Iskander K. Azizov, Ambassador Extraordinary and Plenipotentiary of the Russian Federation to Mongolia, talks to E. Odjargal on the issues, including the current relations and economic cooperation between Russia and Mongolia.
Our readers are always interested in the personal backgrounds and life journeys of heads of diplomatic missions. What path did your career take, how well do you know Mongolia, and have you been in our country before?First of all, allow me to greet all the readers of THE MONGOLIAN MINING JOURNAL. Before assuming my current position, I had an opportunity to become rather closely acquainted with Mongolia. As a MGIMO student, I had had classes together with Mongolian students who later also went into diplomatic service and rose to considerable eminence. Besides, I am a Sinologist. I worked on issues of Asian cooperation in our embassies in ASEAN and the USA, and Mongolia was always of professional and personal interest to me. I first came here in December 2007 and visited many times after that. This current appointment, however, is my first long-term mission in your country. Over 8 years of experience in Russian-Mongolian relations certainly allow me to act with due confidence.
How would you evaluate the scope of cooperation between our two countries? Considering that they are neighbors, the current level of trade-economic partnership could be higher. What do you think?Our cooperation in politics, science, education, culture, our humanitarian ties,and interpersonal contacts have been developing fairly well. The tendency has been especially evident in the recent years. Trade-economic relations are also not standing still, although I do have to agree that they could be more dynamic. Our countries are implementing various joint projects that require a certain amount of time before they provide returns, but their results are noticeable in Mongolia’s economic development. To name a few examples, the Erdenet Mining Corporation has expanded its capacity, allowing it to deal with the current negative environment on world markets of copper and molybdenum concentrates easier; Ulaanbaatar Railway has installed a modern traffic control system; Ulaanbaatar’s HPP-4 has been expanded, with Russian turbo generators installed. Small commercial enterprises have been successful as well – a wide spectrum of Russian foodstuffs and household goods can be found in Mongolia today. Traditional Mongolian export goods are gradually making their way to Russia. Our Chambers of Trade and Industry are in active cooperation. Mongolia has established ties with the EEU.
What issues has the Russian side placed on the foreground of the 19th meeting of the Russian-Mongolian Intergovernmental Commission? Have the sides discussed specific mining projects of the two countries?All of the issues on the Commission meeting agenda were based on the suggestions and initiatives of Russian and Mongolian government bodies and interested businesses.
Special emphasis was placed on areas of bilateral cooperation in which we,regrettably, are still not in complete agreement. The Russian side once again raised the issue of re-registering Soviet real estate in Mongolia in the name of the Russian Federation. It was noted that the activities of certain Mongolian judicial organs that have annulled certificates on some real estate objects belonging to our country here are outside legal boundaries. The sides agreed to step up the work of the joint working group on real estate and expand its powers.
Long-term supplies of electricity from Russia to Mongolia were discussed during the meeting. The Russian delegation put forward a project to expand the power lines from Gusinoozersk (Russia, Buryat Republic) to Darkhan, which could be the best option in terms of price as well as time frame, allowing us to resolve the issue of peak loads in Mongolia as soon as possible. Mongolian power specialists focused more on energy prices and finding their own resources to supply the country with power. At the same time, Mongolian intentions to decrease energy imports by constructing HPPs on the Selenge River may have a negative effect on the ecosystem of Lake Baikal, a World Heritage Site.
As for other venues of cooperation in the fuel and energy sector, a number of Russian companies specializing in heat and power engineering equipment production have offered their products, fit to be used for the decentralized energy supply in Mongolia’s remote settlements.
Opportunities to increase exports of Mongolian meat to Russia were discussed as well. We have an interest in making progress on this issue. In this context, the Russian government has expressed its readiness to assist Mongolian agricultural producers and meat suppliers in improving the epizootic situation and promptly deliver to Mongolia over 20 million doses of vaccines, 7 million of which are to be supplied gratis, as humanitarian aid. We agreed with the Mongolian proposal to hold Rosselkhoznadzor’s inspections of Mongolian factories more often.
The sides have also agrees to supply 126 tons of wheat to Mongolia as soon as possible.
How did the Russian authorities react to the Mongolian request for a new ruble credit?A preferential 50-100 billion ruble credit is currently under consideration. The Mongolian side put forward a request to complete the ratification process of the intergovernmental Agreement on the Settlement of the Remainder of Financial Obligations of Mongolia to the Russian Federation in transfer rubles, signed December 14, 2010, and in this context, to begin talks on a preferential credit.
These statements have been included into the Protocol of the Intergovernmental Commission meeting of November 24, 2015. In only a week, on December 2, the draft ratification law was presented to the State Duma for consideration. It is the positive resolution of this issue that would allow us to develop bilateral investment cooperation in terms of state credits and state bank borrowing. Russian companies would get an opportunity to participate more actively in a wide range of industrial projects in Mongolia.The need to form a legal environment for the mutual exchange of national currencies, i.e. a swap agreement between the national banks of the two states, was noted as well.
Rostec has become the company managing the Russian shares in the Erdenet and Mongolrostsvetmet joint ventures. Is the new leadership planning to reform the companies?The Rostec state corporation has indeed become the full-fledged Russian stockholder of Erdenet LLC and Mongolrostsvetmet LLC, with appropriate changes made to intergovernmental agreements and company charters. Obviously, some new decisions are to follow, changes in staff composition are possible. With that said, we should not forget that the companies are joint ventures, and it is the joint Russian-Mongolian leadership that makes all decisions. Renewing the Mongolian shareholder is an open issue today as well.
One of the most important issues in the economic relations of our two countries is railways. Has the Intergovernmental Commission meeting discussed Ulaanbaatar Railway?It has given the greatest consideration to the activities of Ulaanbaatar Railway JSC. A whole section of the meeting Protocol was devoted to transportation issues. A number of UB Railway issues have been discussed, namely the need to stop the unlawful practice of levying excise on the diesel fuel imported for the needs of the company, establishing a new inspection commission, training and retraining railway specialists in Russia, changing transportation tariffing, etc. Besides, in their addresses the heads of the national sides of the Commission reaffirmed the willingness to carry out the Agreement on Strategic Partnership on the Modernization and Development of Ulaanbaatar Railway signed in September 2014. Specialists negotiated a plan of specific measures to implement the agreement in early December.
What is your assessment of the meeting’s results?As you have noted before, Russian-Mongolian trade and economic cooperation is at this point qualitatively inferior to the level of bilateral political relations. Clearly, cardinal improvements in business partnership require much time and effort, but that is what the work of the Intergovernmental Commission on Trade-Economic and Science-Technical Cooperation is aimed at. The readiness of Co-Chairs and the whole Commission to remove barriers and to work closely and effectively that vividly manifested in Chita during the whole meeting has created the necessary preconditions for moving forward. The meeting gave an opportunity to the sides to make their suggestions and ask questions, involving specialists in the relevant areas, which is valuable in itself. Only through a regular exchange of opinions can we advance the economic component of the relations between our countries.
What is your stance on the implementation of the cooperation agreement on constructing an expressway between Dalstroimehanizatsiya LLC and Chinggis Land Development LLC? I would like to note that trilateral Russian-Mongolian-Chinese projects are a priority for us because they put ideas supported by the leaders of our countries into practice. In this context, we can only welcome quality infrastructure projects. The agreement between Dalstroimehanizatsiya LLC and Chinggis Land Development LLC could become such a necessary and useful project, but a number of issues arose in the process of its implementation, primarily in connection with the Mongolian company. The Embassy has already shared its position on the subject, and it appeared on the pages of your journal, among other places.
Overall, I would like to note that open dialogue and accurate adherence to law is a guarantee of success of joint projects on the level of large companies as well as small and medium enterprises.
There are large coal basins in Russia, some of which are still untapped. Russia is planning to announce an international bid to develop large deposits in order to develop Siberia and the Far East. What significant projects and programs are planned in the framework of this initiative?
Despite lower demand in some countries, coal remains the most accessible and the cheapest energy resource in the world. Russia is truly rich in coal. What is more, we possess all the necessary technologies and, importantly, infrastructure to extract, process and supply it to internal and international consumers in the shortest time possible. Starting with 2011, Russia has been implementing a new Eastern policy, a so-called foreign-policy “turn” to the East. This program provides for domestic policy measures as well, particularly those dealing with accelerated development of Siberia and the Russian Far East. You are correct in saying that significant internal and foreign investments are required to reach that goal. Given today’s stiff market competition, only especially favorable business conditions and the most effective business projects can interest foreign investors. Developing coal deposits with foreign investments completely satisfies all demands and is in the interests of foreign entrepreneurs, as well as Russian interests in developing its Eastern regions.
With that said, this area is promising, but it is far from being the only potential area of cooperation with Russian and foreign capital. With Russia “turning” to the East, the opportunities and areas of cooperation are constantly expanding.
A joint Russian-Mongolian company, Dornod Uran, was established in the atomic sphere. What is Russia’s position on its further development?Dornod Uran LLC was supposed to be established in accordance with two intergovernmental agreements of 2009 and 2014. The Russian side, represented by the Rosatom state corporation, was supposed to enter the project with its investment, and the Mongolian side was to take part by granting a license for the uranium deposit free of any encumbrance and contributing other assets. However, Khan Resources filed a lawsuit against the Government of Mongolia, stalling the whole project for a long time. The issue was only resolved this year, and our Mongolian partners lost the case. Time was lost, the Fukushima tragedy happened, and uranium prices fell so low that the most expensive projects – of which the planned Russian-Mongolian joint venture was one – became unprofitable, with cheaper, mineless technologies becoming widespread post-Fukushima. On the whole, the Russian Federation is still interested in cooperating with Ulaanbaatar in the nuclear sector, especially since we have a rich experience of cooperation in this sector dating back to Soviet times.
Apart from mining, in what other sectors do you believe we should develop cooperation?I believe there are prospects of business partnership in railway transportation, energy engineering, the electric power industry, agriculture, light industry and hydrocarbons supply. Of course, we should also remember our large-scale cooperation in culture, science and education.
Overall, Russia is open for any cooperation with its long-standing reliable partner and friend – Mongolia.
In conclusion, I would like to wish the readers of Mongolian Mining Journal a Happy New Year and all the best!