In 1899, a teenage Evalyn Walsh--still years from marrying Ned McLean and acquiring the Hope Diamond--hid in her mother's closet to spy on guests during a party in their Kalorama home.

Attending a musicale downstairs "was not half so exciting as seeing Miss [Alice] Roosevelt put powder on her face and offer, actually, a cigarette to that brunette of mystery, Countess Cassini, the Russian Ambassador's daughter," she wrote many years later.

Her breathlessness was understandable. At 14, ensconced at 1825 Phelps Pl. NW, she was far from the two-room Colorado cabin the family called home before her father found a mine that yielded $5,000 worth of gold a day.

The handsome yellow brick mansion, with a green tiled roof and 33 rooms, cost $58,129.91, a small fortune in 1899. Her upstairs bedroom was a vision in blue satin. The first-floor salons were richly paneled in oak. Carved pilasters framed the doorways. The most striking feature was a curved, carved oaken staircase in the center hallway, brightened from above by a third-floor domed skylight.

After only four years, however, Father declared the house too small, and commissioned a 60-room, million-dollar palace on Massachusetts Avenue NW, complete with a ballroom for parties and an apartment for visiting royalty.

The Phelps Place house remained in private hands until 1957, when the Soviet Union bought it and made it a place fit for the proletariat. First it was a school for embassy children, then offices for the agriculture counselor; finally it became the visa section, where bureaucrats pushed papers behind bulletproof glass protected by an armed guard, surveillance cameras and a high fence.

Now the building is going back to the future, undergoing an elaborate renovation to become the first modern Russian Cultural Center in the United States, a showcase for Russian artists, entertainers, scientists, athletes, business leaders and intellectuals.

Moscow has 52 other cultural centers worldwide, but the Cold War kept No. 53 out of the United States for decades.

"There really was an Iron Curtain," says Jack Matlock, the ambassador to the Soviet Union from 1987 to 1991. "We didn't have a cultural center [in Russia]. We had a cultural attache at the embassy. The government controlled everything, so it had to be done under USSR auspices."

But Mikhail Gorbachev's push for glasnost in the '80s resulted in a 1990 agreement allowing U.S. cultural centers on his turf (there are currently six in the Russian Federation) in return for similar centers here.

"We wanted one with no restrictions, and assurances of no reprisals against Soviet citizens who went to our center. There was no way to do it without an agreement," says Matlock.

But after the Soviet Union collapsed in 1991, providing a place for Americans to see Kirov ballerinas or savor borscht and blini was low on the fledgling Russian Federation's to-do list. Indeed, in 1998, after years of teetering on the brink of economic and political ruin, Moscow allocated only $182,000 to return this dreary warren of offices to a semblance of its 19th-century splendor. The sum is almost laughable in Kalorama, where homeowners barely blink at six-figure kitchens and master baths. Contractors who bid on the project, which aims to replace or refurbish everything from the furnace to the doorbell, estimated the job could hit $2 million.

Could, but can't. And won't.

Even so, guests at next month's formal dedication will see gilded molding, hand-milled paneling, gleaming chandeliers and, the crowning post-Marxist touch, life-size portraits of Peter the Great and Catherine the Great (who, like McLean, once owned the Hope Diamond).

"We will come in at budget and it will be a first-class job," insists Don Deneselya, a son of Russian immigrants who is working without pay as the general contractor.

He is one among many engaged in a bilateral labor of love. Indeed, some artisans and subcontractors are so taken with the project that they have slashed their fees or are working gratis.

"You know how the budget of Russia is right now, which is why I appreciate what little is given from Moscow to do the job," says Natalia Batova, the Russian Embassy's cultural attache and the center's midwife.

"I want to change the image of Russia today. Unfortunately, right now we have a mixed image," Batova says, taking a break from painting walls. "We destroyed our previous system, and that is good, but at the same time we have made a lot of mistakes. All you hear is about the growth of crime, some kind of corruption through all the echelons of power."

All you hear at Phelps Place these days is the sound of hammers and saws. Laboring every weeknight and most Sundays for meager extra pay after completing their day jobs at the embassy, Russian electricians, plumbers, carpenters and painters have removed the cheesy plastic paneling that covered most walls and ripped up linoleum tarred to the floor. They hand-stripped 12 coats of paint from the central staircase, crafted fluted columns to frame huge windows and repaired delicate molding in the three salons.

Rather than pay airfare and lodging for a Russian foreman, Batova hired Sergey Veretenov and his wife, Tatiana, after their embassy tour ended in June. (He is a plumber; she worked in the embassy's duty-free store.) They live on the mansion's third floor and just roll out of bed to start work each day. He supervises the five-man Russian crew and she paints. But she also learned how to apply gold leaf because there isn't enough money to pay professionals to do all the gilding.

Although Batova coveted a luminous silk damask wallpaper for the entrance hall and stairwell (with an eye-popping $40,000 price tag), she has made do with a nice-enough embossed vinyl that cost just $500.

Two stonecutting companies offered to hand-chisel "Russian Cultural Center" over the front door for $3,500. A third firm did it for $140 with a high-speed drill.

Batova is not the only bean counter. Retired Washington lawyer Lloyd Costley, who heads Friends of the Russian Cultural Center, has raised $50,000 for its programs. But his appeals for money aren't always successful. "There are still Cold Warriors out there," he says, citing one recent reply to a fund-raising letter: "No patriotic American would ever contribute to anything like this."

The day after a Dec. 10 celebratory black-tie ball at the Russian Embassy, the center's new oak doors will be thrown open for a dinner. More than 200 diplomats, socialites and benefactors will drink vodka and eat caviar alongside the Russian and American workers who have spent so much time there.

But in one sense, 1825 Phelps Pl. is already a cultural center.

Consider Arlene Fowler, who helped her brother Larry, a furniture restorer, refinish woodwork there. One night she came across two pictures of 19th-century Russian poet Aleksandr Pushkin.

"He looked rather black. He looked like he was related to me," she recalls. "I used to try to write poetry, so I asked Natalia about him."

Batova told her Pushkin's grandfather was a slave brought from Abyssinia to Russia. "To find out he was black was an added plus," says Fowler. "Natalia's given me some information and is getting me some of his translated poems."

That small moment of cultural education is something Batova has been working toward for years. Although her Washington posting was scheduled to end in 1996, her boss in Moscow asked her to remain through the renovation and first year of operation.

"If I left three years ago, this project would not be born," Batova says. "The mockery of life is that when we couldn't do anything during the Cold War, we had money and we had resources. When the climate was right for us to operate, we didn't have any money, only hopes and dreams and all the shared effort of so many people."

CAPTION: This Phelps Place mansion being renovated for use as a Russian cultural center includes a carved oak staircase; below, a glass door panel.

CAPTION: Tatiana Veretenov pitched in after her embassy tour of duty ended to help renovate the Phelps Place mansion.