Sochi slush

4 October 2011 By Jason Bush

The spiralling cost of the 2014 Winter Olympics in the Black Sea resort illustrates the chaos endemic to Russia’s much-hyped sporting and infrastructure projects. Far from being a boon to the economy and investors, these opaque free-for-alls are a recipe for financial disaster.

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The Russian government last month doubled the size of the federal budget funds allocated to Olympstroy, the state corporation responsible for supervising construction projects in Sochi required for the forthcoming 2014 Winter Olympics. The revision saw Olympstroy’s budget for the years 2008-2014 increase from 143.6 billion roubles ($4.4 billion) to 304 billion roubles ($9.4 billion).
In July, Russia’s Ministry of Sport and Tourism estimated that Russia will need to spend 632 billion roubles ($19.4 billion) in order to host the FIFA World Cup in 2018. The estimate is double the cost originally attributed to the competition by Russia’s premier Vladimir Putin in Dec. 2010, but less than an estimate of $50 billion made by Russia’s Institute of Innovation, Infrastructure and Investments, an independent think-tank.
In 2010, Russia’s finance ministry projected federal budget expenditures on preparations for the Sochi Olympics as 524 billion roubles ($16.1 billion) in the years 2011-13. Russian media have reported that this represents around half of the overall investments required to host the games, estimated at over one trillion roubles ($30.8 billion), citing government sources.

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