Russia vs. the West
Russia considers the tussle to bring Ukraine back under its wing wrapped up for the most part. It isn’t looking to reintegrate Ukraine back into Russia as it did during the Russian imperial or Soviet days, but it does want to ensure that it can influence Ukraine’s orientation and prevent Western influence from permeating this strategically important buffer.
The West hasn’t given up, however. Although the United States is currently preoccupied in the Middle East and South Asia, quite a few influential European states, especially Poland, Romania and Sweden, are still intent on Westernizing Ukraine. Europe knows that as long as Moscow has a strong influence in Kiev, Ukraine will never really be up for EU accession. Moreover, many EU states do not want Ukraine as an EU member for three basic reasons: They fear the European Union is already too unwieldy; they have an aversion to including such a poor and chaotic country; and they want to avoid irritating Russia.
Instead, the Eastern Partnership (EP) project launched in 2008 has been the consolation for those looking to Westernize Ukraine. The EP initiative, which has been slow to get off the ground, is a kind of “friends of the EU” program for FSU states. Under the EP, Europe is hoping to liberalize visas and boost economic investment and aid. No matter which government is in power in Kiev, it welcomes the EP for the economic benefits it brings. Moscow has not been too concerned about the EP because it is such a loose alliance and many EU states are not very enthusiastic about it. However, should the EP start to really transition into an alliance with political influence, or as a superhighway to EU accession, Moscow will be quick to crush Ukraine’s involvement in the nascent organization. It is unlikely that the EP will reach that stage in the next decade or so.
Though Moscow is looking mainly to exert influence over Ukraine, there are many inside Russia who want some sort of economic integration. Discussions are under way to determine if Ukraine should join Russia’s new customs union, which has already integrated the economies of Belarus and Kazakhstan with Russia’s. But the discussions thus far have been merely rhetoric. Should Ukraine actually join, it could crush some of the country’s most important economic sectors under the new regulations. At this point, Ukraine does not appear to be on the path toward joining the customs union, although speculation about its integration will continue to be widely reported.
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UEFA Development
The decision to hold part of the UEFA Euro 2012 football championship in Ukraine was made in 2007, when the Orange Revolution was still fresh and the West assumed Ukraine was going to fall into its fold. Since the shift to an anti-Western government in 2010, there is a lingering level of resentment in Europe about the games being held in Ukraine.
Generally speaking, UEFA-stipulated infrastructure requirements have caused Ukraine to go into overdrive. Ukraine expects more than 600,000 tourists to visit Ukraine for the games. Most new infrastructure will be modern roads and rail connections from the Ukrainian border to all the host cities (Kiev, Donetsk, Kharkov and Lviv). The wave of new construction also includes hotels (70 are planned for Kiev alone), airport upgrades in each host city, restaurants and large stadiums.
There is concern that Ukraine will not complete any more of the planned infrastructural expansion, upgrades or new construction than the minimum requirement called for under the UEFA regulations. One problem for all the construction projects is the permitting structure mentioned above. As it is, most of the required projects are far behind schedule, and sponsors are concerned that some may not be completed by the time the games begin.
The government master plan has changed more than 20 times since 2010. Actual financial figures surrounding the plan are hard to come by due to lack of government transparency. The Ukrainian Finance Ministry estimates that the government spent roughly $3.5 billion on Euro 2012-related projects from 2008 to 2010. Over the next two years, the latest government plan released in April indicates that taxpayers will spend $7.2 billion, though independent estimates are closer to $12 billion. Another $7.5 million will come from city coffers and “other sources” of financing. Roughly 70 percent of these other sources will be public or semi-public companies, namely the state railway company Ukrzaliznytsia ($2.2 billion) and the state roadwork company Ukravtodor ($1.1 billion). (The latter is also expecting some $2.5 billion in government orders.) The government is hoping to cover part of the bill with borrowed money (mainly Eurobonds and low-interest loans from Japan and China).
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For a government already in dire financial straits, the UEFA games are an incredible burden. Over the long term, however, the construction projects that are completed will be a boon for a country that has lagged behind in modern infrastructure development. There is hope that the new transit links will also help spur trade into and across Ukraine.
Security during the games will be a major issue. Traditionally, the European games are much more rowdy than the World Cup because football hooligans and skinheads can travel more easily on the continent than they can around the world. Past UEFA games in England and Portugal saw thousands of incidents of violence and property damage, mainly fights between rival spectator groups, broken windows and a car turned over here and there. Thus far, Ukraine has not planned to implement any alcohol restrictions, which tend to fuel such violence.
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