One of the first visitors Viktor Orbán welcomed in his new office in the former Carmelite Cloister was Nikolai Kosov, president of the International Investment Bank (IIB). This relatively small bank, currently operating out of Moscow, will soon enough move to Budapest. Who are the members of this international bank? Considering that once upon a time it was known as the Comecon (Council for Mutual Economic Assistance) bank, nobody should be surprised to find that the following countries participate in it: Bulgaria, the Czech Republic, Hungary, Romania, and Slovakia (all EU and NATO members), in addition to Russia, Mongolia, Vietnam, and Cuba. IIB as a financial institution is insignificant, with only €319 million in capital, while the European Investment Bank’s capital stock is €243 billion. But, as we will see later, IIB’s significance may not lie in its financial activities.

Hungary’s participation in the Comecon bank continued even after the collapse of the Warsaw Pact and the demise of the Comecon. But in 2000, during the first Orbán administration, the Hungarian government decided to leave the financial institution, which by then barely existed. Orbán at that time complained about the lack of transparency surrounding the bank. In 2012, however, Putin revived the IIB, and two years later, right after Hungary and Russia signed the agreement that provided the €10 billion Russian loan for Rosatom, a Russian state company, to build another reactor in Paks, Viktor Orbán returned to the fold.

We don’t know whose idea it was to move the headquarters of IIB to Budapest, but most observers are certain that the move is, above all, in the interest of Russia, perhaps in more than financial terms. This despite the claim of the government that “the operational strategy and the lending practices of the newly reconstructed IIB coincide with the already drawn-up plans for the future development of the Hungarian national economy.”

The first reaction from government-critical media outlets concentrated on the extensive privileges afforded the foreign staff of IIB, including diplomatic immunity, suitable headquarters and a residence for the president of the bank compliments of the Hungarian government, in addition to all sorts of tax and duty breaks. The bank and its foreign staff will operate in Hungary as “a state within the state.”

But apparently, these privileges are nothing out of the ordinary. The IMF in Hungary is also the beneficiary of these concessions. As Népszava put it, “it is not the [bank’s] privileges that are intriguing but its intentions.” Why is the bank moving to Budapest? Is it possible that IIB is a cover for Russian intelligence work? According to Csaba Káncz, who writes extensively on international relations on the internet site Privát Bankár, IIB is most likely a regional cover for Russian counterintelligence. Those who are suspicious of IIB recall that during the Soviet period banks were often the center of Russian intelligence work. For example, the Hungarian National Bank’s affiliate CW Bank in Vienna was the conduit for Soviet spying in the West. Moreover, there is the possibility, as Attila Ara-Kovács, head of DK’s foreign policy cabinet, believes, that Hungarian investments in Croatian, Slovenian, and Macedonian media outlets actually originate in Moscow. Ara-Kovács bases this assertion on conversations he had with western diplomats.

A few days ago, Káncz followed up his original article on the International Investment Bank with another piece that explored the background of the president of IIB, Nikolai Kosov. It seems that Kosov is no stranger to Budapest. His father, also named Nikolai, spent 12 years as the KGB chief in Budapest. He and his staff occupied several offices in the Ministry of Interior. His mother, Yelena Kosova, also worked for the KGB and was described by TASS at the time of her death in 2014 as the most famous Russian female spy of the 20^th century who, while employed by the United Nations in New York, was actively working with a group that acquired the secret of the atomic bomb for Russia.

Nikolai Junior, who was born in 1955, was a teenager when his parents moved to Budapest. But soon enough he was back in Moscow, attending MGIMO (Moscow State Institute of International Relations), which is described as “Russia’s most revered educational institution.” MGIMO is run by the Ministry of Foreign Affairs, and many of its graduates become diplomats. This is what happened to Nikolai Kosov, who during his 15 years of diplomatic service, spent mostly in London and Dublin, reached the rank of counsellor. In 1993, after leaving the foreign ministry, he was appointed to high positions in several state companies. And in 2012, when Putin decided to revive IIB, he was named president of the bank.

During his stints at Russian state companies, Kosov amassed a sizable fortune. According to the Panama Papers, Kosov was/is the beneficiary of six companies, all registered in the British Virgin Islands. And given his family background, it is likely that Kosov has good connections with SVR, Russia’s external intelligence agency. SVR specializes in intelligence and espionage activities outside of Russia.

Opposition parties were quick to respond to the news of IIB’s relocation to Budapest. Jobbik called IIB the “KGB or Comecon bank,” adding that “by moving the bank to Budapest we can talk about a further slide toward being a Russian colony.” One of the deputy chairmen of Jobbik posed the question of whether Orbán is planning to lead the country out of the European Union by his ever-closer relations with Russia. DK sent a written question to Orbán, who within three weeks must answer in parliament, about the importation of a possible spy center into Budapest. I assume that Orbán will repeat his earlier claim that “the move of the International Bank to Hungary is a significant step forward.” Its presence will strengthen Budapest as the financial center of the region. My take is that it is a significant step, but not in the way that Orbán would like us to see it.

Source: Hungarian Spectrum