Robert A. McConnell: Is the United States conceding Ukraine to China?
Ukraine is a flashpoint for American national security interests and international geopolitical stability.
Russia’s war against Ukraine gets attention from Washington. The United States provides military support and other support to assist Ukraine in its efforts to defend against Vladimir Putin’s outrageous aggression.
However, Russia is not the only threat to United States’ national security interests in Ukraine. It can be argued Ukraine is ground zero in our critical confrontation with the two nations most threatening to our national security interests – Russia as a military adversary and China as the dominant financial adversary. And it is not clear we are serious about the threat posed by China in Ukraine.
China is using its economic might to become Ukraine’s largest individual country trading partner. Starting with agriculture the figures show China providing a greater-and-greater market for Ukrainian goods. Obviously, China has clear advantages over the United States and American businesses in trade in that it does not need to, and does not, play by the same rules. But that should not mean the United States should concede Ukraine to China any more than we should leave Ukraine to fight Putin’s egregious military violations of treaties and international norms of civility alone.
And it is worrying that it can appear that this is exactly what we are doing.
Case in point:
I have written before about China’s specific interest in Motor Sich and United States’ concerns and opposition to China’s efforts to gain control of the company. (Friends of Ukraine Network emails of Dec. 3, 2019; Dec. 7, 2019; Dec. 23, 2019, and April 20, 2020). Motor Sich is an advanced aerospace manufacturer and has been up for sale.
The Motor Sich matter is a huge issue. It has been argued that Chinese control of the company would involve significant technological aerospace advances for the Chinese. Whether this is precisely true or not, proliferation is a genuine concern. And not insignificantly Chinese control would have huge implications for the people of Ukraine who work for the company and the communities dependent its presence.
Further, the observation has been made numerous times that if the Chinese gain control of Motor Sich it likely will end any Ukrainian NATO aspirations, and by all indications will seriously damage American support for Ukraine given that we have urged/warned Ukraine not to allow the Chinese purchase to go forward. A lot is at stake – for Ukraine and for the United States.
But as it is Ukraine is caught in the middle of a battle between the United States and China.
What has happened?
China agreed to buy Motor Sich in 2017 but at the insistence of the United States, the deal was put on hold as a national security issue.
The Chinese have made an investment in Motor Sich, a significant and -although there have been some suggestions there might have been something “fishy” about the Chinese investment – as far as I have been able to learn legal, investment in the company. An investment that has allowed the company to stay in business after it stopped servicing its once major the Russian aerospace market. The Chinese want to proceed to purchase the company.
But we do not want the Chinese to gain control of the company and pressure Ukraine not to let the sale be completed – but what alternative are we offering?
There have been news stories – quite some time ago – about U.S. efforts to find alternative buyers for Motor Sich but by all indications those efforts failed. There were stories about Eric Prince exploring a possible investment. There were reports very early this year of a three-year-old, Beverly Hills-based company, Oriole Capital Group with assistance from the Dallas-based private equity firm Trive Capital taking a serious look a Motor Sich.
But nothing has happened. Are we really to believe that if the United States government seriously put forward an effort to find an alternative purchaser or joint venture it would not have happened over the last three years?
Not only does it appear we are letting Ukraine hang out to dry by insisting it not allow the Chinese sale to go through and, at the same time not coming up with an alternative, but our hypocrisy is startling.
Over and over we lecture Ukraine on rule-of-law, the sanctity of business deals, and the need to protect investments while we demand Ukraine not honor a Chinese investment and genuine offer to purchase.
Just last week in an Atlantic Council program Secretary of State Mike Pompeo in talking about the threat China poses to our national security interests emphasized the central tool of China’s projection of power is its economic might. The Chinese Communist Party’s primary “tool” in its global aspirations is it financial power.
There, the challenge is clearly identified. Are we going to engage seriously and, if so, when?
Motor Sich has value, if we want to keep it out of Chinese hands we cannot simply demand that Ukraine allow a significant company to flounder, atrophy, and eventually die along with all the jobs it provides to the Ukrainian economy and the individual citizens who depend upon it.
We need to act!
Robert A. McConnell is a co-founder of the U.S.-Ukraine Foundation and coordinator of external relations for the foundation’s Friends of Ukraine Network. He is the principal of R.A. McConnell and Associates. Previously, he has served as head of the government advocacy practice at Gibson, Dunn & Crutcher, vice president – Washington for CBS Inc., and assistant attorney general in the Department of Justice during the Reagan Administration. He can be reached at email@example.com.