The ban includes bankers with Hungarian nationality.Continue reading
Hungary is withdrawing from the International Investment Bank (IIB), the Ministry of Economic Development announced in a statement on Thursday. In addition to the withdrawal, the government will also recall government delegates from the financial institution. This comes after the United States placed three senior officials of the Budapest-based International Investment Bank on a sanctions list under measures announced on April 12.
The Hungarian government discussed the situation and concluded that although the Bank had played an important development role in Central and Eastern Europe, the US sanctions had rendered the bank’s operations meaningless. “Therefore, the government recalls the Hungarian government’s delegates to the International Investment Bank and withdraws from the international financial institution,” the statement reads.
Hungary has recently come under a lot of attack for its involvement in the bank and its headquarters located in Budapest.
In connection with the news, Világgazdaság recalled the extraordinary international press conference held on Wednesday by US Ambassador David Pressman in Budapest, when he said that the United States had repeatedly asked Hungary and other NATO members to take the presence of Russia and Russian institutions that do not respect the rule of law seriously. He said that the US does not agree that “Hungary is hosting” a financial institution whose senior officials have diplomatic privileges.
Regarding the withdrawal, Hungarian President Katalin Novák wrote on Twitter that she welcomed the decision. According to her, in the shadow of war in Ukraine, the bank’s operation had lost its meaning and steps are needed to bring us closer to peace.
I welcome the decision of the Hungarian government to withdraw its representatives from the International Investment Bank and will quit it. In the shadow of war in Ukraine, the bank’s operation had lost its meaning; steps are needed to bring us closer to peace.
— Katalin Novák (@KatalinNovakMP) April 14, 2023
Similarly to the president, Prime Minister Viktor Orbán also addressed the topic in his Friday morning interview on Radio Kossuth. He stated that the IIB would have played a major role in European development, but since the war, the bank’s possibilities have been reduced, and with the current sanctions Hungary’s participation in the International Investment Bank has become completely meaningless.
Founded in 1970, the main activities of the international financial institution are to support small and medium-sized enterprises in its member countries and to participate in the financing of socially significant infrastructure projects. Hungary signed a memorandum of understanding to renew its membership in October 2014, and five years later the development bank’s headquarters moved from Moscow to Budapest.
The new bank’s objectives- operational strategy and lending mechanism- were in line with the vision for the development of the Hungarian national economy and in line with the policy of opening up to the East, according to the information at the time.
The IIB played an undeniably important role in Central and Eastern Europe, which is why Hungary was a member.
After Russia’s invasion of Ukraine, Slovakia, the Czech Republic, and Romania withdrew from the IIB, and Bulgaria announced that it would cease its membership in the summer. Since the outbreak of the war, the International Investment Bank has been at risk of insolvency due to the Western sanctions in response, with rumors that it will be forced to restructure its bonds by May 2023 at the latest. Therefore, there was no point in maintaining a Hungarian presence, Világgazdaság notes in its article.
Russia is currently the largest owner of the International Investment Bank with 45.44 percent, followed by Hungary with 25.27 percent. Cuba holds 2.83 percent, Mongolia 1.8 percent, and Vietnam 1.26 percent.
Featured photo via Facebook/International Investment Bank
