Thursday, January 31, 2013

Window on Eurasia: Sochi Olympics to Be Most Expensive in History but Moscow has No Plan for Infrastructure After 2014

Paul Goble

            Staunton, January 31 – Despite spending more money on facilities and infrastructure for the 2014 Sochi Olympiad than any host country has ever spent for such a competition, Moscow currently has no business plan concerning these facilities and infrastructure will be used after the Games are concluded, according to a Moscow analyst.

            In an article on the “Svobodnaya pressa” portal today, Oleg Gladunov says that the Russian government is on track to spend 43 billion US dollars for the Sochi competition, three billion dollars more than Beijing spent when it hosted the Olympiad in 2008 and thus vastly more than any country has spent on any games ever (

            Three things make this lack of a plan especially disturbing, he says. First, Moscow’s expenditures for the games continue to grow. Second, Vladimir Putin has blocked the auditing agencies of his own government from tracking this spending. And third, Moscow is hiding the real costs to Russian taxpayers behind false claims that private firms are picking up the tab.

            When Moscow made its application to the International Olympic Committee in 2007, it said that Russia would spend 314 billion rubles (10 billion US dollars) on them, including 195 billion rubles (6.5 billion US dollars) from the state budget.  But those figures have increased every year, Gladunov notes, reaching 950 billion rubles (30 billion US dollars) in 2010.

             In June 2010, then Prime Minister Vladimir Putin excluded the Sochi Games from the list of state programs, thereby “taking away from the Finance Ministry and Economic Development Ministry the chance to monitor state expenditures in Sochi” and opening the way for corruption.

            In 2011, then-President Dmitry Medvedev said spending on the Sochi Games would have to increase to deal with the weather, and consequently, according to the available budgetary figures, the Sochi Olympad will cost approximately 1.3 trillion rubles (43 billion US dollars), with seven billion dollars spent on facilities and the remainder on infrastructure.

             Moscow officials have sought to deflect complaints about costs by suggesting that most of the money comes from private firms, but the firms who have supposedly invested the most get most of their funds from the state budget and thus, in this case, are little more than pass throughs.  “There is practically no non-governmental money in Sochi,” Gladunov says.

            These officials have also suggested that visitors to the Games will spend approximately 11 billion US dollars and thus allow Moscow to recoup about a quarter of all spending. And they argue that the infrastructure build for the games will be used for a long time in the future.  But as of today, they have no clear plans for how that will happen.

            What is clear, Gladunov says, is that no one is going to be able to “return to Sochi the glory of an all-Russian health resort, at least for the foreseeable future.” The hotels there will likely cost ten times more than those on the Turkish coast, and consequently, all but the wealthiest will choose to go there rather than to Sochi.

            But what is most disheartening about all this, Gladunov suggests, is the enormous amount of state funds – perhaps 20 percent of the 43 billion US dollars -- that is being corruptly diverted into the pockets of those close to the Kremlin, if the testimony of one Russian construction leader familiar with the situation is accurate (

            Such figures and such obvious official manipulation of them are certain to add to Moscow’s headaches as it goes forward with what has become Putin’s signature event. Indeed, precisely because this spectacle is so much on public view, it may prove an even bigger problem for the Kremlin than worries about security at that North Caucasus site.

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