Euro 2012 – Ukraine and Poland

September 13, 2007

Ukraine already in money trouble for Euro 2012

Filed under: Money,Ukraine — Ivan @ 11:23 pm

Kiev – The opening game kick off is still five years away, but already the Ukrainians are having trouble getting ready for Euro 2012. They need other people’s money, lots of it. “Ukraine needs to make changes,” said World Bank spokesman Martin Raisner, according to an Interfax news agency report. “Otherwise they are not going to see financing.” A joint bid by former the Soviet republic and Poland in April defeated Italy, Hungary, and Croatia to host the 2012 UEFA European Football Championship. Ukraine particularly needs massive foreign investment to finance an overhaul of its transportation, sports, and hospitality infrastructures, to accommodate millions of visitors expected to attend the competition. But five months after UEFA gave Poland and Ukraine the nod, preparations have advanced little because of Ukrainian government officials’ unwillingness to give support, and foreign investors’ nervousness when asked to put money in Ukraine, complained FFU chairman Hryhory Surkis. “We have officials at all levels blaming each other – and nothing is getting done,” Surkis told ICTV television. “And time will not wait for us…we must find investors now.” Raisner in radio comments made clear the international lending community similarly was not enthusiastic about fronting Ukraine money, primarily because of worries funds advanced to the Ukrainian government, would be money down the drain. “The market for government orders in Ukraine is between 120 and 130 billion hrivnas (23 to 25 billion dollars),” Raiser said. “It is one of the most corrupt, non-transparent, and ineffective spheres of Ukraine’s economy, and to attract investment there has to be improvement.” Raisner’s remarks were some of the harshest public criticism, ever, by a World Bank official of Ukraine’s government. The comments also were the first direct public challenge by a major international lending institution of the argument used by Kiev in its winning bid to the UEFA: foreign investors are ready and willing to plunk down serious cash to create a European-standard road network, hotel industry, and service standards in Ukraine. Conservative Ukrainian estimates place the cost of the task at hand – including the construction from scratch of thousands of kilometres of first-class roads and dozens of three to five star hotels – at between 25 and 35 billion dollars. Ukrainian private business, thus far, has managed to collect funding to overhaul the stadiums and begin upmarket hotel construction. But the big-ticket problems – repairing the transportation infrastructure and creating tens of thousands of mid-range hotel rooms – in the absence of foreign investors has been left to the cash-strapped Ukrainian government. Ukraine’s government budget in 2006 was roughly 25.5 billion dollars. Thus far Kiev has allocated towards Euro 2012 slightly less than half a billion dollars of taxpayer money, Interfax reported. Even worse for Ukrainian hopes to score extra cash, the World Bank has long been a bellwether for other potential lenders considering whether or not to advance Kiev money, and right now Ukraine’s credit rating doesn’t look good, industry experts said. “These worries (about Ukraine being too corrupt to safely invest money) are absolutely well-founded,” said Ihor Burakovsky, director of a Kiev-headquartered research institute. “And unless they are addressed Ukraine is not going to see the investment.” True, every Ukrainian government since the country became independent in 1991 has declared fighting corruption a top state priority. Ukraine remains among the most corrupt states in Europe, with Transparency International last year rating Ukrainian state officials’ willingness to accept bribes similar to their colleagues in Bolivia and Mozambique. Surkis nonetheless was optimistic at a conference for German businessman in Kiev on Tuesday, arguing tournament planners had already identified facets of running the tournament that would be profitable to farm out to experienced professionals. “There are (contracts) that absolutely should interest German investors,” Surkis said. All stadium needed for the tournament will be complete by June 2010, he said. But key aspects of Euro 2012 – particularly the rail and road systems, the country’s near total lack of affordable hotel rooms, and a primitive telecommunications network – need substantial cash injections from the outside, he conceded. “Without foreign funding, we cannot do it,” he said. “So we must attract investors.”

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  1. […] unknown wrote an interesting post today onHere’s a quick excerpt“These worries (about Ukraine being too corrupt to safely invest money) are absolutely well-founded,” said Ihor Burakovsky, director of a Kiev-headquartered research institute. “And unless they are addressed Ukraine is not going to see … […]

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