Hungary quits Russian-led bank day after US sanctions

BUDAPEST (AFP): Hungary’s government said Thursday it is quitting the Russia-led International Investment Bank (IIB) based in Budapest a day after Washington levied sanctions on the entity and several of its officials.

“The government discussed the situation and found that although the IIB played an important development role in Central and Eastern Europe, the operation of the bank lost its meaning as a result of the imposed American sanctions,” said a statement by the Hungarian Ministry for Economic Development sent to AFP.

“Therefore, the government is recalling the persons holding positions in the IIB and delegated by the Hungarian state, as well as withdrawing from the international financial organisation,” it added.

David Pressman, US ambassador in Budapest, said Wednesday that the IIB and three of its senior executives — a Hungarian and two Russians — living in Hungary have been sanctioned.

The officials were among dozens newly added on a US sanction list of entities and individuals, with Washington seeking to curb Russians’ access to the international financial system.

The IIB moved its headquarters to Budapest in 2019 under Prime Minister Viktor Orban, who cultivated close ties with Russian President Vladimir Putin before the Ukraine war.

The bank’s other EU backers — Bulgaria, Czech Republic, Romania and Slovakia — have quit the lender since Russia’s invasion of Ukraine.

The other members, besides Russia itself, are Cuba, Mongolia and Vietnam.

Pressman said the presence in Budapest of “this opaque Kremlin platform in the heart of Hungary threatens the security and sovereignty of the Hungarian people, their European neighbours and their NATO allies”.

Orban has drawn fierce criticism from both EU and NATO allies for his neutral stance on Russia’s war in Ukraine.

“We have concerns about the continued eagerness of Hungarian leaders to expand and deepen ties with the Russian Federation despite Russia’s ongoing brutal aggression to Ukraine and threat to transatlantic security,” Pressman said Wednesday.

With the sanctions “the US is demonstrating that we will take action in response to Hungary’s choices,” he said.

Founded in 1970 by the Soviet Union to foster links within the communist bloc, the IIB is registered as an official Russian state organ.

Billed as a version of the London-based European Bank of Reconstruction and Development (EBRD) — albeit smaller — the bank distributes loans to firms and projects in member countries.