Mongolia wants to get closer to the U.S. without rattling 'eternal neighbors' Russia and China

Mongolia’s prime minister is barnstorming Washington this week with a message to the Biden administration and U.S. corporations: While Russia and China are his country’s “eternal neighbors,” Mongolia sees its economic future with the West.

“The United States is not just our trading neighbor, it’s the North Star for Mongolia’s market economy and democratic values,” Luvsannamsrain Oyun-Erdene said in an interview at the Mongolian Embassy in Washington following a Wednesday meeting with Vice President Kamala Harris.

Asked about the touchy relationship with Mongolia’s neighbors — Russia to the north and China to the south — Oyun-Erdene said: “We have our geopolitical tensions … but I'm confident that our two neighbors will continue respecting our choices and the partnerships that we are developing.”

Oyun-Erdene will fly back to Mongolia’s capital, Ulaanbaatar, on Saturday having signed agreements aimed to ease U.S. access to Mongolia in a bid to jump-start U.S. investment in the country. They include an open skies agreement that will pave the way for direct flights between the two countries starting next year and an economic cooperation road map that Oyun-Erden sees as key to enticing U.S. firms to invest in the country’s mining sector.

In his meeting with Harris, Oyun-Erdene said he stressed that he sees the agreements as the first step toward larger initiatives.

“I emphasized the importance of U.S. investment and involvement with mega projects in Mongolia,” Oyun-Erdene said. He emphasized, in particular, his hopes for U.S. investment to exploit the country’s rare earths and copper reserves.

Oyun-Erdene referenced Anglo-American mining firm Rio Tinto’s massive Oyu Tolgoi project, which boasts the world largest known gold and copper deposits and France’s pursuit of and French nuclear firm Orano’s pursuit of a billion euro uranium mine deal as examples of the scale of projects it wants U.S. firms to pursue in Mongolia.

That’s good news for the Biden administration, which sent a delegation to Mongolia in June to talk up U.S. interest in getting a bigger slice of Mongolia’s exports of such minerals essential to sustainable energy technologies. The administration sees Mongolia as a candidate for the Minerals Security Partnership, an initiative with 14 mostly Western countries to bolster sustainable investment in the mining, processing and recycling of critical minerals.

But tensions between the U.S. and Russia over its war on Ukraine and fears of the U.S. and China sliding into a Cold War means Mongolia needs to tread carefully in its embrace of Washington.

Beijing buys more than 90 percent of Mongolia’s exports and the country relies on the Chinese port of Tianjin to ship out much of what it sells to the rest of the world. Mongolia hopes that technology may reduce that dependance. “Cargo could be transported by drones” in the future, Oyun-Erdene said.

Oyun-Erdene said he’s trying to balance the needs of Mongolia’s export-dependent economy with the global tensions involving what he calls the country’s “eternal neighbors.”

“There is a fear that the conflicts between two countries or several countries may end up in a lost decade for the international economy and we want to prevent that,” said Oyun-Erdene.

For now, though, he’s concentrating on expanding Mongolia’s business ties to make its economy more global.

The open skies agreement will allow direct flights between Ulaanbaatar and U.S. cities including San Francisco and Washington. That will eliminate a major impediment to U.S. business interest in Mongolia: the multiple connecting flights with long layovers that make air travel in and out of the landlocked country an ordeal.

“Direct flights are essential for Mongolia's democracy and prosperity and expanding our economy,” said Oyun-Erdene.