An IIPM Initiative
Wednesday, October 5, 2022

The Sochi Jamboree is over. Back to work.


Despite challenges and criticisms, the Sochi Olympics was a success. But such short-lived success won’t win back Putinland lost glory!
AMIR HOSSAIN | Issue Dated: March 9, 2014, New Delhi
Tags : National Bureau of Economic Research | Vladimir Putin | Sochi Winter Olympics 2014 |

The Sochi Winter Olympics 2014 was concluded on February 23, 2014. Whether it became the greatest sport show ever, remains a debate. But it was unquestionably the most expensive (with about $51 billion being spent on the event). Vladimir Putin and his government took all possible initiatives to make the 22nd Winter Olympics in Sochi a grand affair!

Truth be told, it did turn out rather well for Russia – as an organiser and a participant. Rather, very well, considering the initial rounds of controversies that made headlines before the Games got underway. The whole world – especially western media – was sceptical about Russia’s credibility to host it smoothly and peacefully. Widespread public disagreement regarding incomplete infrastructure, safety concerns, corruption and LGBT (lesbian, gay, bisexual, transgender) guidelines were common talking points thrown at audiences around the world whenever Russia was discussed in the context of the 2014 Games during the weeks leading to February 2014. Some had even foretold that the event – which was to host more than 2,800 athletes from 88 countries (both new records) – would be a disaster.
When the closing ceremony was over, the world had reasons to believe otherwise.

Hours before the closing ceremony got underway, Thomas Bach, President of the International Olympic Committee, told mediapersons, “We saw excellent Games and what counts most is the opinions of the athletes and they were enormously satisfied. You have to ask all those who criticised whether they change their opinions now,” He continued his words of praise for the mega show and its organisers during the closing ceremony. “Tonight we can say Russia delivered all what it had promised,” he said. He thanked the Russian President for his personal commitment to the extraordinary success of the Winter Olympic Games.

Forget criticisms showered upon Russia over its poor human rights record, or even condemnations of the anti-gay propaganda law passed by the Putin administration in 2013, the successful Games is no minor achievement for any government; especially one which – in form and thought – lacks the spirit of a democratic culture.
But the question remains – can Putin’s recent Olympic triumph help tuck away some serious problems that breathe on the Russian soil in the present day?

Sochi Olympics was Putin’s show. He was the man who restored confidence in Sochi to bid one more time for this Olympics (after two unsuccessful bid attempts).

 Moreover, he showcased Sochi to the International Olympic Committee (IOC) himself. Much is said about how he oversaw everything – from start to finish. It is important to note that Sochi had none of the venues – used during the Games – in place when it was awarded the rights to host the 2014 Olympics seven years back. Significant as can be, is the fact that with this one event, Putin proved to the world that the Russians too can organise a world-class show. In the same light, he even declared that a new Russia had been reinvented in the Sochi Olympics.

But despite the Olympic success, Putin cannot ignore either the allegations made, or Russia’s ongoing socio-economic problems.

The Sochi Olympics was the most expensive Games hosted by any nation in history. Astonishingly, 8 of the 14 former Soviet republicans – Azerbaijan, Estonia, Georgia, Turkmenistan, Moldova, Latvia, Armenia and Kyrgyzstan – indvidually, have smaller GDPs than the Sochi Olympics budget. Yes, everything had to be built from scratch (as there is no blueprint for such an event which has to have innovation and authenticity oozing from all quarters!). But where debates are sparked off, right intentions are often thrown behind tall walls.

Due to an enormous sum being invested in the making of the Games, discourses over corruption within the organising committee took centre stage. Former Deputy Prime Minister, Boris Nemtsov, even said that almost half of the amount spent found its way into the deep pockets of Putin’s associates as they won most of the tenders.
History is testimony to the fact that Putin’s friends have become richer due to the (ever-growing) Russian oil business, while his counterparts have been jailed, exiled or... [worse?]. For instance, the most influential businessmen in Russia and oligarch Arkady Rotenberg won event contracts worth $7.4 billion. However, Bach defended the high costs indicating that the costs incurred were at par with the previous Olympics and whatever extra was incurred was to be seen as a long-term investment.

Irrespective of such high levels of expenditures, Sochi was not able to meet all deadlines for completion of infrastructure-related works, especially hotels. Consequently, Olympic visitors were not able to occupy some hotels during the first few days of the Games. In addition, one of the ski jumps was inaccurately developed and even the Olympic rings (used during the Opening ceremony of the Games) did not work properly. Security concerns also became quite a headache for organisers of the Sochi Olympics, as two separate incidents of suicide bombings took place in the city of Volgograd (420 miles north east of Sochi). However, there was no such report of terrorism during the Games. Russia even attracted a series of protests and criticisms from LGBT rights activists, human rights activists, and world leaders as the nation had tried to suppress the LGBT culture in Russia by banning the distribution of “Propaganda of non-traditional sexual relations” in June last year. But such protests did not paralyse proceedings between February 7 and 23 at Sochi.

To revisit what Bach had said about investments for the long term, some analysts have doubted his optimism. A Moody’s Investor Service report published recently has highlighted that “Russia’s Winter Olympics city and region, Sochi and Krasnodar Krai, respectively, have benefited from government funding for the 2014 Winter Olympic and Paralympic Games, but are likely to face growing fiscal pressures in the longer term. The high costs of the event and other negative publicity have limited the reputational benefits of hosting the Olympics.” The report further mentioned that Russian hotel industry will be vulnerable “As a massive increase in the supply of rooms coupled with stiff competition from other resorts creates uncertainty over the long-term prospects for Sochi’s tourism industry.”

Sochi Olympics is over. Russia won maximum Gold and the hearts of many-an-athlete. But here’s ground reality. The nation is yet to recover from a slowdown and a $50 billion splurge doesn’t sound pretty to taxpayers. The nation’s fiscal deficit problem is also substantial. As per a government report, Russia is likely to register a budget deficit of 391 billion rouble ($12 billion) in 2014 and 817 billion rouble ($25 billion) in 2015. Even a paper released by The National Bureau of Economic Research (NBER) states how, “A 37 per cent immediate and permanent tax hike or a 27 per cent spending cut” would be needed to control the dangerously growing deficit.

Could Russia have saved some money spent on the Games to offset deficits for this year and the next?
But Russia still has a chance to win back old glory. A slim one though. And one that will not happen overnight. Like during the Games, Putin will have to involve himself from scratch to finish (and honestly so) in solving economical and social issues of his nation. Like we said before, the 17-day-long jamboree is over. Ground reality is – life goes on. The wait won’t!

Rate this article:
Bad Good    
Current Rating 0
Post CommentsPost Comments

Issue Dated: Feb 5, 2017