Euro 2012 as an indicator of transparency in society
The authorities are actively preparing for the Euro 2012 European Football Championship. The state budget sets aside 10 billion hryvna ($1.25 billion) in 2010 for this alone, despite the economic crisis. The regional authorities, by coordinating efforts with the government, are trying where possible to modernize infrastructure, which is far from ready to take a massive influx of foreign tourists. However, the problems with the stadiums in Donetsk and Kharkiv are already solved. Also in Kharkiv, the new modern airport has been officially opened.
A separate issue is the reconstruction of the central Ukrainian stadium in Kyiv, which is funded at public expense and is scheduled for completion early in the summer of 2011. In August this year the Cabinet of Ministers of Ukraine increased the total estimated costs of the reconstruction of infrastructure and the construction of stadiums to around 3 billion hryvna ($370 million); almost double the initial estimate. The army of government officials involved in the preparations for Euro 2012 are currently failing to answer basic questions regarding the allocation of these funds.
Citizens of Ukraine, paying for the construction of football facilities from the state budget, do not know where, or through whom, their money is going. Government accountability to those it serves is an indicator of the level of democracy in the country. Let us hope that the present government, in preparation for Euro 2012, will pass examination in compliance with democratic principles and demonstrate a high level of transparency in its actions and expenditures.
People First Comment: The total cost of the recent World Cup in South Africa according to official government information was $4.5 billion, $1.5 billion of which was spent on the reconstruction of 10 stadiums, five of which were brand new. According to the most recent figures the Ukrainian government plans to spend approximately $6.4 billion on organizing half of Euro 2012. One might well ask why Euro 2012, which is a smaller competition than the World Cup, is costing in total three times more particularly when two of the stadiums in Donetsk and Kharkov have been privately funded. The average cost of refurbishment in South Africa was $150 million per stadium, the refurbishment of the Olympic Stadium in Kyiv is now estimated at between $456 and $566 million, less of course the $1.35 million in fraud so far detected by the Security Service of Ukraine (SBU). Labor rates in South Africa are comparable to Ukraine, Ukraine like South Africa, has its own sources of steel and glass, therefore serious questions have to be asked as to why the Kyiv Stadium is costing the Ukrainian taxpayer between three and four times more than a similar stadium for the World Cup.
In Ukraine, nobody utters a word, and the government goes cap in hand to the International Monetary Fund and World Bank for loans to fuel this extravagance. There should be a transparent public inquiry with an independent audit into how and why the costs have been allowed to rise unchecked in this way as it will be future generations of Ukrainians who will have to pick up the bill.
In Ukraine, nobody utters a word, and the government goes cap in hand to the International Monetary Fund and World Bank for loans to fuel this extravagance. There should be a transparent public inquiry with an independent audit into how and why the costs have been allowed to rise unchecked in this way as it will be future generations of Ukrainians who will have to pick up the bill.
‘Ukraine for the people’ goes to school
In several regions of Ukraine, the new school year has started with a presentation of the political program of President Viktor Yanukovych: “Ukraine for the people.” Yanukovych has said that he does not know the facts regarding the studying of his political program at the opening of the new school year. Commenting on the studying of the “Ukraine for the people” program in schools, Minister of Education and Science Dmitry Tabachnyk claims that no governmental hand is involved in it, and suggests that the teachers’ choice of presidential political program as the main theme for the new term should be considered an act of free and creative educational work.
Considering the imposing nature of the dissemination of political publicity materials through educational institutions, it appears that Tabachnyk and other government representatives are aggressively promoting the president, through mandatory political advertising for young Ukrainians. Imposing sympathetic opinions upon the population through the active promotion of the authorities’ ideology is not only contrary to democratic norms and principles, but is likely to cause resentment among ordinary citizens.
People First Comment: Ukrainians are some of the best educated people in Central and Eastern Europe. Does the education minister really expect us to believe that head teachers of a huge swath of state schools across central Ukraine and Crimea simultaneously had the same idea at the very same time that the best thing for their pupils on the first day of school was a North Korean-style lesson in political ideology. When politicians start to use children as a means political indoctrination and agitation, then it is time for them to go. This policy may fit the Soviet education manual, but it has no place in a modern democracy. Voters have long memories, particularly where their children are concerned and this insult to public intelligence will come back to haunt not only the minister, but the government and the president as well.
Western business is not rushing to invest in Ukraine
According to European Bank for Reconstruction and Development Director in Ukraine Andre Kuusvek, there are now very few investors willing to invest in Ukraine. In order for the annual level of foreign direct investment to reach $10 billion, Ukraine will need at least another few years and many systemic reforms. According to the State Statistics Committee, in the first half of this year, foreign direct investment amounted to only $500 million, demonstrating a fall by 78 percent, compared to the first half of 2009.
The problems which pale the cheeks of foreign investors include complications around value added tax returns by the state, the heated debate surrounding the new tax code and the cases of governmental pressure on businesses. At the same time, there is increase of competition for investments on the global market, taking into account the economic crisis.
The most attractive sectors for foreign investment continue to be the metallurgical and chemical industries, agriculture, energy, infrastructure, information technologies, etc. In order to recover to pre-crisis levels of investment, Ukraine should demonstrate to the West that it has a progressive attitude towards democracy, human rights and citizenship freedoms.
However, while Western investors have been active in Ukraine only reluctantly, Russian and Chinese companies are stepping up. Interestingly, for them, the level of democracy in Ukraine does not factor into calculating its investment attractiveness. In particular, during a recent visit to China, Yanukovych called on Chinese businesses to initiate large-scale investment in Ukraine, and signed several agreements.
It would appear that the investment world has finally grown tired of Ukraine and rightly so. Successive governments have singularly failed to understand that Ukraine is in competition with the other 183 nations of the world to attract foreign investment. They have done virtually nothing to understand the needs of international investors or the benefits that can be derived.
People First Comment: It would appear that the investment world has finally grown tired of Ukraine and rightly so. Successive governments have singularly failed to understand that Ukraine is in competition with the other 183 nations of the world to attract foreign investment. They have done virtually nothing to understand the needs of international investors or the benefits that can be derived. The state budget for the international promotion of investment in Ukraine is less than the average company would spend on marketing a chocolate bar let alone worldwide promotion. Of course there are those who believe that there is no need for foreign investment and that Ukraine will survive on its own… the key word there being “survive.” At its peak, Ukraine attracted upwards of $10 billion in foreign investment, but this was the exception due to the 2005 sale of Kryvorizhstal steel plant – the nation’s largest – for $.8 billion. The average is appreciably less, at around $5 billion a year.
Poland, on the other hand, averages 3.5 times more, Slovakia 5.9 times more, Hungary 6.5 times more and the Czech Republic a whopping 7.8 times more. Why… because their governments take their economy and the financial welfare of their citizens seriously. Investment creates jobs, which in turn increases the wealth of the nation but in order to attract investment the government needs to make the country an interesting, safe and profitable investment opportunity. Sky high taxes, a poor regulatory environment, a corrupt court system and enough red tape to sink a battleship are not exactly attractive. Russian and Chinese companies may be stepping up but we have yet to see them sign on the dotted line and once they too have done their due diligence they will realise that there are easier and safer countries in which to invest. If Ukraine wants international investors then the government has to understand that the game has rules.
Crimean Tatars are resisting governmental pressure
Yanukovych and the regional authorities in Crimea appear to be on a collision course with the Crimean Tatars; this manifested itself in the signing of a decree on Aug. 26, effectively reducing the Crimean Tatar’s Council of Representatives from 33 to 19 people without their consent. Moreover, all the representatives will be appointed by Yanukovych and not chosen by the Crimean Tatars’ representative structure – Majlis, whose members may not recognize the newly reformed structure of the Crimean Tatars.
The government would do well to listen to the legitimate representative structure of the Crimean Tatars and compromise, demonstrating an ability to protect the interests of national minorities in their country, in a democratic way. If the authorities ignore the democratic representation of Crimean Tatars through the Majlis – which is formed through meetings of democratic consensus – Yanukovych could significantly exacerbate the ‘Tatar issue’ in Crimea.
People First Comment:In Democracy Watch 3 (Aug. 30), we commented that any attempt to resolve this sensitive issue should be applauded. Unfortunately, the presidential advisers and the regional authorities do not seem to understand that, in a democratic society, you cannot simply impose a solution. You can try but then you run the risk of creating another Chechnya or Afghanistan. The Muslim world today is a very delicate balance of moderation verses radicalism that has not been helped by Western gunboat diplomacy. There is no justification for the administration or the regional authorities to ignore the Crimean Tartars democratically elected body particularly in such a sensitive situation. Furthermore, this “solution” is directly contrary Yanukovych’s recent comments to the German media in support of Ukrainian democracy. Let us hope that the Majlis show the restraint and negotiating skills that the administration has so far failed to demonstrate.
Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: [email protected]
