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Czech Republic, Poland and Slovakia to leave Soviet-era banks

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Prague, Czech Republic – A group of Central and Eastern European countries have announced their intention to quit Soviet-era international banks in the wake of the Russian invasion of Ukraine.

Earlier this week, the finance ministries of the Czech Republic, Poland, Slovakia, Bulgaria, and Romania said they would withdraw from the International Investment Bank (IIB) and the International Bank for Economic Cooperation (IBEC).

The two financial institutions date from the Soviet era and were set up to increase trade and economic cooperation within the communist bloc. They didn’t stop operating after the fall of communism in the early 1990’s, and still have Russia as their largest shareholder today.

“Due to the ongoing and escalating, unjustified, unprovoked and ruthless military aggression by the Russian Federation against Ukraine […] we decided to take steps to stop participating in the International Bank for Economic Cooperation and the International Investment Bank,” they said in a joint statement.

The other members of the Moscow-based IBEC are Russia, Vietnam, and Mongolia.

The IIB – which moved its headquarters to Budapest in a controversial move three years ago – would count Russia, Hungary, Vietnam, Mongolia, and Cuba as its remaining members should the four CEE countries (Poland already left in 2000) effectively leave the bank.

The Czech Republic, which initiated this week’s calls to leave the two Soviet-era multilateral banks, had already signaled its intention to leave the IBEC several years ago, but never followed through.

Hungary is unlikely to follow suit, observers note, after having gone to great lengths to host the headquarters of IIB.

The move, which granted full diplomatic immunity to IIB staff in Budapest and very little oversight from Hungarian authorities on the bank’s operations, sparked criticism among EU and NATO allies –now concerned that Russia could use the banks to bypass European and Western sanctions.