The Hungarian government has submitted a bill that would  introduce criminal sanctions against NGOs, political parties and political organisations for violating a prohibition on foreign campaign financing.

The acceptance of foreign funds for political purposes, or the attempt to conceal them, would be punishable by up to three years in prison. The bill also establishs a Sovereignty Defence Office to investigate foreign financing.

According to analysts, the legislation is reminiscent of the 2017 act targeting NGOs, which was repealed four years later after the European Court of Justice found it discriminatory, but this time Prime Minister Viktor Orban’s political opposition is under the radar. The legislation basically aims to cut off opposition parties from any external financing sources.

The preamble claims the united opposition circumvented the ban on foreign financing during the 2022 elections by using foreign funding through civil organisations.

An inquiry of state audit ASZ found that some HUF1.7bn (€4.5mn) of foreign funding went to the movement led by the opposition’s joint prime minister candidate, Peter Marki-Zay. Budapest Mayor Gergely Karacsony, who stepped back in the campaign to endorse the outsider candidate, the conservative mayor of Hodmezovasarhely, also came under scrutiny from foreign donations of HUF500mn during the campaign.

The bill defines prohibited foreign support as a financial contribution from another state, foreign natural or legal person, or organisation without legal personality.

The draft bill states that political parties may not use foreign funding in local government election campaigns. In addition, MPs, local government representatives and mayors, as well as candidates running for the European Parliament, may not carry out activities aimed at influencing the will of the electorate with foreign support nor attempt to do so. Contrary to the government's communication in previous months, the financing of the press from foreign sources is not included in the draft bill.

If any NGO violates these rules, the tax authority must remove it from the list of entities eligible for donations of 1% of taxes payable.

The proposal mandates the creation of a new, autonomous state administration body, the Sovereignty Protection Office, to investigate those organisations whose activities using support from abroad may influence the outcome of the elections.

The office would be headed by a person recommended by the prime minister and appointed by the president for a period of six years and its operations would be assisted by the National Information Centre, one of the secret services assigned to Antal Rogan.

The first comments by analysts and NGOs suggest that the legislation, if passed next week during an extraordinary session, will most likely fail the constitutionality test.

NGOs warned that the new Sovereignty Protection Office could request data from other state bodies, the tax office, the police, the prosecutor's office, or the secret services for conducting an investigation if needed, which could theoretically result in the surveillance of individuals targeted.

Opposition parties said that this Russian-style legislation’s sole aim is to intimidate the opposition. It is Orban’s government that is endangering Hungary's sovereignty by subordinating the country to Russian and Chinese interests, they added.