Euro-Atlantic assault on the Hungarian government’s undemocratic ways, Part I

We often speak of the Hungarian financial negotiations as if the Orbán government’s sole negotiating partner was the International Monetary Fund. Even Viktor Orbán in his Friday radio interview talked only about the IMF. The IMF is “our bank,” he said, and therefore, in his opinion, it is obliged to give Hungary a loan without any preconditions.We need not parse that bizarre financial logic. Moving on, perhaps he doesn’t want to face the fact that beside the IMF there is a more formidable negotiating partner: the European Union. It is more formidable because the EU can make political demands on Viktor Orbán’s government while the IMF can require only financial guarantees. Yesterday, the abrupt suspension of the negotiations was at the insistence of Olli Rehn, European Commissioner for Economic and Financial Affairs. And the reason for breaking off the negotiations was political: interference with the independence of the Hungarian National Bank.

Practically all analysts predict that the tougher negotiating partner will be the European Union. A taste of what may await Tamás Fellegi and his two fellow Hungarian negotiators is the letter and an attached annex that Tibor Navracsics, justice minister and deputy prime minister, received from Viviane Reding, EU commissioner for Justice, Fundamental Rights and Citizenship.


Viviane Reding

The letter was written on December 12 and Reding demanded an answer by December 16. In the letter Reding reminded Navracsics that at the beginning of the year the European Commission conducted a review of the new Hungarian constitution to check whether it is consistent with Union laws, in particular with the Charter of Fundamental Rights. The cardinal laws that have been passed since “raise serious concerns from an EU law perspective.” In closing, Reding wrote: “I would also ask you to ensure, in the interest of legal certainty, that no measure is implemented until doubts about their compliance with EU law have been removed.”

In the lengthy attachment Reding asked Navracsics to provide answers to the issues raised because the new constitution will come into force on January 1, 2012.

Reding is particularly concerned with four issues: (1) retirement age for judges, (2) president of the National Judicial Office, (3) transformation of the Hungarian Supreme Court into Curia, and (4) the Data Protection Supervisor.

1. Retirement age for judges. Reding reminds Navracsics that the retirement age in Hungary is 62, which will be raised to 65 between 2014 and 2022. Moreover, retirement is not compulsory at the age of 62. It simply means that one is eligible to draw a pension after the age of 62. In the case of the judges, however, they will have to retire whether they want to or not. But “according to Directive 2000/78/EC, discrimination on grounds of age is generally prohibited, but can be objectively justified by a legitimate aim, if the means of achieving that aim are appropriate and necessary.” Reding would like to receive information about the justification for the lowering of the retirement age for judges. First and foremost, “what is the objective pursued by lowering the mandatory retirement age of judges” especially since it will be raised again from 2014 on? “For which reason has the general retirement age been made mandatory for judges whilst it is not mandatory for other categories of workers?” She further asked “for which reason has the mandatory retirement age of 70 years not been lowered for other similar categories of public servants (e.g. public notaries, university professors) and for civil servants in general?”

2. President of the new National Judicial Office. Viviane Reding outlines the structure of appointing judges after January 1, 2012. “The Commission understands that the President of the new National Judicial Office will have sole competence as regards operational administrative management of the court system, including the power to appoint all judges. The National Council of Judges appears to be a consultative body to the President of the National Judicial Office. It appears therefore that there is a concentration of power in the person of the President of the National Judicial Office.” Reding raises the following question: (1) What are the objectives of the reorganisation of the judiciary and what precisely is the role of (i) the President of the new National Judicial Office, (ii) the National Judicial Office itself and (iii) the National Council of judges? (2) What are the guarantees provided for ensuring the independent administration of the courts? and (3) Which authority has a decisive influence on the appointment and promotion of judges and on disciplinary measures against them, and what is the decision making process?

3. The transformation of the Hungarian Supreme Court into Curia.  The European Commission realizes that the current mandate of the President of the Hungarian Supreme Court will expire on December 31, 2011, before the end of his regular term. Reding would like to receive the following information: “(1) What is the competence of the Curia and the power of its President in comparison to the existing Supreme Court? (2) Why will the mandate of the Chair of the current Hungarian Supreme Court terminate before the end of the regular term? and (3) Given the importance of an independent judiciary in upholding rights enjoyed under EU law, how is it ensured that the ending of the mandate before the end of the regular term does not effectively put in question of the independence of the judiciary?”

4. The Date Protection Supervisor. In Hungary they call him ombudsman. The current one, András Joóri, was appointed to the post in 2008 for a six-year term but his position is being terminated because a new office will be established as of January 1, 2012, the National Agency for Data Protection and Freedom of Information. The head of this new office will be nominated by the prime minister and appointed by the president for a period of nine years. “His assignment shall end only if certain conditions are fulfilled.” However, “the current EU data protection legislation in force, Directive 95/46/EC, and the Charter of Fundamental Rights of the European Union require that the data protection supervisory authorities in the Member States act in complete independence.” Therefore the Commission would like to receive the following information: (1) Why was it decided to replace the current supervisory authority with a new one? (2) What are the reasons for not providing any interim measures until the term of the current data protection supervisor is due to end in 2014? (3) How is it ensured that early ending of the Data Protection Commissioner’s Office does not put in question the independence of the data protection authority as provided in EU law? The Commission would like to receive information on the scope and the meaning of the following conditions: (a) Failure to meet the conditions necessary for the appointment of the supervisory authority; (b) Determination of incompatibility of the supervisory authority; (c) Discharge; and (4) Disqualification from holding office.

* * *

Most people even vaguely familiar with the Orbán government’s actions in the last eighteen months or so know the answers to practically all the questions Commissioner Reding is posing here. I have the feeling that Viviane Reding herself knows the answers only too well. The question is what is she going to do about the current situation? Is the European Commission willing to put pressure on the Hungarian government via the financial negotiations for a much needed IMF-EU loan? Apparently, Fellegi does not have a free hand to negotiate about “organizational” matters. But naturally Orbán may change his mind if it is the question of his own survival.

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Eva: Most people even vaguely familiar with the Orbán government’s actions in the last eighteen months or so know the answers to practically all the questions Commissioner Reding is posing here.
Of course she is posing. But Tibor Navracsics needs to answer these questions. And when he does she will have another stone for her potential court case or case in general against Hungary.


“The letter was written on December 12 and Reding demanded an answer by December 16. ” “I would also ask you to ensure, in the interest of legal certainty, that no measure is implemented until doubts about their compliance with EU law have been removed.”
Today is the 17th. DId they receive their answers? Are there any indications what will happen if they forge ahead and implement all the changes regardless of what it was requested, prior to “doubts about their compliance with EU law “?


The 16th was a Friday, so Monday is the key date, rather than today.
Not that I think that will make any difference!


Slightly OT:
An – you were right about the exchanges and the weekend/Christmas – the Forint is absolutely flatlining at 304 to the Euro today!
So it looks like we’ve got another day to dump all our Forint and get into Euros before the proverbial hits the fan…


Paul, it’s really hard to tell how and when forex markets react. Knowing OV I am absolutely sure he will navigate the country into a situation when the forint will loose considerable value, but timing that is very difficult.


“willing to put pressure on the Hungarian government via the financial negotiations for a much needed IMF-EU loan”
So what is at her disposal? Her title sounds menacing but does she have a red phone to the bankers? By the way what’s the relationship between the IMF and EU? Why would the lenders, the IMF is representing, care, especially if they are not from the EU or private organizations? Don’t get me wrong I wish this letter would have consequences, but I have the feeling it will not. Also I think these question can be and will “answered” with the standard Orban propaganda BS. The Orban goverment has very thick skin. If you ask for instance “what is the objective pursued by lowering the mandatory retirement age of judges” – they will probably say “to put young ones into the chairs sooner”. The Reding will say what … ??
Or do I underestimate the forces behind this letter?


@Mutt Damon:
Well, as Eva said, Orban has to include the EU in the negotiations with the IMF, so I guess that means Hungary cannot get a deal from the IMF without an EU approval… and they may set conditions to such approval.
Navracsics, by the way, already answered the letter:
As for the judges, for example, he basically says that forcing the judges into early retirement is not discriminatory because they can still work in other capacity (just not as judges).


I must admit I don’t understand the IMF-EU connection either. Does the EU also lend money as part of the deal? Can an EU country get an IMF loan without EU involvement?


Completely OT:
Compare and contrast. A British MP has just been sacked from his job as a Commons aide for simply sitting next to a friend dressed in a Nazi uniform at a stag do! (And this is a Tory!)
In Hungary, they can write/broadcast anti-Semetic vileness and they can actually attend parliamentary sessions in neo-Nazi uniforms. And there is no censure at all.
On much the same topic, take a look at this:
To misquote Basil Fawlty – “whatever you do, don’t mention the Jews!”.


@An “not discriminatory because they can still work in other capacity”
I read the letter. This “talk to the hand” style is so assaulting. Right. Ultimately they can work in the public works labor camps, 100 miles from home.
Ok, the government replied. Johnny and Joseph are proud happy campers. Now, what?
In 2008 the EU, the IMF and the World Bank were behind the loan guarantee. Is the EU willing to put pressure on the Hungarian government regarding civil liberties? Pressure about decisions related to finances, like the independence of the national bank, are no brainers, but the rest? I doubt it. The lenders behind these organizations, they just want their money back.

Odin's Lost Eye
Yesterday I asked a few questions some of which involved the IMF. I have a nasty feeling that the Viktator and his little chums have probably hedged their position against their own currency. This will have been done in terms of Hedge Funds, on the futures commodity markets and on the future currency markets. The further the Forint falls the more money they will make. I also asked about Iran. Iran is very oil rich but is desperate for refined product. ‘POL’ as it is sometime called -Petrol Oil and Lubricants-. I have a feeling that this problem and the problems getting machine tools for their nuclear ambitions could be being taken care of by Hungary. The present troubles the Hungarian Government is having with the EU. This is the beginning of brinkmanship on a grand scale. As an illustration if this if you remember the government survey which was bar coded and sent to everyone in Hungary. The Hungarian data protection agency ordered the results to be destroyed. Was it? You guess and copies are certainly in the hands of FIDESZ. The problems with the EU will rumble on for years! The answers that Tibor Navracsics gives will ramble,… Read more »

Odin: I am not such a pessimist that to believe that Orban would of bet against the forint and that Hungary’s only hope id Iran. I do not like Orban but he is is not such sinister. This would reach way beyond what would e acceptable by the EU (members), USA (Nato members), Hungarian law. He would loose everything.
I agree with your Navracsics comment. It must be very hard to take Hungary seriously any longer. It is like witnessing a kindergarten revolt. Poor Hofi (Hungarian humorist) if he would be alive…… “Aze? Aze!”


Two days ago, when the interview with Melia came out, I asked something but it kind of get lost as there were so much happening on that day, so I repost the question.
(Melia interview:Thomas Melia is worth reading:
Would anyone know who does Melia refers to with this:
“a magyar sajtóban volt spekuláció arról, hogy vajon az amerikai kormányban mindenki ugyanazt a véleményt képviseli-e, és szeretném aláhúzni, hogy ez így van. ”
“there was speculation in the Hungarian press about whether in the U.S. government everyone share the same opinion [regarding Hungary]. I would like to underline that this is so.”
Is he referring to Kounalakis?


OT? Not sure. And opinions regarding the KURIER vary. But they sum up Austrian financiers’ attitudes to Hungary as… “hold your nose and hold on”, coupled with “no new investment”.
VAT at 27% in January? Oh my.

Paul: I must admit I don’t understand the IMF-EU connection either. Does the EU also lend money as part of the deal? Can an EU country get an IMF loan without EU involvement? These are all combined loans, the lons share ofefred by IMF, a fraction by the EU itself. There is a kind of agreement (I don’t know whether formal or informal) that no EU country can get IMF help without EU involment. It was the model used in the cases of Latvia, Romania, Hungary, Greece. The negotiating teams are alos combined ones and they can only accept the deal unanimously. Éva, even the IMF can demand political concessions, at least in case of a stand-by agreement, which presumes the respective debtor country doesn’t fulfl the criteria of a precautionary agreement that includes stable fscal policy framework. As a result the IMF can demand policy action that will according to their assesment strengthen the policy framework as well. I’m really curious what will happen, bacause in this respect the situation in Hungary deteriorated very much in the last one and half year. (The new fiscal council, the idiot costitutional debt rule instead of the earler one, the castration of… Read more »
Eva S. Balogh

Gábor: “Does the EU also lend money as part of the deal?”
I recall that in 2008 out of the 20 billion euros, 6 billion came from the EU.

cheshire cat

Hi Some1
I don’t know but the government media might have raised the question of these being isolated, “not-to-be-taken-seriously” opinions within the American government. At least Melia’s reply suggests he is refusing some allegations of that sort.
But I’m only guessing.


Orban would have no compunction about harming his country by taking on both the EU and the IMF but his continuing internal power is dependent upon the support of the right-wing Hungarian financial elite, principally, but not only, Csanyi.
Hence the agreement on the currency loans with the banks this week- who was one of, if not the prime instigator behind that do you think?
He (Orban) will finally and begrudgingly give into anything that is required by the IMF and EU in order to get the finance which the country and his rich backers need to keep afloat.
In that regard, the EU’s *apparent* concerns re judicial separation, media independence etc are (unfortunately) neither here or there. It’s the financial issues, ie the central bank independence which matters at the moment.


Vaclav Havel, the great Human Activist and European passed away today.
In 2005 he made the following comment, about the politics in CEE.

I am not sure that the letter of Commissioner Reding is related to IMF/EU rescue programmes. The timing would be strange. Now that Hungary may need financial help, the Commissioner in charge of Fundamental Rights takes action and criticises the changes in the judicial system? I do not think that Commissioner Rehn would need additional information about the constitution, it is fully sufficient what he knows about the attainability of a balanced budget. My impression is that as Odin always suggests, the EU has (perhaps as a coincidence, perhaps not) eventually managed to write a comment to the institutional changes in Hungary. It has often been criticised that the EU is not doing much about the cardinal laws and the Constitution, for me this letter is a first step. What will follow may indeed be a case at the European Court of Justice. Certainly, this will have an effect only to the extent that Hungary as a state respects the ruling of a court that it is formally subject to. It is difficult for a community that is committed to the rule of law to devise a strategy towards a member state that has all of the sudden forgotten what… Read more »