UkraineWatch: April 2012

April 26, 2012

To Transplant or Not: Charter City in Georgia

   The ISET's Michael Fuenfzig has a great post about Lazika, the planned city near Zugdidi, on the Black Sea coast of Georgia. The New York Times also covered Lazika. While the New York Times focused more on investment, planning, and environment issues associated with the new city, Professor Feunfzig raised a very important question of charter government (ht: Paul Romer's charter city). If President Saakashvili's promise of new city comes through, can a city government start from scratch too?
So far President Saakashvili has been very successful in promoting democracy and capitalism in the former Soviet nation, Georgia. Rule of law is getting stronger. Corruption is on decline. Organized crime is nearly eradicated. Georgian's democracy is reviving after the Shevardnadze non-democratic regime.The Georgian economy is also recovering from the Russian protectionist trade policy by redirecting trade flows towards other countries. Overall, Georgia remains a middle-income democratic country with a lot of potential for economic growth.
   President Saakashvili pursues several goals by building a new city. First, he wants to increase urbanization rate in Georgia. Advocates of the modernization theory will give him a high five because from their point of view urbanization and modernization promote democracy and its consolidation. Second, Lazika will follow a concept of the Chinese urbanized economic areas. By building a new city with a world-class infrastructure, the Georgian government expects to attract foreign investors. This strategic move seems to be a part of the bigger plan of capital flow diversification and decreasing a share of the Russian investors in the Georgian economy.
   All these ideas sound great. To deliver these promises, the Georgian government will have to solve a political economy problem of commitment and credibility. The new city will need a world-class government that will be credible and committed to protect capitalism and democracy. Will the world-class buildings and infrastructure transplant a new political culture? We shall see it eventually.

April 11, 2012

EURO 2012: Quid Pro Quo or Not

It turns out that only three national soccer teams out of sixteen will reside in Ukraine during the 2012 European Soccer Championship, co-hosted with Poland. So who is staying Ukraine? Of course, the Ukrainian national soccer team will stay in Ukraine. The Swedish team and the French team will also stay in Ukraine.

I am sure that you wonder about Russia. Where is our big brother? Well, the big brother has very low expectations about infrastructure in his small sister's homeland. That's why the Russian national team prefers democratic and capitalist city of Warsaw, capital of Poland, to any sketchy urban area in Ukraine.

It also turns out that all teams that have group stage games in Kharkiv and Lviv still prefer to stay in Poland rather than in Ukraine. I assume that Sweden and France decided to stay in Kyiv and Donetsk because they had to play their group stage games there. So did Ukraine. The English soccer team, however, prefers to stay in Krakow and commute to group stage games in Kyiv and Donetsk.

So where is quid pro quo? As a matter of fact, Poland will get a lion's share of hotel revenues from the EURO 2012 because Ukraine get to host only three teams and their fans. Wait a sec! Will the Ukrainian national team need a hotel to stay in Ukraine? That's a tough one. Will the Ukrainian fans need hotel to stay in Ukraine? Another tough question. It looks like Sweden and France will be the only two teams to foot the bill for staying in Ukraine. What about their fans? And what about all other teams? I really wonder why they do not want to stay in Ukraine? I just can't find a good answer.

It's so unfair after everything the Ukrainian government and the Ukrainian philanthropist Akhmetov did. Common, Beyonce, Shakira, and Rhianna who were personally invited by the wealthiest person of Eastern Europe, Mr. Akhmetov, performed in Donetsk in front of thousands of factory workers and coal-miners who didn't receive their salaries for months and had to work in illegal and unsafe mines.

The Yanukovych administration also did so much to promote EURO 2012 in Ukraine. Their original ideas of cutting this school year short by a month and kicking out students from dorms so that foreign tourists who pay a humble price of $100 per day can stay in rodent- and insect-infested rooms with shared utilities (if they work) and rolling blackouts. Another original ideas of cutting down public parks and demolishing historical sites like the 16th-century-old synagogue and building roads and hotels there should have also showed everyone that the Yanukovych government welcomes everyone to Ukraine for the EURO 2012. Personally, I am still puzzled what stopped thirteen national teams from staying in Ukraine.

Here is a list of all teams and their locations: