This article is part of our special report EU-Ukraine Relations.
Preparations for the Euro 2012 football championships, which Ukraine is set to co-host with Poland, have been mishandled and could result in a foreign debt catastrophe for Kyiv, independent experts have warned.
Instead of enjoying a widely-expected investment boom as a result of hosting the prestigious tournament, Ukraine is heading for a downward spiral of indebtedness, say experts quoted by the press in Kyiv.
Economist Andrey Novak reportedly told Radio Free Europe/Radio Liberty that the preparations for next summer's major international sports event were proceeding on the wrong footing and as a result, state coffers were being seriously depleted.
"Since the very beginning, since [Ukraine] was selected to host the championships [in 2007], it was said that 82% of the funds needed would come from private investors. Today the proportion is exactly the reverse," Novak said.
"For any other country, such championships trigger an investment boom, but for us this is an investment catastrophe," Novak continued. According to him, the construction of sports infrastructure has been financed almost exclusively from the state budget.
"This means debt. This means Ukraine is preparing for the Euro 2012 cup at the expense of pensioners, students and civil servants," Novak declared.
The economist underlined Ukraine's poor investment climate, corruption and a lack of legal certainty for business in the country.
Alexander Novikovski, president of a business association representing the tourism industry, criticised the Euro 2012 preparations for their lack of emphasis on tourism infrastructure.
Novikovski accused the Ukrainian government of focusing all its attention on building stadiums, airports and roads, while at the same time neglecting tourism infrastructure.
The expert claims that visitors to Euro 2012 will only spend 5% of their time at stadiums, roads and airports, spending the rest of their stay mostly visiting tourist attractions and using tourist services.
"There is a lack of legal support: the tourism infrastructure often does not correspond to international standards," he complained.
Novikovski noted that the country has much to show to foreign visitors in terms of historical heritage, but no strategy on how to make these places accessible to visitors.
He urged Ukraine should find out more about foreign visitors' interests and provide all the information that visitors may need at the tourist centres that the country is planning to put in place.
Although the Ukrainian authorities plan to open 13 new hotels in the capital by March 2012, the existing ones are gradually falling under the control of Russian businesspeople, according to the Ukrainian mass media.
Ukrainian Foundation for Democracy "People First", a Ukrainian civil society organisation whose mission is to help build democracy in Ukraine, sent EURACTIV the following comment:
“At the beginning, it was planned that only 5% of expenses for the Euro-2012 would come from the state budget and the rest would be at investors' expense. However, the real situation is that the state provides allocation of almost 7 billion dollars, local budgets provide about 0.7 billion dollars and other sources provide 6.2 billion dollars. Thus, many economists warn that the conduction of the European championship may bring the state into deep debts.
“To justify the confidence of UEFA, President Viktor Yanukovych and his team will have to really demonstrate extraordinary skills in making sure the necessary infrastructure is in place in due time. The success indicator of Euro 2012 will be the quantity of foreign visitors and their impressions about Ukraine.”
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