The centrepiece of Russian premier Vladimir Putin's visit on May 13 was a deal worth potentially billion, under which the Russia agreed to upgrade and expand Mongolia's rail network. The payoff for the Russian railway company includes mining licenses for the Tavan-Tolgoi copper coal mine and the Oyu-Tolgoi cooper-gold mine.
According to experts Russia’s real aim is to gain primacy in access to uranium deposits in Mongolia for the development of its own nuclear industry. This is why Russia is trying to re-establish ties with Mongolia and this is why in March, Moscow announced an agricultural credit of 0 million.
Putin also discussed with his Mongolian counterpart, Sanj Bayar, a plan under which the two states would settle trade accounts in their respective national currencies: this would create additional demand for the Russian currency, help prop up its value on international currency markets and lead to the Kremlin goal of a ruble-denominated trade bloc.
Recent discoveries of strategically important raw materials in Mongolia have increased the nation's importance. At the same time, the global drop in commodity prices has hit Mongolia hard and the country's economy is now struggling. The International Monetary Fund’s loan of 9 million appears to be insufficient.
Now the next move is Mongolia’s. The country, wedged as it is between China and Russia, has always sought to maintain stable relations with both. Recently it has also increased its ties with the United States (often defined: “our third border”) and Japan as well as Kazakhstan. It may be in Ulaan Baatar’s best interest to increase its dealings with Russia, in order to balance out China’s dominant economic presence.