Ukraine sides with US over Chinese takeover of engine company
The dispute over the ownership of Ukrainian helicopter and jet engine manufacturer Motor Sich seems to have come to an end after Ukraine’s President Volodymyr Zelenskyy sided with the US instead of China.
The case, which according to experts has become a political issue between the two superpowers, could cool the otherwise warm relationship between Ukraine and China, and prevent China from advancing its engine technology in helicopters and jet planes.
“The US sees China’s influence in Ukraine and the purchase of the company as a threat,” says Nan Tian, a senior researcher at the Arms and Military Expenditure Programme at Stockholm International Peace Research Institute (SIPRI).
He tells Euronews: “It is about power politics from the US perspective, and the engines are just one concern. The US wants to stop China from moving too much to the West.”
China circling Motor Sich
Zelenskyy decided to place three-year sanctions on four Chinese companies said to be close to the Chinese leadership, which started to purchase shares in Motor Sich back in 2015.
His security service, the SBU, then broke up a meeting between Chinese and Ukrainian investors, claiming ownership of the Ukrainian engine manufacturer this week.
“The issue (about ownership of Motor Sich) is not about China. The issue is not even how Motor Sich’s shares were bought under the former President, under Poroshenko. The issue is that we do not have the right to sell a controlling stake in the management of strategic defence enterprises of Ukraine to any country…during my presidency, this will not be the case,” said Zelenskyy in an interview with HBO.
Zelenskyy’s decision came under pressure from the US, which fears the Chinese purchase of Motor Sich would advance its military capabilities. In 2019, then-US National Security Advisor John Bolton visited Ukraine and had
several meetings where Motor Sich is said to have been discussed.
A few weeks ago, the then US Commerce Secretary Wilbur Ross also classified Skyrizon, the major Chinese investor company in Motor Sich, as prohibited military end-users.
“Skyrizon — a Chinese state-owned company — and its push to acquire and indigenise foreign military technologies pose a significant threat to US national security and foreign policy interests,” said Ross, according to the Ukrainian business site UBN.
The Ukrainian SBU says that they are blocking the deal because China has a military helicopter production contract with Russia and, therefore, could share the engine technology with Russia, which annexed the Crimean peninsula in 2014 and later supported separatists in war in eastern Ukraine.
Skyrizon said in a statement that Ukraine’s “actions are a barbaric robbery and a serious violation of the legal rights and interests of Chinese companies operating abroad, an unprecedented disrespect for the principles and rules of international trade.”
Skyrizon is suing Ukraine for $3.5 billion for cancelling the deal.
Changing geopolitical equation
The story about Motor Sich began in 2014 when Russia annexed Crimea and the war between Ukraine, and the Russian-backed separatists broke out in Ukraine's east.
Suddenly, Motor Sich was, due to the conflict, unable to sell its engines to Russia and was instead facing economic problems. China was looking to advance its engines for its army combat helicopters and was, therefore, interested in Motor Sich. Ukraine was producing a lot of the military hardware for the Soviet Union during the Cold War and still had appealing technology. Ukraine is still the 12th largest weapons exporter in the world, according to SIPRI, and it all made Ukraine an interesting place for China.
Skyrizon, with other investors, secured a majority of the shares around 2017.
“Russia was not at all interested in providing the assets and technical support that Ukraine could offer the Chinese. The initiative by the PLA (China's People's Liberation Army) to engage Ukrainian industry goes back to the early 1990s. For the simple reason that it was not in Russia’s interest to provide these capabilities to Beijing,” said a leading Ukraine defence industrial director,
according to the Middle East Institute.
Analysts believe the decision could lead to a cooling of the relationship between Ukraine and China, with the latter in turn looking to Russia for closer relations.
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