Russian bank accused of being ‘den of spies’ relocates to NATO member Hungary

Nikolai KosovA Russian-backed development bank, which is accused by its critics of being an intelligence front for Moscow, has relocated to Hungary, a member of the European Union (EU) and the North Atlantic Treaty Organization (NATO). The International Investment Bank (IIB) was founded in 1970 by the Soviet Union as a multilateral development banking institution. Its purpose was to assist in the economic development of the Soviet Union’s allies under the umbrella of the Soviet-led Council for Mutual Economic Assistance (COMECON). Like other Soviet financial institutions with foreign branches, it was suspected by Western spy agencies of being used by Moscow to station intelligence personnel under non-official cover.

In 1991, following the disintegration of the Soviet Union and the Eastern Bloc, the IIB entered a period of stagnation, as did many Soviet institutions of the Cold War period. But in 2002 Russian President Vladimir Putin spearheaded a government-led effort to revive the bank. Today the Russian government has a 47 percent stake in the IIB, with the remaining 53 percent owned by its other member-countries. These are all communist of former communist states: Cuba, Vietnam, Cuba, Bulgaria, Romania, Slovakia, the Czech Republic, and Hungary. Each of these member states is represented on the IIB with an official who speaks for his or her government.

Some critics express concerns that the IIB continues to serve as a front company for Russian intelligence. Some point to the IIB’s director, Nikolai Kosov, whose parents were officers in the KGB and served in several European countries, including Hungary, during the Cold War. Such criticisms resurfaced earlier this year, when it was announced that the IIB would move its headquarters to Budapest. The Hungarian government said it would host IIB’s 100 personnel and granted the IIB building privileges that are usually extended to diplomatic facilities. For instance, Hungarian authorities will not be able to enter the IIB premises without prior authorization by the bank.

The Hungarian government of Prime Minister Viktor Orban has said that the IIB’s relocation to Budapest will further-strengthen Hungary’s relations with Russia and help promote the former Soviet ally as a growing financial hub in Europe. But one critic told the Al Jazeera news network that the IIB “is more likely to make Budapest a Russian intelligence center than a financial hub”. Another critic, referred to by Al Jazeera as a “diplomatic source”, said that NATO has limited its sharing of classified information with Hungary “due to fears it leaves the door open to Russia”.

Author: Joseph Fitsanakis | Date: 03 September 2019 | Permalink

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