Hungarian PM backs down in dispute with European Union

HUNGARIAN PRIME minister Viktor Orban has backed down from a possible court battle with the European Union and pledged to alter laws that have jeopardised Budapest’s bid to secure vital financial aid.

His climbdown yesterday came as neighbouring Romania braced for an eighth night of protests against the government and its austerity measures, and Croats prepared to vote whether to join the EU at a time of economic uncertainty and political tension between members.

“If we take stock of the issues that have emerged, I do not see any particularly difficult issues . . . Naturally, several laws may have to be modified, but the government cannot do it, this can be done only by parliament, and we will make proposals to this end,” Mr Orban said.

The EU and International Monetary Fund have refused to start aid talks with Hungary until Mr Orban scraps plans to merge Hungary’s central bank and financial regulator, which critics say will deeply undermine the bank’s independence from government meddling.

“Regarding the central bank law . . . the easiest will be to abandon the merger of the two institutions,” Mr Orban said, in a conciliatory tone that was long absent from his robust dealings with the EU and IMF.

According to his spokesman, the EU’s economic and monetary affairs commissioner, Olli Rehn, said yesterday that “before we can start formal negotiations on this EU-IMF financing programme, certain preconditions must be met”.

In a meeting with Tamás Fellegi, the Hungarian minister in charge of aid talks, Mr Rehn “stressed that Hungary must take concrete steps to ensure full independence of its central bank”, the spokesman said.

Mr Fellegi stressed that “all those issues can be clarified and settled politically during the meeting” between Mr Orban and European Commission chief José Manuel Barroso that is planned for next Tuesday.

In the Romanian capital, Bucharest, people were gathering last night for the latest in a series of protests against austerity measures imposed as part of a €20 billion emergency loan that the country took from the IMF in 2009.

Thousands of people have rallied in recent days in Bucharest and other towns and cities around the country to demand an end to the austerity measures, the resignation of President Traian Basescu and his government, and snap elections.

Several dozen people have been injured in occasional clashes with riot police, which officials have blamed on groups of football hooligans.

Victoria Nuland, a US State Department spokeswoman, urged Romanians yesterday to express their views “peacefully” and called on “protesters and authorities to refrain from any violence”.

With political and economic tension rising in the EU, Croats will vote in a referendum on Sunday about whether to join the bloc in July 2013.

Recent polls suggest the referendum will be tight, with the latest survey predicting the “yes” camp will take 53 per cent of votes.

Croatia’s president and all major parties back EU membership, but many Croats fear that accession will herald painful economic reform and a loss of sovereignty.