VZCZCXRO4515
PP RUEHLMC
DE RUEHUM #0007/01 0040851
ZNR UUUUU ZZH
P 040851Z JAN 08
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC PRIORITY 1786
INFO RUEHBJ/AMEMBASSY BEIJING 5927
RUEHMO/AMEMBASSY MOSCOW 2046
RUEHKO/AMEMBASSY TOKYO 2812
RUEHUL/AMEMBASSY SEOUL 3116
RUEHGB/AMEMBASSY BAGHDAD 0081
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/HQ USPACOM HONOLULU HI
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS SECTION 01 OF 03 ULAANBAATAR 000007 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NSC FOR P. HANLE 
STATE PASS USTR, OPIC, AND EXIMBANK 
STATE PASS PEACE CORPS 
STATE FOR EAP/CM, NEA/NGA, and INR/B 
USAID FOR ANE FOR D. WINSTON 
 
E.O. 12958: N/A 
TAGS: PREL MARR ETRD SOCI MG
SUBJECT: Ambassador Pays Initial Call on Prime Minister Bayar 
 
Ref: A) 07 White House 12110442, B) Ulaanbaatar 0005 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) SUMMARY: During the Ambassador's initial official courtesy 
call January 4 on Prime Minister Bayar, Bayar said he hoped to make 
already excellent U.S.-Mongolian relations even better.  He 
reiterated President Enkhbayar's invitation to President Bush to 
visit Mongolia, and he reconfirmed Mongolia's commitment to send a 
full 9th rotation of troops to Iraq.  Bayar also expressed his 
intentions to facilitate the speedy implementation of the Millennium 
Challenge Account Compact and the Ambassador encouraged prompt 
ratification of the Compact, passage of a cabinet resolution forming 
MCA-Mongolia, and the early signing of procurement and fiscal agent 
contracts.  The Ambassador noted upcoming policy and trade talks set 
for early February and the PM sought amplification of USTR's 
transparency agreement proposal.  The PM noted the "One Laptop Per 
Child" program was moving forward.  The Ambassador described USG 
plans to provide technical advice on Mongolia's energy system as 
well as to provide in March an energy crisis related emergency 
preparedness exercise. END SUMMARY. 
 
¶2. (SBU)  The DCM and Acting E/P Chief (notetaker)  also attended 
the very cordial 40-minute January 4 meeting, along with Mr. 
Jambaldorj, the PM's newly appointed Foreign Policy Advisor 
(previously Ministry of Foreign Affairs (MFA) Director General for 
Americas, Middle East and Africa Affairs Bureau and a former DCM at 
the Mongolian Embassy in Washington), Mr. Batbaatar, the PM's 
Spokesman, MFA Acting Director General for Americas, Middle East and 
Africa Affairs Mounkhou and MFA Americas Desk Officer Chinuukhei. 
 
PM's Goal: Make Excellent 
Bilateral Relations Even Better 
------------------------------- 
 
¶3. (SBU) The Ambassador congratulated Prime Minister Bayar on 
conveyed to him a congratulatory letter from President Bush (ref A). 
 Bayar responded that 2007, the 20th anniversary of US-Mongolia 
diplomatic relations, had been a very successful one for bilateral 
affairs and he was glad to be Prime Minister during such a high 
point in our relations.  He assured the Ambassador that he would 
work hard to continue the momentum that had been gained over the 
past year. President Enkhbayar's successful visit to the U.S. in 
October was just one achievement in a year full of events designed 
show how close our two countries had become. Bayar hoped President 
Bush would accept President Enkhbayar's invitation to visit Mongolia 
around the time of the Beijing Olympics. The PM said that political 
relations between our two countries were now excellent and that it 
was time to emphasizing the economic and trade relations.  The 
Ambassador said he fully concurred with Bayar's assessment of 
bilateral relations. 
 
9th Rotation 
--------------- 
 
¶4. (SBU) Bayar also reconfirmed to the Ambassador the GOM's decision 
to send a full 9th rotation of troops to Iraq, noting it had been 
formally conveyed by the Vice Foreign Minister the previous day (ref 
B). The Ambassador said everyone from President Bush on down, 
(including the Secretaries of Defense and State and Congress) were 
grateful for this obviously difficult decision.  He remarked that 
even members of the U.S. Congress who were critical of U.S. policy 
in Iraq thanked President Enkhbayar for Mongolia's support when he 
visited Washington in October. 
 
 
MCA Compact Implementation 
-------------------------- 
 
¶5. (SBU) PM Bayar said that one of his administration's priorities 
over the next few months would be taking the necessary steps to 
implement the Millennium Challenge Account (MCA) compact.  He 
 
ULAANBAATA 00000007  002 OF 003 
 
 
expressed gratitude to the US for the generous grant of $285 million 
and understood that the GOM needed to work in a timely manner to 
ensure proper implementation.  He noted that after the Compact's 
recent submission to Parliament there was lively, opinionated debate 
regarding the agreement, and said such was to be expected from 
democracy like Mongolia (Note: MCC was favorably reported out of 
Parliament's Foreign Affairs and Security Standing Committee later 
that morning and will be taken up during a plenary session next week 
for ratification.)  He nevertheless assured the Ambassador that they 
would do their home work to get the MCA Compact implemented. 
 
¶6. (SBU) The Ambassador stressed the need to move quickly on 
implementing the MCA Compact to get money flowing and necessary 
goods procured and hoped that either the PM or the Minister of 
Finance would sign the Procurement Agent Agreement and the Fiscal 
Agent Agreement as first steps even before the MCA Mongolia Board 
was officially formed and a CEO selected.  The Ambassador then 
pointed to a meeting he had earlier in the day in which Minister of 
Roads Transportation and Tourism reiterated the rail road's 
immediate need for five locomotives (under the MCC agreement) as a 
good example of why it was important to move quickly. 
 
 
Transparency Agreement 
---------------------- 
 
¶7. (SBU) The Ambassador said the MCC represented a high watermark in 
bilateral relations but that the two countries now needed to more 
fully develop commercial and economic relations, particularly in the 
area of mining.  He noted that annual TIFA talks were scheduled to 
take place in Washington D.C. in February and encouraged the GOM to 
give serious consideration to the Transparency Agreement (TA) 
proposal to negotiate one element of an FTA offered by USTR after 
last year's TIFA and as discussed at The White House Summit between 
Presidents on October 22, 2007. Such a proposal was unique and had 
never been made before by USTR. This piqued Bayar's interest and he 
asked the Ambassador to expand. The Ambassador said that despite 
repeated calls from the GOM for a Free Trade Agreement (FTA) with 
the U.S., an FTA was not a possibility now and the best way forward 
in our economic relationship would be to build towards one 
incrementally.  A Transparency Agreement, which is a component of 
all FTAs, was achievable and would lay the groundwork that the 
incoming US administration could pick up on.  A Transparency 
Agreement would help garner support for Mongolia's goal of an FTA in 
the U.S. Congress, and the growth of our trade relationship would 
create support for an FTA within the US business community that 
would be needed before any talk of an FTA could begin.  The 
Ambassador spoke from his own experiences in Korea, where the 
announcement of FTA negotiations followed years of preparatory work 
between governments.  PM Bayar agreed that an incremental approach 
was wise and said he would discuss the matter further with the 
Minister of Industry and Trade. 
 
OLPC 
----- 
 
¶8. (SBU) PM Bayar mentioned the One Laptop Per Child (OLPC) program, 
which was set to debut in Mongolia in January with the distribution 
of one thousand laptops to schools in Ulaanbaatar's outskirts.  Part 
of the donated laptops would come from President Enkhbayar's office 
and part from the Prime Minister's office. The Ambassador said the 
Embassy was happy to hear about the start of the OLPC program and, 
while it was a private project, the Embassy would do what it could 
to support the program, including seeing what role, if any, USAID or 
the Peace Corps could play. 
 
Consulting on Energy; Apprised of 
March Emergency Preparedness Exercise 
------------------------------------- 
 
¶9. (SBU) Finally, the Ambassador mentioned that he and the USAID rep 
 
ULAANBAATA 00000007  003 OF 003 
 
 
planned to meet with Minister of Fuel and Energy Khurelbaatar soon 
to discuss with him, at his request, the possibilities of enlisting 
USAID- funded consultants to advise on power plant and pollution 
issues.  The Ambassador also informed the PM of the emergency 
preparedness exercise slated for March, which is being organized by 
the Asia Pacific Center for Strategic Studies, working closely with 
Mongolia's National Emergency Management Agency.  The crisis 
scenario involves the catastrophic failure of one of Ulaanbaatar's 
power plants in the dead of winter. He sought the PM's cooperation 
and support implementing this important joint project. 
 
Minton