By Miranda Lupion
With an estimated price tag of over US$20bn, the 2018 World Cup is slated to be the most expensive FIFA championship in history; a pretty penny to pay for the automatic qualification awarded to the host team, currently occupying 65th place in FIFA’s rankings. The enormous cost, combined with reports of North Korean slave labor used in stadium construction, has left pundits questioning FIFA’s decision to grant yet another autocratic regime the honor of hosting the games. That said, speculation that World Cup 2018 will tarnish FIFA’s image and impair Russia’s economy are premature. In fact, it is Russia’s status as a ‘hybrid democracy’ that will ultimately benefit both the Kremlin and FIFA in the run-up to and during the games.
Spread across 11 cities, the World Cup provides the pretext Moscow needs to develop its regional infrastructure while circumventing the legal mechanisms that would otherwise prevent such rapid construction. The Kremlin has deemed infrastructure development in Russia’s regional capitals a priority, but contrary to what Western media might have you think, the president’s wishes do not instantly become the law of the land. As a hybrid democracy, the Kremlin pays some deference the country’s laws. When United Russia deputies or ministers come up against a legal barrier, they often seek to change rather than ignore the restriction. Normally, the rapid infrastructure development desired by the Kremlin would require at least the token appearance of adherence to the laws that govern these projects, as well as cooperation with (or placation of) regional authorities.
However, hosting the World Cup affords the Kremlin the opportunity to modernize cities without the hassle of clearing certain legal barriers. The most notable law pertaining to the games, “On the Preparation and Organization of the 2018 FIFA World Cup”, allows contractors to ignore article 154 of Federal Labor Code, which requires increased pay for work done at night, and article 152, which prescribes the minimum rates for overtime payment. Under this legal framework, the Duma has also granted FIFA’s contractors a 24-hour working day and has exempted these entities from applying for standard residence and work permits. Complying with currency control measures and holding public hearings on rezoning projects are now optional. Property rights have followed worker’s rights on the chopping block; the government can now confiscate land without reimbursement. In summary, under the pretext of the games, this legislative package (108-FZ) provides for exceptions to Russia’s Civil Code, Labor Code, Tax Code, Land Code, Arbitration Procedure Code, Housing Code, Town Planning Code, and Forest Code – a total of eight regulatory frameworks.
“…hosting the World Cup affords the Kremlin the opportunity to modernize cities without the hassle of clearing certain legal barriers.”
The Kremlin and regional governments have seized on this opportunity to implement projects on an enormous scale. These include, among others, shelling out upwards of US$800m for a new airport in Rostov-on-Don, upgrading airport capacity for Nizhny Novgorod, Saransk, and Volgograd, and updating participating cities’ power systems for US$101m. Russia’s 2009 bid proposal also mentions high speed rail development, although the Kremlin has come up short on funds for similar projects, suggesting it revised its infrastructure plans after winning the hosting rights. The improvements should last well-beyond the month-long games. One estimate finds that 90 percent of initial games-related investment is intended to develop “infrastructure for the long-term needs of cities”. Even as sanctions hit the economy and the government pursued a 10 percent general cut to the federal budget, the Duma protected Cup-related expenditures.
These figures (and common sense) should dispel the notion that soft power projection is the Kremlin’s primary motivation for hosting the World Cup. Between holding the most expensive Olympic games in history and annexing Crimea, Russia has already shown its ambition to be a global superpower. Hosting another mega event adds little marginal clout to the Kremlin’s international reputation.
While hosting the World Cup enables the Kremlin to sidestep democratic duties such as adherence to laws, for FIFA, it is precisely Russia’s quasi-democratic nature that makes the country a suitable site for the event. Institutions like FIFA and the IOC have implicitly and publicly stated their preference for hosting events in countries that tolerate corruption, as organizers tend to face less resistance from and greater influence over governments. In 2013, FIFA’s Secretary General Jerome Valcke said democracy made it more difficult to hold games. The Kremlin’s ability to outlaw protests – an act of governmental oversight that would elicit discontent in a liberal democracy – will prevent FIFA from facing the unrest (and associated negative media attention) it faced in Brazil. The Duma has already approved legislation to prohibit public gatherings in host cities during the games.
Additionally, FIFA, which generates most of its revenue by selling the game’s entertainment rights to networks, benefits from Russia’s geographic proximity to Europe. The continent represents the event’s largest market in terms of views, and European fans, located one or two time zones away, will be able to watch matches live. Although Russia’s state-run television channels are still negotiating a price for broadcasting rights, FIFA predicts revenues of US$5.65bln – a 5 percent increase from the previous cycle.
However, only 2 percent of the Russian population attends a soccer match each season. Compared to the English population (24 percent) or German (16 percent), it’s clear that the Kremlin will not be able to fill the seats of its newly expanded stadiums during the tournament with local crowds alone. To FIFA’s delight, the government has taken attracting tourists seriously. Cracking down on the hooliganism that wracked the 2016 European Championships in France, Moscow will deploy a multilingual brigade of “tourism police” and has already arrested dozens of provocateurs. Still, as any American who has applied for a Russian visa can attest, even securing entry to the country can be more difficult than it might seem. While Brazil could claim over 90 visa-free regimes with other countries (including European Union member states), Russia has only around 40 similar agreements. So, from early June through late July, the Duma has decreed that ticket holders for matches won’t need a Russian visa – just a fan ID and a national passport.
FIFA estimates that international sales will account for about 30 percent of all tickets sold. Coupled with the popularity of the Confederations Cup earlier this year, there is reason to be cautiously optimistic about filling the stadiums. At the very least, Russia can expect to welcome enthusiastic Icelanders with open arms. This tournament marks the country’s first time qualifying for the finals, and fans are reportedly already booking their flights. If the Kremlin’s law-bending preparations fail to deter visitors from one of the world’s strongest democracies, next year’s Cup will have truly netted, so to speak, gains for both the Kremlin and FIFA.