THE KREMLIN TAKES AIM AT MONGOLIA'S URANIUM RESERVES

For centuries, Mongolia was an object of geopolitical interest, widely seen as a buffer between two rival empires. But these days — given the recent discoveries of strategically important raw materials like uranium — the country is assuming a greater level of global economic importance. At the same time, the global drop in commodity prices has hit Mongolia hard and the country’s economy is now struggling.

Budgetary pressure has prompted Mongolian leaders to seek outside funding. The International Monetary Fund announced in early May that it would provide $229 million to Mongolia to help stabilize the country’s finances. But Ulanbaatar’s needs are greater, and that has created an opening for Russia.
Moscow has been particularly active of late in trying to reestablish a strong presence in Mongolia. Back in March, Russia announced an agricultural credit of $300 million, which, in reality, was just one element in a larger stabilization effort. [For background see the Eurasia Insight archive]. That aid can also be seen as a hidden subsidy for the Russian agricultural sector, as much of the money made available to Mongolia was tied to a requirement to purchase Russian products.

Putin’s visit on May 13 aimed to cement a new Russian-Mongolian special relationship in place. The centerpiece of the visit was a deal worth potentially $7 billion, under which the Russian state-controlled railway company agreed to upgrade and expand Mongolia’s rail network. The rail expansion into southern areas of the country would help Mongolia boost exports of uranium, copper, coal and other minerals. The payoff for the Russian railway company includes mining licenses for the Tavan-Tolgoi copper coal mine and the Oyu-Tolgoi cooper-gold mine.

EurasiaNet