The Russian President, Vladimir Putin has met with the President of Mongolia, Ukhnaagiin Khurelsukh in Bishkek. The meeting took place on the sidelines of the SCO summit.

The Russian delegation included Foreign Minister Sergei Lavrov, Deputy Prime Minister Alexei Overchuk, Deputy Chief of Staff of the Presidential Executive Office Maxim Oreshkin, Deputy Chief of Staff of the Presidential Executive Office – Presidential Press Secretary Dmitry Peskov, Presidential Aide Yury Ushakov, Minister of Natural Resources and Environment, Russian Co-Chair of the Russia-Mongolia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation Alexander Kozlov, Transport Minister Andrei Nikitin, Economic Development Minister Maxim Reshetnikov, Energy Minister Sergei Tsivilev, CEO – Chairman of the Management Board of Russian Railways Oleg Belozerov, and Director General of the State Atomic Energy Corporation Rosatom Alexei Likhachev.

This is what Putin had to say:

“Mr President, friends, I am very pleased to meet with you again. Russia and Mongolia’s strategic partnership is based on long-standing traditions of good-neighbourliness, friendship, and understanding of each other’s interests. This year, specifically on November 5, we will celebrate the 105th anniversary of diplomatic relations. That’s a momentous timeframe.

In 2025, our trade increased by 4.5%. We are also seeing positive results this year: it grew by more than 18% over the first six months. This is a good number.

The Russia-Mongolia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation is working actively, and, in my opinion, it is working hard and with success. I hope that the interim trade agreement between the EAEU and Mongolia that entered into force in July 2026 will provide preferential treatment for Mongolian traditional exports across the customs territory of our association.

We cooperate constructively within multilateral organisations and forums, as our positions on many pressing international issues are aligned or close.

Today, the Shanghai Cooperation Organisation summit was held successfully and productively. Mongolia participated in it as an observer, and now, in accordance with the decision adopted, it will receive partner state status.”

Natural Resources and Environment

Russia’s Natural Resources Minister attended the meeting, while Mongolia has been hosting COP17 with land degradation a specific theme. Mongolia’s natural resources and energy policy regarding Russia centers on balancing deep economic dependence for fuel and electricity with a strategic “third neighbor” foreign policy. The two countries actively cooperate on joint mineral exploration and energy supply, with Mongolia relying heavily on Russian petroleum imports while offering vast untapped natural resources. Mongolia possesses immense reserves of copper, coal, gold, uranium, fluorspar, and critical rare earth elements, with the two targeting their  border regions to explore for ferrous, nonferrous, and noble metals, coal, and fluorspar.

In terms of the environment, they cooperate closely on cross-border environmental policy, focusing heavily on water resource management, climate adaptation, and the protection of shared ecosystems like Lake Baikal and the Selenga River basin.

Energy
The Russian Energy Minister and Rosatom’s CEO both attended the meeting.  Mongolia imports nearly all of its refined gasoline, diesel, and aviation fuel from Russia. Around 90% of Mongolia’s electricity relies on domestic coal-fired plants, but the country still imports supplemental power and works with Russia on infrastructure upgrades like the TPP-3 reconstruction in Ulaanbaatar. Rosatom and Mongolian partners have discussed small modular nuclear reactor (SMNR) development to offset Mongolia’s aging coal infrastructure. Mongolia is reviewing a proposal from the Russian state nuclear corporation to build a small modular nuclear reactor in the country, which may be built near New Kharkhorum, a planned new capital city located about 230 kilometers west of Ulaanbaatar. 

Transport
Rail Mongolia
The Russian Minister of Transport, and the Head of Russian Railways also attended the meeting. Mongolia and Russia are actively expanding their transport cooperation through the upgrade of the Ulaanbaatar Railway and the development of the trilateral economic corridor with China. Officials from both countries are working on the technical plans for the central railway line. This includes plans to build a new branch railway from Bagakhangai to the Khushig Valley,  a strategic development area located in Töv Province south of Ulaanbaatar. This is the home of Mongolia’s International Airport and the site of Mongolia’s planned new satellite city, Hunnu City.

The 2026–2030 technical railway upgrade targets the central railway line (Ulan-Ude – Naushki – Sükhbaatar – Ulaanbaatar – Zamyn-Uud – Erenhot) to boost regional transit. This route forms the backbone of the broader economic corridor linking Russia, Mongolia, and China for expanding Eurasian trade, with a target for it to handle 50 million tonnes of freight annually by 2030. The route carried 33.4 million tonnes in 2025, used by a record 3,850 freight trains crossing Mongolian territory. The upgrade will increase Mongolia’s freight traffic capacity by just under 50%.     

New kharkhoram
Mongolia is building New Kharkhorum as a planned new capital city in the Orkhon Valley to ease severe overcrowding, traffic, and pollution in Ulaanbaatar. It will cover about 189,000 hectares across Uvurkhangai and Arkhangai provinces, roughly 230 to 300 kilometers southwest of Ulaanbaatar, near the historic ancient capital of Kharkhorin. It is designed to accommodate an initial population of approximately 500,000 residents. President Ukhnaagiin Khürelsükh issued a decree to restore Kharkhorum as capital in 2022. In mid-2025, a development law was submitted to the Mongolian Parliament and approved.

Estimated to cost around US$30 billion, the master plan features a 4E-class international airport, a transport and logistics hub, extensive green spaces, and potential small modular nuclear reactors for clean energy. Russian and Chinese property developers are highly likely to be involved in construction and the supply of materials once the plans are finalised. 

The project does not have a single final completion date, but broader developmental milestones extend toward 2050 and 2065 under long-term national frameworks like Vision-2050.

Economic Development
EAEU Mongolia
The Russian Economic Development Minister was present, as Mongolia has an interim Free Trade Agreement with the Eurasian Economic Union (EAEU) which entered into force in July. The two sides will have discussed how best to utilise this new agreement. The FTA eliminates or reduces customs duties on 367 product categories for both sides, covering about 90% of bilateral trade. Set for an initial three-year period, with automatic renewal for another three years unless terminated or objected to by either party. These are the main considerations:

Mongolian Exports

Agricultural and livestock goods (meat, cashmere, finished leather, wool) make up 97.5% of covered Mongolian exports, gaining preferential or zero-tariff access to the EAEU market.

EAEU Exports

EAEU member states (Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan) gain better access to Mongolia for dairy, beverages, confectionery, cars, trucks, and cosmetics.

Protections

Sensitive domestic sectors are shielded; dairy and alcohol are protected, while Mongolia applies specific quotas on items like milk powder, eggs and wheat.

Although the FTA has only been in operation for a few weeks, it can be expected to have a significant impact on Mongolia’s trade with Russia and Kazakhstan especially. Mongolian cashmere stores have already opened in luxury malls in Moscow and St. Petersburg.

Summary
Mongolia is poised for an extensive transformation. Sited between Russia and China, its interconnecting rail network between the two countries is set increase by 50%, the Power of Siberia 2 pipeline is set to transit the country (and supply energy) while armed with a new Free Trade Agreement, Mongolian entrepreneurs can access an EAEU market of 185 million. Mongolia’s population is 3.5 million.

That shortly to be created wealth is already being put to use – a new capital city, and a move to cleaner nuclear energy after decades of polluting coal powered stations. While bilateral trade remains relatively modest at US$2.7 billion, that is a reflection on the smaller Mongolian population. Nevertheless, the bilateral figures, boosted by transit operations and free trade should boost the Mongolian economy in the coming years.  

Published Date:2026-09-02