8/27/19
WASHINGTON -- Ukrainian tycoon Vyacheslav Boguslayev is having a hard time parting with the company he has controlled for the past three decades, and it's not just because it is close to his heart. The 80-year old is caught up in the global rivalry between the United States and China as he seeks to sell his defense company, Motor Sich. At stake for Ukraine is potentially billions of dollars of investment from China, thousands of jobs, and eventual membership in NATO, analysts say. The possible sale of Motor Sich -- a maker of engines for missiles, helicopters, and jets -- to the Chinese provoked a raid of its Zaporizhzhya headquarters by Ukraine's Security Service in early 2018 and the seizure of its shares. The issue has become so important to Washington that U.S. national-security adviser John Bolton said he will raise his "concerns" about the sale during his current visit to Ukraine. "This is an issue that I think is significant for Ukraine, but [also] significant for the U.S., for Europe, for Japan, for Australia, Canada, other countries," Bolton told RFE/RL in Kyiv on August 27.
China is using its "trade surpluses to gain economic leverage in countries around the world, to profit from defense technologies that others have developed," Bolton said.
Ukrainian media reported on August 19 that two Chinese firms had reached an agreement with state-owned military concern Ukroboronprom to jointly purchase the engine maker. No price was disclosed. Ukroboronprom Chairman Aivaras Abromavicius declined to comment. The Chinese companies would receive a controlling stake, while Ukroboronprom would receive at least a 25 percent blocking stake, according to Ukrainian media. The Chinese firms are believed to be close to the government in Beijing. Motor Sich, which employs more than 20,000 people in the southwestern city of Zaporizhzhya, is one of the world's largest makers of helicopter and airplane engines. Its products are used to fly the Mi family of choppers, as well as Antonov cargo jets. It is one of the few plants in the former Soviet Union that can build an entire aviation engine from scratch and offers a wide variety of products that "fit the Chinese requirements really well," said Reuben Johnson, a military analyst based in Kyiv. Motor Sich declined to comment on any talks with other potential partners. US defense consultant Johnson said Washington has taken "too long" to act and needs to quickly figure out what Motor Sich "can do well for us and our allies" if it wants to come up with an alternative to a Chinese takeover. Hurak said Washington has woken up to the immediacy of the situation. "The strategic importance of Motor Sich was known for a long time, but until now, no one was treating it so seriously," Hurak said. "I think the U.S. is finally serious." Motor Sich was valued at nearly $500 million when it ceased trading on the stock market. Only a handful of people in Ukraine could afford to buy it at that valuation.