Kremlin to File Counterclaim in Embassy Battle

The Soviet Union intends to file a counterclaim for more than $29 million because it is unable to occupy its new embassy in Washington while the new U.S. Embassy is rebuilt in Moscow, a Foreign Ministry spokesman said Monday.

Gennady I. Gerasimov said he could not put an exact amount on the claim, but he said it would “surpass” the $29 million sought by the United States for sloppy workmanship, cost overruns and construction delays at the controversial bug-ridden U.S. Embassy in Moscow.

President Reagan decided to raze the new embassy building in Moscow because it is riddled with electronic listening devices. He wants a new one built under heavy security at an estimated cost of $300 million to $500 million.

Under a 1972 agreement on construction of new embassies, the Soviets are barred from using their new diplomatic complex, which has been completed, until the new U.S. Embassy is occupied in Moscow.

Besides the bugging problems in the new building in Moscow, the United States claimed last week that it is entitled to $29 million in compensation for poor workmanship and construction delays. The eight-story building was built by Soviet workers under U.S. supervision.

Similar Claim in 1986

The United States instituted a claim against the Soviets for $10 million on similar grounds in October, 1986.

Gerasimov said the U.S. compensation claims were not based on an “objective” assessment of the situation as laid out in the 1972 agreement on construction of new embassies.

“There are reciprocal claims on this mutual agreement and we will discuss them with the Americans, but not through newspaper headlines,” he said.

“Our complex in Washington is unoccupied and we lose much money by not occupying it because the American side cannot take care of things here in Moscow. Of course we suffer losses,” Gerasimov said.

“We also have bills to present to the other side for the construction of our embassy in Washington,” he told a news conference. “The Soviet Union will present to the American side a bill for losses, not all direct but indirect losses. The sum of our claims will surpass the size of the American claims.”

5-Year Project

One U.S. diplomat said it could take more than five years to demolish and rebuild the U.S. Embassy in Moscow.

The 1972 accord established a mechanism to discuss disputes over embassy construction. The last such talks were held in August, 1987. Gerasimov said Monday that it seemed time to hold another round.

Construction of the new American Embassy was halted in August, 1985, already two years after the planned completion date, because listening devices had been implanted in concrete walls that were poured by Soviet workers away from the construction site without direct U.S. supervision.

There have been other delays in construction, including a 1983 two-week strike by the more than 300 Soviet construction workers over the use of X-ray machines to detect bugs and a shortage of proper materials. It is for these delays and enormous cost overruns that Washington is claiming compensation.