Georgia, Moldova and Ukraine get ready for free trade area
Georgia hosts international forum on supporting local agribusiness and promoting rural development
On 13–14 June, the Bolnisi Municipality of Georgia hosted an international forum bringing together rural development actors from Georgia and other countries of the Eastern Neighbourhood region.
The event was attended by around 150 participants representing national and local governments, civil society, business and microfinance organisations from Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine.
They shared their experience and perspectives on challenges and opportunities for local rural economy development, with a primary focus on the role of local administrations in supporting agricultural businesses.
The event was co-organised by the Bolnisi Municipality and the Mayors for Economic Growth Secretariat.
Mayors for Economic Growth (M4EG) is an initiative of the European Union, established in 2017 to support mayors and municipalities of the Eastern partner countries to become active facilitators for economic growth and job creation at local level.
You Can Learn A Lot About Ukraine By Watching Its Football
Ukrainian football, which managed to survive shortly after the collapse of the Soviet Union, embarked on a new model of development beginning from the 2000s. The start of the new millennium in Ukrainian football was marked by wealthy businessmen and oligarchs buying or gaining control over the clubs, thereby reflecting the developments that had been occurring in the socio-political and economic life of the country.
Ukrainian football has become a favourite toy of Ukrainian oligarchs. On the one hand, it gave a short-term boost to football with the impression of a flourishing future; but, on the other hand, it has led to disastrous consequences, with many clubs ceasing to exist, a reducing in the number of clubs able to perform in the national tournament, the Premier League, and huge fall in attendances at games, among other things. So, when you see football declining, this means oligarchs have less money than before.
"OLIGARCHIZATION" OF UKRAINIAN FOOTBALL
In the early 1990s, Dynamo Kyiv, the most decorated Ukrainian football club, came under the control of Hryhoriy Surkis, a Ukrainian businessman and politician, and then passed to his younger brother, Ihor Surkis. Rinat Akhmetov, reportedly the richest man in Ukraine, laid his hands on Shakhtar Donetsk FC carrying his team to the biggest success in the history of Ukrainian football in independent times -- victory in the 2007/2008 UEFA CUP tournament.
Other oligarchs have taken the path of these two: Oleksandr Yaroslavskiy, a Kharkiv-based business tycoon, bought Metalist FC from the same city; Ihor Kolomoyskiy, one of the most scandalous oligarchs, became the owner of Dnipro FC, while allegedly keeping the financial influence over the Kryvbas (Kryviy Rih), Volyn (Lutsk) and Arsenal (Kyiv) football clubs. Other clubs have also fallen under the control of oligarchs. Petro Dyminskiy, a Lviv-based businessman, became the president of Karpaty (Lviv), Kostiantyn Zhevaho, a Ukrainian billionaire, became sponsor of Vorskla (Poltava), Yevhen Heller, a businessman and former MP, started financing Zorya (Luhansk), etc.
Because of this, football has turned into a game of oligarchic nature, with clubs playing the role of toys in the hands of business tycoons and being overwhelmingly dependent on the financial injections of their owners.
Such a state of play reflects developments within the country. The oligarchic and clannish model that has been prevailing in Ukraine's economic and socio-political life has moved to national football. Clubs have become a tool to "do a little muscle-flexing" and play political games between competing rivals. Moreover, they also served, in some cases, as a source to partially legalize revenues invested in football, which had been obtained while committing allegedly corrupt activities. Successful clubs have also showed that there is a lot of "free money" in the economy that oligarchs invested into sports entertainment.
On the one side, backed by some local successes on the international arena, the rising flow of well-skilled foreign players coming to Ukraine and increase in the number of fans coming to games, it provided an imaginary conviction that Ukrainian football has become as wealthy as European football.
But, on the other hand, this model showed its key weakness too: total non-resilience amid economic and socio-political hardships that the country may face and great losses that the moguls who own clubs may sustain.
This trend has become most evident after Euromaidan and the start of Russia's war against Ukraine. The harsh economic situation in the country has hit oligarchs as well: they massively began to give up on their football-related commitments by drastically cutting spending on the clubs they owned or even abandoned them. In such harsh circumstances, oligarchs realized that their clubs had become "suitcases without a handle". As a result, just three years on from 2014, and 20 professional clubs in Ukraine ceased to exist, while many others are eking out a miserable existence. Moreover, many people stopped visiting stadiums, which led to record-low attendances at stadiums.
WESTERN MODEL: FOOTBALL AS BUSINESS
One of reasons that led to such bad consequences is that, over the years of their functioning, national clubs had failed to profit from football. Despite the fact that wealthy businessmen owned Ukrainian clubs, football has hardly developed as a business. Contrary to the Western model, where football and sports is seen primarily as a business activity, in Ukraine it was perceived, to one extent or another, as a way of competition between dissenting business and political camps.
In the West, the understanding of football as a business is common knowledge. According to the 2018 Football Money League report provided annually by Deloitte Touche Tohmatsu, revenues of the 20 most-generating clubs reached EUR 7.9 billion in 2016/2017, with England's Manchester United securing its position at the top of the rating with more than EUR 676 million revenue in 2017. By comparison, the budget for the whole Ukrainian Premier League (UPL) tournament in 2018 was UAH 13 million (approximately USD 480,000), as former UPL head Volodymyr Heninson said.
The English Premier League (EPL) has best mastered such a business model. Among the TOP-5 European football leagues, it is first in terms of revenues. In 2017, EPL's revenues came to EUR 5.340 billion, followed by the Spanish La Liga (EUR 2.899 billion) and German Bundesliga (EUR 2.799 billion). Out of the EPL's entire amount of revenue, more than half (EUR 2.910 billion) was generated by TV broadcasting contracts and EUR 1.250 billion was earned due to sponsorship deals and other commercial activities.
Thus, the Premier League remains the most intensely marketed football league in the world. The EPL has the biggest representation in the TOP-10 list of the most valuable brands, with six clubs being there, alongside 2 Spanish clubs, and just 1 German and 1 French. The marketable value of all players that play in the EPL is also record-breaking and reached EUR 8.3 billion. By comparison, the total market value of all the players of Ukrainian Premier League in 2018/2019, was according to Transfermarkt, evaluated at almost EUR 285 million.
The poor condition of national football has on many occasions been confirmed by club owners. In 2009, Oleksandr Yaroslavskiy, the then-owner of Metalist FC, admitted that his club is "a non-performing asset," saying, moreover, that there will be no possibility to make money out of national football in the next 10 years. Nine years later, Ihor Kolomoyskiy, ex-owner of Dnipro FC, confirmed Yaroslavskiy's words, describing his former football club as a project that leads to losses. "Football [in Ukraine] has almost died," he stressed. In an interview with Viktor Vatsko, one of the most prominent Ukrainian football commentators, in early 2019 Ihor Surkis, President of Dynamo Kyiv, answering the question about the business attractiveness of the club he owns, confessed that only if Dynamo was controlled by a true businessman could it have been seen as an asset capable of generating profit.
Such a trend is confirmed by statistical data. The figures presented by a report by UEFA, the body that runs European football, shows that Ukrainian Premier League clubs suffered losses of EUR 60 million in 2017.
WHAT IS THE WAY OUT
The oligarchic model of football management has been dominant in Ukraine for many years. However, the transformations that have been taking place in Ukrainian football since 2014 may finally become a game changer for the whole sector and lead to its future step-by-step revival.
Financial optimization is one of the tools that may, in the long-term, help Ukrainian football to get back on track. Denys Bosianok, a Ukrainian football commentator, even advocates making football salaries match the real situation in the country
Andriy Kovalenko, in his article for Dilova Stolytsia, predicts that full deoligarchisation and drastic changes in deeply rooted approaches of managing football in Ukraine are key preconditions for the game of millions in the country to begin getting up from its knees. This may, first of all, result in the total decadence of the professional football in Ukraine. However, in the long-run, it might open a new window of opportunities for the clubs, which, after years of stagnation, should realize that living within their means is precisely the way it should be done.
After the rehabilitation, new investors, in cooperation with local authorities and communities, as well as professional football managers, should become the force that will provide a helping hand for a club to survive and develop based on internationally-accepted business models. However, in order for this to become true, the overall economic prosperity of the country should also increase significantly. And the transfer from oligarchic and clannish model in the country's socio-political and economic life is paramount in this regard.
The German model of football management may serve as an example in this situation, subject to certain specifics that Ukrainian football has been living with for years. According to the German legislative framework, at least 51% of shareholders in a club, with some concrete exemptions, should constitute sport communities and football fans. It significantly minimizes the possibility for big moguls, including from those outside the country, to come into German football and establish control over its clubs. On the contrary, this, alongside professional football managers that are involved, provides for maintaining sound economic policy, which allows for profits to be earned from organizing football with further investment in a club's development. Such a model has already confirmed its feasibility: the German Bundesliga ranks third is in the TOP-5 European leagues in terms of revenues it generates (EUR 2.799 billion in 2017), just slightly behind Spain's La Liga.
Thus, the evolution of Ukrainian football from the oligarchic nature of management to the business model, alongside a rise in living standards in the country, may become the factor that will change the rules of the game and contribute to football getting back on track.
Analyst and journalist, Internews Ukraine and UkraineWorld
Europe’s Donbas: How Western Capital Industrialized Eastern Ukraine
Russian aggression in Donbas in 2014 drew Europe's attention to this forgotten region. We would like to remind you, however, that the industrial potential of Donbas was built up in 19th-early 20th century and thanks in the main to Western European money.
In the 15th-17th centuries, these territories, previously known as the Wild Steppe, became part of the lands of the Ukrainian Cossacks(link to "Why Are Cossacks the Key to Understanding the Ukrainian Nation?"). As a result of the Russian-Turkish wars of the 17th-18th centuries, these lands were fully incorporated into the Russian Empire. Donbas began to be industrialized in the second half of the 19th century.
According to historians, in the late 19th - early 20th century, more than 800 million gold francs from Belgium, France, Great Britain, Germany, and Switzerland were invested in the economic development of this Ukrainian region. It was part of the Russian Empire at that time.
Cities like Donetsk, Luhansk, Druzhkivka, Yenakiieve, Selidove, Mariupol, Kostyantynivka, Horlivka, Debaltseve, Torez, Kramatorsk, Lysychansk and other cities in the Donbas region received an industrial boost from Europeans during that period.
DONBAS: FOUR SPHERES OF INFLUENCE
In the 19th century, which was when the Donetsk coalfield was discovered (the actual name 'Donbas' only became widespread at the beginning of the 20th century), foreign investment flooded it immediately. The Russian Empire needed new technologies and up-to-date heavy industry to re-equip its military-industrial complex. And in the 1890's Belgium became the first country – an official partner – to create an entire network of coal and steel enterprises, a unified system of rail connections, and even the newest fittings.
Belgian investors put 550 million gold francs in this steppe (and almost desert) region. To recalculate this into today's more, this would be more than 5.5 billion Euro.
Following the Belgians, investors from other European countries came to Ukraine's Donbas. Thus, there were four nominal spheres of influence – the so-called "Belgian province" with its centre in the city of Luhansk, the "German land" in the south of Donetsk Region, the "French region" in its eastern part, and the "English region" in the center.
The Belgians and French owned 90% of the foreign capital in Ukraine's Katerynoslav (now - Dnipro city) province, a large part of which was called Donbas. In 1900, there were about 300 enterprises in Donbas; foreign investors owned most of them. In 1913, the share of foreign capital reached 70% of total coal mining in Donbas and 86% of total ore mining in the Kryvyi Rih basin.
BELGIUM: ⅔ OF ALL INVESTMENTS IN THE COALFIELD
Nowadays, Belgium is a small country, but at that time it was the third biggest nation in the world in terms of its industrial capacity. It had also big colonial ambitions (remember Belgium's Congo in Africa). At the beginning of the 20th century, Belgium was fourth in terms of investment in the Russian Empire and had ⅔ of total investment in the Donetsk coalfield. There was a direct train to Donbas from Brussels.
In 1895, the Russian-Belgian Metallurgical Society was organized in Donbas at the initiative of several Belgian businessmen. In 1914, 31 Belgian companies were already operating there. Ten of them operated in metallurgy, seven – in the mining industry, six – in trams, and five – in producing construction materials and glass.
In Belgium, there were nine provinces at the time, and they called Donbas "the 10th province".
The participation of Belgian investors in the region's development was interrupted by the Bolshevik revolution, which destroyed the concept of "capitalist property"for decades. This fact supposedly became one of the reasons why Belgium recognized the Soviet regime only in 1935.
FRANCE: HUGE INJECTION OF FUNDS BEFORE THE REVOLUTION
The fastest French investments penetrated into the sphere of heavy industry before the Russian Bolshevik revolution. For example, in November 1914, at a meeting of shareholders of the Donetsk-Yuriivsk Metallurgical Society, 36,726 shares were presented. 510 of them belonged to the French, 61 – to Germans, 25 – to Belgians, 75 – to American capitalists, and the remainder belonged to domestic industrialists and bankers. The Alchevsk Iron and Steel Works, as founded in 1895, is one of the most famous enterprises of this society.
Before WWI, according to the Ministry of Finance of the Russian Empire, 159.1 million rubles of foreign capital were invested in the coal mining industry of the country. The share held by coal enterprises located in the Donetsk coalfield amounted to 118.6 million rubles, i.e. 74%. French capital invested 82 million of the figure, Belgian 24 million, and the capital of other countries of Western Europe reached 12.6 million rubles.
As for the metalworking and machine-building industry of Ukraine, at that time foreign capital reached 44.6 million Rubles there. Among them, Belgium invested 20.2 million, England – 12.2 million, Germany – 6.7 million, France – at least 5 million, and other countries – 0.5 million Rubles.
DONETSK: A BRITISH CITY WITH EUROPEAN SALARIES
The heart of the "English region" was the village of Yuzivka, which was founded in 1869, which turned into an industrial city after the construction of a metallurgical plant there. Nowadays this British-based city is known as the city of Donetsk.
In 1869, John Hughes, a British mining engineer from South Wales, founded the Russian-British Novorossiysk (Metallurgical) Society of coal, iron and rail production to raise a capital. In 1870, he moved to the Donbas region where he started to build a plant.
In 1872, the first blast furnace was in operation, and soon, despite the difficult start, the company demonstrated huge success. In 1910, John Hughes launched a new progressive production technology, based on anthracite. By that time, it was used only in the United States. In 1913, 74% of iron of the entire Russian Empire was produced in Yuzivka. Initially, the plant employed six thousand workers from the locals, and for 25 years their number had reached 50 thousand people.
At that time, salaries in the Donbas were also European level salaries.
In 1959, during his visit to the USA, the Soviet Secretary General Nikita Khrushchev mentioned that he worked as a mechanic of a machine-building plant in Yuzivka in 1914. Its owner was Edward Boss, an Estonian. The 20-year-old Khrushchev earned 40-45 Rubles a month. In today's figures that is more than one thousand Euros.
KOSTYANTYNIVKA: BELGIAN ARCHITECTURE AND CHEMICAL PLANTS
Kostyantynivka was built by immigrants from Belgium. As a result, this city can also boast Belgian architectural monuments from those times. The entire city infrastructure is a sequel of initial constructions.
Unfortunately, one of the most interesting architectural monuments of the city -- the house of the Gomon -- was destroyedrecently. It was built by JSC Belgian Society of Kostyantynivka's glass and chemical plants in 1902 for the manager of the bottle factory named Gomon. Anyway, the stable near this house is still kept in good condition. The Belgian office has also remained.
The secret of preserving architectural heritage is quite simple. If it is used, its owner maintains it in a decent condition.
LUHANSK: GERMAN LOCOMOTIVES
German investment came preferably to Luhansk Region.
For example, one of the most famous Luhansk enterprises – the Luhansk steam locomotive plant – was founded by the German industrialist Gustav Hartmann in 1896as Russische Maschinenbaugesellschaft Hartmann and renamed Lokomotive factory Octoberrevolution in 1918 after the Russian revolution.
LYSYCHANSK: BELGIAN HERITAGE ABROAD AWARD
At the end of the 19th century, a big part of the city of Lysychansk belonged to the village of Verhnie. Here in 1887 the Belgian engineer Ernest Solve launched the production of soda with his Belgian chemical company Solway and a merchant from Perm called Ivan Lyubimov. Unfortunately, the factory is no longer operational – it was destroyed in 2013 before the very beginning of Russian military aggression in Ukraine.
Along with that, company built houses for factory workers, gymnasium buildings, hospitals, and a church. For example, an up-to-date four-floor hospital in Lysychansk was built by the Belgians.
The Belgians built a total of 33 objects in Lysychansk. 30 of them have been preserved to this day.
In February 2018, the architecture of Lysychanskreceived the Belgian Heritage Abroad Award (2017).
Europeans brought not only the technology of industrial productionto Ukraine, but also business skills, management experienceof large enterprises, connections with banking and industrial groups, and the spirit of capitalist entrepreneurship, thereby contributing to the industrialization of Ukraine.
By the time of the collapse of the USSR in 1991, the Donbas, previously known as "Russian America" and the flagship of industrial Europe, was in a state of decline. The economic ignorance of the Soviet authorities had led to Donbas becoming a backward region in ther 1980s with loss-making production. Today, most of its factories are located on territories occupied by the Russian Federation. Some of them are either ruined or still operate using the equipment installed at the end of the 19th century.
Sources used in this article:
Valentyna Lazebnyk, "Steel in the Steppe. View from Ukraine".
Wim Peeters, "Steel on the steppe".
Materials from the exhibitions "Foreign investments in Ukraine, end of the ХІХ – beginning of the XX century. Part I: Belgium" and "Foreign investments in Ukraine, end of the ХІХ – beginning of the XX century. Part II: France", organized by the Ukraine Crisis Media Center.
Sources used in this article:
Valentyna Lazebnyk, "Steel in the Steppe. View from Ukraine".
Wim Peeters, "Steel on the steppe".
Materials from the exhibitions "Foreign investments in Ukraine, end of the ХІХ – beginning of the XX century. Part I: Belgium" and "Foreign investments in Ukraine, end of the ХІХ – beginning of the XX century. Part II: France", organized by the Ukraine Crisis Media Center.TETYANA MATYCHAK
Georgia and Moldova to join multi-country workshop on animal welfare during sea transportation
On 11 June, Chief Veterinary Officers and experts from the Republic of Moldova and Georgia will join their counterparts from some of the EU’s other Neighbourhood countries at a seminar in Bucharest, Romania, to discuss animal welfare during transportation by sea.
This multi-country workshop aims to identify good practices and facilitate exchanges of experience between experts in the field of animal welfare during transportation by sea of live animals from the EU to third countries.
The workshop is being organised by the European Commission’s Technical Assistance and Information Exchange Instrument (TAIEX), in cooperation with the National Sanitary Veterinary and Food Safety Authority in Romania.
According to TAIEX, the communication of standards on animal welfare during transportation are relevant to international trade and cooperation with partners across the world, who play a significant role in promoting and implementing them. Such standards are included in the provisions of the Terrestrial Animal Health Code of the World Organisation for Animal Health (OIE).
In 2004, the EU adopted a regulation through which harmonised rules were set for animal welfare during transport in and between the Member States. Moreover, in 2015, the Court of Justice of the European Union ruled that, for the transportation of animals involving a long journey starting from EU territory and continuing outside of it, the organiser of the transport from the EU is responsible for the welfare of animals for the entire journey, up to the final point in the third country.
Congratulatory Letter to the newly elected President of Ukraine
On the 1st of May 2019, President of Turkmenistan Gurbanguly Berdimuhamedov has sent a congratulatory letter to the newly elected President of Ukraine Vladimir Aleksandrovich Zelenskiy on his election to the high state post.