Background Image

Monday, August 17 – “This will be the beginning of your end…” – Belarus President Aleksandr Lukashenko

Belarus Bends, Ukraine Watches...Ukraine Invites Belarus IT Workers to Move Here...Exports to China Double...Chinese State Co. Wants to Build Deepwater Port in Ochakiv, a Historic Chokehold on the Dnipro...Kharkiv’s Yaroslavsky Offers to Raise $1 billion to Revive City’s Aircraft Plant...Kolomoisky’s Airplane Shell Game?
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

“This will be the beginning of your end, you will go down on your knees like in Ukraine,” Belarus President Aleksandr Lukashenko warned 40,000 supporters in Minsk Sunday, rebutting calls for his resignation. A few hours later, participants at mass opposition rally of 220,000 chanted for Lukashenko to go. After a week of violent police attacks on protesters, policing was light. Workers at key state factories walked out on Friday. Today, state television workers threaten to strike, demanding an end to censorship.

On Saturday, Lukashenko asked President Putin for Russia to intervene militarily. But, according to the Kremlin readout of the call, Putin only promised to keep talking to the besieged 65-year-old leader. In Belarus, protesters do not call for withdrawal from two Moscow-led organizations – the Eurasian Economic Union and the Collective Security Treaty Organization. Without an anti-Moscow slant to the Belarus protest, some analysts drew parallels last night to the 2018 revolution in Armenia. They predict the Kremlin will work with a Belarus democracy movement that does not take aim at Russia.

“Why Vladimir Putin Is Unlikely to Invade Belarus,” headlines an Atlantic Council piece by Anders Aslund, a veteran observer of the region. “While it is impossible to rule out a Russian military intervention, there are numerous good reasons to presume that it will not take place,” Aslund, a Swedish-American economist, writes Sunday from Washington. He cites: Putin’s dislike for the Belarusian leader; Lukashenko’s loss of popular support, and, possibly, security forces support; and “so far, no slogans against Putin or Russia have emerged.” He concludes: “The Kremlin should be able to live with that.”

Belarus is Ukraine’s fourth largest trading partner, largely a transit country for goods restricted by the Russia-Ukraine trade war. Despite this close economic relationship, President Zelenskiy probably will not travel to Grodno, Belarus on Oct. 8-9, for an annual bilateral trade and investment conference. Ukraine’s Foreign Minister Dmytro Kuleba told UA: Ukrainian Radio on Friday: “Until the situation in Belarus stabilizes, it would be reckless to announce any visit or initiative.”

Eying Belarus’ dynamic IT industry, Ukraine’s Digital Transformation Minister posted an appeal to Belarus IT companies and specialists to relocate south of the border — to Ukraine. “Belarus has been going through one of the deepest political crises in its history,” Mikhalo Fedorov posts on his Facebook page. He says that, under a new recruitment program, foreign IT specialists can get their Ukraine work permits in 5-7 days – “that’s all.” Noting that this year’s quota is 5,000 “highly qualified IT specialists,” he says the national distribution is: Dnipropetrovsk, Odesa and Lviv regions – 600;  Kharkiv – 700; and Kyiv – 2,500.

A near doubling of exports to China reduced Ukraine’s trade deficit to $1.3 billion for the first half of this year, the lowest level in recent years. The State Statistics Service reports exports to China rose 93%yoy to $3 billion, to Poland dropped 14%, to $1.5 billion; and to Russia dropped 17%, to $1.3 billion. Overall, Ukraine exported $22.9 billion worth of goods and imported $24.2 billion. For imports, Ukraine’s imports from China dropped 7%, to $3.6 billion; from Germany dropped 17%, to $2.5 billion; and from Russia dropped 43%, to $2.2 billion.

China’s purchase of ship parts and R&D services for aircraft engines made it the largest buyer of military equipment from UkrOboronProm during the first half of this year. Of $145 million in sales, the biggest buyers from the state defense conglomerate were: China, Turkey, Pakistan, India, Jordan, Vietnam, Azerbaijan, Algeria, Morocco, and Ethiopia. Of all deliveries, 56% went to Asia-Pacific.

China Railway Construction Corporation is talking with Vadym Novinsky’s Smart Holding about building a deep water port at Ochakiv, a Black Sea port 60 km south of Mykolaiv city. A strategic chokepoint controlled by at least 10 different peoples over the last 2,500 years, Ochakiv is 3.6 km across from the Kinburn Spit, a position that controls shipping to the mouth of the Dnipro. Smart Holding reports the Chinese are discussing doubling the depth of the harbor, to 15-18 meters, building a 70 km rail spur to Mykolaiv, and building port terminals for grain and iron ore, two products that dominate Ukraine’s trade with China, now its largest trading partner.

Given Ochakiv’s strategic location, facing Crimea 100 km to the south, US Navy Seabees built last year a $700,000 operations center at Ochakiv for Ukrainian Navy. When construction was announced, Vladimir Zhirinovsky, the Russian nationalist politician, announced: “This is Russian land – Ochakiv.” Next year, several US-supplied Mark VI fast patrol boats are to be based at Ochakiv.

in collaboration with CMS Cameron McKenna Nabarro Olswang Ukraine and UBN,  we have created the "Investing and Doing Business in Ukraine 2020 guide”.

Last month, CRCC, China’s second largest state-owned construction company, signed a memorandum of understanding with Ukraine’s Infrastucture Ministry about modernizing Ukraine’s inland waterways. These are the Dnipro, which flows through Kherson, and the Southern Bug, Ukraine’s second longest navigable river, which passes through Mykolaiv. For both projects, the Chinese team was led by Li Junqiang, executive director of CRCC’s subsidiary CRCC14 Overseas Construction and Development Co Ltd., and Wang Chuang, deputy general director of CRCC’s 14th Bureau Group.

Nibulon, the largest shipper on the Dnipro, is building a Black Sea port complex in Ochakiv and restoring the fish canning factory. To supply the cannery with fish, crustaceans and mollusks from the Dnipro-Buzky estuary, Nibulon’s CEO Oleksiy Vadatursky writes on his Facebook page that he is considering building shallow water fishing vessels at Nibulon’s shipyard in Mykolaiv.

Fresh from announcing a deal with Chinese investors to take over Motor Sich, Ukraine’s jet engine factory, Alekander Yaroslavsky offers to raise $1 billion to revive the aviation plant in his home city of Kharkiv. Earlier, Yaroslavsky’s DCH group rebuilt the terminal of Kharkiv airport and revived production at the Kharkiv Tractor Plant. Kharkiv Aircraft Plant has not made a plane since 2014. It largely survives by making spare parts and performing maintenance. It owes $8 million in back salaries. On Friday, Yaroslavsky offered to raise: $100 million to pay off debts; $500 million to complete airplanes on the production line and to start new ones; and $400 million for design development.

Today, flights resume between Kyiv and Yerevan, Armenia and between Kyiv and Almaty, Kazakhstan. Air service to the two countries was suspended five months ago as part of the coronavirus travel restrictions.

Do the math: Ihor Kolomoisky’s Windrose airline is receiving its 14th aircraft, a leased ATR-72-600. Within a year, Windrose is to receive another five of these regional turboprops, bringing its fleet to 19. At the same time, Kolomoisky’s UIA is cancelling leases and cancelling orders. Currently. UIA’s fleet is down 33, with 14 in storage. In 2013, Kolomoisky’s airline Aerosvit filed for bankruptcy and several jets were transferred to UIA.

From the Editor: What looks like the end game of Belarus’s Lukachenko promises to be entertaining to watch this week.  But in the slow days of August, take a step back for a long look at Ochakiv and who has controlled that narrow entrance to Ukraine’s hinterland. Recorded history starts around 6th Century BC with the Thracians and Scythians. Then came Pontic Greeks, Imperial Romans, Mongol Hordes, Moldavian Kings, Genoese merchants, Crimean Tatars, the Ottoman Empire, a Wallachian Prince, and, in 1788, the Czarist Russians, with an American naval officer, John Paul Jones, commanding the Russian fleet. In the Crimean War, an Anglo-French fleet took command of both sides of the strait in 1855. From 1941-1944, Romanians again occupied Ochakiv. Given the China’s proposal to double navigable depths and build modern terminals in a city with a population of 14,000, one wonders if they are playing the long game in a city that some dismiss as a backwater. With Best Regards Jim Brooke