A project to restore the historic National Hotel to its former grandeur has been brought to a virtual halt as a dispute over nonpayment between the Western construction firm and the Moscow government is negotiated.


Susanne Fawakhiri, chief Moscow representative for the Austrian construction firm Rogner, said the company is owed $9. 5 million by its Russian partner, MosIntour, for work already completed on the ageing building. She said that unless the debt is paid, Rogner will be unable to continue financing the project.


"We are not progressing because we have not been paid", she said. "Until that is resolved, we are reducing our operations".


But a MosIntour representative, Nikolai Shevelkin, said that the debt was not a serious matter.


"We will pay what we owe, but not all at once", he said. "Besides, the contract was signed under the laws of the USSR. , which no longer apply".


Fawakhiri said that 30 percent of the work called for had already been completed since Rogner signed a renovation contract with MosIntour on April 22, 1991.


Sixty percent of the contract, worth $50 million in total, was guaranteed by the Austrian government in the form of low-interest credits, she said.


Since then, about 400 Polish and Russian workers, directed by Austrian engineers, have been refurbishing the grand old hotel on Manezh Square.


The National, built in 1903, was one of Moscow's finest hotels before the revolution, and served as Lenin's headquarters for a time.


In recent years, however, neglect and pollution had reduced the building to near ruin, and the Moscow government's decision last year to offer the restoration contract to a foreign firm was greeted with enthusiasm.


But work at the site has been slowed almost to a standstill as the project's Russian partners, unable to pay for work already completed, negotiate with other Western hotel firms for the necessary financing.


An operating agreement with Marriot, the world's largest hotelier, was to have contributed $60 million to the restoration, with an additional $20 million in the form of guaranteed U. S. credits.


But according to June Farrell, Marriott's director of international public relations, the company is not yet involved in the project "because the authorities in Moscow are considering modifying the ownership structure of the hotel".


"Obviously, until this issue is resolved, it is not clear to us who we should be working with", she said.


Rogner, for its part, has been expecting payment from the Russian side for over a year and no longer wants to invest the capital needed to keep the project going, Fawakhiri said.


"We are, of course, pressing the Russians very hard", Fawakhiri said. "A contract is a contract".