Hungary in another standoff with EU over constitutional changes

By bne IntelliNews March 11, 2013

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The Hungarian parliament is set for a final vote on proposed constitutional changes on March 11 that will limit the power of the Constitutional Court, which has blocked several other recent moves from the Fidesz government. The issue threatens to produce yet another standoff with Brussels.

European Commission President Jose Manuel Barroso called Hungarian Prime Minister Viktor Orban on March 8 to register his objections, while a few thousand demonstrated against the proposal in Budapest. Barroso, who has regularly clashed with the PM since he came to power in 2010, asked Orban and his government to address concerns "in accordance with EU democratic principles," reports Reuters.

Earlier last week, the Council of Europe urged Budapest to postpone the vote that could limit the powers of the highest court, saying it would put Hungary's democratic checks and balances at risk. "We will now continue bilateral consultations to discuss the concerns," said EU executive spokeswoman Pia Ahrenkilde Hansen.

Fidesz calls the criticism unjustified and says it respects its obligations to the EU. Foreign Minister Janos Martonyi said Orban had assured Barosso that any changes to Hungarian law would comply with EU norms.

In his phone call to the PM, however, Barroso said he shares the Council's views and expressed concern over issues such as changes to advertising rules for next year's European Parliament election. Other issues include rules on judgments rendered by Europe's top court and on the retirement age of judges.

Washington also moved to register its concern. The US State Department said the proposed amendments could threaten "the principles of institutional independence" and should be reviewed.

However, Orban has illustrated repeatedly over the past three years that he is ready to duck and dive EU objections and take a tighter grip over the country's institutions. His government has rewritten hundreds of laws thanks to its two-thirds majority in parliament, and introduced a raft of constitutional amendments in January 2012. The EU officially challenged three of those moves - those affecting the central bank, the judiciary and the data protection office.

Hungary's Constitutional Court has also blocked several pieces of legislation pushed though by Fidesz. Critics say the government is now looking to close that avenue of resistance with its draft law, which says the court can examine the constitution or amendments in terms of formal procedural aspects, but that it cannot rule on the content.

Protests of 2,000-3,000 people took place in Budapest over the weekend, with participants claiming concern that controversial pieces of legislation blocked by the Constitutional Court and affecting higher education, homelessness, electoral law and family law will now be implemented, reports AP. The draft legislation invalidates any decisions made by the court before the current constitution came into force.

Hungary has several cases against it pending in the European Court of Justice, but Brussels' main point of leverage over the past couple of years has been economic, with Hungary being forced to apply for a bailout from the EU and International Monetary (IMF) in late 2011 in order to keep the markets off its back as the economy sinks. However, taking advantage of the ongoing emerging market rally, Budapest tapped the international debt market for the first time for around 18 months in February when it sold $3.25bn of bonds.

The government is expected to follow up that issue with another soon, and as long as it enjoys access to the international capital markets, Fidesz is unlikely to be swayed by any objections from Brussels. Barroso and his colleagues will need to wait until investors' appetite for high yield assets like Hungarian bonds recedes further in order for their words to have any real impact on Orban and his government.

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