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As Ukraine reels from a series of setbacks in its relationships with the U.S., and the European Union, China stands to gain. dailysign.al/34X0oFu via @nolanwpeterson @DailySignal
@nolanwpeterson @DailySignal China has been steadily increasing its economic clout in Ukraine through a broad gamut of infrastructure investments and other initiatives. This year, China overtook Russia as Ukraine’s top trading partner, underscoring a landmark shift in economic ties between Kyiv and Moscow.
@nolanwpeterson @DailySignal Ostensibly, China is grooming Ukraine to become a key node in Beijing’s One Belt, One Road trade route across Asia to Europe. China also has its eyes on Ukraine’s military hardware and agricultural exports.
@nolanwpeterson @DailySignal Ukraine has replaced the US as China’s top supplier of corn. And China is now the top purchaser of Ukrainian military arms, according to data from the Stockholm International Peace Institute, a research body that maintains a yearly assessment of the global military arms industry.
@nolanwpeterson @DailySignal “China is really interested in our military technologies, and for Ukraine it’s a matter of economic growth,” Oleksiy Goncharenko, a member of Ukraine’s parliament, said in an interview with The Daily Signal.
@nolanwpeterson @DailySignal Ukraine will not likely return to Russia’s fold anytime soon. After five and a half years of war in which more than 13,000 Ukrainians have died, there’s simply too much bad blood. This likely will taint relations between the two erstwhile Soviet allies for decades to come.
@nolanwpeterson @DailySignal But that Russo-Ukrainian divorce doesn’t necessarily mean Ukraine is on an irreversible, pro-Western trajectory. If Kyiv begins to doubt the long-term durability of US or European support, then it could prefer Beijing’s promises of easy cash and indifference to corruption reforms
@nolanwpeterson @DailySignal In the winter of 2013-14, a grassroots revolution overthrew Ukraine’s pro-Russian president, Viktor Yanukovych. At its heart, the “Revolution of Dignity” was about Ukrainians’ choice to be a democratic, European country, free from Russian vassalage.
@nolanwpeterson @DailySignal In 2014, the United States and the European Union levied punitive economic sanctions on Moscow for its aggression in Ukraine. Since then, relations between Russia and the West have hit a post-Cold War nadir.
@nolanwpeterson @DailySignal Yet, some European Union countries recently have sent Ukraine mixed messages about the bloc’s appetite for pushing back against Russian aggression.
@nolanwpeterson @DailySignal Last week, Denmark—a member of both NATO and the EU—approved a permit to allow Russia’s Nord Stream 2 gas pipeline to pass through its territorial waters.
@nolanwpeterson @DailySignal The move rolls back the final regulatory roadblock for the controversial, 756-mile-long pipeline to Europe, which now can be completed within a matter of weeks if construction moves ahead as scheduled.
@nolanwpeterson @DailySignal Russia currently supplies about half of Europe’s gas, and about half of that amount passes through Ukrainian transit pipelines, providing Kyiv with about $3 billion a year in gas transit fees.
@nolanwpeterson @DailySignal That number represents about 2% of Ukraine’s 2018 gross domestic product of approximately $131 billion—not an insignificant loss if Russia were to turn off the spigots. In fact, that loss in income would almost negate the 3.3% in GDP growth Ukraine notched in 2018.
@nolanwpeterson @DailySignal Once operational, Nord Stream 2 would double the annual 55 billion cubic meters of Russian gas currently pumped from Russia to Germany via the existing pipeline, allowing Russia to bypass the Ukrainian transit pipeline system altogether.
@nolanwpeterson @DailySignal “It’s going to give the Russian Federation an enormous lever over Ukraine and a hammer that they can hit the Ukrainians with,” U.S. Dep Sec of State John Sullivan said
@nolanwpeterson @DailySignal “If the Russians cut gas transit through Ukraine, Ukraine will lose billions in hard currency that is desperately needed for its economy.”
@nolanwpeterson @DailySignal The view from Kyiv is that by green-lighting Nord Stream 2, the EU is signaling its economic bottom line takes a higher priority than pushing back against Russia’s military aggression in Ukraine. President Zelenskyy said Nord Stream 2 “strengthens Russia and weakens Europe.”
@nolanwpeterson @DailySignal About 87% of Nord Stream 2 already has been completed, according to the Russian gas conglomerate Gazprom, which controls the project. Gazprom CEO Alexei Miller said that with the permit in hand, Nord Stream 2 can be completed by year’s end.
@nolanwpeterson @DailySignal Since the breakup of the Soviet Union in 1991, Russia often has leveraged its power over Ukraine through the energy economy, particularly by cutting off gas supplies in winter.
@nolanwpeterson @DailySignal Notably, in January 2009, Russia cut its gas exports to Europe through Ukraine, plunging the Continent into an energy crisis almost overnight. Vladimir Putin, who was then Russia’s prime minister, ordered Gazprom to cut exports through Ukrainian pipelines by about three-fifths.
@nolanwpeterson @DailySignal Ukraine’s outsized role in the U.S. impeachment drama has many officials in Kyiv worried about the durability of U.S. bipartisan support.
@nolanwpeterson @DailySignal The country also is grappling with a holdup in IMF loans, which are vital to Ukraine’s economic recovery from the 2014 revolution and the ongoing war in the Donbas. According to news reports, those IMF loans have been withheld due to concerns over corruption in Ukraine’s banks.
@nolanwpeterson @DailySignal Bulgaria, another member of NATO and the EU, recently announced it had approved an extension to Russia’s TurkStream pipeline, which passes under the Black Sea to Turkey. That pipeline will bypass Ukrainian transit pipelines to deliver Russian gas to Serbia, Hungary, and Austria.
@nolanwpeterson @DailySignal Andy Hunder, president of the American Chamber of Commerce in Ukraine said, “Ukraine remains most attractive due to its talents, low labor costs, and considerable access to the European market. Rule of law is top of the list of areas that require urgent improvement.”
@nolanwpeterson @DailySignal China has had its economic sights set on Ukraine since 2011. That year, under the watch of Yanukovych the two countries established a long-term strategic partnership in economic ties and trade. In 2012, China supplied Ukraine with $3 billion in agricultural loans.
@nolanwpeterson @DailySignal Xi Jinping became president of China in March 2013. The following September, China reportedly leased 3 million hectares (about 7.4 million acres) of agricultural land from Ukraine for use in producing meat and crops.
@nolanwpeterson @DailySignal In December 2013—as pro-democracy protests were simmering in Kyiv—Yanukovych met with Xi in Beijing. Both sides recommitted to their strategic partnership. The following February, Yanukovych was ousted in Ukraine’s pro-Western Revolution of Dignity.
@nolanwpeterson @DailySignal Yet the momentum of tightening Sino-Ukrainian ties that Yanukovych set in motion continued on unabated by the successive post-revolutionary presidencies of Petro Poroshenko and Zelenskyy.
@nolanwpeterson @DailySignal Through August, China was the top source of Ukraine’s imports and the top destination for its exports. China’s Poly Changda Engineering company recently signed an agreement with Ukraine’s state highway agency to build a ring road around Kyiv.
@nolanwpeterson @DailySignal As the so-called bread basket of Europe, Ukraine represents an enticing foreign investment opportunity for China as it looks to diversify its agricultural import base in light of ongoing trade tensions with the U.S.
@nolanwpeterson @DailySignal “President Zelenskyy wants to open [the] land market for foreign investors,” Goncharenko, the member of Ukraine’s parliament, told The Daily Signal. “So, I think China will do a lot of efforts to buy our lands.”
@nolanwpeterson @DailySignal From the Russian perspective, a Ukraine economically beholden to China might be the best option to forestall Ukraine’s pro-Western transformation. Moscow wants to forestall Ukraine’s Western pivot, in particular, to derail any aspirations of Ukraine one day joining NATO.
@nolanwpeterson @DailySignal Zelenskyy recently made overtures to Moscow to restart peace talks to resolve the war in the Donbas. He also has made it clear that Ukraine wants to join NATO. To that end, since 2014, Ukraine has revamped its armed forces, looking to achieve interoperability with NATO forces
@nolanwpeterson @DailySignal Ukraine is rapidly transforming into a regional counterbalance to Russia’s military strength, upheaving the pre-2014 security picture in Eastern Europe in the process.
@nolanwpeterson @DailySignal In 2014, Russia invaded and seized Crimea and launched the war in Ukraine’s eastern Donbas region. The ongoing war has so far killed more than 13,000 Ukrainians. In October alone, nine Ukrainian soldiers died in combat, continuing the pace of about one death every three days
@nolanwpeterson @DailySignal Russia’s invasion spurred a political, economic, and cultural divorce between the two allies. As a result, Ukraine’s society and governmental institutions have evolved dramatically along a pro-European vector since 2014, propelled by a groundswell of pro-democratic activism.
@nolanwpeterson @DailySignal However, economic progress has lagged.
Some analysts say Ukraine needs to notch annual GDP growth rates of about 8% for the average citizen to notice any quality of life improvements. Last year’s GDP growth of about 3% fell far short of that benchmark.
@nolanwpeterson @DailySignal The catch is that Western economic aid, such as IMF loans and U.S. military support, typically is tied to specific anti-corruption reform benchmarks. If Ukraine doesn’t demonstrate measurable anti-corruption progress, it doesn’t get Western cash.
@nolanwpeterson @DailySignal That’s not the case, however, with Chinese investments, which come without any reformation riders, promising Ukraine easy cash to fund infrastructure, agricultural, and industrial projects that have an immediate impact on citizens’ quality of life.
@nolanwpeterson @DailySignal Therefore, some experts warn that Chinese cash could offer Ukrainian officials a tempting chance to jump-start their country’s economy without the caveat of following through on reforms.
@nolanwpeterson @DailySignal Goncharenko, however, says China’s growing clout has not yet eclipsed Ukraine’s preference for developing closer ties with the U.S. and Europe.
“Ukraine is a Western country,” he told The Daily Signal.
@nolanwpeterson @DailySignal “From my point of view, we should find a way where our people will have their jobs, and also we can’t go against [the United States],” the member of parliament said. “But I don’t think Ukraine can choose China over the USA …
@nolanwpeterson @DailySignal News reports say Eric Prince, an adviser to President Trump and former owner of the private military force Blackwater, has traveled to Ukraine several times over the past few years in an effort to block China from purchasing Motor Sich, a Ukrainian aviation engine manufacturer.
@nolanwpeterson @DailySignal Motor Sich pursued new ties with China after 2014 to shore up its finances, reflecting a broader shift among all Ukrainian defense exports from Russia to China due to the war’s resultant arms sale embargo.
@nolanwpeterson @DailySignal n 2018, 35% of Motor Sich’s $450 million in sales went to China, whereas Russia previously accounted for about one-third of the company’s $1.1 billion in total sales.
@nolanwpeterson @DailySignal Ukrainian officials authorized the Chinese purchase of Motor Sich in June, but the move has since stalled and is reportedly awaiting approval by the Antimonopoly Committee of Ukraine.
@nolanwpeterson @DailySignal The purchase would be instrumental to China’s developing its own fleet of attack helicopters as well to mass produce its own fighter jet engines, according to a Ukrainian government report.
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