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Selling Motor Sich to Chinese investors: Is Ukraine interested in such a deal?

Author : Oleksiy Kushch

John Bolton, US Presidential Advisor on National Security, who arrived in Kyiv, must stop this at all costs, that is, force the Ukrainian authorities to block the deal with the Chinese
20:37, 2 September 2019

Open source

The U.S. is now concerned about preserving the technological and scientific potential of our country. Apparently, the supplies of Pennsylvania coal to Ukraine inspired new overseas friends so much that they decided to stop the brain drain from Ukrainian enterprises to the third countries.

In this case, we are talking about the possible sale of shares of Motor Sich (a manufacturer of helicopter engines) to Chinese investors. John Bolton, US Presidential Advisor on National Security, who arrived in Kyiv, must stop this at all costs, that is, force the Ukrainian authorities to block the deal with the Chinese with the help of a power club – the Security Service and the Antimonopoly Committee of Ukraine, or nationalize an enterprise by paying its owners several hundred million dollars from the state budget.

The funniest thing in the latter option is that the entire privatization of 2018 brought to the treasury a little more than UAH 200 million, or less than $ 10 million in equivalent. That is, for the nationalization of one plant at the request of the "overseas guest" it will be necessary to spend tens of times more than the sale of state assets for the whole year brought.

But the “problems of the Indians” are of little concern to the “sheriff”: the Americans have a global economic war with China on the agenda, and any blows on the Chinese are welcome, even if such actions lead to the loss of the potential benefits of cooperation with China (for example, in terms of attracting Chinese investment in the framework of the New Silk Road project).

After all, the Chinese, as well as the Americans, do not forgive insults. Today it’s Trump’s personal war, and the main goodies for our corrupt “elites” are already at stake: it’s money (the Trump administration announced the suspension of military assistance to Ukraine until some audit is completed) and personal favor when the local leader is allowed to kiss the hand of the Great White Father from Washington.

In this case, a possible meeting between Trap and Zelensky on September 1 in Poland looked as exchange.

Over the past few years, the Ukrainian government has not noticed a production and innovation center in its country that can start the production of domestic "light" helicopters for the needs of the army, police and medicine.

The Minister of the Interior solemnly reported on the signing of a contract with France for the purchase of French helicopters for the needs of the national police, with a total contract value of billions. Here, one could, following the example of the second president of the country, write a new book, “Ukraine Is Not the USA”.

In the United States, regardless of who owns Boeing and who currently owns the Oval Office, aircraft for the needs of the army will still be ordered from domestic companies. The interests of the state as a whole and each ordinary American individually always outweigh the narrow political and individual selfish interest.

In Ukraine, everything is more complicated and simpler at the same time. Here, if you are not part of a pro-government block, then you have only two ways: either bring the bribe or sell the business to someone authoritative. If there is no desire to do either one or the other, then in this version your enterprise will either be "raided" like the famous candy factory in Zhytomyr, or left to die slowly.

On the other hand, those who believe that the private owner should take care of the effectiveness of his business are right.

In dollar terms, the gross revenue from the sale of the Motor Sich finished products in 2018 amounted to approximately $ 452 million, while in 2013 it reached almost a billion dollars. The fall more than doubled.

Moreover, the situation only worsens every year: in January - July 2019, the company's loss amounted to 426 million UAH (17,5 million USD), while for the same period last year a profit of 0.9 billion UAH was recorded. And the reason here is not the owner, but the change in the concept of state industrial policy. More precisely, I mean its absence.

Since 2014, Ukraine at the state level has ceased cooperation with the Russian Federation in the supply of military products and dual-use products and services.

This is the sovereign right of the state, but at the same time, the officials also have a duty to develop the necessary compensation mechanisms and additional incentives to preserve and modernize those industries that have been designed for eastern markets, mainly of the CIS countries.

Related: Danyliuk discusses energy security improvement with Westinghouse

How could we do this? There is the successful experience of dozens of countries: state order, development of domestic demand, lending to foreign buyers of Ukrainian products, which can be attributed to the group of investment goods.

For Motor Sich it could be programs for the development of a domestic light multifunctional helicopter for the needs of the army, police, medicine, as well as credit programs for buyers of plant products from African and Asian countries. In this case, neither technology nor human potential would “flow” to distant China.

But the US administration has a strategy for Ukrainian high-tech industries. And it is called a code phrase "soft euthanasia." Its essence lies in the fact that in Ukraine there are a number of industries that have promising dual-use technologies: primarily aircraft manufacturing and rocket science.

These areas cannot be developed in any way, but they cannot be closed simultaneously either: technology carriers - engineering and technical personnel - will disperse throughout Asia, and the technologies themselves will also move there in the form of intellectual property and intangible assets.

This means that they need to be loaded at a minimum, so that there will be enough money for minimal operating costs without any capital investment in development. In this format, technologies will remain in place, and their carriers will gradually die physically.

The task is to extend this process of soft euthanasia for 10-15 years, when most of the old personnel will go to another world, new specialists will not come, and the technologies will become hopelessly outdated.

Let's consider two illustrative examples.

Boeing decided to help our Antonov aircraft design bureau and supply components for the production of 8 modernized aircraft per year under the new An-1X8 NEXT designation (An-148, An-158, An-178 series).

In fact, this is the first example when the world's largest company decided to help its rival, albeit microscopic. By the way, the Americans never helped other countries to establish the release of aircraft.

Why will this euthanasia be humane? It will allow to stretch the process of “dying” of “Antonov” for 5-10 years, until the old engineering staff, educated in Soviet universities, finally leave the stage and completely wipe out the technologies created then.

In 2017, the Ukrainian rocket (Zenit) had only one out of five launch. Three launches are associated with the Vega project and one with Antares. The Vega project is the brainchild of the European Space Agency. Ukraine is making a fourth-stage mid-flight engine for a rocket.

As for Antares, it is being developed by Orbital Science Corporation (USA), and our country is taking part in the creation of the first stage design. That is, these are projects where Ukrainian rocket scientists act as contractors. One of many contractors.

In fact, this is a program of smooth depreciation of the space complex of Ukraine by Western partners.

Under the conditions of sanctions against the Russian Federation, our space enterprises need to provide some alternatives, because otherwise domestic specialists and technologies may find themselves in the most unpredictable countries. With Western contracts, the industry will "die" naturally.

But transferring our state-owned enterprises to an “euthanasia dropper” is not difficult for the United States: a new portion of “gifts” - and local “elites” are ready to sell their birthright for “lentil soup”.

They can’t do this with private enterprises – those have the owners. But when it comes to family honor, bargaining is inappropriate.

There are several libertarian candidates being nominated to the economy ministers, so the future Ukrainian helicopter will be an ordinary plowman who grabs his shovel and rotates it very quickly around his head ... Until he flies up over the plowed field.

Related: China responds to U.S. attempts to convince Ukraine not to sale Motor Sich enterprise

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