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2014 Winter Olympics bring on the ruthless redevelopment of tourism around Sochi

Valery's eyes burn ice blue as he stares towards the Black Sea coast just yards from his house. The local government has given him three months to pack up and leave, as the country begins preparing to turn Sochi and its environs into an Olympic playland. "We built our houses with our own hard-earned money, unlike [Prime Minister Vladimir] Putin," said Valery, who makes his living fixing refrigerators. "Why should his children and the oligarchs' children get to play in the sea while ours are chased into the mountains?"

The residents of Nizhneimeretinskaya Bukhta, a town 30 miles from central Sochi, are being forced from their homes to make way for the Olympic Village that will serve as one of the main sites for the 2014 Winter Olympics. All 119 houses in the neighbourhood, home to some 400 people, will be razed, replaced with elite hotels, ice rinks and manicured grounds. The houses, simple structures, line the Black Sea shore. There are a few shops, steps away from the rocky beach. These will be razed too.

Last November, the Russian parliament passed a law to clear the way for fast-track evictions, arguing that they would be needed to get the Olympic sites built on time. In August, residents were told they had three months to leave their homes. The Olympic Village complex, known as the Imeretinskaya Riviera, is being built by Altius Development, part of the Basic Element holding owned by the billionaire Oleg Deripaska, Russia's richest man. An Altius spokesman did not respond to written requests for comment.

The biggest worry, for him and the residents of Nizhneimeretinskaya Bukhta, said Valery Suchov, the head of residents' rights organization Svoi Dom, is how the land will be valued. "They have to give us a fair price, we need independent assessments, we don't trust the people the government chooses to value our land," he said.

More at: Fury of Sochi Russians being forced from their homes to make way for Winter Olympics, Miriam Elder, Telegraph, 5 October, 2008

Sochi could well be turned into a luxury resort catering to the super-rich after the last fireworks fade at the 2014 Winter Olympics. With billions of dollars earmarked for hotels, stadiums and infrastructure upgrades, the Black Sea getaway spot is set to become one of the country's most modern cities with top-notch tourism and sporting facilities in the next five years.

The idea of turning the Soviet-era resort into Russia's answer to the French Riviera has been raised numerous times over the years. Hopes grew after Vladimir Putin started vacationing and hosting international leaders there during his presidency. But now, with a $13 billion Olympic investment program, including a pledge of $7.7 billion from the government, the money appears to be in place to finally turn the Riviera dream into reality.

The Olympic construction program calls for the construction of more than 250 facilities, including up to 25 five-star hotels and 15 stadiums located in two clusters -- one along the coast, the other in nearby mountains. The coastal cluster will evolve around a grand Olympic Park, which will include the Olympic stadium, an Olympic Village, the main media center and Russian International Olympic University. Since winning the right to host the Olympics last July, Sochi has seen a windfall of $800 million in private investment, according to the Chamber of Commerce and Industry for the Krasnodar region.

The mountain cluster is being created at Krasnaya Polyana and will comprise biathlon and ski complexes, a bobsleigh track and a mountain Olympic Village. All the facilities in the mountain cluster are to be financed by private investors.Some of the most ambitious projects now on the drawing board are to be transformed into national training centers to cater to top Russian athletes. This includes the Russian National Ski Jumping Center, which is to be converted into a training center for athletes and youth. Currently, Russia's national ski jumping competition takes place in Germany because of a lack of facilities. Likewise, national training centers would be made out of the planned Alpika Service Mountain Resort (freestyle skiing), the Roza Khutor Alpine Resort (alpine skiing and snowboard) and the Russian National Sliding Center (bobsleigh, luge and skeleton).

In keeping with the spirit of the times, the mammoth main media center will be converted into a world-class exhibition and shopping center. This will include a 40,000-square-meter multipurpose exhibition hall and a 30,000-square-meter shopping and entertainment mall. "Russia desperately needs this infrastructure, having lost all world-class facilities in the mountains after the collapse of the Soviet Union," the organizing committee said.

For now, Sochi resembles a huge construction site, rendering roads impassable and the city center overcrowded. Despite the recent launch of private air-taxi services to the city and airlines shifting base to Sochi in anticipation of the Olympics, air tickets to Sochi are among the most expensive in the country. There is no greater threat to Sochi's ambition of becoming an year-round tourist resort than the exorbitant prices of air tickets from places like Moscow, said Elizaveta Shaforostova, a development consultant at Cushman & Wakefield Stiles & Riabokobylko. .

The Sochi 2014 Organizing Committee attributed the problems to temporary glitches and said its development program would move off the drawing board sometime next year, when construction is to start on all Olympic venues.

More at:Turning Sochi Into a Playground for the Wealthy Tai Adelaja , Moscow Times, 18 September 2008

Leading Russian and foreign investors reacted with cautious optimism this weekend at the 2008 Sochi International Investment Forum to an emergency government package aimed at bolstering the country’s bourses but warned that difficulties remained ahead for the markets and the economy itself. “The reasons that created this situation still exist,” Andrei Sharonov, managing director of Troika Dialog and a former deputy economy minister, said in an interview. “Mechel, TNK-BP, Georgia — they just accelerated the process.”

Bankers conceded that Russia’s wild economic boom, founded on soaring oil prices, had led to looser risk controls. About $25 billion of foreign capital fled the country in the wake of Russia’s war with Georgia in August, while its markets sank more than 20 percent in the first half of last week. Many said they expected that the credit crunch would soon hit Russia’s real estate market, collapsing prices and, crucially, passing the pain of the turmoil on to middle-class Russians, who tend to invest in hard assets such as real estate rather than stocks and bonds. Real wages could also be affected, as firms cut down on projects and labor in the face of decreased credit lines and slowed growth.

At a meeting Thursday evening at his Sochi summer residence, Putin assured top Western investors — including the chief executives of BP, Shell, Total, Deutsche Bank and Siemens — that there were “no systemic problems in the Russian economy,” news agencies reported. Yet some expect changes ahead. Veniamin Golubitsky, head of construction firm Renova Stroygroup, said he thought a new real estate landscape would emerge because of the credit crunch. “It’s harder for us now to get money from the banks,” adding that he believed that housing prices could fall up to 10 percent this year. “The crisis will lead to some changes in the market generally,” he said. “Bigger companies will absorb the smaller ones, as those will have their access to credit cut.”

The initial announcement of the extra access to funds named VTB, Sberbank and Gazprombank as the only beneficiaries, but an additional 25 banks will be included on the list, the Finance Ministry said Sunday evening, Bloomberg reported.

Valery Antonov, head of Raiffeisen Investment’s infrastructure department in Russia, said investment in the country was still growing, especially in retail, food production and pharmaceuticals. “Foreign investors are also showing increasing interest in getting into infrastructure projects, which, due to state involvement, seem to be a stable investment,” Antonov said. Contracts worth $19.7 billion, mainly in construction and resort development, were signed at the forum in Sochi, which was chosen last year by the International Olympic Committee to host the 2014 Winter Olympics.

More at: Investors Hope for End to Volatility, Miriam Elder, Nadia Popova, The Moscow Times, 22 September 2008

The IOC, in an unusual move, granted the games to Sochi without there being any actual infrastructure in place to receive them, solely on the Kremlin’s word that a whole new world would be created from scratch.

At a press conference in Moscow on April 10, timed to coincide with the Kremlin’s first formal progress report to the International Olympic Committee, a coalition of anti-Kremlin activists, including Garry Kasparov, warned that several of the Kremlin’s planned construction sites have become infeasible due to the unforeseen height of the water table. Last October, Vladimir Putin himself stated: “We unfortunately have to admit that at this point, in a city of half a million people, there is no proper sewage system, electricity supply, or infrastructure.” One must wonder how clearly Russia made that point to the IOC in its bid document.

But even if the facilities could be constructed, opposition advocates point out that the cost of doing so will be astronomical, far beyond the figure quoted by Russia to the IOC in its bid. Victor Ilyukhin, a Communist parliamentarian, said “the state’s planned budget for Sochi, $11.9 billion, would dwarf the $6 billion combined total spent on the Winter Olympics in Nagano, Salt Lake City, and Turin.”

Andrey Savelyev, deputy chairman of the Committee of the State Duma for Constitutional Legislation and State Building, stated: “Indeed in order to convert this city into the sports center, it is necessary to spend colossal amounts of money, which are necessary in our country for other purposes.” Greenpeace is threatening legal action over wanton environmental spoilage that is occurring in the formerly pristine Black Sea ecosystems .

Mass evictions are occurring under an eminent domain law that was hurriedly pushed through parliament, and local residents are complaining about mistreatment and lack of fair compensation. They argue the eminent domain statute is unconstitutional. Recently, protesters clashed with police and many were violently assaulted.

On top of all that, there’s still a thousand-pound gorilla in the room named Chechyna. Separatist violence in the war-torn region is far from under control, and the region is suffering from extreme levels of unemployment (up to 400,000 of Chechnya’s 1.1 million inhabitants are jobless). It’s hard to imagine how the Chechen rebels, who have inflicted the brutal Beslan and Dubrovka terrorist assaults, will decide to stand idly by as Russia attempts to carry out a public relations stunt right under their noses, literally a Molotov’s cocktail throw away.

And the people of Russia would certainly be better off without the games, devoting their precious (and temporal) fossil fuel windfall to vital needs such as medical care. Quite literally, the IOC’s decision to hand Putin’s Russia the games may be helping the people of the country into an early grave.

Seen in that light, the apparent decision of Russia’s opposition forces to target the Kremlin’s weakness on Sochi is a formidable one. This is clearly an area where they have the potential to gain serious traction if they play their cards well, and it will be most interesting to see how the matter unfolds.

More at: Russia’s 2014 Olympics a Disaster in the Making Kim Zigfeld, May 4 2008, Pajamas media blog,

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