Ukraine &Poland granted the right to host the Euro-2012
Mirror-Weekly, #15 (644) Kyiv, Ukraine, 21-27 April 2007

Ukraine has yet another chance (maybe the last) -- a unique opportunity to show its consistency to the world. It has five years to cope with a multitude of problems that have been weighing heavily for the last fifteen years. In all these years, the cleverest Ukrainian brains have been unable to work out a consistent strategy for uniting the nation.

This country still lives without its Ukrainian dream. By far, politicians have only offered remedies for dissention that have only aggravated this disease. It looks like the strategy and the dream began to take shape on April 18 in Cardiff, Wales.

Last Wednesday, eight of eleven members of the UEFA executive board created a sensation: they granted Ukraine and Poland the right to host the Euro-2012 finals.

In the summer of 2012, Kyiv, Warsaw, Donetsk, Wroclaw, Lviv, Poznan, Dnipropetrovsk, and Gdansk will receive millions of fans from all corners of the continent and the rest of the world.

In a long and hard marathon competition, the two Slavic countries went ahead of Azerbaijan, Greece, Romania, Russia, and Turkey, and in the final round they bested Italy and the Hungary/Croatia tandem.

Italy was seen as the favorite, although its chances were seriously undermined by the recent corruption scandal and fan clashes.

It is no small wonder the Coriere della Sera gave a reserved comment, calling the UEFA boards decision somewhat unexpected. UEFA President

Michel Platini called Ukraine and Poland's success a great victory of Eastern Europe, saying they won by right. Figaro warned, however, that the hardest part for the eastern nations is only just beginning.

The newspaper reminded the hosts of the Euro-2012 soccer finals,Poland and Ukraine have to renovate four stadiums each, reconstruct their road infrastructure, expand their hotel chains, and start a lot of construction from scratch. These are tremendous tasks.

It should be noted that these tasks are even more difficult for the Ukrainians than the Poles, which will rely on a more stable economy and can count on some backup from the European Union.

The news came to Ukraine as a big surprise: most soccer fans had not even dreamed of watching the great sport event live! They are even happier, knowing that the Ukraine national team will play in the finals as the host, without having to go through the qualification ordeals.

Not only are fans happy at least because this is a rare opportunity to be proud of the much degraded country. The news inspired optimism in those who still believed in an idea that could reconcile leaders and mend the dissented nation together.

The organization and conducting of a good continental championship is a task that takes a lot of joint efforts. Residents of all parts of Ukraine, supporters and opponents of the government, and all leaders regardless of political colors are equally eager to host such a prestigious forum.

This is any host natural desire - to rise to the occasion. There are purely pragmatic reasons. This is the last lucky chance for Ukraine to regain Europe's interest and attention after it squandered the great opportunities opened by the Orange Revolution.

This is a chance to convince disillusioned European politicians that we can live up to promises if we build and rebuild what we pledged to build and rebuild by 2012.

We still can convince disillusioned European businessmen that it is possible to do civilized business in Ukraine, that our government can create an agreeable and safe investment environment, that Ukrainian entrepreneurs can be reliable partners, and that Ukrainian officials can make do without

This is a fantastic opportunity to have a hand in a large-scale international business project as a partner of an EU member country. No lobbying could have helped. Football did. There were many factors behind Ukraine's victory in this competition, but one is undeniable: colossal personal efforts exerted by Football Federation President Grigory Surkis.

It was his zeal and his fanatical desire to make Ukraine the Euro-2012 host that overcame the skepticism of European football officials.

Probably, he was the only one who believed, and even those who disliked him before (not without reason) give credit where credit is due. And if Euro-2012 does become a turning point in Ukraine history, many might temper justice with mercy and gratitude to him.

There are good reasons to expect improvements in this country. National Olympic Committee President Sergey Bubka noted justly that the UEFs historic decision would not only make Ukraine more authoritative in the sports world, but would also spur its political and economic development. His phrase,in five years we will achieve what we should have achieved in fifteen years, was quoted by all leading news agencies.

Yes, Bubka is right: within five years Ukraine has to do what it has hardly been able to do since independence in 1991. Otherwise, it is sure to lose the trust of the European community for good.

Ukrainian political leaders and moneybags are now bound to do for their own international reputation what they have been reluctant to do for their own people.

So far, Ukraine's economic development has been like the hurdles. Year after year, private business has been carving its way through the high walls built by bureaucrats indolence, obtuseness, and greediness. In sectors where authorities keep business under total control, Ukraine lags decades behind free economies.

The simplest and obvious example is transportation problems. Many residents of Kyiv say,I just can't believe we're going to host a European championship And I can't believe we're ever going to have good roads

Even Kyiv roads that leave much to be desired, seem like autobahns for residents of other Ukrainian cities. There is so much to build: modern airports, road junctions, tunnels, overpasses and underpasses, and thousands of parking lots.

Ukrainian authorities must be aware of the transportation problem to which they have turned a blind eye so far. They do need to look at this country from the eyes of Europeans. However, they are hardly able to see the real scope of this problem.

Here is an example. German roads are reputed as the best in the world. Nevertheless, in preparation for the 2006 World Cup finals, the German government spent 4.15 billion to improve the transportation system!

There is another incentive money. Soccer championships are like a big lottery in which the odds of grabbing the jackpot are directly proportional to the number of tickets bought.

A European championship is the best way to draw investment, a perfect stimulus for expanding the advertising market, and a strong impetus for developing various businesses, especially tourism, hotels, and catering services.

Here are some more figures, reflecting the scale of financial input into the 2006 World Cup finals in Germany. Twelve stadiums were built or reconstructed. The Munich stadium alone cost as much as 300M. All-in-all, 1.5 billion was spent on building, reconstructing, and renovating sports facilities.

The sum spent on improving the water supply system amounted to millions of euros. (Doesn't this figure send shivers down the spines of Ukrainian city mayors? Especially the mayor of Lviv where the water supply system is badly dilapidated. Are they ready to cope with such a tremendous job in five years?)

Every sixth German company saw a substantial increase in net profit. The highest profits flowed into the pockets of owners of cafes, restaurants, bars, hotels, and souvenir shops where tourists left more than 900M.

The World Cup finals gave Germany 40,000 jobs. Six national and fifteen international sponsors gave the country more than 750M. German companies paid 13M to pose as exclusive sponsors and foreign companies paid 45M.

Ad placement prices soared: TV companies charged up to 32,000 for a 30-second spot during a live broadcast (whereas the standard price is between 6,000 and 7,000).

According to expert estimates, total financial input into Germany's economy exceeded 10 billion, and it is going to feel the positive effects of the 2006 championship for the next fifteen years.

Of course, Ukraine is not Germany and a European championship is not a world championship, but the above figures give a clear picture of the input/profit ratios.

Is Ukraine ready to bear this brunt? There are at least two favorable circumstances. Firstly, almost all Ukrainian billionaires except Viktor Pinchuk are presidents of football clubs.

Rinat Akhmetov, Sergey Taruta, Igor Kolomoysky, and Alexander Yaroslavsky know what has to be done, possess enough financial resources, and are willing to invest them. Secondly, all the topmost officials are very
enthusiastic about this excellent opportunity, which can encourage them to act TOGETHER, at least on this job.

The most evident problem stadiums looks quite soluble. The government has already allocated funds for the reconstruction of the Olympic Stadium in Kyiv. Akhmetov is building a modern stadium in Donetsk (worth approximately $250M).

At Kolomoyskys initiative, another modern stadium is under construction in Dnipropetrovsk. Next year, reconstruction is going to start on the Ukraina stadium in Lviv.

Yaroslavsky has invested in the reconstruction and re-equipment of the Metallist stadium in Kharkiv. Funds are being raised for renovating the football arena in Odesa.

Kyiv Mayor Leonid Chernovetsky made a surprising statement, promising to outstrip Akhmetov with a brand new $200M stadium in the capital city and making experts wonder whether Ukrainian moneybags understand what exactly they should do and how.

Experts are sure that the costs could be a lot lower. They can build stadiums with marble walls, but what difference will it make to a Portuguese, Dutch, or Italian tourist if he has rusty water in his hotel
room or has to roam the city for hours, looking for a place to park his car?

The list of problems Ukraine has to handle would take pages and they demand quick and cost-effective solutions. Sergey Taruta, the owner of Donetsk Metallurgy, has a rational suggestion. He proposes to involve experienced Western companies that would:

- conduct audits;
- help with drawing up tentative budgets and setting quality criteria;
- control the quality of operations;
- pose as credit grantors.

Such a model would:
- make future tenders transparent;
- ensure proper quality standards;
- minimize interference from authorities, protectionism, and lobbyism;
- practically eliminate embezzlement.

Taruta is convinced that only national companies should act as contractors. For example, it is possible to create a powerful private company. With the help of investors, support from the government, and supervision of Western specialists, it would build quality roads for Euro-2012.

After the championship the company would continue to build quality roads across Ukraine. One might call this project utopian, but didn't the idea of hosting Euro-2012 seem utopian?

Meanwhile, Ukraine's top leaders are already calculating their future profits. President Yushchenko expects about $3 billion. The government specifies $3.2 billion, of which one-fifth will go to the national budget in VAT deductions.

Net profit is expected to exceed $800M and each of the 400,000 tourists is expected to spend $400 in three weeks during the championship events.

At the same time, planned expenditures announced by the government look unsubstantiated. According to a tentative estimate published by the Justice Ministry, an equivalent of $240M will be provided by the government and $3,960M will come from extra-budgetary sources.

Some experts say unofficially that these figures are spun out of thin air. Others say that the estimate was drawn up by old Soviet methods, without considering the experience of the recent continental and world championships.

The document leaves too many open questions. How much will be spent on renovating the transportation and communication infrastructures? How much will be spent on transitions for travel agencies?

How much will be spent on retraining hotel personnel and teaching police officers foreign languages? How does the government plan to develop the hotel business?

Some officials have announced plans to build a dozen five-star hotels, but where are they going to accommodate hundreds of thousands of other tourists? In refurbished suburban hostels and sanatoria?

There are serious apprehensions about the disgraceful repetition of Eurovision 2005 in Kyiv, when guests had to live in tarpaulin tents and use wooden johns or go in the bushes. With such an approach, Ukraine is in for a global scandal.

Ukrainian authorities will not only have to change roads and sewers. They will have to change their way of thinking. They have too little time - just five years, and they must know that there will never be another chance.


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