How Moscow's reconstruction is putting profit before preservation

The Russian capital is being transformed from grey Sovietism to a modern metropolis, says Fred Weir. But as the property prices boom there are accusations of corruption

Staff at the Alexei Tolstoy State Museum arrived at work last month to find that their classic 19th-century mansion, which houses an art and literature collection devoted to the famous Soviet-era writer, had been bought by a private developer.

"This is a protected state institution; it's impossible to sell it," says the museum's director, Inna Andreyeva, who has worked there since it was founded after the death of the writer's widow in the 1980s. "We are all in shock."

Despite inquiries from at least two leading Russian newspapers, no one has yet prised an explanation from Yury Luzkhov, the Mayor of Moscow, of how the Tolstoy Museum came to be sold, or what will happen to it next.

Grigory Rezvin, a columnist with the liberal daily Kommersant, says: "This is a typical story of downtown development in Moscow over the past decade. Luzhkov is remaking the city according to his own design. He tears down landmarks, redevelops whole sections of the city and relocates the inhabitants, with no public accountability at all."

Foreign visitors often marvel at how Moscow has broken its grey, Soviet-era mould and blossomed into a dynamic city of skyscrapers, five-star hotels and bustling business centres in just a few years. But critics say Moscow's property boom, in which prices have doubled to near-world records in the past four years, has been fuelled by greed, incompetence and corruption.

In the past decade, more than 400 historic buildings, many listed as under the protection of federal law, have been razed and replaced by "replicas" which are often many times larger and bear little resemblance to the original.

In most cases, the decision to rebuild has been made by the Mayor's office, the work done by city hall-connected companies (Inteka, a company owned by Mr Luzhkov's wife, Yelena Baturina, controls 11 per cent of Moscow's construction market) and the redeveloped properties secretly sold or leased to insiders.

Georgy Bovt, deputy editor of Izvestia, the daily newspaper that broke the story of the Tolstoy Museum's sale, says: "Moscow's construction boom is also a bribe-taking boom. The treatment of historical buildings by the Moscow authorities is completely focused on finding ways to exploit them commercially. There is no rule that won't be bent, or forgotten entirely, with the amounts of money at stake."

As President Vladimir Putin consolidates his hold on absolute power, the Kremlin has taken a new interest in Moscow's property boom.

Mr Rezvin says: "The destruction of Moscow's historical heritage has been going on for a decade, but information is coming out now because there is a power struggle between the federal authorities and local ones. Moscow is the only place in Russia that the Kremlin does not control, so there is a campaign to replace Luzhkov. Everything is connected with this."

The battle lines were drawn over the Manezh art museum, a sprawling 19th-century Tsarist riding school beside the Kremlin wall. Luzhkov had drawn up plans to "reconstruct" the building to replace its wooden ceiling beams, and add several levels of underground parking, a restaurant and shops. The Ministry of Culture, which is responsible for protecting monuments of national importance, forbade any commercial development in the Manezh, and also announced that it was investigating several other cases of "renovated" Moscow monuments.

On the night of 14 March, just as Mr Putin was announcing his triumphant re-election as president, a huge fire broke out along the entire length of the Manezh's 200-metre long roof. The Russian press later said Mr Putin "appeared to be furious" as he watched the flames towering over the Kremlin walls.

Near the entrance to Red Square, the Hotel Moskva is already half-demolished and shrouded in scaffolding. The first hotel built in the Soviet Union, the Moskva was also a protected national monument, but Mr Luzhkov arranged to have it torn down and replaced with an "exact replica".

Alexei Komech, director of the State Institute of Art Studies, says: "Only in Moscow is demolition called restoration." The pretence of building a replica is a fig leaf that conceals a redesign of the original space to maximise commercial potential, and often enables a stealthy change of ownership, says Mr Komech, a dissenting member of the Moscow government's architectural consultative council. "One day an object is protected state property, and the next time you look it belongs to some company or individual."

Moscow officials bridle at the criticism and claim the only way to rebuild the city's housing stock, infrastructure and commercial core after decades of Soviet neglect is to harness the power of business.

Nikolai Shurin, chief specialist of the Moscow government's main directorate for the preservation of monuments, says: "No matter what shortcomings may exist, the situation in Moscow is being steadily improved. Moscow is in far better condition than other Russian cities."

Critics agree that Mr Luzhkov has done much to transform Moscow into a modern European metropolis over the past decade. But they say the urge for profit often trumps reason, citing plans to rip down beloved Moscow landmarks such as the Vointorg military shop, the Detski Mir children's store and Red Square's Hotel Moskva, and replace them with facsimiles.

Mr Komech says: "You can go to other European cities and find beautifully restored old buildings in the centre. But in Moscow they must have underground parking, swimming pools, business centres, and so on, so they tear it down and build a phoney copy. Everything must give five-star profits in Luzhkov's Moscow. Anything that doesn't will be destroyed."

The same logic has led to frenzy in the housing market, as rich individuals and businesses from all over Russia compete to acquire a central Moscow address. Prices have soared to about $6,000 (£3,000) per square metre, which means a small, one-bedroom apartment near the city centre goes for upwards of £275,000.

Although individual flats were privatised when the USSR collapsed, the city still owns most buildings and land. Construction firms connected to city hall have been handed contracts to renovate or demolish hundreds of old apartment buildings in recent years.

Under Russian law, evicted residents must be compensated with an "equivalent" living space within the city boundaries. Critics say tens of thousands of Muscovites have already been moved from potentially valuable flats they obtained in Soviet times to relatively cheap, concrete-slab housing on the outskirts of the city.

City hall has listed a further 1,200 apartment buildings for "reconstruction" work because they have wooden floors and ceiling beams.

"Downtown Moscow is going to be exclusively for the rich," Mr Revzin says. "The poor are shipped off to the suburbs, and the developers get very wealthy. It's a great business."