The Czech Republic left the post-Soviet banks 33 years after the Velvet Revolution

Department 74 – External Relations and Communication
Department 74 – External Relations and Communication


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On 26 and 27 January 2023, the Czech Republic terminated its membership of the International Bank for Economic Cooperation (IBEC) and the International Investment Bank (IIB) respectively, without any agreement on the settlement of mutual obligations.

Immediately after the start of Russia's aggression against Ukraine, the Ministry of Finance of the Czech Republic (MoF) initiated a Joint Statement of Czechia, Bulgaria, Poland, Romania and Slovakia regarding their intention to leave these two Moscow-controlled post-Soviet institutions. Subsequently, in late July 2022, a coordinated handover of the Czech, Polish and Slovak notifications took place, setting the shortest possible withdrawal period at six months.

Throughout this period, the MoF actively negotiated with the member states of both institutions on the terms of settlement of mutual obligations and coordinated the positions of the withdrawing countries. In the course of the negotiations, the MoF sought at least the return of the paid-up capital, which amounts to EUR 26.7 million in IBEC and EUR 37.4 million in IIB (a total of approximately CZK 1.5 billion). 

The Minister of Finance, Zbyněk Stanjura, in cooperation with the Ministry of Foreign Affairs, approached the other Member States, Mongolia, Vietnam, Cuba and Hungary, with a request for support. The Czech Republic repeatedly requested to convene extraordinary meetings of the governing bodies and submitted proposals for settlement, but these were supported only by the Withdrawing Members and thus did not gain sufficient support. 

"No settlement agreement has yet been reached with the two post-Soviet banks, in the case of IIB mainly because of the very unfriendly attitude of the Bank's management and the remaining members led by Russia. I find the proposed 20 years repayment schedule without any inflation clause and default insurance completely unacceptable. All the more as without any mathematical logic the IIB wants to pay out only about a fifth of the capital invested," says the Minister of Finance Zbyněk Stanjura. In the IIB, not even an agreement has been reached on the return of the paid-up capital of EUR 37.4 million, for the reason that according to the IIB proposal, it is to be reduced by the outstanding share in the capitalisation programmes of EUR 29.3 million.

"In the coming weeks I expect active efforts by both institutions to reach a realistic agreement. Otherwise, we will consider legal action to recover our claims, including arbitration. Moreover, any failure to reach an agreement will be a major reputational problem for both banks. Their partners, rating agencies and financial markets in general will undoubtedly reflect this irresponsible approach in their decision on future cooperation with these institutions," Stanjura added. 

From the foreign policy point of view, the termination of membership in the two Russian-controlled banks is a clear success and fully in line with the government's foreign policy. "Withdrawal from the post-Soviet banks is another step forward for Czech foreign policy in the revision of the Czechia's relations with Russia. We started the process after our government took the office and the war accelerated the whole process. I am convinced that Czechia has no place in these relics of Russian influence," said Minister of Foreign Affairs Jan Lipavský. 

From a long-term business perspective, there has been no significant interest from Czech companies in the services of these two banks. IBEC has not financed any projects in the Czech Republic for a long time. IIB's existing commitments to partners and investors in the Czech Republic continue regardless of changes in the Bank's membership. 

Along with the Czech Republic, Slovakia and Poland left both institutions at the end of January, while Romania will terminate its membership in June 2023. Bulgaria is currently finalising internal procedures and is expected to terminate its membership during 2023.