By Mark Baber
April 8 – Despite encouraging signs of resilience in the economy, Russia looks poised to cut back on the number of hotels built specifically for the 2018 World Cup, following the publication of a consultation document by the Sports Ministry.
A list of 25 projects which may be abandoned and 23 projects which will be substantially downsized has been published, with 27 billion rubles ($502 million) expected to be trimmed from World Cup budgets. The cuts are in projects which had been slated to be funded by private or regional, rather than state, capital and there are no cuts in stadium capacities over and above those previously agreed upon with FIFA.
Savings will largely come from a reduction in the number of new luxury hotels from 63 to 38 including 14 new hotels being ditched in Nizhny Novgorod as well as projects in Kaliningrad, Volgograd, Rostov-on-Don and Saransk. Depending on the results of the two week consultation, the total cost of the World Cup looks to be reduced to 637.6 billion rubles ($11.8 billion), of which 336 billion rubles ($6.2 billion) will continue to be provided by the central government.
The Russian economy has taken a number of hits since the country won the right to win the World Cup. The seizure of power by anti-Russian forces in Kiev, subsequent reunification of Crimea with Russia, “anti-terrorism operation” mounted by the new Kiev authorities in the east, attempts to break the economic ties linking Russia to the rest of Europe and reduced oil prices have all undermined traditional trading patterns and reducing the nation’s income.
However, Russia’s economy has defied predictions of doom as the ruble has made a steady recovery, becoming 2015’s best performing currency, and as the country even recorded a 0.4% growth in GDP in the last three months of 2014.
The Federal Tourism Agency told local media: “When investors announced these facilities, the economic situation was entirely different.”
Sports Minister Vitaly Mutko explained: “We don’t want elite hotels built to FIFA’s highest requirements to end up out of demand after the World Cup.”
According to Mutko, Russia will ensure there is sufficient accommodation for the teams and FIFA officials saying: “Bearing in mind the minimum requirements of the organisation (FIFA), we have worked with each region on programs for accommodating FIFA groups and we will optimise expenses.”
Although a reduction in the current European sanctions regime appears possible, that is unlikely to diminish the enthusiasm of US lawmakers or Ukrainian President Poroshenko for a boycott of Russia 2018.
Contact the writer of this story at moc.l1735742354labto1735742354ofdlr1735742354owedi1735742354sni@r1735742354ebab.1735742354kram1735742354