Russian President Vladimir Putin held talks with his Mongolian counterpart on Wednesday during a five-hour working visit to a traditional friendly neighbor amid soaring tensions with Washington and NATO over a Kremlin-backed offensive in Ukraine.
Putin and Elbegdorj Tsakhia met in the capital, Ulan Bator, for discussions on increasing trade and upgrading transit links. They were to oversee the signing 13 agreements across a range of fields before Putin's late afternoon departure.
Moscow firmly controlled Mongolia during the Cold War and retains considerable influence over this vast landlocked nation sandwiched between Russia and China. Mongolia relies on Russia for almost all of its gasoline and diesel fuel and much of its electricity.
Moscow also holds a 51 percent stake in Mongolia's railway and a 49 percent stake in its largest state-owned copper mine.
With Western investment declining, the Alaska-size country of 3 million people is turning increasingly to China and Russia to support its mining and animal herding-based economy, while also maintaining close ties with the U.S. and others as a counterbalance.
Chinese President Xi Jinping paid a state visit last month, during which the sides pledged to almost double their annual two-way trade to $10 billion by 2020.
In contrast, trade with Russia fell by 16 percent to $1.6 billion in 2013 versus the year before, and dropped by another 13 percent in the first six months of this year, according to Russian figures. That was attributed to reduced demand for oil products, machinery and equipment as a consequence of the ailing Mongolian economy.
Coming so soon after Xi's visit, Putin's stop in the country is a further indication of the increased significance Mongolia's neighbors are playing in its economic development, said Neil Ashdown, an expert on Mongolia at London-based information and analysis firm IHS.
Despite Mongolia's transition to Western-style democracy, the two countries remain close, something seen in the positive views of ordinary Mongolians, particularly the older generation, Ashdown said. Attitudes toward China tend to be somewhat less trusting, reflecting fears of being swallowed up by their giant neighbor.
"Russian's relationship with Mongolia is in some ways more straightforward than China's. Russia and Mongolia get along quite well," Ashdown said.
Putin's visit is his third since he first became Russia's president in 2000. It comes as Ukrainian officials say their country's armed forces are now locked in a conflict with not only Moscow-backed separatists, but also the Russian army, although Putin has denied that his forces are invading Ukraine.
In response, President Barack Obama and Western allies are due to approve plans this week to position at least 4,000 troops and military equipment in Eastern Europe to reassure nervous NATO states near the Russian border.
Even before the crisis over Ukraine, Putin had been seeking to upgrade Russia's relations with countries to the east, including Japan and South Korea, Ashdown said. As a stable, low-risk neighbor, Mongolia plays an important role in the strategy, particularly as a southward transit route for Russian exports, he said.