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Architectural Landmarks Slated for Privatization.
The RF government is planning a large-scale sell-off of properties currently under federal control. Apparently, it is now the turn of monuments of history and culture

Borislav Mikhailichenko, The Moscow News

by Borislav Mikhailichenko The Moscow News St. Petersburg bureau

It took Russia less than two weeks to warm to the idea of handing over palaces and mansions to the monied classes.


On April 15, St. Petersburg Governor Valentina Matviyenko, fresh from a tete-a-tete with Vladimir Putin, proposed "expediting the sell-off of cultural monuments." On April 20, her initiative was backed by Sergei Mironov, speaker of the RF Federation Council, who advised that the practice be extended to Moscow and other cities. Three days later, Moscow Mayor Yuri Luzhkov, on a business trip to Seoul, responded to Mironov's call. On April 27, it transpired that a raft of amendments to the federal law on privatization of state-owned and municipal property was pending in the State Duma.

It would be futile now to try to convince the general public that this is a grassroots initiative. Ms. Matviyenko's explanation, to the effect that her initiative reflects the concerns of the business community reluctant to invest millions of dollars in properties over which they have virtually no control, has been conveniently forgotten. Incidentally, she had the first serious conversation on the issue exactly a week after her plan was made public. On April 22, the governor discussed with Lukoil CEO Vagit Alekperov the future of the Baron Stieglitz house, agreeing that within the next two weeks, Lukoil would commit $30 million into the mansion's reconstruction Ч please note, without waiting either for changes in the RF law allowing privatization of federal landmarks or for the adoption of a St. Petersburg city law on the privatization of historical monuments.

Before shelling out on the Stieglitz house, the oil major received from the town hall, without any tender, 60 sites to build gas stations on.

The Mastermind

"Billions of dollars are needed. Neither the federal nor the city budget can provide this kind of money. Only an entity that fully owns them can fittingly restore and maintain these buildings," St. Petersburg governor says. "Don't let us indulge in misguided 'patriotism' and look on as precious monuments crumble away, because in a few years there won't be much left to restore."

The impression that Ms. Matviyenko merely voiced someone else's idea proved to be basically correct. True, it was not Vladimir Putin's idea either. He could only have backed the initiative. According to well-informed sources, the State Committee for Oversight, Use and Preservation of Monuments of History and Culture started drafting a law on privatization of historical monuments back in 2002, when the city was still governed by Vladimir Yakovlev, who hoped to stay on for a third term. Initially it was planned that the draft law, providing for the sell-off of mansions and stately homes at half their balance-sheet value, would be passed by the time 198 of St. Petersburg's architectural landmarks had their status downgraded from federal to local protection.

Matviyenko boldly rushed in where the Kremlin would not have let her predecessor tread in its worst nightmare. The St. Petersburg city administration is going to propose amendments to the 2002 Law on Cultural Landmarks (Monuments of History and Culture of the Peoples of the Russian Federation) while the fate of these amendments is all but a foregone conclusion.

On March 13, 2004, Prime Minister Fradkov appointed Valery Nazarov head of the Federal Agency for Federal Property Management. Previously, Nazarov was head of St. Petersburg's Property Management Committee. It was on his (not Yakovlev's) say-so that the previous city administration devised the procedure for the sell-off of historical buildings.

Idee Fixe

"The number of federal properties in St. Petersburg is incomparably greater than in Moscow or any other part of Russia. Today the state is unable to maintain most of these buildings. The core problem is the lack of a legal framework that would make for efficient management of federal property" Ч Nazarov said this long before Matviyenko, at a time when he was lambasting the government for creating an agency that he himself headed later on.

The idea of privatizing historical buildings, even those of the greatest cultural value, seems to be Nazarov's fixation. It was part of the concept for real estate management that was developed by the Nazarov team back in September 2001. As a matter of fact, this concept is the underlying principle of the draft law on privatization of historical monuments. It is simply that the document has now been dusted off.

In January 2003, when the decision to downgrade the protection status of 198 architectural landmarks was finally made, the chairman of the St. Petersburg City Property Management Committee stated bluntly: "To fix up St. Petersburg's architectural monuments and ensure their proper maintenance, their management should be entrusted to commercial structures." Yet the year of St. Petersburg's tercentennial there were plenty of other concerns Ч ceremonial as well as political Ч to deal with. Who knows how the St. Pete voter would have reacted to the idea of privatizing the city's palaces and mansions. But now that everything, and everyone, is in place, it is just the right time to take action.

Sincerity Test

A list of St. Petersburg's architectural/historical landmarks that will be put on the block is pending. According to Valentina Matviyenko, it will include only those buildings that "are not being used according to their functional designation and are in a state of disrepair." St. Petersburg city authorities have vowed to carry out "pinpoint" sell-offs, under strict oversight by agencies responsible for the preservation of architectural landmarks.

There is no doubt at all that the Committee for the Preservation of Monuments of History and Culture will lay down rigorous conditions for future owners. All the indications are that they as well as leaseholders will be forbidden to alter the buildings' exterior and interior, they will be obligated to get all construction projects approved by city government officials, and so on. The problem, however, is that whereas a leaseholder who has violated the terms of a lease can have his contract terminated, there is practically nothing that can be done about an owner:

He may not be ordered to vacate the premises; suing him is an impractical proposition while 200-ruble fines would be less than pinpricks for him.

Indeed, "the core problem is the lack of a legal framework that would make for effective management of federal property" (Nazarov certainly put it very well). This threat is far more serious than the fear of unauthorized remodeling or the concern that state-owned properties are poorly looked after (in December 2003, Prof. Valentin Sofronov said that "there is no systematic, comprehensive monitoring of a single architectural landmark in St. Petersburg"). When the State Duma was debating the Law on Cultural Landmarks, it was proposed that Article 48, allowing privatization of monuments, be counterbalanced with corresponding amendments to the RF Civil Law Code. In fact, it was planned to introduce a whole new chapter. For some reason it did not materialize. "We came up against fierce opposition already at subcommittee level," Alexei Kovalev, a deputy of the St. Petersburg city legislature and co-sponsor of the bill, recalls. "In the end, the Duma refused to amend the Civil Law Code, and now there is no effective system of limiting property owners' rights in Russia. Our property owner is the freest in the world. Not even in Africa do owners have so much freedom as here."

The Russian federal authorities have subjected themselves to a test of sincerity. Either the St. Petersburg initiative is designed to preserve historical buildings, and then Valentina Matviyenko, in the State Duma, will certainly succeed in doing what Kovalev failed to do in 2002.

Or Nazarov, after a month in the new job, has launched yet another "special operation" (his background gives cause to rank him among the Kremlin siloviki), and Russia is going to see another spiral in property re-division. But in that case descendants of the Russian gentry, who complain that the Communists seized their ancestors' houses without any compensation and now the selfsame Communists want to sell these houses for money, seem to have a good case.


According to German Gref, at present there are 60 federal laws and 18 presidential decrees in Russia that limit privatization in the country. "I invite the government to review all laws limiting privatization, including privatization of cultural and historical monuments," Gref told a Cabinet session on April 21.

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