Sochi Olympics: Putin's moment at world podium
Russia's leader, eager to burnish his legacy and boost the country's global standing, has risked a lot of prestige in staging the most expensive Olympics in history.
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"After the Games end, one suspects that this road and railway, along with all the new hotels up there, will be left empty most of the time," says Nikolai Petrov, a professor at Moscow's Higher School of Economics. "A lot of things have been built in Sochi that are absolutely not needed for the development of the region."Skip to next paragraph
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The seaside city of Sochi, once the USSR's main subtropical resort for working-class vacationers, has seen most of its big health spas close down and replaced by luxury hotels the average Russian can ill afford. "Why would most Russians choose to go there when nearby Turkey offers lots of low-cost, excellent beach vacation packages, and far better services than you're going to see anywhere in Russia for quite a while?" asks Mr. Petrov. "It's just not realistic."
Critics also allege that the Kremlin's emphasis on megaprojects has elevated Russia's notorious culture of corruption to Olympian heights. It has been fed by vast amounts of government cash and closed contracts that can be secured only through official patronage. Boris Nemtsov, a former deputy prime minister and author of a scathing report on corruption in Sochi, argues that most of the construction contracts went to state corporations and private businessmen in Putin's inner circle, and that is why they've been able to jack up the costs with impunity.
"We compared the cost of construction in Sochi with budgets for building similar objects for several previous Olympic Games," Mr. Nemtsov says. "We found that whether it was a road, a stadium, or some other athletic facility, the cost of building it in Sochi was typically about three times higher than anywhere else."
Some economists warn that the Kremlin's misplaced priorities are contributing to the economic slowdown and boosting inefficient state-connected businesses at the expense of smaller enterprises. Russia is still making its transition to a market economy, and, despite much change in recent years, still lacks the breadth and quality of consumer goods and services that most citizens of Western countries take for granted. The number of small and medium businesses in Russia has actually been declining in recent years. They now account for just 20 percent of the economy, compared with 50 percent in the United States.
"Few of our small and medium businesses are benefiting in any way from all this Olympic expenditure. Our authorities' main priority is big state corporations, and [they have] no interest in little entrepreneurs," says Yevgeny Gontmakher, an expert at the official Institute of Economics in Moscow. "We have a real depression now in the sphere of small and medium businesses, and this is one of the key reasons for Russia's falling economic growth rates."
Alla Anashkina, an accountant who works with small businesses in Moscow, says that thousands of otherwise viable enterprises are dying each year because of heavy taxation, over-regulation, and crippling interest rates – which average about 20 percent on bank loans.
"Putin talks a lot about supporting small businesses, but in fact they're being destroyed," she says. "You can't say it's because of the Olympics, but it's because state policies are making it simply impossible to survive."
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Musa Muradov is a Chechen, from the restive southern republic that spawned the ongoing regional rebellion against Russian rule. He's lived and worked in Moscow for almost 20 years. He's a Russian citizen with all the appropriate documents, an army veteran who now holds a prestigious job as correspondent for the pro-business Moscow daily newspaper Kommersant, and yet he says he lives in daily unease.