“Is your boss working for Moscow?”

It isn’t a question any Western counter-intelligence officer wants to be asked by counterparts in agencies from allied NATO countries, but for Ferenc Katrein it wasn’t such an infrequent query during his decade-and-a-half at Hungary’s Constitution Protection Office.

Worst of all, there were grounds for suspicions about Hungary’s civilian intelligence services, doubts Katrein himself harbored.

Five-and-half years ago Katrein left Hungary’s counter-espionage agency, where he’d risen to become executive head of operations and later chief adviser to the director. “There comes a point when you have to say no,” he told me as we sipped coffee in a cafe near a railway station.

“It was both a matter of being asked to do things I didn’t think right and blocked from doing things we needed to do,” he adds. The final straw for Ferenc was being obstructed from mounting operations to counter Russian intelligence activity in Hungary by, among other things, targeting Russian officers in a bid to recruit them as double agents.

‘Russian’ bank relocation

Katrein, who now lives outside Hungary, agreed to be interviewed by VOA amid a political storm in Budapest over a controversial decision by the government of Viktor Orban to agree to the relocation to the Hungarian capital of a Russian-controlled development bank steeped in Cold War history.

Known now as the International Investment Bank, formerly as Comecon, the obscure Russian-controlled financial institution is headed by Nikolai Kosov, whose parents had storied careers in the Soviet spy agency KGB.

Opposition politicians in Hungary, as well as Western security officials, have expressed fear the bank will be used as cover for Russian espionage activities in Europe.

Katrein shares the worries, hence his agreement to the interview and his readiness to discuss the politicization of the Hungarian intelligence services and the Russian threat to Europe.

“The Russians will use the bank, as they use other state-owned companies and organizations that set up shop overseas, for intelligence purposes,” he says. “This hurts me as a former counter-intelligence officer to see this bank being allowed to re-base in Budapest,” he adds.

The bank has denied it or its director is in any way linked to Russian intelligence.

But Katrein says his old agency won’t have the resources or manpower to be able to monitor what the bank is up to or the activities of its employees. The Orban government has extended diplomatic immunity to the bank, further shielding it. He believes Orban is anxious to play Russia and the West against each other.

“All the Russian [intelligence] services — the GRU, FSB and SVR — are highly active in Hungary and they have free rein, that was my problem. There was no effort to curtail or control them. We are a member of NATO and we have a responsibility to our allies. The question some of us started asking was, ‘Who is our partner, NATO or the Russians? The question was being asked inside the building. We didn’t understand what was going on,” he says.

The original sin in Hungary after the fall of communism was not to effect a root-and-branch clearing of the country’s intelligence agencies. “We didn’t do what the Czechs did or what happened to the intelligence services in the Baltic countries. They all rebuilt their agencies from scratch, with the help of the British,” he says.

One of the first triggers for Hungarian agents to question operations in their agencies was in 2007, a decade after Hungary had joined NATO. During the socialist administration of Ferenc Gyurcsany, the then-chief intelligence director Lajos Galambos invited Russian operatives to help him find the source of political leaks to Orban’s party, Fidesz.

Sixteen Hungarian intelligence officers were polygraphed by two Russian operatives, who pretended to be Bulgarian psychologists, according to documents declassified and released by Hungary’s general prosecutor last week.

Katrein says the focus was on up-and-coming younger officers, many of whom are now in leadership positions in the agency. “The polygraphs were very deep and probing and they have a lot of information on those people. If I had that information on the leaders of Russian counterintelligence, I’d consider that a big coup,” he says.

Counterintelligence in crisis

The politicization, as well as demoralization, of the counterintelligence agency continued under Orban, who was re-elected in 2010 replacing Gyurcsany, says Katrein. Around 100 experienced intelligence specialists have left the agency in the past eight years, frustrated by having their hands tied when it comes to combating Russian espionage activity.

“Hungary is being used as a logistical base to launch operations in other European Union countries,” Katrein explains. “They can organize operations and missions in Hungary without many worries,” he adds.

Asked how he would characterize the Russian espionage and active measures threat to Europe, he doesn’t hesitate in replying, “It is grave.” Katrein adds, “I have no problems with Russians; I like the culture. But the Russian government is very aggressive against the European Union. You shouldn’t underestimate these guys.”

 
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