Institute for the Works of Religion

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Template:Short description Template:Use dmy dates Template:Infobox company Template:Vatican city The Institute for the Works of Religion (Template:Langx; Template:Langx; abbreviated IOR),<ref>Template:Cite web</ref><ref>Template:Cite web</ref> commonly known as the Vatican Bank, is a financial institution<ref name="chirograph2019">Template:Cite web</ref> that is situated inside Vatican City and run by a Board of Superintendence, which reports to a Commission of Cardinals and the Pope. It is not a private bank, as there are no owners or shareholders; it has been established in the form of a juridical canonical foundation, pursuant to its statutes.<ref name="chirograph2019" /> Since 9 July 2014, its president is Jean-Baptiste de Franssu. The IOR is regulated by the Vatican's financial supervisory body ASIF (Autorità di Supervisione e Informazione Finanziaria).<ref>Template:Cite web</ref>

The Institute was founded in June 1942 by papal decree of Pope Pius XII. In June 2012, the IOR gave a first presentation of its operations. In July 2013, the Institute launched its own website.<ref>IOR launches website, Vatican Radio, 31 July 2013</ref> On 1 October 2013, it also published its first-ever annual report.<ref>IOR: IOR Annual Report 2012 Template:Webarchive</ref><ref>Template:Cite web</ref><ref>Template:Cite web</ref>

On 24 June 2013, Pope Francis created a special investigative Pontifical Commission (CRIOR) to study IOR reform.<ref>Template:Cite web</ref> On 7 April 2014, Pope Francis approved respective recommendations on the IOR's future which were jointly developed by the CRIOR and COSEA commissions and the IOR's management. "The IOR will continue to serve with prudence and provide specialized financial services to the Catholic Church worldwide", as the Vatican release stated.<ref name=communique>Template:Cite web</ref> On 7 April 2014, Pope Francis approved a proposal on the Institute's future, "reaffirming the importance of the IOR’s mission for the good of the Catholic Church, the Holy See and the Vatican City State".<ref name=communique/> On 30 January 2023, with a Chirograph published on March 7, Pope Francis revised the Statute, reaffirming that the purpose of the Institute is "to provide for the custody and management of movable and immovable assets transferred or entrusted to it by individuals or legal entities, intended for works of religion or charity."<ref>Template:Cite web</ref><ref>Template:Cite web</ref>

On 23 August 2022 Pope Francis signed a Rescript establishing that all financial resources of the Holy See and its associated institutions must be transferred to the Institute for the Works of Religion, which is to be considered the sole and exclusive entity responsible for asset management activities and the custodian of the Holy See's movable assets, as well as those of its departments, offices, and affiliated entities.<ref>Template:Cite web</ref><ref>Template:Cite web</ref>

Origin and mission

Pope Leo XIII

The Istituto per le Opere di Religione (IOR) was founded on 27 June 1942 by Pope Pius XII. It absorbed the Amministrazione per le Opere di Religione (Administration of the Works of Religion), which had originated in the Commission for Works of Charity (Commissione ad pias causas) established by Pope Leo XIII on 11 February 1887.<ref name="Chirografo">Template:Cite web</ref><ref name="Annuario Pontificio' 2012">Annuario Pontificio 2012, p. 1908</ref> The IOR is not a department of the Roman Curia, the central administrative structure of the Roman Catholic Church,<ref>Template:Cite web</ref> nor is it a central bank.<ref group="note">The central banking function of the Vatican is regulated by the Monetary Agreement between the European Union and the Vatican City State, Monetary Agreement between the European Union and the Vatican City State authorizing the use of the euro as the official currency of Vatican City. Implementation of that Agreement and oversight of the Vatican law against money laundering and financing of terrorism is in the hands of the Financial Information Authority established by Pope Benedict XVI on 30 December 2010. Motu proprio for the prevention and countering of illegal activities in the area of financial dealings, Pope requires full transparency of transactions in the Vatican Template:Webarchive</ref>

The purpose of the IOR is "to provide for the safekeeping and administration of movable and immovable property transferred or entrusted to it by physical or juridical persons and intended for works of religion or charity".<ref name=Chirografo/><ref name="Annuario Pontificio' 2012"/>

In 2014, the Vatican officially confirmed the IOR's mission as provider of "specialized financial services to the Catholic Church worldwide." Furthermore, it was affirmed by the Vatican that the "valuable services that can be offered by the Institute assist the Holy Father in his mission as universal pastor and also aid those institutions and individuals who collaborate with him in his ministry".<ref>Template:Cite web</ref>

Corporate governance

According to its Statutes, in effect since 2023,<ref name="Chirografo"/> the IOR is composed of four bodies:

A Commission of Cardinals with five members, appointed for renewable five-year terms, who elect their president.<ref name="VIS 2014">Template:Cite web</ref> As announced on 21 September 2020 the Commission's members, appointed for two years ad experimentum, are:<ref>Template:Cite news</ref><ref>Template:Cite news</ref>

Pietro Parolin's office of Secretary of State was omitted from the new Commission.<ref>Template:Cite web</ref>

The Prelate of the IOR, Mgr. Battista Ricca, appointed by the Supervisory Commission of Cardinals with the Pope's approval, acts as secretary of the Commission and attends meetings of the Board of Superintendence.

A Board of Superintendence, defining the strategy and ensuring oversight of operations.<ref>Template:Cite web</ref><ref name="VIS 2014"/><ref>Template:Cite web</ref>

A Directorate, in charge of operational activities and accountable to the Board of Superintendence.

  • Gian Franco Mammì – General Director

Financial information

Table with a comparison of IOR's financial performance over the last years.

Year Total Equity

(million €)

Net profit

(million €)

Intermediation margin

(million €)

Operating expenses

(million €)

TIER 1 Ratio Clients Coverage of Catholic ethics principles

(AUM products)

2024 731.915 32.759 51.506 23.752 69.4% 100%
2023 667.561 30.598 49.655 22.908 59.78% 12361 100%
2022 578.497 29.583 33.264 20.865 46.14% 12759 100%
2021 649.315 18.091 34.395 19.237 38.54% 14519 100%
2020 673.234 36.375 45.483 19.340 39.74% 14991 100%
2019 668.292 38.012 56.068 17.665 82.40% 14996 100%
2018 654.567 17.518 14.694 16.007 86.36% 14953 n.a.
2017 659.119 31.934 49.938 18.727 68.26% 14945 n.a.
2016 672.600 36.001 42.595 19.086 64.53% 14960 n.a.
2015 670.278 16.127 42.843 23.428 60.65% 14801 n.a.

Controversies

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Historical allegations

When the Holy See, whose tax-exempt status on income from Italian investments was revoked in 1968, decided to diversify its holdings, it employed as financial adviser Michele Sindona. Once among the country's most powerful businessmen, subsequent investigations into his business affairs brought to light questionable associations with the Mafia as well as the secret P2, a Masonic lodge that the Italian Parliament classified as a subversive organization.<ref>Template:Cite news</ref> The 1974 failure of Sindona's Franklin National Bank and the subsequent collapse of his financial empire, into which he had channeled part of the Holy See's investments, entailed losses for the Vatican estimated by one source at 35 billion Italian lire (£20 million).<ref name=Spotts>Spotts, Frederic and Wieser, Theodor. Italy: A Difficult Democracy, Cambridge University Press, 1986 Template:ISBN</ref><ref>Template:Cite book</ref><ref>Lombardi, Mark; Hobbs, Robert Carleton and Richards, Judith. Global Networks, Independent Curators, 2003 Template:ISBN, pp. 61–65</ref><ref>Template:Cite book</ref>

In 1982, a political and financial scandal connected with the collapse of Banco Ambrosiano involved the head of IOR from 1971 to 1989, Archbishop Paul Marcinkus, who allegedly had given "letters of patronage" on behalf of the IOR in support of the failed bank.<ref>Template:Cite book</ref><ref>Template:Cite web</ref> In 1987, an Italian court issued a warrant against Marcinkus, whom they accused of being an accessory to fraudulent bankruptcy. Marcinkus evaded arrest by staying inside Vatican City until the warrant was dismissed in 1991, whereupon he returned to his home country, the United States. Chairman of the Banco Ambrosiano and member of the illegal Masonic lodge P2, Roberto Calvi was convicted of violating Italian currency laws and fled on a false passport to London where he was found murdered under Blackfriars Bridge in London some days after he went missing from Milan.<ref>Template:Cite news</ref> The Istituto per le Opere di Religione, then a 10% shareholder of Banco Ambrosiano,<ref>Template:Cite book</ref> denied legal responsibility for the Banco Ambrosiano's downfall but acknowledged "moral involvement", and paid US$224 million to creditors.<ref>Template:Cite book</ref><ref>Template:Cite web</ref>

Several works published during the 1980s and 1990s were highly critical of the Institute for the Works of Religion's historical relations with anti-communist governments.<ref name=Paris>Template:Cite book</ref><ref name=Holocaust>Template:Cite book</ref>

In reference other alleged covert activities, Tony Abse, writing in The Weekly Worker, an organ of the Communist Party of Great Britain, has said that the CIA used the Institute for the Works of Religion to funnel funds to the Solidarity Polish trade union "as part of the final offensive against the Soviet Union".<ref>Template:Cite news</ref> The organization American Atheists says covert United States funds were channelled in the same way both to Solidarity and to Contra guerrillas.<ref>Template:Cite news</ref>

Alperin v. Vatican Bank was a class action suit by Holocaust survivors against the Institute for the Works of Religion filed in San Francisco, California on 15 November 1999. The case was dismissed as a political question by the District Court for the Northern District of California in 2003, but reinstated in part by the Ninth Circuit Court of Appeals in 2005. That ruling has attracted attention as a precedent at the intersection of the Alien Tort Claims Act (ATCA) and the Foreign Sovereign Immunities Act (FSIA). The complaint against the Vatican Bank was dismissed in 2007 on the basis of sovereign immunity.

Judicial events and reorganisation (2010–2018)

In 22 September 2010, Italian magistrates seized €23 million from the IOR, on the grounds that the anti-money laundering laws in force had been violated. The money was originally to be transferred from the Italian Credito Artigiano to JPMorgan Chase and another Italian bank, Template:Ill.<ref>Template:Cite web</ref><ref name="bbc">Template:Cite news</ref> Both the origin and destination of the funds were accounts under the control of the IOR.<ref name="nytimes">Template:Cite news</ref> It was furthermore declared that Gotti Tedeschi and another IOR manager were under investigation for money laundering charges.<ref>Template:Cite web</ref> On 31 May 2011, Rome's attorney general released the €23 million in assets which had been seized in September, apparently in acknowledgment of the steps taken in the following months to conform the Institute to international standards.

On 24 May 2012, Ettore Gotti Tedeschi was ousted as Head of the Vatican Bank because of his alleged "failure to fulfill the primary functions of his office".<ref>Template:Cite web</ref> In July 2013, the money laundering case against Gotti Tedeschi was dropped.<ref>Italian prosecutors drop inquiry into former Vatican bank chief, Reuters, 6 July 2013</ref> In March 2014, he was again acquitted by the Roman court that followed the public prosecutor's position and relieved Gotti Tedeschi from any responsibility in that operation.<ref>Template:Cite web</ref><ref>Template:Cite web</ref>

On 15 June 2013, with the approval of Pope Francis, the Cardinals' Commission appointed Monsignor Battista Mario Salvatore Ricca as the Institute's Prelate ad interim.<ref>Pope Francis appoints prelate to oversee Vatican bank , BBC News, 15 June 2013</ref> There was also speculation that opponents of reform might have withheld information about possible scandals in Ricca's past or that they might have made up unfounded rumours about Ricca's past.<ref name=Lurid>Template:Cite web</ref><ref>Pope Francis's judgment in question after priest named in gay sex scandalGay scandal at the heart of the Vatican: Pope Francis faces his first crisis Prelate Battista Ricca's 'gay romance' rocks Vatican</ref> It was reported that Ricca had offered his resignation because of the controversy,<ref>Template:Cite web</ref><ref>Template:Cite web</ref><ref>Template:Cite news</ref> but the head of the Holy See's Press Office declared the accusations as "not credible"<ref name=Lurid/> and Pope Francis himself informed journalists that an inquiry "found nothing".<ref>Template:Cite web</ref>

On 28 June 2013, three persons were arrested by the Italian police on suspicion of corruption and fraud. Allegedly, they had planned to smuggle €20 million in cash from Switzerland into Italy. One of the arrested was Monsignore Nunzio Scarano, previously senior accountant at APSA, the Vatican's Administration of the Patrimony of the Apostolic See.<ref>Template:Cite web</ref> Subsequently, he was indicted with corruption and slander and set under house arrest.<ref>Template:Cite news</ref> On 21 January 2014, he was further charged with money laundering through IOR accounts in yet another investigation.<ref>Template:Cite news</ref> According to a police statement, millions of euros in "false donations" from offshore companies had moved through Scarano's accounts. Already in July 2013, the IOR had frozen the money in Scarano's accounts. As news agency Reuters reported, Elena Guarino, the Salerno magistrate who led the investigation, told reporters "the Vatican was fully cooperative and gave her much information on Scarano's bank movements.".<ref>Template:Cite news</ref> In January 2016, Scarano was acquitted of allegations of corruption, but was given a two-year sentence after being convicted of lesser charges of making false allegations.<ref name=jan2016>Template:Cite web</ref> His money laundering trial in his hometown of Salerno was still pending at this time.<ref name=jan2016 /> The other person arrested was a bank person and a former secret service agent.<ref>Template:Cite news</ref>

In February 2017, a court in Rome convicted two former top Vatican Bank officials Paolo Cipriani and Massimo Tulliof for omissions in communications involving three small transfers.<ref name=feb2017 /> Cipriani was a former Vatican bank director and Tulliof was Cipriani's former deputy.<ref name=60million>Template:Cite web</ref> They were, however, acquitted of a more serious money laundering charge, which involved $60 million in transfers,<ref name=60million /> and were sentenced to four months and ten days in prison.<ref name=60million /><ref name=feb2017>Template:Cite web</ref> They were also forced to return $6,000 each.<ref name=60million />

In 2018, Vatican prosecutors indicted former Vatican Bank President Angelo Caloia, and an attorney, Gabriele Liuzzo, for embezzling $62 million, using a real estate scam, between 2001 and 2006.<ref>Template:Cite news</ref> The trial is still pending.Template:When

Process of reform

Institutional milestones

In August 2019, the IOR was re-structured by a chirograph of Pope Francis, which established the IOR's present Statutes. According to Article 4 of the Chirograph, the Institute consists of four bodies: A Supervisory Commission of Cardinals, a Board of Superintendence, a Prelate and a Directorate.<ref name="Chirografo"/>

Reform steps 2010/2011

On 1 January 2010, a renegotiated monetary agreement between the EU and the Vatican City State entered into force, supplementing the monetary agreement between the Vatican City State and Italy from the year 2000. Having signed the agreement, the Vatican transposed EU legislation on euro counterfeiting and money laundering by the end of 2010 and accepted the European Court of Justice as the only jurisdiction responsible for settling disputes under the agreement.<ref>Template:Cite web</ref>

On 30 December 2010, Pope Benedict XVI established the Vatican's independent Financial Intelligence Authority (Autorità di Informazione Finanziaria, AIF) to oversee the monetary and commercial activities of all Vatican-related institutions, including the IOR. The Vatican's so-called "financial watchdog" monitors all Vatican financial operations and ensures they conform with international norms against money-laundering and the financing of terrorism.<ref>The Vatican Creates a Financial Watchdog, The New York Times, 30 December 2013</ref>

In June 2011, the Roman prosecutors ordered the release of the seized €23 million that should have been transferred via an IOR account at Credito Artigiano. According to the prosecutors, this request of release was due to the newly instituted mechanisms that should help the Institute to conform to international anti-money laundering and antiterrorist financing standards, such as the AIF's establishment.<ref>Template:Cite news</ref>

Reform steps 2012

In July 2012, Moneyval, the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, published and issued a report on the Vatican City State, by request of the Vatican itself.<ref>Template:Cite web</ref> This was the first time that the Holy See had submitted its institutions and laws to the judgment of an international external auditor. The Italian news magazine l'Espresso called this "an historic watershed".<ref name="Elemedia S.p.A. - Area Internet">Template:Cite web</ref> The Vatican received grades of "compliant" or "largely compliant" on 22 out of 45 guidelines and adhered to international standards in 9 out of the 16 core points.<ref name="blogs.wsj.com">Template:Cite news</ref>

Moneyval stated that the Vatican "has come a long way in a very short period of time" and stated that the city state met the international requirements in 9 out of 16 core topics. At the same time, Moneyval requested further reforms to be enacted<ref name="Elemedia S.p.A. - Area Internet"/><ref name="blogs.wsj.com"/> The Vatican expressed a goal to get into the so-called OECD white list which includes countries that comply with international anti-money laundering standards and regulations against tax offences.<ref>Template:Cite web</ref>

In November 2012, a Swiss anti-money laundering expert, René Brülhart, was appointed director of the AIF. Previously, he had worked for the Financial Intelligence Unit (FIU) in Liechtenstein as well as for the Egmont Group of Financial Intelligence Units.<ref>Template:Cite web</ref>

Reform steps 2013

On 15 February 2013, Ernst von Freyberg was appointed the IOR's President. Since the beginning of his tenure at the IOR, von Freyberg has focused on comprehensively reforming the Institute, stating he would<ref>Template:Cite news</ref> focus on transparency<ref name="en.radiovaticana.va">Template:Cite web</ref> and a "zero tolerance" approach to any suspicious transactions.<ref name="en.radiovaticana.va"/><ref>Template:Cite news</ref>

In May 2013, the international consulting and auditing firm Promontory was assigned a forensic review and screening of the Institute's client relationships. In this context, all accounts of the IOR's 19,000 customers were being checked if they meet the respective criteria.<ref>Template:Cite web</ref>

On 24 June 2013, Pope Francis created a Pontifical Commission, often referred to as the CRIOR commission, to review the IOR's status and activities.<ref>CHIROGRAPH OF THE HOLY FATHER FRANCIS ESTABLISHING A PONTIFICAL COMMISSION FOR REFERENCE ON THE INSTITUTE FOR WORKS OF RELIGION, vatican.va, 24 June 2013</ref> Its task was to "gather accurate information on the legal status and various activities of the Institute to permit, when necessary, a better harmonization of the said Institute with the universal mission of the Apostolic See". Its five members were Raffaele Farina (President) Jean-Louis Pierre Tauran, Juan Ignacio Arrieta Ochoa de Chinchetru, Peter Bryan Wells (secretary) and Mary Ann Glendon.<ref>Template:Cite web</ref> The commission terminated its work in May 2014.<ref>Conclusi lavori Commissioni referenti, il grazie del Papa Template:Webarchive Template:In lang News.va. Retrieved 27 May 2014</ref>

In July 2013, the Holy See's Financial Intelligence Authority (AIF), charged with monitoring the monetary and commercial activities of Vatican agencies, was admitted as a full member of the Egmont Group, an international network of financial intelligence units.<ref>Template:Cite web</ref><ref>Template:Cite web</ref>

On 1 October 2013, the IOR published its first ever annual report.<ref>Template:Cite web</ref> The annual report is available for download on the Institute's homepage which was launched in July 2013.<ref name="theguardian.com">Template:Cite web</ref> The report's figures were audited by the global accounting firm KPMG.<ref>Template:Cite news</ref> According to the report, the Institute in 2012 had a net profit of €86.6 million, of which it has transferred €54.7 million to the budget of the Holy See to help the pope carry out the church's global mission. Both measures – the annual report's publication and the launch of the website – were reviewed as remarkable signs of enhanced transparency and compliance: The Guardian called the website launch a "giant leap"<ref name="theguardian.com"/> and Reuters named it a "transparency drive".<ref>Template:Cite news</ref> On 12 June 2017 IOR published its fifth annual report, showing net gains of €36 million for the year 2016.<ref>Template:Cite news</ref>

Also in October 2013, newspapers reported that the IOR had requested around 1,300 customers to close their IOR accounts. Allegedly, this request was directed at lay account holders, who do not fit into any of the five categories of clients the IOR is legally allowed to have.<ref>Template:Cite web</ref> The closures are said to be a result of the review process conducted by Promontory.<ref>Template:Cite web</ref>

On 12 December 2013, Moneyval published its Progress Report that assessed the Holy See's progress made on measures to combat money laundering.<ref>Template:Cite web</ref> It was stated that the IOR has made significant progress but at the same time needed more institutionalized internal controls, especially with regard to the AIF's watchdog function.<ref>Template:Cite news</ref> Overall, the report was rated as the approval of the economic and financial reforms enacted since Pope Francis' taking office.<ref>Template:Cite web</ref>

Reform steps 2014

On 22 January 2014, the IOR published a report on the progress of the compliance and transparency program.<ref>ior.va, 22.01.2014: Press release Template:Webarchive</ref> IOR President Ernst von Freyberg commented on the release, stating that "it is very possible to reform an institution like the IOR" and that the Institute has "used the past year to create the system and to analyse our customers for possible irregularities". Von Freyberg also stated much work needs to be done as regards transparency and compliance.<ref>Template:Cite web</ref>

On 7 April 2014, Pope Francis ruled the IOR will stay operative and approved recommendations on the Institute's future, which were drawn up jointly by the papal commissions CRIOR and COSEA, by the IOR's management and by Australian Cardinal George Pell, head of the Vatican's Secretariat for the Economy. The decision was interpreted as a "backing" of the process of reform that had been intensified under Pope Francis and von Freyberg.<ref>Template:Cite web</ref> The IOR itself stated that the Pope's decision "represents a powerful endorsement of our very mission and the hard work accomplished over the past 12 months."<ref>Template:Cite news</ref> Von Freyberg stepped down in July as head of the IOR and Pope Francis named Jean-Baptiste de Franssu to replace him.<ref>Template:Cite web</ref>

In September 2014, the Cardinals' Commission of the IOR appointed Mauricio Larraín (Chile) and Carlo Salvatori (Italy) as members to the IOR Board of Superintendence. Other members included Jean-Baptiste de Franssu (France), President of the Board, Clemens Boersig (Germany), Mary Ann Glendon (USA) and Michael Hintze (UK). In addition to these six lay members of the Board, Monsignor Alfred Xuereb, Secretary-General of the Secretariat for the Economy, served as its non-voting Secretary.<ref>Template:Cite web</ref> From January 2017 additional members added to the board were: Scott C. Malpass (USA), Template:Ill (Spain), and Georg Freiherr von Boeselager (Germany).<ref>Template:Cite news</ref>

2023

In March 2023, a chirograph of Pope Francis was published, whose goal is "to further renew the Statute of the Institute for the Works of Religion to make it consistent with the most modern organizational requirements as well as with the operational needs that arise daily in the Institute's activities".<ref>Template:Cite web</ref>

See also

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Notes

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References

Specific citations

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General references

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  • John F. Pollard: Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950 Template:ISBN
  • Mark Aarons and John Loftus: Unholy Trinity: How the Vatican's Nazi Networks Betrayed Western Intelligence to the Soviets. New York: St.Martin's Press, 1992. 372 pages. Template:ISBN
  • Malachi Martin: Rich Church, Poor Church (Putnam, New York, 1984) Template:ISBN
  • Malachi Martin: Vatican (Jove (1 August 1988)) Template:ISBN
  • Charles Raw: The Moneychangers: How the Vatican Bank Enabled Roberto Calvi to Steal 250 Million Dollars for the Heads of the P2 Masonic Lodge (Harvill Press, 1992) Template:ISBN
  • Giancarlo Galli: Finanza bianca. La Chiesa, i soldi, il potere (Mondadori, 2004) Template:ISBN
  • David A. Yallop: In God's Name: An Investigation into the Murder of Pope John Paul I
  • Mark Lombardi: Global Networks. Mark Lombardi, Robert Carleton Hobbs, Judith Richards; Independent Curators, 2003 (published for the travelling exhibition of his work, "Mark Lombardi Global Networks"). Template:ISBN
  • Jonathan Levy, "The Vatican Bank", in Russ Kick (Ed.), Everything You Know is Wrong (Disinformation Press, 2002) Template:ISBN
  • Michael Phayer: Pius XII: The Holocaust and the Cold War, 2008, Template:ISBN.

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Criticism

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