Early this year, 24 hours before the International Olympic Committee inspectors landed in Sochi, the Black Sea-resort town which will be hosting the 2014 Winter Olympics, there was an emergency meeting held in several local schools. Teachers were instructed to put on their best clothes, pack their best luggage and hand-pick five students each. Instead of going to class the next day, they were told to arrive at the local airport and stay there for a full day, posing as tourists and making the airport look packed with travelers.

This type of hoax - showing something which isn't actually there -- has been common practice in Russia since the 1700s. It's called the "Potemkin village", named after Count Potemkin, Catherine the Great's favorite. Preparing for Potemkin's inspections, governors built ghost villages with pretty houses, nice lawns, and placed there well-fed cows and peasants in clean outfits. The "Potemkin villages" all consisted of one solitary street and the houses weren't real. They were merely painted wood-panel replicas. The villages disappeared immediately after the inspection. In the Soviet Union the "potemkinatisation" reached epic levels. There were even accounts of painting the leaves with green paint to make them look, well... greener for the arriving head of state's viewing pleasure.

This type of hoax - showing something which isn't actually there -- has been common practice in Russia since the 1700s.

During 1980 Summer Olympics in Moscow, the entire country was stripped of food to fill the capital's grocery stores (this was not simple hospitality, but rather face-saving measures.) Even now, in provincial cities across Russia, people can easily predict the president's or prime minister's visit by simply looking if the facades on main streets are being painted and restored.

Right now, five years before the 2014 Winter Olympics, Sochi is one giant Potemkin village and those responsible for the construction are starting to wonder if it's going to be built at all. Two years ago, Russian president Vladimir Putin addressed the Olympic Committee: "Russia is ready to host the Olympics and Paraolympics in 2014. The Olympic family is going to fill at home in Sochi." After they announced that Sochi will be hosting the Olympics, members of the Russian delegation, including major businessmen, government officials and famous athletes, hugged each other and cried with joy. They did have a reason to celebrate -- Russia was embarking on the most ambitious construction project of their lifetimes, building an Olympic city with a budget of over $12 billion. There were at least 5 years of guaranteed, well-funded business ahead. The government was flushed with cash from oil exports and the opportunities were enormous. Two years later, the financial crisis has completely changed the scene: oil prices are down 75% off their peak, credit markets dried out, national currency depreciated 30%, and the oligarchs' asset prices went down almost 75%. Most of the investors who were eager to take part in the construction are having second thoughts.

"Construction is not the issue here," says one of the major Sochi developers, who agreed to speak to the reporter on the condition of anonymity. "The real issue is infrastructure: roads and electricity. You need this in place before you can start construction and it's not there. I decided to freeze my construction projects in Sochi until there is a clear indication that the Olympics will happen. My properties are not on the top of the list of the Olympic program, but they are still important, and they require time to be build. I can't build them in a month." The developer also indicated that other developers are also wary of the situation: "Rumors have it that South Korea, the runner-up to host the Olympics in 2014, is going on with construction of the Olympic properties. We are really concerned."

Right now, five years before the 2014 Winter Olympics, Sochi is one giant Potemkin village

In Moscow, everyone is confident that the Olympic construction will be completed on time. "This is [prime minister] Putin's personal project," says a senior government official involved in the project (he requested anonymity, of course, as did most people we interviewed.) "But at some point, it will become obvious that something is wrong. Then, it will turn very, very ugly. And probably sooner rather than later."

The construction for the Sochi Olympics is coordinated by Olympstroi, a state corporation created specifically for this purpose. It is responsible for planning, mapping and coordination of the construction effort and awarding the sub-contracting jobs to third-party developers. Olympstroi will also be building the venues, which could not land an investor, such as roads or power supply stations. According to the general development plan of Sochi, 243 sites have to be erected for the Olympics, including two ice skating arenas, two ski complexes, the central stadium, as well as the international airport, hotels, Olympic villages and other venues. Several Olympics sites are being successfully built but all of them would be popular among tourists even if there was no Games in Sochi at all. Construction of Gornaya Karusel ski resort and hospitality complex, financed by major St. Petersburg bank Natsbiznesnank, is almost complete. President Medvedev came to the resort this March to inspect the construction and to give his stamp of approval. "I wish for Gornaya Karusel to become the best resort in the world!" the president wrote in the visitors' log.

President Medvedev came to the resort this March to inspect the construction and to give his stamp of approval.

Alpika-service, a mountain lift system and ski resort owned by Russia's largest company Gazprom, is already open for business. It's likely to become a training camp for Russian atheletes in 2009-2010 and it's very popular among amature skiers given that the popularity of mountain skiing went through the roof in Russia in the last four years. Roza Khutor, a major mutli-functional ski resort, is also showing some progress. The venue will become one of the Olympics' important hubs and is being built by Vladimir Potanin, the owner of Interros. Potanin founded Roza Khutor before Sochi became the 2014 Olympics host city. Roza Khutor press secretary Natalia Kudryavtseva stated in a phone interview that the construction is going according to schedule. "We are working very hard to get the resort ready by 2010, but that depends on the local government and how fast it can provide infrastructure. We can't complete the construction until we have electricity. So we have to wait," says Kudryavtseva, adding that in the last year Sochi transformed from the Soviet-style resort to a major construction site, readying to host the Olympics.

Other major Russian corporations are also going forward with the construction. Along with other projects, Gazprom is building a hotel complex, which will be used as one of the athletes' residences during the Olympics. It has been reported that Russia's largest bank Sberbank is financing key infrastructure sites as well as Krasnaya Polyana, the 70 kilometer and 32-lift skiing site. Most of the members of the Russian Forbes billionaires list are involved in the Sochi construction. But just like the their fortunes, the oligarchs' Olympic ambitions have shrunk. Inteco Group, controlled by Elena Baturina, Russia's richest woman and Moscow mayor's wife, planned to build a $250-million apartment and hotel complex in downtown Sochi. Like any new construction in the resort town, the apartment complex is going to become a part of the Olympics infrastructure, housing athletes, journalists, officials, service crew members and tourists, who will flock the city during the Games. Construction was set to begin in 2008. It's still an empty lot with no signs of activity.

But just like the their fortunes, the oligarchs' Olympic ambitions have shrunk.

Infrastruktura, an engineering firm owned by Roman Abramovich, was expected to become one of the major sub-contractors responsible for the city's transportation system -- roads and tunnels. As the New York Times reported last year, the firm placed an order for the largest tunnel-drilling machine in the world. So far, Infrastructura is not listed among the official sub-contractors. According to the Olimpstroi, most of the infrastructural work is supposed to be done by the Russian Railways (RZHD.) The company's spokesman denied interview requests and said that all projects related to Sohci are "to begin on time."

Other vital Olympics sites are in no better shape. Eugeny Titov, a reporter for the Russian daily newspaper Nezavisimaya Gazeta, observed during his visit to Sochi in March 2009: "Nizhneimeritinskaya Harbor, an alleged home for the ice palace, ice-skating ring and curling stadium, is nothing but a huge, fenced-off area. There should also be a media center for 12,000 reporters. The fence has been erected in December in time for the International Olympic Committee inspection. The inspectors left, the fence remained. There is no sign of construction whatsoever," writes Titov.

The constructions troubles appear to be compounding. Semen Vainshtok, a well-known executive put in charge of Olympstroi last year, resigned, reportedly because of lack of funding and clear development strategy. But Dmitry Kozak, deputy prime minister and the senior government official responsible for the Olympics, says that the construction is going as planned. In his interview to state-controlled Channel One Russia television, he said that the 2014 Olympics construction comes at a perfect time because it will serve as a fiscal stimulus for the ailing Russian real estate development industry. "We will employ more than 145.000 workers over the course of the next five years," Kozak said.

Developers who were recently awarded construction contracts in Sochi are less optimistic. Chelyabinsk Construction Company, which has secured a contract to build a 7000-people ice hockey ring, is cautious of the budget deficit.

"We are very happy to be a part of the great Olympics construction," says Dmitry Danilin, the CCC's executive. "We are clearly the best for the job and we'll do it right, but we are planning to start only after we receive financing for the project. We won't be able to finance the construction in the present economic climate. We are expecting the Olimpstroi's financing to start," Danilin adds.

Boris Nemtsov, the former deputy prime minister and an opposition leader who unsuccessfully ran for mayor of Sochi in April, suggested in his Washington Post op-ed piece that Russia should rethink its Olympics strategy and spread the venues through the country, diversifying the construction efforts and building Olympic sites, such as ice skating rings, in locations where they might actually be used after the Games are over. However, most officials responsible for the 2014 Sochi Olympics remain confident. "It's like our President said," said the newly elected Sochi mayor Anatoli Pakhomov. "If we need snow for the Olympics in Sochi, there will be snow. Period."