Nezavisimaya Gazeta: “Sochi’s costs surpass other Winter Olympics“
Sochi Winter Games in 2014 may become the most expensive eve.
Russia has earned the gold medal in Olympic spending, with the projected costs of the 2014 Winter Games adding up to ten times as much as the amounts spent for the recent Winter Games in Turin, Salt Lake City and Vancouver.
Estimates for the upcoming Olympics at the Russian Black Sea resort of Sochi have now reached $30 billion, nearly three times the initial budget of $12 billion. Russia's Regional Development Ministry announced these figures prior to a Sochi visit by Prime Minister Vladimir Putin.
Economists attribute Russia's record-high Olympic expenses to corruption, the low efficiency of the contractors and an errant choice in venue. They say it is extremely difficult to track funds for specific projects and that further unjustified increases are therefore inevitable.
While in Sochi, Mr Putin will have a scheduled meeting with the president of the International Olympic Committee, Jacques Rogge. The two officials will discuss the progress of the 2014 Olympics site. According to experts, there are some rather controversial issues that need to be addressed, but the Russian delegation is unlikely to bring these up for discussion.
A deputy to the Regional Development Minister said total 2014 Olympics costs, already topped 950 billion roubles, will exceed the host city's annual budget by 20 times.
In remarks to a public council overseeing the 2014 Olympics, Yuri Reilyan said: "This amount includes financial investment in the municipality, overall allocations for Olympic construction, city development and the implementation of investment aspirations. No programme would be able to attract such an amount of investments."
In terms of dollars, the cumulative financial injections into the Sochi Olympic effort will total, according to various estimates, between $30 and $39 billion - an unprecedented sum surpassing the budgets of the most recent Winter Games in Italy, the U.S. and Canada, where the overall Olympic expenses were within the range of $1.5 to $3 billion.
Experts attribute the unprecedented cost to corruption, overstated cost estimates, inefficient construction resulting in a rush to meet deadlines, and starting with an underfunded infrastructure.
"Our expenses are so incredibly high because of inefficiency and corruption," said Natalia Zubarevich, director of a regional program run by the Independent Institute for Social Policy. "We are just not capable of building cheaply and with a good quality. We have huge non-production related spending, meaning corruption. Our highways, incidentally, cost more to build than anywhere else in the world. Also, the land alone where we are now building Olympic projects is exceptionally expensive by itself. It's a narrow strip along the sea with a badly developed infrastructure. Also, some of the projects are being implemented on mountainous terrain, which increases construction costs still further."
"The newly cited costs are as much as one-sixth of all regional budgets combined," the expert said, adding that this implies cuts on many public services and benefits financed with taxpayers' money.
Alexei Skopin, of the Higher School of Economics, echoed this point: "Taxpayers' money will be spent [for the Olympics] on an incredible scale and at incredible prices. Out of the $39 billion, at least $30 billion has to be deducted as kind of a tax we will have to pay to civil servants, to the underworld and to all those involved in the implementation of the Olympic project."
It does not take complex calculations to figure out that the per-capita share of the Olympic burden will be at least $200, Skopin said. He added that the business plan for the Sochi Olympics has never been made available for independent experts to study. He believes the reviewed Olympic budget, now put at nearly one trillion roubles, includes government allocations and business investment alike and that it envisages funding for Olympic sports sites as well as for the development of regional infrastructure. But since a transparent spending structure is non-existent, it will be hard to tell how much of that overall amount has been provided from treasury coffers, how much has come from private investors, and how big a share has gone to finance purely Olympic projects in Sochi, as opposed to infrastructure development programmes for the region as a whole. What is absolutely clear, though, is that the Sochi Games will be a source of enormous profits for those involved in Olympic venue construction, Skopin said.
Experts argue that behind the mounting Olympic budget for Sochi, there is a government policy aimed at ensuring that the population has no control over the use of public finances. Indeed, had the real Olympics costs ($30-40 billion) been disclosed to the general public right at the start, they may have spoken out in favour of spending that money on healthcare and other vital public services rather than on a two week sporting extravaganza.
According to Zubarevich, "there is the strong suspicion that the proportion of public money to finance the Olympics will be far greater than that of private capital."
It is hardly surprising therefore that feasibility studies cover only part of the 500 billion roubles provided for the Olympics in private investments, an amount Putin cited this past February.
At the end of the day, the 2014 Sochi Olympics may prove to be a curse for Russia rather than a blessing.
"The use of one trillion roubles [earmarked for the Olympics] should be absolutely transparent," said Skopin. "Otherwise, we are in for bankruptcy - both financially and in the games themselves. Both the government and the taxpayers will be hard hit if, having made such record-high financial investments, Russia fails to win a decent number of gold medals."
By Anastasia Bashkatova
