Johnson's Russia List
22 May 2003
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A CDI Project
St. Petersburg: Russia's Window to the West
Wealth of cultural assets can strengthen economic development
May 20, 2003-With 4.7 million people, St. Petersburg is the second largest
urban locale in Russia. The city, which in 2003 will celebrate the 300th
anniversary of its founding by Tsar Peter the Great, was the capital of the
Russian Empire until 1917. Designated by UNESCO as a World Heritage Site in
1990, it is home to some of the world's most important art treasures, and
displays one of Europe's largest concentrations of eighteenth and
nineteenth century civil and religious architecture. The city was, and
still is, an important manufacturing center. As Russia's largest port in
the West, it is also a strategic gateway for exports to, and imports from,
the markets of the European Union and the Western hemisphere.
However, like other regions and cities in Russia, St. Petersburg has had to
weather the fundamental structural changes brought about by the
disintegration of the Soviet Union and the transition of the last decade.
Its wealth of culture and art has been underutilized, and economic growth
in the city is not yet at an optimal level. The recently approved St.
Petersburg Economic Development Project will work to address these
challenges by supporting both aspects of the city's valuable assets:
cultural and economic.
The hybrid loan is a unique combination of two components: adjustment and
investment. On the adjustment side, the St. Petersburg Economic Development
Loan will enhance the city's prospects for sustainable economic growth, and
allow it to more fully exploit its position as Russia's "Window to the
West." "This project is an attempt to support a city that is undertaking a
broad range of reforms," says Russia Country Manager and Co-Task Manager
for the project Richard Clifford.
Fundamentally, the project aims to improve the business climate in St.
Petersburg. It will support small and medium enterprises by bringing the
city into compliance with federal licensing regulations; analytical work
undertaken by the city and the Bank has found that the current burdensome
regulatory and licensing environment is one of the most critical obstacles
to attracting new businesses. The project will also promote the development
of land and real estate markets by supporting the adoption of an urban
development code to bring zoning regulations to the city.
These reforms will also enable St. Petersburg to take greater advantage of
its unique position as one of Russia's top centers of culture and the arts
and create the basis for developing tourism as a key element of future
economic growth. "The project will support St. Petersburg's transition to
an economy that is much more broadly based on services and takes advantage
of the city's status as a World Heritage site," says Clifford.
On the investment side, the project will, among other things, finance
repair and rehabilitation that will help protect historical buildings of
several major cultural institutions (including the Marinsky Theater, the
Hermitage, and the State Russian Museum) from further physical
deterioration; increase the exhibition and activities capacity of the
institutions; improve the operational safety and efficiency of the
facilities for both visitors and personnel; and provide higher safety for
artworks on display from fire, theft or other hazards.
Many of St. Petersburg's cultural assets have been in major disrepair as a
result of years of neglect. "Security and safety at the Marinsky Theater is
particularly bad," says Urban Management Specialist Jean-Jacques
Soulacroup, who is the Co-Task Manager of the loan. "The fire system and
electrical system are not up-to-date, and emergency exits are lacking.
Every available space at the theater is used for storage, and there are
historical costumes piled everywhere. If placed on display, the costumes
could attract many visitors, but now they are a fire hazard. The project
will reorganize the theater and rehabilitate the safety and security
systems to a world-class level."
Both Clifford and Soulacroup stress that the loan helps the city address
two of the key issues that will underpin growth over the next decade. The
investments in the cultural assets are needed to strengthen the city's
unique strategic asset as a world renowned center for culture. Policy
reforms are also needed to foster the growth of small businesses in the
cultural sector and tourism infrastructure. The Bank's unique ability to
support policy reform and provide critically needed finance to preserve
these cultural assets are essential elements of the support for the city.
The project also includes a Cultural Investment Facility, a competitive
grant-based fund to which any cultural institution in the St. Petersburg
vicinity can apply for financing. The Facility will fund small-scale
activities that would help the recipients to increase their commercial
revenue, improve the accessibility to cultural assets or activities to the
public (such as through installation of special facilities for the
handicapped), and carry out critically needed small investments for the
preservation of buildings and assets including security systems, other
protective equipment, and restorative emergency repair works. These grants
will not exceed $200,000 in order to obtain as many proposals as possible
from all eligible local cultural institutions.
For more information on the World Bank's work in Russia, visit