Ukraine faces organizational headaches over Eurofoot 2012

The Euro 2012 football championships, to be jointly organised by Poland and Ukraine, will come far too soon for Kiev. The direct costs are estimated at 12 billion euros, since the Ukraine will have to increase its road, rail and airport networks

From our special envoy in Yalta

"To be frank, the majority of local politicians did not expect Ukraine to be chosen with Poland to organise the European Football Championship in 2012", confesses Ivan Federenko, director of the Ukrainian organising committee. "I hope that now all the problems we have before us will be resolved as quickly as possible". As the fourth annual Yalta meeting to encourage the Ukraine's integration into the European Union was held last week-end, the challenges that the former soviet republic has now to face in order to organise Eurofoot provide an eloquent summary of the handicaps that the country must overcome if it dreams of joining the EU one day.

In terms of infrastructure, the U8kraine must build stadiums, roads and airports. "The direct costs linked to the organisation of this competition will reach 2 billion euros" calculates Igor Burakovsky, director of the Institute for Economic Analysis and Political Consultation. "To support that we shall have to combine public and private financing through PPP partnerships." Easier said than done... Ukrainian legislation does not allow the signing of such agreements today. And "for large projects that need state guarantees, the administrative procedures take an average of one year", complains Kamen Zahariev, a manager with the European Bank for Reconstruction and Development. "It will only be after this stage that we can launch invitations to tender. This mechanism takes much too long for a competition that will begin in five years' time." Time is indeed getting short... "This is our principal handicap" says Adam Olkowicz, in charge of the Euro 2012 at the Polish Football Association. "But we have already received 8 billion euros of European aid over the past two years. And between now and 2013, these subventions are scheduled to reach 29 billion euros just for road, rail and airport infrastructures."

The Ukraine, which does not benefit from this EU manna, has another serious weakness: corruption. "The very day that the UEFA announced that the Ukraine was to organise the European Football Championship, businessmen went to see their local politicians to try and tie up contracts" adds Kamen Zahariev, "but it would be better to issue invitations to tender".

Struggle against corruption

This problem has to be solved fast. "Private groups like Accor would like to invest in this country, but first we have to establish the conditions that will enable them to come. That requires going through with the fight against corruption" warns Vitaly Klitchko, the former world boxing champion who is today advisor to the president of the Ukraine. "Today the bureaucrats are fighting to see who will control the budget allocated for the organisation of the Eurofoot competition. They would do better to try to define precisely the projects that need to be successfully completed, instead of talking about money. We have to put an end to the old habits that hark back to the time of the USSR, and take ourselves in hand. This competition is a chance to reunite the Ukraine in the great European family." To be continued...
Frédéric Thérin

The Ukraine is a country that would do well not to ignore Brussels, it has a long way to go before joining the European Union. The country is still suffering from practices that are not really compatible with European standards.

Do what I say but don't do what I do...Victor Pinchuk has become an expert at just what this old saying says. This billionaire, aged just 46, does not stop criticising the woes that paralyse his native Ukraine. "It is important you separate business from politics - says the boss of Interpipe Corporation. "It's a tragic and unhealthy situation". The criticisms are so very true. But when you look a little closer at his track record it is difficult not to smile when hearing what he is saying.

The man is certainly not lacking in talent. As an engineer he got his PhD at the Dnipropetrovsk metallurgical institute when he invented a novel process for manufacturing tubes for the oil and gas industry. But he owes his breakthrough in business to a getting a helping hand by marrying the daughter of the then president of the Ukraine, Leonid Kuchma. These family connections "probably" helped him get the exclusive rights for exporting pipes for pipelines. He was an MP in the Ukraine parliament from 1998 to 2006; in 2004 he also managed to buy two huge metalworking plants, Nikopol and Krivorzhstal, for a song. These privatisations were, however, annulled in April 2005 after the Orange Revolution. But Interpipe is still the majority shareholder in Nikopol. His empire stretches today over about a dozen business sectors including banking, television, real estate and metalworking. He is a master at lobbying and for the last four years he has been organising an annual summit at Yalta aimed at encouraging Ukraine's entry into the European Union.

"A booming market"

This year the atmosphere was a bit glum. The truth is the last twelve months have not helped Kiev's cause in Brussels. A violent political conflict paralysed the parliament for eight weeks. Pinchuk, a young billionaire emphasise s that, "this crisis is a sign that we are a young democracy. Parliament is very weak". The Ukrainian president does not contradict this. Viktor Yushchenko admits that, "the Ukraine must recognise that people expect a lot of it in terms of press freedom and political stability". Even the most enthusiastic supporters of this country joining the European Union are losing patience. Brussels could just let this country go down the chutes and do nothing. But it has a lot to lose... In fact, as Stéphane Fouks, chairman of EuroRSCG Worldwide affirms, this nation represents "a population reserve of 46.3 million people who are well educated." Andrew Chulak, M&A manager at Deutsche Bank, confirms this view, "it's a market in full boom, In Europe, growth rates of 4 or 5% are considered good. Here they are talking of 20% and even 30% in some sectors. And the Ukrainians average income is continually on the increase." This country has a long way to go before joining the Union.
Kamen Zahariev, a manager at European Bank for Reconstruction and Development (BERD), comes straight to the point: "It must fight against corruption, reform its judiciary and get rid of its Soviet mentality... It's upcoming entry into the World Trade Organisation and free-trade negotiations going on with Brussels are nevertheless the first major steps."

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