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DE RUEHUM #0327/01 1630009
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FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 1171
INFO RUEHBJ/AMEMBASSY BEIJING 5592
RUEHKO/AMEMBASSY TOKYO 2505
RUEHMO/AMEMBASSY MOSCOW 1784
RUEHUL/AMEMBASSY SEOUL 2776
RUEKJCS/SECDEF WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0596
RHEHNSC/NSC WASHDC
RUCPODC/USDOC WASHDC 1289

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000327 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PREF MARR EAID KMCA MG
SUBJECT: MCC Issues Briefer for Assistant Secretary Hill's June 
14-18 Visit to Mongolia 
 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) The following draft bullets and talking points are provided 
in preparation for Assistant Secretary Hill's planned visit to 
Mongolia. 
 
¶2. (SBU) Background: 
 
-- After three years of false starts and sometimes emotional 
give-and-take with MCC, there is very strong optimism that a Compact 
will finally be approved in the August-September timeframe 
(including MCC's internal Investment Committee approval, Board 
approval, and Congressional Notification). 
 
-- Mongolian politicians have claimed a publicly-perceived "link" 
between MCC and Mongolia's support for U.S. positions on a wide 
array of topics, particularly Iraq deployments. They hinted that 
slow progress of an MCC compact was a sign that Washington is not 
"rewarding" them for taking a politically risky position in support 
of the U.S. 
 
-- Signing a Compact this year will be a major advance forward for 
bilateral ties, and a major landmark in two countries' diplomatic 
relations, a fitting achievement for the 20th anniversary year for 
U.S.-Mongolia diplomatic relations. 
 
-- According to MCC, due diligence and assessment teams have visited 
Mongolia over the past several months, and the compact process is on 
track with only minor details and questions to attend to.  MCC 
reports no "deal breakers" are seen on the horizon. 
 
-- A signing is expected to take place shortly after compact 
approval (ideally in October) as a deliverable during President 
Enkhbayar's expected visit to Washington this fall.  If funded with 
FY 2008 money, as now seems likely, a Compact signing in October 
will remain dependent on Congress passing the budget in time. 
 
-- In its current (and most likely final) form, Mongolia's MCC 
Compact proposal has four components (with estimated project 
values): 
 
(A) Railway Project ($129 million) to improve the capacity and 
efficiency of Mongolia's sole railway artery on which virtually all 
goods flow, thereby reducing transport costs and promoting exports. 
 
 
(B) Health Project (about $12 million) focusing on prevention of 
non-Communicable diseases particularly:  breast and cervical cancer, 
cardiovascular; and diabetes.  These are major killers in Mongolia. 
 
(C) Vocational Education Project (about $15 million), will fund 
eight (out of Mongolia's current 35) model vocational education 
centers.  Training will focus on "core curriculum" and "hard" areas 
like construction, heavy equipment, etc. 
 
(D) Property Rights Project: (amount unconfirmed) This project, 
still in flux, includes a peri-rrban land leasing and management 
lease programs that will lease some 1,000 tracts of peri-urban land 
to herder groups around major urban areas  and will install or 
rehabilitate up to 1,000 wells on leased tracts of peri-urban land. 
 
-- Mongolians were very disappointed with the cutting of the health 
project's diagnostic and training center. 
 
-- Mongolia's current proposal is approximately $160 million, or 
half of its original proposal of $300 million.  In recent years, 
USAID has averaged around $7 million, so the MCC Compact amounts to 
over 20 year's worth of assistance, which will be delivered over a 
five year period.. 
 
-- One area of concern, however, is with Russia's influence over the 
Railway project.  The Russian Government owns 50% of the Mongolian 
Railway (MTZ) based on a 1949 agreement.  The Mongolians are waiting 
until summer, when they will assume control of MTZ's rotating 
chairmanship, before discussing the project with their Russian 
counterparts, for fear of giving them a de facto veto power. 
 
¶3. (SBU) Talking Points: 
-------------- 
 
-- We're glad that the work on the Compact now appears to be going 
smoothly and is on track for signing later this year.  This will be 
a major step forward in bilateral relations in our joint effort to 
 
ULAANBAATA 00000327  002 OF 002 
 
 
reduce poverty and promote sustainable economic development.  It 
will reward and support the many tough, courageous economic and 
political choices Mongolia has made since 1990. 
 
-- We also hope to be able to sign the Compact in October, but 
Congress must pass the FY 2008 budget before the U.S. can sign the 
Compact.  That is our law. 
 
-- (If raised) We are extremely grateful For Mongolia's deployments 
to Iraq and Afghanistan, and more than $10 million in assistance 
provided by the U.S. to Mongolia's military is a direct result of 
that gratitude.  There are no link, however, between the MCA Compact 
and those deployments, which reflect Mongolia's wise recognition 
that playing a significant international peacekeeping role is in 
your own national interests. 
 
MINTON