Hungary Likely To Back Down In EU Legal Dispute

Victor Orban

THE HUNGARIAN GOVERNMENT has given a strong indication that it is likely to back down in its legal dispute with the European Union over controversial changes to its constitution which go against EU law.

Prime minister Victor Orban told a radio interview that the complaints raised by the European Commission – which this week initiated legal proceedings against Hungary over the changes – would be “not an especially difficult matter”.

The government had already come up with proposals to address the crisis, the Budapest Business Journal reports Orban as saying, with the parliament ready to adopt the proposals when it returns from recess on February 13.

The Daily Telegraph said Orkan was also abandoning his plans to merge the central bank and the regulator of its financial markets.

The European Commission had cried foul over the proposals which brought in an enforced retirement age for the country’s judiciary, forcing 274 judges into compulsory retirement, a move which contravenes EU treaties.

The government had also given itself the power to govern the national data protection body, as well as giving its finance minister a seat on the board of governors of the national central bank.

That move meant that the government could take a direct role in monetary policy – and potentially result in political pressure being put on the ECB, if Hungary was to join the euro and have its central bank take a seat on the ECB’s governing council.

Further progress is likely to be made next week when Orban meets with the European Council president Herman van Rompuy, and with European Commission president Jose Manuel Barroso.

Hungary’s concession is most likely because of its deteriorating financial circumstances, which have required it to begin talks with the IMF over an alternative source of funding.

Markets remain reluctant to lend to Hungary, which was today being charged over 9.3 per cent interest for 10-year loans.

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