US Sanctions Russian-Controlled IIB Bank, Executives in Hungary
(Bloomberg) -- The US imposed sanctions on the Russian-controlled International Investment Bank, saying its presence in Budapest allowed Moscow to expand its ability to spy, conduct “malign influence activities,” and engage in corruption from within the European Union and NATO.
Most Read from Bloomberg
US Arrests 21-Year-Old National Guardsman in Classified Documents Leak
JPMorgan Calls Managing Directors to Office Five Days a Week
The US Treasury Department also designated for sanctions three current or former executives of the bank: Russian nationals Nikolay Kosov, Georgy Potapov and Hungarian Imre Laszloczki for coordinating with Russian officials on IIB business following the Kremlin’s invasion of Ukraine.
The bank, which relocated from Moscow to Budapest in 2018, describes itself as a multilateral lender seeking to boost economic ties between its members, mostly former communist states such as those in eastern Europe.
But critics said the move to Hungary — the EU member with the closest ties to Moscow — was dangerous to the US and its allies, with a group of US senators saying it’s “widely seen as an arm of Russia’s secret services.” The bank has rejected the allegation.
“Hungary’s choice to continue to host the IIB, the Russia-controlled entity, within EU and NATO, is a cause for enormous concern,” US Ambassador to Budapest David Pressman said at a briefing on Wednesday.
“Looming Default”
Most of IIB’s EU backers — the Czech Republic, Slovakia, Bulgaria and Romania — left or are in the process of withdrawing from the lender after Russian President Vladimir Putin sent his forces into Ukraine a year ago. With assets frozen, the bank is facing a “looming default,” the Treasury said in a statement. Hungary is the sole remaining EU member.
The US has sanctioned individuals in EU countries before, including in Hungary. The US last put pressure on Budapest in 2014, when the Obama administration barred several Hungarian officials from entering the US, including the head of the national tax office, on suspicion of corruption.
Under Biden, the US didn’t invite Hungary to a recent summit of democracies, and Prime Minister Viktor Orban’s government has often been at odds with Washington and other NATO allies over Russia’s war in Ukraine.
Budapest has refused calls to supply Ukraine with weapons to defend itself and has lobbied against sanctions imposed on Russia.
Hungary, along with Turkey, has also refused to ratify Sweden’s bid to join NATO over that country’s criticism of Orban in a dispute with the EU over the rule of law. Meanwhile, Foreign Minister Peter Szijjarto visited sanctioned officials in Moscow this week to secure energy deals, even as much the country’s EU allies work to cut their dependency on Russian oil and gas.
Hungary’s government denounced the Treasury’s move.
“The Americans have not given up on forcing Hungary into the pro-war stance shared by many of our allies, but Hungary remains convinced that peace is the only common interest,” Gergely Gulyas, the minister leading the prime minister’s office, said at a news conference earlier Wednesday. “There is no allied, diplomatic or even friendly pressure that Hungary will not resist.”
--With assistance from Marton Kasnyik.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
