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THE BRONX, N.Y. -- For most of the past 20 years, Laura Spalter ignored the enormous building across the street from her yellow two-story house.

"I didn't know anything about Russia," says the middle-school English teacher. "I concentrated on the local news."

Since the early 1970s, the Russian Federation Diplomatic Residence (formerly the Soviet diplomatic residence) has towered 20 stories above the trees, co-op complexes and posh homes of Riverdale in the northwest Bronx. But it was more forbidding than impressive.

The building has no windows on two of its four sides. Even the tight-lipped diplomats who lived there conceded that their home was bleak and gray.

But early last year, the Russians announced plans to expand the complex by building four 12-story buildings and renovating the apartment tower.

In the process, the diplomats touched off a furor that seems to challenge conventional wisdom about Americans' presumed lack of interest in foreign affairs.

The residents of Riverdale have turned into amateur Russia scholars, scouring the newspapers and foreign policy journals for tips about Russia's fiscal health.

They have stared down seasoned diplomats across a conference table at the United Nations.

And for now, they have stalled the Russians' project and put the country's New York-based diplomats in an unexpected and embarrassing position: trying to assure people like Laura Spalter that Russia has enough money and know-how to complete a $60 million construction project.

"Let me tell you, now I read everything about Russia," Spalter says. "We keep asking the Russians for some real guarantees, in writing, that they have the money to do this job, but all they've said is, 'Nyet, nyet.' "

Russia's budgetary troubles have become topics for the Riverdale Community Association, of which Spalter is co-president.

The group maintains that the new Russian residence -- which would be expanded to 360,000 square feet, from the current 240,000 -- would exceed limits set by zoning laws.

But the larger fear is that Russia will begin the project and fail to finish it, scarring a city block that is home to a park, Little League field and day care center.

Riverdale, a community of about 50,000 people that sits on a bluff high above the Hudson River, prefers quiet. Police in the neighborhood spend much of their time finding the occasional stolen car and enforcing canine waste laws.

But on many evenings, the talk at Laura and Bob Spalter's kitchen table turns to Russia.

"This project is so big it will just dwarf our neighborhood," she says, pouring a glass of seltzer water.

"And this country hasn't paid their soldiers in two months," says Bob Spalter, who runs a plastic manufacturing company.

"It's been eight months since their teachers got a paycheck," adds Laura Spalter.

"And did you see that story about how the government is not even bothering to collect taxes?" her husband asks.

The Russians insist that construction will eventually go forward. So residents are organizing.

The Riverdale Nature Preservancy has set up a legal defense fund. A local lawyer has briefed his neighbors on the intricacies of the Foreign Missions Act of 1982.

And there is, of course, the drumbeat of the community newsletters, with headlines such as "Russian Plan Blocks Sun."

Residents say they will support the expansion plan, but only if Russia scales it back and sets aside money for performance and completion bonds -- insurance that construction will be finished and any damage paid for.

The Russians say no deal is possible in the face of such insults.

"Let me be blunt," says Alexander Kovalev, second secretary for Russia's mission to the United Nations. "This is the Russian government, and we are guaranteeing the project.

"It is quite hard to explain the neighborhood's objection to the Parliament and, quite frankly, to President [Boris N.] Yeltsin."

Paul J. Elston, chairman of the Riverdale Nature Preservancy, offers this response: "The proposed construction is too large, and a big question is, Will they run out of rubles?"

When the Soviet Union began building its diplomatic residence in the early '70s, it picked the highest point in the neighborhood. But the building itself was a letdown. Some new residents thought it was a jail.

There were tense periods during the Soviet era, when contact with neighbors was forbidden, and Riverdale residents wondered whether Soviet spy equipment might be responsible for their poor TV reception.

Glasnost eventually opened up the diplomatic compound. Beginning in 1986, several diplomats sent their children to Public School 81. The Soviets allowed use of the residence's meeting hall for concerts and fund-raisers.

Last winter, the Russians organized a basketball game between their children and a team from the local Police Athletic League. The Bronx boys won, 85-75, "but it was close," Kovalev says.

As the Cold War was melting away, the diplomatic residence was falling apart. Originally designed for Soviet bachelors, the one-bedroom apartments were too small for Russian families. Walls cracked, and floors adopted steep slopes.

"This is the worst conditions of any place my family has lived," says Kovalev, who has been posted to Myanmar and New Zealand.

Last year, with tensions rising over the proposed expansion, the poor maintenance attracted neighbors' attention. Trash collected in the residence's playground.

Neighbors began to complain about a group of Russian teen-agers, known locally as "the diplo-brats," who left beer bottles along the street.

Russian diplomats say they expected a warm reaction to their expansion proposal, with its colorful new apartment towers, bar, school and indoor swimming pool.

Instead, they have received a lesson in New York City zoning laws, as inscrutable as any set of regulations issued by the Soviet Politburo.

When Russia secured a city building permit in early 1996, Riverdale residents discovered a street that appears on city maps but was never completed.

The road divided the Russian property into two lots; after residents pushed the issue, city building officials were forced to revoke the Russians' permit. Russia was told to re-start the permit process from scratch.

The Russians, who say they have already spent $3 million on plans for the project, have appealed in recent months to the State Department for help. Victor Marrero, who handles economic and social issues for the U.S. mission to the United Nations, arranged a series of meetings at the United Nations over the winter.

Marrero was at the head of the negotiating table. Riverdale neighborhood groups sat on one side and the Russians on the other, though only their American lawyer spoke.

The summit produced no agreement, and the State Department now says publicly that the Russians will have to comply with New York zoning laws.

That bodes poorly for the project, in part because aides to Mayor Rudolph W. Giuliani have indicated that the mayor is worried about the Russians' ability to pay for their proposals.

"The Riverdale community is rightfully concerned," Giuliani said earlier this year.

Kovalev says he believes the State Department will intervene, or the neighbors will cave.

The latter is not likely.

"I'm afraid," says Laura Spalter, "that this is going to be decided in the courts."

Pub Date: 4/27/97

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