7th Aug 2020

Leading firms seek sanctions against 'EU president' Hungary

  • Budapest: complaints about a media gag and unfair taxes have cast a shadow over the start of Hungary's EU presidency (Photo:

Thirteen European companies have written a joint letter to the EU commission asking for sanctions against Hungary over a set of special taxes imposed on foreign investors. The row comes just as Budapest takes over the rotating EU presidency and comes on top of an existing controversy over its strict media law.

The five-page letter addressed to EU commission chief Jose Manuel Barroso called on Brussels to "convince the Hungarian government of the importance of having stable legal conditions for investors" and of "making Budapest withdraw its unfair taxes," the Sunday (2 January) edition of Germany's Die Welt newspaper reported.

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The signatories include the heads of Germany's energy giants RWE and E.ON, Deutsche Telekom, German insurer Allianz, the Dutch ING bank, French insurance firm Axa, Czech energy company CEZ and Austria's energy champion OMV, all of which have threaten to withdraw their investments from the central European country.

The letter, dated 15 December, says that Deutsche Telekom alone stands to lose up to €100 million euro as a result of recently-imposed retroactive taxes on foreign investors designed to reduce Hungary's public deficit. According to the company chiefs, the new taxes could yield €1.3 billion for cash-strapped Budapest.

Speaking to Sueddeutsche Zeitung, German economy minister Rainer Bruederle said it was "fundamentally problematic for the EU internal market" that an EU country should harvest funds in this way from foreign companies. Berlin has already raised these concerns with the Hungarian government and will "follow this issue closely also through the EU commission," he added.

If the commission decides that Hungary is in breach of EU law, it may refer the case to the European Court of Justice.

The court has the power to oblige EU countries to change their laws and to levy fines. The process - known as "infringement procedure" - is lengthy and can be halted at any time if the Hungarian government falls into line voluntarily.

The tax row, with its implication of un-European behaviour, will contribute to the unpleasant atmosphere at the start of Hungary's EU presidency.

Budapest took over the rotating office on 1 January amid widespread criticism of a new media law which gives greater powers to a media council to sanction broadcasters for publishing material that is "not politically balanced" or offends "human dignity."

Under the headline "The Putinisation of Hungary," in reference to Russia's authoritarian Prime Minister Vladimir Putin, the leading US newspaper, the Washington Post, ran an editorial on 26 December saying that the EU may be "regretting" its rotating presidency system.

"That's because the gavel will be handed to Hungary, whose populist and power-hungry government has just adopted a media law more suited to an authoritarian regime than to a Western democracy," it said.

Meanwhile, US rapper Ice-T has become the subject of the first case handled by the new media body after his explicitly-worded songs were broadcast before 9pm by a local radio station.

"I love it! The world still fears me. hahaha!" he posted on his Twitter account.

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