The tournament - being attended by competitors from more than 100 countries - is dogged by controversy.

Its organiser, Kirsan Ilyumzhinov - who is both the president of the republic and of the International Chess Federation - has been accused of involvement in the murder of a prominent opposition journalist.

Larisa Yudina, the editor of Kalmykia's only opposition newspaper and an outspoken critic of the president, was stabbed to death on 5 June after probing the funding of the Chess Olympiad.

Russian human rights groups are urging competitors to boycott the event in protest.

Mr Ilyumzhinov says the charges are unfounded.

According to him, they are part of a Moscow plot to discredit a powerful regional leader.

The 36 year-old millionaire has said he will stand in Russia's next presidential election.

Lavish hospitality

Kalmykia - Europe's only Buddhist republic - is one of Russia's poorest regions.

Kalmykia's flamboyant president

But the colourful president has poured millions of dollars of public money into hosting the Chess Olympics, constructing a special chess city for the purpose.

Its rows of luxury cottages have now been filled by some of the visiting competitors, more than 1,000 of whom have arrived despite the calls to boycott the event.

The winners will take home Kalmyk thoroughbred horses, Mr Ilyumzhinov told the Interfax news agency.

The president's critics accuse him of building Chess City with federal funds that had been earmarked for industrial and agricultural programmes.

Delayed start

But even as the opening ceremony was taking place, chess city was filled with hundreds of workers frantically trying to finish the main playing hall.

James Coomarsamy reports

Our correspondent in Kalmykia, James Coomarasamy, says it is still surrounded by scaffolding and has many windows missing.