Biden Names Mongolia Horse, Cheers Democracy on Way to Tokyo

Vice President Joe Biden took a detour through Mongolia today en route from China to Japan to show support for the country’s nascent democracy and thank the government for sending troops to Afghanistan and Iraq.

“In the last 20 years, Mongolia has captured the imagination of the world by its remarkable transition to democracy,” Biden said after meeting Prime Minister Sukhbaatar Batbold in Ulan Bator. Mongolia is “an emerging leader in a worldwide democratic movement.”

While the Alaska-sized nation with fewer than 3 million people has an economy smaller than Apple Inc. (AAPL)’s annual sales of iPod music players, its location between Russia and China, untapped mineral wealth and ties to North Korea give it added importance. Biden said the U.S. was “very proud to be considered a third neighbor” for the landlocked country.

The trip is “part of a broader policy in Central Asia to try and show that the U.S. has a presence there, that it’s not merely a Russian or Chinese backyard,” said Jeff Bader, who was senior director for Asia affairs at the National Security Council until April and is now a visiting scholar with the John L. Thornton China Center at the Brookings Institution.

After his remarks, Biden went into a ceremonial ger, commonly referred to as a yurt, with President Tsakhia Elbegdorj. He later attended a demonstration of traditional Mongolian sports including wrestling, trying his hand at archery and naming a horse chosen in his honor “Celtic.”

Diversifying Trade

Mongolia’s transition to democracy took place in 1990 after seven decades as a Soviet satellite. The collapse of the Soviet Union left the country increasingly dependent on China.

Batbold today said he wants to increase trade with the U.S. and attract more investments from the country to Mongolia.

U.S. exports to Mongolia were $164.7 million in the six months to June, according to the U.S. Census Bureau, led by mining and related equipment and vehicles. Imports were $9.1 million. More than 90 percent of Mongolia’s exports go to Northeast Asia, according to data compiled by Bloomberg.

Mongolia is trying to seek a “balance of interests” in its relations with neighbors like Russia and China and Western countries, Batbold said in a June 17 interview.

Mongolia’s economy grew 28 percent last year to $6.8 billion in current prices, driven by surging investment in mining projects to tap demand from China and resource-poor Asian countries such as Japan and South Korea. Cupertino, California- based Apple’s sales of iPods were $8.3 billion.

Coal Output

Coal production in Mongolia doubled last year to become the nation’s top export earner. St. Louis-based Peabody Energy Corp. (BTU) was among bidders picked to develop Mongolia’s Tavan Tolgoi deposit, potentially the world’s largest untapped reserve of coal used to make steel. The country also has substantial deposits of other resources, including copper, gold and uranium, according to the U.S. Geological Survey.

South Korean President Lee Myung Bak, who was also in Ulan Bator today, signed an initial agreement with Mongolia to expand cooperation on developing energy resources, the Korean Ministry of Knowledge Economy said in an e-mailed statement.

Mongolia was among the first countries to send troops to the Iraq war and its troops have been deployed in Afghanistan since 2003. Still, the government also maintains ties with North Korea, which Batbold said offers a possible export route to the Pacific Ocean for the country’s mineral wealth.

North Korea’s Intentions

One possible purpose of the vice president’s trip is to glean information on North Korea’s intentions, said Elizabeth Economy, director of Asia studies at the Council on Foreign Relations in New York.

The U.S. maintains sanctions on North Korea in addition to United Nations trade restrictions imposed to force the regime of Kim Jong Il to return to talks over its nuclear weapons programs. Kim will meet this week with Russian President Dmitry Medvedev in the Siberian city of Ulan-Ude, about 420 kilometers (260 miles) from Ulan Bator.

Biden left China this morning and will later head for Japan as the final leg of his three-nation tour of Asia. The vice president has been repeating a message of reassurance to the Chinese that their investment in U.S. Treasuries is safe.

To contact the reporter on this story: Kate Andersen Brower in Washington at kandersen7@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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