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After plans to introduce casinos to Crimea, Putin approves gambling zone in Winter Olympic resort. EurasiaNet.org report.
Can Sochi take the Black Sea casino crown? Photograph: JACQUELINE LARMA/AP.
Paul Rimple for EurasiaNet.org, part of the New East network
A decade ago Sochi was just another dilapidated holiday destination but the 2014 Winter Olympics transformed the Russian resort, which now hopes to become the Monte Carlo of the Black Sea.
The plan to bring gambling to Sochi is a surprise addition to Russia’s move to allow casinos in Crimea: the peninsula, annexed by Russia in early 2014, experienced an economic crash and officials hoped that casinos could help with recovery.
Sochi is also looking for money to pay the bills from its Olympic makeover and the state-owned Sberbank – which has a 92% stake in one of Sochi’s proposed gambling zones Krasnaya Polyana – had been lobbying for a gaming license to help recoup tens of billions of roubles it invested in the city for the winter games.
The Russian president, Vladimir Putin, who had originally opposed gambling in Sochi, had a change of heart and approved the new gambling zones earlier this year.
Russia cracked down on the industry in 2009, restricting casinos to four far-flung areas: Yantarnaya in Kaliningrad, Altai in central Siberia, Primorye in the far east, and Azov City in Krasnodar.
The 2009 restrictions had created an opportunity for Georgia to establish itself as a gambling hub, buoyed by the fact that gaming is prohibited in neighbouring Azerbaijan and Turkey and restricted in Armenia. But just as it starts to make solid contributions to Georgia’s struggling economy, it faces a challenge.
Sochi could be the largest threat to Georgia’s industry since 2013, when parliament introduced a bill to ban gambling. The Orthodox Church, the country’s most influential institution, is also opposed to the spread of casinos.
But Georgian MPs understand the significant contribution casinos make to the state’s coffers. In 2013 Georgia generated nearly 105.26 million lari (£36m) in 2013 from gambling taxes, about two percent of the the state budget, according to the State Revenue Service.
For the past nine year the Black Sea port of Batumi, 370km south of Sochi, has been the centre of gambling in Georgia, as the operating costs are lower than in the capital, Tbilisi.
Casinos in Tbilisi face one of the highest annual license fees in the world: 5 million lari. By contrast Batumi casinos only have to pay 250,000 lari. Anyone building a 100-room hotel with a casino is offered a 10-year freeze on annual license fees. The port has five casinos, with two more slated to open next year.
Russian high-rollers go to Macau or Monte Carlo
Mehmet Esen, finance director of Batumi’s Peace Casino, said he was not concerned about the competition as Russians only make up a small percentage of Georgia’s gamblers. Most come from Turkey or Azerbaijan, and there is a growing number from Iran. “Russian high-rollers go to Macau or Monte Carlo,” he said.
If Russia were to become serious competition for Batumi, it would have to implement a sound gaming law and somehow change its negative gaming reputation, he added. Gambling is largely unregulated in Russia and has a reputation of being connected to organised crime.
At a two-day gambling industry conference in Sochi, Mustafa Yilmaz, a director at Princess Casinos International, which operates casinos around the world, said the Russian resort could attract some of Georgia’s Azerbaijani and Turkish clients. Turkey currently enjoys a 30-day visa-free regime with Russia. Azerbaijanis can stay in the country for 90 days visa-free.
Batumi’s tourist season lasts only a few months in summer but Sochi attracts visitors in both summer and winter, Yilmaz added.
But a lack of strategy for Sochi’s gambling sector leaves Yilmaz and other casino investors with more questions than answers: nobody knows whether the planned gambling zone will be at the Olympic Park media centre, 30km from the city centre or the Olympic alpine site of Krasnaya Polyana, 67km away.
Conference attendees also said they are still unclear about the tax rates, the number of licenses that issued and how the casinos will be regulated.
“It’s a big if; a big blank. We don’t know anything,” Yilmaz said.
Ultimately, whether or not Georgia’s gaming industry suffers from Sochi casinos depends on the scale of investment and services there, said Ian Livingston, managing director at the Casino Adjara in Tbilisi: “If Sochi were to develop to such a degree as to be a mini-Vegas, then we feel it might draw some of our foreign players from surrounding areas,” he said.
Gambling experts agree that this will not happen soon: “you need a few years just to start and it will take them one year just to figure out the legal questions,” said Darren Keane, chief executive officer of Storm International, a major gaming-industry player which operates in Tbilisi and Moscow.
Anti-Putin protests in Brisbane, Australia. The Russian leader has defended his stance over Ukraine. Photograph: Daniel Munoz/Getty Images.
Vladimir Putin does not want to rule Russia for life, but may well run for another six-year term in 2018, he has said.
In an interview with a Russian state news agency, Putin, who has ruled as either president or prime minister since 2000, said he would base any decision to run again on the mood of the country and his personal feelings.
Staying in office beyond 2024 would be detrimental for the country, he told Tass. It was too early to erect monuments to himself, he said, but local officials who wanted to name streets after him “did so out of good intentions”.
The interview touched on familiar topics including the deterioration of Russia’s relations with the west. Putin said the west wanted to punish Russia for being strong and assertive, and not over the unrest in Ukraine.
“Take a look at our millennium-long history. As soon as we rise, other nations immediately feel the urge to push Russia aside, to put it ‘where it belongs’, to slow it down,” he said.
On Monday, the finance minister, Anton Siluanov, said that sanctions could cost the Russian economy at least $40bn (£26bn) a year, while the recent sharp drop in oil prices could lose the country as much as $100bn more.
Putin said the western countries that imposed sanctions on Russian individuals over the Kremlin’s actions in Ukraine this year “proceeded from a false assumption that I have some personal business interests because of ties with the people on the list”.
“By pinching them, they were trying to hit me,” he said, adding that the people on the list made their fortunes legally over a period of many years.
Many of those on the sanctions list are Putin’s former judo partners or KGB associates and have become wealthy since he became president.
As to events in Ukraine, which have pushed Russia and the west into their worst crisis since the cold war, Putin said he had no regrets because he was certain that Moscow had acted justly. “The strength is in the truth. When a Russian feels he is right, he is invincible. I am saying this with absolute sincerity, not for the sake of just saying.
“If we knew we had done something bad and were unfair, then everything would be hanging by a thread. When you lack the inner certainty that what you do is right, this always causes some inner hesitations, and these are dangerous. In this case I have none,” he said.
Mikhail Gorbachev, first and last president of the Soviet Union, is defiant at 83 over his role in the breakup of the Soviet Union and its ongoing fallout. Pascal Dumont / MT
Ivan Nechepurenko, The Moscow Times.
Many people who send letters to the first and last president of the Soviet Union, Mikhail Gorbachev, still write on the envelope: “To the Secretary General of the Communist Party, Kremlin.” The Russian postal service is used to this and redirects the mail to the Gorbachev Foundation, headquartered in a modern building about seven kilometers north of the Kremlin.
Some of those letters are harshly critical of Gorbachev, who is regarded as a traitor by many Russians who regret the demise of the Soviet Union and the shocking economic transformation that followed. Some of the more vitriolic missives even encourage him to commit suicide. But at 83, Gorbachev is defiant and determined.
“I live and will continue to live according to my conscience and principles. Everyone else can go crazy,” he told The Moscow Times in an extensive interview this week.
Despite saying he is “already a part of history,” Gorbachev said he cannot simply observe passively what is happening in Russia today.
“I need to participate, and I will. Nobody will shut my mouth, even though people wanted me to emigrate. I don’t want to leave, let those people leave,” Gorbachev said, banging his hands on the table for emphasis.
Gorbachev, who in recent months underwent treatment at a hospital in Moscow, said he has been reported dead at least 10 times.
“I am called a traitor because I destroyed so many nuclear arms. The second treachery is that we built good relations with the U.S.,” he said.
For those who address their letters to Gorbachev at the Kremlin, time has clearly stood still. And today, when President Vladimir Putin’s Russia and the West find themselves at odds once again, the time when secretary generals in the Kremlin were engaged in an ideological rivalry with the West seems closer than ever.
Seeds of Discord
During the festivities marking the 25th anniversary of the fall of the Berlin Wall this month, Gorbachev warned that the world risks a new Cold War. As someone who worked his way up through the Communist Party at a time when the Soviet Union and the U.S. were ready to destroy each other in a nuclear war and who then worked hard to eliminate divisions in Europe and the world at large, Gorbachev is better qualified than most to offer insight into the strikingly similar issues the world faces now.
Today, Gorbachev argues that the problems in Ukraine and the world at large are in part due to errors made during the collapse of the old system.
“What is happening now in Ukraine is in many ways due to the mistakes of the breakup of the Soviet Union. Once they decided to dissolve the union, they should have agreed on territories and borders,” Gorbachev said.
“Crimea was Russian, and most people in Crimea voted in favor of joining Russia [in the recent referendum]. I supported this move from the beginning, and I am half-Ukrainian. I worry about what is happening in Ukraine. … It might not be a scientific fact, but we are the same people,” he said.
Gorbachev believes that the Soviet Union collapsed mainly due to the political self-interest of local leaders — above all, the first Russian President Boris Yeltsin, who, Gorbachev said, wanted to “get rid” of him.
Gorbachev has never communicated with Yeltsin since. “There was nothing to talk about with this usurper who went behind my back,” Gorbachev said.
Gorbachev says he supports Putin, despite having criticized previously. Pascal Dumont / MT
The Gift of Hindsight
At the same time, Gorbachev does not believe that the Soviet Union should have been preserved in its old form as a repressive state.
“We could not live like we did before, when people would make a joke and find themselves in jail the next day. There were so many problems, but society did not discuss them,” he said.”
“People had been breaking each other’s bones in lines for Italian shoes in our country,” he said.
Gorbachev said the union should have been preserved “with a new essence that would consist of independent sovereign states.”
The West, according to Gorbachev, used the resulting chaos in Russia to its own advantage.
“The West, especially the Americans, applauded Yeltsin. A half-suffocated Russia was ideal for them. Much of the mess we are in today is due to what happened then,” Gorbachev said.
“The main thing is that trust has now been broken. Everybody was losing because of the Cold War, and everybody won when it ended,” he said, referring to the ongoing rift between Russia and the U.S.
The U.S. felt triumphant and justified to expand NATO into Eastern Europe, Gorbachev said.
“It is true that the spirit of these German unification agreements were broken because we agreed that NATO infrastructure would not expand into East Germany, which creates a certain spirit. When they began to accept new countries into NATO in the 1990s. That violated the spirit of the agreements,” he said.
The question of the promise allegedly made to Russia by the West not to expand NATO eastward is often mentioned by Putin in his foreign policy speeches, with NATO expansion used to justify Russia’s actions on the world stage.
Gorbachev said that when he was in office the issue of expansion was not discussed, as Eastern European countries had not signaled any desire to join NATO.
“The main idea was that both NATO and the Warsaw Pact would gradually transform from military-political into political organizations,” he said.
“We pledged not to aim to seek military superiority over each other. Is this the case now? No. We destroyed so many weapons, tanks and so forth, and now it is all coming back,” he said.
The tense relations between Russia and the U.S. are also created by certain groups in both countries in favor of confrontation, Gorbachev said.
“There is the same type of public both in the U.S. — including the military-industrial complex that cannot imagine its life without weapons and war — and here in Russia too. Every U.S. president feels obliged to wage a war during his term or, even better, two — as the saying goes. I am serious. It’s not a joke. This idea has survived, and that is very bad.”
Putin the Statesman
Gorbachev, who on Thursday presented his new book about his life after leaving the Kremlin, said he supports Putin and ranks him with the political leaders of his own rule, such as then U.S. President Ronald Reagan and U.K. Prime Minister Margaret Thatcher.
“He is a statesman. I can say one thing: Despite all the criticism, I strongly supported him, especially during his first term, because Russia was disintegrating. He has done a lot. I said the president is successful. I criticized him too because you have to criticize leaders,” Gorbachev said.
He accused Putin of saying “what suits him” about the Soviet Union’s collapse, which Putin famously described as the 20th century’s greatest geopolitical tragedy.
“Doesn’t he know how it all happened? He knows, but says what suits him,” Gorbachev said, adding that Putin is currently “under attack” by media that are “not free.”
“There are no free media, either in Russia or the West. Everybody is dependent and works for the benefit of their own states. That is beyond doubt. For instance, I was in a hospital, where I had to do everything as prescribed. This reminds me of the press: It is free, but follows orders,” he said.