States of America signed in Washington D.C. on September 20th, 2018;

DESIRING to increase economic opportunities, create new jobs, and reduce poverty through economic growth, investment, and free, fair, and reciprocal trade;

ACKNOWLEDGING that the United States of America and Mongolia have a mutual interest in cooperating more closely to ensure peace, security, and stability in the region;

GUIDED by the joint intent to continue expanding and developing relations across all areas of cooperation, including political, economic, cultural, educational, humanitarian, and people to people ties in order to meet evolving challenges and to maximize new opportunities;

AFFIRMING that the United States of America and Mongolia share the principle of respect for national independence, sovereignty, and territorial integrity;

The governments of the United States of America and Mongolia hereby declare their relationship to be a Strategic Partnership, and further note their shared desire to:

Intensify cooperation as strong democracies based on the rule of law through safeguarding and promoting democratic values and human rights, including the freedoms of religion or belief, expression, including internet and media freedom, assembly, and association; anti-corruption and fiscal transparency; and youth and emerging leader development;

Cooperate in promoting national security and stability across the Indo-Pacific region so that all nations, secure in their sovereignty, are able pursue economic growth consistent with international law and principles of fair competition;

Deepen national security and law-enforcement ties through collaboration on bilateral and multilateral security, judicial, and law-enforcement efforts in the region and to strengthen cooperation in multilateral engagements such as peacekeeping, humanitarian assistance, and disaster preparedness and relief operations;

Expand trade and investment relations on a fair and reciprocal basis, support private sector-led growth, fully implement the U.S.-Mongolia Transparency Agreement, promote women’s entrepreneurship, and continue to explore support for infrastructure under the new Development Finance Corporation with the new tools provided under the BUILD Act;
Strengthen border security, prevent illegal transshipment and trafficking, expand cooperation on civil aviation safety and oversight, and efficiently facilitate legitimate travel between Mongolia and the United States;

Increase cooperation in addressing transnational threats such as terrorism, human trafficking, drug trafficking, the proliferation of weapons of mass destruction, cyberattacks, transnational organized crime, pandemics, and other emerging non-traditional security threats;

Continue to develop an environment in which civil society, social media, and a free and independent media can flourish;
Maintain high-level official dialogues, encourage bilateral exchanges at all levels of government, and further develop people-to-people exchanges to deepen engagement on issues of mutual interest and concern.

JICA hands over diesel particulate filters for public buses www.montsame.mn

Ulaanbaatar /MONTSAME/. On August 1, the Japan International Cooperation Agency (JICA) delivered diesel particulate filters (DPF) for public buses in the capital city to the Ulaanbaatar city administration. The device has been installed in buses for a test since 2017 within a project to decrease PM emissions from vehicles. In particular, the device was installed in 24 large-capacity buses of three companies in Ulaanbaatar city by the Japanese grant aid directed at developing small-sized business. During the test, the devices installed in the buses removed around 181 grams of soot every day from each bus. In Ulaanbaatar, some 800-1000 buses serve for public transportation and it is calculated that they emit 57 tons of particulate matters into the air in one year, polluting the environment.

Will Putin visit Mongolia for Khalkhyn Gol Victory Celebration? www.news.mn

Who else accompanied Mongolian President to the White House? www.news.mn

When Mongolia’s President visited the White House on Wednesday, he was accompanied by a large group including Attorney General B.Jargalsaikhan. It was first visit of a Mongolian President to the USA since 2011. Mongolian President Kh.Battulga, who was inaugurated in 2017, held a 40 minute face-to-face meeting with his American counterpart Donald Trump on Wednesday even though the meeting had been scheduled to finish within five minutes.