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SOCHI, Russia The mountains of Sochi now are home to Potanin s slope,monster headphones, Gazprom s gondola lift and Sberbank s ski jump. The nicknames used by locals and an army of construction workers leave no doubt about who is paying for the 2014 Winter Games: Russia s business powerhouses.
Other countries that have hosted the Olympics overwhelmingly have used public funds to pay for the construction of needed venues and new infrastructure. The Russian government,beats by dre Spaces- Words and pictures fill home 0 864,dr dre headphones, however, has gotten state-controlled companies and tycoons to foot more than half of the bill, which now stands at $51 billion and makes the 2014 Winter Games by far the most expensive Olympics in history. In contrast, the much-larger 2012 Summer Olympics in London cost about $14.3 billion and the 2008 Summer Games in Beijing cost about $40 billion.
For President Vladimir Putin, the games have been a matter of pride. He has entrusted the country s top businessmen with Sochi s key projects. He himself is spending increasing amounts of time in the southern Russian city, hosting world leaders at his luxurious presidential palace.
Mikhail Kasyanov, a former prime minister under Putin, described the tycoons participation as a sort of tax imposed by the president.
If you want to carry on doing business in Russia, here s the tax you need to pay the kind of a tax that he wants you to pay,cheap beats by dre, Kasyanov, now an opposition leader, told The Associated Press.
This is particularly true of those like metals tycoons Vladimir Potanin and Oleg Deripaska, who made their fortunes in the rags-to-riches privatizations after the 1991 collapse of the Soviet Union. For others who have grown fabulously wealthy since Putin came to power in 2000,beats by dre, the 2014 Olympics have been a chance to reap the profits through lucrative state contracts.
Most of the projects the tycoons are involved in are not profitable and many businessmen are making no secret of the losses they are incurring. But anyone who does business in Russia today is acutely aware of the importance of maintaining good relations with the government and especially with Putin. The tycoons remember well how Putin in 2008, with one verbal attack,beats headphones, sent the stock of metals company Mechel tumbling 40 percent, cutting $6 billion from its shareholder value.
Russian big business is heavily dependent on the government and often has to follow Putin s requests and take on projects that are important for top officials, said Vladimir Milov, an economist and former deputy energy minister who also now is part of the anti-Putin opposition.
The tycoons and state-owned companies dismiss claims that they were pressured to invest in Sochi or that they did so in exchange for promises of preferential treatment.
Gazprom, the world s largest natural-gas producer and a publicly traded company, said in a written statement to the AP that its work in Sochi is both a business project and serious social responsibility.
Gazprom s Sochi projects are vast. It is building a pipeline to bring gas supplies to the Sochi area, a power station in a Sochi suburb, an Alpine ski resort, one of the three Olympic villages and a cross-country skiing and biathlon center. Its total costs run to $3 billion.
Andrei Elinson, deputy general director at Deripaska s Basic Element investment vehicle, insists its Sochi projects were all designed to be profitable. The company is building an Olympic village and a seaport and has just finished revamping the Sochi airport, for a combined cost of $1.4 billion.
We are a strategic investor in the area. We believe in the development of the area on the whole,beats headphones Missions snap skid, beat Arkansas, Elinson said. After the games, Basic Element plans to convert the Olympic village into apartments and the sea port into a marina.
Even so, some tycoons are grumbling that they have been hit up with unexpected demands that are stretching their funds more than anticipated. Their balance sheets have been dragged down by a flow of requests from the state contractor Olimpstroi to build more infrastructure than originally planned.
Potanin started building his Roza Khutor ski resort even before Sochi was picked in 2007 to host the 2014 games. He is spending $2.5 billion, including $500 million on infrastructure required by the International Olympic Committee. In addition, the Alpine resort had to close to tourists for months at a time while hosting Olympic test events during the last two winter seasons, costing it $3.2 million in lost revenue each month it was closed, said Roza Khutor general director Sergei Bachin.
When Potanin s Interros holding company first committed to the games, we had no idea what exactly would be required from us, Bachin said. Now, delivering everything on time has become a matter of honor, he said.
Still, looking back, Bachin said Roza Khutor should not have been so compliant.
When we were asked to build this or that, we were probably too yielding in taking up those requests, he said.