26 May 2008
Winning the bid for the Euro 2012 football championships gave a huge boost to the confidence of both Poland and Ukraine, not just economically, but also for its reignition of national pride. But behind every silver lining can be a dark cloud, and Uefa has been conscientious in prodding both countries to ensure they do not lose sight of the end goal - delivering a successful football event. Just a few months ago Uefa president Michel Platini warned both countries to avoid "critical slippages" in preparations, including upgrading stadiums and infrastructure, and particularly on transport, which looms as the biggest challenge facing these nations.
The economic benefit to host countries of major sporting events is proven, but for Poland and Ukraine Euro 2012 provides a chance to form closer relations not only with each other, but also with the rest of Europe.
Poland: growing GDPFunds are pouring into Poland from Brussels and business investment sources. A report commissioned by the Regional Development Ministry shows that EU money alone added 1.7 per cent to GDP in 2007, and the impact of EU funding inflows is set to grow in the lead-up to 2012. The funds are to assist Poland in building and upgrading facilities, including stadiums, hotels and transport hubs. It also needs to invest heavily in an express road and rail network to link the various host cities.
The Polish government has made the success of Euro 2012 one of its top priorities. A special legal regime has been promulgated to streamline the investment process, especially pertaining to real estate. By prioritising strategic projects, the new regulations ensure the wheels of administration turn faster throughout the entire development process - including the notoriously difficult compulsory purchase order regime.
There is now a regulatory architecture for special purpose vehicles (SPVs) to be established by central or local governments purely for the delivery of Euro 2012-related projects. By extending the hand of cooperation to private investors in this way, the government has ensured that SPVs will be pivotal in getting the nation ready for the championships. Economic, political and national reputations are on the line.
Other amendments to legislation are in the pipeline to get Poland in the best shape for the games. Changes to public-private partnership regulation and the Public Procurement Act will provide incentives to encourage private sector investment. Such moves look set to perpetuate Poland's economic good fortune, which has been relatively resilient despite recent credit crunch woes afflicting global markets. Poland's economy continues to show more than 5 per cent growth. Ukraine: a bustling economyUkraine has a bustling economy with excellent long-term prospects and is widely identified as the last major frontier in Europe. No longer a secret among those companies with an eye on the CIS, the race is on for foreign investors to get in there. In spite of inflationary pressures and signs of political unrest, the real estate market in particular may provide significant returns in the lead-up to 2012.
Ukraine has unveiled ambitious plans to attract foreign investment to the country. In particular, there are plans to build some 300 new hotels in Ukraine by 2012 - a 25 per cent increase on current levels - and significant funds have been earmarked for improving and upgrading existing infrastructure.
The development and modernisation plan adopted by the Ukrainian State Railways envisages investment outlays in excess of e12bn (£9.53bn) between now and 2015, with the bulk of expenditure to occur by 2012. Key projects focus on establishing high-speed rail links between Kiev and other host cities, such as Poltava, Donetsk and Dnipropetrovsk to begin with, followed by Lviv, Odessa and Kharkov. Ukraine plans to build approximately 1,000km of new roads, modernise approximately 500km and repair around 3,000km. The airports of Boryspil (near Kiev) and Donetsk are considered to be in good condition, but will nevertheless require significant investment prior to the championships to cope with expected airline and passenger traffic. At least e560m (£444.81m) is earmarked by the country's Transport Ministry for such projects.
To ensure that Ukraine gives sufficient resource and attention to Euro 2012, dedicated government structure the 'National Agency to Prepare and Host Euro 2012' has been established. One of the major objectives of this agency is to simplify the construction process and introduce a one-stop shop for obtaining construction permits. At present various construction approvals and permits are issued by local and central government authorities, making the process at times contradictory and often needing unexpected additional funding from investors.
Other government agencies are also keen to provide input into the development of Ukrainian legislation. The State Committee on Regulatory Policy and Entrepreneurship has already prepared a draft for amending various laws to simplify the permit procedure for construction, which will be submitted to Ukraine's parliament shortly.
Both governments seem to be taking the right steps and are forward-looking in their thinking. Where the preparations may go off track is if party politics, inflationary pressures or in-fighting between levels of government distract the main players from the game. One thing is for sure: with both countries expected to be ready by the first half of 2011, the clock has started and the crowds are watching.
Bartosz Clemenz is counsel and Dominik Rafalko is an associate in Warsaw and Volodymyr Monastyrskyy is a partner in Kiev at Salans