Beijing is still very keen to add Ukraine to the list of cCountries partnering its Belt and Road Initiative.

There is a lot at stake in Ukraine for both the US and China, and neither side is going to give up easy.

According to a report in Intelligence Online, China is making good use of the Chinese Trade Association there to find lawyers who are well established in Kyiv to defend its interests.

High on the list is the battle over control of Motor Sich one of the largest aero-engine enterprises left over from the former USSR.

Based in Zaparozhiye, Ukraine, it is probably the few aerospace firms that could design and build a new, reliable and efficient engine front-to-back on their own.

If the contentious sale to Beijing Skyrizon goes through, it will let China obtain a key defence technology that has eluded them for decades, in one of the few remaining disciplines where the US and its allies retain a competitive advantage.

Meanwhile, Washington and Kiev are trying to block the Chinese takeover the US in an effort to keep Beijing from solving its aeroengine technology deficiency and Ukraine acting in order to not lose a strategically important enterprise.

The US government takes the view that Skyrizon is not a private firm but an extension of the PLA’s military-industrial empire.

In other words, the bad guys, as the Pentagon sees it.

Ukrainian law firm SDM Partners, which joined the Chinese Trade Association (KTA) on 23 August, can reasonably expect to get new business as a result of its membership of the association, like the three other Kyiv law firms which have already joined, Intelligence Online reported.

Indeed, Sergii Koziakov & Partners has been advising China’s Lenovo group, while “Ty i Pravo” Lenivskyi Group now works mainly for Chinese groups.

It was also reported that Pravo-Control boss Kristina Tsoy, who already has considerable experience in doing business with China, has been able to make new contacts.

SDM Partners’ business is diversified but largely involves assisting foreign firms looking to invest in the Ukrainian market, Intelligence Online reported.

It uses the services of some 26 lawyers and four partners, including Serhiy Dzis and Dmytro Syrota who sometimes acts as an independent expert for the government on the drafting of legal texts and other work related to economic reform and investment climate.

The KTA, which was set up in 2015, is headed by the highly energetic Rouslan Osipenko.

It now has some 40 Chinese and Ukrainian members, including telecoms giants Huawei and ZTE, Chinese-Ukrainian agri-food group Fanda, energy firms ZPEC and Beiken Energy Ukraine, IT groups ERC and IT-Dialog and several tourism companies, Intelligence Online reported.

Other members are the Ukrainian Bank for Reconstruction and Development, Ukraine’s only Chinese-financed bank, management consultancy TopClass and Mykola Siutkin and Natalia Osadtcha-led S&P Investment Risk Management Agency.

While it looks like China may not win control of Motor Sich, it is still very keen to add to the list of countries partnering its Belt and Road Initiative and Ukraine is not averse to playing a role in this respect.

In March, a Ukrainian court seized the assets and all the shares of Motor Sich, RadioFreeEurope reported.

Ukraine’s State Security service SBU said in a statement that the company was transferred to a government body responsible for managing assets obtained through corruption and other crimes.

In January, the US blacklisted Skyrizon, claiming the firm’s “predatory investments and technology acquisitions in Ukraine represent an unacceptable risk of diversion to military end use” in China.

Two weeks later, Ukrainian President Volodymyr Zelensky signed a decree imposing sanctions on four Chinese companies including Skyrizon that were seeking to gain control of the aerospace firm.

“It’s not just about the fate of one company, but about how the state is able to protect its own interests. After all, the preservation of Motor Sich is a matter of national security,” SBU chairman Ivan Bakanov said in the statement.

Motor Sich has been under investigation for crimes related to benefiting Russia and violations of the law during the initial privatisation and subsequent illegal concentration of shares.

Ukraine’s Security and Defence Council also announced plans to nationalise Motor Sich due to its strategic importance to national defence. Zelensky’s ruling party then told parliament that it would submit a bill on nationalising Motor Sich.

Chinese investors behind Skyrizon have filed a US$3.5 billion arbitration case against Ukraine, accusing Kyiv of expropriating its investment in Motor Sich.

The interests of the Chinese plaintiffs are represented by international law firms WilmerHale, DLA Piper and Bird & Bird.

Meanwhile, Zelensky met with US President Joe Biden in Washington on Sept. 1, the culmination of a years-long struggle to get a White House visit locked up.

Senior administration officials said the US remains “supportive” of Ukrainian democracy reforms, a stipulated requirement ahead of any future possibility of Ukraine joining NATO.

The administration notified Congress last week of an additional US$60 million security assistance package to Ukraine, which includes Javelin missiles and other lethal and non-lethal defence capabilities.

Leverage that will no doubt give America the edge, at least for now.

Author: Dave Makichuk