Euro-2012 championship to cause $8 billion of losses to Ukraine

The European Soccer Championship to be held in Poland and Ukraine is only four months away. However, Ukraine is no longer excited about the long-awaited sports event. Experts estimate that, instead of profits and stimulation of the economy, it would bring the country a loss of eight billion dollars.

Ukraine along with Poland won the right to host the continental soccer championship in 2007, but the joy was short-lived. Very soon serious concerns emerged that the country will not have time to build the necessary infrastructure for the championship. Kiev was given the right to host the championship as an advance due to the intent of the UEFA President Michel Platini to develop soccer in Eastern Europe.

However, at the time Ukraine could not boast technical capability to host an event of this level. And yet, despite numerous difficulties and corruption scandals, upgrading of the sports facilities in Kyiv, Kharkiv, Donetsk and Lviv that will host the games was completed on time. However, the situation with the hotels of international standards and transport infrastructure still leaves much to be desired. In the capital of Donbass, for example, the attempt to finish construction of the subway before the championship has failed.

In any case, a great deal of work has been done, and Ukrainians have all reasons to rejoice that they have not lost face before the European soccer community. Yet, the hosts of Euro 2012 do not seem to be too excited. The closer the continental championship, the more obvious it becomes that it cannot recoup resources and efforts expended. A new evidence of this unpleasant fact was unveiled by a quarterly report of the analytical group Da Vinci AG. Experts predicted Ukraine significant losses instead of income from tourism and push for economic development.

"The overall cost of the championship in Ukraine may be at least $14 billion. The losses may amount to six to eight billion dollars. These funds are unlikely to return to the country's economy in the medium term. We do not expect an increase in the flow of tourists after the championship in the second half of 2012 that would dramatically change the situation in the recreation area. At the same time there will be no boost to tourism in the country or development of small and medium businesses," "Economic News" quoted analysts of Da Vinci AG.

One could sympathize with the unfortunate residents of Ukraine and leave it at that if it had not been for the following paragraph of the report: "We draw attention to the dynamics of the GDP in the countries that have implemented the event of such a scale without having the appropriate infrastructure. Sporting events slow the growth of GDP in the corresponding quarter, and then to a great extent causes it to slow down or crash. GDP growth before the tournament is always higher than that thereafter. We believe that this dynamics is typical for Ukraine."

These words can be fully attributed to the country where the situation with the preparations for the Sochi Olympics and soccer World Cup in 2018 is extremely similar to the Ukrainian scenario. It is too early to talk about soccer championship, but the games in Sochi are only two years away, and the grand Olympic construction on the Black Sea resulted in a gigantic corruption scam with uncertain prospects for the future.

The Court of Auditors has found a serious delay of construction at 76 sites out of 393. Many of them are critical to the sports events, such as the Grand Sports Arena with a half-open vault designed for the opening ceremony. The Court of Auditors believes that some of the problematic sites can no longer be completed on time. This is despite the fact that unprecedented funds have been allocated for the preparation for the Olympics. This project will cost a whopping $80 billion.

"It is such a big corruption project, huge amounts of money are spinning there, and a system of "kickbacks" is thriving. The Court of Auditors has repeatedly carried out checks and talked about the misuse of budget funds citing the Sochi Olympics as an example. In other words, there are large contractors who cut part of the money; there are sub-contractors who hire subcontractors themselves. That is, the money is cut in several stages, which in fact was the reason for ineffective implementation of the project. Officials perceive any such object as a business, and their goal is to delay the project as much as they can, "Radio Liberty" cited the head of the National Anti-Corruption Committee Kirill Kabanov.

All this is well understood by the Russian authorities. Dmitry Medvedev instructed the Government to take measures to strengthen accountability for default on the construction of Olympic facilities in Sochi. But this is unlikely to help much, as the main instrument to influence the officials who openly sabotage the national project - bringing criminal charges against them - is not being used.

"There is a problem: the budget funds have been spent, re-financing is not possible, and we should either invent some new forms of additional budgetary funds to finance this construction site, or choose a legal solution - namely, prosecution," said Kirill Kabanov. "The latter seems extremely difficult - I know that the materials of the Court of Auditors in fact have not been used, though there were repeated violations. This delay is beneficial to those who manage the funds. They understand that their time is running out, there is an urgent need to complete projects, so there will be an influx of money, and a lot of money. "

It is clear that crooks and thieves will not be allowed to disrupt the Olympics - the image project of Vladimir Putin. However, its ultimate value to the Russians may be such that it will make Ukrainians rejoice their losses from Euro 2012.

Sergei Podosenov.

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Author`s name Dmitry Sudakov