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. Last Updated: 07/27/2016

Building New Embassies Requires Diplomacy

A person's success may be measured by the opulence and size of his or her house; a company's prosperity by its headquarters; and the state of relations between countries by the embassies.

By this measure, the relations between Russia and the rest of the world have improved enormously since the end of the Cold War because many of Russia's former foes have significantly expanded their embassies.

But it has not been smooth sailing. With the Russian government strapped for cash and embassies leasing some of the best sites in Moscow at low rental rates, the embassies have needed all of their diplomatic skills. Security issues also have created headaches as the American and British embassies construct new buildings.

The most recent expansion is the new British Embassy building that is going up on Smolenskaya Naberezhnaya, opposite the hotel Ukraine and across the road from the White house. Taylor Woodrow is about half finished constructing the 21,000-square-meter building, which is more than three times larger than the original building on Sofiyskaya Naberezhnaya, opposite the Kremlin. Due to be completed next summer, construction is estimated to cost $80 million.

Michael Haddock, the embassy's press attache, describes the current building as little more than "a small stately home," which is unable to house the swelling staff needed to cope with increasingly active relations with Russia. "From 1991, just the number of visa requests has grown from a few thousand to more than 100,000 a year today," he says.

The British Embassy has steadily grown from less than 80 people in the early 1990s to more than 150 people working there today, making the Moscow embassy its sixth largest in the world after cities like Washington, Bonn and Rome.

Many embassies have grown since the change in regime. The German and Swedish governments now have their largest embassies in the world in Moscow. The Americans have built a new complex and their embassy employs more than 1,000 staff.

The construction of the new British Embassy building puts an end to pressure from the state to raise rent at the existing embassy. Moscow has some of the highest real estate prices in the world, and because most of the embassies are in prime locations (bar those on Mosfilmovskaya), they are worth a fortune. The state would like to capitalize on that high-priced real estate.

For example, the Sofiyskaya Naberezhnaya building is probably one of the most beautiful buildings in the city and certainly in one of the best locations. The Russians have had their eye on the building since the 1930s. It is said Stalin would fly into a rage after looking out of the Kremlin windows, only to be confronted with the "bastion of imperialism and hotbed of spies" sitting just over the river spoiling his view. But even Stalin didn't dare the ire of the international community by forcing the British to move.

The imperialistic reminder was particularly poignant as the building was originally built in 1893 for Pavel Ivanovich Kharitonenko -- described as the Boris Berezovsky of the time -- who had made a spectacular fortune as a sugar merchant. The house was filled with object d'art and was one of the social centers of Moscow's high society.

While Stalin objected to imperialists spoiling his view, the current government was more interested in the commercial value of a prime piece of real estate. However, these lingering differences were finally resolved in the early 1990s during an official visit by then-Prime Minister Margaret Thatcher. A deal was hammered out whereby the British kept Sofiyskaya Naberezhnaya and were given the new site on Kransnopresnenskaya Naberezhnaya in exchange for equivalent sites in London.

Other embassy sites are worth a bundle and the UPKD, the Russian state body responsible for dealing with diplomats, has been badgering embassies to give sites back and renegotiate leases on others.

The Germans have been persuaded to give up their apartments in the so-called "German House" opposite the site of the new British Embassy and are moving their people to a site in the wilds, near the Olympic Village. The Americans have also been under pressure because the UPDK wanted to increase the rent on the ambassador's residence.

The current 20-year lease on the ambassador's palatial Spaso House, located between the old and new Arbats, was signed in December 1986 at which time the rent was fixed at 72,500 rubles a month. The rent has since been increased once to 120,000 rubles a month. But during the years of hyper-inflation the real value of the rent fell dramatically from the equivalent of about $18,000 in the 1980s to little more than $20 a month by the early 1990s and the UPDK demanded a renegotiation of the lease.

The Americans refused and have offered to buy the house instead. They point out that they have had to come up with a considerable amount of their own money to do repairs -- normally the UPKD's responsibility -- and are still waiting for an answer on the purchase. However, the rent has now gone up to about $20,000 a month after the redenomination of the currency.

In addition, expansion is bringing security headaches for all the embassies because old habits die hard, despite the end of the Cold War. The British Embassy staff won't comment on anything to do with security, but barbed wire surrounding the site and 24-hour security guards are sufficient comment. Their worries can only be reinforced by experience of the U.S. Embassy.

In 1985, U.S. officials discovered extensive bugging in the embassy building before it was opened along the Garden Ring Road. During the past decade, they struggled with options to deal with the problem. Those included doing major overhauls of the embassy and refusing to allow Russia for several years to open its new embassy in Washington as a result of the bugging. Nevertheless, repeated attempts to de-bug the building failed, giving it the nickname "Giant Transmitter."