Reformist Mongolia Reasserts Its Sovereignty, Opens Doors to World : Asia: With Soviet influence declining, Ulan Bator is reaching out to the industrialized democracies.

At a railway station southeast of this Mongolian capital, passengers on the Beijing-Moscow express recently caught a brief glimpse of flatbed railway cars loaded with Soviet tanks.

There seemed to be little doubt that the tanks were headed back to Soviet territory, part of a military withdrawal from this landlocked Central Asian nation.

Incorporated into the empire of China’s Qing Dynasty in 1696, Mongolia was wrested from Chinese control in 1921 by the combined forces of Mongolian revolutionaries and the Soviet army. Since then, while nominally independent, it has functioned as virtually a Soviet Asian republic.

But political liberalization in Moscow, reduced Sino-Soviet tension and the gradual withdrawal of Soviet forces now give this nation of 2 million people a chance to act independently for the first time in centuries.

In all Central Asia, where once there were many independent tribes and kingdoms, only Mongolia has managed to reassert sovereignty. In the decades ahead, its economic and political success or failure could influence whether other Central Asian nationalities, now incorporated in either China or the Soviet Union, will seek independence.

The reform-oriented Communist government in Ulan Bator, pressed by an impatient opposition demanding even faster political and economic change, has begun reaching out to the rich industrial democracies, seeking trade, investment and expanded contacts in virtually all fields.

A new law due to take effect May 1 allows creation of wholly foreign-owned enterprises and Mongolian-foreign joint ventures in virtually all sectors of the economy, with no taxes for three years.

“Now the foreign policy of Mongolia gives first priority to foreign economic relations,” government spokesman Terbishiin Chemiddorj said at a recent news conference.

At the same event, J. Choinhor, a Foreign Ministry official, said, “We have raw materials, we have minerals, so we could export our raw materials and mining products to developed countries and bring from those countries high-tech products.”

Early last month, in the first meeting ever between a Mongolian premier and a Western Bloc head of government, Mongolia’s Dumaagiyn Sodnom received pledges of economic assistance from Japanese Prime Minister Toshiki Kaifu.

Kaifu announced that Japanese aid will be designed to support democratization and economic reform in Mongolia. During the six-day visit by Sodnom, who was replaced by Sharavyn Gunjaadorj in a mid-March political reshuffle, the two countries also signed a trade agreement granting Mongolia most-favored-nation status.

The day before Sodnom’s arrival, C. Itoh & Co. and Mitsubishi Engineering announced plans to jointly build a steel plant in Darhan, 150 miles north of Ulan Bator, with financing from Japan’s Export-Import Bank. On the same day, plans were announced for Nissho-Iwai Corp., Victor Co. of Japan and Mongolian Electronics Corp. to start production of color television sets in September on the outskirts of Ulan Bator.

As part of last month’s changes, former President Jambyn Batmonh was replaced by Punsalmaagiyn Ochirbat, the former minister of economic relations and a key architect of the policy of reaching out to capitalist countries.

Shortly after his election by the Great People’s Hural, Mongolia’s legislature, Ochirbat declared that although Mongolia wants to deepen its friendship with the Soviet Union, it also will promote greater political, economic, cultural and scientific ties with China and seek to expand contacts with other countries around the world.

The Soviet Union moved large numbers of troops into Mongolia beginning in the 1960s, when Sino-Soviet relations deteriorated and border tensions rose. About 60,000 soldiers were stationed there in the mid-1980s, according to Western estimates. Moscow began pulling these soldiers out in 1987.

By the end of this year, according to Vladimir Philippov, the second-ranking official at the Soviet Embassy in Ulan Bator, it is expected that only about 25% of the original troops will remain.

Soviet and Mongolian officials agreed last month on complete withdrawal by the end of 1992, the Soviet news agency Tass said.

The Soviet Union still accounts for about 85% of Mongolia’s trade and 70% of its foreign investment, with East Europe accounting for much of the rest.

Trade with capitalist countries is small. But British and American firms are in Mongolia searching for oil. Foreign joint ventures are under discussion in such fields as camel-wool processing. The first flights to Ulan Bator from a non-Communist country are to begin from Tokyo this summer.

Attempts are under way to upgrade the outdated telecommunications system, a major barrier to closer foreign contacts. At the capital’s best hotel, the Ulan Bator, it is usually impossible for visitors to make an international telephone call from early evening to morning, work hours for associates in the United States and West Europe.

The United States, which established diplomatic relations with Mongolia in 1987 and began staffing an embassy here on a year-round basis only last year, is negotiating a trade rules agreement.

“Mongolia does have a lot of mineral resources, and that has drawn the interest at least so far of these oil companies,” commented Michael Senko, charge d’affaires at the U.S. Embassy in Ulan Bator.

In keeping with reduced Sino-Soviet tension, Mongolia’s trade with China is also growing.

“We export raw materials, wood, small amounts of copper and small numbers of horses,” Choinhor said. “We import consumer goods, silk, fabrics, Thermoses and fruit. . . . We believe there is room for expanded trade.”

A major swing toward a pro-Chinese stance is unlikely, however, because Mongolians are wary of any renewed Chinese attempt to dominate them.

Ulan Bator’s tolerance of several newly established dissident organizations and opposition parties appears to be rooted primarily in complex political considerations and a sense of Mongolian nationalism. But a desire to improve foreign ties also seems to be a factor.

“I think my government’s position (of tolerance toward dissent) will promote the development of Mongolia’s relations with the West,” said L. Davaagiv, a Foreign Ministry official.

“If they can point to an opposition and say it’s free . . . that helps them when it comes to establishing closer relations with the non-Communist world, or getting loans from the Asian Development Bank,” one informed observer of the Mongolian political scene said, asking not to be identified. “It just plays better in the non-Communist countries if you have an opposition. They’re spreading their wings on the world stage, and they’re enjoying the new independence they have.”

Mongolia has been dependent on the Soviet Union for so long, however, that it is not clear how successful it can be going it alone.

“They have beautiful stamps on their envelopes, but they are not made in Ulan Bator,” a foreigner living here said. “They are printed in the U.S.S.R. Many things are like that. When you try to imagine a beautiful, strong, modern and strictly Mongolian Mongolia, it seems difficult. But they want it, this is for sure.”