April 28, 2013 / 3:17 PM / 4 years ago

Rocky trail for Kremlin's conflict-zone ski resorts

Skiers sit in a chair-lift while ascending to the top of Elbrus's neighbouring Mount Cheget, with security personnel seen in the background, February 3, 2013.Kazbek Basayev

ELBRUS, Russia (Reuters) - Police checkpoints, pot-holed roads and a billboard that shows the Earth in flames and warns "Terrorism is a threat to humanity" might put off visitors to Russia's ski resort at Mount Elbrus, the highest mountain in Europe.

These days only a handful of the most intrepid skiers and hikers make it to Elbrus, which dominates the North Caucasus region, where Islamist insurgents from ethnic minorities are fighting Russian rule and want to establish an Emirate.

Elbrus is the unlikely centerpiece of a $26-billion Kremlin project for a chain of luxury mountain resorts that Moscow hopes will succeed, where guns and troops have not, in ending the violence and easing dissent in the region.

Russia's high Caucasus mountains will have their debut on the global stage of winter sports next year with the Olympic games in the Black Sea resort of Sochi - a pet project of President Vladimir Putin.

By investing in tourism in other parts of the mountain range, Moscow hopes it can curb the flow of young men into the ranks of militants - who have come to the world's attention in the past two weeks after the Boston bombing suspects were found to have roots in the region.

So far it has not been easy. Weeks after the investment plan was unveiled in 2011, gunmen attacked a tourist minibus, killing three people, and blew up a ski lift.

"People are killed all the time there ... Who is going to go on vacation there?" asked Vladimir Kantorovich, vice president of the Russian Association of Tour Operators.

And violence is not the only problem. In April, scores of heavily armed police raided the Moscow and regional offices of Northern Caucasus Resorts, the company set up to run the investment scheme, to investigate accusations against its former boss. He was charged with embezzlement and has left the country.

The French state investment fund Caisse des Depots has pledged to invest up to 10 billion euros ($13 billion) in the project, but its international affairs director Laurent Vigier acknowledges that "it's not an easy idea".

"Elbrus is mythical," he said in an interview. "Developing it is a question of national prestige for Russia."

KREMLIN HOPE

Putin's protégé Dmitry Medvedev, who at the time held the presidency for a single term while Putin sat out as prime minister, set up Northern Caucasus Resorts in 2011 to "show how we can beat poverty and terrorism with tourism".

The project envisions carving hundreds of miles of new ski runs out of the almost vertical mountains at seven resorts stretching from the Black Sea to the Caspian, with ambitions to rival the grand resorts of the Alps.

By 2025, NCR hopes the resorts will have 167,000 beds, 75,000 jobs and attract 3.5 million tourists each year, spending about 170 billion roubles ($5.5 billion).

The plan for 5,642 meter-high (18,510 foot-high) Elbrus is the centerpiece of the project. The aim is to build the world's tallest ski lift and increase capacity at the Soviet-era resort to offer more people the chance to conquer a peak 800 meters taller than the highest in the Alps, Mount Blanc.

For the local Balkars - a Muslim Turkic people - the mountain was sent to try them. They say Allah imprisoned Mount Elbrus in ice to punish the double-peaked giant for being too proud to bow down to the Islamic holy site of Mount Arafat.

Empty lifts, half-built hotels, security cameras and panic buttons newly installed around Elbrus's snowy skirts show the depths of the challenge Russia faces in carrying out a plan met by as much suspicion as hope by locals.

"It's a utopia," said one mountain guide, who asked not be named. "They need to stabilize the situation in the region first or where is the money going to come from? If it's from the budget, it'll be stolen. If it's private, no one will invest."

COSTS SPIRAL

Moscow started Northern Caucasus Resorts (NCR) with capital of 60 billion roubles ($1.93 billion). Costs have ballooned as the project has grown. Estimates reached $26 billion in January, from $15 billion in 2010.

NCR's former head Akhmed Bilalov, who also served as vice president of the Russian National Olympic Committee, was sacked in February after Putin criticized delays and cost over-runs at the Sochi Olympic ski jump complex.

A board displaying a full-length portrait of current Russia's President Vladimir Putin is on display near a ski slope of Mount Elbrus, February 3, 2013.Kazbek Basayev

Prosecutors opened a case against Bilalov in April, accusing him of spending huge sums of money on lavish trips, including more than $63,000 on hotels in London for the Summer Olympics.

Bilalov faces four years in jail if found guilty. He fled Russia and has no plans to return, a representative said. "He believes that all these pseudo-charges have been plucked out of thin air," the representative said, declining to be identified.

His dismissal may also point to a tug-of-war between doves and hawks within the Kremlin, divided over the degree to which investment, rather than force, can help subdue the Caucasus, where Moscow fought two brutal post-Soviet wars against Chechen separatists and has battled Islamist insurgents since.

A former NCR manager who launched the project expects the initiative to be dropped altogether now that Putin has returned to the presidency. He described the April raid on NCR's office as a "classic of the genre" - the post-Soviet pattern of crackdowns on ventures that lose Kremlin favor.

"It was his (Medvedev's) project. He wanted to go down in history as that person who sorted out the Caucasus," said the former manager, who requested anonymity. "Of course ... Medvedev overestimated his strength."

NCR's acting head Alexei Sadikov said the project was going ahead as planned.

"Checks by monitoring agencies have had no impact on our plans. The company ... is the operator of this tourism project and nothing will take that role away," he said in responses to questions sent to Reuters by a spokeswoman.

Slideshow (2 Images)

BRIBE YOUR WAY UP

Elbrus has seen a lull in militant attacks, but violence can flare in a moment. Firefights between insurgents and Russian forces have been frequent in Tyrnyauz, a nearby village.

Residents offer conspiracy theories that the authorities or businessmen - not militants - are behind attacks.

"No one I know thinks locals would do this because who would cut off the hand that feeds him?" Eduard Ionikh, 78, who started work at the resort 50 years ago when it opened.

Violence killed 107 people in 2012 in the Kabardino-Balkaria region, home to Elbrus, according to the website Caucasian Knot, which monitors the conflict.

Elbrus is among the last of the peaks slated for development by NCR, with the project to take place from 2017 to 2025.

A life-size cardboard cutout of Putin, grinning in ski gear, at the foot of the mountain was probably its most recent installation. Soviet-era apartment blocks are grafted to the wild, pine-thick valley as if plucked from a large city.

Skiers aiming for the top of Elbrus's neighboring Mount Cheget swing up a grinding one-person chair-lift, with thin foam pads zip-tied to the rusted metal seats. One skier carried a rope in case the lift broke down.

Until recently, two queues fed the cable car: a slow lane for those with tickets and a fast lane for those bribing their way up.

Skiers say the charm of the mountains is in their wildness. The frontier feel draws "free-ride" skiers who avoid groomed trails, eager to skim the first powder tracks off back country runs rimmed by tooth-like snow fences.

"A day on these slopes is as good as heli-skiing - maybe not as comfortable, but much cheaper," said Andrei Tyumenev, who works at one of the few equipment rental shops.

Some in the region think the project is an attempt to grab land. The Russian government can take ownership of territory for 50 years in each of the resorts to create tax-free zones.

"They see the resort without us - and this is wrong," said Abdulkerim Elmezov, an imam who also trades souvenirs near Elbrus. "This is our cradle. It's our land."

In another of the region's mountainous valleys, Bezengi, everything will need to be built from scratch. Today, cows roam freely, some men ride mules and shepherds take turns to sleep with the sheep.

"Of course we want to develop tourism," said Takhir Tekkeyev, 35, a member of the Bezengi village council who quit along with five others over the project. "But not like this."

Additional reporting by Maria Tsvetkova and Elizabeth Piper; Editing by Elizabeth Piper and Peter Graff

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