Ukrainian government expects to take a loan from China in the amount of seven billion dollars. On the background of complications of relations with Western financial institutions, China could become a useful alternative for those in the Ukraine crisis. “Ribbon.ru” understood that Ukraine expects to spend the money, if they would help the Ukrainian economy and what are the goals of China.
In February, the Deputy Minister of infrastructure of Ukraine Viktor Dovgan, speaking at the presentation of the exhibition project of the China International Import Expo, said that Ukraine hopes to sign with China a loan agreement for seven billion dollars.
a few days Later, his boss — the Minister of infrastructure Volodymyr Omelian — confirmed the fact of negotiations with China on attraction of borrowed funds. The official gave to understand that it has a very vague idea of what will be the funding arrangements: “whether loans or investments,” he suggested hesitantly.
the Ministry also issued a list of objects, the creation of which is planned to spend billions of Chinese. The list includes a railway line from Boryspil airport to Kyiv’s fourth subway line in Kyiv and concrete road Kremenchug — Odessa — Nikolaev. In addition, the Department reported the signing of contracts for $ 200 million for the construction of roads in Ukraine.
for anyone in Ukraine, these statements were not a novelty. Back in December, the Prime Ministers of the two countries, where agreement was reached on joint projects to all the same seven billion dollars. However, interestingly, then it was just on joint investments, not about loans.
For Ukraine, the development of financial relations with China is the way. Just a month ago the world Bank (WB) and international monetary Fund (IMF) have put forward the Ukrainian leadership a number of political and economic requirements as a condition of receiving additional financial aid: creating an anti-corruption court, the increase in prices for gas for the population and privatization of agricultural land. To meet these requirements in the near future Ukraine is unlikely — it is enough to recall the fate of the bill on the anti-corruption court, which rested in the bowels of the Verkhovna Rada.
China, in contrast, is not interested in political processes and discusses financial and economic issues. Moreover, the Chinese comrades are willing to invest in Ukraine, despite her bad credit history. From this we can assume that China in relation to Ukraine has long-term plans.
According to Deputy Dean of the faculty of world economy and international Affairs Higher school of Economics Andrei Suzdaltsev, China is interesting agro-industrial complex and transit to Europe, the consequence could be the creation on the territory of Ukraine Assembly plants.
the Ukrainian political analyst Volodymyr Will in the list of Chinese priorities also raises the use of the transport possibilities and the agricultural sector of Ukraine. In addition, according to experts, China is interesting investments in industrial enterprises, energy and the financial sectors.
Investment in the above sectors, oddly enough, favored by the status of Ukraine as a “gray zone”. The competition here is minimal. On the one hand, for obvious reasons, extremely limited the ability of Russian business — Western business does not consider Ukraine a good place for investment because of the complicated political and social situation.
it is Possible to assume, however, that cooperation with China is not very profitable for Ukraine. For corrupt officials, will to develop loans and investments, the benefit, of course, will be. As for a more global effect for the General population — it is not worth waiting. There are several reasons.
In 2013, Ukraine was agreed to receive $ 3.6 billion loan from China. The loan was issued under the supply of grain to China, as well as the purchase in China of agricultural machinery and fertilizers. For implementation of credit obligations on the part of Ukraine meet the State food and grain Corporation of Ukraine (SFGCU).
However, of the 19 items of the contract Ukraine has fulfilled only one. The first tranche of $ 1.5 billion just disappeared. Credit disputes came to court in London. According to recent data, between Ukraine and China signed an agreement on the settlement of the dispute.
Only subsided disputes with the Chinese on agricultural credit, as in 2016, a new problem appeared. The state development Bank of China granted Ukraine another line of credit — $ 3.6 billion for energy development.
However, the Ministry of energy, regional development, the coal industry and the company “Naftogaz” is so fond of disputes about the powers-that simply could not agree on project needs and missed the submission deadline for the Chinese loan.
as a result of the construction and modernization of thermal power plants, purchase of equipment for drilling and coal mining and other work was delayed due to unproductive competition agencies and the incompetence of their leadership. This, by the way, another argument in favor of the fact that Chinese lenders and investors is good to think about the safety and effectiveness of future investments.
as for another Chinese loan, the list of objects which are supposed to invest in itself raises suspicion.
the Construction of the fourth metro line in Kiev (the so-called “subway to troieschyna” — in a residential district of Kiev) to Kiev has become a byword. Its construction was planned in the Soviet Union. Once again the discussion was back in 2007 — then the mayor of the Ukrainian capital has estimated the cost of a new branch in one billion dollars. Further conversations business did not go again.
the idea of a subway to troieschyna was returning in 2013 and 2015, with similar results. And here at the end of 2017, the mayor of Kiev Vitali Klitschko has signed a Memorandum of cooperation with Chinese companies in building a long-awaited branch. The price of the project in ten years has increased twice — up to two billion dollars.
Critics have pointed out that actually this is only a Declaration of intent. It was noted that the implementation of the project interfere with the unfinished bridge across the Dnieper, the private sector, where it is planned to put a metro line, and so on.
the Experts also called credit conditions of the Chinese people impossible for the city budget. The fact that to complete the transaction and receive money from the Chinese the city must obtain a state guarantee from the government. In the words of Advisor to the Minister of infrastructure of Ukraine Alexander Kava, the state will not do it. A municipal guarantee of from Kiev impossible because of the unsatisfactory credit rating of the city.
a Similar story with the involvement of Chinese loans for the construction of the railway from Boryspil airport to Kiev. For the first time the government of Ukraine decided to build it in 2010. Then it was planned that the road will be ready by 2013. And just in 2013 it began to build.
adds Piquancy to the fact that the construction also took place on Chinese credit is still under Viktor Yanukovych reached an agreement on the allocation of 372 million dollars for the construction of the road.
Since then four years have passed. The effectiveness of spending said in an interview with the Deputy Minister of infrastructure Victor Dougan the end of 2017. According to him, the construction site was spent, but rather “mastered” $ 50 million, but the project has not moved forward and was stopped.
the Implementation of the project prevents its questionable effectiveness. In 2017, the passenger traffic of the airport Boryspil was a little more than 10 million people. According to General Director of Boryspil, the feasibility of building a railroad between the city and the airport appears only in the stability of the passenger traffic of 12 million people. And the adviser of the Minister of infrastructure Alexander Cava, minimal ridership, where it is expedient to build a railroad is 15 million people a year. To these indicators, the airport is still very far away.
All this casts doubt that the project will be implemented. The lack of progress for four years, embezzlement of 50 million dollars and the payback is not obvious, it leaves open the question of whether the allocation of a new Chinese loan to Ukraine for this purpose.
the Most probable of all Chinese projects in Ukraine sees the new road Kremenchug — Odessa — Nikolaev. This road connects the agricultural and industrial centre and the South of Ukraine with its main port. The development of infrastructure in the region is to promote exports of agricultural and industrial products from Ukraine.
Ukrainian roads are among the worst in Europe. According to the Minister of infrastructure of Ukraine Volodymyr Omelyan, 90 percent of Ukraine’s roads “were killed in the trash.” Last year for repairs allocated about $ 1.4 billion. In these circumstances, the emergence of the Chinese money would be very helpful.
the Problem is that from the project will benefit a lot more Chinese than Ukrainians. According to the Executive Director of the Bleyzer Foundation Oleg Ustenko, the loan for an infrastructure project is very dangerous in the conditions of shortage of financial resources. Payback is quite long, and you need to pay immediately. The effect of the implementation of the project may be opposite of what was intended. Ukraine’s economy will spend more on credit than to benefit from the construction of the road.
All of the above casts doubt on the usefulness of Chinese money for the Ukrainian economy. The Ukrainian government has shown itself to be negligent, incompetent, and corrupt. His ability to implement infrastructure projects with China raises serious doubts. For these reasons, we can hardly expect that the Ukrainian-Chinese cooperation will go beyond declarations and statements.