Ukraine Defense Firm Caught Up in US-China Rivalry Probed for ‘Subversion’ 

This story originated in VOA’s Ukrainian service. Some information is from Reuters and RFE. VOA Ukrainian’s Tatiana Vorozhko contributed reporting. 

WASHINGTON – Ukrainian security officials have a launched an investigation into “subversive” activities by one of the Eastern European country’s defense contractors over plans to supply military hardware to neighboring Russia. 
 
Ukraine’s main government agency for counterintelligence and counterterrorism, the SBU, confirmed Thursday that Motor Sich, the country’s largest manufacturer of engines for missiles and military aircraft, was under investigation for preparing an illegal export shipment of military or dual-use equipment to Russia, with whom Ukraine is at war. The news was first reported by RFE. 
 
SBU officers raided Motor Sich headquarters and seized its shares in 2018 when the defense firm, then valued at nearly $500 million, was in the process of being sold to a Chinese company. 
 
That Chinese aeronautical firm, Beijing Skyrizon Aviation, renewed efforts to acquire a controlling share of Motor Sich in June, drawing scrutiny from Kyiv’s Anti-Monopoly Committee. 
 
The prospective sale also drew the attention of White House officials, who told Ukrainian media ahead of White House national security adviser John Bolton’s late-August visit to Kyiv that Motor Sich should not be handed over to a “potential enemy.” 
 
As Ukraine’s antitrust agency began reviewing the proposed China deal, the U.S.-government-run Overseas Private Investment Corp., an agency that provides financial support for American companies looking to invest in emerging markets, said it would consider backing a U.S. private-sector bid for Motor Sich.  

FILE – White House national security adviser John Bolton meets with journalists in London, Aug.12, 2019.

Bolton has aimed to scuttle Beijing’s acquisition of Motor Sich “on grounds that it will give Beijing vital defense technology,” The Wall Street Journal reported before Bolton’s Kyiv trip.
 
Aid withheld 

Bolton, it was widely reported, used the Kyiv visit to warn pro-Western Ukraine, which the White House views as a geopolitical ally against an increasingly assertive Russia, to avoid being lured into China’s orbit by what he called Beijing’s “debt diplomacy.” 
 
A day after Bolton concluded his Kyiv visit by announcing stepped-up military assistance to Ukraine, President Donald Trump issued a contradictory directive, calling for a suspension and review of a $250 million military aid package to Kyiv.

Later that day, Pentagon officials confirmed that they had already conducted an audit and fully supported allocation of the funding to Ukraine. 

The ongoing White House delay has since sparked an outcry from a bipartisan group of U.S. lawmakers from the Senate’s Ukraine Caucus, who issued a letter to Trump demanding that he release the funds. 
 
Falling under the Ukraine Security Assistance Initiative, the funds, the lawmakers wrote, “help Ukraine develop the independent military capabilities and skills necessary to fend off the Kremlin’s continued onslaughts within its territory.” 
 
Asked for a response, a senior Trump administration official told VOA’s Ukrainian service, “We can confirm the letter from the Senate’s Ukraine Caucus has been received and is going through the normal process for correspondence at OMB.” 
 
The senior administration official failed to confirm whether the $250 million in question was currently under active review. 
 
Op-ed on White House action 
 
On Friday, The Washington Post published an editorial slamming the Trump White House for withholding the military aid over what it called explicitly political purposes. 

FILE – Ukrainian President Volodymyr Zelenskiy speaks during a meeting with law enforcement officers in Kyiv, Ukraine, July 23, 2019.

“We’re reliably told that the president … is attempting to force [Ukrainian President Volodymyr] Zelenskiy to intervene in the 2020 U.S. presidential election by launching an investigation of the leading Democratic candidate, Joe Biden,” the Post editorial states. “Mr. Trump is not just soliciting Ukraine’s help with his presidential campaign; he is using U.S. military aid the country desperately needs in an attempt to extort it.” 
 
In August, Trump’s personal lawyer, Rudolph Giuliani, told The New York Times that he traveled to Europe to ask Zelenskiy aide Andriy Yermak to investigate Hunter Biden’s role on the board of a Ukrainian gas company. Hunter Biden is former Vice President Biden’s son. 
 
Giuliani’s office did not respond to VOA’s requests for comment. 

Budgetary issues ‘being sorted out’

George P. Kent, deputy assistant secretary in the Bureau of European and Eurasian Affairs at the U.S. State Department, told VOA that although he was optimistic U.S. funding would continue, “I think there are some issues about the U.S. budgetary process being sorted out right now.” 
 
“The U.S. has contributed over $1.5 billion in security assistance to Ukraine`s defense since Russians invaded Donbass in 2014,” Kent said. “And I think we will work very closely together with Ukrainians to ensure that we support Ukraine`s abilities to defend itself effectively, and it has been the case the last five years, and it will also be the case going forward.” 
 
Earlier this week, two senior White House officials, speaking on the condition of anonymity, told Reuters that chances were the money would be allocated as usual, but that the determination would not be made until a policy review was completed and Trump made a decision. 
 
The federal fiscal year ends Sept. 30.