Despite rumors to the contrary, Harvard continues to honor an agreement with the Moscow city government and is assisting with the installment of a market-based mortgage system in the city.

Moscow officials met with a group of professors at the Kennedy School of Government (KSG) last January to create a $500 million plan for making the city's housing more affordable by developing a capitalist real estate market.

The result of the meeting was the creation of the Moscow Mortgage Initiative (MMI).

Under the provisions of the plan, Harvard agreed provide technical assistance in creating the legal, institutional and regulatory climate necessary for a market-based mortgage system in Moscow.

But, Vladimir Shternfeld, the program coordinator with the Moscow city government, was quoted Tuesday in the Russian daily Vremya as saying the plan was cancelled after Russia suffered an economic crisis in August.

"As soon as trouble started in Russia, they stepped aside," he said.

But Stefan Y. Zhurek, executive director of the MMI at the Kennedy School of Government, was quick to deny Shternfeld's statement and affirmed Harvard's commitment to the Moscow government.

Zhurek said MMI agreed in January that the initiative would last for one year.

After the initial agreement, Harvard was given 90 days to draft a concept proposition for the Moscow government.

It was approved and implementation began last April.

Taking the first step in the plan, MMI implemented a pilot program in Moscow on Sept. 7.

Zhurek said after the pilot was installed, Harvard was to give Moscow more responsibility in expanding the market-based mortgage system.

He said confusion surrounding the shift of responsibility from Harvard to Moscow may have led to the rumors about Harvard's withdrawal from the plan.

"The first stage of the transition where Harvard played a big role has been completed," Zhurek said.

"Russia will pick [the responsibility] up, but we will still be working closely with them," he said.

Even with Russia's recent financial crisis, Zhurek said Harvard will honor the agreement it made with Moscow last January.

But because of the economic turmoil, the implementation will take much longer than MMI anticipated, Zhurek said.

Harvard will continue to work with Moscow at least until next summer, he said.

Jay H. Walder, a representative from MMI, also commented on the fragility of the Russian economy.

"Post-August 17 Russia is obviously much different from pre-August 17 Russia. We will have to modify our procedure to the new macroeconomic environment there, but we will still be working closely with them," said Walder, who is also a lecturer in public policy at the KSG.

The MMI plan will create the first market-based mortgage system used in Moscow, which in combination with Russia's economic instability, makes this initiative precarious, Zhurek said.

Zhurek said Harvard has been staying in close contact with the Moscow city government to help establish new stabilizing legislation.