Russia Awards Lucrative Crimea Bridge Contract to Putin's Crony

The Russian government has contracted Vladimir Putin's childhood friend and judo partner to build a vital $3.3 billion bridge connecting the annexed peninsula of Crimea with mainland Russia.

No public tender was held for the project. Instead, Prime Minister Dmitry Medvedev appointed Stroygazmontazh, a company controlled by billionaire Arkady Rotenberg, as the contractor in an order published Friday. According to Rotenberg, the government considered more than 70 builders, but the only other builder known to be interested in the project was Gennady Timchenko, another Kremlin-connected billionaire.

Rotenberg studied judo with Putin as a child and later became an instructor in the martial art, serving as the future president's sparring partner in the 1990s. Since Rotenberg founded Stroygazmontazh in 2007, it has become one of the largest construction companies in the world, building several large gas pipelines. This will be the company's first bridge project.

A Forbes ranking compiled before last year's ruble crisis estimated Rotenberg's net worth at about $4 billion. The report called Rotenberg and his brother, who also studied judo with Putin, the "Kings of State Tenders" because of the large number of government contracts the two have won.

Rotenberg won lucrative state contracts to build much of the infrastructure for the 2014 Sochi Olympics. According to a Bloomberg report, companies controlled by the billionaire were awarded contracts for the games worth at least 227 billion rubles, then worth about $7.4 billion. The contracts made up 15 percent of the $50 billion budget for the Sochi Olympics - making Rotenberg's projects worth more than the entire budget for the 2010 Vancouver Olympics.

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Opposition activist and anti-corruption campaigner Alexei Navalny published photos in July of two matching 7,000-square-meter mansions outside of Moscow, along with documents that allegedly linked the real estate to the Rotenbergs.

Due to their ties to Putin, Rotenberg and Timchenko were hit with Western sanctions after Russia annexed Crimea in March. Italy later seized 30 million euros worth of real estate from Rotenberg, including a mansion in Sardinia and a hotel in Rome. In response, Russia's parliament passed the "Rotenberg Law," which allows Russians whose assets are confiscated abroad to receive compensation from the government.

The car and railroad bridge will extend about 19 kilometers to connect Russia to Crimea through an island in the Kerch Strait. Roughly six kilometers of the bridge will stretch over open water. The project is supposed to be finished by December 2018, according to a decree by Putin. Originally planned as a public-private partnership, it was announced in July that funding for the bridge would come entirely from the state budget.

The cost is estimated to be 228.3 billion rubles, or about $3.3 billion, although the state road company Avtodor said it could cost up to 377 billion rubles. But such projections tend to increase - many projects for the Sochi Olympics ended up costing three to five times more than their original price tags - and the awarding of the lucrative contract comes just days after Medvedev announced an anti-crisis plan to cut government expenditures by 10 percent in all spheres except agriculture and defense.

Russia's economy has been hit by falling prices for its main exports, oil and gas, as well as by Western sanctions over its role in the Ukraine crisis. The country is almost certain to experience a recession in the coming year.

Nonetheless, improving transportation links to Russia is vital to Moscow's attempts to support Crimea through the Western economic blockade imposed on the peninsula.

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Putin ordered the government in April to take measures to solve the transportation problems between Crimea and the mainland. Since Russia lacks a land connection to the peninsula and the border with Ukraine is closed to most goods, people and supplies reach it mainly by ferries that sail several times a day across the Kerch Strait. But lines for the ferry are long, with people sometimes waiting for days to cross this summer, and navigation is often disrupted by fog and bad weather.

Since Putin annexed the peninsula and welcomed it back into its "home port" of Russia in March, Moscow has announced grand plans to invest in Crimea, including spending 416.5 billion rubles ($6 billion) on transport infrastructure through 2020. Analysts have said much more will be required, and the economic development minister said as much as $4.5 billion per year will to be need to be poured into the peninsula.

A number of problems are already being predicted for the Crimea bridge. Rotenberg told the newspaper Kommersant that his company will use domestic materials and Western equipment purchased before sanctions, but some kinds of high-grade steel necessary for bridges are reportedly not available in Russia.

Because the Azov Sea north of the Kerch Strait is bordered by both Russia and Ukraine, international maritime law stipulates that Kiev must also agree to any bridge project - which will almost certainly not occur. Rotenberg said the legal side is the government's responsibility, and Crimea head Sergei Aksyonov has admitted that the judicial problems related to the bridge can't be overcome "in the near future."

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Dmitry Shevchenko, deputy coordinator for the Environmental Watch on North Caucasus, doubted the project could be completed by the end of 2018, since the bottom of the strait is covered in shifting sand, which will greatly complicate the drilling of support holes. He also said a lengthy drilling and building process could harm the environment.

"No one builds such complicated objects in just two or three years," Shevchenko told the BBC Russian service.

The local weather conditions will also complicate construction. A World War II bridge across the strait was destroyed after only a year by ice floes from the Azov Sea. And, according to journalist Yelena Yurchenko, who is originally from Kerch, the Crimean side has a shortage of construction materials, and Russian cargo ships spotted in Crimea will be blacklisted in ports around the world due to the current embargo.

"No serious ship owner will be ready to do that," Yurchenko told the BBC Russian Service.

Follow Alec Luhn on Twitter: @ASLuhn

Photo via Wikimedia Commons