RUSSIA MONITOR

Date: 2 July 2017

Demolition worth billions of dollars

Vladimir Putin has recently signed the law on the basis of which Moscow’s Soviet-era housing is set to be torn down starting in September. Since the very beginning, this idea has caused some controversies. The authorities and some friendly businessmen pretend to care about citizens, but at the same time they simply seek to take over perfectly located areas in overcrowded Moscow, in order to make money. Demolition of the buildings and resettlement of their inhabitants will trigger protests against the authorities. This case may become, at least in the Russian capital, an important point of the presidential campaign, of course with some negative consequences for Putin.


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On July 1, the president signed a controversial act enabling the demolition of thousands of apartment blocks built during the Soviet era. This may mean the resettlement of hundreds of thousands of people. In mid-June, the bill was approved almost unanimously by the State Duma (399 to 2). Two weeks later, on June 28, it was accepted by the Federation Council, the upper house of Russian parliament. The law concerns about 4,500 apartment blocks built in the 1950s and 1960s. Among them there are many five-storey buildings, known as Khrushchevki, named after then Soviet-leader Nikita Khrushchev. Nonetheless, members of parliament have reduced the scope of the demolition; originally, it was to affect even 8,000 apartment blocks.
Moscow authorities insisted that the buildings were outdated and they posed a threat to their inhabitants. However, many of the residents believe that it is only an excuse to build very expensive apartment and office buildings that are going to replace the old settlements, located in a valuable neighbourhood. Expelled inhabitants will be given apartments of the same size as the ones they were forced to leave. However, they will not necessarily be of the same value. Work on the draft of the bill and its final adoption were accompanied by the protests of thousands of Muscovites.
The mayor of Moscow, Sergei Sobyanin, a faithful executor of Putin’s commands, announced that he will begin the implementation of the program in September. However, its main aim is to make real estate available in the prestigious neighborhoods of Moscow in order to make way for commercial buildings. The second objective is to guarantee work for the massive construction sector in the capital at the expense of the city budget. According to the law, the massive scale project will be governed by a renovation assistance fund which was set up especially for this purpose in Moscow. It will combine representatives of the authorities, client and contractor. The program will last more than a decade (though probably much longer) and will be extremely expensive. Its total cost ranges from 68 to 103 billion dollars. It’s a real bonanza for developers belonging to people from Putin’s milieu. They have already earned billions, for instance during infrastructure work before the Olympic Games in Sochi. Now, they seek to make money in Moscow, thanks to the law which stipulates the mass expulsion of a significant part of Moscow’s population.

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