15 March 2021, Monday, 11:30 511

Expert’s Opinion: Financial Sanctions for the Expropriation of Motor Sich to Be Unaffordable for Ukraine

Редактор: Микола Поліщук

ПАТ "Мотор Січ

Financial sanctions for the expropriation of Motor Sich from Chinese investors in the amount of USD 3.6 billion will be unaffordable for Ukraine. As a result, Washington will compensate Kyiv for losses in international arbitration.

This was stated by Andrii Pilipenko, an expert on relations between Ukraine and China and a member of the Board of the Ukraine-China Investment Club.

“This is too expensive for the country, the economy of which is on the verge of collapse but survives thanks to the export of goods to China and the IMF loans. Most likely, Washington will have to look for money to compensate Kyiv for USD 3.6 billion losses that threaten Ukraine in international arbitration,” Pilipenko predicts.

At the same time, he added that by expropriating Motor Sich from the PRC investors, Kyiv is trying to “buy the loyalty” of the new US government, although Washington does not require such radical actions. The United States Department of Commerce has only introduced a regime of monitoring American companies with China’s Skyrizon that is a shareholder of the Ukrainian engine plant.

The expert is also convinced that the situation around Motor Sich is just an attempt to divert the attention of the new US government without fulfilling their key requirements in the fight against corruption.

“The latest publication of the Washington Post on March 13 gives Ukraine and its authorities clear signals of what is expected: deoligarchization, fight against corruption, judicial reform and state institutions that will ensure efficient movement in this direction. There is no word about the expropriation of Motor Sich or some other opposition to the commercial cooperation of Ukraine with the PRC in the list of priorities. However, the Ukrainian authorities persist in the Motor Sich issue, failing the top-priority “homework” of the United States for reforming, which will benefit Ukraine itself,” the expert noted.

To recap, the Chinese shareholders of Motor Sich resorted to international arbitration to recover USD 3.6 billion from Ukraine for “illegal expropriation” — this is how the PRC investors treat the actions of Ukraine that has been preventing them from managing their company for many years.

Concurrently, the National Security and Defense Council of Ukraine and the Verkhovna Rada of Ukraine are getting ready to nationalize Motor Sich that was corporatized and privatized by the company’s staff about twenty years ago.

According to Pavlo Rozenko, a former Deputy Prime Minister, nationalizing Motor Sich is a manifestation of political corruption at the highest level, as public funding and benefits for the aircraft industry have produced a whole caste of corrupt officials and lobbyists who deceive the authorities to achieve their personal goals of enriching themselves illegally.

In turn, the financial market representatives predict that Ukraine will face some serious risks of the hryvnia collapsing after Ukraine will lose international arbitration case for expropriating Motor Sich from the Chinese investors.

Besides, the strain in relations between China and Ukraine may result in direct and indirect losses of USD 11 billion that can be catastrophic, since the net gold and foreign exchange reserves of the National Bank of Ukraine, less the debt to the IMF, amount to only USD 18.1 billion.

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