OPINION: World Cup 2018: A Potential Catalyst for Modernization

Contributed by Chris Weafer, chief strategist at UralSib

MOSCOW, Nov 29 (PRIME-TASS) -- A great deal of attention will be focused on FIFA’s decision as to which country will host the 2018 World Cup. That decision will be announced in Zurich on Thursday. Russia is now considered the favourite, albeit slight. Still, the vote will be tight.

Winning the right to stage the World Cup would provide a major boost to both the Russian economy and also would provide a huge incentive for the government to push ahead with plans to rebuild the country’s infrastructure. The total cost to South Africa, the most recent host, is estimated to have been $ 4bln but franchise fees, etc can be a multiple of that if handled correctly.

World Cup success would set a timeline for modernization.

Importantly the 2018 World Cup would dominate the agenda of the next government (2012-2018) and, and to a much greater extent than the Sochi Winter Olympics, would impose a strict deadline for modernization plans. Several million foreign tourists would turn up in June 2018 and would expect international standard facilities and services. Several billion people would watch on live TV. The government would have to ensure not only modern stadiums but hotels, roads, airports, communications and a reliable power supply. No doubt about it, while the cost would likely run into the tens of billions, World Cup 2018 would inject a great deal more urgency – and a stricter timeline - into the government’s modernization programme. And Russia wouldn’t have to worry about qualifying as the host country.

Specifically, Russia success would be very positive for stocks such as Aeroflot, the steel companies, media companies and the banks (as a Russia proxy).

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