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Russia’s Economic Malaise Casts Specter Over Games As Olympics Arrive, Russia Experiences A Downturn
(about 7 hours later)
MOSCOW — When President Vladimir V. Putin delivered Russia’s successful pitch to host the Winter Olympic Games in Sochi — in English, and a smattering of French, no less — he declared it an international validation of the Russia that emerged from the ruins of the Soviet Union. MOSCOW — After President Vladimir V. Putin delivered Russia’s successful pitch to host the Winter Olympic Games in Sochi — in English and a smattering of French, no less — he declared it an international validation of the Russia that had emerged from the ruins of the Soviet Union.
“It is, beyond any doubt, a judgment on our country,” he said then, nearly seven years ago.“It is, beyond any doubt, a judgment on our country,” he said then, nearly seven years ago.
Now, as the first events begin, the Games have for Mr. Putin and his allies become a self-evident triumph of Russia’s will. The avalanche of criticism that has already fallen, from minor complaints about ill-prepared hotels and stray dogs to grave concerns about the costs, security and human rights, is brushed away like snowflakes from a winter coat. Now, as the first events begin, the Games have for Mr. Putin and his allies become a self-evident triumph of Russia’s will. The avalanche of criticism that has already fallen, from minor complaints about ill-prepared hotels and stray dogs to grave concerns about the costs, security and human rights, is being brushed away like snowflakes from a winter coat.
“Its realization is already a huge win for our country,” Dmitri N. Kozak, a deputy prime minister and one of Mr. Putin’s longest-standing aides, said in Sochi on Thursday. He went on to use a phrase attributed to Catherine the Great when she intervened to halt the court-martial of a general who had stormed an Ottoman fortress without orders in the 18th century: “Its realization is already a huge win for our country,” Dmitri N. Kozak, a deputy prime minister and one of Mr. Putin’s longest-standing aides, said in Sochi on Thursday. He went on to use a phrase attributed to Catherine the Great when she intervened to halt the court-martial of a general who had stormed an Ottoman fortress without orders in the 18th century: “Victors are not judged.”
“Victors are not judged.” The Olympic Games are a crowning moment for Mr. Putin, a chance to demonstrate anew his mastery of the global levers of power, but perhaps not for the country he governs. With Russia’s natural-resource dependent economy slowing as commodities prices fall, and with foreign investments drying up, the Kremlin has already signaled that it would have to cut spending. The $50 billion or so lavished on Sochi is becoming a political liability.
For Mr. Putin’s critics, inside and outside Russia, a reckoning looms nonetheless. What was once supposed to be a crowning moment for Russia and Mr. Putin himself, they say, is now awkwardly coinciding with a significant slowdown in Russia’s economy, raising questions about whether the $50 billion or so spent on Sochi might better have been invested elsewhere. Lilia Shevtsova, an analyst at the Carnegie Moscow Center, argued that the International Olympic Committee awarded the games to Sochi — over Salzburg, Austria, and Pyeongchang, South Korea — at a time when Mr. Putin was at the zenith of his powers in his second term but when the verdict on his legacy remained an open one. Many had been critical of his authoritarian instincts after he rose to power, including the tightening of news media and political freedoms and the war in Chechnya, but Russia had indisputably recovered from the chaos of the 1990s.
Despite relatively high oil prices that have driven Russia’s recovery for most of Mr. Putin’s time in power, the Kremlin has already signaled that it would have to cut spending to make up for projected shortfalls in revenue, caused by an erosion of most other commodity prices and a dearth of new foreign investment. “At that time, Russia was ‘rising from its knees,’ ” Ms. Shevtsova wrote in an essay on the center’s website, “whereas now — in 2014 — Russia has started its downward slide.”
Lilia Shevtsova, an analyst at the Carnegie Moscow Center, argued that the International Olympic Committee awarded the games to Sochi — over Salzburg, Austria, and Pyeongchang, South Korea — at a time when Mr. Putin was at the zenith of his powers in his second term but when the verdict on his legacy remained an open one. Many had been critical of his authoritarian instincts after he rose to power — including the tightening of news media and political freedoms and the brutal war in Chechnya — but Russia had indisputably recovered from the chaos of the 1990s.
“At that time, Russia was ‘rising from its knees,'” Ms. Shevtsova wrote in an essay on the center’s website, “whereas now — in 2014 —– Russia has started its downward slide.”
The stalling of the economy, despite the stimulus of Olympian spending, has raised worries about popular unrest directed at the Kremlin and a tightening of political freedoms in response once the Games are over.The stalling of the economy, despite the stimulus of Olympian spending, has raised worries about popular unrest directed at the Kremlin and a tightening of political freedoms in response once the Games are over.
Growth last year slowed to 1.3 percent, the lowest in a decade except for during the global recession in 2009, even as other major economies showed signs of recovery. The Organization for Economic Cooperation and Development recently called for urgent changes in labor policies, productivity and a government and legal bureaucracy that now stifle development — all long promised but not enacted.Growth last year slowed to 1.3 percent, the lowest in a decade except for during the global recession in 2009, even as other major economies showed signs of recovery. The Organization for Economic Cooperation and Development recently called for urgent changes in labor policies, productivity and a government and legal bureaucracy that now stifle development — all long promised but not enacted.
“Structural reforms to improve the business climate are key to raising potential growth and economic resilience,” the organization wrote in its survey of Russia’s economy last month. “As energy prices stagnate and labor and capital become fully utilized, growth is falling behind pre-crisis rates. Making the economy stronger, more balanced, and less dependent on rents from national resource extraction is therefore a key challenge.”“Structural reforms to improve the business climate are key to raising potential growth and economic resilience,” the organization wrote in its survey of Russia’s economy last month. “As energy prices stagnate and labor and capital become fully utilized, growth is falling behind pre-crisis rates. Making the economy stronger, more balanced, and less dependent on rents from national resource extraction is therefore a key challenge.”
The sheer cost of the games has suddenly become a liability even in a political system that allows little room for public debate about the wisdom of government spending. The sheer cost of the Games has suddenly become a liability even in a political system that allows little room for public debate about the wisdom of government spending.
“It is about a lost chance,” said Aleksei A. Navalny, whose Foundation for the Fight Against Corruption recently published an interactive website charting what critics have called excessive waste and corruption in the construction of the Olympic facilities. “It is about what Russia could have done with this money. We could have had a new industrialization along the same lines as the industrialization under Stalin.”“It is about a lost chance,” said Aleksei A. Navalny, whose Foundation for the Fight Against Corruption recently published an interactive website charting what critics have called excessive waste and corruption in the construction of the Olympic facilities. “It is about what Russia could have done with this money. We could have had a new industrialization along the same lines as the industrialization under Stalin.”
Instead, he added, “It’s just one crazy little czar who chose to throw money right and left in some kind of madness.” Instead, he added, “it’s just one crazy little czar who chose to throw money right and left in some kind of madness.”
Russia is not about to collapse. Nor does Mr. Putin’s rule face any foreseeable challenge, something even a determined critic like Mr. Navalny acknowledged. Mr. Putin’s approval rating, bolstered by lavishly positive coverage on state television, remains as high as when he first came to office.Russia is not about to collapse. Nor does Mr. Putin’s rule face any foreseeable challenge, something even a determined critic like Mr. Navalny acknowledged. Mr. Putin’s approval rating, bolstered by lavishly positive coverage on state television, remains as high as when he first came to office.
Hosting the Olympics, however, seems to have lost some of the luster officials expected for Russia’s prestige at home and abroad, much to the frustration of Mr. Putin’s supporters.Hosting the Olympics, however, seems to have lost some of the luster officials expected for Russia’s prestige at home and abroad, much to the frustration of Mr. Putin’s supporters.
The Olympics have refocused international attention on the hard-line policies Mr. Putin’s government has pursued since he returned to the presidency in 2012 after a four-year interregnum as prime minister and prompted calls for protests and even boycotts. The Olympics have refocused international attention on the hard-line policies Mr. Putin’s government has pursued since he returned to the presidency in 2012 after a four-year period as prime minister, and prompted calls for protests and even boycotts.
The list is long: Russia’s support for Syria’s president, Bashar al-Assad, and its efforts to keep Ukraine out of the orbit of the European Union; its prosecution of political opponents, real and perceived; its restrictions on foreign adoptions, and the passage of a law last year prohibiting “homosexual propaganda” aimed at children; even its most recent campaign to choke off the only independent television news channel on the pretext of questioning the Soviet Union’s victory following the Siege of Leningrad, which ended 70 years ago. The list is long: Russia’s support for Syria’s president, Bashar al-Assad, and its efforts to keep Ukraine out of the European Union; its prosecution of political opponents, real and perceived; its restrictions on foreign adoptions; the passage of a law last year prohibiting “homosexual propaganda” aimed at children; and its recent campaign to choke off the only independent television news channel on the pretext of questioning the Soviet Union’s victory following the Siege of Leningrad, which ended 70 years ago.
“The Games are supposed to be outside of politics,” Aleksandr D. Zhukov, the deputy speaker of the lower house of Parliament and the chairman of the Russian Olympic Committee, said in a recent interview. “Those who try to pin some political tails on them are just being undignified.”“The Games are supposed to be outside of politics,” Aleksandr D. Zhukov, the deputy speaker of the lower house of Parliament and the chairman of the Russian Olympic Committee, said in a recent interview. “Those who try to pin some political tails on them are just being undignified.”
To many officials here, criticism of the Games has a pernicious undertow of Western hostility toward Russia, intended to deny the country its rightful place in the world order. It is a sentiment that shapes Russia’s foreign policy, especially toward the United States.To many officials here, criticism of the Games has a pernicious undertow of Western hostility toward Russia, intended to deny the country its rightful place in the world order. It is a sentiment that shapes Russia’s foreign policy, especially toward the United States.
“I once heard a very good explanation from a very wise person about why we will never be able to explain ourselves completely in such a way that everyone will like us,” the Kremlin spokesman, Dmitri S. Peskov, said in a lengthy interview with the newspaper Kommersant this week. Presumably he meant Mr. Putin himself.“I once heard a very good explanation from a very wise person about why we will never be able to explain ourselves completely in such a way that everyone will like us,” the Kremlin spokesman, Dmitri S. Peskov, said in a lengthy interview with the newspaper Kommersant this week. Presumably he meant Mr. Putin himself.
“This wise person said, ‘Do you know when everyone will love us and cease to criticize us and so on, including criticizing us for no reason?'” Mr. Peskov said. “And I asked, ‘When?’ And he said, ‘When we dissolve our army, when we concede all our natural resources to them as a concession and when we sell all our land to Western investors. That’s when they’ll cease to criticize us.'” “This wise person said, ‘Do you know when everyone will love us and cease to criticize us and so on, including criticizing us for no reason?’ ” Mr. Peskov said. “And I asked, ‘When?’ And he said, ‘When we dissolve our army, when we concede all our natural resources to them as a concession and when we sell all our land to Western investors. That’s when they’ll cease to criticize us.’ ”
Mr. Putin, for his part, has presided over the final preparations in Sochi seemingly impervious to the flurry of rebukes, from trivial mockery of the state of Russia’s hospitality industry to searing criticism from groups like Human Rights Watch and Amnesty International, which has already declared two environmentalists arrested this week as the Olympics’ first prisoners of conscience.Mr. Putin, for his part, has presided over the final preparations in Sochi seemingly impervious to the flurry of rebukes, from trivial mockery of the state of Russia’s hospitality industry to searing criticism from groups like Human Rights Watch and Amnesty International, which has already declared two environmentalists arrested this week as the Olympics’ first prisoners of conscience.
He met with the presidents of Tajikistan and China on Thursday, the first of a series of meetings with heads of state that will happen on the margins of the Games.He met with the presidents of Tajikistan and China on Thursday, the first of a series of meetings with heads of state that will happen on the margins of the Games.
“We have strong memories of the emotional, uplifting enthusiasm we felt during the 1980 Moscow Olympics,” Mr. Putin said, again in English, when he opened the 126th session of the International Olympic Committee on Tuesday, omitting any reference to the United States-led boycott that marred those Games. “And we feel truly joyful and positive because the mighty, inspiring spirit of the Olympic Games is once against returning to our nation.” “We have strong memories of the emotional, uplifting enthusiasm we felt during the 1980 Moscow Olympics,” Mr. Putin said, again in English, when he opened the 126th session of the International Olympic Committee on Tuesday, omitting any reference to the United States-led boycott that marred those Games. “And we feel truly joyful and positive because the mighty, inspiring spirit of the Olympic Games is once again returning to our nation.”
President Obama and the leaders of France, Germany and Britain may have declined to attend the Games, but they will end up in Sochi soon regardless. Russia will be the host of this year’s Group of 8 summit, and Mr. Putin has decided to hold it there.President Obama and the leaders of France, Germany and Britain may have declined to attend the Games, but they will end up in Sochi soon regardless. Russia will be the host of this year’s Group of 8 summit, and Mr. Putin has decided to hold it there.