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29 November, 2011  ▪  Oleksandr Zvorsky

Window Dressing in Kyiv

As it prepares for Euro 2012, the government wastes billions to build Potemkin villages

“The reconstruction of the Olympic Stadium is a landmark project for Ukraine’s image,” said Viktor Yanukovych at the opening of the renovated stadium. Kyiv authorities also report the successful construction of infrastructure facilities. Independent experts say corruption scams continuously boost the cost of Kyiv’s preparations for Euro 2012, while the authorities fail to draw private investment and the quality of facilities under hasty construction is questionable.  

AT ANY COST

The 70,000-seat Olympic Stadium has been under reconstruction for over three years. However, 65% of all works have been completed since March 2010. The renovation has been going on in three shifts to finish the facilities on time.  

Borys Kolesnikov, Vice Premier and Infrastructure Minister, who is in charge of Euro 2012 in Ukraine, estimated the total cost of the renovation at UAH 4.5-4.6bn (USD 570-585mn). This is almost as much as the GBP 390mn (UAH 4.86bn) London-based Arsenal needed to build the Emirates Stadium for 60,000 seats in 2006. For Arsenal, though, this was enough not only to construct the stadium but also renovate the neighborhood. Earlier, Munich-based Bavaria and TSV 1860 München spent EUR 340mn (about UAH 3.74bn) to build the 70,000-seat Allianz Arena for the 2006 football championship. Such comparisons make Borys Kolesnikov nervous. To justify the cost, he says the stadiums in Europe were build prior to the financial crisis, unlike the Olympic Stadium. This is not convincing enough as the crisis knocked down the cost of construction materials and labor.

In pursuit of the successful completion of the “landmark project for Ukraine’s image,” as officials refer to it, the government turns a blind eye to numerous violations in the course of Euro 2012 preparations. Oleksandr Bryhinets, Member of Kyiv City Council, says the construction of the stadium destroyed two ramparts of the Kosiy Kaponir (the Sloping Caponier), part of the Kyiv Fortification architectural complex. Vasyl Kostyrtsia, a Ukrainian representative of the International Labor Organization, claims numerous subcontractors illegally employed builders from Western Ukraine for the reconstruction, paying their salaries in envelopes (undeclared).      

LOST IN THE INFRASTRUCTURE

Tetiana Slyshyk, Head of Kyiv State Administration’s Main Department for Euro 2012 in Ukraine, says most city infrastructure facilities, primarily roads, will be completed this year.

The administration, however, is not going to repair Kyiv streets on a large-scale basis. It does not have enough cash in the budget. The Mayor is only planning the renovation of 19 streets surrounding the Olympic Stadium.

One of the roads completely renovated for Euro 2012 is Kyiv-Vyshhorod-Desna highway to the president’s infamous residence in Mezhyhiria. Officials claim they have done this on UEFA’s demand. In fact though, not a single facility that could be used for the championship is located along that stretch of road.

Kyiv authorities also intended to improve the health care system for Euro 2012. They have planned to repair some city hospitals and the Kyiv City Blood Center. “The money was allocated less than a year before the championship but the tenders have yet to be completed. The estimated budgets are often hugely overpriced, while most of the planned work has not begun,” Kyiv Council Deputy Oleksiy Davydenko complains. Officials have funneled UAH 5.5mn to buy a mobile hospital for the city, despite that fact that the Ministries of Defense, Health and Emergencies already have several. “For some reason, Kyiv authorities decided they wanted one of their own. They’ve reported the cost alone without a cost estimate, or a list of medicines and equipment,” says Mr. Davydenko. “This means its medical supply will be adjusted, based on the funds available, not what Kyiv needs”.  

It has emerged that the city does not have adequate housing to host all potential visitors for Euro 2012. Their estimated number is at least 200,000. Local authorities have fulfilled UEFA’s task to prepare nearly 8,000 rooms in 3-5 star hotels to accommodate the target groups but, just like before, there are too few to host all football fans. According to Andriy Stavenko, Director of TUI, the travel agency responsible for accommodating Euro 2012 fans, Kyiv lacks more than 12,000 rooms including 5,300 in the economy class category. As a solution, the Kyiv City Administration is signing contracts with local colleges to use their dormitories, where they can accommodate nearly 60,000 guests, charging them EUR 30-40 per bed. Dmytro Zaruba, Deputy Chairman of the State Tourism and Resort Service, admits that dorm staff is totally unprepared to provide hotel-quality services, such as changing bedding and toiletries every day.

As an alternative, football fans will be offered tent cities near Kyiv. But even officials doubt this backup plan will work. “The most humble European tourists will still need something more than just an open-air field. They need a complete infrastructure with water supply, transportation network, nearby shopping and so on. I really doubt that all these improvised tent cities will ever meet these standards,” Mr. Zaruba admits.  

POTEMKIN VILLAGES

Kyiv authorities fear the government will stop funding the renovation of infrastructure facilities immediately after the championship, since it will no longer be an image-making thing. “The same thing happened in 1980 when Kyiv stores were stocked with deficit products for a short period during the Olympics in Moscow,” says Oleksandr Davydenko. “Nothing has changed over the last 30 years.”

Nor has Kyiv seen any meaningful investment into Euro 2012 facilities. Initially, the authorities hoped investors would largely lighten the financial burden of the central and local budgets. Hopes have been crushed, Oleksandr Holubchenko admits. “Investors are only interested in hotels,” he says. “Other sectors have failed to lure any private investment.” Analysts link this to the unfavorable investment climate in Ukraine. “Corruption, bribery, weak protection of investor rights, game rules that change all the time and other “treats” scare off foreigners who are used to civilized conditions for conducting business,” comments Volodymyr Ovadenko, Senior Analyst at UFC Capital. He thinks corruption has significantly increased the cost of Euro 2012 preparations.

REFERENCE

According to different estimates, 500,000-1,000,000 foreign fans will visit Ukraine during Euro 2012

At least 200,000 fans will attend championship games in Kyiv

Because of the shortage of hotels, authorities are going to settle 60,000 fans in dorms

Hoteliers anticipate that hotel prices could double or quadruple for Euro 2012, increasing to more than USD 200 at certified hotels 


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