The head of the US State Department, Mike Pompeo, said in an interview with Ukrainian President Volodymyr Zelensky about the concern of the American administration over Kiev's plans to sell the Motor Sich defense plant to China. The conversation took place on August 26, but the report of the State Department press service about it was published only three days later.
Pompeo congratulated the Ukrainian people on Independence Day and stressed that the United States intends to continue to support the Ukrainian side in combating corruption and attracting foreign investment. At the same time, not all foreign investments can be considered useful for Ukraine from the point of view of the American leadership.
- Mike Pompeo
- © Kevin Lamarque / Pool
"Secretary of State Pompeo expressed the US's concerns about China's malicious investment in the Ukrainian economy, including Beijing's attempts to acquire Motor Sich, which produces (aircraft. - RT ) engines," reads a statement posted by the press service of the US foreign policy departments.
Outrage in Washington
Back in August 2019, John Bolton, who was then the National Security Adviser to the President of the United States, spoke about Washington's concern over a possible deal to sell the Motor Sich aviation company to Chinese investors. Answering journalists' questions during his visit to Kiev, Bolton said that the deal was a sovereign affair of Ukraine, but made it clear that the White House was unhappy with these plans.
“We have outlined our concerns about ... unfair Chinese trade practices and national security threats from a US perspective,” Bolton said at the time.
According to Reuters, the Chinese company Beijing Skyrizon Aviation Industry Investment signed a deal to acquire a stake in Motor Sich back in 2016. In May 2017, the Minister of Economic Development and Trade of Ukraine (then this post was held by Stepan Kubiv) told reporters that Motor Sich had already begun construction of a plant in China as part of a joint project with the Chinese company Beijing Skyrizon Aviation Industry Investment Co Ltd.
- Vladimir Zelensky and John Bolton
- © Ukrainian Presidential Press Service
However, soon the deal on the sale of Motor Sich to Chinese investors was in limbo. In September 2017, the SBU suspected the management of Motor Sich that 56% of the company's shares were sold in violation of the law, with the participation of offshore companies. The siloviki argued that the new owners would destroy the enterprise and take its technology abroad. As a result, by the decision of the Shevchenko District Court, the shares were arrested.
In April 2018, SBU officers conducted searches at the enterprise, and according to a new court decision, the arrest was imposed on the shares of foreign participants in Motor Sich.
On August 6, 2020, President of Ukraine Volodymyr Zelenskyy addressed a letter to Prime Minister Denis Shmyhal, in which he called for a "systematic assessment" of the impact of privatization or sale of corporate rights in the authorized capital of enterprises of strategic importance to the economy and security of the state, including Motor Sich ".
On the same day, the Ukrainian prosecutor's office imposed a second arrest on the shares of Motor Sich and added the article "high treason" to the criminal case on the illegal sale of shares in the enterprise. This was announced by the management of the Ukrainian company DCH Group, which earlier signed an agreement with the Chinese side on the joint development of Motor Sich.
In August, it also became known that the subsidiary of Beijing Xinwei Technology Group Co., Beijing Skyrizon, and its Ukrainian partners from DCH Group submitted a joint application to the Antimonopoly Committee of Ukraine (AMCU) to purchase Motor Sich shares. At the same time, the Chinese side withdrew the statement filed back in 2019 together with the state concern Ukroboronprom.
In addition to the Ukrainian special services and the prosecutor's office, the implementation of the deal on the sale of Motor Sich JSC to China is hampered by the AMCU. As the head of the committee said in November 2019 (then this post was held by Yuri Terentyev), the sale of the Motor Sich plant to a Chinese company may lead to the fact that the Ukrainian state concern Ukroboronprom will be under US sanctions. According to the leadership of the antimonopoly department, this is possible if it turns out that the Chinese side is in the supply chain associated with the Russian holding Russian Helicopters.
In February 2020, the American resource BuzzFeed News, citing unnamed Ukrainian officials, reported that Kiev was allegedly preparing to fulfill Washington's wishes and finally abandon the deal with China. According to the newspaper, the American company Oriole Capital Group should become the new buyer of Motor Sich JSC.
- Workshop of the "Motor Sich" plant
- RIA News
- © Marina Lystseva
These plans were personally confirmed by the head of Oriole Capital Group Hossein Mousavi to BuzzFeed News reporters.
“The longer I have been working on this issue, the more I am convinced that this company is a real find. I myself have visited the Motor Sich territory several times and personally know Mr. Boguslaev (the president of Motor Sich JSC), - said Mousavi.
It is worth noting that Oriole Capital Group was already in the spotlight of the Ukrainian media in 2017, when it entered into an agreement with the Kharkov Aviation Plant on the serial production of aircraft in the amount of $ 150 million. Then the local media was somewhat suspicious of the fact that the Internet is almost completely there was no information about the company. It also turned out that Oriole Capital Group was registered only in June 2017 - shortly before the information about the deal with the Kharkov plant appeared. As later explained in Ukroboronprom, the American company was created specifically under a contract with the Kharkov Aviation Plant.
According to the Ukrainian political scientist and economist Alexander Dudchak, the Ukrainian leadership is now in a difficult situation.
“The Ukrainian side cannot completely abandon the deal with China, because it has previously undertaken serious obligations and has already received funds from Chinese investors. It is thanks to cooperation with China that Motor Sich showed profit for the first half of this year. Therefore, the issue of a deal with the Chinese side has not yet been closed, "the expert explained in an interview with RT.
At the same time, China does not intend to withdraw from the struggle for Motor Sich, military expert Alexei Leonkov is sure.
- © Valentyn Ogirenko
“The Chinese industry needs technologies that Motor Sich has. But the United States, too, will not abandon its plans to intercept the enterprise, because the Mi-8 helicopters, which the Pentagon uses in Afghanistan, are equipped with engines manufactured by Motor Sich. But if there is no other way out, the option is not ruled out in which the United States will push through the Ukrainian authorities the complete liquidation of Motor Sich so that the plant does not go to the PRC, "the expert suggested in a commentary on RT.
Motor Sich JSC traces its history back to the beginning of the XX century, the first aircraft engine was developed by the designers of the enterprise back in 1916. For many decades, the plant has been producing aircraft engines and gas turbine units that have been operated on airplanes and helicopters for various purposes in more than a hundred countries around the world.
The company is considered the flagship of the Ukrainian aviation industry, along with the state-owned Antonov. After the collapse of the USSR, difficult times began for the Ukrainian industry, but in the 2000s, both Antonov and Motor Sich remained afloat due to the remaining technological ties with the Russian military-industrial complex - in the total export of Motor Sich, the share of supplies to Russia was about 50-60%. Mostly Moscow imported engines for helicopters and warships.
After the "Euromaidan", this cooperation was severed at the initiative of the new authorities of Ukraine. According to Alexei Leonkov, cooperation with the PRC can be beneficial to Motor Sich, but only for a while.
“When the Chinese side gets the technologies it needs, Motor Sich will lose interest for it. And whether Ukraine will be able to receive any dividends from this cooperation if the deal is unlocked is a big question. As for the United States, the Americans are only interested in a small part of the plant's output. Therefore, for now, in Ukraine, the sale of defense enterprises continues for a song, to the detriment of the country's interests, ”the expert said.
Alexander Dudchak adheres to a similar point of view. As the expert noted, Motor Sich is an enterprise with a unique technological base, but after the severance of economic ties with Russia, the plant found itself in an unenviable position.
“Washington does not want important technologies to be at the disposal of Beijing and puts pressure on the Ukrainian authorities. It is unknown how this conflict will be resolved. Both China and the USA are unlikely to work for the prosperity of Motor Sich. If the plant goes to the Americans, they will simply ruin it, and all the workers will end up on the street. If China gets Motor Sich, it will simply transfer production and technologies to its territory, and Ukraine will still have to part with it, ”the expert concluded.