1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

US sanctions on bank in Hungary mark new low in relations

Keno Verseck
April 14, 2023

For the first time since Russia's invasion of Ukraine, the US has sanctioned a Hungary-based bank. Prime Minister Orban's government seems unimpressed but has announced it will withdraw its staff from the institution.

Putin and Orban have been on friendly terms
Putin and Orban have been on friendly termsImage: Kremlin Press Office /AA/picture alliance

Anyone who looks at Hungary's pro-government media outlets these days could get the impression there is no war raging in eastern Europe. Russia's invasion of Ukraine is mainly referred to as the "Ukrainian crisis," with the US portrayed as the aggressor. Pro-government media outlets suggest the US is attacking Hungary's sovereignty and "pulling it into a war."

Not even in the final years of Hungary's socialist dictatorship did anti-Americanism reach such shrill extremes. This recent backlash was sparked by an anti-Russian sanctions package announced by the US on April 12 that also affects Hungary. The sanctions include measures that impact the Russian-Hungarian International Investment Bank (IIB) and its management and IIB deputy head Imre Laszloczki, a Hungarian national.

International Investment Bank building in Budapest, Hungary
International Investment Bank building in Budapest, HungaryImage: Martin Fejer/EST&OST/IMAGO

This is not a first. The US has sanctioned politicians and business figures from allied countries before, including entities in Albania and Bulgaria. Hungarian citizens have also been sanctioned, though their identities have not been made public. But this time, for the first time since the start of Russia's war on Ukraine, an entity based in  Hungary— a NATO ally and EU member — is officially being sanctioned. The IIB is not just any bank, but one of which Hungary owned around 25% of the shares although it has majority Russian ownership.

On Thursday, however, Hungary's Economic Ministry announced it would withdraw from the IIB.

The operations of the bank, which was once a development bank for the communist eastern bloc, no longer had any relevance to Hungary, the Ministry for Economic Development said in Budapest. Hungary was for this reason withdrawing its staff.

The operation of the Russian-controlled International Investment Bank has "become impossible" after US sanctions so Hungary has quit the bank, Prime Minister Viktor Orban said on Friday. 

IIB: Hungary's 'spy bank'

In Hungary, the IIB is also known as the "spy bank," as its leadership is comprised of individuals liked to or associated with Russia's FSB intelligence service. IIB head Nikolay Kosov comes from a family of KGB officers. The bank, whose headquarters were moved from Moscow to Budapest in 2019, plays an important role in Russo-Hungarian relations. IIB deputy head Laszloczki manages Hungarian economic policy in Russia and the Central Asian republics.

Donald Trump and Viktor Orban during a meeting at the White House
Donald Trump and Viktor Orban during a meeting at the White HouseImage: Imago Images/UPI Photo/K. Dietsch

These sanctions against the Hungary-based bank mark a new low point in the already strained and now openly hostile relations between Hungary and the US. Orban has never concealed his dislike for the US Democrats and US President Joe Biden and remains a friend and fan of Biden's predecessor, Donald Trump. Orban was the first EU leader to congratulate Trump on his election victory in 2017. And more recently, when Trump faced criminal indictment for hush money, Orban tweeted, "Keep on fighting, Mr. President! We are with you, @realDonaldTrump!"

Orban's close ties to Russia

US government representatives have repeatedly criticized the state of Hungary's democracy and rule of law, denounced corruption among Orban's entourage and expressed concern over Hungary's close ties to Russia.

Hungarian Foreign Minister Peter Szijjarto (left) is seen with his Russian counterpart Sergey Lavrov (center) and IIB Board Chairman Nikolay Kosov (right)
Hungarian Foreign Minister Peter Szijjarto (left) is seen with his Russian counterpart Sergey Lavrov (center) and IIB Board Chairman Nikolay Kosov (right)Image: Russian Foreign Ministry/Tass/IMAGO

Hungary is the only EU country that still maintains friendly relations with Russia today. It has only half-heartedly condemned Russia's war against Ukraine. On Tuesday, Hungary's foreign minister, Peter Szijjarto, traveled to Moscow for talks on Russian gas supplies and on Russian investments in the Hungarian nuclear industry. On the same day, Belarusian Foreign Minister Sergei Aleinik came to Budapest for talks.

Homophobic abuse

Hungary has so far supported the EU's sanctions on Russia,which can only be enacted if all 27 members of the bloc agree to them. For this, Moscow recently designated it an "unfriendly country." However, Orban has repeatedly spoken out in favor of ending the sanctions against Russia. The Hungarian leader has also made numerous controversial statements, for instance claiming the war in Ukraine would not have erupted if Trump were still US president. Orban indirectly blames the Biden administration and the "pro-war" EU for Russia's full-scale invasion and ongoing war in Ukraine.

Orban on stage at the Conservative Political Action Conference in August 2022
Orban on stage at the Conservative Political Action Conference in August 2022Image: Shelby Tauber/REUTERS

David Pressman, the US ambassador to Budapest, is openly homosexual, making him an ideal target for Hungary's homophobic government. Upon taking office in the Hungarian capital, Pressman was subjected to savage abuse by pro-government activists and the media. This has further strained US-Hungarian relations.

Anti-American media

Hungary's government, in turn, has long accused Pressman of supporting opposition parties and seeking to overthrow Orban. One of the reasons is that the US Embassy currently supports a pro-Ukrainian poster campaign in Hungary that reads: "Russians go home" — a campaign slogan once used by Orban's Fidesz party during the fall of communism.

Pressman, for his part, is friendly in tone but critical in his assessment of the Orban regime. Sometimes he can't resist sarcastic digs: Last fall, for example, the Budapest embassy posted an online quiz with bizarre anti-American and pro-Russian statements from Hungarian politicians and journalists. 

After Pressman announced US sanctions against the IIB late Wednesday afternoon, representatives of Hungary's governing Fidesz party said Hungary would defend its sovereignty and not change course.

Hungarian pro-government media outlets, meanwhile, continued spewing anti-American vitriol. The widely read tabloid portal Origo ran the headline: "The USA has been exposed again: it betrays all its allies and stabs them in the back." 

Orban on Friday told state radio the United States was an important ally but there was a difference of views over the war in Ukraine, and the US had "not given up on its plan to squeeze everyone into a war alliance," a step he said Hungary would resist.

This article was translated from German.

Skip next section DW's Top Story

DW's Top Story

EU foreign policy chief Josep Borrell shakes hands with Ukrainian President Volodymyr Zelenskyy in Kyiv
Skip next section More stories from DW
Go to homepage