PROJECT INFORMATION DOCUMENT (PID)

APPRAISAL STAGE

Report No.: AB5389

Project Name

/ Preservation and Promotion of Cultural Heritage Project
Region / EUROPE AND CENTRAL ASIA
Sector / Other industry (100%)
Project ID / P120219
Borrower(s) / RUSSIAN FEDERATION
Implementing Agency / Ministry of Culture of the Russian Federation
Environment Category / [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / February 16, 2010
Date of Appraisal Authorization / February 3, 2010
Date of Board Approval / May 14, 2010

1.  Country and Sector Background

Russia’s dramatic economic growth between 1999 and 2007 has transformed the country’s economic and social structures. Russia’s success is in large part due to the implementation of a sound macroeconomic policy that supported impressive accomplishments in the Russian economy. However, the country’s developmental challenges remain formidable. The dominance of extractive industries and an uncertain investment climate have hampered private sector investments and led to a slowdown in the manufacturing sector. Additionally, whereas the reform of public administration and the civil service has been a top priority for the government in recent years, progress in this area has been limited and mixed thus far. These weaknesses have made Russia particularly vulnerable to the recent world financial and economic crisis

Russia’s GDP growth swung from positive 8.1% at the end of 2007 to negative in 2009, despite higher oil prices assumed in the current forecast. In similarity to many countries around the world, Russia is experiencing a recession in the wake of the global financial crisis. While Russia's strong short-term macroeconomic fundamentals - low debt, large international and fiscal reserves, and initially strong fiscal position - makes it better prepared than many emerging economies to face the crisis, its underlying structural weaknesses- including a dependence on oil exports, narrow industrial base, and limited small and medium-size enterprise sector means - mean that the country is still vulnerable to external shocks. As such, Russia’s Medium-Term Program (2006/2008) and Long Term (2020) Concept for Social and Economic Development are aimed at addressing many of the challenges mentioned above.

The Government would like to diversify growth and share the benefits of development more widely across Russia’s regions and population. Russian cultural heritage can play an important role in this diversification. The richness of the Russian history with both strong Asian and Western influences and the position of Russia as a commercial trade route linking the north and the south of the European and Asian continent have created a rich and diverse culture. The intellectual and political transformations of Russia in the 18th and 19th century have created an explosion of the arts that draw many foreign tourists and are a source of pride for the Russian population. Located in the Northwest of Russia, the four participating oblasts witnessed events that are seminal to the creation of Russian national identity and have remained heretofore largely unrecognized outside its borders. The region also has literary significance: in the nineteen century, the region was referenced in many novels and has been visited by many writers. The palaces built along this route for Catherine the Great as she traveled between the two cities is a testimony of the cultural significance of this region. Pushkin, the most cherished Russian poet, was inspired by many of the monuments, villages and mansion along the roads he traveled from Moscow to St Petersburg. This richness can also be harvested to stimulate local development through cultural tourism and cultural industries

The Medium-Term Program of Social and Economic Development of the Russian Federation (2006 - 2008) and the Concept for the Long-Term Social and Economic Development of the Russian Federation to 2020 indicate that culture is a strategic resource that can be used to promote economic diversification and economic development. Both t he policies both stress the importance of building on Russian regions’ cultural potential and advocate actively preserving and conserving Russia’s cultural and historical heritage; integrating cultural heritage into tourism development strategies; developing capacity to manage cultural sites; supporting integrated local development; promoting of Russian cultural heritage abroad; increasing the amount of users of cultural services in Russia; and ensuring the dynamic development of public/private partnerships to support the development of cultural activities. Many elements of these policies are reflected in the strategies elaborated by the regions participating in the project.

2.  Objectives

The project development objectives are to: (i) support the conservation, safekeeping, valorization and promotion of cultural heritage assets in four oblasts of the RF and (ii) strengthen regional capacity for cultural heritage management so that cultural heritage assets fully support the socio-economic development of the four oblasts. The key indicators are: (i) number of cultural heritage preservation subprojects implemented, (ii) volume of stakeholders’ co-financing to support the cultural heritage project investments, (iii) number of visitors in supported cultural heritage sites, and (iv) level of stakeholders’ satisfaction. It is expected that the project will have broader outcomes that are difficult to measure but are also very important such as: improved safety and management of cultural assets in the areas covered by the project; adoption of new integrated methods for regional planning by local governments so as to enhance the value added of cultural assets for local development; and new initiatives by the private sector, NGOs and public institutions for cultural asset preservation and development. Economic and financial analysis will be conducted for each subproject during implementation.

3.  Rationale for Bank Involvement

Supporting the Russian government’s program. The Project is in line with the objectives of the Medium-Term Program of Social and Economic Development of the Russian Federation (RF) (2006-2008), as approved by RF Government Ordinance #38-r of January 19, 2006 and the Concept for the Long-Term Social and Economic Development of the RF to 2020 (approved by RF Government Ordinance #1662-r of November 17, 2008). These documents refer to culture as a strategic resource for the economy and express support for developing Russian regions’ cultural potential. The Preservation and Promotion of Cultural Heritage in Russia Project (PPCHRP) aims to support the development of opportunities for cultural tourism in four specific oblasts of the Russian Federation (RF) – Leningrad, Pskov, Novgorod and Tver oblasts - located between St. Petersburg and Moscow in order to spur economic and social development. Moreover, the project supports the government’s recent directives for improving the protection of Russia’s moveable cultural property by supporting improved conservation and storage facilities and the establishment of security standards.

Linkages with CPS. In addition to the fact that the project is strongly aligned with the RF’s priorities, the proposed Project is fully consistent with the Russia Country Partnership Strategy (CPS) for the period FY2007-09 (Report No. 37901-RU) (including sustaining rapid economic growth and strengthening public management and performance). The project is also consistent with three of the extended CPS’s objectives (the extended CPS will be in effect through June 2011) including: (a) diversifying the economy for sustainable development and growth (formerly, “Sustaining Rapid Growth”); (b) improving public sector management and performance; and (c) enhancing Russia’s global economic positioning in the world.

Additionally, due to substantial development challenges remaining in a large number of Russian regions, the federal government has asked the WBG – as in the previous CPS – to increase its support to the regions. The technical assistance part of the PPCHRP will allow the four regions participating in the project to improve their institutional capacity and enhance their ability to incorporate cultural and historical heritage into regional development strategies.

Proven track record and comparative advantage of the Bank. The design of the PPCHRP is based on the experience gained from the Bank-financed St. Petersburg Economic Development Project (SPEDP) and its predecessor, the St. Petersburg City Center Rehabilitation Project. Indeed, in many ways the PPCHRP is an extension of the SPEDP’s investment component to neighboring oblasts. The Ministry of Culture (MoC) views the PPCHRP as a pilot that, if proven successful, could be scaled-up to other regions of Russia. The Russian Government values the Bank’s participation in the design of the project because of its experience with the development of mechanisms for procurement, financial management, environmental and social safeguards, and monitoring and evaluation. The Bank’s experience in Russia specifically, and in the sector of rehabilitation and conservation of cultural heritage generally, its access to specialized skills and its ability to convene international partners play an important role in the design of the project. The St. Petersburg Foundation for Investment Projects (FISP), which was asked by the government to conduct preparation of the PPCHRP, worked closely with the Bank as Project Implementation Unit (PIU) for a number of projects for over a decade and has accumulated a very solid experience in project implementation.

4.  Description

Component 1: Integrated Heritage Site Development (US$ 200 million). This component will be implemented through a demand driven mechanism that will support, on a competitive basis, sub-project proposals made by oblasts and cultural institutions. The component will consist of two sub-components: (a) rehabilitation and improvement of cultural heritage sites and institutions and (b) capacity building for integrated site development to regions and local level institutions.

Sub-Component 1a: Rehabilitation and improvement of cultural heritage sites (US$ 196 million): The sub-projects funded from this sub-component will support the regeneration of areas with strong cultural significance through safekeeping, conservation and improvement of cultural heritage sites. To realize their full potential as drivers for social and economic growth, sub-projects will include the preparation of a site development and management plan prepared in collaboration with all relevant stakeholders concerned by the sub-project. The sub-project proposals will clearly present how the facility/monuments to be rehabilitated will be integrated in broader development activities and how various stakeholders will be involved in the development and maintenance of these sites. The sub-component will be separated into two windows. The first window will be intended for large investment programs presented by oblasts, that will require more complex local planning and economic and technical studies. The other window will support smaller local subprojects presented by regional cultural institutions that will require less planning and could be rapidly implemented.

Integrated Site Development (Window for large projects, US$ 176 million): Funding will be granted to comprehensive applications that meet the program’s selection criteria and will be supported by viable site development and management plans based on social, environmental and economic assessments. The sub-projects will also have to be consistent with regional (oblast levels) development plans. Under this window the component will finance the conservation of built heritage and other site interventions. Stakeholders such as the oblasts, local governments, local agencies and the private sector will provide sub-project co-financing for infrastructure investments (such as roads, parking, lighting) and the provision of services (such as support for small business activities, environmental upgrading, organization of guided tours or other site improvements and tourism development activities and investments).

Support to Cultural Institutions (Small project Window, US$ 20 million): This window will support the financing of small scale local sub-projects to improve existing heritage sites already functional in order to enhance their appeal to visitors and improve their value for local populations. This component will allow for relatively quick interventions in areas that may only require small site management plans.

Sub-component 1b: Capacity building for integrated site development to regions and local level institutions (US$ 4 million): This sub-component will build the capacity of oblasts and local level institutions to improve comprehensive cultural development planning. The sub-component will support: a) activities necessary to improve the capacity of oblasts in cultural heritage management and, specifically, in linking cultural heritage with economic and social development; b) pre-identified training and technical assistance specific to subprojects investments as well as similar additional support identified by the applicants, oblast and cultural institutions necessary for the effective implementation of the proposed investment; and c) exchange of experiences between oblasts and cultural institutions participating in the project for knowledge and innovation sharing across the regions involved via study tours and workshops.

Component 2: Protection of Museum Assets (US$ 43 million). This component is designed to support the MoC’s efforts in Russia and to protect and promote the moveable heritage assets of Russia. This component will comprise two inter related sub-components: (a) improvement of collection management of the institutions under the stewardship of the Museum Agency of Leningrad Oblast, and (b) development of museum security practices and their application in selected institutions in each of the participating Oblasts for demonstration purposes.

Sub-Component 2a: Improvement of collection management (conservation and storage, US$ 35 million). This sub-component is designed to improve the management of museum collections of the Leningrad Oblast from a conservation and storage perspective. The Oblast currently faces challenges in terms of lack of conservation services and human resources, as well as lack of exhibition and storage space. Artworks are currently at a high risk of damage and deterioration due to inadequate storage practices, and in need of conservation and skilled experts to carry it out. The sub-component will support: a) an in-depth institutional and physical needs assessment for the development of a conservation and storage strategy, b) targeted capacity building to improve the management of collections including inter alia spatial management, conservation, reporting practices and practices for electronic management of collections, and c) the construction of a Multifunctional Museum Facility. This facility, located at the Priutino museum complex, near St. Petersburg, will be used as a conservation, research and training center with laboratories and studios for various types of items and materials (e.g., works on paper, wood, canvas; metal, porcelain etc.) and serve as a regional hub for providing professional art services.

Sub-Component 2b: Museum security practices (development & testing, US$ 8 million). This subcomponent consists of two sets of activities: i) the elaboration of a set of practical guidelines for security by category of venues, and ii) the installation of security equipment in a selected number of venues for testing. Due to the wide variety of museums in Russia, institutions will be classified based on a number of characteristics including: architectural features of the building, the value, type and size of collections, location and the proximity of public services (police, fire department etc.). Specifications for the type of security systems and the type of training for museum guards and security personnel will be integrated into the guidelines. For demonstration purposes, the project will install relevant equipment and train targeted personnel in selected museums in the oblasts covered by the project.