How the CIA fought Soviet banks

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The CIA declassifies hundreds of documents every year. Most of them are boring desk reports, but there are also curious intelligence reports.

The study of some materials is interesting not only from a purely historical point of view. It helps to better understand the psychology of the "witch hunt" (and the communists), the new targets of which today are President Trump, Ambassador Kislyak and "Russian hackers."

For example, one of the recently published documents reveals how the CIA monitored Soviet banks in the West. And if we compare this with, without exaggeration, detective articles in the American press of the 1970-1980s. about "Russian bankers", then "Russian hackers" today will evoke a sense of déjà vu.

Banks as a tool of industrial espionage

During the Cold War, the United States could not view Soviet financial institutions in the West without suspicion. After all, such banks were commanded directly from the USSR State Bank or Vneshtorgbank. Instructions were given to provide credit lines to communist states and third world countries.

Roughly speaking, it was one of the levers of influence on world politics. And, of course, the Soviet bank abroad was perceived as a potential instrument of financial intelligence.

For the time being, such things were written about in closed reports or analytical notes, but in the 1980s. the topic emerged in the American press. The Los Angeles Times published an article in 1986 with an intriguing headline: "Soviet claims to buy banks in the United States are still shrouded in mystery." And right there, in the text itself, newspapermen partially remove the veil of obscurity from this topic.

According to journalists, in the 1970s. American special services thwarted the USSR's attempt to take possession of four banks in Northern California.

For this, a very convoluted scheme was used, in which two businessmen from Singapore were involved. It was they who were supposed to participate in the purchase of small banks, including those in San Francisco.

Presumably, the Soviet side wanted through these financial institutions to get one of the important technologies in Silicon Valley.

Some of the firms in the valley were clients of banks that almost fell into the hands of the USSR. But this was not a multi-step industrial espionage. The Union wanted to use American computer technologies of that time for more global purposes. After all, banks, in turn, were also clients of computer firms.

By understanding how new information technologies work in the US banking system, it was possible to get important information from the Federal Reserve Bank.

The newspaper writes that the Soviet side still managed to invest $ 1.8 billion in the purchase of shares in banks. The money came from the Moscow Narodny Bank branch in Singapore. For camouflage, finances were "twisted" through Panama. However, the scheme was disclosed by the US intelligence services. The American court canceled the deals. One of the Singaporeans who participated in the negotiations went to prison in Kong Kong. Of course, not without the help of the States. It is not known exactly what happened to his partner.

Thus ended one of the spy stories associated with Soviet financial activity in the West. Who knows how many such episodes of the Cold War are kept in the intelligence archives, which are still under lock and key.

Narodny bank

But the classification was removed from the CIA report "Soviet and Eastern European Banks in the West", drawn up in December 1977. The paper says that at that time the USSR sharply increased its presence in the banking sector in all major financial centers of the capitalist world. Assets exceeded $ 6 billion.

Moscow Narodny Bank and Banque Commerciale pour l'Europe du Nord stood out among the major banks in London and Paris. We have already mentioned the name of the first one above. It can be translated without knowing English. It is immediately clear that the bank is Soviet. But the second name is somewhat encrypted - the Commercial Bank of Northern Europe.

His second name is Eurobank. Try to guess that the Soviet state is behind it.

According to CIA analysts, the Union and the socialist countries needed such banks for greater financial flexibility during crises. For example, it was possible to quickly attract loans - and not only for themselves, but also, for example, for Cuba. Or convert gold to currency without getting noticed.

For such purposes, a whole network of banking institutions was created. According to the CIA, this system has evolved since the early 1960s. In 1963, Moscow Narodny Bank opened an office in Beirut. In 1971, a branch was opened in Singapore. In 1966 Wozchod Handelsbank was opened in Zurich. The Ost-West Handelsbank appeared in Frankfurt in 1971, Donaubank was founded in Vienna in 1974, etc.

Most Americans knew about Eurobank and the Moscow People's Bank (MNB). The first structure of the MNB was founded as a branch of a Russian bank in London in 1916, that is, even before the Soviet government came to power. In 1919, the bank became independent, and in 1929 it already had assets worth $ 40 million and branches in Paris, Berlin, London and New York.

The Great Depression in the United States and World War II battered the bank a lot. He lost many of the capital and all the mentioned branches. After several decades, the situation has improved. In 1958, assets were $ 24 million, and in 1974 they exceeded $ 2.6 billion.

The history of Eurobank is a little different. It was founded by Russian emigrants in 1921 in Paris. And in 1925 the business was sold to the Soviet government. In 1958, the bank had assets in the amount of $ 198 million, and in 1974 it reached almost $ 2.8 billion.

Unlike the MNB, most of this wealth was kept in foreign currency, and was not invested in stocks or bills.

The Soviet financial and credit business was not always successful abroad in the 60s and 70s. XX century But this has more to do with politics, not management mistakes. For example, the USSR lost one of the banks in Pakistan, which the local authorities actually confiscated.

New York is not for everyone

The CIA, of course, was not worried about this, but the fact that the USSR expressed a desire to get banks in Latin America, Canada and the States themselves.

According to US intelligence analysts, it was important for the Soviet authorities to gain access to the foreign exchange market in New York. This would make it possible to create funds for the implementation of projects in third countries. For example, in October 1975, Vneshtorgbank, together with several banks registered in the West, provided Turkey with a large loan for the construction of an oil pipeline.

In the 70s. of the last century, the USSR also carried out an operation to finance the construction of a nuclear power plant in Yugoslavia. At the same time, the Soviet state, with the help of banks, managed to create a joint business with the FRG in the chemical industry.

True, the CIA documents (at least declassified) do not explain what the benefits for the USSR are. Perhaps this was one of the steps to strengthen Soviet influence in the region. If so, it becomes clear why Moskovsky Narodny was unable to open a branch in New York. The process is stuck at the negotiation stage.

The Americans saw that the Soviet bankers were well entrenched in Europe and did not want to repeat this at home.

I wonder what the current position of the United States is on this score. Maybe we will find out in 40 years, when the CIA declassifies the next portion of the documents. The look from the other side is even more curious. Did the States try to create their own financial instruments of influence in socialist countries? Surely this happened, and somewhere in the archives of Russian intelligence a folder is gathering dust, left as a legacy by Soviet colleagues …