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. Last Updated: 07/27/2016

Powerful Bedfellow Boosts Hotel Project

You do not have to be a billion-dollar hotel chain like Sheraton or Hilton to build a five-star hotel in Moscow. Being a public non-profit organization with a former Moscow mayor as president might be enough.


The International Economists' Union, which claims to exist exclusively on membership fees, has been given a 49-year lease on a prime spot of land on Voznesensky Pereulok, next to the mayor's office. The Moscow government has also pledged to lend $300,000 to the Economists' Union for three years, interest free, to complete the architectural design of the hotel it plans to build.


Why has the city been so generous to a public organization that did not win a tender for the lease, as private companies are required to do under city rules?


"Well, isn't Gavriil Popov still president of the Economists' Union?" answered Yury Zagrebnoy, spokesman for the mayor's office.


Popov, the former mayor of Moscow who named Yury Luzhkov his successor when he stepped down in 1992, has since enjoyed benevolent treatment from city authorities. According to Zagrebnoy, in 1992 the mayor's office presented an office at 22 Tverskaya Ulitsa to the Economists' Union, and though the city council, since disbanded, tried to contest the decision, Popov's group hung on to the prime office space.


"If they want money to build the hotel, any bank would give them a loan if they put up those offices as collateral," Zagrebnoy said.


Raisa Plotnikova, a director of the International Economists' Union, said that she felt the union was qualified to complete the project.


"We are not a wealthy organization, but we are a rather influential one," she said. "Why can't we build a hotel? We can certainly use the money it will bring in." The Economists' Union, set up in November 1991, is a professional association akin to the writers' and composers' unions, Plotnikova said. Many renowned economists have joined the union, which boasts members in the West as well as in the former USSR and East Europe.


"We are an international organization and we often receive foreign guests," Plotnikova said. "Every time we do, the question of accommodation arises and we have to go begging and we wind up paying exorbitant rates in the end." Plotnikova declined to provide specific details of the project, saying that it was still in its early stages. But a July 5 order of the Moscow government said the Economists' Union has undertaken to build the hotel, called the St. George, by Moscow's 850th anniversary in 1997. The order said that the Economists' Union was allowed to lease 800 square meters of land next to the mayor's office for 49 years. According to the Moscow Land Committee, this year's rent on the plot amounts to a mere 2,694 Ecus ($3,232).


The city's foreign affairs department was also ordered to grant the union a $300,000 interest-free loan within a month, but Plotnikova said she did not expect the money to materialize quickly. "A Moscow government order is like having your hand on the window handle," she said. "It's a long way to actually opening the window. "


The Economists' Union does, however, have connections that could help it find funds: Plotnikova said managers of giant banks like Promstroibank and Mosbiznesbank were members. Zagrebnoy expressed confidence that the union's ties to Russia's nouveaux riches would help it find the financing it needs. "The Economists' Union is very close to the 'new Russians,'" he said. "and building a five-star hotel is something for which they will always find money.