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. Last Updated: 07/27/2016

Spaso House Not Low-Rent Anymore

APMoscow complained for years that Washington was just paying a few dollars a year in rent for the U.S. ambassador's residence.
The United States has agreed to a higher rent for Spaso House, the U.S. ambassador's residence just off the Arbat, after paying just $2.50 per year, Russian and U.S. officials said Tuesday.

The two sides did not release the terms of the new 49-year lease but said in identical statements that the agreement was based on a joint assessment of the property's value.

A U.S. Embassy spokesman said it was against U.S. government practice to release specific details of rent agreements but said the new deal "appropriately reflects the value of Spaso House."

The agreement will come into force within days, he said.

Rent for a typical ambassador's residence runs at no less then $480,000 per year, according to Penny Lane, an upper-market real estate agency.

The previous lease on Spaso House was negotiated in 1985 and fixed the rent at 72,500 rubles per year -- an enormous amount at the time. However, post-Soviet hyperinflation slashed most of its value, and the lopping off of three zeroes from the ruble in 1998 further cut the rent to just 72.50 rubles per year, or $2.50 at the current exchange rate.

The Foreign Ministry has long complained that the low rent was unfair. U.S. officials countered that the contract had no provisions for currency fluctuations and that Washington had paid an exorbitant rate in Soviet times due to an artificially controlled exchange rate.

The 1985 lease was to expire on July 1, 2005.

Moscow has refused to accept rent payments for Spaso House since 1994 and has demanded that the United States pay a total of $9 million in back rent. At one point it threatened to take the issue to international arbitration.

With the agreement announced Tuesday, the issue of back rent also appeared to have been resolved. Russia and the United States reached "an amicable settlement of other outstanding issues," the two sides said in their statements.

"The decline in value of the ruble, which was the currency of the contract, did place strains on the agreement, and we are glad to have overcome potential obstacles that resulted from this," the embassy spokesman said.

The new contract was negotiated last Thursday and Friday by Ivan Sergeyev, director of the Foreign Ministry's Main Administration for Service to the Diplomatic Corps, and Charles Williams, director of the U.S. State Department's Office of Overseas Building Operations.

"The parties expressed their deep satisfaction that this longstanding issue has been resolved to the benefit of both sides, and that Spaso House will continue to contribute to the advancement of U.S.-Russian relations," the statements said.

The embassy spokesman added, "We are also pleased that the resolution of this issue allows us to focus exclusively on the many important challenges that require our mutual attention and cooperation."

Among other things, Russia and the United States are strong allies in the struggle against terrorism.