… Kremlin pleads for no kickbacks in preparations
(REUTERS)-As the euphoria from winning the right to stage the 2018 World Cup faded on Friday, Russia grappled with the challenge of rebuilding crumbling Soviet-era infrastructure to host soccer’s most prestigious competition. Local media hailed Prime Minister Vladimir Putin and his deputy, Igor Shuvalov, for winning a “fairy tale” victory for Russia’s soccer fans.
“You can take me at my word: the 2018 World Cup will take place according to the very highest standards,” Putin said after flying to Zurich to thank the governing body, FIFA.
Putin said the infrastructure would be ready on time and the $10 billion cost would be borne partly by Russia’s biggest companies including Gazprom and the oil company LUKOIL.
Finance Minister Alexei Kudrin gave a figure of 200 billion to 300 billion roubles ($6.38 billion to $9.56 billion), adding that the main expense would fall after the completion of the sites for the 2014 Winter Olympic Games.
“The main expense load will be starting from 2013, after we finish all the Olympic sites,” Kudrin, who has been feted by investors for demanding a tight lid on spending, said in Krasnaya Polyana, the southern mountain resort where many Olympic events will be held.
Whatever the figure, the challenge is huge. Russia must repair or build thousands of kilometres of roads and railway tracks while upgrading airports, telecommunications and hotels throughout the land.
NO KICKBACKS
The Kremlin made a plea for people to refrain from stealing the money, a stark reminder of the corruption that accompanies almost every major Russian infrastructure project.
“Let’s do it without kickbacks,” Kremlin chief economic adviser Arkady Dvorkovich wrote on Twitter.
Russia is ranked as the most corrupt G20 country by anti-graft groups and has been cast in leaked U.S. diplomatic cables as a state ruled by a venal bureaucracy that creams off cash from sales of its vast oil and gas reserves.
Deals connected with Russia’s Winter Olympic preparations have been the focus of corruption investigations, including one ordered by President Dmitry Medvedev early this year.
The cost of the Olympics preparations have spiralled and are likely to total about $30 billion, according to current forecasts, half of that coming from Russia’s federal budget.
Kudrin has promised less will be spent on the World Cup, although the business daily Vedomosti said the cost could reach more than $50 billion, a figure Dvorkovich said was grossly exaggerated.
Compared with the nominal gross domestic product of $1.2 trillion, which is forecast to double over the next decade in dollar terms, the investment figures are modest, as is the projected effect on growth, although some sectors could receive a boost.
Shares in Russian steel companies rose after Russia’s bid won, on expectations of a spending boom. Construction, tourism, transport and construction tool companies are also likely to benefit.
“The scale of the required infrastructure upgrades is massive,” the investment bank VTB Capital said in a note to clients.
“There is a strong desire to go beyond what is absolutely necessary. Plus the propensity for embezzlement must be taken into account as well. We therefore estimate the potential 2018 World Cup-driven investment at $20 billion for now.”
Caption:  Russia’s Deputy Prime Minister Igor Shuvalov (front-R) poses on stage with FIFA president Joseph Blatter   (C) Russian Sports Minister Vitaly Mutko(C-L) and other members of the Russia 2018 bid committee.