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Sochi's Winter Olympics in 2014 run into trouble

By Julian Worker     Mar 17, 2009 in Business
And Vancouver thinks it has problems...Sochi's extensive building plans have been thrown into confusion by Oleg Deripaska's net worth falling by 85% due to the credit crunch. He still has $3.5 billion but owes 4 times this amount to his creditors.
In 2007, Sochi on the Eastern coast of the Black Sea was awarded the 2014 Winter Olympics. It was a surprise that Sochi was chosen as most neutrals thought that both Salzburg and Pyongchang had better bids overall. It seemed that Sochi’s traffic system wouldn’t be able to support such an audacious plan. A road would have to be built to the mountain resort of Krasnaya Polyana where the skiing events would take place and a new terminal would have to be constructed at the airport. However, Russia had plenty of billionaires to help create the infrastructure and one of these, Oleg Deripaska, agreed to build the road and the terminal. He owns Rusal, the world’s largest aluminium company, and only 12 months ago he was Russia’s richest man, worth around $28.5 billion US Dollars.
Now, Deripaska is only worth one eighth of that amount and his company owes $14 billion to creditors with half of that amount going to Western banks who understandably want their money back now. Last month the 2009 budget for Olympstroi, the state company overseeing construction work, had its budget cut by $890 million.
Of course, the Russian government won’t allow Sochi’s status as Olympic host in 2014 to be undermined and they will step in to bolster the ailing construction efforts should they be deemed to be affecting the suitability of Sochi to host the Games.
In a move that is a microcosm of what may happen in the rest of the world during the credit crunch, the desire to cut costs as much as possible and to create a town that will be economically prosperous will be more important than any Environmental effects that the construction will have on ecosystems, the native bear population, and the beautiful forests of the region. In times of hardship, economic necessities come ahead of Environmental concerns.
All this makes me wonder what the International Olympic Committee was playing at when awarding Sochi the 2014 Winter Games. Perhaps delegates were won over by President Putin’s eloquence in both English and French at the final meeting in 2007 and ignored the negative social and environmental impacts the Olympics would have on Sochi and its hinterland.
More about Winter olympics 2014, Oleg deripaska, Sochi, Russia, Putin
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