Whatever may happen to the economy the new city of Sochi, Vladimir Putin's city, will be built on schedule.
According to the International Olympic Committee, rules the Olympic mascot cannot be chosen until the end of the previous Olympics, so Sochi will have to wait until 2010, until after the Vancouver Olympics.
Yet it held a tentative referendum on the matter a year ago. The referendum revealed a paucity of ideas: a dolphin on skis, a snowflake on skates: not very eye-catching. Father Frost as a biathlon athlete was a little over the top and re-launching the Olympic Bear of 1980 would look like an aggressive gesture especially considering the delicate state of relations with the West in general.
If the matter is really important a solution can always be found. The question is only of price. A Caucasus leopard, otherwise known as the Turkmen leopard, would make a fine mascot: a noble animal that would cut an attractive figure placed on skates or skis. The problem is that it is nowhere to be found, the wild cat was exterminated in the Caucasus Mountains in the 1930s. Now it has been suggested that the population of leopards be restored, allegedly the required number of animals has already been caught in Turkmenistan, a source connected with the Olympic project says.
The Turkmen leopard may provide a good symbol not only of the Games, but of the whole Olympic project. No other city has been so unprepared to host the Olympics as Sochi, Russia's main holiday resort.
There is an endless succession of officials in charge of the Olympic preparations, and on Sunday Sochi will again be voting for its Mayor. Whoever is elected, his position could be envied because he is assured of success. For the country at large the coming years will be lean years, but the golden rain will be falling on Sochi as before.
The Sochi construction project, Vladimir Putin's pet project, was from the outset a challenge from the financial, logistical, engineering and political points of view. The crisis dealt a heavy blow to the project as money became more scarce: "The Olympics is now like a suitcase without a handle," says political analyst Mikhail Vinogradov. It's hard to carry but it's too dear to be dropped. Officials say in public conferences and off the record that applications for funding all the projects would be fulfilled, that money would be no problem.
I promise
Vladimir Putin at the final presentation of the Sochi bid in Guatemala in 2007 promised that everything would be fine. He has now to keep his promise: the budget system is splitting at the seams, investments are shrinking and investors are getting ruined, but as long as Mr Putin is Prime Minister financing of the Sochi Olympics will continue uninterrupted. The National Welfare Fund has been dubbed the Sochi Olympics Fund by officials.
The funding of Olympic programmes will be cut by a minimum amount, if at all, agrees political scientist Yevgeny Minchenko. If a choice has to be made between Sochi or the budget's social commitments, it is by no certain that the latter would be chosen, a member of the Government staff reflects. Social spending has always been a holy cow for Mr Putin, but it may turn out that some cows are holier than others.
The Government almost seriously discusses another devaluation of the rouble for the sake of Sochi (if things deteriorate and there is no end to the crisis in sight). The rouble falls by another 30%, the budget deficit automatically disappears and the reserves can then be used for the Sochi construction projects.
The application to host the 2014 Olympics put their cost at $8.8 billion for the building of facilities and another $1.8 billion for the holding of the Games. That adds up to $10.6 billion, an amount other Olympic capitals never dreamt of. The sum will increase by at least 50%, experts warn.
There is an explanation to the staggering cost - the building of the Channel Tunnel cost about the same amount - not only stadiums and ski slopes will have to be built but the infrastructure of a large city will have to be modernised and some of it built anew. Ports, the airport, the railway, flyovers and interchanges, power supply and sewerage: all these things are either absent or are in a sorry state in the city, which since the beginning of the century has developed chaotically without a master plan.
From the very top
Before the crisis Sochi was such a lucrative place in terms of investments that when it won the Olympics, the scramble for the right to build the facilities almost ruined the whole project, and the danger has not quite disappeared. There was a rapid succession of new bosses at Olympstroi and City Hall. Rumours that Krasnodar Governor Alexander Tkachev, one of the chief lobbyists, was about to be fired alternated with rumours that he was about to take control of the whole project.
The question being decided is what agencies and levels of government would earn and how much from that global construction site. Even pro-establishment officials agree that it is a problem. But a Government source claims that the construction site is directed "from the very top" and neither the regional authorities, still less the new mayor, nor even the Ministry of Sports, have the final say in how construction is run. The Krasnodar Government has proposed creating a managing company Imereti Valley. Transport Minister Vitaly Mutko is thought to be promoting the idea of various agencies responsible for specific construction projects.
It is hard to tell the real cost of the Olympics as disbursements will be made for various purposes and in different years, under different budget items and by different agencies. For example, the application puts the cost of building roads and railways at $4.4 billion, about 105 billion roubles at the exchange rate of the time, and 145 billion roubles today. Opposition members, Boris Nemtsov and Vladimir Milov, who made a bid for mayor of Sochi, published a report analysing the Olympic problems. They believe that the Sochi construction site is a gamble.
They have calculated that the cost of building a road and a railway from Adler to Krasnaya Polyana has jumped to 242 billion. "Nonsense", comments Rosavtodor press secretary Andrei Menshov. Russian Railways told Newsweek that feasibility studies of the motorway and the railway from Adler to Krasnaya Polyana are still in progress.
Mr Nemtsov and Mr Milov criticise the Olympic project over power shortage: Sochi is short of power as it is. "There are power cuts twice a day," a representative of one investor confirms. After Sochi becomes an Olympic capital, power consumption will double.
New power plants, not one but several, will need to be built and a gas pipeline will have to be laid under the Black Sea. At the recent builders' forum at Cannes Olympstroi presented two new projects: the Dzhubga and Kudepsta thermal power plants. The terms offered to would-be investors are fantastic: control over 30% of the cost of the project, and the rest - an easy-term credit from the state-owned Vnesheconombank, the proposed returns four times higher than in the industry on average.
There is no alternative
Energy, communications, 13 interchanges, some two-tiered, a bypass road, Olympic villages, hospitals, media centres, water supply and even a 200-heactare ornithology park with artificial lakes in the Lower Imereti Valley, a concession to the Greens and the IOC : deputy chief architect of Sochi, Viktor Protsenko enumerates the building projects. Refurbishment of holiday hotels, rather grim-looking affairs from the Brezhnev era. Hotels.
How to do it all in such a short time? "The task has been set by the President and the Prime Minister. It will be fulfilled. We shall see about the methods, but there is no alternative", the architect replies. Everybody involved in the Olympics understands that the project will not be built to its initial plan. Something will have to be sacrificed. Some facilities will probably be made from prefabricated light structures.
About 100 million tonnes of cargoes will have to be delivered to the city construction sites. For now, this is simply impossible: the existing infrastructure can handle no more than 10 million tonnes a year, that way the 2014 deadline would be met. Therefore a port will have to be built, the only cargo port in the world which will operate for just four years before becoming a place where private yachts of millionaires will be parked. However, it remains to be seen whether millionaires would choose to keep their yachts there.
Oleg Deripaska's Basic Element, which is in charge of this construction site, admits that it is a loss-making project. However, part of the project is a dam, which would enable Mr Deripaska to build an Imereti Riviera: 250,000 square metres of residential stock, shops and offices on the beach front. The project had been mooted for a long time, but building the dam and removing the current residents was the stumbling block. If the dam were to be paid for by the company, the project would make no economic sense. Now the dam is to be built by the Transport Ministry, and Olympstroi will pay for the resettlement of the local residents. In addition, Mr Deripaska's company has obtained easy-term credits for all the projects which are already under construction.
There exists a conspiracy theory, which claims that the idea of holding the Olympics in Sochi was the brainchild of big businessmen. Not only Oleg Deripaska was planning to develop the Imereti Valley. Vladimir Potanin was building a skiing resort as "an alternative to Courchevel," as he put it. However, economics was the problem: the project cost about $160 million and the money would be sunk into the ground for many years - before the Olympic project, the payback period of the Roza Khutor skiing resort would have been 10-15 years, a staggering period by Russian standards, Interros admits. Mr Potanin proposed to hold the winter Olympic Games in Sochi in an interview with Sovetsky Sport back in 2004.
When Sochi won the Olympics the cost of the project jumped from $160 to $540 million, with the need for more hotels and better roads. But the payback period dropped to 5-7 years. Vnesheconombank issued an easy-term loan of $750 million to Roza Khutor, which will cover the construction of other facilities included in the complex.
Roza Khutor is part of the Krasnaya Polyana holiday resort. Anatoly Pakhomov, a candidate for mayor of Sochi, came to Krasnaya Polyana last Tuesday as part of his campaign. "He was so decent and articulate," Lyubov Tokareva, secretary of the Krasnaya Polyana Community Council, praised the candidate. He made promises of course. But what's in a promise? The locals have long resigned themselves to the Olympic construction project, she says. "They think we are wallowing in gold. In the Soviet times they did not allow to fell a single tree within 1 km of the shore. And now they fell beech and alder. As a former forestry specialist it pains me to watch all this."
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Olympic deposit
The cost of building the sports facilities and infrastructure will account for less than a quarter of the total funding made available to prepare Sochi for 2014. The lion's share of the budget will go to build roads, hotels and provide power supply.
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Starting from scratch
The 2014 Sochi Olympics has every chance of becoming the most expensive winter Olympics in history as the city has to build everything from scratch.
By Konstantin Gaze, Pavel Sedakov, Igor Ivanov