Poland, Ukraine businesses join forces to raise capital for Euro 2012

By bne IntelliNews June 25, 2007

Bogdan Turek in Warsaw -

In an unprecedented show of economic cooperation, Polish and Ukrainian businesses have formed a joint coalition to help raise the capital that will be needed for the two countries to host the Euro 2012 football championships, a business official told bne in an interview.

The Confederation of Polish Employers (KPP), an influential organization of private businesses, and its counterpart, the Ukrainian Union of Industrialists and Entrepreneurs, led by Ukrainian Minister of Economy Anatoli Kinach, will work together in tackling the enormous tasks of preparation for the championships, the co-hosting for which was awarded to the two countries in April.

Among the issues they are exploring is formation of a free-trade zone between Poland and Ukraine. The details will be announced in Warsaw on September 6-7 at a meeting to which investors from across Europe will be invited to view the list of projects.

Before Kickoff Day on June 5, 2012 in Warsaw, Poland must build or modernize about 900 kilometres of highways, refurbish eight airports, build dozens of hotels and built or renovate stadiums in Warsaw, Gdansk, Poznan and Wroclaw. Additionally, stadiums in Krakow and Chorzow might be needed too, so they will also join the reconstruction works.

Although there will be state and EU financial support for Euro 2012, much of the project will depend on private capital.

"We are going to have many meetings both in Warsaw and Kyiv over the next months to hammer out plans on how to implement the various projects," Andrzej Malinowski, president of the Confederation of Polish Employers (KPP), told bne.

Although the tasks are enormous, he added, it is part of the Polish character —and that of Ukrainians — to meet daring challenges and to overcome them.

"Poles like tackling big projects," said Malinowski. "We will not be a laughing stock."

New laws for investment

While the decision involves a sporting event, both countries believe it will bring political benefits as well for Warsaw and Kyiv. In fact, Ukrainian Foreign Minister Arsenic Yatzeniuk, who visited Warsaw in May, said his country's political future is on the line.

"It will be the test for Ukraine's ability to integrate with Europe," he said. "Poland will be a partner in this test."

The Polish government says it is proposing changes in about 20 laws, mostly covering road and housing construction, to attract foreign investors.

"The changes will be presented in the parliament at the end of June," Deputy Prime Minister Przemyslaw Gosiewski said recently. "The new legislation will offer favourable conditions for both state and private partners in line with the PPP [Public-Private Partnership] principle."

Among major issues still to be tackled are Poland's labour shortages, particularly in the construction industry, and shortages of building materials.

"It is not so bad with building materials, but as regards labour, the Chinese solution is being considered," the KPP's Malinowski said, referring to plans to bring Chinese workers to Poland and build makeshift hotels for them. "Anyway, we will look for labour both east and west."

Although Prime Minister Jaroslaw Kaczynski is the titular head of the Organizing Committee for Euro 2012, the operating position will be filled by an official with the rank of minister.

Among those under consideration is Elzbieta Jakubiak, chief of the presidential office of his brother, Lech Kaczynski. Jakubiak has a reputation as a good organizer.

A public survey made at the end of May found that 78% of respondents believe relations will be further strengthened between Poland and Ukraine in the process of preparation for Euro 2012. A total of 74% said the significance of both countries in Europe will also grow.

Despite some negative comments in the Polish media, the heads of the organizing committees in the four Polish cities that will host the games are optimistic that all will be ready in time.

"The first two years will be crucial for the event," said Pawel Adamowicz, mayor of Wroclaw. "If all plans are fixed and drawn in that time, then we will be able to wait quietly for the opening of the event in 2012."

Neither are there governmental worries about financing. The announcement coincided with European Commission's decision to approve the National Strategic Reference Framework for Poland covering 2007-2013. Poland is expected to get €67bn for all kinds of projects.

Grazyna Gesicka, who is in charge of the Ministry of Regional Development, said the European funds will help to create 3m new jobs linked with Euro 2012 needs.

According to Gesicka, the construction and tourist sectors will benefit the most from Euro 2012. She estimated that construction of 900 km of highways will cost €6.5bn and modernization of railway tracks some €4.5bn, including modernization of eight airports.

Foreigners are expected to spend some €8bn in 2012.

Piotr Misztal, an independent deputy in the Polish Parliament, is probably one of very few Poles who believes the project will be a fiasco. If it was up to him, he would auction the rights for organizing the event — with a starting bid of €1bn.

"It's science fiction," scoffs Elzbieta Jakubiak from the presidential office.

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