Sochi 2014: Anti-Gay Laws, Terrorism And Financial Issues Plague Putin's Big Project

It's still several weeks before the start of the 2014 Winter Olympics in Sochi, Russia, and the Games have already had a host of troubles. They've been shrouded in controversy and trivialized for possible doomsday sporting scenarios ranging from widespread condemnation over anti-gay legislation and scares of possible terrorist attacks, to more-mundane fears such as insufficient amounts of snow in the subtropical Black Sea resort town. And then this week, two deadly bombings occurred within 24 hours in a town not far from the site of the Games.

It's mainly been bad news for President Vladimir Putin, who has a huge stake in Russia hosting a successful, safe and scandal-free sporting event. Many experts believe the Sochi Games represent a golden opportunity for the Premier to promote a more favorable world perception of Russia, as well as to showcase infrastructure that could attract increased domestic tourism.

After suffering high-profile snubs from numerous world leaders in opposition to Russia’s human rights record, Putin has done a public-relations blitz in recent weeks to alleviate political tension by announcing that gay athletes and guests are welcome at the Games, granting amnesty to two members of the punk band Pussy Riot, and pardoning his Kremlin opponent Mikhail Khodorkovsky.

But there may not be much Putin can do to deflect attention from security issues. On Monday morning, a suicide bomber struck a bus killing at least 14 people in the city of Volgograd, located between Moscow and Sochi.

On Tuesday, Putin vowed “total annihilation” of terrorists, a particularly bold response considering the numerous attacks on the city since the 1990s. He also sent the head of the Federal Security Service to investigate the attacks, which may have been perpetrated by Chechen separatists who seek to ignite fears that Russia is incapable of guaranteeing safety during the Olympics.

A terrorist attack during the Olympics could overshadow the Games, and it seems clear that Putin will do all he can to prevent such an occurrence. Reports from both Sochi and Moscow claim the cities have heightened security for several months.

“If things go poorly and the two recent terrorist events near Volgograd become part of a continued trend of violence, Putin will lose the sense that security is good in Russia and that he can be trusted to create safety and security,” said Tara Sonenshine, a former under-secretary for public diplomacy and public affairs.

“This is more than a game or a set of games—it is about prestige.”

The eyes of the world will be focused on Russia for most of February, and Putin has a lot to lose and a lot to gain -- politically and economically. Should the Games go smoothly, he could be remembered as the man who quelled some lingering Cold War sentiment with the West. Putin’s pet project is intended to be an image booster for Russia, as well as for his own image at home and abroad. The same may go for the FIFA World Cup, which will be staged in Russia in 2018.

RIA Novosti -- a state-run Russian media outlet willing to challenge the Kremlin replaced by Putin earlier this month for one that promotes Russia’s international image -- reported in April that 55 percent of Russians did not want Putin to run for president when his third term ends in 2018. A September poll showed that positive opinion of Putin had plummeted 33 percentage points in the past five years.

Sonenshine believes that Putin cares about his legacy and reputation, and that the Sochi Games offer a chance for Russia to feel national pride and show the world that they are very much “a player.” She cites how Russia hired a PR firm in 2006 to undo negative images, as well as the country’s hopes to play a larger role in diplomacy.

“Putin stands to gain a reputation as a strong leader able to bring together nations of the world if he can pull off a successful Olympics in a once-neglected Soviet resort on the Black Sea. He can reduce the concerns about overseas investment in Russia and persuade others that the North Caucasus don’t pose a threat,” she added.

There are already some controversies Putin can’t repair, such as the hefty cost for the Games that reportedly have filled the pockets of his wealthy cronies. Companies owned by construction tycoon Arkady Rotenberg, a boyhood friend of Putin, reportedly were awarded contracts worth more than $7 billion, which is roughly the entire cost of the Vancouver Games in 2010. Meanwhile, there have been reports of a large number of construction workers complaining about being underpaid or not paid at all.

The Sochi Games are expected to exceed a staggering $50 billion price tag, but the infrastructure in place could prove to be a profitable long-term investment for Russia. Much of the construction projects will outlast the Olympics, which include a transport link between Sochi and Caucasus Mountain ski resorts, a highway along the Black Sea coast, a Formula One track, and an 8,000-seat arena that will be turned into the largest trade and exhibition center in the south of Russia.

Tourism could also see a sustained spike following the Olympics, but there are other competitors and factors to take into account. Will more Russians choose Sochi over summer locations like the scenic Montenegrin coast, or winter locations like the slopes of Finland?

Sochi’s long-term appeal may depend on whether the region receives a gambling license. Russian Prime Minister Dmitry Medvedev recently stated that there has been no proposal to turn Sochi into a gambling zone and that the idea was floated by the banking community.

“If it merges the Las Vegas model with winter sports, it might remain busy 365 days a year,” Chris Weafer, a senior partner at macro investment firm Macro Advisory, told Bloomberg.com.

The heavy investment into Sochi might be particularly risky considering Russia’s economic forecast. In November, Economy Minister Alexei Ulyukayev announced that the nation’s economy would lag global growth in the next two decades, growing by just 2.5 percent.

Meanwhile, the Olympics may not necessarily be a good investment. Only a small number of the Summer and Winter Olympic Games have proven profitable for their host cities, making the rising cost of Sochi appear to be a serious gamble. Putin may have justifiable concerns that the $50 billion-plus Sochi Games, the most expensive in history and five times more than originally estimated, may not be worth it.

The Nagano Games in 1998 went over budget, causing the city to fall into a recession. And the Athens Games in 2004 vastly exceeded their budget, which many believe contributed to Greece’s financial crisis.