Hungary's EU presidency is just getting started, but is already beset with controversy. Government controls of the media and corporate taxation policies have the EU up in arms but Hungary's leader remains unswayed.
Hungary's Viktor Orban has dismissed criticism of new laws
The six-month European Union presidency of Hungary is just a few days old, but new policies are already raising an uproar at home and in the rest of the union.
A new media law is in force which has provoked a storm of indignation, and multinational corporations are demanding sanctions against the eastern European country, for what they see as unfair taxation policies. Hungarian Prime Minister Viktor Orban has come out fighting against all detractors.
Criticism of the media law was based on "misunderstandings" that would be cleared up during the course of the EU presidency, he said.
A new media authority now controls private television and radio broadcasters, newspapers and online news sites in Hungary. All the members of this government body are also members of the ruling Fidesz party. Many European newspapers are calling it an attack on freedom of the press.
Through this entity, the government can fine broadcasters more than 700,000 euros ($930,000) and newspapers and news websites roughly 90,000 euros if their coverage is deemed unbalanced or immoral.
Presidency role at risk
Several EU governments have openly criticized Hungary. Werner Hoyer, minister of state at the foreign office in Berlin, announced that he expects Hungary to revise the law. Social Democrats and Liberals in the European Parliament have even suggested removing Hungary from its EU presidency role, if the law continues in its present form.
The Hungarian press has not been shy about their feelings on the law, either.
"The freedom of the press in Hungary comes to an end" was the headline on Monday, printed in all 27 official languages of the EU, on the front page of Nepszabadsag, Hungary's biggest circulation newspaper.
Out of solidarity, the German daily newspaper, Tageszeitung, printed the same headline on its own front page.
"The freedom of the press in Hungary comes to an end" bemoaned Hungarian media on Monday
The European Commission has registered doubts about the legality of the new law. The commissioner responsible for telecoms and information technology Neelie Kroes announced concerns about three aspects of the media law.
"It is about the law itself, the application of EU law and the question whether the new media council can act independently, mainly because of its composition," Commission spokesman Michele Cercone said in Brussels on Monday.
The Commission is now waiting for a detailed response from Budapest. If the EU Commission concludes that Hungary is acting contrary to EU law, they can take legal action.
Chafing under increased taxes
At the same time, some thirteen leading European firms have urged the European Union through a letter to impose sanctions on Hungary for what they view as a crackdown on foreign investors and anti-competitive measures.
Hungary plans to aggressively tax selected industries, and foreign companies in particular, to balance the state budget.
Multinationals such as Deutsche Telekom have been targeted by a "crisis tax" in Hungary
Among those pushing for change are energy groups such as Austria's OMV, French insurance giant AXA, Germany's Deutsche Telekom, and Dutch financial groups ING and Aegon.
"This letter is focused on the extra crisis tax which is taken from many multinationals," Marleen de Vries, an executive director of the Netherlands-Hungarian chamber of commerce in Budapest, told Deutsche Welle.
"That was not agreed when they began investing here ... so of course they are upset. It's very interesting to see that Hungary, which is taking over the European Union presidency, is now adopting domestic policies that are not always welcomed by the international community."
The crisis tax targets banks, energy, telecommunications and retail companies specifically.
'Laugh together, cry together'
Prime Minister Orban defended this development too.
"No matter which European leaders I meet, I make sure to tell them that for those companies that operate in Hungary, we will cry together and we will laugh together," he said at a press conference. "The fate of large companies operating in the country must be connected to the fate of Hungary. It can't continue that when we cry, they laugh, or when they cry we laugh. It can't go on."
Orban said Brussels had no right to interfere. But not everyone agrees with this sentiment.
"We don't have any problem with the fiscal or tax decisions made by member states to balance their budgetary situation," European Commission spokesman Olivier Bailly told Deutsche Welle. "In the rules, however, there is a system of equality. And it is not possible to tax some operators more than others. There may not be any discrimination between operators."
The European Commission has started proceedings for similar reasons against other countries including Spain and France, Bailly said.
Sanctions could include financial penalties and the freezing of EU funds for Hungary. There have also been calls among European officials to strip Hungary of its voting rights within the Union.
Author: Stefan Bos (sjt/dpa/AFP)
Editor: Rob Turner