Vladimir Putin was at the height of his powers, and his popularity, when he boarded his presidential plane to travel to Guatemala City on a July day almost seven years ago. He was bringing a carefully prepared pitch to put to a skeptical International Olympic Committee. It bespoke a key personal dream of his and a goal he hoped would secure his legacy and elevate Russia once again to a major world power.
Speaking in English, a language he'd been secretly studying, he pledged to transform the sleepy, Soviet-era Black Sea spa town of Sochi into a world-class Olympic venue in time for the winter Games of 2014. He pledged the staggering sum of $12 billion in Kremlin cash to make that happen – a bid that dwarfed the competing cities of Pyeongchang, South Korea, and Salzburg, Austria. When Sochi won, Mr. Putin was ebullient.
"This is ... not just a recognition of Russia's sporting achievements but it is, beyond any doubt, a judgment on our country," he said. "It is a recognition of our growing capability, first of all economically and socially."
Visitors to Sochi this month will discover that Putin's promises have been spectacularly fulfilled. The city now boasts a gleaming new airport, dozens of ultramodern stadiums and sports facilities, and a state-of-the-art media center. It has free high-speed Wi-Fi everywhere on the Olympic grounds, a new road and rapid-transit rail line hewn from the mountainside to link the subtropical coast with the alpine winter sports cluster, and rows of new luxury hotels.
It's an impressive achievement. Even though the cost has since ballooned to an astonishing $55 billion, almost one-third of which appears to have been due to Russia's pervasive corruption, public opinion polls show that Russians remain overwhelmingly proud that their country is set to host the world's most prestigious athletic event.
No one will be encouraged to stray from the Olympic zone, but visitors who do will soon bump up against evidence that it's all something akin to a latter-day Potemkin village. The glowing subtext of Putin's appeal was that visitors to Sochi would be welcomed by a rapidly modernizing and democratizing Russia that is vaulting into the global mainstream.
Indeed, back in 2007, that almost seemed like a credible narrative. Then, Russia had been one of the world's fastest-growing economies. Prices for the country's main export, petroleum, were at record highs. A burgeoning middle class was redrawing the social map while showing few signs of political discontent. A long-running separatist rebellion in the southern republic of Chechnya appeared defeated and the turbulent North Caucasus region – uncomfortably close to Sochi – largely pacified.
Today, Russia's economy is struggling. It is beset by near-stagnant growth, rising inflation, and growing working-class unease over imminent housing, education, and pension reforms. Race riots in Moscow and other centers have shattered the impression of ethnic harmony and exposed yawning social fault lines. The formerly quiescent middle class erupted en masse two years ago to air an array of pent-up grievances, particularly allegations of electoral fraud.
Although that protest wave has died down, it spawned a harsh conservative backlash that seems to confirm Western fears that Russia is, in its traditional heart, a xenophobic and authoritarian place. A raft of draconian new laws, including a ban on foreign adoptions and a crackdown on gay rights, has drawn international outrage and contributed to decisions by many world leaders, including President Obama, to stay away from Sochi. It's hardly the image of a progressive Russia, open for business, that Putin had planned to project.
"The Sochi Olympics are a vestige of a more innocent time, when Russia had become an energy superpower, Putin's popularity was climaxing, and it seemed perfectly natural to take on these exciting new commitments," says Lilia Shevtsova, an expert with the Carnegie Moscow Center. "But this is a different time. The Olympics have become a costly headache, and the danger is that Russia's shortcomings rather than its achievements will be highlighted."
Most chilling of all, a fresh surge in terrorist attacks has underlined Putin's failure to quell a smoldering Islamist insurgency, which is metastasizing around the mainly Muslim North Caucasus region. Most of the near-daily carnage, confined to little-known southern republics such as Dagestan, Ingushetia, and Kabardino-Balkaria, is barely noticed even by the Russian media. But in recent months, suicide bombers have struck three times in the transport hub of Volgograd, killing 40 people and casting a menacing shadow over the Olympics themselves.
If Sochi remains secure through the nerve-racking period to come, it will be thanks to one of the most sweeping and ambitious security operations ever launched. Putin's $2 billion "ring of steel" will virtually isolate the Olympic venues from the surrounding region and subject anything that moves inside the zone to near-total surveillance. According to Andrei Soldatov, one of Russia's leading security experts, the city will be garrisoned by at least 30,000 special police and hundreds of plainclothes agents, while thousands of troops will patrol the city's perimeter. Russian Air Force fighters and dozens of drones will watch unceasingly from above, while ultramodern "anti-saboteur" gunboats with teams of frogmen will ply the coast.
"Sochi will have the most widely accessible and fastest Internet connections ever seen at an Olympics," Mr. Soldatov says. "But that comes with a hook. Every single digital communication will be recorded and scrutinized. Nothing will escape the attention of the security services."
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It is a truism about life in the former Soviet Union that very little ever got done in the country's far-flung provinces until a visit by a top leader or foreign delegation was announced. Then, local officials would suddenly whip into a frenzy of activity, pushing workers to repave roads, clean up garbage, paint buildings, and complete long-neglected construction projects. Soviets used to joke that the only practical recipe for "building communism" would involve keeping the country's leaders permanently on the road, visiting every community in the land.
Some experts suggest that Putin has adopted a similar strategy for getting big infrastructure projects built, often in out-of-the-way places. By securing the right to host high-profile international events such as the Sochi Winter Games, he challenges Russia's notoriously corrupt and sluggish state corporations to get it done or be shamed in front of the world.
Before Sochi, Russia hosted a two-day summit of the Asia-Pacific Economic Cooperation group in 2012 in the far-eastern center of Vladivostok, for which the Kremlin splashed out $22 billion to make the city ready. Vladivostok received, among other things, a new airport, a rapid-transit line, and a nearly mile-long bridge to remote Russky Island, where the conference was held. Last year Moscow spent almost $5 billion to host the Summer Universiade, an international athletic competition for students from more than 160 countries, in the Volga city of Kazan.
With Sochi now finished, Russian businesses are already reorienting their priorities to the huge list of stadiums, roads, hotels, and railroads to be constructed for soccer's 2018 World Cup, which is to be hosted by 11 Russian cities. The opening state budget for that is $20 billion, but if it follows the same trajectory of cost overruns seen in Sochi, it could balloon to as much as $100 billion.
"Putin understands that he needs to do something to develop the country's infrastructure, but his liberal economics advisers are against this. They believe the money will be stolen and have no effect," says Sergei Markov, a Kremlin-connected analyst who's been a frequent adviser to Putin in the past. "Russians are not good, everyday, routine-following soldiers. This characteristic runs deep in our history. We need a crisis, an emergency to mobilize our efforts. Russians always perform better when pursuing big goals, rather than small ones. So Putin creates these challenges, and he believes that it does work. Everything is ready in Sochi, isn't it? Putin does not believe these tales of massive corruption associated with the preparations for Sochi. He thinks it's opposition propaganda."
You don't have to look far in Sochi to find the limitations of this model. One clear sign is the open hostility to the Games expressed by many local inhabitants. They claim the state has destroyed the city's traditional economy, cut down all the trees, damaged electrical and heating systems, and, in some cases, forced them out of their homes to make way for Olympic construction.
"I was so happy when they announced the Games would come to Sochi, but now I haven't got anything nice to say about it at all," says Alexander Krotov, a war veteran who lives in the village of Akhtyr. He claims they confiscated his plot of land, and then turned the village into a virtual wasteland, with trucks rumbling through it around the clock and huge sand pits nearby choking the air with toxic dust. "Don't ask me about the Olympics," he says. "I feel as though I lost everything to them."
Lyudmila Serebryakova, a worker in one of Sochi's traditional seaside health spas, says all the Olympic preparations have discouraged the usual clientele from coming for the past four years, and caused rolling blackouts, traffic snarls, and other problems. Local authorities have warned residents that most small businesses will have to close during the Games. Severe travel restrictions will be in effect.
"We won't be able to leave the district by car, even to visit a relative outside the city," Ms. Serebryakova says. "All we'll get to do is sit at home and watch the Games on TV."
Other concerns loom about what Sochi will do with all that dedicated Olympic infrastructure once the athletes leave. Many of the stadiums, ice rinks, and other venues will be dismantled and shipped off to distant Russian cities, where they will be reassembled for public use. But the more permanent accouterments built for the Games, such as roads, rail links, hotels, and other buildings, will remain. The Kremlin argues that newly refurbished Sochi will become a tourist magnet and a business center for the entire Black Sea region.
"Sochi," Putin told the International Olympic Committee back in 2007, "is going to become a new world-class resort for the new Russia. And the whole world!"
But critics have their doubts. Krasnaya Polyana, the venue where most of the winter sports events will be held, will have enough snow for the Olympics, in part because authorities ordered almost half a million cubic meters of the white stuff stored in special refrigerated facilities over the past two years. But for much of the year, Krasnaya Polyana is a ski resort with no snow – and sometimes none even in winter. Yet the road and rail link serving the resort cost almost $9 billion to build – more than all the preparations for the Vancouver Winter Games combined.
"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."
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.
"Whenever I go out, I expect unpleasant things to happen to me," he says. "I am protected by my profession, by the fact that I work for a big newspaper and have lots of influential friends. And yet, I don't feel safe. Here an ordinary person has no protection against aggression or injustice, whether it comes from the authorities, bureaucrats, police, or hooligans."
Mr. Muradov is talking about Russia's growing inner division between its poverty-and-insurgency-racked and mainly Muslim south and the mostly white, Slavic, and Orthodox Russian heartland. Many like Muradov have fled the instability of the North Caucasus only to find themselves treated like unwanted refugees within the very country whose citizenship they hold. The problems have been aggravated by a huge influx of brown-skinned Muslims from the former Soviet republics of Central Asia who flocked to big Russian cities during the Putin-era oil boom to take menial jobs local Russians wouldn't. Experts estimate that as many as 2 million Muslims, both Russian citizens and post-Soviet migrant workers, now live in Moscow.
With the economy slowing down, ethnic tensions are bubbling. They boiled over last fall in the Moscow suburb of Biryulyovo, where thousands of local Russians, spurred on by ultranationalist agitators, went on an anti-immigrant and anti-Muslim rampage that made no distinctions between migrants from Central Asia and Russian citizens from the south.
This, too, is an example of Putin facing the consequences of his own actions – at an inopportune time. Back in 2007, Putin had reason to believe that he'd solved the Chechnya challenge through the application of massive force in a war that killed tens of thousands and left the little mountain republic in ruins. He installed a local pro-Moscow strongman, Ramzan Kadyrov, and gave him a free hand to crush the rebel remnants. But in the years since, the uprising has mutated from a nationalist uprising to an Islamist jihad, spreading around the region.
"Moscow gave power to local leaders, and they are reverting to traditional values, which means Islam and sharia law, which only emphasizes the vast gulf between the North Caucasus and the rest of Russia," says Alexey Malashenko, an Islam expert with the Carnegie Center in Moscow.
Meanwhile, he says, Putin is turning Russia toward more conservative and traditionally Orthodox values, in an effort to bridge the growing contradictions in Russian society. "It makes the chasm wider every day," he adds.
Whenever the low-level civil war going on in Russia's North Caucasus spawns acts of mass terror, as it did most recently in a string of suicide bombings in Volgograd, it attracts world headlines, but also increases the level of hostility faced by people like Muradov, trying to live his life in his own country's capital city.
Russian police, utilizing the crudest forms of ethnic profiling, harass brown-skinned people in public places. Teachers isolate, and sometimes expel, non-Slavic children from schools. Bureaucrats cancel housing permits, and ultranationalist thugs target them in the streets.
"It comes to the point that people are just afraid to go out of their homes," says Lyoma Turpalov, a professor of journalism at Chechen State University in Grozny. "There is a feeling that certain forces, even at the top, are interested in stirring up ethnic hostility."
None of this is likely to be visible to participants and visitors to the Sochi Games. Never in the history of the Olympics, some experts point out, has an Olympic venue been as thoroughly isolated and walled-off from its host society as this venue will be.
"I only wish our leaders had not made such a big deal out of getting these Games for Russia in the first place, or staged so much boastful PR about it, because then, maybe, there wouldn't be such an attractive target for terrorists to threaten to spoil," says Dmitry Oreshkin, head of the Mercator Group, a Moscow media consultancy.