Over the past two years, Ukraine has built two stadiums, opened four airports, and unveiled a fleet of high-speed trains. It has spent $14.5bn (£9.3bn) on preparations for the Euro 2012 football championships, a whopping sum for a small GDP country. Workmen have been tidying up outside Kiev's impressive web-roofed Olympic stadium, the venue for the 1 July final.

And yet on the eve of the tournament Ukraine is staring at nothing less than a full-blown PR disaster. In an interview with Panorama , the former England defender Sol Campbell bluntly says Uefa was wrong to give Euro 2012 to Poland and Ukraine because of their failure to get to grips with racism. He tells fans: "Stay at home, watch it on TV. Don't even risk [going] … because you could end up coming back in a coffin."

Campbell's apocalyptic remarks come after the families of England players Theo Walcott and Alex Oxlade-Chamberlain said they would not be attending England's three group-stage matches in Ukraine because of the threat of violence and racist attacks.

The Foreign Office advises travelling fans of African-Caribbean or Asian descent to take "extra care". And the FA estimates that only 5,000 England fans will travel to Kiev and Donetsk. This compares with the 10,000 who visited South Africa, much further away, in 2010 and the 100,000 who descended on Germany in 2006.

Others are queuing up to boycott too. The German chancellor Angela Merkel and assorted EU chiefs are to shun Ukraine in protest at the treatment and imprisonment of the opposition leader Yulia Tymoshenko, who was beaten up in April while being transferred from prison to hospital. Ukraine's president Viktor Yanukovych has so far obdurately refused to bow to EU pressure.

Uefa's president Michael Platini, meanwhile, has complained of rip-off hotel prices in Ukraine, alleging "bandits and crooks" have muscled in. There is an acute shortage of hotel rooms in Donetsk, the gritty eastern mining town next to Russia where England will play France on 11 June and Ukraine on 19 June. England have snubbed Donetsk's world-class facilities to base in the Polish city of Krakow, offending many.

If this were not bad enough, on 21 May topless activists from the group Femen grabbed the championship trophy during its whistle-stop tour of Ukrainian cities; they claim the tournament will boost prostitution and the country's already booming sex industry.

(The activist Inna Shevchenko yanked off her top to reveal the words "Fuck Euro 2012". Police dragged her into a van; video shows her repeatedly screaming "Fuck Euro!")

So who is to blame for this mess? The answer, to a large extent, is Ukraine itself. Since the Soviet-style apparatchik Yanukovych became president in 2010, he has – as the thinktank Freedom House puts it – "revealed authoritarian tendencies". These include the selective prosecution of opposition figures and a squeeze on independent media.

Many of Ukraine's problems pre-date Yanukovych; corruption was a feature of previous governments. But Yanukovych's all-consuming desire to persecute Tymoshenko, his defeated rival, has united Brussels, Moscow and Berlin against him - no mean feat.

More than this, according to the football writer Mark Perryman, Ukraine has been slow to offer up an interesting narrative about itself. The 2006 World Cup in Germany proved to be a transformational moment, for popular British perceptions of Germany and for the Germans' perception of themselves. (British fans discovered Germans were friendly football-loving hedonists; Germans finally lost their inhibitions about patriotism, proudly waved their own flags and wrapped in a dreamy summer fairytale.)

"Ukraine has spectacularly failed to sell itself," Perryman says. In reality, he says, the country has lots of positives: a football-orientated society; fans who drink a lot of beer; Kiev, "one of the great European cities"; and a noble footballing past, with Dynamo Kiev twice winners of the European cup. One could also add an absence of inter-ethnic conflict, and a rich literary heritage (Anton Chekhov wrote some of his most famous work in Crimea; Mikhail Bulgakov was born in Kiev; Konstantin Paustovsky penned one of the last century's great memoirs).

Ukrainian officials feel they have been hard done by. "We prepared the country in two years. It was a hard job by 500,000 people working every day," Yuri Gromnytsky, from the Euro 2012 organising committee, told the Guardian. "If some politicians are trying to put pressure on Ukraine it's unfair."

Gromnytsky insisted England fans would get a warm welcome in Donetsk. "Security will be OK. Our people have made all the preparations. They will see great pubs and an excellent stadium, one of the best in the world."

Some observers believe the dangers of racism in Ukraine are overstated. Yuri Bender, a journalist who follows Ukrainian football closely, points out that the country's two leading clubs, Shakhtar Donetsk and Dynamo Kiev, both regularly field five or six black players in league and European matches. They are not subjected to abuse. A new, younger generation of supporters, particularly in the Donbass region, see the black, mainly Brazilian players as role models and make a six-eight hour round trip by bus to see their heroes every two weeks, he adds.

Rinat Akhmetov, Ukraine's richest man, who privately financed the Donetsk stadium, is a Muslim. He has also built a new mosque in Donetsk. There are no recorded incidents of racist chanting directed at Akhmetov. Bender argues the situation in Poland – which has largely escaped media scrutiny – is far worse.

There has been a reported incident of racial chanting against Dynamo Kiev's owner Ihor Surkis, who is Jewish. The visiting club whose supporters were involved was immediately fined by the authorities.

Bender said: "My wife, who is of Afro-Caribbean origin and our two mixed-race children, have accompanied me to Ukraine on several occasions, to Lviv in the West, Kiev in the centre and the Donbass region in the east, of which Donetsk is the capital. There has certainly been no abuse directed against them and in fact quite the opposite. The locals have gone out of their way to make them feel welcome in Ukraine, with people on the street and on public transport often stopping to chat with them."

Bender said much of the reporting on the issue was "sensationalist". And yet Panorama has filmed horrifyingly real footage of abuse at a Ukrainian stadium: fans attack a small group of Asian home supporters, punching and kicking them on the terraces, at one of the last league matches of the season. The Asians flee. The police are seemingly indifferent.

For all its democratic shortcomings, Ukraine is more plural and arguably less racist than its mighty neighbour Russia, which persuaded Fifa to award it the 2018 World Cup. England fans are also no strangers to travelling to places with poor human rights records such as Kazakhstan. But in the absence of a positive message, and amid swirling fears of racism, many are skipping Ukraine.

This March the FA quietly returned thousands of tickets from its 7,000-per-match England allocation. There were just 2,000 tickets bought for the two Donetsk matches and 3,000 for Kiev. Uefa insists the tournament is now practically sold out. But it admits 50,000 tickets were still available on 8 May, an embarrassingly large number for Europe's most popular sport.

Uefa's rationale for awarding the tournament to Ukraine and Poland was to show that the countries had changed, after decades of dark Moscow rule. For sure, Poland is the EU's star pupil. But Ukraine has clearly not changed, or not enough. The country's current leadership remains intractably Soviet. And most fans are preparing to watch next week's tournament from their sofas at home.