THE MOSCOW EMBASSY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90G00152R000500680020-9
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 11
• Document Creation Date: December 23, 2016
• Document Release Date: August 18, 2011
• Sequence Number: 20
• Publication Date: October 22, 1986
• Content Type: MEMO

Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
ROUTING AND RECORD SHEET
SUBJECT: (Optional)
FROM: EXTENSION NO.
William F. Donnelly ATE ER-1469x
Deputy Director for Administration 15 April 1987
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
REGEIVEO
FORWARDED
INITIALS
to whom. Draw a line across column after each comment.)
1.
Acting Director of
Central Intelligence
FYI
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
DCI
EXEC
14.
15.
c
FOR
I-79M 61 0 uaEaT wsus
STAT
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UgEr- OP
uKUENT
Office of the
UNDER SECRETARY OF STATE
FOR MANAGEMENT
WASHINGTON
A -
Mr.
Bouchard
DS -
Mr.
Lamb
EUR/SOV -
Mr.
Parris
M/OFM -
Mr.
Nolan
PA -
Mr(.
Redman
SUBJECT: The Moscow Embassy
The Secretary asked Mr. Spiers to produce an unclassified
report on the history of our negotiations with the Soviets on
the construction of our new embassy in Moscow. Attached is a
draft of that unclassified report.
Could you or your staff take a look at this report and rive
me your comments? In particular, I would appreciate your
suggestions on how we might use this report in the press and.'or
on the Hill. We also need to make sure that all of the
information in this report is indeed unclassified.
The Secretary apparently wants this unclassified report as
soon as possible. We would appreciate your comments by COE
Thursday, October 23.
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
Inchin4 Towards a New Embassy in Moscow:
An Historical Perspective of Soviet-American Negotiations
Background
Soon after the U.S. recognized the Soviet Union,
William C. Bullitt, our first ambassador to the USSR, reported
in January 1934 that Stalin had promised him a new embassy site
in Moscow on Lenin Hills overlooking the Moscow River. For the
next five years we negotiated with the Soviets on quality
assurances on construction materials, permission to use foreign
(including American) laborers to construct an embassy,
duty-free import of construction materials, the adequacy of
Lenin Hills as a chancery site, and Soviet demands that we use
a Soviet company to construct the new building. The
discussions were fruitless, so funds which had been earmarked
for Moscow were diverted to Central American posts in 1937.
Discussions on new embassy construction ended completely in
1939.
As a result, the Embassy staff moved into temporary
quarters on Ulitsa Mokhovaya near Red Square. Legend has it
that Stalin, who lived in an apartment in the Kremlin,
frequently complained that be woke up mornings seeing the
British Union Jack and the American Stars and Stripes outside
his windows. He insisted that both embassies move. The
British still occupy their chancery opposite the Kremlin. We
moved in 1953.
The Soviets offered us our present chancery building on
Ulitsa Chaikovskovo. Bowever, they insisted upon renovating
the building before we occupied it. Americans were not
permitted to supervise the renovations. In fact, the Soviets
were so secretive about the renovations that, at one point, the
future chancery was shrouded in tarpolins while the Soviets
worked inside.
Searching for Sites
We quickly outgrew the Ulitsa Chaikovskovo chancery.
Likewise, the Soviets were bursting at the seams in their 16th
Street chancery in Washington. As a result, in 1963 the
Soviets tried unsucuccessfully to get a new chancery site in
the Bonnie Brae subdivision of Chevy Chase. Through a series
of court cases, the community successfully blocked construction.
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
- 2 -
To avoid future squabbles over zoning, we began:searching
for land owned by the U.S. Government in Washington as possible
Soviet chancery sites. (Government-owned land is not subject
to D.C. zoning regulations.) we investigated two sites -- the
Bureau of Standards site (now the the International Chancery
Project) and the Veteran's Administration Hospital site on Mt.
Alto. The Soviets had not previously indicated an interest in
either site.
For the next two years officers from all interested U.S.
Government agencies discussed, and eventually agreed to, the
acceptability the Mt. Alto site. The Soviets, however, were
not universally enthusiastic about the Mt. Alto site. In
November 1966 they complained that we had showed them only one
site -- Mt. Alto -- which was "not very favorable" because of
its distance from the center of the city and from government
buildings.
However, after a brief Soviet daliance with the idea of
buildinc a chancery at Tregaron in Cleveland Park, in 1969 we
signed an exchange of sites agreement, giving the Soviets an
85-year lease for 12.5 acres on Mt. Alto.
Meanwhile, in Moscow we were also looking for an
appropriate site for our new embassy. The Soviets again
offered a site high atop Lenin Hills overlooking Moscow, but we
balked, concluding that the site was too inaccessible and too
far from the center of the city. We focused instead on a site
the Soviets offered behind the existing chancery. The site was
topographically lower than the existing chancery and in an area
slated for urban renewal. However, the site was centrally
located, overlooking the Moscow River, within walkin distance
o fte Ambassador's Residenc, across the street from the site
of the new RSFSR (Russian Republic) Council of Ministers
office, and near major thoroughfares and several metro
stations; in short, it was on rime Moscow real estate. (The
site is not, as legend as it, in a swamp. This
characterization crept into the rhetoric about the site as a
result of some drainage problems during excavation.)
Congressman Wayne Hays travelled to Moscow in September 1967
and concluded that his Foreign Affairs subcommittee would
support this site.
We negotiated for several years on the precise size and
shape of the plot of Land. Eventually in 1969 we accepted --
with Congress interposing no objections -- an 85-year lease for
a 10-acre site for the chancery compound, plus the 1.8-acre
site of the Ambassador's Residence, Spaso House.
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 I .:. JI -
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90G00152R000500680020-9
UNCLASSIFIED
- 3 -
At Soviet suggestion, negotiations on sites and.
construction had been separated into two tracks. According to
the Soviets, the sites agreement had to be approved at the
highest levels of Soviet government: the conditions of
construction could be ironed out by technicians. Separating
the negotiations would speed up the process, the Soviets said.
To encourage a speedy conclusion of agreements, the eventual
exchange-of-sites agreement stipulated that we would agree to
conditions of construction within 120 days. However, our
negotiations dragged on for 3 years. One of the major sticking
points was the height of the Soviet buildings on Mt. Alto and
of our new chancery in Moscow.
Negotiating Chancery Heights
After long, arduous negotiations, we finally settled the
height issue as a part of the conditions of construction
agreement signed in 1972. The Soviets agreed that our new
chancery in Moscow could be 176 meters (above sea level) tall.
At that height, our building would be about 9 meters lower than
our existing chancery, but slightly taller than the nearby CEMA
(Council of Mutual Economic Assistance) building. Our new
chancery would nevertheless be dwarfed by the nearby
"Stalin-scraper" apartment building. All of the interested
U.S. Government entities -including Congress -- eventually
agreed to this arrangement.
Meanwhile, in Washington the Mt. Alto height issue raged
between the Soviets, the State Department, and the National
Capital Planning Commission. The issue was complicated by the
fact that the new Soviet chancery is in an area of Washington
where building heights are strictly controlled. Eventually,
however, the Soviets reluctantly accepted the 136.21-meter
(above sea level) height limitation which the National Capital
Planning Commission had placed on their buildings on mt. Alto.
Conditions of Construction
The exchange-of-sites agreement was only the first major
hurdle. The second, reaching an agreement on conditions of
construction, was like building a house of cards during a
windstorm. The haggling over conditions grew so acrimonious
that both sides at times considered giving up the
negotiations. The 120-day deadline for agreement (set in the
exchange-of-sites agreement) was extended repeatedly.
-? - Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90G00152R000500680020-9
 i ..
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
- 4 -
We submitted our initial draft conditions of construction
to the Soviets in January 1968. Nineteen months passed before
the Soviets submitted their counterproposals. Their demands
were, for the most part, "categorically unacceptable" to the
.U.S. Among other things, the Soviets stipulated that:
Soviet contractors would carry out basic construction;
Soviets would control all phases of construction in Moscow
(According to Soviet law, they said, foreigners could not
supervise construction of buildings in the Soviet Union);
Soviet firms would survey the property and prepare design
drawings;
our plans had to take into consideration not only local
construction norms and rules, but also local technology and
methods of erection (In other words, we had to agree to
design a building which Soviets would be capable of
constructing);
we would use Soviet construction materials;
we had to pay for Soviet goods and labor with hard currency;
up to 40 Americans could do the interior finishing work on
the buildings, but only 10-12 American administrative and
technical people would be permitted on the construction
site for limited supervision and control of Soviet
contractors; and
Americans would have only very limited access to the
construction site.
We recognized from the start that common Soviet
construction techniques and materials would fall well below
U.S. standards. (As if to validate our fears, several
balconies in the Soviet-constructed new French Embassy in
Moscow collapsed in the late 1970s.) We also knew that Soviet
inefficiency would inevitably drag out the length of
construction.
Among other things, we insisted on
maintaining control over the construction of our new office
building;
unrestricted access to the construction site;
guarantees that we could bring in enough technicians and
security personnel to supervise the Soviets and thereby
maintain the security of the construction site;
competitive bidding to decide who would construct our
chancery compound
no restrictions (or import duties) on construction
materials and equipment;
parallel ('brick-by-brick") progress on construction in
Moscow and Washington; and
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
- 5 -
-- simultaneous occupancy of our respective chanceries. (The
Swedes had not made this a requirement when they built
their embassy in Moscow. As a result, the Soviets moved
into new quarters in Stockholm long before construction on
the Swedish embassy in Moscow was completed. The Swedes,
lacking any leverage to prevent Soviet construction delays,
then faced continued difficulty getting Soviet cooperation
on embassy construction.)
The longer the negotiations dragged on, however, the more
both sides moved, albeit at a snail's pace, from their original
positions. The Soviets agreed that we could do the finishing
work in the building and loosened their restrictions on the
number of Americans permitted on site. They agreed to let
third-country workers install equipment we purchased in third
countries. They also agreed to simultaneous occupancy of the
chanceries.
In March 1970 we also began to back away from our original
position. We began considering using Soviet workers to
construct our building, but using our designs and under our
supervision. We realized that, fro-ma practical standpoint,
some Soviet labor and Soviet materials would have to be used
for the new building. We hinted that,*in order to meet Soviet
requirements for generating hard currency, we would permit the
Soviets to build a portion of our building. We suggested that
the Soviets could excavate the site, construct the structural
frame of the office building, and build the residential portion
of the project.
In September 1971 we sent a team of architects to Moscow to
tour a number of Soviet industrial facilities and a number of
recently completed Soviet-constructed buildings. The team was
supposed to evaluate Soviet construction capabilities and
prepare a report on the type of building we wanted and the type
of construction required.
No architectural and engineering- drawings had been prepared
at this point. However, the architects concluded that it would
be possible to build our embassy compound in Moscow with
substantial input of Soviet materials and labor. They reported
that pre-cast concrete would be adequate to ensure the
structural integrity of the building.
In July 1972, a sev.gn-man interagency team concluded two
exhausting weeks of discussions with the Soviets and agreed to
a long list of conditions. The team worked out a formula
whereby construction of the new office building was to be
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
- 6 -
divided into two stages, with the Soviets performing all basic
structural work in stage one (using Soviet labor and Soviet
materials) and Americans (or third-country nationals) doing the
finishing work in stage two. In effect, we could be our own
overall builder-developer for the entire project and our own
general contractors for stage 2.
-- We were given unrestricted access to the site during
construction.
-- We were permitted to install our own windows, doors, final
roofing, all mechanical and electrical equipment, final
wiring, plumbing and other systems.
-- We could supply our own exterior facing, as well as
specialists who would supervise and instruct Soviet
laborers on how to install the (brick) facing.
The groundwork had been laid for a "face-saving
compromise." Some of the reasons cited in various Soviet and
American sources for agreeing to use Soviet labor and materials
included:
-- All other foreign embassies in Moscow had been built by
the Soviets.
-- The Soviets pledged their "full cooperation" to get
qualified Soviet workers for the American embassy
project.
-- We didn't want to permit the Soviets to build Mt. Alto
by themselves. The counterintelligence challenge of
monitoring the large number of Soviet construction
workers in the D.S. would be too great.
-- Importing large numbers of American construction workers
into Moscow could pose more personnel security problems
than the physical security advantages of building our
own building.
-- The French had tried to build their new Embassy in
Moscow themselves and had eventually, in exasperation,
given up. They let the Soviets finish the project.
-- Problems of language and convoluted Soviet building
regulations would slow our progress if we used only
American workers and materials.
-- It would cost too much to import an "army" of American
construction workers to build our compound. We
estimated in 1969 that we would need 150-200 Seabees,
Marines, and contract personnel to build our embassy in
Moscow.
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
- 7 -
As the differences between the two sides narrowed,
pressures to conclude an agreement increased. On October 3,
1972, during the height of detente, the State Department got
word from the White House that the President wanted an
agreement on conditions of construction before Soviet Foreign
Minister Gromyko left the U.S. for Moscow the next day.
Despite this pressure from the White House, no agreement was
forthcoming. Two months later, after three-and-one-half years
of negotiations, Secretary of State Rogers apparently
personally intervened. In a December 1. 1972, memo to
Secretary Rogers, EUR Assistant Secretary Stoessel stated,
"Yesterday you directed me to sign the Agreement on the
Condition of Construction of Embassy Complexes." The agreement
was signed on December 4, 1972 at 11:30 a.m. President Nixon
sent a congratulatory memo to Secretary Rogers on December 15,
noting that it is particularly appropriate that this agreement
? . for improved diplomatic facilities should come at a time
of expanding, improving US-Soviet relations."
Protocol of 1977
However, the agreements we had nailed down in 1972 with the
Soviets on conditions of construction turned out to be moving
targets. Negotiations to refine these conditions of
construction dragged on without success for five more years.
Secretary of State Vance's planned trip to Moscow in 1977 broke
the logjam. Eager for an agreement for Vance to sign in
Moscow, Soviet and American negotiators signed a Protocol of
negotiations on construction in March 1977. In the Protocol,
the Soviets agreed to furnish us with the long-awaited
construction cost estimate by August 1977. The final cost
would then be determined when the actual construction contracts
were signed. We agreed that the calculation of our Moscow
construction costs would be based on the prices of constructing
similar buildings in Washington.
Although an exchange of sites agreement had been signed in
1969, neither side took possession of their respective plots of
land until 1977. In the 1977 Protocol, both sides agreed to a
simultaneous exchange of sites on March 30, 1977.
Constructing New Chanceries
Once the Soviets had possession of their site, they were
eager to begin construction of their school, clubhouse and
apartments. Although We weren't ready to begin construction in
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
UNCLASSIFIED
Moscow, we agreed to let the Soviets begin construction on Mt.
Alto immediately in exchange for a new American school, 14 new
apartments for official Americans, warehouse space, and a new
dcha_ sjLe_ in,1~o~cow. ;
Our construction in Moscow was not scheduled to begin until
over a year later in May 1978. However, even that date proved
optimistic. The Soviet buildings (school, clubhouse, and
apartments) on Mt. Alto were completed in 1979 by the time we
signed our construction agreement to begin construction in
Moscow.
Once their buildings on Mt. Alto were completed, the
Soviets began pressing us to let them move into the buildings.
Since we hadn't even started construction in Moscow, we
refused. Construction contract talks in Moscow had stalled,
since we refused to accept Soviet construction costs which we
considered unreasonable. We finally agreed to permit occupancy
of Mt. Alto if the Soviets would agree to a fair construction
price for our Moscow chancery. The Soviets eventually agreed.
On June 30, 1979, we signed a construction contract with
the Soviet firm, SVSI. The following year, in September
of 1980, Assistant Secretary Tom Tracy signed a Memorandum of
Understanding with the Corps of Engineers to provide four
experienced technical personnel -- one electrical engineer, a
mechanical engineer, an architect, a logistic scheduler -- to
assist with the construction of the new office building. These
technical personnel, along with over 30 Seabees, the FBO
project management team, security personnel, and three American
contractor firms, now form the core of our American
construction team in Moscow.
Despite the agreements contained in the 1977 Protocol, we
failed to obtain the promised warehouse or dacha sites in
Moscow because we refused to pay the exor-bitant annual fees the
Soviets demanded for the properties. The impasse broke in 1979
when Soviets suddenly proposed a swap of properties -- the
warehouse and dacha sites in Moscow in exchange for additional
land (4 acres) for the Soviets at their recreational site at
Pioneer Point, Maryland.
The Soviets, using American labor, continued their rapid
pace of construction in Washington and in mid-1982 began
building the structural shells of the remaining buildings on
their Mt. Alto compound -- the chancery, consulate, and
reception hall. These structures were completed in 1985.
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90GO0152R000500680020-9
 I 11 -
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90G00152R000500680020-9
UNCLASSIFIED
- 9 -
Soviet workers are now completing all Interior finishing work
in those buildings.
The Soviets were able to build their buildings in
Washington much more quickly that we were able to build in
Moscow, in part because the Soviets did not have to negotiate
the series of bureaucratic hurdles and delays we have faced in
Moscow. In 1985 we tried to change that. We brought Mt. Alto
construction under M/OFM control. M/OFM now controls the
acquisition of all building materials and services the Soviets
need for their construction at Mt. Alto.
Security concerns, Congressional pressure, Soviet
construction delays, and the transition to an all-Soviet labor
force at Mt. Alto, all argued for excluding Soviet workers from
the new office building in Moscow. Without any advance notice,
Soviet workers were locked out of the new chancery building
after they left the site late Saturday evening, August 17,
1985. Americans will complete the interior finishing work and
remaining construction in the office building.
Problems will continue to plague us in Moscow. However,
barring other as-yet-unforeseen problems, the vision born in
1934 and resuscitated in 1963 -- building a new chancery in
Moscow -- may become a reality in 1989.
UNCLASSIFIED
Sanitized Copy Approved for Release 2011/08/19: CIA-RDP90G00152R000500680020-9