By Nathan Abbington
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| Cover Image Attribute: The 2018 file image of Chinggis Khaan International Airport, which is located in the city's capital, Ulaanbaatar. It was established as Buyant-Ukhaa in February 1957 but was renamed as Chinggis Khaan International Airport in December 2005. / Source: Asian Development Bank |
Mongolia, a landlocked nation nestled between Russia and China, finds itself at a critical juncture as it shapes its energy future and geopolitical positioning. The recent parliamentary approval of a draft agreement with Russia to secure aviation fuel supplies has sparked intense debate, reflecting broader tensions about dependency, neutrality, and national interest. This agreement, coupled with ongoing discussions about the Power of Siberia-2 (PoS-2) pipeline, highlights Mongolia’s complex relationship with its northern neighbor—a relationship shaped by historical ties, economic necessities, and the pressures of a shifting global order. As Mongolia seeks to meet its growing energy demands while maintaining its carefully cultivated neutrality, the decisions it makes today will reverberate for decades, shaping its economic stability and international standing.
The recently approved agreement aims to ensure a stable supply of aviation fuel from Russia, which currently meets 100% of Mongolia’s aviation fuel demand. This dependency is stark: parliamentary data reveals that aircraft fuel consumption surged from 27,900 tonnes in 2021 to 70,000 tonnes in 2024, driven by a 44.6% increase in passenger flights and a 21% rise in cargo transportation. Authorities project continued growth, making a reliable fuel supply critical for sustaining air travel and moderating airfare prices. The agreement seeks to lock in supplies at competitive market rates, guaranteeing uninterrupted deliveries to Chinggis Khaan International Airport and ensuring compliance with international standards. “In the future, considering global oil prices and the situation on Russia’s domestic oil products market, the Russian government may impose export restrictions or tax increases, which could affect petroleum product supplies to our country, including aviation fuel, potentially leading to shortages,” the parliament noted, highlighting the urgency of securing a long-term deal.
Yet, the proposed 20-year agreement has ignited controversy, exposing deep-seated concerns about Mongolia’s reliance on Russia. Critics argue that the deal, which involves forming a joint venture with Mongolia’s Erchis Oil LLC holding 60% and Russia’s Rosneft Aero 40%, risks entrenching dependency. The joint venture would manage fuel storage, refueling operations, and the airport’s jet fuel system, raising questions about sovereignty over critical infrastructure. The inclusion of a clause stipulating that disputes be resolved by the International Commercial Arbitration Court under Russia’s Chamber of Commerce and Industry further fueled opposition, with protesters in Ulaanbaatar’s Sukhbaatar Square demanding the ousting of Prime Minister Oyun-Erdene Luvsannamsrai. The Democratic Party caucus and parliamentary committees ultimately rejected the draft, with 73.3% opposing it, citing the 20-year term as excessive and calling for arbitration to occur in Mongolia.
Supporters, including Minister of Industry and Minerals Tuvaan Tsevegdorj, defend the deal as a pragmatic necessity. “In the short term, until we find and allocate the financials and the infrastructure to improve our situation, the deal with Russia can secure our industry for the next twenty years without interruptions,” Tuvaan argued. With 97% of Mongolia’s fuel consumption reliant on Russian imports and alternatives like China deemed unprofitable due to high transportation costs, the agreement offers stability amid global energy price volatility. Proponents also point to the broader economic benefits, noting that a stable fuel supply could bolster tourism and international connectivity, key pillars of Mongolia’s development strategy.
The aviation fuel debate cannot be divorced from the broader context of Mongolia’s energy and geopolitical strategy, particularly its role in the PoS-2 pipeline. This 962-kilometer Mongolian section, known as Soyuz Vostok, is pivotal to Russia’s plan to transport 50 billion cubic meters of natural gas annually from Russia to China, offsetting losses from European markets due to sanctions. Russian President Vladimir Putin’s visit to Mongolia in September 2024, despite an ICC arrest warrant, underscored the strategic importance of this partnership. Putin highlighted a 21% increase in bilateral trade and reaffirmed commitments to the China-Mongolia-Russia Economic Corridor, alongside agreements on petroleum supplies and the reconstruction of Ulaanbaatar’s TPP-3 thermal power plant. First Deputy Prime Minister Gantumur Luvsannyam’s March 2025 statement that PoS-2 negotiations were progressing further dispelled concerns about the project stalling, though unresolved issues like gas pricing and construction costs between Russia and China could delay progress.
For Mongolia, the pipeline offers economic opportunities but also risks. Russian investments could diversify Mongolia’s economy, reducing its reliance on Chinese exports and countering fears of a Chinese monopoly linked to the Belt and Road Initiative. However, deeper ties with Russia could complicate relations with Mongolia’s “third neighbors”—the U.S., Europe, and others—who view Russia’s actions in Ukraine with alarm. Signing a long-term energy deal with Russia, especially amid its ongoing conflict, risks perceptions that Mongolia is aligning with Moscow, undermining its neutral stance. “We are a peaceful and free nation,” former President Tsakhiagiin Elbegdorj quipped, a sentiment that reflects Mongolia’s desire to avoid entanglement in great power rivalries.
Elbegdorj’s outspoken criticism of Russia, particularly his 2022 appeal to Buryats, Kalmyks, and Tuvins to flee Russian mobilization, highlights the delicate balance Mongolia must strike. His call, framed as a humanitarian gesture rooted in shared Mongol heritage, was provocative, with some interpreting it as an attempt to undermine Moscow. “We had just one choice: Be as close to Russia as possible to ensure our independence,” Sangaa Bayar, a former official, told the Washington Times in 2001, reflecting Mongolia’s historical pragmatism. Yet, Elbegdorj’s pro-Ukrainian stance and alignment with Western values suggest a divergence from this approach, raising questions about whether his actions reflect personal convictions or broader geopolitical maneuvering.
Mongolia’s historical relationship with Russia adds further complexity. As the Soviet Union’s first Asian satellite state, Mongolia benefited from literacy improvements but endured brutal purges, with 22,000–100,000 victims between 1937 and 1939, including 17,000–18,000 Buddhist lamas. The story of Peljidiin Genden, executed in 1937 after defying Stalin, remains a potent symbol of resistance. “There are a few thousand left. Sometimes, I interview one and he dies the next week,” Genden’s daughter, Tserendulam, said in 2001, underscoring the fading memory of these atrocities. Today, Soviet-era Cyrillic scripts and apartment blocks stand as reminders of this legacy, even as Mongolia considers reverting to traditional scripts used in China’s Inner Mongolia.
The aviation fuel and pipeline agreements also raise questions about Mongolia’s neutrality in the context of Russia’s war in Ukraine. President Ukhnaagiin Khurelsukh’s decision to welcome Putin in 2024, despite the ICC warrant, signaled a pragmatic prioritization of bilateral ties over international legal obligations. This move drew Western criticism, with media framing it as Russia’s attempt to portray its ties with Mongolia as untouched by international law. Meanwhile, the disproportionate casualties among Russia’s Buryat population in Ukraine highlight the human cost of Mongolia’s strategic partner’s actions, complicating public sentiment. Opponents of the aviation fuel deal argue that it undermines Mongolia’s goal of reducing foreign dependency, particularly at a time when Russian energy companies face global sanctions. The Democratic Party caucus’s rejection of the draft agreement reflects a broader desire to diversify energy sources and protect national sovereignty. Yet, the reality of Mongolia’s geographic and economic constraints limits its options.
As Mongolia weighs its next steps, it must balance immediate energy needs with long-term strategic goals. The aviation fuel agreement, if revised to address concerns about duration and arbitration, could provide stability for a burgeoning aviation sector. The PoS-2 pipeline, if realized, could position Mongolia as a key player in regional energy dynamics, but at the cost of deeper entanglement with Russia’s geopolitical ambitions. Both decisions require Mongolia to tread carefully, preserving its neutrality while leveraging its strategic position between two global powers. The protests in Sukhbaatar Square and the parliamentary rejections signal a public and political class acutely aware of these stakes, demanding a path that safeguards Mongolia’s independence and prosperity without compromising its values or international standing. In a world increasingly defined by great power competition, Mongolia’s ability to navigate this tightrope will determine its future.
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