What exactly will Prime Minister Vladimir Putin officially open in July if there is only dirt, grass, and two cowsheds instead of the Azov-City Gambling Zone?
Formation of gambling zones is almost like the Olympics in Sochi. It was expected to become one of the Government's most successful "national" projects. Everyone heaved a sigh of relief when in late 2007 Mr Putin personally intervened in the lobbyist fuss around gambling business in the Duma, and submitted a bill, resolving all issues, including gambling addiction. Gambling should be limited to specific zones, the President said, and officials of different levels - from the Duma to the regions - promised to have everything ready by July 1, 2009.
Their enthusiasm was easy to explain - the project offered a prospect of fabulous financial injections into local budgets and pockets. However, as soon as it became clear that there would be no money from the federal budget for this project, enthusiastic support was gradually reduced to backstage sabotage, and everything ground to a halt in three zones out of four. Triumphant reports about construction activity and laying down cables and connections are still emerging from the fourth zone, Azov-City. Yevgeny Titov, a Novaya Gazeta correspondent, went to see for himself the future South Russian Las Vegas.
Dirt-covered roulettes
To follow the future Azov-City Gambling Zone is indeed interesting. Russia has few construction sites with a budget of 350 billion roubles. This is the price tag of one of the four federal zones where gambling tycoons from all over Russia should move after July 1.
Initially, a decent tarmac motorway leads from Krasnodar to Azov-City. Last July, the head of the territorial motorway management Valery Zhukov said: "We guarantee that by the middle of December a quality, 4th category motorway will be built here." However, all of a sudden, the tarmac comes to an end, giving way to gravel, and the car is bucking along at a tortoise's speed. Stones are hitting the car's bottom, prompting the cabbie to swear every now and then.
Two cowsheds is the first thing you see in the future gambling zone. Cows are melancholically chewing hay and looking at us. The Molchanovka farmstead is adjacent to the zone. It consists of one street and several houses. Next to it is the Priboi children's holiday camp. In summer, school students from all over the country spend their vacation at this camp - up to 800 children in one season. How will gambling addicts get along with children of 10 to 12 years?
The Gulf of Taganrog is a hundred metres away but it is impossible to go ashore because of the precipice. The ground is all cracked, and requires thorough repair work. However, building equipment is nowhere in sight. Vladimir Ignatov lives in the nearest house, which will soon be demolished.
"I'm worried that they won't pay us a normal compensation. We are in recession, and people are being cheated everywhere," Vladimir said. Recently, he was laying a gas pipeline on the Azov-City construction site: "They promised us to pay 500 roubles per day, but they haven't paid. They cheated me and those who worked with me," he said.
I looked at the construction site. Contrary to my expectations, I did not notice any traces of capital construction - just a vast, empty field. I walked, pulling out my boots from liquid clay. Several lorries were tossing and carrying soil. In some places I saw pieces of plastic pipes. I could not but recall the words of Kuban Vice Governor Alexei Agafonov who declared on February 27: "Azov-City will be connected to a water supply by March." I approached a team of workers pulling the water pipe.
"Do you still have a lot to do?"
"We've just started."
Seeing surprise on my face, one of them explained: "Guys were working here. They told us that they were not paid, so they left."
There was nothing else to look at - just barren land. I returned to the taxi. Suddenly a Lada with a license plate U005ET, 23rd region, stopped on the road. A man in a security guard uniform climbed out of the car and told me to switch off my camera. I replied that I am a journalist and have the right to use it under the law on the media. The man tried to snatch my camera and threatened to destroy it. "You won't get out of here," he yelled. We departed but a minute later the Lada caught up with us, this time together with a Jeep (license plate E0640S, 93rd region). The Jeep forced us to stop. Two men in construction overalls and one in a suit came out. The latter tried to take away my camera, and pull me out of the car by snatching my coat. Then he showed me a red document folder, saying: "I'm from the administration of the Krasnodar Territory." I called my relations from Krasnodar and asked them to contact the territorial Main Department of Internal Affairs. I walked out of the car and showed my ID. I also called the editors' office and quoted the license plates. The construction workers did not look so brave anymore. Taking my chance, I shut the door.
Immediately after the incident, I wrote a complaint to the Department of Internal Affairs of the Staroshcherbinovskaya village, while the Novaya Gazeta editors officially reported the incident to Presidential Envoy in the Southern Federal District Vladimir Ustinov and Governor of the Krasnodar Territory Alexander Tkachev.
Swindling, Pure and Simple
Why were these men with red document folders so worried? The answer is simple: it appears that a field with two cowsheds has nothing to do with what the Kuban authorities promised. At the economic forum in Sochi last September, Governor Tkachev personally promised to Vladimir Putin that the gambling zone will be opened on July 1, and invited him for its grand opening. But what will Putin come to open?
Things look quite different on paper. As our editors' office found out, there were 15 investors from the Rostov and Kuban regions, which took an interest in the zone. However, only Royal Times, a gambling company from Tatarstan, started working on the Krasnodar Territory.
In January, Kuban Vice Governor Agafonov declared that none of the investors, which had won the tender, renounced its participation in the project. Apparently, he forgot that RostStroyInvest, which signed a contract for 350 million roubles, started the procedure of terminating the contract in December. Casinos Austria, Europe's major gambling operator, also renounced its participation in the project.
Are there financial giants among the current "contesters" for the zone? Let's see the list. Here is Biznes-Konsult. Set up in Armavir [a city in Krasnodar Territory] in 2007, it is working under contracts with district organisations. The stated investment is six billion roubles, which is a lot even by Moscow's standards. Worthy of mention, for comparison's sake, is that last year Armavir's entire budget was about 2.5 billion roubles.
Visa MK is next in line. Its revenues for 2007 were 40 million roubles, and net profit, 11 million roubles. Some undistinguished company, Beta, from the town of Chekhov near Moscow paid 95,000 roubles for a plot in the zone, having promised to invest 500 million roubles into construction. The investment potentialities of Chekhov business are truly impressive, although there is no money so far. There is also Kubanneftproekt, Pak-Express, and the businessman N.M. Odintsov. How much of the required 350 billion will they invest? No one knows the answer.
Gambling at the federal budget's expense
Director of the Gambling Business Association in the Southern Federal District Nikolai Oganezov has remarked that "it is impossible to open anything in the zone by July 1 because there is nothing to open."
Representatives of the local gambling business told me that they could work in the zone: "This is a good place, and much could be built in two to three years. It is easy to make it accessible - buses could be sent from Krasnodar and Rostov. Local gamblers from nearby cities would make the zone profitable." Why didn't this happen? "It is only possible to invest money on clear terms, whereas here nothing is clear, neither the deadlines, nor the distribution of investment, nor the status of land. Tenders were cancelled three times," I was told.
I hoped to hear something more optimistic from Oleg Buzunov, head of the Azov-City Krasnodar Board. However, he was rather evasive about deadlines, and did not add anything to the known facts.
A businessman close to the territory's administration came up with quite a rational idea: "Nobody is going to build any casinos there. The location is good - the sea is nearby, and one can build a hotel. The remaining land, especially with the infrastructure, is a top-selling item."
What is the point of sending these triumphant reports from an empty field? Probably, the answer lies in the economic evaluation of the zones' construction. It appears that out of 101.2 billion roubles of federal investment into four zones, Azov-City was supposed to receive about 90 billion! To all intents and purposes, the local bosses are counting on this money. This is why they are trying to attract investors to the zone at any price, giving them land for next to nothing. While imitating construction, they can report that the money has been spent and ask for more.
We can only regret that the law has fallen through. Ironically, in an interview with Channel One television, Vladimir Putin pinned special hopes on the local authorities: "It will depend on the local and regional authorities how civilised this will be done..."
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P.S.
Las Vegas, Nevada, is a global gambling and entertainment centre. For 78 years, the city's economy has rested on the revenues from gambling business. This industry emerged there almost a hundred years ago. Everything started after the legalisation of gambling business in the United States in March 1931. At that time, the population of Las Vegas was a little more than five thousand people (a hundred times less than now), and casinos received about 9,000 people. Two decades later, the number of gamblers grew seven times, and by now, several thousand times. Today, the city's casinos, expensive hotels, and shows annually attract more than 40 million tourists. According to the U.S. Gambling Business Association, profit from gambling runs into $6.7 billion. Las Vegas receives up to $500 million per year in taxes on casinos' profits alone. All in all, in the estimate of the city's municipality, its treasury has $1.5 billion at its disposal.
Titov Evgenie