Infringement proceedings galore, but what good will they do?

Lawyers working on infringement proceedings launched by the European Commission against the Hungarian government must have been especially busy in the past few months. Yesterday the Orbán government received notices of three such infringement proceedings. Although infringement proceedings against Hungary are numerous, I have the feeling that three notices in one day is a record of sorts. One is a “letter of formal notice” and two are “reasoned opinions.”

Notices that bear the odd name “reasoned opinions” represent the second stage in the infringement proceedings. In these cases the European Commission had already sent a”letter of formal notice” concerning a piece of legislation but found the corresponding answers to their objections unsatisfactory. If the answers to the reasoned opinion are still unsatisfactory, the case will go to the European Court of Justice.

I will start with the odd man out here: the reasoned opinion concerning restrictions on loss-making enterprises in the retail sector. You may recall that recent Hungarian law prohibits supermarkets to continue operation if they operate at a loss for two consecutive years. Not surprisingly, the Commission considers such a measure unacceptable because it runs counter to “the freedom of establishment and the principle of non-discrimination” (Article 49 TFEU) and “the free movement of capital” (Article 63 TFEU). Hungary has two months to respond.

Although this is a horrendous piece of legislation and one very much hopes that it will be abolished one way or the other, it is taking back stage to the two other infringement proceedings. The first, another reasoned opinion, concerns the Higher Education Law, which as amended on April 4, 2017 in practical terms makes the continued existence of Central European University (CEU), founded by George Soros, impossible. The other infringement proceeding, this one a letter of formal notice, addresses the law, adopted on June 13, dealing with foreign-funded NGOs.

The European Union is often accused of dilatoriness, but this time such criticism cannot be leveled against “the bureaucrats of Brussels,” as Viktor Orbán likes to call the officials and politicians of the European Union. They acted quite promptly. In the case of the Higher Education law, the note the Orbán government received is a reasoned opinion and the Hungarian government has only one month to respond instead of the customary three. As for the foreign-funded NGO case, it took the EC only one month to send out a letter of formal notice. Again, the Hungarian government has only one month to respond. Zoltán Kovács, who is in charge of foreign communications, has already complained bitterly about the unfair treatment Hungary received in these cases because of the very short time limit given.

So, let’s see what the EC’s objections are to the amendment of the Higher Education Law. In the opinion of the European Union, “it is incompatible with the freedom for higher education institutions to provide services and establish themselves anywhere in the European Union.” In addition, it “runs counter to the right of academic freedom, the right to education and the freedom to conduct a business as proved by the Charter of Fundamental Rights of the European Union and the Union’s legal obligations under international trade law.”

The law on foreign-funded NGOs introduces new obligations for certain categories of NGOs, for example, to register and label themselves as “organizations supported from abroad.” Again, in this case the European Commission decided that this law doesn’t comply with EU law. (1) It interferes with the right to freedom of association. It could prevent NGOs from raising funds and would therefore restrict their ability to do their work. (2) The law introduces unjustified and disproportionate restrictions to the free movement of capital. (3) It raises concerns as regards the respect of the right to protection of private life and personal data. In plain language, the exact amounts of transactions and detailed information about donors would have to be reported to the Hungarian authorities, which in turn would make the data public.

Anyone who thought that the Orbán government would be terribly impressed by the legal arguments outlined above would be wrong. Zoltán Kovács told Politico that “we, of course, maintain our position.” If necessary, the government will go to court. Politico also got in touch with Márta Pardavi, co-chair of the Hungarian Helsinki Committee, who correctly pointed out that “infringement procedures alone are inadequate to redress the combined impact of retrogressive reforms that have taken place since 2010.” The European Parliament would need to vote on an appropriately damaging report which, if passed by two-thirds of the European Parliament, could trigger Article 7(1), which would result in the withdrawal of Hungary’s voting rights.

The Hungarian government’s response to these latest infringement proceedings is defiance. Pál Völner, undersecretary in the ministry of justice, said that “the government is ready to face infringement proceedings with relation to the NGO Act. These are organizations that want to weaken Hungary’s defense capabilities in the fight against illegal immigration.” The charge that organizations like Transparency International or the Hungarian Helsinki Commission want to weaken Hungary’s defense capabilities is of course nonsense. The Hungarian government wants to curtail their activities because it considers them opponents of the Orbán government’s unlawful modus operandi.

Márta Parvadi is right: the Orbán government cares not one whit about all these threats of legal proceedings under the aegis of the European Court of Justice. Viktor Orbán doesn’t mind paying fines, even heavy fines. For political gain he has no compunctions about spending billions of forints of the Hungarian taxpayers’ money. That’s why the only hope of the anti-Orbán forces is that the European Parliament report that may trigger Article 7(1) will be prepared soon. Well, there is good news on this front. On July 11 Judith Sargentini of the Greens/EFA was appointed rapporteur for the European Parliament’s investigation into whether Hungary is in breach of the values of the European Union. But more about that tomorrow.

July 14, 2017
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Guest

I still haven’t decided yet whether those Fideszniks have an ideology behind all this (A kind of Fascism of course) or whether it’s just their Mafia family concept (We’re only in it for the money!) – really difficult …

On the other hand it’s a good sign that the EU is getting more active!

Member

Probably the Nazis had more “ideology”.
Maybe few KDNP members have some kind of yersterdays values, maybe Kövér, too.
The bulk of Fidesz members have to believe what the leader currently chooses to be ideology.

The younger Fidesz generation, who actually have the say, like
János Lázár, Habony Árpád, Zoltán Kovacs, Antal Rogán, Szilard Németh…
I don’t believe they have any other ideology, than to serve the leader and to enrich themselves (stealing).

The big dictator himself clearly has the Mafia family ideology with him as godfather.

Member

Fidesz has never had any kind of consistent ideology beyond its leaders’ personal enrichment.

That being said, Hungarian politicians of all stripes have trouble with the concept of ideology. The MSZP calls itself left-wing, but privatized everything except grandma’s Herendi while in government. The LMP calls itself green, but environmental activism seems like nothing more than an election platform for them.

I once took part in a political movement. At one meeting, I asked the senior members to explain themselves in ideological terms. The response was eye-rolling and whining. The movement still exists, but ranks very poorly in opinion polls.

The only ideologically clear party is Jobbik.

dos929
Guest

Whilst the various EU committees and leaders dragging their feet in coming to ENFORCABLE sanctions against the regime, Orban and his faithful servants are anchoring themselves into more and more power, so much so that not the EU and not one else can convince the regime to change their tunes. And of course, no one can turn back the time, and no one can compensate the country and the Hungarian people for those 7 lost years for development and the advancing towards western democracy.

It is a great pity that the weekly newspaper ES cannot be read in English, as every word in it speaks louder than all the weak actions of the EU. Were the EU leaders able to read just one edition of the ES in its entirety, then perhaps they would REALLY realise the hopelessness the country has fallen into under the FIDESZ rule, and perhaps they would act more forcibly. Many afraid that whatever and whenever the EU will wake up and act against the Orban regime, it will be far too late for the majority of Hungarians…

exTor
Guest

Not sure why Viktor Orbán’s regime targeted only supermarkets that were profitless for more than 2 years, as opposed to any other enterprises that were similarly profitless. Maybe the government felt that such enterprises were more of a financial burden than the government could bear.

I used to occasionally go to the Renaissance Café [east-end Toronto] to see poetry events and the like. The owner [Randal Clark] told me about his ongoing fight with Revenue Canada, which wanted to disallow certain deductions because the café operated at a continuous loss for years.

Randal eventually had to close the Renaissance Café (where I myself featured a couple of times as a poet) because, as it turns out, there is no real money to be made catering to the arts. The old/new infringement.

MAGYARKOZÓ

Member

Does anyone know the rationale behind the supermarket law?

Jean P.
Guest

I can think of two possible explanations why a multinational company operates at a loss for years. Firstly the loss may not be real. It is easy to make the books show a loss in order to evade taxes. The rationale for the law may be to prevent tax evasion by multinationals. Secondly the loss may be real because the company sells goods at too low prices in order to kill competition. The rationale for the law may be to prevent competition from multinationals.

P.s. I am a layman on economy.

Guest

I think it’s just another try at Aldi, Interspar, Tesco etc which have been known to be in the red some time because of the fierce competition – Fidesz is always looking out to find some rule to help their CBA owners …
First it was the ridiculous idea of Sunday closing, then some rule re the number of people you need, now someone came up with this.
The logic of it doesn’t really matter – it just can’t be too obvious because of the EU rules.
The RTL-law was similarly designed – twist the numbers in such a way that only your real target(s) are touched, without making it too obvious.
And of course the CEU law is another example, like those “selection processes” where always the same (Fidesz owned) companies win.
Fair competition cannot exist in the mind of the mafia …

wrfree
Guest

Re: ‘Fair competition cannot exist in the mind the mafia’

Perhaps the Aldi’s etc have had enough? They’ve come here recently with low prices and with good quality. Their store here is packed.

Observer
Guest

Yes, the law is to weaken, crush the CBA’s competitors. Don’t forget there were other measures against them: the ban on opening large space stores, the shelf tax, the advertising tax, the Sunday closure…. The mafia state in action.

ambator
Member

Spokesman Szabó already declared in a television interview two days ago that Sargentini is not to be taken seriously, because she is an enemy of Hungary.

Guest

Of course, anyone who is not pro-Fidesz must be anti-Hungarian!
It happens evrywhere …

Ferenc
Guest

Sargentini is a member of the Greens/EFA fraction, and is almost sure on the (in)famous Open Societies ‘list of friendly European MP’s’. So according to OV&Co she must be a ‘by Soros payed agent’ and therefore an enemy of them.
For OV&Co’s interest in that list and their conclusions out of it, I can only think “Evil doers are evil dreaders – Ki mint él, úgy ítél”.
So looking out for the moment when somebody uncovers OV&Co’s lists with ‘friendly and unfriendly’ persons, and really to when some of the related financial transactions will be revealed…

Bowen
Guest

Not living in Budapest any more, I’d almost forgotten that the FINA event (the most expensive sports project in Hungarian history) started last night. There has been no coverage of it at all in the press here.

A quick look at the main news stories about Hungary on Google News shows that most press coverage is about infringement procedures from Brussels and anti-semitism.

wrfree
Guest
Putin must be heaving a sigh of relief. Previously his government had lot on their hands as they kept tabs on their occupied territories. And Magyarorszag and others in the same place certainly couldn’t be blamed for being say ‘fidgety’ under the circumstances. But today as those countries were dumped (Russia ironically got ‘free too) all the tables look turned. The EU is now a sort of kindergarten sandbox where the judicial sands are thrown as it is the one kept up all night dealing with the totality of Magyar headaches. It is the EU now having to involve itself more deeply with the intransigent country. Strange proceedings as that was one who wanted to be a member in that august democratic European Union who not only would ‘take away’ but contribute to the solidarity of the continent. Looks the EU has gotten the shaft on both counts. The EU shouldn’t get bogged down too much with the ‘problem child’ for the apparent delays, obfuscation and intransigence habitually wastes its time by taking away time deliberating on other issues. The EU should worry that the usual 80/20 rule doesn’t become 99/1. … 99 percent of its problems results from 1… Read more »
aida
Guest

I look forward to Eva’s next instalment which I am sure will continue to help us understand the problems with Hungary.

The removal of the Orban regime will be unlikely to be achieved by EU action alone. The EU and its institutions are not set up to procure regime change. They move gradually and proportionately and seek agreement. We are impatient that it takes so long for any action and even then the action has limited prospect of success. On the other side you are dealing with an opponent who has nothing to lose. What does he care if the country loses. He and his oligarchs do not.

Any prospect of change must involve the local population being on side. I do not advocate violence because its victims as always are the innocent. Hungarians know perfectly well what is happening. During the years of successive communist regimes we who lived there knew what was happening without being able to rely on free and independent media. How do you get rid of a politician you do not want? Do not vote for him. Simple.

Ok, I know it is not quite so simple, but it is a good start.

Ferenc
Guest

If the next option is something like a boycott, in general the population is the first one to really feel it. But then it is expected they come more into action against those really responsible for the boycott (so not against the boycotters!).
I have been thinking myself recently, in what way the HU government (OV&Co) can be boycotted the best way, e.g.not visiting, not buying HU products, etc.
Haven’t found a good method yet, all suggestions and insights for boycott are welcome here!

B-uda
Guest

While the Russian patronage is very positive for many Hungarians now, but one day, the majority of Hungarians will reject it again.
The sooner the better.

Guest

If you’re a calvinist like many Hungarians it’s easy:
Everything is predetermined – so there’s no chance against god’s will to have Hungary turn into a fascist state …
So why fight?
Better to leave – if possible …
Always remember the Fidesz motto:
If you have nothing then you are nothing!

Member

Infringement procedures don’t bring much results.:
– they target only some laws and not all the other visciousnesses
– sometimes the laws are modified a bit to satisfy the EU, but the mods don’t change the vicious impact (Media law)
– when the infringement procedures come to an end, the vicious effect already took place (sending judges to pension, who never returned after the procedure was through)

The EU cannot start infringement procedures
– against Péter Polt (Orbáns’ mate) being chief prosecutor
– against János Áder (Orbáns’ mate) being president and signing any vicious law
– against buying media and letting starve independend media
– against corruption
– and, and and…

I am looking forward to Evas next post. I was worrying already because I haven’t heard anything anymore about the Article7 thing.

Ex_Hu_Can
Guest
Hi, I am a Canadian businessman of Hungarian origin. I ran to Hungary after the “system change” to help the revival of the economy without getting into politics. For over a decade it wasn’t a smooth sailing but I tried to coop with the “elements”. I functioned under four different regimes and I can say from experience that “egyik sem külömb a deákné vásznánál”. After many negative experiences with unscrupulous “businessmen” I finally gave up and moved “home” in 2002. I had enough. My dreams dissipated in the daily struggles and for the last fifteen years I am a silent observer only, enjoying my annual vacations there. The loss law can be better understood in the light of my personal experience which is one of the above mentioned struggles. Back at the beginning of the free market economy my friend and I got involved with a German manufacturing company and established a joint venture for the purpose of selling their products in the first phase and later to transfer part of the production to Hungary. From the very beginning they inflated their invoiced prices claiming that their taxation in Germany was better than in Hungary. And that was true with… Read more »
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