US Seeks to Block Ukraine From Selling an Aircraft Engine Company to China
Bolton in the lead, not that US has bothered to make a counter offer for the orders-starved company
U.S. national security adviser John Bolton is seeking to scuttle the pending Chinese acquisition of a Ukrainian aerospace company on grounds that it will give Beijing vital defense technology, according to senior U.S. administration officials familiar with the matter.
Bolton’s personal interest and involvement in the deal, acknowledged by the senior administration officials, underscores the growing importance of this case to the U.S. national-security establishment, according to The Wall Street Journal.
The company, Motor Sich, is one of the world’s foremost manufacturers of helicopter and airplane engines, and for years has supplied engines for the bulk of the Russian military-helicopter fleet.
A sale to a group of companies, including Beijing Skyrizon Aviation, controlled by Chinese businessman Wang Jing, is pending.
U.S. officials are working to schedule a meeting between John Bolton and Motor Sich’s top executive next week in Ukraine’s capital, where Mr. Bolton is set to attend a security conference, according to a senior administration official.
“We are going to have a conversation with the Ukrainians about China’s ambitions and what our view is of what China’s up to,” said another senior administration official. “This is all part of the national-security strategy and the national-defense strategy. It’s a strategic competition with China.”
As UNIAN reported earlier, citing Asia Times, a Chinese aviation industry investment company reportedly renewed its attempt to acquire stakes in Motor Sich, a Ukrainian aircraft engine manufacturer, which has built engines for the world’s largest transport aircraft the An-225 Mriya. Skyrizon would own more than 50% of Motor Sich if the acquisition works.
China has 13 types and more than 1,200 aircraft engines built by Motor Sich, the note said.
Established in 1907, Motor Sich is considered one of the largest advanced aircraft engine manufacturers in the world and produces engines including turbofans, turboshafts and turboprops.
China still lags behind the world’s top level in aeroengines, an anonymous military expert told the Global Times.
The prospect of a Ukrainian engine factory selling out to China has so alarmed Washington that none other than national security adviser John Bolton is seeking to stop it. The US didn’t bother making a counter-offer, either.
Bolton is headed to Kiev after the G7 summit in France, and said on Monday he was looking forward to meetings with “partners” there, to support the government’s vision for a “stronger and more prosperous Ukraine.”
The President had productive meetings in Biarritz at the #G7. I’m looking forward to my upcoming meetings with our partners in Kyiv. We support President Zelenskyy’s reform efforts and vision to create a stronger and more prosperous Ukraine.
— John Bolton (@AmbJohnBolton) August 26, 2019
He did not comment, however, on the Wall Street Journal story from Friday that one of those meetings will involve the fate of Motor Sich, which is seeking approval from a Kiev watchdog to sell the controlling stake to two Chinese companies. This has raised alarms in Washington, where hawks worry that Beijing will acquire more than just the plant in Zaporozhye, but the technology and expertise to build helicopter and airplane engines.
Beijing Skyrizon Aviation Industry Investment had already tried to buy almost 49 percent of Motor Sich shares in 2017, but was blocked by the Ukrainian security services. Trade in Motor Sich stocks was frozen in April 2018, to prevent them from falling into unapproved hands.
Now Skyrizon has partnered with Xinwei Group to make another bid, this time for more 51 percent of the company’s shares, while a 25 percent stake would go to Ukroboronprom, the state military conglomerate. The purchase must be approved by the Antimonopoly Committee – which is where Bolton comes in.
Ukraine’s only aircraft engine plant, founded in 1907, has fallen on hard times since the 2014 coup in Kiev resulted in a trade war with Russia, formerly its biggest customer. Motor Sich is not the only defense giant to suffer, either. Antonov, for whose transport planes Motor Sich made engines, shuttered its doors in 2016 and folded into Ukroboronprom, after a deal to get Chinese funding for finishing the mammoth An-225 fell through.
Last August, after pressure from Washington stopped Motor Sich from working with the Chinese, one politician argued that it would only be fair for the US to step in as a customer.
“If the Americans do not want us to sell to the Chinese, let them them buy our aircraft engines,” said Oleh Lyashko. The controversial nationalist’s party had 22 seats in the Rada at the time, but failed to clear the threshold in last month’s parliamentary election, losing all of them.
Ukraine’s new president Volodymyr Zelensky, who won a landslide victory over the US-backed Petro Poroshenko in April, has since been presented with numerous “red lines” from Western NGOs and turned his priorities to NATO membership. It remains to be seen if he will respond to pressure from Washington like his predecessor, at least where the fate of Motor Sich is concerned.