SOCHI, RUSSIA // The ski jump sits shrouded in mist, its coat of snow undisturbed by any athletes hurtling down the ramp to take off into the air.
A year ago, the jump bustled with activity at the Sochi Olympics as the world’s best ski jumpers – including women, for the first time – competed for gold.
But it invited unwanted attention as well, becoming a stark symbol of how the plans for President Vladimir Putin’s 2014 Winter Games went terribly wrong – at a price tag of US$51 billion (Dh187bn).
The cost of the facility soared during construction from $40 million to nearly $300 million.
The overrun embarrassed the Kremlin, which publicly shamed the businessman involved. He fled the country in the face of a corruption investigation.
Russia had vowed to pay for what became the most expensive Olympics of all time by getting super-rich private investors to take the cost from the state.
Instead, as the first anniversary of those games approaches, at least two of those oligarchs are quietly dumping their increasingly toxic assets on the state, forcing Russian taxpayers to pick up the bill.
For the oligarchs, it is a way to recoup billions of dollars as they struggle in an economy battered by plunging oil prices and Western sanctions.
For Mr Putin’s critics, it is evidence of the crony capitalism that shields Russia’s rich and powerful businessmen from economic pain.
Two key investors have unloaded properties built for the Olympics at a combined cost of $3 billion, a spokesman to Russia’s deputy prime minister said.
The issue is a major headache for Mr Putin, who needs to pay off the oligarchs to keep them happy, while preventing the murky deals from triggering a wave of popular unrest.
The risks for Mr Putin are magnified as the country enters recession and its rainy-day funds dwindle, even as Russia prepares to stage yet another major international sports event – the 2018 World Cup.
In addition, other oligarchs may now be waiting for the right moment to demand their reward or compensation for coming to the government’s rescue by taking on what became unprofitable Sochi projects.
“They don’t have any good options here,” Sam Greene, director of King’s Russia Institute at King’s College London, said of the Kremlin. “They either have to take the public hit, or they have to take the opposition of the oligarchs.”
For now, Mr Greene said it appears that Mr Putin is opting for coddling the oligarchs.
“There seems to be something of an emerging understanding ... that the government will help the titans of the economy to maintain the liquidity they need to stay in business,” he said. “In return for that, they remain quiet, they remain loyal, but they also maintain employment and they keep moving money through the economy.”
The ski jump and nearby ski resort first became a notorious example of Sochi’s excesses in 2013 when Mr Putin visited the construction site and publicly dressed down officials for allowing the original owner, tycoon Akhmed Bilalov, to incur massive cost overruns.
“Well done!” Mr Putin burst out, his voice heavy with sarcasm. “You’re doing a good job!”
Mr Bilalov fled Russia days later, after prosecutors launched a corruption investigation into why the cost of the ski jump had ballooned.
Meanwhile, residents of Sochi have seen few economic benefits from hosting the Olympics. Promises that the games would solve perennial problems such as poor transportation and electricity remain unfulfilled one year afterward.
A much-touted rail link between the Black Sea coast and the mountains is all but suspended.
Tourists who came to Sochi this winter to ski found only six trains a day running between the coast and the mountains, and no trains running between the airport and central Sochi. During the Olympics, there were trains rolling along the picturesque ravines of the mountain resorts every 15 minutes.
The legacy of Sochi’s busted budget is causing concern about Russia’s ability to pull off the World Cup in three years, now that the ruble has lost more half of its value and the economy is struggling under the brunt of Western sanctions over the crisis in Ukraine and the collapse of the price of oil.
The soccer stadiums are only a tiny part of the overall construction for the World Cup. There are 11 host cities that will require new highways, airport expansions, train links, metro lines and giant hotels that are unlikely to be used again.
Unlike Sochi, the World Cup will largely be funded directly by the Kremlin, either through the federal budget or through state-owned companies, with only a few oligarchs in the mix.
The ruble’s plunge also means the price of building materials will soar, causing the World Cup to far exceed its original budget of $20 billion.
Despite such uncertainty, a recent opinion poll conducted in Russia by the Associated Press and NORC Center for Public Affairs Research showed that half the respondents expect the World Cup to be good for the economy.
And despite Sochi’s problems, the poll also found that 51 per cent believe the Olympics were an economic boon.
* Associated Press
