The unexpected triumph over the South Korean resort of PyeongChang by just four votes in voting in Guatemala City was immediately attributed - and not just by Russian officials - to President Vladimir Putin, an avid sportsman whose favorite skiing resort, Krasnaya Polyana above Sochi, will be a big center for the Winter Games.
Taking a leaf from Tony Blair's successful personal lobbying to win the 2012 summer Games for London, Putin went to Guatemala to lobby voters and lead Sochi's presentation.
"Putin being here was very important," Jean-Claude Killy, a French member of the International Olympic Committee and former ski champion, told The Associated Press in Guatemala. "He worked very hard at it. He was nice. He spoke French - he never speaks French. He spoke English - he never speaks English. The Putin charisma can explain four votes."
An MP3 of Putin's fluent, if thickly accented English speech was making the rounds of the Russian Internet on Thursday, and officials hailed what Sergei Mironov, a speaker for the Federation Council, called " a personal victory for Russia's president."
Putin himself spoke only of success for his country, which in the seven years of his presidency has boomed economically and grown in confidence on the world stage.
"This is, without doubt, not just a recognition of Russia's sporting achievements, but it is, beyond any doubt, a judgment of our country," Putin said after stepping off the presidential plane in Moscow on this return.
Once the victory party is over, Russia must face up to the serious job of turning Sochi, better known as a Black Sea resort, into a venue capable of holding the Winter Olympics.
Russia, a wintry country, has won 293 medals in Winter Olympics but never hosted the Winter Games. The bonanza of development the Games are expected to bring may boost Russia's already booming economy by a further $15 billion, Alfa Bank said in a note to investors on Thursday titled, " Let the Gains Begin."
Putin pledged $12 billion for Sochi's development in his prevote speech to the International Olympic Committee delegates.
Many of the sporting facilities will have to be built up from scratch, while work is going on to build a slew of Western-class hotels and revamp Sochi's Soviet-era airport.
"This is not a one-off investment but a chance to lift Russia up in international opinion," said Michael Lange, head of the Moscow office of the real estate agency Jones Lang LaSalle.
Some of Russia's richest men look set to make even more money in the race to develop Sochi and Krasnaya Polyana, nestled in the dramatic mountains behind the city.
Developers are already throwing up hotels, sports complexes and ski lifts.
The billionaire Vladimir Potanin, head of the holding company Interros, announced Thursday that his company would pump $1.5 billion into Sochi and Krasnaya Polyana.
"It will be the resort for everyone and not only for the rich," Potanin said, Prime-Tass agency reported.
Interros has already spent about $300 million developing the Rosa Khutor ski center in the area, said a company spokesman, Andrei Kirpichnikov.
A spokesman for Roman Abramovich confirmed that the billionaire owner of Chelsea soccer club is participating in the Olympics project, but refused to say how much was being spent.
The aluminum magnate Oleg Deripaska will be investing more than $2 billion on Sochi's airport and a 180-hectare, or 450-acre, complex to be used during the Olympics, a spokesman said.
The state-controlled energy giant Gazprom is already plowing a reported $375 million into the Peshkhako Ridge project, a ski complex. Gazprom's press office did not comment on Thursday.
"There is a huge amount of money to be made in Sochi," said Darrell Stanaford, the managing director of the real estate agent CB Richard Ellis Noble Gibbons in Russia.
"Foreign investment will be welcome, but Russian and Kazakh investors will have an advantage because they understand the market better," Stanaford said.
Positive market reactions to Sochi's victory gave an indication of who will be the most likely to gain in the run-up to the Games.
Shares in the steel giant Evraz, part-owned by Abramovich, shot up 9.6 percent on the London Stock Exchange, and shares in Kubanenergo, the main power supplier to Sochi, rocketed 18 percent on the local MICEX exchange.
Government coffers are set to swell, too. German Gref, the economic development and trade minister - who greeted the victory in Guatemala with the words "Russia has risen from its knees! - said that Russia could collect about 300 billion rubles, or $11.7 billion, in taxes from the Olympics, Interfax reported.
Speaking from Guatemala, Gref said that Russia would also make money from selling the broadcast rights to the Olympics but that the total potential gains had yet to be calculated.
As to whether Sochi will be ready on time, companies on the ground were bullish about the prospects.
"I don't have any doubts that everything will be built. Only last year we helped build 40 ski slopes," said Alexander Kozlovsky, general director of Skado, the construction firm that worked on the Gazprom ski project.
Commentators dismissed fears that a lack of basic infrastructure around Sochi would seriously hamper the Olympics.
"We are talking about roads, electricity and airports. Those are the main things," Stanaford said.
The obligations that the Olympic Games impose will force local authorities to address infrastructure issues, as well as making the real estate market more open, Stanaford said.
Anatoly Chubais, head of the state-controlled power utility Unified Energy System, said Thursday that the electricity grid in Sochi would be fully functioning by 2011.
Anthony Bijkerk, head of the International Society of Olympic Historians, said that recent Games showed that host cities often receive considerable benefits.
"Both Athens and Sydney saw a very positive influence on their infrastructure," Bijkerk said.
Herald Tribune
by Max Delany and Kevin O'Flynn
The Spoils and Concerns of a Sochi Olympics
After the announcement, Putin said, "This is, without a doubt, not just a recognition of Russia's sporting achievements, but it is, beyond a doubt, a judgment of our country." Putin spoke only of Russia's recent successes in its growing economy and its resurgence onto the world stage. People are once again looking at Russia as a noteworthy country.
Getting to Business
But now that Russia has the games, it faces the task of turning Sochi into a venue capable of holding the Winter Olympics. Russia is expecting a surge of foreign investment into Sochi, which will boost the Russian economy. Most of the sporting facilities will have to be built from scratch, as will Western-class hotels, and the Soviet-era Sochi airport will need an overhaul. The federal government has officially budgeted $7.2 billion to upgrade Sochi's infrastructure, with another $5 billion expected to come from private sources. However, it is expected that the actual reconstruction cost will far exceed these initial estimates.
Russia's politically weighty oligarchs have already started to donate funds for the Olympics -- most likely to Putin's delight and at his insistence. Private investment company Interros President Vladimir Potanin is pumping $1.8 billion into a new resort and ski center; aluminum magnate Oleg Deripaska is throwing in $2 billion for the airport and a sports venue; U.K.-located Roman Abramovich, who partially owns steel giant Evraz, also has pledged a few billion dollars. Russian natural gas behemoth Gazprom has already started building some of the ski slopes, and is expected to be the largest contributor after the Russian government. It will be good publicity for the Russian energy giant, which already enjoys its name all over tents and slopes when Putin is photographed in Sochi.
But the Russian heavyweights will get much back aside from the obvious good graces of the president. Most of those throwing their money into Sochi are in construction, commercial real estate, steel manufacturing, transportation services or energy -- all of which are expected to skyrocket with the demands of building and hosting the Olympics. Shares of Mechel and Evraz already soared Thursday with the news. Economic Development and Trade Minister German Gref said Russia will collect more than $11 billion in taxes from the Olympics, which will help with the costs it is fronting.
Serious Concerns
But the Olympics will not be all fun and games for Russia -- it also must prepare for security. Sochi is located on the border of Georgia. It remains unknown as to whether Moscow will be forced to ease diplomatic tensions or impose a forceful hand on Tbilisi to ensure a secure and stable region over the next seven years. And directly across the Georgian border from Sochi is the secessionist region of Abkhazia, which is relatively pro-Russian but has a history of instability and conflict with Georgia. If the tense relationship with Russia continues, Georgia could be prone to push for flare-ups in the region, putting Russia in a difficult political situation.
The other large security concern comes from Sochi's close proximity to Chechnya. Putin has worked hard on stopping militant activity in Chechnya since Chechen militants pulled off a series of attacks -- such as the Moscow theater incident and the crisis in Beslan. Putin and his group are experienced in security and will no doubt tighten their hold on Russia, Georgia and Chechnya.
Putin, even after he leaves office in 2008, will assuredly keep his hand in all the preparations for the Olympics he fought so hard to secure.
The Black Sea resort of Sochi Russia was awarded the hosting of the 2014 Winter Olympic Games.
Russia has never hosted Winter Olympics before, although Moscow was the host city for the 1980 Summer Olympics.
Great victory not just for the Russian winter sports, but for the politicians and businessmen. Sochi still retains its Soviet infrastructure and accommodations, the current roads will not be wide enough for the Olympic traffic, and the Soviet-style hotels and villas (datcha) will struggle to accommodate the number of visitors expected with each Olympic Games.
Billions of dollars will be poured into Sochi from the government and private investors to reconstruct the Black Sea resort. A measure welcomed by the region, as well as the millions of dollars that would be spent by the foreign visitors.
Russia faces challenges to have Sochi Games ready
- Building the main Olympic Park, with two new ice arenas, an ice skating centre, a stadium for the opening and closing ceremonies as well as the main media centre and athlete accommodation. The site, on a plot of land on the Black Sea coast, has already been earmarked. At the moment, it is a collective farm with a corner used by local people for riding off-road motorbikes.
- Construction of the Alpine venues at Krasnaya Polyana. The plan is to build an Olympic village, hotel accommodation, another media centre, seven cable car railways and new ski lifts, as well as pistes and cross-country ski courses.
- Resolving Sochi's transport problems. A narrow strip wedged between the sea and the mountains, Sochi already suffers from serious congestion. Work has begun on a tunnel through the mountains to take traffic away from the centre of Sochi.
- Modernising the creaking electricity supply. In February, Sochi suffered two blackouts when the ageing lines that deliver power to the region failed. The city had to draw on power from neighbouring Georgia. A new 60-km cable network is being laid and new substations are planned.
Gazprom given right to bear arms
A law backed by 341 lawmakers in the 450-seat State Duma gave Gazprom and oil pipeline monopoly Transneft exemption from strict limits on private businesses wielding arms.
The two state-controlled companies will be allowed to employ their own armed operatives instead of contracting an outside security firm. Their units will also have access to more weapons and more freedom to use them than private security companies.
Gazprom is already described by some observers as a state within a state: it has 430,000 employees, controls some of Russia's biggest media outlets, has a firm grip on gas exports and owns the country's third largest bank.
"This law is like a Pandora's Box," said Gennady Gudkov, a lawmaker with the left-wing Fair Russia party who opposed the law. "Gazprom and Transneft are proposing the creation of their own corporate armies," he said.
Supporters of the law said it was needed to improve protection of oil and gas pipelines from attacks by militants.
Russia supplies almost a quarter of Europe's natural gas and is the world's No. 2 exporter of crude oil, after Saudi Arabia.
The weapons that Gazprom and Transneft armed units will be allowed to carry under the new law are restricted to hand-guns and pump action shotguns. The law includes no restriction on the number of armed employees.
They can be deployed only to protect infrastructure. But given both firms' have pipelines throughout the vast country, that would mean they could operate almost anywhere.
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