The United States has blacklisted Skyrizon, the Chinese aviation company that’s using international arbitration to pressure Ukraine to let it buy aircraft engine manufacturer Motor Sich.
The blacklist, also known as the Military End-User List, will require U.S. companies to have a special license to do business with Skyrizon.
Skyrizon is owned by Chinese tycoon Wang Jing and his Xinwei Technology Group. However, both Wang and Skyrizon are closely tied with China’s military, the People’s Liberation Army, to the point where the U.S. considers Skyrizon a state-owned company.
China tried to buy Motor Sich to get its hands on Ukraine’s advanced helicopter engine technology. Ukraine froze the sale in 2017 after strong pushback from the U.S.
The tech would help China grow its power in the South China Sea, which threatens the U.S. and its allies in the region. China has been building artificial islands since 2013, helping it militarize disputed outposts. China plans to continue massively ramping up its strength in the region, which includes the production of tens of thousands of helicopters.
“Skyrizon — a Chinese state-owned company — and its push to acquire and indigenize foreign military technologies pose a significant threat to U.S. national security and foreign policy interests,” stated U.S. Commerce Secretary Wilbur Ross. “This action serves to warn the export community of Skyrizon’s significant ties to the People’s Liberation Army.”
China also has multiple joint defense projects with Russia, including the development of heavy helicopters. Analysts fear that if Ukraine allows the deal, it will strengthen Russia, whose proxies have been waging war in the Donbas since 2014.
The U.S. blacklist potentially increases pressure on Ukraine to stand firm and not allow the sale. If Kyiv relents and allows the acquisition to go forward, Motor Sich and the companies with which it does business may also face U.S. sanctions.
However, with its $3.5 billion arbitration case, China has also stepped up pressure on Ukraine to let the sale proceed.
Skyrizon is working with Oleksandr Yaroslavsky, the business magnate from Kharkiv, who has become the Ukrainian face of the deal.
Ukraine has a tough decision to make, whether it wants to anger the U.S., its biggest ally or China, it’s largest trade partner.
Kyiv has sought an alternative buyer, but U.S. company Oriole Capital Group, which expressed interest earlier, has yet to commit.
In a related move, the U.S. also blacklisted the Chinese National Offshore Oil Corporation (CNOOC), adding it to the Entity List. This is a tool to restrict exports to entities believed to pose a threat to U.S. national security.
According to the Department of Commerce, CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, trying to drive up political risk for interested foreign partners, including Vietnam.
“CNOOC acts as a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Ross said in a statement.
