In the wake of the international socialist economic system's collapse and the disintegration of the former Soviet Union, Mongolians began to pursue an independent and nonaligned foreign policy. Mongolia is landlocked between Russia and China and seeks cordial relations with both nations. At the same time, Mongolia has sought to advance its regional and global relations. Ties with Japan and South Korea are particularly strong. Japan is the largest bilateral aid donor to Mongolia, a position it has held since 1991. Mongolia has also made efforts to steadily boost ties with European countries. China is now the largest foreign investor in Mongolia.

As part of its aim to establish a more balanced nonaligned foreign policy, Mongolia has sought to take a more active role in the United Nations and other international organizations, and has pursued a more active role in Asian and northeast Asian affairs. Mongolia became a full participant in the ASEAN Regional Forum (ARF) in July 1998 and a full member of the Pacific Economic Cooperation Council in April 2000. Mongolia is currently seeking to join the Asia-Pacific Economic Cooperation forum (APEC). Mongolia is an observer in the Shanghai Cooperation Organization (SCO), but has stated it does not intend to seek membership. Nonetheless, in 2009 the SCO-financed Durgun Hydropower Station came online. Mongolia, which has diplomatic relations with both North and South Korea, has also sought to play a role in the Six-Party talks. In late 2007, Mongolia hosted a closed meeting between two Six-Party members, North Korea and Japan. Mongolia has also offered to help organize and to host a northeast Asian regional security mechanism. Mongolia is a founding member of the Asia-Pacific Democracy Partnership (APDP) and hosted the group's planning meeting in Ulaanbaatar on July 1, 2008. Mongolia sent four technical experts to the ASEAN Regional Forum’s May 2009 disaster relief exercise in the Philippines.

Mongolian relations with China began to improve in the mid-1980s when consular agreements were reached and cross-border trade contacts expanded. In May 1990, a Mongolian head of state visited China for the first time in 28 years. The cornerstone of the Mongolian-Chinese relationship is a 1994 Treaty of Friendship and Cooperation, which codifies mutual respect for the independence and territorial integrity of both sides. China has objected strongly to visits since 1990 of the Dalai Lama; during the 2002 visit, China briefly disrupted railroad links for "technical" reasons. There are regular high-level visits and expanding trade ties. President Hu Jintao visited Mongolia in 2003 (his first international visit as China's President). President Bagabandi visited China in 2004, President Enkhbayar visited in 2008, and Prime Minister Bayar met Premier Wen Jiabao in Beijing in April 2009.

After the disintegration of the former Soviet Union, Mongolia developed relations with the new independent states. Links with Russia and other republics were essential to contribute to stabilization of the Mongolian economy. In 1991, Mongolia and Russia concluded both a Joint Declaration of Cooperation and a bilateral trade agreement. This was followed by a 1993 Treaty of Friendship and Cooperation establishing a new basis of equality in the relationship. Mongolian President Bagabandi visited Moscow in 1999, and Russian President Vladimir Putin visited Mongolia in 2000 in order to sign the 25-point Ulaanbaatar Declaration, reaffirming Mongol-Russian friendship and cooperation on numerous economic and political issues. In December 2003, Mongolia believed it had settled the Soviet-era debt it owed to Russia with a negotiated payment of $250 million. However, in 2009 the Russian Government stated that hundreds of millions of dollars in debts remained unpaid. The two governments are said to be negotiating a resolution to this. In July 2006, Prime Minister Fradkov visited Mongolia with a large business delegation. The Mongolian and Russian Governments continue to jointly own the railroad and the large Erdenet copper mine. Prime Minister Bayar visited Moscow in April 2008, and the following month President Enkhbayar met President Medvedev in Moscow. Prime Minister Putin visited Ulaanbaatar two weeks prior to the Mongolian presidential election in May 2009, and President Medvedev visited Mongolia in August 2009 to commemorate the 70th anniversary of the Battle of Khalkhin Gol, a combined Soviet-Mongolian victory over Imperial Japan in one of the opening salvos of World War II. After nearly two decades of inactivity, Russia is renewing military ties with the Mongolian armed forces through military education and training exchange programs, as well as joint exercises focused on the repair of Mongolia’s Soviet-built equipment.

U.S.-MONGOLIAN RELATIONS
The U.S. Government recognized Mongolia in January 1987 and established its first embassy in Ulaanbaatar in June 1988. It formally opened in September 1988. The first U.S. ambassador to Mongolia, Richard L. Williams, was not a resident there. Joseph E. Lake, the first resident ambassador, arrived in July 1990. Secretary of State James A. Baker, III visited Mongolia in August 1990, and again in July 1991. Mongolia accredited its first ambassador to the United States in March 1989. Secretary of State Madeline Albright visited Mongolia in May 1998, and Prime Minister Enkhbayar visited Washington in November 2001. Deputy Secretary of State Richard L. Armitage visited Mongolia in January 2004, and President Bagabandi came to Washington for a meeting with President George W. Bush in July 2004. President Bush, Mrs. Bush, and Secretary of State Condoleezza Rice visited Mongolia in November 2005. Defense Secretary Donald Rumsfeld visited in October 2005 and Speaker of the House of Representatives Dennis Hastert visited Mongolia in August 2005. Agriculture Secretary Mike Johanns led a presidential delegation in July 2006 in conjunction with Mongolia's celebration of its 800th anniversary. President Enkhbayar visited the White House in October 2007 and the two Presidents signed the Millennium Challenge Compact for Mongolia (see below). House Minority Leader John Boehner visited Mongolia in August 2009.

The United States has sought to assist Mongolia's movement toward democracy and market-oriented reform and to expand relations with Mongolia primarily in the cultural and economic fields. In 1989 and 1990, a cultural accord, Peace Corps accord, consular convention, and Overseas Private Investment Corporation (OPIC) agreement were signed. A trade agreement was signed in January 1991 and a bilateral investment treaty in 1994. Mongolia was granted permanent normal trade relations (NTR) status and generalized system of preferences (GSP) eligibility in June 1999. In July 2004, the U.S. signed a Trade and Investment Framework Agreement with Mongolia to promote economic reform and more foreign investment. In July 2007, six members of the U.S. House of Representatives visited Mongolia to inaugurate an exchange program between lawmakers of the two countries. The return visit came in August 2007, with five members of the Mongolian parliament traveling to the U.S. Similar exchanges of lawmakers and staff members have continued. The House Democracy Partnership (HDP), under which members of the U.S. Congress and staff directly assist their parliamentary counterparts in newly democratic countries, is an increasingly prominent means of engagement. In total, 25 Mongolian members of parliament have visited Washington and Macedonia on this program. A handful of congressional delegations have also traveled to Ulaanbaatar, including that led by House Minority Leader John Boehner in August 2009. Six staffers from the Mongolian parliament also visited Washington during this time. Members of parliament involved have risen in prominence and spearheaded reforms.

The U.S. Agency for International Development (USAID) plays a lead role in providing bilateral development assistance to Mongolia. The program emphasizes two major themes: sustainable, private sector-led economic growth and more effective and accountable governance. Total USAID assistance to Mongolia from 1991 through 2009 was about $190 million, all in grant form. In the area of economic growth, USAID Mongolia's FY 2009 budget of $7.5 million was to focus on economic and trade policy, energy sector reform, and national consensus-building, with a special emphasis on stabilizing the banking sector and building national consensus on the future of the mining sector. In the area of governance, USAID funding in 2009 was to support anti-corruption work and help improve the ability of the judiciary to adjudicate commercial cases. In January 2010, through USAID the United States signed an agreement to contribute $10 million in grant money to assist the people of Mongolia in recovering from the negative effects of the global financial crisis. Provided by the FY 2009 global financial crisis supplemental, the U.S. assistance will help the government meet its deficit reduction targets while maintaining essential social safety net transfers to those hardest hit by the economic crisis. Additional funds also support technical advisors at Mongolia's central bank. Both the budget support and technical assistance are designed the complement the IMF's continuing Stand-By Arrangement with Mongolia.

In most years since 1993, the United States Department of Agriculture has provided food aid to Mongolia under the Food for Progress and 416(b) programs. The monetized proceeds of the food aid ($5 million in 2008) are used to support programs bolstering entrepreneurship, herder livelihood diversification, and better veterinary services.

The United States has also supported defense reform and an increased capacity by Mongolia's armed forces to participate in international peacekeeping operations. Mongolia contributed small numbers of troops to coalition operations in Iraq and Afghanistan beginning in 2003, gaining experience that enabled it to deploy armed peacekeepers to both UN and NATO peacekeeping missions. Mongolia committed to sending additional rotations of troops (up to 300) to Afghanistan on site security and artillery training missions in late 2009 and also committed to supplying an 800-man peacekeeping battalion to Chad in late 2009 or early 2010. With U.S. Department of Defense assistance and cooperation, Mongolia and the U.S. jointly have hosted "Khan Quest," the Asian region's premier annual peacekeeping exercise, since 2006. The number of participants has grown each year, with the Republic of Korea joining for the first time in 2009.

The Peace Corps has approximately 120 volunteers in Mongolia. They are engaged primarily in English teaching and teacher training activities. At the request of the Government of Mongolia, the Peace Corps has developed programs in the areas of public health, small business development, and youth development. In 2005 and 2006 Mongolian Government officials, including then-President Enkhbayar and then-Prime Minister Elbegdorj, requested significant increases in the number of volunteers (“PCVs”) serving in country. On August 19, 2009, the largest group of PCVs to serve in Mongolia, numbering 66, took the oath of service. This is the 20th PCV group to serve in Mongolia.

Mongolia was one of the first countries eligible for the new Millennium Challenge Account initiative that began in 2004, administered by the Millennium Challenge Corporation (MCC). MCC's program focuses on providing grant support to countries that perform above the median in their income peer group on key indicators in three broad policy categories: ruling justly, investing in people, and encouraging economic freedom. MCC-eligible countries propose projects that will significantly reduce poverty in their countries through stimulating economic growth. On October 22, 2007, at a White House signing ceremony, President Bush and President Enkhbayar signed a Millennium Challenge Compact for Mongolia that called for $285 million to be spent on four projects over a 5-year period beginning in September 2008. The Compact will support efforts to broaden and deepen economic development in Mongolia. The original focus of the Compact was on four key areas: rail modernization, property rights, vocational education, and health. In April 2009, the Government of Mongolia requested the termination of the rail modernization project, citing circumstances beyond its control due to the lack of cooperation of the 50% Russian owners of the Mongolian railway. The government proposed areas for reallocation of the rail project funds, and additional funding for the other three projects as well as a new road/bridge construction project and an energy and environment project were approved by the MCC board in late 2009. Implementing MCC projects in Mongolia will enable key institutions and infrastructure to better support the country's burgeoning urbanized, market-based economy and help Mongolians to increase their incomes by becoming healthier and better trained, by using their land assets more productively, and by increasing their capacity to trade with the world.

Principal U.S. Embassy Official
Ambassador--Jonathan S. Addleton

The U.S. Embassy is located in Micro District 11, Big Ring Road, Ulaanbaatar; tel. [976] (1) 329-095 or 329-606, fax 320-776. Consular and commercial information are available at the embassy's web site: http://mongolia.usembassy.gov.