The Olympics have partnered with autocrats like Putin and there will be consequences.
One president’s IOC Baron Von Ripper, Thomas Bach, was one of the great global lobbyists for Putin and China’s Xi Jinping, and that won’t be forgotten even as the Olympics spin with relief in Paris in 2024. The new force and coordination of US-led economic sanctions is not just targeting Putin over Ukraine: it is a whole new doctrine calculated to clean the dirty money of dictators from institutions and tear off the masks of economic collaborators. The architects of this policy focus on corporate behavior in all areas – including the Olympics – that could help and abet Putin. “You do business in these places at your own risk,” warns Paul Massaro, congressional foreign policy adviser, member of the US Commission on Security and Cooperation in Europe and specialist in anti-corruption sanctions.
Previously, Olympic sponsors simply had to weather a public relations storm as punishment for engaging with autocrats. This has changed. Now they have massive financial exposure resulting from the sanctions that isolate Russia. Example: Approximately $1.2 billion in Visa annual net revenue comes from Russia and Ukraine. Russia – where ruble wheelbarrows are worthless in a ten-cent store.
Then there is the matter of public pushback from the companies that have contributed to Putin’s war chest. Olympic sponsors, says Massaro, “absolutely helped support the Russian economy and on several occasions even did Putin’s bidding.” Which raises this question: Can we no longer consider these companies “ours”? Massaro asks.
These are just some of the costs borne by US sponsors for failing to oppose Bach’s odious leadership, under which the Olympics came furthest from political or economic neutrality. Bach was markedly gentle on everything from state doping to building for the Sochi Games. He laughed with Putin over coffee and macaroons as corrupt money poured into the coffers of Putin’s allies; Assassinated opposition leader Boris Nemtsov said up to 30 billion dollars were stolen in Sochi by Putin associates. Bach not only conferred legitimacy on the procedure; in 2019 he awarded the IOC Olympic Values Trophy to now-sanctioned Putin oligarch Alisher Usmanov.
It is no exaggeration to say that all of this had a significant and harmful international impact. On the one hand, it helped Putin look like “I can get away with anything I want,” observes Massaro. Putin came to believe that the West commercial holdings in Russia would prevent serious sanctions or even much pushback against Ukraine. “It’s absolutely connected,” Massaro says. “It’s all part of a pattern of impunity and fostering Putin’s mindset.”
It is crucial to recognize the serious and clever role played by the Olympics, a role much broader than simply giving prestige to Putin or public relations. The Games are part of what Massaro describes as an “elite capture” strategy through which actors such as Putin and Xi attempt to co-opt and compromise Western influencers with various forms of financial entanglement. They are a cog in the “transnational networks that are used by the Kremlin, the CCP and other dictators to pursue their foreign policy goals and exert their influence”. Just read the breathtaking prescience of Massaro argument for severe penalties in Foreign Policy magazine in December.
Bach is now curled up in visible silence. Although Russian athletes are currently banned from international competitions, no one believes for a second that Bach will keep Russia away from Paris. “I would be surprised if the IOC took any action that appears to be harsh or judgmental in relation to Russia,” said Rick Burton, former director of marketing for the US Olympic Committee and now professor of sports management at Syracuse University. . “I imagine they’re hoping – and it’s always a bad strategy, hoping – that it’s going to blow up.”
It won’t crumble for policymakers for one simple and powerful reason: Taiwan. A similar confrontation with China is looming. And the economics of this will affect corporate America in a whole other order of magnitude. According to Bloomberg10 of the 12 biggest Olympic sponsors – including Intel, Coca-Cola and Procter & Gamble – generate a combined revenue of $110 billion a year in China.
It is possible that the IOC and its partners will sail impenetrably towards Paris and that consumers will experience the usual surge of the Olympic spirit, especially if the war in Ukraine ends. But it’s not like that – it’s as if a tipping point has been reached. Penalties for wrong choices will be new and greater; these revolutionary sanctions show it clearly. And as political advisers such as Massaro seek a total reset of the landscape for American companies that previously profited carelessly, those that partner with bad international actors will find themselves in a squeeze.
At the Beijing Winter Games, corporations were mute and gagged, and they saw their millions squandered in toxic association with genocide and shattered advertising campaigns. And that was just a prelude.
“The risk of being associated with dictators is actually much higher than we thought – that’s the huge benefit of that,” Massaro says. “The private sector needs to realize this. It’s been a long time coming. We should have realized this 10 years ago, and if you don’t recognize it now, you are indeed in cahoots with the enemy and it will hurt your bottom line. … It is the risk of being exposed to dictators.
There is a way for corporate America to unravel this Olympic trap: openly start emphasizing values over short-term economic gain, with the understanding that, like Massaro said once, “Trading without the rule of law is authoritarianism” and will inevitably jeopardize your business. American corporations find themselves in a position “where they promote social issues inside America and genocide outside America,” Massaro observes. It is untenable. The answer is to reject Bach’s bluster and instead use corporate influence to force the Olympics to be true defenders of human rights – starting with the demand that Russia be banned. from Paris now.
The Games have been an active agent of evil over the past decade under Bach, but that association is now proving volatile and even potentially ruinous, given the global pushback against Ukraine and the coming showdown with China. “The effectiveness of sponsorship relies on perception, and these brands are at high risk if they react in the wrong way – or don’t react,” says Norm O’Reilly, dean of the Graduate School of Business at the University of Maine. . “Equally, there is a big opportunity if they react in the right way. There are a lot of pieces here. It goes both ways.
The Olympics retains the potential to be a powerful and deeply beneficial brand for the same reason sponsors bought in the first place: no other event reaches hundreds of millions of people across the globe. It’s not just morally right for their sponsors to dissociate themselves from dictators. It’s better for business. Safer too.