In what appears as an escalation of tensions between Brussels and Budapest, the European Commission has opened the second stage of two infringement procedures against Hungary for government interference in the judiciary and in the data protection authority. The next step could be a referral to the European Court of Justice.
The decision, taken by the College of Commissioners yesterday (7 March), appears as another blow to Hungarian Prime Minister Viktor Orbán, who was slammed two weeks ago with the threat to lose part of his country's regional funding for failing to correct its excessive deficit.
Although the EU executive sees the issues as unrelated, Commission spokesperson Pia Ahrenkilde Hansen admitted that the questions relating to the independence of Hungary's central bank may put in jeopardy the 'precautionary aid' which Budapest seeks from the EU and the International Monetary Fund as insurance against possible financing difficulties.
"The conditions for any talks on financial assistance are not yet met, that it's very clear also from the points I listed," Hansen told a news conference. "We need clarification and settlement of those issues before any such talks could start."
The Commission sought clarifications and translation into law of the commitments Hungary made over the independence of the central bank, and also a calendar that indicates when these laws would enter into force, Hansen said.
Also, more explanations were needed regarding the remuneration of the central bank president and "indications that the central bank would be consulted on these measures".
The Commission was quick to react after the explanations it received on 17 February by Budapest, one month after it started legal action over legislation and constitutional changes that came into force on 1 January. The EU executive regards the matter as an urgency, as the laws in question are already in force.
The Hungarian government was also prompt to issue a statement, saying that "90% percent" of its explanations, provided on 17 February, had been accepted by the Commission.
"As regards the remaining unresolved questions, the Government is ready to continue the dialogue with the European Commission," the statement ends.
In January, the EU executive sent three "Letters of Formal Notice" to Hungary – the first stage in the EU's infringement procedure. This time, it issued two "reasoned opinions" – the second stage under EU infringement proceedings, after which the matter may be referred to European Court of Justice. It also sent two "administrative letters".
The Commission opinions concern the independence of the data protection authority and the retirement age for judges. The two administrative letters are seeking further clarifications regarding the independence of the judiciary and central bank.
More infringements possible
Commission sources said the only apparent outstanding issue over the central bank's independence concerns the salary of its governor, which the government wants capped. The Hungarian government has responded that the measure applies to all the civil servants.
But more important appears to be the "permanent dispute" between the central bank and the government, which is being played out by the news media, a source said.
Regarding the early retirement of judges, the Commission is reportedly unconvinced that the measure to lower the retirement age from 70 to 62 years was a measure applying for the entire administration, as Budapest had explained. The Commission sees this measure as discriminatory.
On the data protection authority, the outstanding issue appears to be the abrupt termination of the mandate of the former holder of this office, and the request of the EU executive to be informed of the changes in the statute and procedures of the authority.
On a controversial media law, which is not a subject of infringement procedure, the Hungarian government reportedly was consulting with the Constitutional Court and the Commission was waiting for the development.
More infringements were possible on "crisis laws" introduced by Orbán's government that affect foreign firms and banks, a source said. In December 2010 15 large European firms filed a complaint to the European Commission about hastily-adopted taxes in Hungary which they say threatens their activities.
On other issues being examined by the Council of Europe and the European Parliament – with the option of possibly triggering Article 7 of the Lisbon Treaty – the Commission would follow the work of these institutions and provide them the information they would need.
Under Article 7 of the Lisbon Treaty, serious breaches to the values of human dignity, freedom, democracy, equality, the rule of law and respect for human rights by a member state can result in a suspension or loss of voting rights in the EU Council of Ministers.
This would mean Hungary would temporarily lose its EU membership rights. But before such a decision can be taken, the Council shall hear the member state in question and may address recommendations.
"We support the Commission's decision to pursue its action against Hungary in those areas where they have not had a satisfactory response. Nevertheless the Commission must still tackle the core problem and its consequences", said ALDE Leader Guy Verhofstadt.
"Hungary must stop this cat and mouse game, trying to win time by providing all necessary information requested drop by drop. Infringement proceedings have been launched and they will go the whole way," he said.
Commenting on the European Commission's announcement to pursue investigations on the retirement age of judges and data protection in Hungary, Joseph Daul, chairman of the EPP Group, said: "The EPP Group fully endorses today's assessment from the Commission and calls on Hungary to meet its commitments to remove all questions relating to EU laws and norms.
"The clearest way to show what the rule of law means to us in everyday life is to recall what happens when there is no rule of law. I ask Prime Minister Orbán to make sure that anything that is not in accordance with EU common standards be corrected as he himself promised in the European Parliament," Daul said.
The European Parliament's Green/EFA group welcomed the decision but expressed concern that the Commission is continuing to ignore the wider concerns with constitutional changes, which are leading to a scale-back of democracy in Hungary.
Commenting after the announcement, Greens/EFA co-president Daniel Cohn-Bendit said:
"The Commission is right to take action to address the 'reforms' threatening the independence of the judiciary and the data protection authority. However, in focusing on these narrow areas, the Commission is continuing to ignore wider concerns with constitutional changes, which are completely at odds with the core values on which the EU is founded and which the Commission, as guardian of the Treaty, has a duty to defend."
Greens/EFA co-president Rebecca Harms said: "The EU must take stronger action in defence of core EU values and prevent the slide away from democracy in Hungary, which is totally against the interests of its citizens and its economy. If the Commission lacks the courage to act, the EU Parliament must fill the void.
"The Greens/EFA group has already called for the initiation of a procedure under Article 7.1 of the EU Treaty to examine whether Hungary is in breach of EU fundamental values (2) and will continue to push for this. Clearly, the best solution for all would be for the Orbán government to have a belated change of heart."
European Socialists and Democrats regreted that the European Commission had to announce that the Hungarian government's clarifications on three recent controversial laws were not sufficient to dispel serious concerns on their compatibility with EU legislation and values. The S&Ds have called for a "deeper and broader investigation".
Following tje decision by the European Commission to pursue accelerated infringement proceedings regarding recent controversial laws on the independence of the data protection supervisor, the retirement age for judges and the independence of the central bank, S&D Vice President Sylvie Guillaume MEP said:
"Unfortunately, the European Commission's decision confirms that our concerns were well-grounded and that Mr Orbán's arguments were not convincing enough to prove the compatibility of these laws with EU legislation."
MEP Marie-Christine Vergiat from the European United Left–United Nordic Left (GUE/NGL) group called the Commission move "a small step" in the right direction. However, she said it represented "a very limited denunciation" of the deep constitutional reform pushed forward by Orbán for several months now.
Vergiat criticised the Commission for not taking stock of the opinion of the Council of Europe Venice Commission and blasted Commission Vice President Viviane Reding, in charge of Justice, Fundamental Rights and Citizenship, for not engaging into an analysis of the violations of fundamental rights "in Hungary and elsewhere".
Hungarians voted overwhelmingly in April 2010 for a radical change in leadership, sending the ruling Socialists into opposition and giving the centre-right a qualified majority in parliament.
The election marked the biggest victory for any political party in a general election since the fall of communism 21 years earlier. However, several measures put in place by the new government have since fuelled controversy.
A controversial new constitution that entered into force on 1 January brought tens of thousands of protestors. They believe it undermines the independence of the central bank, the judiciary and the news media. Critics also say that the new measures represent an assault on religious freedom by cutting down the number of recognised religious groups from 300 to 14.
Under its EU accession treaty, Hungary is obliged to adopt the euro as soon as it is ready. However, the new constitution makes the national currency, the forint, the country's only legal tender.
- 16-17 March: The Venice Commission of the Council of Europe is to issue a definitive opinion on what is seen as an authoritarian drift in Hungary.
- 7 April: Deadline for Hungary to respond to the Commission's two "reasoned opinions" and two "administrative letters".