HUNGARY TAKES over the rotating presidency of the European Union tomorrow at a time of troubles for the bloc and amid mounting international criticism of the government in Budapest.
Having gained some respite following the travails of Greece and Ireland in 2010, few experts see 2011 as free from possible pitfalls for the EU, with the debt markets again likely to test the strength of weaker euro zone members.
Brussels and the European Central Bank will have to handle the next six months of challenges in tandem with Hungary, which has become something of an economic renegade under Prime Minister Viktor Orban.
He very reluctantly accepted an EU budget deficit target for 2011 of 3 per cent of gross domestic product and froze talks with the International Monetary Fund over aid for next year, preferring instead to forge his own path and raise cash in a different way without hiking income tax.
As well as tapping the debt markets, Mr Orban has ordered the nationalisation of the assets of Hungary’s private pension funds and levied so-called crisis taxes on banks, energy firms and others sectors – measures that have raised the hackles of foreign investors and drawn criticism from the EU and IMF that he is seeking quick fixes to problems that require tough structural reforms.
If Mr Orban’s economic policies irked the EU, a raft of other reforms caused deeper concern.
Since taking power in spring with a crushing two-thirds majority in parliament, Mr Orban has installed allies in nearly all major positions of power, curtailed the powers of the constitutional court and tinkered with the constitution ahead of plans to overhaul it next year.
He has also scrapped an independent budgetary council that monitored state spending, and he is trying to force out the head of the central bank in a battle over who controls fiscal policy in the deeply indebted nation.
But the most vocal criticism was saved for a new media law, which places all Hungarian media outlets under the supervision of a council run by Orban loyalists.
The council will have the power to levy very large fines on publications, websites and broadcasters whose coverage is deemed to be unbalanced or in breach of guidelines on taste and decency. It will also be able to force reporters to reveal their sources in cases that are deemed to involve national security or public safety.
Luxembourg’s foreign minister Jean Asselborn urged the European Commission to take swift action over a law which he said “clearly violates the spirit and the letter of EU treaties”.
“It raises the question whether such a country is worthy of leading the EU,” he added.
Yesterday, Germany stepped up its criticism of the law, after a government spokesman earlier warned that as EU presidency holder Hungary now had “particular responsibility for the image of the whole union in the world”.
“I assume that the final word by the Hungarian government hasn’t been spoken yet on this issue,” German deputy foreign minister Werner Hoyer said yesterday.
“We must ensure that basic rights are guaranteed in the European Union and a free press is among the core rights. If there are doubts they need to be eliminated. Even if I don’t know the exact wording of the new law, there are indeed doubts.”
Germany’s call for changes to the law suggest Budapest is already on collision course with the EU’s biggest member.
Mr Orban has already insisted that he has “no intention whatsoever” of amending the law, saying that “we are not frightened of a few criticisms, or even many criticisms, coming from western Europe or even beyond”.
Friction with the EU’s big powers will not help Hungary successfully launch what are likely to be tough talks on the bloc’s 2014-2020 budget. They are expected to pit rich countries such as Britain, France and Germany against the poorer eastern members, and potentially fuel tension between themselves over how the EU pie will be divided.
Budapest also hopes to oversee the completion of Croatia’s EU accession talks and help Romania and Bulgaria join the Schengen area of passport-free travel. They had hoped to enter the area in March 2011, only to have their bids blocked by Germany and France over security concerns.
Hungary will host the Eastern Partnership summit in May, the second such gathering that is part of EU efforts to develop economic and political links with former Soviet states Ukraine, Georgia, Belarus, Armenia, Azerbaijan and Moldova – and which Russia views with some scepticism as an attempt to erode its traditional sphere of influence.
Mr Orban also hopes to forge a comprehensive policy on Roma integration for the EU – a considerable challenge for Hungary, where the far-right is strong and anti-Roma feeling widespread.