He arrived quickly and with little fanfare. At first, it wasn’t even clear that he was even in Ukraine.
But when U.S. National Security Advisor John Bolton flew into Kyiv on Aug. 27, he came on serious business.
Bolton was there to prevent the Ukrainian side from selling a major stake in aircraft plant Motor Sich to Beijing Skyrizon Aviation, the Wall Street Journal reported on Aug. 23.
The United States sees the sale as a strategic threat to Ukraine’s military security.
“Military and sensitive technologies should not reach enemies or potential enemies,” Bolton told the Evropeiska Pravda news site. “We inform friends and partners about the danger of Chinese investment.”
Making China great again?
Since 2014, the U.S. has allocated more than $1.3 billion to support the Ukrainian Armed Forces in their fight against Russian aggression. For Washington, the Motor Sich sale looks like another move by China to build up its military strength and influence around the world.
Built in the Soviet era, Motor Sich is one of the world’s leading manufacturers of engines for both civil and military airplanes and helicopters, as well as for cruise missiles. This makes it extremely important for China.
Acquiring a controlling stake in Motor Sich would mean gaining access to the Ukrainian company’s most valuable asset: the engine technology that Beijing still lacks.
For China, Ukraine is the best option to fill knowledge gaps and build a world-class military, says Yurii Poita, an expert at the Center for Army, Conversion and Disarmament Studies.
U.S. National Security Adviser John Bolton speaks to the press at the press conference in Kyiv on Aug. 28.“Motor Sich technologies have been developed for decades,” Poita told the Kyiv Post. “China can’t fill the gap itself, but they want to do it with the help of Ukrainian technologies.”
The plant, which also makes engines for the famous Ukrainian An-225 Mriya, the world’s largest transport aircraft, is located in the city of Zaporizhzhya, 520 kilometers southeast of Kyiv, and employs tens of thousands of people.
Currently, Beijing Skyrizon Aviation’s controversial bid to purchase Motor Sich is pending approval from the Anti-Monopoly Committee of Ukraine. Few details of the deal have been disclosed due to the strict and often excessive secrecy of Ukraine’s defense industry.
If the agreement includes technology transfers to Chinese companies, then experts predict few positive benefits for Ukraine in the long run.
“Once China gets this technology from Ukraine’s factory, will China move the production to China or will China be interested to keep employing 30,000 Ukrainians at Motor Sich? It’s rather a rhetorical question,” said Olena Tregub, secretary general of the Independent Defense Anti-Corruption Committee, an international civic body created by Transparency International.
Different countries, same goal
Historically, the Russian market was the final destination for much of Motor Sich’s production.
But after Russia illegally annexed Crimea and invaded the Donbas in 2014, that grew more challenging. In 2017, Ukraine outright banned exports of military equipment to Russia.
Led by its president Vyacheslav Bohuslaev, a Ukrainian political heavyweight with close ties to ex-presidents Leonid Kuchma and Viktor Yanukovych, Motor Sich has started to play a shadowy, complicated game to sell its production.
According to the company website, Motor Sich sells its production to more than 120 countries around the globe.
However, according to the Bihus.info investigative journalism project, Russia remains one of the key destinations for Motor Sich products, including some used for the military purposes of the Russian Federal Security Service.
Bohuslaev used countries like Belarus, Serbia and Bosnia and Herzegovina as intermediaries to supply the plant’s production to Russia, Bihus.info reported.
Still, the official ban on sales to Russia hit Motor Sich hard. The company’s production nearly halved and profits fell from $1.1 billion in 2013 to $450 million in 2018, according to the company’s financial reports.
Experts do not exclude the possibility that China could offer more than just investment.
“It is possible that Bohuslaev is trying to enter the Russian market through China,” Poita said.
Motor Sich did not respond to multiple requests for comment.
(Read more about Motor Sich and relations between Russia and China here)
For Washington, China is also a country that announced plans last month to expand military cooperation with Russia in order to compete against the U.S., Tregub says.
Official reaction
The controversy surrounding Motor Sich’s ties with China began in 2016, when Bohuslaev carried out a number of transaction to sell the company’s controlling stake — including his own 15-percent share and shares controlled by several offshore companies.
The result shocked defense experts: a 56 percent stake was sold to investors associated with Skyrizon Aviation.
This did not go unnoticed. In 2017, the Ukrainian authorities — particularly the Security Service of Ukraine (SBU) — froze the deal and launched an investigation into the sale as a potential act of sabotage.
Soon, at the SBU’s request, a Ukrainian court had arrested the company shares set to be sold to China.
In June 2018, Ukrainian lawmaker Hanna Hopko, who headed the parliamentary committee on foreign affairs, warned that the deal posed a serious threat to Ukraine and its NATO allies.
“It’s extraordinary that we would allow a strategic partner of Moscow to acquire such sensitive and unique technology,” Hopko said.
Because Ukraine aspires to integration with the West and relies on the United States and Europe for support, the country should be careful about transferring military technology to China, Tregub told the Kyiv Post.
Should the Anti-Monopoly Committee allow the sale to go through, Chinese companies will also pay a modest $100 million in grant funding into the Ukrainian aviation industry. In return, they may get full control over the plant.
“The worst-case scenario (for Ukraine) is when our technology will be transferred to China practically for nothing — $100 million is like a couple of tanks,” said Poita.
Another 25-percent share of Motor Sich would go to UkrOboronProm, Ukraine’s giant state-run group of defense production companies, which has often faced accusations of corruption.
According to Poita, Ukraine needs to evaluate situations like these not only from an economic or military point of view, but also from a geopolitical point of view.
“Many experts and countries have already concluded that long-term relations with China most often lead to losses,” he said.
