Russia bets big on World Cup economic revival

Russia bets big on World Cup economic revival

15th August 2011, Comments 0 comments

Russia is making a multi-billion-dollar bet on the 2018 World Cup bringing wealth and promise to remote regions that have seen little progress since Soviet times.

Success could spark a social and economic revolution in which growth seeps to cities whose infrastructure had spent decades decaying from mismanagement and financial neglect.

But failure could crush the hopes of a generation of Russians living in the provinces and reinforce global investor doubts about a country whose bureaucracy is as notorious as its surly service.

"Our government takes it all very seriously. Our regional governments take it very seriously. It is a great motivation to really change for the better," said Russia 2018 World Cup Organising Committee chief Alexei Sorokin.

"We want to make full use of the infrastructural growth," he said at the Inside World Football Moscow Forum.

The obvious benefits a World Cup can bring have been felt most in countries such as South Africa -- places with needs and grand projects that refused to get off paper until it was time to prepare for the world's most watched event.

Russia desperately wants to follow suit. It plans to pour up to USD100 billion into high-speed rail development and upgrades stretching from the Gulf of Finland to the Ural Mountains host city of Yekaterinburg.

Roads have been assigned double that figure while another USD10 billion will be spent on more immediate projects linked to the World Cup such as airport and stadium renovation and the construction of hotels.

"We are already looking beyond 2018 at all the infrastructure services the World Cup will offer Russia," said British Embassy commercial team leader Damion Potter.

"Stadiums are like candles on a cake," added Andrew Garbutt of the Los Angeles-based AECOM engineering and design firm.

"They look pretty and they are there for a reason. But what really matters is the cake -- the infrastructure -- underneath."

Organisers have the dual brief of making the hinterlands hospitable to the international masses while locking in long-term rewards.

Russian football bosses speak gravely of "white elephants" that dot some less successful host cities and promise flexible-capacity stadiums that will suit local needs after the World Cup buzz fades.

But some of the biggest excitement is around the high-speed rail lines. The one from Moscow to Saint Petersburg has been a pet Kremlin project but a second is now proposed for cities such as Kazan and possibly Yekaterinburg.

Faster links are also planned throughout central and southern Russia -- regions whose shambolic infrastructure is one of several big drags on investment.

"What high-speed rail does, is it has a very big impact on the sustainability and legacy of a region. It provides social, economic and financial benefits not just in the short term but also in the longer term," AECOM's Garbutt said.

"It brings investment to areas and starts more building in a number of areas that can be developed on."

Yet the scale of the task at hand and the Kremlin's central role in it has some Western investors concerned.

Current development around the Black Sea resort town of Sochi for the 2014 Winter Olympic Games is already haunted by reports of graft and the money for the World Cup is exponentially bigger.

"It would be recommended to hand things to an experienced international project manager," said Lorenz Schneider of the Tilke & Partners project management firm in Abu Dhabi.

"In this context, in these circumstances, it would seem the appropriate thing to do."

Russia still needs to change its laws so that refurbished sites can be privatised once completed and streamline a state tender process whose reliability has failed on many occasions in the past.

But Prime Minister Vladimir Putin -- the de facto leader who spearheaded Russia's World Cup drive -- said that at stake was the "development of the entire infrastructure of the European part of the country."

And officials from the FIFA world football governing body said this was the backing they were hoping for when awarding one of the world's most prestigious events to an Eastern European country for the first time.

"The political support for this in Russia has been astounding," FIFA Secretary General Jerome Valcke told the Moscow forum.

"I have personally not seen this level of political support anywhere before."

Dmitry Zaks / AFP / Expatica

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