Not only democracy but the free market economy is in danger in Hungary

We have often talked about the hundreds and hundreds of new laws and amendments Fidesz politicians “propose.” Naturally, very few of these laws and amendments are genuine in the sense of actually originating with the MPs who turn them in. Individual members’ proposals are just a convenient way of avoiding thorough preparation and discussion. The preparation of these laws and amendments is often farmed out to Fidesz-friendly law firms whose members with great speed throw together something that often turns out to be very poor legislative work.

The purpose of amendments is frequently obscure. It can happen that something that didn’t seem at all significant at the time it was adopted turns out to be of huge importance. It has happened more than once that the “evil” intent of the piece of legislation became clear only months later.

On October 11 László Koszorús, a Fidesz MP, turned in an amendment to the Competition Act of 1996 which entrusted the Hungarian Competition Authority (Gazdasági Versenyhivatal) with surveillance control of all mergers and acquisitions that might be “essential” from the point of view of the national economy. The Authority can scotch a merger or acquisition if it significantly reduces competition. Article 24 of the Competition Act defines the thresholds above which the authorization of a merger has to be approved by the Competition Authority. László Koszorús’s amendment to this article adds a new section which would allow the government to approve a merger without its being scrutinized by the Competition Authority “in case that merger is considered to be significant from the point of view of national strategy, especially in the case of mergers that would save jobs, would strengthen international competitiveness, and would secure basic supplies to the population.”

Hungarian journalists miss a lot of new amendments, which is not surprising given the tsunami of legislative work, but this one was not overlooked. Index immediately picked it up and explained to its readers what the amendment means. Even if a merger of two companies would contravene competitiveness, would negatively influence the price of products, would be harmful to the consumers, the government despite all that could allow the merger to go ahead. With this amendment the government would seriously limit the jurisdiction of the Competition Authority which is, after all, the guardian of competition and which serves the interests of the consumers. Index learned that this latest move of the Orbán government came as a surprise to the Competition Authority itself. But there is nothing unusual in that. This is how things go in today’s Hungary.

Hungarian Competition Authority / Photo István Fazekas, HVG

Speculation followed the announcement. What can possibly be afoot? Surely, as is usual in Orbán’s Hungary, the amendment serves a specific purpose. What large merger is in the offing which the Orbán government wants but which the Competition Authority would most likely veto? One thing is sure, concluded Index, Koszorús’s explanation of saving jobs is not the true reason; it has to be something else.

Today HVG picked the topic up and offered several possible reasons for the amendment and for the curtailment of the Authority’s competence. One is the potential nationalization and merger of the utility companies. The paper also pointed out that the merger for which the amendment was most likely designed must involve companies that belong to national competence, i.e. they are not so big that one would need the permission of the European Commission to go ahead with a merger. HVG learned from a Fidesz official in charge of economic matters that the government is currently working on the creation of “non-profit” utility companies. In the case of nationalization the government would have to determine the optimal size of these companies so they could be run on a non-profit basis with the least amount of loss.

Others speculated that this amended law would also be useful if the newly nationalized credit unions were to be sold to a single person or company. Some suggested the merger of Ringier, the Swiss media firm, and Axel Springer, the German newspaper giant. But others think that this is unlikely to be the case. When HVG turned to László Koszorús for an explanation, he sent them to the press department of Fidesz. A rather odd answer from someone who turned in the amendment as a private member proposal. So at the moment this is where we are.

Viktor Orbán’s interview in The Daily Telegraph coupled with recent domestic developments which have turned Hungary into a “laboratory” for an authoritarian nation state and state capitalism have aroused considerable interest in opposition papers.

This is the theme of Róbert Friss’s opinion piece in yesterday’s Népszabadság. He calls attention to the so-called “strategic agreements” certain companies are invited to sign with the government. These companies, foreign and domestic, really have no choice. Those who don’t get into this charmed circle don’t stand a chance of thriving financially in Orbán’s Hungary. Instead of true competitiveness an “informal struggle is developing for loyalty.” Some multinational firms, utility companies, and banks are in trouble because of their refusal to cooperate. These companies are threatened: either comply or receive more “punishment.” For example, for the time being the Bankers’ Association is resisting the pressure to “help the debtors in foreign currencies,” but Mihály Varga, minister of economics, already promised a further government squeeze in November if the CEOs of the banks don’t play ball. With his “strategic agreement” program Orbán is weaving  “a corporative net.”

Removing the threat posed by Viktor Orbán to democracy and the free market will be difficult. As the Baja by-election proved, Fidesz will make sure that one way or the other they will win the next national election. If necessary by fraud. Or, if not outright fraud, by legal maneuvering. In the next by-election in Békéscsaba on November 10 there might not be an opposition candidate at all because the local electoral commission found that the opposition’s candidate, Katalin Kovács, was ineligible because of a technical mistake committed by the Párbeszéd Magyarországért (PM), one of the parties supporting her.

Viktor Orbán’s answer to the Tavares report

As soon as the vote in the European Parliament went against the Hungarian government, Viktor Orbán announced that a resolution will be introduced for the Hungarian parliament to adopt that will condemn the Tavares report.

And indeed, by this afternoon the proposed text of the resolution was already on László Kövér’s desk. The bill is signed by three Fidesz members of parliament: Antal Rogán, the leader of the Fidesz caucus, Gergely Gulyás, one of his deputies and the alleged constitutional expert of the party, and Máté Kocsis, mayor of District VIII and a very active young member of parliament.

This afternoon I heard an interview with Gergely Gulyás, in the course of which he was asked whether the idea for the resolution came from Viktor Orbán. Gulyás, who is one of the few Fidesz politicians for whom lying doesn’t come easily, paused. It was a very long pause. Eventually he found the right words: the prime minister can certainly identify with it.

What we must keep in mind is that the resolution comes from Fidesz the party and, as you will see, is at  least in part addressed to the government. So, strictly speaking, Viktor Orbán, the party chief, is asking Viktor Orbán, the prime minister, to do certain things.

Decree of Parliament on the equal treatment due to Hungary

1. We Hungarians entered into the family of European nations by establishing a state and adopting Christianity.

We Hungarians often stood up for European values. There were times when we defended these values with our blood against attacks from outside. In 1956 we armed ourselves against the communist dictatorship. In 1989 we contributed to unifying Europe with the demolition of the iron curtain.

We Hungarians entered into the European Union of our own free will.

We did that in the hope that we would join a community based on law, justice, and freedom.

We Hungarians  do not want a Europe where freedom is limited and not widened. We do not want a Europe where the larger ones abuse their power, where national sovereignty is violated, and where the smaller have to honor the larger. 

We have had enough of dictatorship after 40 years behind the iron curtain.

We Hungarians have always respected the desire of European Union institutions for dialogue, and we have always been ready for reasonable compromises. 

Therefore, we rightly expect the respect and equal treatment due to Hungary from the European Union’s institutions.

We expect the European Union to respect the rights that we acquired after our accession just as it would respect those of any other country. 

The Parliament of Hungary is surprised that the European Parliament passed a decree that it had no right to pass, that exceeded its jurisdiction. The European Parliament made demands, introduced new procedures, and created institutions that violate Hungary’s sovereignty as guaranteed in the fundamental treaty. 

With this decision the European Parliament went against basic European values and led the Union on a dangerous path.

The Hungarian Parliament is further worried by the undue influence of business interests that underlie this abuse of power.

Hungary is reducing the cost of energy paid by families. This may hurt the interests of many European companies that for years have had windfall profits from their monopoly in Hungary. It is unacceptable that the European Union tries to influence our homeland to further the interests of these companies.

The Hungarian Parliament believes that Europe is in danger if the interests of multinationals are realized at the expense of the rules laid down in the fundamental treaty.

Today we adopt a resolution to defend Hungary’s sovereignty and the equality of Hungarians in the European Union.

We call on the Hungarian government not to give in to the pressure of the European Union, not to let the nation’s rights guaranteed in the fundamental treaty be violated, and to continue the policies that make the lives of the Hungarian people easier.

2. This decree of Parliament will enter into force the day after its publication.”

The embellished historical commonplaces that introduce this resolution are to be expected. Hungarians always drag them out when they want to prove their European roots and vaunt their accomplishments in defending Europe from the eastern peril.

What is much more interesting is the government’s attempt to establish a connection between the Orbán government’s lowering of energy prices and the Tavares report which, after all, is about the Hungarian government’s transgression of democratic norms and not about economics. This alleged connection is ludicrous in and of itself, but if we consider that Rui Tavares has been working on this report for at least one and a half years and the Orbán government came up with the political masterstroke of lowering energy prices only a couple of months ago, it should be clear to everybody that there is absolutely no link between the two.

The attempt to cast business interests as a motivating force behind the Tavares report and its acceptance is more than tenuous. Support for it came largely from the left–the socialists, greens, and liberals who are not exactly known for their support of big business. The right- and right-of-center parties are by and large more pro-business. And a majority of their representatives stood by Viktor Orbán.

In his speech in parliament today Orbán again attacked the multinationals and the banks, but some Hungarians, it seems, want more than bellicose talk. Here are the first signs.

Today the verdict was handed down in a case that has been been in and out of court for two and a half years.  The plaintiff took out a foreign currency loan which he now finds impossible to pay back due to the weakening of the Hungarian forint. He claimed that he shouldn’t have to pay the loan back because the bank did not mention the bid-ask spread in the contract. Two lower courts decided in favor of the plaintiff. The case then moved up to the highest court, the Kúria. For a number of days demonstrators have stood in front of the building, waiting in a rather ugly mood. The verdict finally came: OTP, Hungary’s largest bank, is not liable. The plaintiff will have to pay his loan back.

Scuffle in front of Viktor Orbán’s house – Népszabadság, Photo Árpád Kurucz

The crowd outside was outraged at the verdict. One would have thought that the crowd would go OTP headquarters to vent their anger. But no, they headed toward Viktor Orbán’s private residence in Buda. One could see gallows and red-and-white striped flags (the favorite symbol of the Hungarian extreme right), interspersed with the Hungarian tricolor.

So, if Orbán thinks that by whipping up anti-business sentiment he will gain great political advantage, he might be mistaken. These dissatisfied people, it seems, blame him for being unable to “solve their problems.” After all, he promised that he would take care of those hundreds of thousands of people who lost their homes as a result of the collapse of the Hungarian forint over the last few years.

As for Viktor Orbán’s speech in parliament, he didn’t add much to the content of the proposed resolution, except for getting close to calling those Hungarian MEPs who voted for the Tavares report traitors. However, Attila Mesterházy in a forceful speech condemned the Orbán government, the prime minister’s “business interests,” and his “majoritarian rule.”

The Fidesz back benchers are the noisiest ones on the right and unfortunately they are also ignorant. For example, when Mesterházy reminded Viktor Orbán that when he was in opposition he went so far as to ask the European People’s Party to use its influence in the European Union to stop any payment to Hungary, they tried to drown out Mesterházy. I’m sure most of them thought that this was a lie. It was, however, absolutely true. Orbán rarely if ever thought about collateral damage to the country as a whole in his relentless attacks on the socialist-liberal government.

In addition, Attila Mesterházy and Gábor Harangozó on behalf of MSZP turned in amendments to the proposed resolution. Since there is no chance of Fidesz ever accepting any amendment coming from the opposition, by now parties on the left write these amendments in jest. It is an amusing piece that is worth reading.

A severe blow to the Orbán government: The Tavares report is accepted by the LIBE Commission

After less than a day of very hard work getting everything installed and tweaked on my new computer I’m up and running with only minor temporary inconveniences. So, it is time to return to my daily routine of  monitoring the Hungarian media. Today I’ll concentrate on the Tavares report that was prepared for a vote in the European Parliamentary Committee of  Civil Liberties, Justice and Home Affairs (LIBE).

You may recall that I left off with the approximately 500 amendments to the draft report, of which about 200 were submitted by Fidesz MEPs and a Slovak and a Romanian member of parliament of Hungarian nationality. The vote was scheduled for June 19.

Given the enormous number of amendments, Hungarian newspapers predicted that the session would be very long, taken up with debating each of the submitted amendments, and they seemed to be surprised that after only two or three hours it was all over. They also emphasized that the committee was highly divided on the issue and so the vote one way or the other would be very close. That prediction also turned out to be erroneous. Of the 58 people present (the committee has 60 members) 31 voted for the report, 19 against it, and 8 abstained. I wouldn’t call that exactly close. In fact, observers in Brussels were somewhat surprised at the outcome. They expected a much closer vote, considering that half of the members come from either the European People’s Party (EPP) or the group of conservatives and reformers.

Kinga Gál (Fidesz), one of the deputy chairmen of LIBE, immediately announced that it was a lie that some EPP members voted for the Tavares report, adding that a few of them abstained. But the numbers don’t add up. Someone from that group had to endorse the report. After all, there were 29 right-of-center MEPs present. But even Fidesz MEPs had to admit that, in spite of very heavy lobbying, they failed to alter the text of the original proposal in any significant way. Most of the Fidesz amendments were thrown out.

One substantive suggestion came from the chairman of LIBE, Juan Fernando López, who proposed some additional text. He suggested that a serious investigation of the new Hungarian election laws be undertaken and that the Office of Human Rights actually monitor the forthcoming election. Quite a blow for a member country of the European Union. A first.

It seems that some Hungarian MEPs felt compelled to make a scene. I guess nobody who knows anything about Krisztina Morvai (Jobbik) will be terribly surprised to learn that she managed to wreak havoc in the committee meeting. Morvai is not a member of LIBE, she was there only as a spectator. Just before Chairman López called for a final vote, she interrupted the proceedings. She  denied the legality of the procedures followed by the committee and held up a poster reading: “The European Union is a dictatorship.” López warned her that “the European Parliament is not a circus.”

The toothless lion of the Chain Bridge, Budapest commons.wikipedia.org

As it turned out, some members of the Alliance of Liberals and Democrats were convinced that Morvai was a Fidesz MEP; after all, her arguments in defense of the Hungarian government’s position were identical to those articulated by Enikő Győri, undersecretary in charge of European Union Affairs, except Győri used milder language. She called the report “deeply biased” and claimed that even the report’s facts don’t stand up to scrutiny. The committee discarded corrections of factual errors that EPP members submitted to the committee. Therefore, the Hungarian government still cannot subscribe to the report’s conclusions. She contended that the report is a political document that was heavily influenced by party politics. After all, she claimed, European parliamentary elections will be held next year and therefore it was predictable that the split in the committee was entirely along party lines. As we have seen, Győri is not exactly reliable on this point. Her verdict was that “the committee clearly overstepped its authority.”

The Fidesz MEPs went even further. They announced point blank that the Tavares report’s acceptance by the LIBE commission has “neither legal, nor budgetary, nor economic consequences.” The same is true of the possible adoption of the report by the full plenary session of the European Parliament sometime in July. One could ask: if the European Parliament is such a toothless lion, what on earth is the Fidesz delegation doing in Brussels? Why do they even bother to participate in the useless activities of the European Parliament?

As for the Tavares report, it is no more than “a party dictate of the European Left.” As far as the Fidesz delegation is concerned, this document is simply unacceptable. In any case, it is the end of the excessive deficit procedure that really matters and that was approved by Ecofin today. The delegation also expressed its optimism concerning a satisfactory resolution to the Hungarian government’s debate surrounding the fourth amendment to the new Hungarian constitution which, they are certain, will end in Hungary’s favor. I find this last prediction just a bit premature considering the very strong condemnation of the latest constitutional amendments by the Venice Commission, which is comprised of internationally renowned constitutional lawyers.

There is no question that the adoption of the Tavares report is a severe blow to the Hungarian government. The answers referencing bias, party politics, and the European Parliamentary election next year sound hollow, especially if one takes the trouble to read the Tavares report or the opinions of the Venice Commission.

Hungarian nationals’ attacks on the LIBE draft report of Rui Tavares

Let’s hope that I will be able to tear you away from the historical discussion that has developed after my short note on the Hungarian situation in 1918-1919 and move on to the present.

I would like to turn to the draft report of the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (LIBE) on Hungary. It is a 30-page document that shows a thorough understanding of every aspect of Hungarian politics, relating specifically to constitutional issues, and recommends tough sanctions. But it is only a draft proposal to which amendments can be attached. The members of LIBE–fairly equally divided between the right and the left–will have to vote on the amendments one by one.

The proposed amendments were made public the other day: a total of 551 amendments taking up 134 pages. That is 134 pages of amendments to a 30-page document.  About two weeks ago I read somewhere that the Fidesz delegation itself submitted 200 amendments. The members of the Fidesz delegation were assisted by two other Hungarian members of the European People’s Party, Edit Bauer of Slovakia and Csaba Sógor of Romania. These two were almost as busy as Kinga Gál (Fidesz), who submitted at least 75 amendments. Another Fidesz MEP, Lívia Járóka, an ethnic Roma, was also active. László Surján and Ildikó Gáll-Pelcz also submitted minor amendments. I find it interesting that Hungarian nationals like Bauer or Sógor who don’t live in Hungary are so heavily involved with Hungarian domestic policies. I might add that Kinga Gál was born in Cluj/Kolozsvár, Romania.

The two most active EPP members, Kinga Gál and Edit Bauer / http://www.maszol.ro

The Hungarian group was greatly aided by Frank Engel, EPP MEP from Luxembourg, who at times was just as radical in his opposition to certain recommendations as were the Hungarian defenders of the Orbán government. Jean-Pierre Audy (France EPP) was also fairly active.

On the other side (the greens, the left front, the socialists, and the liberals) few people seemed to find fault with the draft document. Their amendments were minor and often aimed at clarifying or strengthening Tavares’s arguments. If the committee follows the suggestions of the Gál-Bauer-Sógor-Engel group, however, not much would remain of the original recommendations.

Here are a few examples. Frank Engel would delete recommendation 58 of the Tavares report, which reads:

Considers that the European Council cannot remain inactive in cases where one of the Member States is faced with changes that may negatively affect the rule of law in that country and therefore the rule of law in the European Union at large, in particular when mutual trust in the legal system and judicial cooperation may be put at risk.

Edit Bauer is perhaps the most radical because she would eliminate almost all the recommendations to the Hungarian Authorities. Here is one of the key sets of recommendations (section 61) of the LIBE draft report that the Fidesz supporters find especially odious. It’s long but nonetheless worth quoting in full.

Urges the Hungarian authorities to implement the following recommendations without any further delay, with a view to fully restoring the rule of law and its key requirements on the constitutional setting, the system of checks and balances and the independence of the  judiciary, as well as strong safeguards for fundamental rights, including freedom of expression, media and religion and the right to property:

On the Fundamental Law:

–        to fully restore the supremacy of the Fundamental Law by removing from it those provisions previously declared unconstitutional by the Constitutional Court;

–        to fully apply the recommendations of the Venice Commission and, in particular, to revise the list of policy areas requiring a qualified majority in line with the recommendations of the Venice Commission and with a view to ensuring future meaningful  elections;

–        to secure a lively parliamentary system which also respects opposition forces by allowing a reasonable time for a genuine debate between the majority and the opposition and for the participation of the wider public in the legislative procedure;

 On checks and balances:

–        to restore the right of the Constitutional Court to review all legislation without exception with a view to counterbalancing parliamentary and executive actions and ensuring, through full judicial review, that the Fundamental Law always remains the supreme law of the land;

–        to fully restore the prerogatives of the Constitutional Court as the supreme body of constitutional protection, and thus the primacy of the Fundamental Law, by removing from its text the limitations on the Constitutional Court’s power to review the constitutionality of any modifications of the Fundamental Law as well as the abolition of two decades of constitutional case-law;

 –        to restore the case-law of the Constitutional Court issued before the entry into force of the Fundamental Law, in particular in the field of fundamental rights;

–        to restore the prerogatives of the parliament in the budgetary field and thus secure the full democratic legitimacy of budgetary decisions by removing the restriction of parliamentary powers by the non-parliamentary Budget Council;

–        to provide clarifications on how the Hungarian authorities intend to remedy the premature termination of the term of office of senior officials with a view to securing the institutional independence of the data protection authority;

On the independence of the judiciary:

–        to fully restore and guarantee the independence of the judiciary by ensuring that the principles of irremovability and guaranteed term of office of judges, the rules governing the structure and composition of the governing bodies of the judiciary, as well as the safeguards on the independence of the Constitutional Court, are enshrined in the Fundamental Law;

–        to promptly and correctly implement the above-mentioned decisions of the Court of Justice of the European Union of 6 November 2012 and of the Hungarian Constitutional Court, by enabling the dismissed judges who so wish to be reinstated in their previous positions, including those presiding judges whose original executive posts are no longer vacant;

–        to establish objective selection criteria, or to mandate the National Judicial Council to establish such criteria, with a view to ensuring that the rules on the transfer of cases respect the right to a fair trial and the principle of a lawful judge;

–        to implement the remaining recommendations laid down in the Venice Commission’s opinion No CDL-AD(2012)020 on the cardinal acts on the judiciary that were amended following the adoption of Opinion CDL-AD(2012)001;

On the media and pluralism:

–        to fulfil the commitment to further discuss cooperation activities at expert level on the more long-term perspective of the freedom of the media, building on the most important remaining recommendations of the 2012 legal expertise of the Council of Europe;

–        to ensure timely and close involvement of all relevant stakeholders, including media professionals, opposition parties and civil society, in any further review of this legislation, which regulates such a fundamental aspect of the functioning of a democratic society, and in the process of implementation;

–        to observe the positive obligation arising from European Court of Human Rights jurisprudence under Article 10 ECHR to protect freedom of expression as one of the preconditions for a functioning democracy;

–        to respect, guarantee, protect and promote the fundamental right to freedom of expression and information, as well as media freedom and pluralism, and to refrain from developing or supporting mechanisms that threaten media freedom and journalistic and editorial independence;

–        to make sure that legally binding procedures and mechanisms are in place for the selection and appointment of heads of public media, management boards, media councils and regulatory bodies, in line with the principles of independence, integrity, experience and professionalism, representation of the entire political and social spectrum, legal certainty and continuity;

–        to provide legal guarantees regarding full protection of the confidentiality of sources principle and to strictly apply European Court of Human Rights-related case-law;

–        to ensure that rules relating to political information throughout the audiovisual media sector guarantee fair access to different political competitors, opinions and viewpoints, in particular on the occasion of elections and referendums, allowing citizens to form their own opinions without undue influence from one dominant opinion-forming power;

On respect for fundamental rights:

–        to take positive action to ensure that the fundamental rights of all persons, including persons belonging to minorities, are respected;

On the freedom of religion and the recognition of churches:

–        to establish clear, neutral and impartial requirements and institutional procedures for the recognition of religious organisations as churches which respect the duty of the State to remain neutral and impartial in its relations with the various religions and beliefs and to provide effective means of redress in cases of non-recognition or lack of a decision in line with the constitutional requirements set out in the above-mentioned Decision 6/2013 of the Constitutional Court;

Very often Edit Bauer, Frank Engel, Csaba Sógor, and Kinga Gál want to delete exactly the same passages from the draft report. Since I suspect that these four worked together, the repetitions are not the results of an oversight. Rather they most likely want to emphasize four times over how unacceptable these recommendations are. Engel, for example, wants to get rid of  “to restore the right of the Constitutional Court to review all legislation without exception with a view to counterbalancing parliamentary and executive actions and ensuring, through full judicial review, that the Fundamental Law always remains the supreme law of the land.” He also wants to get rid of the passage “to restore the case-law of the Constitutional Court issued before the entry into force of the Fundamental Law, in particular in the field of fundamental rights.”  Edith Bauer wants to remove the passage “to implement the remaining recommendations laid down in the Venice Commission’s opinion … on the cardinal acts on the judiciary that were amended following the adoption of Opinion CDL-AD(2012)001.”

These amendments will be discussed in the LIBE Committee on Thursday, after which Tavares will try to come up with a compromise text. Then, most likely on the 19th, the members of the committee will vote. The revised report will come before the plenary session of the full European Parliament, probably in July.