YT Files – Blog by Yuliya Talmazan Blogging about Russia

The culture of squandering: is there an antidote?

Vancouver journalist Bob Mackin is one of the most respected local reporters, so when he published a story about Russia's spending at the 2010 Vancouver Olympics, I took notice. I mean, I've heard stories about insane dollars that the Russian delegation shed to promote Sochi games in Vancouver, but my jaw literally dropped when I read the findings of the June 18th audit of the Olympic spending commissioned by the Russian budget watchdog.

Russia House, February 2010

The most expensive item on the list was the Sochi Russia House. It came at a price of close to $8 million. I've been to Russia House myself during Vancover Olympics, and I could almost hear the sound of money going down the drain in that place. From non-stop entertainment to all-you-can-drink open bar, the decadence was in the air. I was told it was a way to show the so-called "Russian hospitality." I didn't buy that argument, but if that was part of the Sochi PR campaign, sure...

The next most costly item on the list was the Olympic flag handover ceremony. That wasn't much of an eye-opener either. These things are staged to impress, so blowing that much cash on a five-minute show, likely to be seen by millions of people around the world, made marketing sense.

But it was a different line of spending that made me cringe. The report points out that Russian Sports Minister Vitaly Mutko spent $29,980 on his 20-day stay at the Fairmont Hotel, plus $4,800 in breakfast vouchers and $300 for Internet access. By comparison, Canada’s Minister of State for Sport Gary Lunn billed Canadian taxpayers $10,213.49 for his Vancouver and Whistler hotel rooms from Feb. 4 to March 1. Not a bargain either, but the contrast is there. In fact, if you work out the numbers, Mr. Mutko's stay in Vancouver could probably have easily financed the equipment for the next generation of Russian bobsledders, for example. And I'm not talking about the elite up-and-coming athletes. I'm talking about the young kids back in the Russian periphery who have to share Soviet era sleds simply because their parents can't afford anything better. I understand that future Olympians have to be raised in Spartan conditions, but this is no Sparta, this is Absurdville, because these kids are the ones who will be expected to earn Russia those coveted medals in 2018 and beyond.

Of course, spending lavishly has always been part of elitist sub-culture in Russia.  And that is a bigger part of the problem. In Russia, for people in power, the magical word LUXURY still means status, and status means respect. For middle-aged power elite in Russia, it still comes down to the kind of shoes you wear, the kind of car you drive, and the kind of posh ambience you create around yourself.

When President Medvedev toured the United States at the end of June, he and President Obama went for a burger at Ray's Hell Burger in Arlington, Virginia. They went for a place that was as casual as it gets, very American, very conversation friendly... and, an absolute nightmare for any self-respecting businessman or politician in Russia. Anyone who considers themselves to be a prominent member of the business or political community in Russia wouldn't dare go to a burger joint for lunch. Instead, they would spend an hour driving to a very expensive restaurant, dine on the most expensive food and drinks imaginable.. all alone so as not to be bothered, and then spend another hour getting back to downtown Moscow to put on the busy face and go about their business again.

And that is exactly the kind of culture that Mr. Medvedev will have to fight, if he wants his Sillicon Valley mock-up project Skolkovo to succeed. When the Russian Presdient was visiting San Francisco in June, he Tweeted, "The biggest benefit that the Sillicon Valley provides is the conversation. Not the frivolous kind, but the business oriented, productive one."

And that is bang on. Skolkovo will never become the Sillicon Valley of the East, unless influential people in Russia don't stop wasting money on pretentiousness, trapped in their "insider" social circles. With the past focus on economy grounded in oil and gas, that might have still worked. But, with Russia's new ambition to re-orient themselves for technological innovations and being part of the global market, the love of ostentation has to be thrown out of the window because that is how the rest of the world operates. And that is the bottom line.