Arkivfoto: Emil Filtenborg.

The Secretary of the National Security and Defense Council of Ukraine Oleksiy Danilov has rejected that talks about nationalizing Motor Sich is under way.

Last week, Secretary of the National Security and Defense Council of Ukraine Oleksiy Danilov, said that the preparations for nationalizing Motor Sich was under way. He has rejected ever talking about nationalizing it.

“The word ‘nationalization’ was neither used in any way at the meeting of the NSDC, nor in the decisions adopted by the NSDC, nor at the briefing at which I spoke. Today we are involved in an information war with the Russian Federation, which has a direct relationship with China to attempts to seize the Motor Sich enterprise.”

“So, today we have such negative information regarding the nationalization. It was about the fact that the Motor Sich enterprise will soon be returned to the ownership of the Ukrainian people in a legal way in accordance with the current legislation,” Danilov said in the program Freedom of Speech on the Ukraina TV channel according to Interfax.

There have been abundant criticism of the decision to allow Chinese investors buy three fourths of the shares in the company, because it produces aviation engines for the military industries. Returning Motor Sich to Ukrainian hands is still a priority, Danilov says.

American pressure

Ukraine has been caught in a difficult dilemma because of the Motor Sich sale. Though the sale has been blocked for a long time and the assets frozen, there has been pressure from both China and the US.

On one side, the US is a very prominent partner in matters of national security and membership of NATO. On the other hand, China is growing to be an increasingly important financial partner.

The Americans, however, are not thrilled about the prospects of selling military knowledge and production to the Chinese, and the both the Trump and the Biden administration have been very vocal about their stance.

China on the other hand has been waving a number of direct threats of “worsening” economic ties between the two nations. Essentially, Ukraine has been in a position not unlike a child with divorced parents being told to pick a home.

It seems, they have decided to stay with the US.

A global conflict

All over the world, China and USA is competing about dominance of all sorts: cultural, social, strategic and economic control. This fight is also taking place in Ukraine, where China is becoming more and more active investors.

A lot of the Chinese money are being funnelled into infrastructure and agriculture – sectors in Ukraine desperate for investments. Another investment went into the Ukrainian company Motor Sich, where the Chinese bought a controlling share of the stocks.

Under normal circumstances, that would not raise the amount of concerns that this particular investment has done. Motor Sich is the producer of engines for fighter jets and military helicopters, among other things.

They are one of the world leaders and has been the primary source of engines for Russia for a long time. This market was logically shut down after the war between Russian backed separatists and Ukraine broke out in 2014.

Since then, Motor Sich has been in a very deep crisis. In 2017, the Chinese company Skyrizon Aircraft Holdings Limited bought 41 percent of the company. They later went on to get majority, but then politics interfered in the sale leading us to the situation, we see today.

Court case

Not only might the blocking of the trade gain favour of the Americans and spite of the Chinese, a court case is also pending. In December, Motor Sich stakeholders launched an international arbitration.

They want 3.6 billion American dollars from the state of Ukraine, as they believe that the investment has been expropriated. Furthermore, they also claim that it violates the agreement signed between China and Ukraine in the early 90’ies.

International law firms WilmerHale, DLA Piper and Bird & Bird are going up against the state of Ukraine. For comparison, the IMF loan that Ukraine has been struggling to get is 5 billion USD, so losing a law suit of this size would greatly damage the Ukrainian budget.