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January 02, 2012

EU Postpones Talks On Financial Assistance For Hungary After Massive Protests

by Stefan Bos

The European Union's executive body says it and the International Monetary Fund have no plans yet to resume talks with financially troubled Hungary over multi-billion dollar assistance, amid concerns that new laws will lead to a government  take-over of the Central Bank and other previously independent institutions.

Tuesday's announcement by the European Commission came hours after tens of thousands of Hungarians protested in Budapest against a new constitution and related laws which, they say, are being used by the center right government to establish a dictatorship.

It was the largest such rally since Prime Minister Viktor Orban came to power in May of last year.

Shouting 'Orbanistan' and 'Dictatorship' protesters gathered near the State Opera building in Budapest, where Hungary's top leaders attended a gala performance celebrating the new constitution.

The constitution was enforced on New Year's Day without opposition support, despite Western concerns it curbs many basic freedoms in Hungary.

The constitution also changes the country's official name from 'Republic of Hungary' to just 'Hungary'. Name signs were changed at border posts, ahead of New Year's Day.

The European Commission made clear Tuesday that European delegates and the International Monetary Fund have not decided whether they are willing to start official negotiations on a financial safety net for Hungary of up to $26 billion.

Last month, the IMF and Commission officials walked away from talks in Budapest, amid concerns that planned legislation would threaten the independence of the country's Central Bank.

Despite these tensions, the center right Fidesz party of Prime Minister Orban used its two-thirds parliamentary majority to push through a controversial Central Bank law.

The bill strips Central Bank President Andras Simor of his right to name deputies, expands the interest rate-setting Monetary Council and creates a position for a third vice president.

Analysts have warned that can lead to government influence over Central Bank policies, which a European Commission spokesman said would violate EU law.

In one of his harshest comments on the issue yet, Commission spokesman Olivier Bailley said European and IMF delegates are not "for the time being" planning to come back to Budapest. "Because of the lack of certainty of the legal environment around the central bank which is very important to ensure the financial stability of the country, the IMF and the Commission have not decided yet to come back to Budapest for the start of the formal talks on the financial assistance," he said.

European Commissioners also raised worries about other Hungarian government issues, ranging from alleged threats to the independence of the judiciary, to a restrictive media law and to freedom of religion.  

Controversial legislation limits the churches and religious groups recognized and supported by the state from over 300 to just 14, a move critics say resembles policies of Hungary's previous Communist regime.

Methodist Pastor Gabor Ivanyi, whose church is not recognized under the new church law, suggested to demonstrators that he is concerned about his nation's spiritual and political future.

He says Hungarians want a prime minister who is able to go to the opera house by walking or by bicycle and can enter through the main entrance and not through the back door.  He also says: "There is no truth where laws are passed forcefully, without consultations, where people live in fear and where people are not equal.”

Hungarian Prime Minister Orban has denied he seeks to establish an authoritarian state.

Mr. Orban views the new constitution and other key laws as the closure of Hungary's transition from the collapse of Communism, in 1989, to democracy, now.