Bolton and Motor Sich. Why the US doesn’t like the story with the Chinese and the Ukrainian factory
Translation of and commentary on a 2019 article by Ukrainian economist Aleksey Kusch
August 28, 2019 at 08:31 pm. Aleksey Kusch. Original article here
Events in Ukraine: the topic of the Motor Sich factory has long fascinated me. I have been planning to write an article about it for a long time. For now I will be publishing some translations of good articles on the topic. Motor Sich is a soviet aeronautics factory which made much of its post-soviet income by selling (among other things) helicopter engines to Russia. On that topic, it is worth noting that much of Ukraine’s trade with Russia was quite beneficial for Ukraine - Russia bought Ukraine’s high-tech products (which did not find many buyers elsewhere), and sold Ukraine cheap energy. One could even joke that Ukraine was engaged in neo-colonial trade relations with Russia - but to whose benefit…
Providing a great deal of employment to its region in the eastern city of Zaporizhye, its owner, Vyacheslav Bohuslaev, was a classic example of a post-soviet neo-patrimonial businessman, or a representative of the national bourgeois. He was interested in deepened economic cooperation with Russia and China. After the EU association agreement and Ukrainian economic sanctions against Russia, Motor Sich suffered huge blows to its revenue. Finally, Bohuslaev was arrested November 2022, accused of, among other things, evading sanctions and continuing to export to Russia. He is still under arrest.
Motor Sich has thus been a battleground between the comprador intelligentsia who consider it a useless leftover from the soviet union, and the industrial bourgeois and those who support a state-led model of economic development. But as this article explains, it has also become the site of a global struggle between the US and China. The US has forced Ukraine at numerous points to ban Chinese attempts to buy the factory, for fear of the military-technological consequences. This has a history - China bought a Soviet aircraft carrier from Ukraine in 1998 on the pretext that it would simply convert it into a floating casino, a pretext that, naturally, was not honored.
One of my favorite arguments from Kusch, outlined in this article, is that the US plan regarding Motor Sich is its ‘slow euthanasia’, as he says in other articles. While purchase by China is unacceptable, so is instant closure of the plant - this would lead to trained technicians being out of work, and possibly being purchased by China. Instead, as Kusch says in this article, the factory is to be ‘closely monitored until the extinction of its life cycle’. The plant is to be kept alive as long as the technicians are alive - once they pass away, there is no longer any need for the factory to exist. A fitting example of the Western economic attitude towards Ukraine, which has little to do with the development of any - even dependent - productive forces.
The level of subjectivity of Ukraine in terms of making certain decisions in the field of international strategic cooperation has once again hit rock bottom. Apparently, we are no longer only coordinating with our Western partners the issues of carrying out systemic reforms, for example, in the field of education, medicine or pensions, but we are also looking questioningly at our curators when it comes to selling the "candle factory".
And even if the factory is clearly not a candle factory, the Pavlovian salivation-reaction developed as a result of many years of feeding on IMF tranches does not allow our politicians to say anything articulate in response.
This time, an auditor from the United States, National Security Adviser John Bolton, has come to us, who is supposed to “deliver unpleasant news”: the current Ukrainian authorities should block the sale of the Motor Sich aeronautic plant to Chinese investors.
“We believe that China is trying to integrate into the economies of countries around the world, including through the Silk Road project and through attractive investments ... We inform friends and partners about the dangers that Chinese investments bring,” said the American security official. ".
In the West, the possibility of leakage of dual-use technologies to China has aroused keen interest. Even the Wall Street Journal has dedicated an article to this event. The Ukrainian enterprise has unique technologies for the production of helicopter engines, and China has long been picking up "intellectual scraps" in the post-Soviet space from Belarus to Kazakhstan, using joint economic projects to corrupt local elites.
Bolton's task is to block the sale of Motor Sich to the Chinese at any cost, to be more precise, to suspend the transfer of intangible assets to the PRC in the form of technology and project documentation. In general, everything that is called intellectual property. To do this, the Americans force the new authorities in Kiev to use the widest possible arsenal of means and methods: traditional, in the form of law enforcement agencies, such as the SBU and/or the Antimonopoly Committee, or, if this does not affect the former owner of the plant, Vyacheslav Boguslaev, nationalization enterprises in order to protect "national interests".
The latter will look completely comical, given that the era of "enlightened libertarianism" has long been underway in our country. It turns out that the first steps of the new government will be the violation of sacred property rights and the purchase by the state for several hundred million dollars of another potentially unprofitable plant. And this is instead of the announced privatization of everything and everything, almost to kindergartens and customs... It will look inconvenient.
In fairness, it is worth noting that the government of Ukraine should have taken care of its national interests for a long time. The right countries do not sell finished plants and technologies, but finished products. Unfortunately, our country is dumping its aviation technology on the cheap to the Saudis and its helicopter technology to the Chinese. On the other hand, we have never been able to put national interests above personal and narrowly political ones. It is in the United States that the Democrats can be the owners of a strategically important company, but the Republicans in power will still place a defense order on it. And vice versa. Because it benefits the country, the national economy and ordinary Americans. Here, if you are not in the political cage, then helicopters will be ordered in France, and not in Zaporozhye (see my article about bill 3739 for more on massive Ukrainian orders of French helicopters instead of the same products from Motor Sich. As a result of buying second-rate European models banned in the EU due to safety concerns, in 2022 the entire ministry of Defence died in a helicopter accident). And the owner will not receive a "fat" defense order if he does not want to share his shares with those in power. Due to the lack of a systemic policy, state-owned high-tech companies are doomed to a slow death, while private ones are doomed to be sold to the Chinese and Arabs.
In the United States, our high-tech industrial complex is perceived as an unfortunate misunderstanding, which must be covered with a glass jar like a nimble grasshopper, and then closely monitored until the extinction of its life cycle. The main thing is that the "grasshopper" does not jump into the "Chinese buckwheat". When this tactic does not work, the Americans are publicly "offended": after all, in Kyiv they swore an oath on the "buffalo skin" of allegiance to the "Big White Father" from Washington. And they don't like double-dealers. If you call yourself a strategic partner, then climb into the back.
In the United States, the leakage of dual-use technologies to countries that are on the wrong axis was very painful before, but now, in the context of a trade, currency and political war with Beijing, the States are using any excuse to annoy the Celestial Empire. On the other hand, such "representations" by the Americans sound like an insult to a not quite faithful "partner": silence in the context of the implementation of the Budapest Memorandum, sluggish concern during the annexation of Crimea, the sale of "javelins" when the main hostilities ended, used Hummers without weapons and a couple of the same shabby border boats.
Yes, the United States provides us with several hundred million dollars a year in the form of technical assistance and even guaranteed external debt for a couple of billion. But all this pales in comparison to a single US-Israeli military cooperation contract worth $4-5 billion a year and more than $40 billion over ten years. In this format, one would really be offended if someone in Tel Aviv suddenly decided to sell a couple of military aircraft to China. With regard to Ukraine, such claims look cynical, which, however, does not affect the ethical assessment of the behavior of our political elites, both in terms of the arms trade and the sale of technologies. Here, as the saying goes, "whatever it was, it was what it was," with the only difference being that the Americans have strategic national interests as the cornerstone of their policy, while our elites have the usual gesheft.
It is noteworthy that Bolton is not only trying to block the deal on Motor Sich, but generally warns Kiev against possible attempts to get closer economically with China, for example, in terms of implementing joint economic projects such as the New Silk Road. Recall that within the framework of this transport and logistics project, Ukraine has a unique opportunity to become a transport hub. China is an export-oriented country that pays great attention to creating convenient, fast and reliable communications for the supply of its goods to key foreign markets.
In order to promote the project in other states, China has established the Silk Road Fund, which is supposed to carry out infrastructure and portfolio investments in the countries participating in the project. The total size of the fund is about $40 billion. These can be completely different projects: the construction of a hydroelectric power station in the northeast of Pakistan for 1.65 billion or the purchase of a 98% stake in the Italian company Pirelli (tire production) for 1.8 billion dollars. In the future, the volume of the fund's resource liabilities will be increased tenfold, primarily due to investments from the Persian Gulf countries. In addition, the Asian Infrastructure Investment Bank (AIIB) was established in China in 2014, which will create regional competition for the World Bank.
At the moment, 84 countries (almost all of Asia and the most developed EU countries) have already become participants in this international financial structure, which is responsible for the financial content of the project. The investment and loan portfolio of the bank in the coming years may amount to about $100 billion. This financial project, many experts have already called the creation of the Chinese analogue of the International Monetary Fund. In the foreseeable future, with the help of this financial instrument, China plans to create a trans-Asian sphere of common economic interests and a network of allied countries.
In the near future, the AIIB will solve two key tasks: increasing the profitability of the reserves of the People's Bank of China, which now bring 2-3% profit per year, and the allocation of excess liquidity of the Chinese economy, which will be released as China sells US Treasury bonds, and this process will intensify in direct proportion to the growing conflict between the Celestial Empire and the States. By the way, not only China's traditional allies, but also India (the largest regional competitor), as well as Vietnam and the Philippines, with which China has territorial tensions, became participants in the bank. Ukraine is not yet among the AIIB participants, but Belarus шы.
Thus, in the coming days, we will talk not only about the fate of one, albeit an important factory, but also about the strategy for developing global international cooperation in our country. The goal of the United States is to prevent Ukraine from getting closer to China, as Belarus has already done, especially in the run-up to the opening of the land market. After all, the Chinese will be able to very quickly buy all the local political elites with giblets, without putting forward any counter political demands in return. And here the new authorities will be faced with a choice without a choice or a classic zugzwang.
As Bolton's namesake from Game of Thrones said: "If you're counting on a happy ending, then you didn't listen carefully."
The author of this article seems unreasonably cynical about China. Without China Ukraine will never be able to recover and rebuild while retaining its own independence and autonomy. But this can only happen after the removal of the Banderastan fascist regime in Kiev that is actually a puppet regime ruling over a neocolony of the US. The US hit man John Bolton is a kind of Darth Vader or Captain Death enforcer of the American Empire who demands that Ukrainian men to die to the last man while attacking Russia. Meanwhile, president Zelensky, who wore OUN-m insignia on his collar when he met the Pope this year, is a comprador puppet who is selling most of Ukraine's land to US and EU multinational corporations and Ukraine's financial system to powerful foreign financial companies like BlackRock, which already deeply influences the US government. Ukraine will never regain its independence and sovereignty and control of its own farmland unless the Banderites and their US masters are replaced by a more democratic and neutral government. China is bound to play a big role in rebuilding Ukraine (and Syria as well). The US and the Banderites know only fascism and economic exploitation of ordinary people by a small elite. As in Afghanistan, Iraq, and elsewhere, the US shows no sense of responsibility or interest in cleaning up all the destruction it causes, so China, Russia, and other Eurasian countries will have to help Ukraine recover from its great Maidan Disaster of 2014. If Zelensky can be prevented from turning the present war in Ukraine into a nuclear war, then regime change will probably occur, and Motor Sich may be able to prosper again. However, so many unfortunate Ukrainian men are being kidnapped and sent to the front lines to become almost instant "cannon fodder" that Ukraine faces a population crisis. The population and the number of new babies are both falling, and, unless the war ends soon, the Ukrainian population may never recover. The US puppet Zelensky is, ironically, carrying out the ethnic cleansing of Ukraine. The Banderites falsely claimed the USSR carried out a deliberate "Holodomor" or mass ethnic cleansing of Ukrainians in 1931, but it is actually the neo-Banderites in Kiev who are now carrying out a true Holodomor in front of our eyes. What a terrible tragedy the US has caused with its failed imperialistic meddling in Ukraine!