VZCZCXRO2931
RR RUEHLMC
DE RUEHUM #0202/01 1220914
ZNY CCCCC ZZH
R 010914Z MAY 08
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 2118
INFO RUEHBJ/AMEMBASSY BEIJING 6124
RUEHMO/AMEMBASSY MOSCOW 2215
RUEHUL/AMEMBASSY SEOUL 3321
RUEHKO/AMEMBASSY TOKYO 2998
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 03 ULAANBAATAR 000202 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM, EAP/J, EAP/K AND INR/EAP 
 
E.O. 12958: DECL: 05/01/2018 
TAGS: PREL PGOV ENRG KCOR ECON MG JP KN KS
SUBJECT: JAPANESE EMBOFFS EXCHANGE VIEWS ON RECENT 
MONGOLIAN TRENDS, BILATERAL RELATIONS 
 
Classified By: Charge d'Affaires Brian L. Goldbeck for Reason 1.4 (d). 
 
¶1. (C) SUMMARY: Japanese DCM Kobayashi met with the Charge on 
May 1 for an exchange of views across the full array of 
Mongolian domestic and bilateral issues.  On Mongolia,s June 
29 Parliamentary elections, Japan believes that the 
post-election Parliament will look a lot like it does at 
present.  He and the Charge also discussed election 
monitoring, and the Asia Pacific Democracy Partnership. 
Regarding controversial mining legislation, Kobayashi said 
that if, as expected, the Mongolian state takes a 51% stake 
in key mining deposits, many Western mining companies as well 
as Japanese firms will bow out, leaving the field to the 
Chinese and Russians.  Referring to reports that Mongolia 
will turn to Russia for help building a nuclear power plant, 
Kobayashi said Japan is encouraging Mongolia to first focus 
on the development of its uranium resources, and only later 
focus on setting up a nuclear power program. 
 
¶2. (C) On talks with the DPRK, Kobayashi said Japan 
appreciates Mongolian efforts to host more bilateral 
normalization discussions between Japan and North Korea; he 
said no such meeting has been scheduled.  Kobayashi 
reconfirmed that Japan was amenable to accepting Mongolia,s 
offer to hold Six Party Talks Peace and Security Working 
Group talks in  Mongolia, once Russia, as the group,s chair, 
sets a date.  He said President Enkhbayar is considering a 
visit to Pyongyang in or around October, provided the DPRK 
will confirm a meeting for him with DPRK leader Kim Jong Il. 
Regarding bilateral relations, he said Japan hopes next 
year,s 60th anniversary of the battle of Khalkhin Gol, in 
eastern Mongolia, will not turn into a &major event8 that 
hurts bilateral ties.  (In that 1939 tank battle, 45,000 
Japanese were killed in combat with Russians and, to a lesser 
extent, Mongolians.)  He expressed concern that  Russia is 
trying to play up the anniversary in order to drive a wedge 
between Mongolia and Japan. END SUMMARY. 
 
¶3. (C) Japanese DCM Kobayashi invited the Charge and Econ/Pol 
Chief to lunch May 1, following a lengthy hiatus, for an 
update on recent trends in Mongolia.  Japanese Poloff Yadomi 
also attended. 
 
PARLIAMENTARY ELECTIONS: 
JAPAN EXPECTS NO MAJOR CHANGES 
------------------------------- 
 
¶4. (C) On Mongolia,s June 29 Parliamentary elections, DCM 
Kobayashi said Japan believes that the post-election 
Parliament will look a lot like it does now.  (Note: The 
Mongolian People,s Revolutionary Party, or MPRP, holds 39 
seats in the 76-seat Parliament and leads a three-party 
coalition government.  End Note.)  He predicted it will be 
difficult for Prime Minister Bayar to keep his good standing 
among voters, because so many Mongolians are frustrated by 
the skyrocketing prices for food and fuel.  Kobayashi asked 
about the USG,s plans for election monitoring in Mongolia; 
we informed him that the Embassy will field a modest 
election-monitoring program, sending a team or two of Emboffs 
to key contested provinces and a few more teams to pivotal 
capital districts, to observe and report on the June 29 
balloting.   We also discussed the Asia Pacific Democracy 
Partnership (APDP).  Kobayashi said it is likely that the 
Japanese Embassy would be able to send a person, or persons, 
to monitor elections in Mongolia, in the event that the APDP 
were to decide to monitor the Mongolian elections. 
 
ON MINING LEGISLATION 
--------------------- 
 
¶5. (C) Regarding controversial mining legislation that would 
give the Mongolian state a 51% stake in &strategic8 mining 
deposits, the Japanese DCM said he had repeatedly warned the 
Mongolians.  He said that if the state share is set at 51%, 
many Western mining companies as well as Japanese firms would 
be unwilling to take part, opening the door for participation 
by Chinese and Russian mining companies.  Ironically, he 
said, the decision to embrace a 51% stake was aimed at 
keeping the Chinese and Russians from playing a key role in 
Mongolia,s most important deposits.  Kobayashi accused 
Mongolian Parliament members, and other senior officials, of 
 
ULAANBAATA 00000202  002 OF 003 
 
 
frequently failing to understand the mining situation.  &We 
have to talk with them like they are kindergarteners,8 he 
said.  He added that Japanese mining companies strongly 
oppose the mining amendment proposals.  The 51% is bad 
enough, he said, but what really bothers the Japanese firms 
are the odds that the GOM would also try to manage the 
operations.  He said he had trouble believing Mongolian 
authorities, promises, based on past experiences, to give 
foreign mining companies wide latitude in the management of 
mineral extraction at strategic sites. 
 
MONGOLIA,S NUCLEAR DEVELOPMENT 
------------------------------ 
 
¶6. (C) Kobayashi noted PM Bayar,s recent visit to Moscow, 
which produced a number of &deals,8 which he dismissed as 
hollow and meaningless, as FM Oyun had described them when 
she met with the Japanese Ambassador following the trip. 
There had also been reports suggesting that Mongolia will 
turn to Russia for assistance with the construction of a 
nuclear power plant.  He said Japan is encouraging Mongolia 
to first focus on the development of its uranium resources, 
and only later focus on setting up a nuclear power program. 
&The Russians and French are very aggressive8 in pushing 
their proposals at the Mongolians,8 he said, &but the 
quality of their technology8 may be lacking.  Kobayashi said 
Russia has not developed a new nuclear power station in 
perhaps 10 years.  He said that Japan, conversely, has much 
experience in recently setting up nuclear power stations and 
currently operates more than 50 such stations.  He noted 
Japanese government funding for developing such projects 
required that the products then be exported to Japan, which 
was possible regarding uranium, which Japan will need for 
decades to come, but not for coal and other minerals, which 
are likely destined for China. 
 
JAPAN-DPRK TALKS 
---------------- 
 
¶7. (C) The Japanese DCM said Japan is comfortable with 
Mongolian efforts to host more bilateral discussions between 
Japan and North Korea.  He made clear that although Japan 
supports the idea of further discussions, no such talks have 
been scheduled.  Kobayashi said the DPRK is enthusiastic 
about holding the meetings in Mongolia because Mongolia pays 
their transportation and lodging costs.  Kobayashi 
reconfirmed that Japan was amenable to accepting Mongolia,s 
offer to hold Six Party Talks Peace and Security Working 
Group talks in Mongolia and was pleased to learn the USG also 
supported this proposal, noting it,s up to Russia, as the 
WG,s chair, to set a date.  He understood that President 
Enkhbayar is planning to visit Pyongyang in or around 
October, but said the trip is jeopardized by the fact that a 
meeting with Kim Jong Il has not been ensured.  He noted that 
this is a sore subject, given that previous Mongolian 
Presidents who visited North Korea several years ago had been 
unable to meet with the DPRK leader.  Kobayashi said he 
believed that the GOM is putting conditions on the trip, to 
ensure an Enkhbayar-Kim meeting. 
 
JAPAN-MONGOLIA RELATIONS: NO MAJOR VISITS; 
WORRIES ABOUT WWII TANK BATTLE ANNIVERSARY 
------------------------------------------ 
 
¶8. (C) Regarding bilateral relations, Kobayashi said that on 
a recent visit to Japan, Mongolian Foreign Minister Oyun 
invited Japan,s Foreign Minister to visit Mongolia.  But the 
DCM said he feels it is unlikely that the Japanese Foreign 
Minister will make such a visit this year.  Kobayashi 
expressed concern that Russia is attempting to &make a big 
deal8 out of next year,s 60th anniversary of the epic tank 
battle of Khalkhin Gol, which took place in eastern Mongolia. 
 He said Russia is doing so in order to drive a wedge between 
Mongolia and Japan.  &Russia is concerned about Japan,s 
relationship with Mongolia,8 Kobayashi said, adding that 
Japan hopes that a major anniversary event will not occur, 
and that relations between Japan and Mongolia relations will 
not be harmed. 
 
¶9. (U) In September or October, a large Japanese economic 
delegation will come to Ulaanbaatar to attend the Trade and 
 
ULAANBAATA 00000202  003 OF 003 
 
 
Investment Promotion Council gathering, Kobayashi said.  This 
is the follow-up to a gathering in Japan last year. 
GOLDBECK