Ukraine's Euro Cup Bodes Ill for Russia: Leonid Bershidsky
Russian President Vladimir Putin must be watching with a mixture of gloating and foreboding as neighboring Ukraine struggles with a daunting task: keeping its dignity as host of the European Cup 2012, the continent's main soccer event.
For the rulers of ex-Soviet nations, winning the right to host prestigious international tournaments is a matter of national pride, a way to put their countries on the map. Ukraine will be first when Euro 2012, which it is co-hosting with Poland, kicks off in two months. Then comes Russia, with the winter Olympics in 2014 and the soccer World Cup in 2018.
But as the experience of Ukraine is demonstrating, political leaders' dreams of grandeur clash with a harsher reality: For local businesspeople, the sporting events represent a once-in-a-lifetime opportunity to rip off a bunch of foreigners.
On April 6, Ukrainian President Viktor Yanukovich had to issue a special directive to ministers responsible for Euro 2012 preparations, telling them to drive down hotel rates in Ukraine “to economically justified levels." During the competition in June, a night at a Kyiv hotel will cost, on average, 247 euros, compared to 111 euros in Warsaw, Poland, according to media reports.
Not surprisingly, 13 of the 16 national teams taking part in the Euro have chosen to stay in Poland, even though eight face first-round games in Ukraine. Of the remaining three teams, one is local and so does not need to stay in hotels. The other two are the Swedes and the French. The Danes tried to rent a hotel in the Ukrainian port town of Odessa, but opted for Poland after its owners drove up the price from 200 euros to 500 euros per night.
The naked greed far exceeds what fans have seen at recent events of this magnitude in other countries. The weekly magazine Focus wrote of a normally inexpensive Kharkiv hotel charging the price of a small car for its Euro package and of others driving up rates by a factor of ten and more. During Euro 2008, Vienna hotels merely doubled their rates.
Private apartment owners have joined the gold rush, offering their flats to soccer fans for weekly fees higher than the normal annual rent. Taxi fares are expected to go up by at least 20 percent, and many restaurants are preparing to mark up their menus by about 50 percent.
Beneficiaries are less than apologetic, despite an uproar in the Ukrainian media and blogs. As one hotel near the newly built stadium in Donetsk, called the Econom, posted on its web site after raising its single room rate to 225 euros per night, from 17 euros: “Okay, gentlemen. We are fully booked. Good luck searching for cheap hotels. Smile more often.”
Apart from the hotel owners, few people are smiling -- least of all European soccer fans, a thrifty and not particularly prosperous bunch. The magazine Futbol published a long-winded complaint by an anonymous German journalist who visited Ukraine to take a look at Euro preparations.
“We Europeans are not the fat cats you and your bureaucrats for some reason imagine us to be,” the journalist wrote. “We are far from overjoyed by the thought that someone in Ukraine wants to live well at our expense.”
The diatribe was widely quoted in Ukrainian blogs and received a surprising amount of sympathy from the locals -- at least those who do not own hotels or rent out apartments. As one blogger wrote: “It is hard to argue, unless you're blinded by patriotism.”
Deputy Prime Minister Boris Kolesnikov, one of the recipients of the presidential directive on hotel rates, said he understood hotel owners' motives. “Greed often comes from poverty,” he said, but "even for Western tourists, prices have to be adequate." He added that the government had the right to expect hoteliers to cooperate: After all, it had given them a five-year corporate tax holiday in preparation for the Euro.
The tax break is a small part of the Ukrainian authorities' investment in the soccer cup. Ever since Ukraine won its independence from Russia 20 years ago, it has struggled to show it was more of a European nation than its powerful neighbor to the east. According to Yanukovich, the government has spent 3.3 billion euros on preparations, building stadiums and airport terminals and improving infrastructure. For months, Ukrainian cities have been adorned with billboards saying, “We Look Forward to the Euro.”
Things often went slower than expected. Donetsk tried and failed to open its first subway line, but that is not considered a big loss because the line would bypass the new soccer stadium. A public competition to create a new logo for the capital, Kyiv, disintegrated into squabbling when city authorities hesitated to accept the design that won the popular vote on a special website. News soon leaked out that the son of a deputy mayor had been the runner-up. The logo won’t be ready in time for the Euro.
As Putin will find out when it comes time for Russia to host its own global spectacle, it is not enough for the government to spend billions and call on the nation to put on a good show for the world. Many people do not share the official notion of national prestige – or simply do not care enough about it. In both Ukraine and Russia, it is a widely held perception that much of the money invested in preparing for the sporting events gets stolen by bureaucrats and their pet contractors. So those private citizens who have an opportunity for one-time gain are not about to pass it up, even if it makes Putin or Yanukovich look bad.
(Leonid Bershidsky, an editor and novelist, is Moscow and Kiev correspondent for World View. Opinions expressed are his own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Leonid Bershidsky at firstname.lastname@example.org
To contact the editor responsible for this story:
Mark Whitehouse at email@example.com