Natorina A.O.

Vlasova I.A.

Donetsk state university of economics and state after Michael Tygan-Baranovsky, Ukraine

Euro 2012 as anti-crisis measure

Euro 2012 is one of the most challenging and complicated projects that Ukraine has undertaken since independence. It is not only one of the largest sporting events in Europe, but it is also an opportunity, if properly executed, that will provide Ukraine with tangible benefits for years to come. Ukraine's leadership publicly announced its interest in further integrating with the larger European community and the European Football Championship will go a long way in proving that Ukraine's European future is a reality.

Ukraine is slated to host the championship jointly with Poland, which is already a member of the European Union, and many observers believe that if Ukraine successfully accomplishes its part of the Euro 2012 project, it will be a clear signal that Ukraine has also achieved European levels of management, economic development, and business-government relations.

Sentiments against holding Euro 2012 soccer games in Ukraine are explained by superficial knowledge of the crisis and Euro 2012. A crisis is usually portrayed as a lack of funds, although in time of crisis money does not vanish into thin air; rather, it keeps working somewhere. That the bad stereotypes in financial management and old patterns of state administration will be the only ones to vanish into thin air. Crisis in Ukraine will mark the beginning of progress in our country. Paradoxically, in time of global crisis Ukraine may the last who will become the first. What concerns Euro 2012, competitions of this caliber are held all over the world not to deplete the central budget but to replenish it. Estimates show that the championship Euro 2012 will preserve or create two million jobs, slow down the decline in production, provide steel and construction companies with large-scale, long-term contracts, and attract fresh investments in the face of the opposite trend when investors are withdrawing their assets. The government is prepared to give guarantees to all investors who will make financial injections in the key infrastructure projects.

Until recently Ukraine had to struggle for its right to host the championship and prove that it is capable of doing so. This year, thanks to the championship, our society will have an opportunity to heal its economic organism, awaken public initiatives, and smooth over the political and social conflicts. In conditions of world crisis, Euro 2012 is actually Noah’s Ark that Ukraine has received. It is an opportunity to get a new lease on life and complete our mission. Therefore, the question whether or not to hold Euro 2012 in Ukraine is not on the agenda. The championship will be a truly colossal chance for Ukraine to mitigate the consequences of the economic crisis.

It is necessary to regard preparations for the championships as a long-term project. By the time Euro 2012 is scheduled to begin will have built air terminals, hotels, and a transport infrastructure that will remain functioning for the benefit of Ukrainians after the championship. The state program of financing the championship was revised and adopted before the fall of 2008. The overall amount of state investments is close to $10 billion plus $20 billion worth of private investments. State is making adjustments and will continue making them, depending on progress in the implementation of construction projects. Ukraine has recently received information about subcontracts signed with Kyivmiskbud (the company is the general contractor in the Olimpiiskyi National Sports Complex construction project). Subcontractors bidding for material purchase contracts have lowered the prices by 8-10 percent as compared to the initial figures.

In addition, the state will increase its share in projects that will have problems with private investments, so as to guarantee its commitments before the UEFA. After the UEFA names the four main cities (May 8, 2009), budget funds will be redistributed between them.

Ukraine is faced with risks of going broke every day, going for each other’s jugular in politics instead of taking care of things that really matter. However, this has nothing to do with the crisis or Euro 2012. Euro 2012 is a strategic investment intended to produce a steady income and secure sustained development of this country. The championship is opening up horizons for reconsidering the economic policy as a whole, in terms of new post-industrial endeavors such as recreation and leisure, sports, tourism, and so on. Elsewhere in the world these sectors produce better revenues than traditional businesses. The state and society will benefit from them on a much greater scale.

The biggest risk today is the construction of hotels because it involves private investments only. The state is not financially involved in any of these projects. Today the investors who have already launched these projects are faced with the problem of getting access to loans. The 2009 budget envisages money in the Stabilization Fund; it can be used to partially offset the loan interest rate that the private investor has to pay to build a hotel for Euro 2012. In addition, the candidate cities have cut land lease fees to nearly zero and reduced a number of other local taxes.

Deputy Prime Minister Ivan Vasiunyk 3.03.2009 met with World Bank Country Manager for Ukraine, Belarus and Moldova Martin Raiser. They agreed to organize a conference for foreign investors and Ukrainian officials in this crisis year to consider the possibilities of investments in the infrastructure projects, particularly hotels.

The hotel business constitutes the largest investment area. At the time when it was announced that Euro 2012 soccer games will take place in Ukraine there were but a few 4-5-star hotels available in cities other than Kyiv. Ukraine must have some 270 such hotels to accommodate the championship. Tentative estimates point to 50 billion hryvnias worth of investments. Investment projects reached the realization stage as late as in the second half of 2008. In many cases they are still lacking investors. A number of investment forums with European countries have taken place. Ukraine is negotiating US investments using a credit mechanism via Ukraine’s Eximbank, she intend to discuss the possibilities of joint investments in Ukrainian Euro 2012 projects with Polish investors. Here one of the largest projects is the first concession turnpike, Krakovets–Lviv–Brody–Kyiv, which is worth several billion dollars of investments.

Ukraine also plans to extend automobile concession practice to air terminals. There will be a tender for such a terminal at Lviv Airport and eventually for Ukraine’s central Boryspil Airport. The most effective way to channel state investments into Boryspil ($200 million for Terminal D alone) would be by concession. Airports run by professional companies are standard international practice.

To date not a single large-scale project agreed between Ukraine and international financial institutions (EBRD, EIB, and WB) has been stopped. This serves as a reply to criticism from those who claim that crisis kills the desire to make investments. Moreover, Ukraine is receiving new signals from these institutions. Lviv, for example, has signed a new agreement with the EBRD to receive €50 million for the preparation and acquisition of new ground transport and road construction.

Consequently, the governmental team is ready to prepare the country for Euro 2012 finals. Ukraine's leadership prefers business relations, rather than emotions in Euro 2012 preparations. The country's readiness to host Euro 2012 finals should be assessed through concrete work. The time of discussions and uncertainty in Euro 2012 preparations had ended. The time has come for constructive and firm actions. UEFA experts think that no any doubts at all that Euro 2012 will be one of the most profitable projects ever undertaken by the Ukrainian government. Each such competition has produced more profits for this organization than the previous one.