Vladimir Putin and the Household Budget

7/28/2016 - David Buckham CEO of Monocle

When Sebastian Coe, a multiple Olympic medalist in the 1500 metres discipline, and currently president of the International Association of Athletics Federations, announced on the 17th of June that the Russian Track and Field team would continue to be banned from international competition, my first thought was that the inner child within Vladimir Putin must have thrown a tantrum. The unanimous vote by the 27 members of the IAAF board to effectively exclude the Russian Athletics team from the 2016 Rio Olympics must have felt particularly unjust to the man who had orchestrated the spending of more than 50 billion US dollars to hold the 2014 Winter Olympics in Sochi.  

This Russian recreational town, nestling the Eastern shores of the Black Sea, enjoys balmy weather throughout the year. Sochi has a humid climate with mild winters. The average temperature from December through March is 11 degrees during the day and 4 degrees at night. Owing to the relative lack of snow in Sochi itself, enormous effort was made to transport both competitors and fans between the mountain ski slopes some 40 kilometres away and then back to the infrastructure in Sochi. In Sochi, events such as curling and figure skating were held. At the slopes, snowboarding and alpine skiing were on offer.  

To put this somewhat into perspective, imagine if the Winter Olympics for 2018 were to be held in Pietermaritzburg, and that the Drakensberg Mountains were used for the downhill and slalom ski events, whilst Town Hall in Maritzburg was converted into an ice rink. Then imagine a railway track being constructed between the two locations. That would be something along the lines of what Putin achieved with Sochi. In fact, Pietermaritzburg in mid-winter can be chillier than Sochi in January.  

Days later after Sebastian Coe’s statement, when Russia hinted at the potential sale of 20 percent of one of its crown jewels, the state energy company Rosneft, it became clear that Putin had moved past anger as his primary emotion and had migrated rapidly into the acceptance stage of the five stages that constitute the experience of loss. Whilst Putin may play the aggressor on the international stage he has been very much the granny of belt-tightening on his home turf.  

One must feel, however, some sympathy for the man. Since Sochi, the oil price has collapsed, Russian gross domestic product per capita has declined from US 14,000 dollars in 2013 to just US 8,000 US dollars in 2016. Even the executive heads of state-sponsored businesses are being ferried around the traffic-infested streets of Moscow in Toyotas today rather than in the limousines of the past.  

This new ascetic version of Putin and his adoption of Greek-style economics reminds me of a friend who threw an enormous party that went on all night in the penthouse suite of the Michelangelo Towers. Moet and Chandon as well as Chivas Regal 18 year-old was flowing freely and the DJ played into the early hours of the morning. By all accounts, a rollicking time was had of it. It was only a few months later that he sold a particularly cherished sports car to help fund paying off the bond on his Cape Town home.  

Putin’s cherished Rosneft, a firm that was begotten out of the chaos that ensued following the collapse of communism is now up for grabs by Chinese and Indian investors. According to the latest reports these are the only ‘partners’ that Putin desires as potential acquirers of the 20 percent Rosneft stake.  

To put this sale somewhat into perspective, the 20 percent stake the Russian government is thinking of selling will bring in approximately US 11 billion dollars of cash. That is something like 20 percent of what Putin spent on the Winter Olympics in Sochi – which would suggest that he will have to find a few more state-assets to flog. Perhaps even a sports car or two.  

Putin must have felt some relief though on learning this week that the Russian Judo team, in spite of much invective from sports bodies around the world, has been given the go-ahead to compete in the Rio Olympics. If I am not mistaken Vladimir Putin is a Judo fan, practicing the sport himself – on occasion without a shirt and in front of domestic cameras. Or perhaps I am mistaken. Perhaps it was on one of his hunting trips…

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