Background Briefing Previewing the Secretary's Visit to Mongolia

Special Briefing
Office of the Spokesperson
Senior State Department Official
Via Teleconference
June 3, 2016

MODERATOR: Okay, this is a background briefing in advance of the Secretary's visit to Mongolia in a couple days, and our briefer will be a senior State Department official. I'll turn it over to [Senior State Department Official] now to offer you some – an overview of the purpose of the trip and the events that the Secretary will participate in, and then we'll have some time for a few questions.

So with that, to our briefer.

SENIOR STATE DEPARTMENT OFFICIAL: Okay, thanks very much, [Moderator]. Hello, everybody. This will be Secretary Kerry's first visit to Mongolia. Secretary Clinton traveled there in 2012, and according to my notes, before that, Secretary of State James Baker traveled in 1991. Vice President Biden also visited Mongolia in 2011, and Secretary of Defense Chuck Hagel was there in 2014. That paucity of high-level visits notwithstanding, Mongolia is a terrific partner to the United States and a good friend.

I think the label that attaches itself pretty naturally to Mongolia is "plucky democracy." They're a landlocked country of about 3 million people, almost half of whom live in Ulaanbaatar, in a country twice the size of Texas, and in a very, very tough neighborhood. They're sandwiched in between Russia and China. They depend on Russia for the lion's share of their oil – over three-quarters – and China accounts for something on the order of 90 percent of Mongolia's trade. So it's not an easy place to operate. They've been invaded and annexed by China in the 19th century, Russia in the 20th century, and it's been about 25 years since the Mongolians won their freedom and independence from – full political independence from Russia and became a democracy in a peaceful transition of power.

And Mongolia really is an extraordinary democracy. In fact, they're only a little more than a month out from a major parliamentary election in July[1]. They've been active as a democracy on the UN Human Rights Council, as a UN member. Their voting coincidence with the United States, by the way, is very, very high. It's something like, I don't know, 80 or 85 percent. They're also a very active peacekeeping contributor, and quite apart from UN peacekeeping, the Mongolian military has fought side by side with the U.S. military in Afghanistan, in Iraq, and in other dangerous places. It's really a great friend and an inspirational story of people who have achieved independence through peaceful means and developed a robust democracy.

They're very active in things like the Community of Democracies and the Freedom Online Coalition. And so the – Mongolia is in some respects a role model for others in the Asia-Pacific region.

So Secretary Kerry will visit on Sunday. His visit has been compressed by other international meetings that were scheduled or got scheduled. So he's unable to spend as long a time as he had intended, but he nevertheless will be able to hold a meeting with the Mongolian foreign minister, Purevsuren, and will have a meeting as well as a working lunch with President Elbegdorj.

While he is visiting, in part because of the importance of our people-to-people connections and the fact that U.S.-sponsored exchanges bring many Mongolians to the United States to study every year – I think there's something in the neighborhood of 1,500 Mongolians currently studying in U.S. universities – he will hold a town hall with young Mongolian leaders to hear from them what they're thinking in terms of Mongolia's future, its political and social next steps.

The Secretary will meet with some of our Peace Corps volunteers. The Peace Corps program in Mongolia has been active for 25 years and we have had a large number of wonderful volunteers who served in all parts of Mongolia. And the Secretary will also launch a new USAID project to increase both citizen engagement in the democratic political process, and also to enhance good governance in Mongolia, which is a priority for Mongolia as well as, of course, for Mongolia's friends.

He will – before he leaves to go to Beijing for the Strategic and Economic Dialogue, he will attend what's called a Naadam [spells out], which is a traditional Mongolian cultural festival, which is – I think the technical term is "super cool." It features classic Mongolian horseback races – young kids, young boys on horseback racing through the steppes just like they did under Genghis Khan in the 12th century; it includes Mongolian wrestling, which is a huge cultural sport, as testified by the fact that the majority of the reigning sumo wrestlers in Japan are actually Mongolian; archery; and few other interesting and fun things like that.

So, [Moderator], I think that's the basic overview of the visit, and I defer to you on questions.

MODERATOR: Thank you very much. We got questions?

QUESTION: I --

MODERATOR: Nike, go ahead.

QUESTION: -- just have a quick question. Will Secretary Kerry be there to attend the Khaan Quest‎ joint exercise? It will be ended on June 4th, I believe. Will he be – he's visiting part of that?

MODERATOR: Did you hear that?

SENIOR STATE DEPARTMENT OFFICIAL: Yes, I did. No. I mean, Khaan Quest‎ is an important multilateral military exercise hosted by the Mongolians. And the Mongolians, by the way, have a really terrific Five Hills military training facility that many countries greatly benefit from. But Secretary Kerry's visit is not directly connected with the Khaan Quest‎ exercise.

QUESTION: Okay. Thank you.

SENIOR STATE DEPARTMENT OFFICIAL: Although the U.S. is represented at that exercise.

QUESTION: Hi. When Clinton went four years ago, one of the things that it coincided with was a bid for the Tavan Tolgoi coal mine and deposits.

SENIOR STATE DEPARTMENT OFFICIAL: Yes. Yeah.

QUESTION: Did that ever get resolved? And if so, is there any new tendering going on that the United States has a bid or a stake in?

SENIOR STATE DEPARTMENT OFFICIAL: Right. No, the U.S. advocated actively in connection with the Tavan Tolgoi mining project for Peabody, the U.S. mining company. But the project moved very, very slowly. It was bid and then rebid, ultimately going to a Chinese prime contractor. My understanding is that Peabody opted out of subcontract to that bid after extended negotiations, and certainly in the last year the significant drop in the price of commodities such as coal I think has further retarded any real progress on the Tavan Tolgoi mining operation.

QUESTION: If I remember right, there were also some concerns about the transparency of that bidding process and concerns about possible bribes and interference. Is that something that's a lingering concern of yours with the Mongolian Government?

SENIOR STATE DEPARTMENT OFFICIAL: Yeah. The issue of transparency in terms of investment and commercial activities is an ongoing one for the international community. And President Elbegdorj and his government have committed to a range of anti-corruption, good governance, and transparency measures. We negotiated a transparency agreement with the Mongolians that would very much build investor confidence and strengthen the steps that Mongolia, under President Elbegdorj, has taken in the last few years to combat corruption and develop the capacity of Mongolian institutions to promote the rule of law, to, among other things, strengthen the justice sector.

The Mongolian Government has told us that it plans to finalize the transparency agreement in the coming month or two. And one of the things that Secretary Kerry will take up and will encourage is for them to make good on that promise. We think that the regulatory environment and the legal environment in Mongolia needs to be improved and that moving forward with the transparency agreement, in addition to their other anticorruption programs will be an important positive sign to foreign investors. Over.

MODERATOR: You good, Brad?

QUESTION: Mm-hmm, thank you.

MODERATOR: Okay. Felicia.

QUESTION: Hello. Thanks for doing this. Okay, two questions. One is obviously the Secretary is going to China after this, so I was wondering if you might kind of – as you said, it's a tough neighborhood. I was wondering if you could frame his engagements in the context of the message he'll be bringing to China after that. And then two is previous dignitaries who have visited have been presented horses or drank goat's milk or – so what kind of fun things does the Secretary have in store for us, and is he getting a horse? (Laughter.)

SENIOR STATE DEPARTMENT OFFICIAL: Okay. So not surprisingly, Mongolia has a complex and fraught relationship with its two immediate neighbors, China and Russia. It is heavily dependent on China, as I said, in trade and economic terms. But it is a proud, independent nation that's determined to protect and defend its sovereignty. And in doing so, Mongolia has developed a policy – what – of – that they call the third neighbor policy. And that means that they have reached out to certain democratic partners – in the first instance, the United States, but also, importantly, to Japan and others – to build relationships of both political substance but also important economic development as well. And the United States has been able to support Mongolia's political and economic development in some of the ways that I've mentioned, but also through the – through the MCC compact process, and right now we're in the process of negotiating and developing a second major compact arrangement with Mongolia.

Now, this is – the concept of the third neighbor policy is that while Mongolia wants political and economic lifelines to other major powers and democracies in the world so as not to be enveloped or – I forget the word – contained basically by geography, it also has very strong and basically very good relations with Russia and with China. It's a complicated balancing act. I don't think – we'll see, of course, but I don't think that there are specific Mongolia-related issues that would spill over into the U.S.-China Strategic and Economic Dialogue, but I think the overriding fact is that the United States thinks it's important for China to sustain positive and constructive relations with all of its neighbors in the Asia Pacific region, and at the same time the United States very much values our own bilateral relations, and we do not see this as a contradiction or as a zero-sum enterprise.

Now, in terms of fun things for you all, I will gladly donate to the traveling press pool my share of the fermented mare's milk that undoubtedly will be on offer. I've tasted it, and so I think it's probably your turn next.

The – in – when I traveled with Vice President Biden, the Mongolian hosts offered him the choice of a horse, a camel, or a yak. And he chose a horse, and his granddaughter who was traveling with us named it and in fact he has a picture of that horse. I'm not saying it's on his wall or he carries it with him wherever he goes, but he – he's pretty fond of that memory even if he left the horse behind in Mongolia, where it's being cared for by nomadic horse herders.

So if precedent is a guide, the Mongolians may indeed offer a – an animal to Secretary Kerry. We'll have to see if they do, and if they do, what he chooses, and if he chooses, what he names it. But the expectation is that the horse would not travel on with us to Beijing. (Laughter.)

QUESTION: (Inaudible) violates the gift rule.

QUESTION: Thanks.

MODERATOR: We got one – we got another one here, [Senior State Department Official].

QUESTION: So, hi. This is Yeganeh Torbati from Reuters. Thanks for doing this. The – a quick question on what's the size of the USAID project that Secretary Kerry will be launching in terms of how many millions of dollars? And then how concerned are you about Mongolia's high levels of public debt? They're approaching around 90 percent of GDP with about a 1.5 billion coming due in the next year to 18 months. Is that something that Secretary Kerry's going to be discussing with them? Is that something you're engaging with them on to follow through with their plans to pay that off?

SENIOR STATE DEPARTMENT OFFICIAL: Right. Well, we'll provide the facts on the USAID program when we get on the ground if that's okay.

In terms of the fiscal environment in Mongolia, I think that it is certainly of concern to us as it is to the Government of Mongolia. The Mongolian economy is hugely dependent on the price of coal and Mongolia's not unique among coal-producing nations in having budgeted and operated on the basis of an expectation that commodity prices would remain high when, in fact, they have dropped precipitantly.

So for that reason, we're working with the Mongolian Government to reduce their fiscal deficits, to strengthen their monetary and their banking sector policies. And one of the important things we think that will help with the economy and, therefore, with the debt load is to reduce restrictions on foreign investment on the one hand, and to strengthen transparency regulatory arrangements and to combat corruption on the other.

Let's see. We're also doing a lot of energy cooperation and agricultural cooperation. It may sound counterintuitive for a nation that is so abundant in fossil fuel as Mongolia, but we are doing a lot including through a large-scale GE wind turbine program to help them with renewable energy technologies, with solar power as well, because after all, the – as I said, the – Mongolia's practically the size of Iran with a population of only 3 million people. Some 60 percent of the population are nomadic and live spread out across the steppes. Mongolia has an incredible amount of sunlight. And because of the geography that I just described and the demography, there's just never going to be a way to build a typical energy grid outside of Ulaanbaatar. And so the use of solar energy and the use of wind turbines and the use of innovative energy technology is going to be a big part of growing their economy.

The other area is in the agricultural sector, which is, I think, probably, after mining, the second-biggest sector. And we've got a trade delegation coming up that the Department of Commerce is going to lead of U.S. agricultural companies that will explore business opportunities in that sector as well. Okay?

MODERATOR: Everybody good?

QUESTION: Hello?

MODERATOR: Okay. Thanks, [Senior State Department Official].

QUESTION: Oh, that's Nicolas.

SENIOR STATE DEPARTMENT OFFICIAL: All right. My pleasure, take care.

MODERATOR: Oh, Nicolas. Sorry, wait, wait. I think we got Nicolas. We got one more.

QUESTION: Yeah, a quick one, please. Two months ago, I think the U.S. announced that it will return to Mongolia stolen dinosaur fossils. I'd like to know if the process has been completed. And apparently, these dinosaur fossils have been stolen in Mongolia and sold by a French company on eBay. So I'd like to know if there would be legal consequences for this French company.

SENIOR STATE DEPARTMENT OFFICIAL: Okay. I should know the answer to your first question, but I don't, and I don't know the answer to your second question. Mongolia is the source of a incredible treasure trove of prehistoric fossil remains. I've driven myself past these extraordinary dinosaur fossil fields. And I'm familiar with the first case that you mentioned, the restoration of dinosaur bones to Mongolia. We'll have to check on the status of that and get back to you.

QUESTION: Okay, thank you.

MODERATOR: Thanks, Nic. Thanks, [Senior State Department Official], appreciate it. I think we're good here.

SENIOR STATE DEPARTMENT OFFICIAL: Sure.

MODERATOR: And I guess we'll see you in a day or so.

SENIOR STATE DEPARTMENT OFFICIAL: Yep. See you there. Take care, [Moderator]. Bye-bye.

MODERATOR: Thanks, everybody.

QUESTION: Thank you. Thank you.

[1] The election is June 29.