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Analysis & Opinion
07.12.10 Shuvalov’s Bidding
By Tom Balmforth

FIFA President Sepp Blatter got up a lot of noses on Thursday when he unexpectedly handed the 2018 and 2022 Football World Cups to Russia and Qatar, while both nations delighted in what the world’s biggest sporting event could do for them. Prime Minister Vladimir Putin immediately jetted over to Switzerland to raise a glass to a jubilant Russia delegation, but one Russian was smugger than the rest. A victorious Deputy Prime Minister Igor Shuvalov, who led the delegation, is not only looking forward to 2018 – he has his eye on the 2012 presidential elections.

Russia unexpectedly brushed aside hard-fought bids from Spain/Portugal, Netherlands/Belgium, as well as England, to win the campaign to host the 2018 World Cup, promising to open up “a new world with distinctive culture and geography.”

In the run-up to the decision taken by the FIFA board in Zurich, Russia had emerged as a slight front-runner in the bid after the BBC alienated England’s backers on the FIFA board with a corruption expos?. Nonetheless, after FIFA President Sepp Blatter delivered the verdict on Friday, football aficionados were still sent rummaging around for the atlas when they were told that the provincial backwater of Saransk in the Volga basin would be one of 13 Russian cities playing host to millions of soccer fans in 2018.

Still, speaking to the BBC over the weekend, PR guru Mike Lee said that England had no one to blame but its own calamitous World Cup bid. Lee said it was wrong to blame failure on anything else, presumably alluding to the furious English fans who could only detect a heady whiff of greasy backhanders after oil-gushing, but relatively football barren Russia and Qatar fended off stiff competition to take the 2018 and 2022 bids. Meanwhile, Moscow’s enigmatic bid included a video featuring a babushka doing kick-ups before bicycle-kicking a football over a yurt.

But the feeling in the England camp prior to the decision was one of optimism when Prime Minister Vladimir Putin decided at the last minute not to speak at the final bidding ceremony in Zurich, whereas Prime Minister David Cameron, Prince William and David Beckham all pitched up to add weight to the England campaign.

The euphoria that subsequently appeared on the faces of Russian footballer Andrei Arshavin and Deputy Prime Minister Igor Shuvalov after FIFA awarded them 2018 was the crazed look of disbelieving champions. But in Shuvalov’s eyes there was also the look of a man who had scored a key political victory 16 months before presidential elections, said Alexei Mukhin, the director of the Center for Political Information.

Fourty-three year old Shuvalov, the official number two to Putin, seriously strengthens his candidacy for the presidency through his “touching” bid to win Russia the World Cup. Mukhin said he sees three main candidates in the bid for Russia’s most prized position: the Head of the Kremlin Administration Sergei Naryshkin, Moscow Mayor Sergei Sobyanin and Shuvalov, all of whom have close ties with Putin.

So why not Medvedev in March 2012 elections? Put simply, Medvedev will not be given a second – this time six-year – term because the current president could become “very dangerous” for Putin, said Mukhin.

Why not Putin? “Putin is comfortable in his current role of prime minister. He controls the economy and all the politics without all the virtual responsibilities of the president. At the moment if he doesn’t want to meet someone, then he doesn’t have to meet them,” said Mukhin. To stay put, Putin has to come up with another variant.

But whoever ends up as Russia’s head of state for the World Cup preparations, the Kremlin has its work cut out for it in overhauling its outdated transport infrastructure, particularly in the regions. This was, of course, precisely the goal in hosting the World Cup, just as the Kremlin banked on revamping its regions by hosting the 2012 APEC Summit in Vladivostok, the 2013 University Olympics in Kazan and the 2014 Winter Olympics in Sochi.

The world soccer tournament will be a “catalyst” for the Kremlin’s modernization agenda, Chris Weafer, chief strategist for UralSib, wrote to investors ahead of the decision in Zurich. “Importantly, the 2018 World Cup will dominate the agenda of the next government (2012 to 2018), and to a much greater extent than the Sochi Winter Olympics, will impose a strict deadline for modernization plans. No doubt about it, while the cost will likely run into the tens of billions, World Cup 2018 will inject a great deal more urgency – and a stricter timeline – into the government’s modernization program,” Weafer wrote.
“Certainly, it’s a catalyst,” agreed Ovanes Oganisian, a strategist for Renaissance Capital. “It’s a strong catalyst for rebuilding part of Russia’s infrastructure. Russia has all the critical infrastructure in place and just needs to renovate it, as it received practically no investment in the 1990s. But these things had to be done anyway. The situation would have been inoperable in another five to ten years. The biggest catalyst is still the underinvestment of the transition period.”

This year’s World Cup in South Africa cost some $4 billion, but the Russian government has already earmarked $9.6 billion of federal investment. Billionaire Roman Abramovich and gas behemoth Gazprom, both of which have been very visible in developing Russian football, are tipped to contribute to the total expenses which could run as high as $50 billion, although one economic adviser dismissed this estimate as exaggeration. Lukoil and VTB, it is thought, will also help build stadiums, 13 of which need to be built from scratch with three existing ones renovated.

Stretching from the Russian exclave Kaliningrad to Yekaterinburg east of the Urals, the 2018 World Cup only crosses three times zones, but the huge distances, almost 2,000 kilometers between St. Petersburg and Sochi, are good news for airlines and will boost stocks in Aeroflot. “There are two phases in terms of who is going to benefit,” said Oganisian. The preparatory phase of the World Cup stands to benefit construction companies, steel-makers and international logistics firms, he said. “But in the year of the World Cup, it’ll favor real estate, hotels, leisure and entertainment, airlines, consumer companies, soft drink and beer producers.”

Naturally, Russia faces the same challenges as it has so far in its Sochi gambit. The threat of terrorism has not been mentioned with regard to 2018, although Head of the Chechen Republic Ramzan Kadyrov has already put forward Grozny’s candidature as a possible venue for matches.

Instead, however, analysts forecast corruption as the main obstacle to success. Oganisian said he expected there to be numerous management reshuffles during the World Cup preparation in much the same way that the Olympics’ Stroika management has been sacked and new management hired. Still, crooked management away from the federal center’s immediate reaches may represent a challenge, but it will hardly stop the necessary infrastructure being laid down by 2018. “I don’t think there’s any question. Eight years is enough time,” said Oganisian.
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