Tag Archives: European Court of Justice

The Orbán government defeated in Luxembourg: Will it retaliate?

On January 25 the European Court of Justice (ECJ) ruled on a case that the Hungarian Helsinki Committee had brought to it in April 2015 on behalf of a Nigerian man seeking political asylum because of his homosexuality. In Nigeria’s 12 northern states that have adopted Shari’a law, the maximum penalty for homosexuality is death by stoning. The Hungarian authorities, on the basis of psychological tests, turned down his request. With the help of the Hungarian Helsinki Committee, he appealed to the Szeged Administrative and Labor Court, where one of the judges decided to ask the opinion of the ECJ. He apparently had doubts about Hungarian law as it applied in cases like the Nigerian asylum seeker. As it turned out, not without reason.

Now, almost two years later, the court in Luxembourg ruled that “an asylum seeker may not be subjected to a psychological test in order to determine his sexual orientation” because “the performance of such a test amounts to a disproportionate interference in the private life of the asylum seeker.” This ruling is a great victory for the Hungarian Helsinki Committee, which was an early opponent of psychological testing. In fact, the organization received a 120 million-forint grant from EU sources to put together a training manual titled Credibility Assessment in Asylum Procedures, which was published in 2013. It is a 140-page, extremely thorough guide for those who have to decide the fate of refugees or migrants. The staff of the Helsinki Committee argued that these psychological tests, especially the ones used by the Hungarian authorities, are of no help; in fact, they can easily lead to unfair assessments of individual cases. If well-trained professionals do the questioning, the veracity of the asylum seeker can be ascertained in most cases without any psychological testing, the Helsinki Committee contended. Although there were earlier ECJ rulings on similar cases, this decision is especially significant because it is applicable in all 28 member states of the European Union. Moreover, the Hungarian court cannot appeal, which makes the Nigerian refugee’s chances for asylum much stronger.

The Hungarian authorities’ decision was based on a psychologist’s report that included an exploratory examination, an examination of the applicant’s personality, and the results of three personality tests: Draw-a-Person-in-the-Rain, Rorschach, and Szondi. The Rorschach test was developed almost 100 years ago in the 1920s; Lipót Szondi’s test is not much more recent. It first appeared in 1935. According to current opinion, “when interpreted as a projective test, results [of the Rorschach test] are poorly verifiable.” There is some evidence that it is still good for detecting such conditions as schizophrenia and psychotic and/or personality disorders, but I found nothing that said the test is good at proving or disproving homosexuality. When it comes to the Szondi test, it is not widely used in modern clinical psychology “because its psychometric properties are weak.” Both the Rorschach and the Szondi tests are available online. The third test is positively amusing. The subject is asked to draw a person in the rain, on the basis of which far-fetched conclusions are drawn. These conclusions are so bizarre that I urge everybody to pay a visit to the site, which explains the significance of every aspect of this drawing, starting with the position of the person on the paper to the handle of the umbrella.

Naturally, the Hungarian Helsinki Committee is delighted with the ruling, which “is the result of the Hungarian Helsinki Committee’s decade-long struggle to put an end to the humiliating and stigmatizing psychological testing of asylum-seekers’ sexual-emotional orientation in asylum procedures.” For Viktor Orbán, on the other hand, this is yet another blow from an NGO that he perceives as part of a centrally ordered and organized attack on his political system with a view to his removal from office. In opposition circles most people express their disbelief that Viktor Orbán can seriously think that George Soros, like a puppeteer, pulls all the strings that result in his repeated humiliation. I might be mistaken, but I think that Orbán’s repeated attacks on George Soros and his activities through the NGOs is more than a campaign stratagem. I suspect it is a reaction to what he perceives as a genuine threat to his power.

This latest defeat was answered by a plethora of belligerent articles and editorials in the government media. In Magyar Idők two relevant articles and one editorial appeared on the day following the release of the ECJ’s verdict. All three emphasize that the court opted to share “the point of view of the Soros-financed Helsinki Committee.” Calling the lawyers working for these civil rights organizations “human rights fundamentalists,” one of the articles accuses them of “removing the administrative barriers which hamper the admission of migrants to the European Union.” An article titled “According to the EU the immigrants are always right” is mostly concerned about the exclusion of psychologists. It charges that “in the future lay people will decide whether those who claim to be homosexuals are really ‘different’ or not.” Misinterpreting the Helsinki Committee’s handbook, the author accuses the organization and the European Court of Justice, which agrees with it, of always believing the words of the asylum seekers, even if their stories are confused and contain contradictory statements. These opinions reflect the judgment of the Hungarian ministry of justice. Undersecretary Pál Völner considers the ECJ verdict unprofessional because the judges failed to consult “the experts on the subject,” the psychologists. They are the ones who can pass judgment on the tests the Hungarian psychologists have been administering to asylum seekers.

Magyar Idők’s editorial titled “An absurd verdict” is frightening. According to the unsigned opinion piece, as a result of this new development the “Stop Soros action plan is not only justified and urgently needed but it is presumably insufficient against the systematic undermining of traditional European societies.” It continues: “to defend against the activities of the Soros organizations and to counter migration pressure further changes in the law will presumably be necessary.” Does this mean that attacks against the “Soros network” will intensify? Unfortunately, the government media’s predictions more often than not turn out to be an announcement of government policy. There is therefore a good likelihood that the answer to the Helsinki Committee’s success in Luxembourg will be another round of attacks on them and the other civil rights groups.

January 27, 2018

European Union salvo against Viktor Orbán’s illiberal state

Yesterday an editorial appeared in Magyar Hírlap, a government-sponsored daily paper. The author reassured the paper’s readers that “yesterday nothing new happened; nothing was decided; the political, financial, legal, and communication war [between the EU and Hungary] will continue.” And in any case, next week there will be an important EU summit where “the power relations between Brusselites and the camp of those countries that defend sovereignty can shift further toward the latter.”

Admittedly, it is important for a government publication to spread optimistic messages, but the fact is that official statements belie these hopeful predictions. Viktor Orbán rarely gives “extraordinary” television interviews, but after the barrage of bad news coming from Brussels he felt it necessary to explain his version of the events.

What is the Hungarian government facing at the moment? Two different proceedings against the country are underway. The first is a triad of infringement procedures. The second, the beginning of the Article 7(1) process.

Infringement procedures are legal actions against a member country that fails to implement EU laws. There are stages to these procedures, which basically involve an exchange of legal opinions. After the second such unsatisfactory exchange the Commission sends the case to the European Court of Justice. In the event the judgment goes against the country and that country doesn’t rectify the situation, the Commission will propose that the Court impose financial penalties which, depending on the seriousness of the infringement, may be quite high, especially if the penalty is imposed for each day the country is not in compliance.

Hungary at the moment has three serious infringement cases under consideration at the European Court of Justice: the country’s refusal to accept a small quota of refugees, its modification of the laws regarding foreign-financed civic groups, and the amendments to the education law that placed Central European University in a precarious position. Its continued existence is still very much in question.

The other “drama” is being played out in the European Parliament, where a resolution was adopted earlier that calls for launching Article 7(1). It instructs the Committee of Civil Liberties, Justice and Home Affairs (LIBE) to draw up a formal resolution for a plenary vote. On December 7 there was a hearing on the issue, where Péter Szijjártó represented the Hungarian government. The adoption of a resolution calling for the initiation of Article 7(1) proceedings, which could result in the suspension of voting rights for the targeted country, is a first in the history of the European Parliament.

These are significant matters, so I wasn’t surprised that Viktor Orbán, who rarely initiates television appearances, decided to grace the newly appointed Echo TV with his presence. Of course, Orbán’s interviews are so obviously staged that one can easily pick out all the “key words” that were supplied to the anchors ahead of time. And naturally the interviewers never ask “difficult questions.” One of the messages of government communication from here on will be that none of these “attacks” on Hungary has anything to do with the Orbán government’s transgression of European laws and values. They are inflicted on Hungary either because the Orbán government’s actions have had an adverse effect on the economic interests of foreign multinational companies or because they interfere in some mysterious way with the goals of the bureaucrats in Brussels.

In this interview Orbán renewed his claim that economic interests triggered the Tavares Report of 2013, which was a sharply worded, hard hitting report on the state of democracy in Hungary. After the European Parliament accepted Rui Tavares’s report, the Hungarian government wrote a resolution of its own which was then submitted to parliament. It was a verbose, clichéd piece of writing which included a sentence that struck me as odd at the time. It claimed that the Tavares Report was an answer to Hungary’s “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.” That claim was ridiculous in 2013, if for no other reason than that the Tavares Report, which had nothing to do with economics, had been in the making for a year and a half while the Orbán government’s lowering of energy prices took place about two months before the release of the report. I really wonder whether by now Viktor Orbán actually believes this lie since he used the same kind of rationalization to explain away the report that is currently being drafted in the European Parliament.

Viktor Orbán claimed in 2013 that the very thorough analysis of the Orbán government’s transgression of democratic norms was nothing but a series of political attacks. Today he claims the same. As far as he is concerned, all disputes about democratic norms were closed before 2013. The Hungarian government has “the paper” to show that the European Commission and the Venice Commission were totally satisfied with all the changes that had been made to the media law and the constitution. It is not a lack of democracy that the Commission and the Parliament are really worried about today. EU politicians are concerned that Hungary’s stance on migration will hurt “their interests.” As if it was in the interest of the European Union to be faced with a million and a half refugees and immigrants. It is hard to fathom that anyone believes such nonsense or, for that matter, that any self-respecting politician can utter such an absurdity. And yet Orbán, with a straight face and in all seriousness, discussed the European Union’s plans to create a “continent of mixed population.” I assume I don’t have to add that George Soros and his network are behind this diabolical plan.

The key word, by the way, in this interview was sovereignty, which was kindly supplied by Orbán’s old friend Zsolt Bayer, one of the two anchors. Often, when Orbán encounters a word that is borrowed from abroad, like sovereignty (szuverenitás), used in Hungarian since 1786, he feels compelled to explain what the word actually means. This time he came up with “freedom” (szabadság) as a good equivalent. “At stake is the question of Hungarian freedom,” he claimed. The debate in the Union “touches on the question of freedom.”

With this switch from sovereignty to freedom, Orbán moved the discussion to an entirely different plane. Sovereignty means complete independence and self-government. Freedom, on the other hand, has many meanings, including “the condition of not being subject to a despotic or oppressive power,” and that can conjure up all sorts of xenophobic reactions in Hungarians. “Brussels is after us.” And indeed, some of the comments I read today in right-wing papers were revealing. One genius announced that the reason for the five-times higher living standards in Austria is Vienna’s exploitation and oppression of Hungary for five hundred years. The same can also be heard about the European Union’s plutocrats. Hungarian nationalism can easily be awakened by an appeal to “freedom,” a ploy Orbán loves to use. And it always does the trick.

December 9, 2017

Another peacock dance: Orbán’s reversal on the verdict of the European Court of Justice

Yesterday I dealt with the exchange of letters between Jean-Claude Junker and Viktor Orbán concerning Orbán’s demand for EU reimbursement of half the cost of the fence the Hungarian government erected along the Serbian-Hungarian border. The Hungarian demand raised eyebrows in Europe and elsewhere, so Hungary was again in the international news.

The other reason for the preoccupation of the international media with Hungary was the long-awaited verdict of the European Court of Justice on the legality of the EU decision on the relocation of 120,000 asylum seekers. Slovakia and Hungary claimed that the decision-making process was illegal. Two days ago, on September 6, the Union’s top court dismissed the complaints of the two countries, dealing a blow to Viktor Orbán.

Slovak Prime Minister Robert Fico immediately reacted to the verdict, saying that “we fully respect the verdict of the European Court of Justice,” adding, however, that his government’s view on the relocation plan “has not changed at all.” Viktor Orbán, on the other hand, remained silent. In his place, Péter Szijjártó, minister of foreign affairs and trade, and László Trócsányi, minister of justice, gave a joint press conference, where the foreign minister vented. He called the ruling “outrageous and irresponsible.” In his opinion, the verdict endangers the security and future of Europe and is contrary to the interest of the countries of the Union, including Hungary. “Politics raped the European law and European values,” he claimed. He announced that “the real battle begins only now,” and he promised that the Hungarian government “will use all the remedies available at its disposal” to prevent similar central decision-making for Hungary.

Trócsányi was no less belligerent when he announced that the Hungarian government will start a new legal debate. Since he liked the phrase “the real battle begins only now,” he repeated it. He didn’t go so far as to accuse his fellow judges of acting politically, but he charged that they were preoccupied with the case’s formal aspects and neglected its contextual qualities. The case was thrown out in its entirety, but Trócsányi still praised the excellent legal work of his team. The legal arguments presented to the court were outstanding, and therefore he was quite surprised by the outcome. Trócsányi also indicated that Hungary will not have to take the 1,294 migrants because the case was only about the legality of the decision-making process.

Péter Szijjártó and László Trócsányi / MTI-MTVA / Photo Szilárd Koszticsek

In brief, it looked as if the Orbán government was prepared to go against the ruling and suffer the consequences. A day later, on September 7, this impression was reinforced by János Lázár at his regular “government info” press conference where he interpreted the decision of the European Court of Justice as an opportunity for the European Commission to allow “Brussels” to meddle in Hungary’s internal affairs. “We will use every legal instrument to preserve the independence of the country.” Zoltán Balog, minister of human resources, also chimed in and, in an interview with Deutschlandfunk, repeated Szijjártó’s accusation of a politically motivated and irresponsible decision on the part of the European Court of Justice. Everybody suspected, including naturally Viktor Orbán, that Slovakia and Hungary would lose the case, and therefore the word probably came down from above some time ago about what the proper reaction to the verdict should be.

After two days of criticism of the court and its verdict, Viktor Orbán came out with an entirely different approach to the question. In his Friday morning “interview” on Magyar Rádió he said: “Hungary is a member of the European Union. The affairs of the Union, its internal power relations are settled by the Treaty, so contracts have to be respected. Consequently, one must take cognizance of the verdicts of the courts. Hungarian is a sophisticated, refined language and therefore it does matter with what kind of word we react to a verdict, especially when we are functioning in a hostile Europe. I decided to use the word “tudomásul venni” which I took over from Slovak Prime Minister Fico.” Unfortunately, I don’t know what Slovak word Fico used when talking about his reaction to the verdict. English translations of Fico’s press conference use the verb “to respect” which, unfortunately, is not the equivalent of “tudomásul venni,” which might be better translated as “to take cognizance of.” However, I’m sure that some readers of Hungarian Spectrum will provide us with the the Slovak word that Fico used as well as with the best translation of the Slovak equivalent of “tudomásul venni.” Then we will be able to see whether Orbán and Fico are talking about the same thing or not.

Orbán’s interview was long, during the course of which he said many uncomplimentary things about the European Union, but at the end he came up with some startling statements. The interviewer reminded him that the politicians of the European Union consider the Polish refusal to abide by a court verdict as preparation for the country’s exit from the Union. If Orbán keeps talking about his “fight,” this communication may lead to the interpretation that Hungary is also planning to leave the Union behind. Here is Orbán’s answer: “Communication is interesting and in politics is often important, but it does not replace reality…. Hungarian reality is that the Hungarian people decided after a referendum to join the European Union. That decision was a correct one. No political decision can overwrite that decision. A popular referendum was held, and therefore no government action can reverse that determination. It was the Hungarian people’s choice, and that’s right and well.”

Although Szijjártó, who is in Tallin at the moment, expressed his trust in the unity of the Visegrád Four, there are signs that Slovakia and the Czech Republic are not ready to sacrifice themselves for Poland and Hungary. The weak link, I believe, is Slovakia. I heard an interview with Pál Csáky, a Slovak member of the European Parliament, who surprised me to no end with his condemnation of the Orbán government’s attitude toward the European Union. The reason for my surprise was that Csáky was Fidesz’s favorite among Hungarian ethnic politicians in Slovakia back in 2010. Lots of money was poured into Csáky’s party, the Magyar Koalíció Pártja (MKP), against Béla Bugár of Híd/Most. Despite the funding, MKP didn’t even manage to get enough votes to become a parliamentary party. Csáky at this point resigned. Today he made it clear that Slovakia will not follow Orbán’s suicidal strategy. Slovakia is all for the European Union.

There is another reason that Orbán may have changed his mind. The spokesman of the European People’s Party delivered a message to Viktor Orbán: don’t go against the ruling of the court because this verdict gives an opportunity to heal the wounds caused by the recent conflict between the member states. “The unanimous opinion of the party is that Slovakia and Hungary comply with the rules.”

Otherwise, Jean-Claude Juncker is ready to have a chat with Viktor Orbán, but his spokesman reminded his audience as well as Viktor Orbán that the position of the European Commission is explained in Juncker’s letter to Orbán. It is available for everybody to read and, in any case, the Commission is not in habit of verbal ping pong. Given Juncker’s firmness as expressed in his letter, I would not advise Orbán to continue to press his case.

September 8, 2017

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

Viktor Orbán is getting ready for a fight

If anyone thought that a second victory, especially with two-thirds parliamentary majority, would slow Viktor Orbán down, he was sadly mistaken. In fact, if it is possible, since his reelection he has been surpassing his own past performance as far as attacks on the European Union are concerned.

In the last few weeks numerous articles have appeared, especially in Népszabadság, on the possible shape of the third Orbán government. Most of the reporting is based on hearsay, but a couple of personnel changes seem to be certain. First, Rózsa Hoffmann, undersecretary for public education, has finished her controversial activities in the Ministry of Human Resources. Second, the mysterious minister of national development about whom nobody knew anything turned out to be a flop. If you recall, no one knew her first name for weeks because she was introduced to the public only as Mrs. László Németh. By the way, she was the one who signed the agreement on Paks with Gazprom. And then there is János Martonyi, the one cabinet member in whom European and American politicians still had some trust. Mind you, his words didn’t mean much because he was stripped of practically all power to conduct Hungary’s foreign policy. According to the latest, it looks as if his replacement will be Tibor Navracsics.

I consider Navracsics’s move to the foreign ministry a demotion for the former close associate of Viktor Orbán. By now the foreign ministry is largely impotent, and I hear rumors to the effect that it might be further stripped of its competence. Earlier Navracsics had a position of real power. He was entrusted with the position of whip of the Fidesz parliamentary delegation. The ministry of administration and justice, which Navracsics headed during Orbán’s second term, had a dual mandate. On the one hand, it was supposed to oversee the restructuring of the entire public administration and, on the other, it was responsible for preparing bills for parliament. At least in theory. Most of the hundreds of bills presented to parliament in the last four years were in fact proposed by individual members. Their authors were most likely outside law firms. It seems that the ministry’s chief job in the legal field was not so much drafting bills as battling with Brussels over legislation the Hungarian parliament enacted.

In the third Orbán government the ministry of administration and justice will be dismantled. In its place there will be a separate ministry of justice, and the section of the ministry that dealt with the country’s territorial administration will be transferred to the prime minister’s office. This ministry’s chief job will be, according to Viktor Orbán, to concentrate on future legal battles with the European Union. He already warned his people that the European Union will try to force the Hungarian government to undo the lowering of utility prices which assured Viktor Orbán his resounding victory at the last election.

Hungary seems to lose one legal battle after the other in the European Court of Justice and the European Court of Human Rights, which functions under the jurisdiction of the Council of Europe. The latest is the question of  life sentences without the possibility of parole. The European Court of Human Rights, in a unanimous ruling, found the law inhumane and degrading. The court is not against life sentences as such, but they held that courts should be allowed to review life sentences in order to assess whether prisoners had made such significant progress toward rehabilitation that their continued detention might no longer be justified. There are perhaps 40 such cases in Hungary at the moment, and if all the “lifers” turned to Strasbourg it could be a very costly affair for the Hungarian state.

Viktor Orbán remains adamant in the face of the court ruling since he knows that, if depended on the Hungarian public, the majority would be only too glad to reintroduce the death penalty. Therefore, Orbán fiercely attacked the ruling and blamed the European Union for preventing Hungary from having its own laws. He repeated his favorite claim that in the European Union “the rights of those who commit crimes are placed above the rights of innocent people and victims.” Friday morning during his customary interview on Magyar Rádió he elaborated on the theme and went even further. He said that the European Union forbids capital punishment, although he personally is convinced that it is a serious deterrent.

In cases like this, one is not quite sure whether Orbán is ignorant of the facts or for political reasons is simply lying. It is not the European Union that forbids the death penalty. Article 1 of the Convention for the Protection of Human Rights and Fundamental Freedoms specifies that “The death penalty shall be abolished. No-one shall be condemned to such penalty or executed.” The Council of Europe is a signatory to this convention. Moreover, the European Court of Human Rights functions not under the European Union but under the Council of Europe of which Hungary is a member. And quite aside from all this, the Hungarian Constitutional Court on its own volition abolished the death penalty in 1990. So, either Orbán doesn’t know any of this or he for political reasons is trying to turn his people against the European Union while he is campaigning for the European parliamentary election. He must know that the reintroduction of the death penalty in Hungary is out of the question.

But before his fight against Brussels and Strasbourg on utility prices, pálinka distillation, acacia trees, and life sentences without parole, Orbán has another fight ahead of him which he may easily lose. It is his opposition to the election of Jean-Claude Juncker for the presidency of the European Commission. Juncker is the candidate of the European People’s Party, which currently has the largest caucus in the European Parliament. It has been clear for some time that Juncker is not the favorite politician of Viktor Orbán. Already on Friday in his interview he mentioned that just because Juncker is the head of the 212-member EPP caucus it doesn’t mean that the Christian Democrats have to nominate him. Juncker is far too liberal for Orbán, who would prefer the far-right Joseph Daul, the Alsatian farmer who is an admirer and defender of the Hungarian prime minister. Orbán thus made up his mind that he and the Fidesz MEPs will try to prevent the election of Juncker in the likely event that EPP is again the largest bloc in the European Parliament.

Jean-Claude Juncker and Martin Schulz

Jean-Claude Juncker and Martin Schulz

Today he announced his decision to try block Juncker’s nomination and/or election. I myself doubt that he will succeed at the nomination level. As for the election, currently EPP has 212 seats and Fidesz’s estimated 10-12 MEPs will vote against him. Juncker will have to get at least 376 votes to be elected, so he will need supporters outside of EPP. The socialist Martin Schulz will also look for supporters outside of the socialist caucus. It looks as if the Fidesz group will lobby against both Juncker and Schulz in favor of some other EPP politician. I’m sure that Orbán’s favorite would be Daul, but I think he is too far to the right to have a chance at either the nomination or the election.

So, what will happen if Juncker wins? Orbán, even if Fidesz MEPs were to support Juncker, would have a harder time with him than he had with Barroso. The same is true if Schulz becomes president. Actually the two men’s views are rather close. Both are miles away from Viktor Orbán’s worldview. In either case, Orbán will be even more unhappy with Brussels than he has been until now.

New infringement procedures: “pálinka” and big box stores

The European Commission most likely waited until the election was over before handing down some bad news to the Hungarian government. The first to reach Budapest was a court ruling on the issue of tax-free “pálinka,” a powerful alcoholic drink made out of various kinds of fruit. The Orbán government’s decision to allow country folk to produce tax-free home brew from fruit grown on their own land came early. It was one of the twenty-two proposals presented by Viktor Orbán to solve the “economic crisis,” and it went into effect on July 1, 2010 despite warnings that it was in contravention of EU law. The announcement that home-distilled pálinka would no longer be taxed was described as the pinnacle of ninety years of struggle for liberation against the backdrop of the tyranny of the state. The “tyranny” referred to was the sensible regulation that owners of orchards who wanted to distill pálinka had to take their fruit to a state distillery and pay tax on the product.

This hasty decision to please Fidesz’s rural voters had all sorts of negative effects. First of all, since these amateur distillers can produce up to 50 liters of pálinka a year without paying taxes, the Hungarian state nowadays receives considerably less revenue from excise taxes on liquor. Second, the professional pálinka producers worried about the hard-won fame of good pálinka, which is considered by the European Union a “hungaricum” and is highly regulated. It must be made from fruits or herbs indigenous to the Carpathian Basin and grown in Hungary. It must be produced and bottled in Hungary, and its alcohol content must be between 37.5% and 86% ABV (alcohol by volume).

To make a long story short, a few days ago the European Court of Justice handed down its ruling: Hungarian home brewers must pay taxes on their products even if they produce no more than 50 liters a year. The reaction? The typical Fidesz one. Instead of telling Brussels’ real objections, they lie and claim that “the bureaucrats in Brussels want to abolish the national heritage of pálinka distillation which is a hungaricum.” Sándor Fazekas, minister of agriculture, called the court’s decision a provocation.

As long as the Hungarian government distorts the rulings of the European Court of Justice we shouldn’t be surprised if the ordinary Hungarian farmer in the countryside accuses the European Union of interfering with the values and traditions of their nation and if he develops a hatred of all those anti-Hungarian foreign bureaucrats. But I guess this is the purpose of the government rhetoric.

The second infringement procedure is about the “plaza stop.”  This particular infringement procedure hasn’t yet ended up at the European Court of Justice and it may never land there because of the extreme slowness of EU bureaucracy. For some background on this particular piece of legislation I suggest reading an old post of mine from November 2011. It started as an LMP draft bill and was then taken up and completely rewritten (and distorted) by the government party. The bill stated that between January 1, 2012 and December 31, 2014 no establishments greater than  300 m2 (3,230 ft2) can be built. Real estate developers protested, not without reason. Moreover, the law inflicted economic pain on the country. Hungary was in the midst of an economic crisis in which unemployment was high and the construction industry had almost collapsed. At that time there were at least five such retail outlets in the planning stages. All work on the construction had to be stopped.

Today the European Commission launched an infringement procedure against Hungary over the country’s ban on the construction of “hypermarkets” as it may be against the competition rule applicable in the territory of the European Union. The reaction? The usual Fidesz demagoguery. “The European Commission once again put the interests of large multinational companies before that of the small Hungarian businesses.”

Hyper market

But who is going to defend the Hungarian consumer from the higher prices which are inevitable in smaller retail stores? And what about the variety of goods that only large establishments can offer?  Small, individually owned stores can never compete with chains on price or availability. I know all the arguments pro and con on this sensitive issue, but the fact is that forcibly stopping economic developments that seem inevitable is not good for anyone, including the consumer.

Retail is always changing. Think, for instance, of the mail order catalogs of businesses like Montgomery Ward and Sears that not only revolutionized nineteenth-century retail but also improved the lives of the rural poor and the segregated blacks in the South. That was in the 1870-1880s. Today online companies like Amazon have disrupted retail yet again.

Yes, big box stores tend to squeeze out small retailers just as mail order catalogs were hard on ma and pa stores in the nineteenth century. But this is how modern economies function. The state’s role is not to forbid the normal flow of goods and services but to regulate their activities.

Another corruption case and the news of the day

Yesterday I promised to write about another scandalous affair, this time involving a close friend and business partner of Viktor Orbán, István Garancsi. This morning after I read a number of articles on the subject I almost gave up on the idea. The case is so complicated–surely for good reason–that it takes some doing to figure out exactly what happened. Here is what I managed to put together. I’m waiting for more input from readers.

Shortly after Viktor Orbán won the election, companies dealing with distance heating wanted to raise their prices, a move that would not have been popular and something the new government wanted to avoid. So the government instructed the state-owned MVMP Partner Energiakereskedelmi Zrt. to supply gas to these providers from its reserves at a lower rate. In return, the government made sure that MVMP would receive cheaper western gas by way of compensation. In fact, the government bought a great deal more gas than was necessary to replenish the reserves. The extra, which was in fact the bulk of the purchases, was sold by MVMP to a company called MET. It then sold the inexpensive gas at a handsome profit.

MET has its headquarters in Switzerland, but some of its subsidiaries are in Cyprus, the British Virgin Islands, and the Cayman Islands. Behind its complex business structure are two Hungarians:  György Nagy and István Garancsai.  György Nagy was the founder of Wallis Rt., an investment company, whose CEO between 2000 and 2006 was Gordon Bajnai. Subsequent to Wallis Nagy was involved in several successful business ventures. István Garancsai is the owner of Viktor Orbán’s favorite soccer team, Videoton. He also owns a small credit union, Duna Takarék, which miraculously was not nationalized when all others were. It turned out that it was Duna Takarék that gave a loan of 600 million forints to Viktor Orbán’s soccer foundation in Felcsút.

These offshore companies got inexpensive gas thanks to the largesse of the Hungarian government. They then sold it at the going market price in Hungary. According to estimates, their profit was 50 billion forints in 2012 alone.

Those of you who are interested in the extremely complicated details should read the two articles published by atlatszo.hu on January 28 and February 3.

Just a taste of the complexity of the businesses involved / Source: atlatszo.hu

Just a taste of the complexity of the businesses involved / Source: atlatszo.hu

And now let’s move on to some important news of the day. Early in the morning it became known that although the Hungarian government claimed that the European Commission supported its agreement with Russia concerning Paks, the claim is not true. Of course, that doesn’t surprise me because members of the Orbán government are not known for their truthfulness. On Monday, for example, Viktor Orbán delivered a twenty-five-minute speech in parliament in which there was not one truthful statement about the real state of affairs. At any event, when the government initially made its claim that the EU was on board with the Paks deal,  HVG was skeptical and inquired from the commissioner for energy about the case. The reporter was told that the commissioner hadn’t received detailed information and that they were waiting until they had it in hand. Today came the news that the European Commission will investigate the case very soon.

And in a blow to the Hungarian government’s tax policy, the European Court of Justice ruled that

Articles 49 TFEU and 54 TFEU must be interpreted as precluding legislation of a Member State relating to tax on the turnover of store retail trade which obliges taxable legal persons constituting, within a group, ‘linked undertakings’ within the meaning of that legislation, to aggregate their turnover for the purpose of the application of a steeply progressive rate, and then to divide the resulting amount of tax among them in proportion to their actual turnover, if – and it is for the referring court to determine whether this is the case – the taxable persons covered by the highest band of the special tax are ‘linked’, in the majority of cases, to companies which have their registered office in another Member State.

To translate this convoluted sentence into plain English, the extra tax that foreign-based retail chains had to pay since 2011 is discriminatory. The judges instructed the Hungarian courts to make a ruling in accordance with EU laws in those cases where foreign companies suffered financial discrimination. Apparently the contested tax revenues amounted to about 90 billion forints. According to legal experts, it is likely that the Hungarian government will end up paying a great deal more compensation to these companies.

As for a resolution on the fate of the “Gabriel” monument, the suspense remains. Tomorrow János Lázár will have a meeting with various Jewish organizations. A leak published by Népszabadság claimed that the erection of the monument has been “postponed,” a statement that was promptly denied by Antal Rogán. Meanwhile one Jewish organization after the other is returning the money received from the government for the events of the Holocaust Memorial Year. In brief, it is a mess. But Viktor Orbán doesn’t like to admit defeat, and therefore there is a good possibility that he will go ahead with the project. Let’s hope that he realizes the gravity of such a decision given the general climate both within and outside Hungary.