15.03.2009
The XXII Winter Olympic Games “SOCHI-2014” can bring political dividends to Russia, but not profit. Construction of objects, infrastructure and conduction of the Olympics will cost several times more than planned in the Federal budget. The managing staff is already three times larger than normal. No wonder, since most of the expenses will be covered by the “investments” of natural monopolies, i.e. with public money that belongs to the nation. But this money is being managed by the “Russian power elite” and their “monopoly business partners”. Preparations for, and conduction of the Olympics in Russia provide the corrupt officials with an excellent opportunity to get rich at the expense of the State, bearing no criminal liability for cost overruns and misuse of allocated funds. Frequent rotation of the Heads of this Federal program, who don’t want to become scapegoats and take responsibility for embezzlement and theft of huge financial resources, is no accident.
Intensive “high season” on the Black Sea coast of Krasnodar Territory does not exceed six months; making Russian Citizens spend their vacations in Sochi in winter is not possible, even with the help of an administrative resource. Most solvent Citizens prefer spending their vacation abroad. Gone are the times when, at the expense of free vouchers issued by trade unions, it was possible to fully load the capacities of sanatoriums, rest homes, recreation areas, sports and tourist camps - which were not interested in providing an adequate level of service to the masses of “free of charge” holidaymakers of USSR.
Citizens want to spend their money on recreation in the places of high quality service at affordable prices, with the availability of clean sea water and beaches, cultural, entertainment, sporting and recreational activities, low prices for food, fruits, vegetables, etc. Sochi does not enjoy those conditions and will not in the foreseeable future. Independent expert reports and ROI calculations for expensive construction projects of XXII Olympic Winter Games and their subsequent use for commercial purposes are not reassuring. That’s why “real” investors, unlike “straw men”, will not invest in obviously unprofitable Russian projects. The matter of developing Sochi as a Russia-wide resort city cannot be solved by a single sporting event. It requires a political settlement of the situation in North Caucasus, a long-term Federal targeted program and creation of favorable conditions for socio-economic development of Krasnodar Territory as a whole.
After the Games of the XXIX Olympiad in 2008 in China, intended usage of the Beijing National Stadium turned out to be economically unjustified. Thus, a decision was made to eventually turn the stadium into a commercial shopping and entertainment centre with pavilions and kiosks, just like the Grand Sports Arena of the Luzhniki Olympic Complex in Moscow in the recent past. As for the sporting objects in Sochi, these can only be loaded under one condition: hosting sport and training events, funded by the Federal budget, in a non-stop mode. Arguments that the usage of sport facilities will be funded by natural monopolies rather than by the State, are knowingly wrong, since the State is the main owner of those monopolies. Therefore, financial support will come at the expense of “unpaid” taxes. Hence, the acquisition of sports facilities by natural monopolies will not solve the funding problem. Moreover, balance sheets of the monopolies already have plenty of non-core assets and high costs of the numerous activities, for which they have to respond to the State and Russian Citizens.
Could the conduction of Sochi Winter Olympics in 2014, as well as the subsequent use of its infrastructure, be made economically efficient? Yes – if carried out in parallel with the nongovernmental investment YACONTO Integrated Program. If we analyze the Program of preparation for Winter Olympic Games in Sochi, it becomes apparent that it incorporates the creation (but “at public expense”) of highly expensive objects, originally specified in the YACONTO List of Projects from 09.05.2005 (where “public funding”, on contrary, was not envisioned). Primarily, the core Project for construction of a new double-track railway section on the route between the cities of Tuapse and Adler, within 3–11 km from the Black Sea cost, replacing the current single-track section along the Black Sea coast, as well as the Project for construction of a modern high-speed multilane highway from the town of Goryachi Klyuch to the Georgian border, in parallel to the existing federal highway Tuapse – Sochi (M27), bypassing all settlements, next to the aforesaid railway.
Implementation of just the two above-mentioned Projects from the YACONTO List of Projects of 09.05.2005 will allow to dismantle the old railway branch and move the intensive car traffic away from the Black Sea coast further inland, which will create conditions for extensive development of a whole world-class health & recreation industry and sporting & tourism business. That’s why the large-scale multidisciplinary YACONTO Integrated Program fully corresponds to the vectors of socio-economic development of Krasnodar Territory, and of Southern Russia in general, as well as Russia’s geopolitical interests. This program is able to create synergy and multiplier effect, not only in Russia but also abroad. More details are set forth in the Letter from YACONTO LLC to Russian President Vladimir Putin (out. №80116-1 of 16.01.2008), concealed from him by officials, and the YACONTO Explanatory Note of 09.05.2008.