An important conference devoted to the discussion of concrete issues relating to Euro-2012 took place in Lviv during the 7th International Investment Forum. The forum was dedicated to a single goal: to coordinate our shared problems and tasks, define the situation — where we are and where we’re headed — and formulate guidelines. Most importantly, the gathering helped to start dispelling the frightening idea that from time to time occurs to practically every Ukrainian — we won’t be able to cope with hosting Euro-2012. Interestingly enough, confidence in our ability to cope with this task was boosted not by our fellow countrymen but foreign investors, who demonstrated such readiness to take all the strategic projects under their wing that it took our breath away. Now, people who used to smile ironically at billboards announcing the Euro-12 games with the bold slogan “Forward, Ukraine!” have dropped their ironic stance.
Another good thing about the forum was that politics were pushed aside. It was finally and resolutely determined that no matter what kind of government Ukraine will have, regardless of what political winds start blowing in the near future, the European event will rise above all petty, excessive ambitions and unite businesspeople and patriotically-minded people. The forum participants joked in the corridors: “We’re used to everything: we push our troubles in front of us. Even investors have gotten used to things; they’re not afraid of elections or changes of government. They keep investing; working, building, and getting revenues.
Petro Oliinyk, the governor of Lviv oblast, commented: “More investments have come into Lviv oblast in the last three years than in the preceding thirteen. What we need now is investment in construction projects: (1) a stadium; (2) hotels; (3) customs checkpoints; (4) automobile passage; and (5) recreational infrastructure. According to preliminary estimates, we’ll have to spend three billion euros in the five years left before Euro-2012.”
This is a big task for Lviv oblast. It will require considerable efforts from the people of Lviv authorities, a balanced policy of the Ukrainian government, regional authorities, interregional cooperation, and a coordinated effort on the part of the Ukrainian and Polish teams. In this sense, the forum that was held in Lviv was an example worth emulating. Officials from key ministries came to the province, so to speak, and listened carefully to what people had to say and voiced their own views on various issues. This was the first time that delegates from six Ukrainian and six Polish cities deliberated on such a substantial and broad scale. Below is a selection of commentaries by some participants of the forum.
Olena SLISARENKO, Deputy Minister of the Economy (Ukraine):
We are now convinced that investors are taking an extraordinary interest in Euro-2012 because this soccer championship will be a unique opportunity to change the macroeconomic map of Ukraine and the business mood in the state. The Ministry of the Economy has almost finished drafting a national target-oriented program to prepare and host Euro- 2012; the draft is expected to be approved this October. We will finish the programs for the host cities sometime in October or November. There will also be sectoral and regional programs. This way we will have prepared all the documents, the mega-plan, the general plan to prepare for Euro-2012 by the end of the year.
Where money is concerned, as of today the indices on the first stage of the national draft program are the following: 127 billion hryvnias, including 21 billion from the state budget; 2 billion from local budgets, and 103 billion from investments. These are tentative estimates, which will be firmed up. Five years lie ahead of us, and there is a great deal of work to be done. But thanks to the energy that dominated the forum, the dialog between the government and business will be successful, and we will obtain a serious economic and social effect. True, this requires the passing of the public-private partnership bill because this is an absolute necessity for concession and leasing activities. A taskforce will be formed under the aegis of the Ministry of Justice, which will carry out audits after stipulating the directions of legislative reform, including in the sphere of investments in order to realize an effective Euro-2012 project.
Every investment process has three components: political, economic, and financial. Of course, the political climate has an impact, but the kind of interest the investors showed during the forum, the atmosphere, and the investment demand for installations for Euro-2012 nullifies the political risks. We are planning to create registers of projects and investors by introducing a single investment window. The creation of a single Euroinvest-2012 information space, where proposals can arrive through the Internet, will accelerate these processes considerably: registration on the Internet, the constant search for investment projects of Ukrainian enterprises, proposals to be entered in a database, information exchange support in accordance with the state procurement system. In other words, this open information space will offer equal opportunities for businesses in all regions of Ukraine. Preparations for Euro-2012 will be monitored online.
Of course, there are problems. We have prepared a chart of discrepancies that we will submit to the government committee. First and foremost, this is the question of how much money should come from the budget and how much from investors, because there is a tendency whereby some people believe that it’s better to get funds from the budget than to provide investors with decent financial instruments, guarantees, and proposals that would interest them. Yes, it’s easier to spend funds from the budget than to work in the sphere of public-private partnership and carry out concession activities. As of today, the proportions that are being offered by the ministry are one to nine: one from the budget and nine from investors. We will keep to this statistic and will be recommending that it be developed in all the programs.
Lviv oblast has been working creatively and very pragmatically, and this is having a fundamental impact on all the documents being drafted in collaboration with the Ministry of the Economy. In Lviv, some two billion hryvnias will be channeled into building sports facilities, training centers, and highways, and developing tourism and the “Health” program. The latest proposals that Lviv submitted to the Ministry of the Economy reflect the format of the local program. We are satisfied with this productive work and believe that Lviv will the first city to complete its preparations.
Yevhen PRUSENKO, deputy head of the State Roads Service of Ukraine (Ukravtodor):
Ukravtodor has also developed a concept of getting our roads ready for Euro-2012. It envisages almost 700 kilometers of new highways and repairs to existing ones; the program requires about 12.5 billion euros. As noted during the forum, we have still not reached an understanding with the Ministry of the Economy, but I think we will, especially since our Polish neighbor is planning to spend 30 billion euros on developing its network of roads. In Lviv oblast there are plans to complete repairs to the Kyiv-Chop highway by March 2008. The Lviv-Truskavets and Lviv-Brody concession highways will have to be built, along with part of the Brody-Rivne highway. Ukravtodor is aware of the need to build highways leading to the reconstructed border checkpoints, namely Rava-Ruska and Shehyni. Out of the scheduled 85 billion, about 10 billion will come from the state budget, and another 20 or so are expected from loans from international financial organizations; all the rest will come from investments.
Adam Olkowicz, chairman of the Euro-2012 Organizing Committee (Poland):
The first of the eight Ukraine-Poland workshop seminars has taken place. We finally determined the means of communications and precisely how we must inform the public about our problems and achievements. We don’t have much time left. The stadiums must be ready by 2010, the sports facilities, while the roads and the rest will have to be ready by 2012. Whatever serious and complicated tasks we’re facing, we believe that we have a great chance of shrinking the distance between the old, “fat,” and somewhat obsolete Europe, and the new members of the European Union: 12 countries that were admitted in 2004 and 2007. I must admit that we are happy that the joint action proposal came from the Ukrainian side. In fact, Hryhorii Surkis told me about the idea and we accepted it in Kyiv in 2003. We have been struggling for four years. Now we have won the right to organize. We have no rivals, like Italy, Croatia, and Hungary. There is only one challenger left: the quick passage of time; there is still a lot of work to do.
We are not politicians. We are the Soccer Federation of Poland, and we believe that no situation, faction, or coalition will stand in our way because Euro-2012 is far more important than the current — or future — elections. I want you to quote me on this. When the government realizes this, we will succeed.
The team working on Euro-2012 in Poland and Ukraine is already regarded as a single team, especially by the controlling authorities. This kind of control will be to our advantage: there will be new stadiums, highways, airports, modernized hospitals, and border checkpoints: all of this will be left to us.
We have already determined all the organizational levels. The first is the Coordinating Council on the level of the heads of state, Kaczynski and Yushchenko; the second level consists of the national organizing committees headed by the prime ministers; the next level is the hosting cities with which we will be discussing the arrangements. There are also thousands of committees established in regions, cities, towns, and even villages that want to gain something from the championships. We’re supporting this idea, all the more so as we have access to the European Union fund, which was founded with precisely this purpose in mind. I must emphasize that today there is no idea in Poland that would unify everyone as much as this one, and I think that the same can be said of Ukraine. This is the only way we can succeed.
In Poland, we’re counting on 10 kinds of financial flows. As a member of the European Union, we will receive 100 billion euros, one-tenth of our budget. We have no centralization: our big cities operate their own budgets, and they feel that they are masters of their funds. The same is true of the regions, where the principle of local self-government reigns supreme. We have public and private partnership. This is an old pattern that has existed in the West for some 20 years; here this practice is just being introduced. All projects that relate to public life can be implemented through social and private partnership. International banks are willing to issue loans at interest rates of three or four percent. A national lottery pegged to the soccer championship will be another opportunity to accumulate funds, five percent of which will be available to the winners.
Poland has computed the Euro-2012 budget: about a billion euros’ worth is for sports facilities (stadiums and accommodations for the soccer teams). We have this money. We will build three stadiums in Wroclaw, Gdansk, and Warsaw; three other stadiums are being rebuilt. Unfortunately, we have no way to help Ukraine financially other than with loans from Polish banks. However, information exchange is also helpful. Six Ukrainian and six Polish cities will be working closely with each other.
Andrii SADOVY, Mayor of Lviv:
A draft communique has been prepared, proceeding from the results of this forum. It outlines the Euro-2012 tasks discussed by government officials, representatives of municipal and oblast authorities, and foreign investors. This draft communique reflects the main topics that were raised in the course of the discussions on the transportation infrastructure, construction of a stadium and sports infrastructure, the renovation of Lviv International Airport, the renovation and construction of highways from the state border to Lviv, and so on.
What do we expect from the central government? Above, all we want improvements to the current legislation. The Law of Ukraine “On Concession” must be amended so that we can start building modern highways without asking for state funds but be able to propose such a possibility to investors. This means our legislative base with regard to the procedure of work and services must be perfected. We have a huge volume of work to do in the next five years, and it requires a simplified system. A program to expand the state border also has to be adopted at the state level. Most importantly, the state must finally resolve an issue that has a crucial bearing on the Euro-2012 project: 50 percent of income tax must remain in local budgets; only then will we have a hundred percent guarantee that we will stick to the schedule.
Lviv has also come up with the initiative to coordinate the efforts of the Ukrainian and Polish cities. We realize the burden we’ll have to shoulder. This initiative, which places a great deal of responsibility on us, already has the support of Poland’s foreign ministry, to a considerable extent by Ukraine’s Ministry of Foreign Affairs, the city of Lviv, and other cities, because this is our cause and our cities’ cause. I am convinced that if civic organizations are handling this issue, this will produce results.
