HUNGARY IS on a collision course with the European Union after passing a new central bank law in defiance of warnings from Brussels.
The rules, which critics say will erode the independence of the central bank and place yet more power in the hands of Hungarian prime minister Viktor Orban, have also drawn the ire of the International Monetary Fund and cast doubt on Budapest’s bid for its financial support.
Hungary’s parliament, dominated by Mr Orban’s conservative Fidesz party, also put further pressure on his foes by voting to hold the opposition Socialist Party responsible for crimes committed by the communists who ran the country from 1947 to 1989.
That law is likely to bring more international opprobrium on Mr Orban, who received a letter this month from US secretary of state Hillary Clinton detailing her concerns about Hungary’s democracy and press and religious freedom, as well as the removal of crucial checks and balances on government power.
The new measures allow the government to appoint an additional deputy governor to the bank and to expand the monetary council, which sets interest rates.
“These new bills create the possibility for influence over central bank decision-making based on government and party interests, which . . . goes against . . . the basic treaty of the European Union,” said the central bank, which has repeatedly refused to bend to Mr Orban’s will.
European Commission president José Manuel Barroso wrote to Mr Orban recently asking him to change his plans. “We will be assessing the legal scope of the new laws,” an EU spokesman said yesterday. “We have reiterated our concerns to the Hungarian authorities in the past few days.”
Some analysts think the EU will take Hungary to the European Court of Justice over the dispute.
The issue prompted IMF officials to call an early end to recent talks on a multibillion-euro financial “safety net” for Hungary.
“It is a European fashion that the central bank must be in a sacred state of independence,” Mr Orban said yesterday. “Nobody can interfere with Hungarian legislative work, there is no one in the world who might tell the elected deputies of the Hungarian people which act to pass and which not to.”
Ignoring Mrs Clinton’s concerns, parliament passed another law yesterday to slash the number of officially recognised faiths to 14 from more than 300.
Since taking power in 2010, Mr Orban has placed allies at the head of most major national institutions, dramatically strengthened government influence over media and the judiciary, nationalised private pensions and hit certain business with special taxes.
He says he is trying to reinvigorate the country’s finances and reclaim its economic “sovereignty”, while protecting the weakest elements of Hungarian society and stripping away the corrupt remnants of the communist era. Critics say he is mounting a dangerous power grab which, once his new constitution comes into force tomorrow, will make it hard for any other party to take office and overturn his radical reforms.