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23rd Jan 2022

EU commission starts legal action against Hungary

The European Commission has launched legal action against Hungary over its new constitution, amid fears that its right-wing leader has too much control of judges and the central bank.

Speaking to journalists in Strasbourg, EU commission chief Jose Manuel Barroso said on Tuesday (17 January) that the independence of the central bank, the national data protection authority and the early retirement age of judges as outlined in the constitution do not conform to EU standards.

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  • Barroso (r) and Orban in happier times (Photo: EC)

"We hoped that the Hungarian authorities would make the changes necessary to guarantee respect of EU law. This has not been the case so far, therefore we have decided to begin infringement proceedings," he said.

Under normal infringement procedures a country has two months to respond, but the commission decided to push the deadline to one month. If Hungary does not alter its law by the deadline, it could end up at the EU court in Luxembourg and face fines.

The issue - which has been heating up ever since the commission first voiced concerns last week - will see Hungary's Prime Minister Viktor Orban make a special trip to attend the European Parliament plenary debate on Wednesday. He is also scheduled to meet Barroso next week.

The reforms empower Orban to make key appointments in the central bank, the Magyar Nemzeti Bank (MZB), raising questions over its independence. The body's president, Andras Simor, no longer has the right to name his own deputies. A legal provision also creates a third central bank vice president to be nominated by Orban.

Hungary is at the same time facing a stark economic problem.

Credit rating agencies recently downgraded it to junk and government 10-year bond yields hit a whopping 11 percent in early January.

But discussions over an EU and International Monteray Fund (IMF) lifeline - reportedly in the region of €15 billion to €20 billion - fell apart in December, due in part to Orban's new bank powers.

Last week, the commission said talks on the credit line will not resume until the bank's independence is guaranteed. The position was reiterated on Tuesday by economic affairs commissioner Olli Rehn. Rehn's spokesman, Amadeu Altafaj-Tardio told reporters there is still no date for talks to resume.

An official at the European Central Bank (ECB) told EUobsever that ECB President Mario Draghi on Tuesday met with Hungary's IMF negotiator Tamas Fellegi and with the MZB's Simor to discuss the central bank law. She declined to give details.

Meanwhile, Hungary's EU ambassador the same day told press in Brussels that Budapest plans to co-operate fully with the commission. "We trust in the European Commission and their approach has been absolutely correct," he said.

The Hungarian government has defended itself by saying that it made around 230 laws in the past one and a half years. A few potential errors cannot be ruled out, it noted.

Budapest is now left with three options: it can either comply with the commission's decision, debate the technical details and try to come to a compromise or challenge the EU executive in court.

For its part, the Liberal group in the EU parliament has said the commission missed the big picture by not acting on Orban's erosion of freedom of expression, media and religion in Hungary. The Green group also derided the commission for not addressing the wider "democratic scale-back" in the country.

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