Hungary’s Rift with US Deepens over “Spy Bank” Issue

Hungary’s deteriorating relations with the US took a turn for the worse as Washington announced a series of sanctions against Russia that also affected Hungary. This was the first time since the start of the war in Ukraine that an entity based in Hungary, a NATO and EU member, was sanctioned. Meanwhile, Prime Minister Viktor Orbán named the U.S. as one of the top three adversaries for his Fidesz Party, according to a purportedly leaked CIA assessment, underscoring the depth of the rift between the two countries.

The United States announced a series of sanctions this week, targeting among other entities a Hungary-based bank linked to Russia. Washington imposed sanctions on the International Investment Bank (IIB), a controversial institution located in Budapest with ties to the Russian state. Commonly referred to as a “spy bank,” the institution has been suspected by Western officials as a front for Russian intelligence operations inside Europe. The sanctions concerned three top officials of IIB in Budapest: two Russians and a Hungarian. At a press conference in Budapest, US Ambassador to Hungary David Pressman stressed that Washington had long urged Hungary to sever ties with the IIB but to no avail. “Unlike other NATO allies previously engaged with this Russian entity,” the ambassador said, “Hungary has dismissed the concerns of the United States government regarding the risks its continued presence poses to the alliance.”
The IIB moved its headquarters from Moscow to Budapest in 2019. Its presence in the Hungarian capital is one of the many testaments of Prime Minister Viktor Orbán’s close ties with Russia.

Quitting IIB
A day after the Ambassador’s press conference, the Hungarian Ministry of Economic Development announced that “the Government is recalling the persons delegated by the Hungarian State for offices held in the International Investment Bank and is resigning from the international financial institution.” The ministry said the decision was taken in light of the US sanctions imposed on the IIB. With this move, Hungary follows in the footsteps of Czechia, Slovakia, Romania and Bulgaria, which had all been members of the IIB but decided to leave the organization.
At the end of January, Hungary held a 25.27% stake in IIB, the second biggest stake after Russia with 45.44% according to the bank's website.
Despite agreeing to withdraw from the bank, Hungarian officials expressed frustration at being pushed to do so. "We accept and understand that we represent different positions, but we don't understand why pressuring other states to change theirs is necessary," Foreign Minister Péter Szijjártó said at a press conference. "Hungary is a state, therefore it should be treated as one, instead of a colony."
The verbal war between the US and Hungary has been unfolding for quite some time. The US embassy in Hungary is financing a billboard campaign that say “Russians go home.” The slogan is identical to that used in 1989 by the Hungarian democratic opposition (including Viktor Orbán) to force Soviet troops to leave Hungary.

US main adversary
Ties between Washington and Budapest are further tested by purportedly leaked CIA documents stating the Orbán called the U.S. a main adversary of his Fidesz party. Orbán allegedly made the comment during a Feb. 22 “political strategy session,” the leaked document said, citing the U.S. Embassy in Budapest. The CIA said the inclusion of the U.S. in Orbán’s “list of top three adversaries constitutes an escalation of the level of anti-American rhetoric in his discourse,” according to the document. The Wall Street Journal was first to report on the leaked document that revealed Orbán’s alleged move to characterize the U.S. as an adversary. Orbán’s chief of staff, Gergely Gulyas, accused the U.S. embassy on Wednesday of whipping up public support to change the government’s position on Ukraine and Russia, according to a series of posts tweeted by Hungary spokesperson Zoltan Kovacs.