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Chris Borowski and Dagmara Leszkowicz:: Will Poland's winding road to economic salvation be side-tracked by Euro 2012?

FANS arriving in Warsaw for the European soccer championships this week will find traffic gridlock, barely finished roads and a series of giant holes where the city's new Metro line should be.

The spanking new motorway west to Berlin - for years a rutted one-lane track - is open, but only thanks to a special law rushed through parliament. There are no gas stations, no exits for miles, and in places it still needs one more layer of asphalt.



But behind the shortfalls, the imperative of getting ready for the tournament has broken down barriers of bureaucracy, corruption and political infighting in the former Soviet bloc country that had blocked projects for years.



If the result is the 21st-century infrastructure that European Union's sixth most populous nation needs to prolong an economic miracle, it will be more important than any temporary boost to tourism that the tournament will provide.



"This is a civilisation leap. It is too early to pop the champagne, but there is satisfaction in my heart," Prime Minister Tusk told reporters before Poland opened the last section of the Berlin road this week.



"I am very happy that the (A2) motorway will be passable. I would be even happier if all of them were ready."



Poland had hoped to use Euro 2012 tournament, which it co-hosts with Ukraine, as its coming-out party as an emerging economic powerhouse in Europe's eastern wing.



Strong economic growth and access to EU funds allowed the government to plough some 20 billion euros ($25 billion) into preparing for the tournament over four years - 60 percent of it on road building - around twice what the Ukrainian government has mustered.



That amounts to about 5 percent of annual national output, an estimated 30,000 jobs and a boost that has kept growth going and made it the only European economy to have expanded throughout four years of economic crisis.



"The championship was an impulse that helped a lot," says Lech Witecki, the head of the road agency that leads the efforts to build new motorways. "It created a reality where over the last four years, we were able to sit at the table and solve problems that before took up so many years."



Olympics and football tournaments have a history of leaving host countries with little to show for the huge investments required afterwards.



Greece was left only deeper in debt by the Athens Olympics, Portugal has followed it to the brink of bankruptcy eight years after its own euro finals were supposed to revitalise football and a tourism-based economy.



Thanks to the partnership with Ukraine, however, the Poles have only had to build or renovate four stadiums for the tournament rather the normal eight. That has allowed them to focus investment on more general infrastructure needs, which should mean far more to ordinary Poles in years to come than a brief jump in tourists coming for the soccer.



It may also go a long way to addressing an Achilles heel on transport that has often seen it lose out to Slovakia, the Czech Republic and Hungary in recent years for major factory investments in the EU's cheap eastern wing.



After finishing the A2 stretch, Poland has nearly 1,200 kilometres of highway, nearly twice what it had five years ago, and a further 337 km are planned for completion by the end of 2012. It still has a long way to go before it meets the levels of neighbouring Germany, where the autobahn stretches 12,800 km in a country only 10 percent larger in area with just over twice the population.



"Hosting a tournament like this is positive for the economy - one cannot necessarily say that about developed countries that already have well-functioning infrastructure," says Jakub Borowski, chief economist at Kredyt Bank in Warsaw.



"The championship is a catalyst for investment that is necessary and would be realised anyway, but later. The improved infrastructure will attract more foreign direct investment."



Erste Group estimates that Poland's GDP should grow by 1.4-2.7 percent in the long term thanks to co-hosting the tournament. Borowski's own study puts the value at around 2 percent of GDP annually till 2020.



In the immediate aftermath, however, economists say layoffs of staff taken on for the tournament and the completion of many projects could bring the economy down to earth with a bump.



Poland's economy grew 0.8 percent in the first quarter of 2012 at a time when most of the countries it exports to in the euro zone were moving into recession.



Without the boost from the football investment in the third quarter, that slowdown in external demand could finally begin to hurt, exacerbated by a wave of construction sector bankruptcies.



Poland's No. 3 builder PBG, which helped build three of the four Euro 2012 stadiums, has already filed for creditor protection this week, and dozens of others could go under as a result of unpaid bills, delays and legal battles.



Many underbid in the dash to secure the business and are now paying the price; Chinese builder COVEC was kicked off its portions of the A2 Berlin road after it stopped paying its contractors a year ago, having lodged a bid for the project that undercut its Polish competitors by nearly half.



One of the replacement firms also went belly up, and in both cases, dozens of subcontractors were stuck with unpaid bills. The government is working on a new law to protect the smaller companies in future road projects.



Industry figures warn of further troubles after the enthusiasm surrounding the soccer championship subsides.



"After the Euro we could see a complete collapse, because now (state road agency) GDDKiA is paying because of emotional blackmail - If you don't pay, you won't have roads for the tournament," said Marcin Marciniak, who heads one of the road projects for Alpine Bau, a German builder.



"Up to now, there was a stick. After the Euros, there won't be any."



Reuter