EU warns Hungary over new laws

Hungarian Prime Minister Viktor Orban faced heightened external pressure on Thursday after Brussels fired a warning shot over new laws in the EU member state that critics say undermine democracy. Just over a week after tens of thousands demonstrated against what they see as Orban's growing authoritarianism -- placards read "Viktator" and "Orbanistan" -- the EU executive on Wednesday threatened legal action over a raft of new laws. On January 1 a new constitution came into effect which Orban's detractors say undermines the independence of key state institutions, while altering the electoral system in his party's favour and curbing press freedoms. The EU executive said it has "raised concerns on the compatibility of these laws with European Union law." "As guardian of the Treaties, the commission remains preoccupied that a number of the new provisions may violate EU law," a statement said. The Commission said it would continue an analysis of the new Hungarian legislation and would decide next Tuesday whether or not to launch legal action. The Hungarian opposition socialist party MSZP said Brussels had given Orban "one week to restore democracy" and demanded an early recall of parliament from its winter recess next Monday. Orban himself remained silent, but his spokesman said in a statement that Hungary was a "country with a rule of law. The government is committed to universal European values." "Hungary continues to be open to continue consultations on issues raised by the European Commission," the spokesman said. "It is ready for discussions and searching for solutions." Hungary would "wait for and consider the outcome of the analysis of the commission, trusting its thoroughness and unbiased nature." "The government reacted as if nothing has been said today. They seem not to have grasped the message," Kornelia Magyar, head analyst of Hungarian Progressive Institute, told AFP. The government seems to think that Brussels will always be on hand to help Hungary "no matter how tough the EU is verbally," she said. But the pressure is not just political, it is also economic, and this could hurt Orban much more, experts say. One of the laws that Brussels objects to is a revamp of Hungary's central bank which the EU executive and the European Central Bank say crosses a line in the sand by affecting the bank's independence. The worries prompted EU and International Monetary Fund officials last month to walk away from talks about providing Hungary with a 15-20-billion-euro ($20-25-billion) credit line. With Hungary's currency, the forint, last week hitting record lows against the euro and borrowing costs -- as well as the cost of insuring Hungarian bonds against default -- rising, Hungary is in dire need of the money, experts say. Last week Fitch joined the other two main credit rating agencies Moody's and Standard & Poor's in downgrading Hungarian debt to "junk" status, spooking investors already nervous about the country's economic prospects. Peter Kreko, analyst at the think-tank Political Capital, said that Orban has two "rational" options: accepting the EU conditions in an embarrassing U-turn or handing power to someone else. "The third, irrational but not unimaginable option is that he does not accept the EU conditions and continues on his way," Kreko told AFP. "Bankruptcy would soon follow."