Pentagon chief Chuck Hagel [10] toured Asia earlier this month ahead of Obama's coming visit, and at an April 10 stop in Ulan Bator signed a "joint vision" statement with his Mongolian counterpart Dashdemberel Bat-Erdene, calling for expanding military cooperation through joint training and assistance. "A strong US-Mongolia defense relationship is important as part of the American rebalance to the Asia-Pacific region," Hagel told a joint press conference. Bat-Erdene ruled out the possibility of hosting US forces, citing a Mongolian law that bars foreign military bases from the country. But the agreement is clearly aimed at extending US military encirclement of China. Days earlier, Hagel had lectured his hosts in Beijing over China's establishment of an air defense zone [11] in the East China Sea. He also made a flat warning about the disputed Senkaku/Diaoyu islands, telling reporters: "We affirmed that since [the Senkaku Islands] are under Japan's administrative control, they fall under Article 5 of our Mutual Security Treaty." (AFP [12], April 10; Time [13], April 8)
But Mongolia has hardly burned bridges with China, which remains the destination for 90% of its exports. As Hagel was in Ulan Bator, a pact was cemented between Shenhua Group [14], China's top coal producer, for a joint venture with Mongolian partners to build a cross-border rail link to faciliate expanded exports. Shenhua Group, will own 49% of the project, with the remainder held by a consortium of Mongolian firms, including state-owned miner Erdenes Tavan Tolgoi [15], and the Hong Kong-listed Mongolian Mining Corporation [16]. (Reuters [17], April 9)
