EU eyes action over Hungary's planned Russia-style law

Tens of thousands of Hungarians took to the streets over the weekend after the Hungarian government tabled new legislation to monitor foreign funding for NGOs and media outlets or anyone deemed a threat to what it sees as Hungarian sovereign interest.

The bill is labeled "Transparency of Public Life” and the government says it is aimed at protecting Hungary's sovereignty from outside interference. But activists say it mimics Russia's foreign agent law and would similarly offer the Hungarian government sweeping powers to crack down on the press and critical voices in civil society.

The protests are the latest cry for help from Hungarians looking at the European Union to reign in their government.


Some of the protesters in front of the parliament in the Hungarian capital Budapest held a big flag of the European Union imprinted with the English word HELP.

What is Hungary's new 'transparency law?'

If the draft bill were to turn into law, activists say, the government could control media outlets and NGOs or even dissolve them.

In December 2023, Hungary passed a national law on the "Defence of Sovereignty" and established what it called a Sovereignty Protection Office (SPO) to investigate organizations that use foreign funds to influence voters.

With the new law, that agency will be responsible for investigating all kinds of organizations and authorized to blacklist those who receive foreign funding without prior government approval.

If blacklisted, organizations will also lose access to donations through Hungary's annual 1% income tax contribution scheme, potentially pay a fine of 25 times these funds, and their owners will be made to declare their assets.

Reports suggest that the country's secret services have been authorized to assist SPO in any investigations.

Tineke Strik, Hungary rapporteur of the European Parliament, told DW that Hungary's transparency bill was aimed at "dissolving all organizations, all media outlets, even punishing all individuals, that criticize the government. That is exactly what the Russian law does."

Russia's foreign agent law was adopted in mid-2022, in what human right organizations described as a smearing campaign to discredit legitimate Russian civic activism.

"The law expands the definition of foreign agent to a point at which almost any person or entity, regardless of nationality or location, who engages in civic activism or even expresses opinions about Russian policies or officials' conduct could be designated a foreign agent, so long as the authorities claim they are under 'foreign influence,'" the NGO Human Rights Watch said.

Hungary's 'transparency' bill 'authoritarian'

Peter Magyar, the leader of Hungary's opposition Tisza party and the only Hungarian politician seen to be a credible challenger to Hungarian Prime Minister Viktor Orban's 14-year grip on power, also accused the government of adopting Russian-style legislation to strip funding for activists and journalists, including through EU grants. He said it was "copying its master, [Russian President ] Vladimir Putin."

A statement signed by 300 international organizations including the human rights organization Amnesty International described the bill as an "authoritarian attempt to retain power" that "aims to silence all critical voices and to eliminate what remains of Hungarian democracy."

The non-profit group Transparency International said the new bill threatened to "end civil society" and, if passed, would empower the government to "persecute with impunity."

It said the law would apply to EU grants and foreign donations as small as €5 ($5.70), and that "vague language" adopted in the bill left "wide room for political misuse, threatening a broad swathe of civil society — including independent media, watchdog organizations, and ordinary citizens engaged in public life."

Last year, Georgia adopted a similar law amidst much uproar at home and in Brussels. The move is suspected to have scuttled the country's chances of joining the EU.

But while Georgia is an EU candidate nation, Hungary is a full-fledged member of the bloc.

How can EU ensure Hungary aligns with the bloc's value system?

Zsuzsanna Vegh, a program officer at the German Marshall Fund of the United States, said that theoretically the EU could move ahead with the Article 7 procedure it first initiated in 2018.

The Treaty on the European Union outlines a procedure for addressing serious and persistent breaches of EU values by member states underArticle 7. It allows for the suspension of certain rights, including voting rights in the Council of the European Union, if a member is determined to be in repeated violations of the EU's fundamental principles, such as weakening rule of law, democracy and freedoms.

"The EU could declare that there is indeed systematic violation of democracy and rule of law in Hungary and suspend its voting rights" in the Council of the European Union, where the bloc debates and decides its policies, Vegh said.

"But that is still a political decision and it is unlikely."

Some European parliamentarians have advocated that the EU slash Hungary's funding to force it to reduce corruption that has an adverse impact on the EU's financial interests. But experts say the same method could also be effective in encouraging Hungary to stick to the EU's value system.

"We urge the European Commission to increase pressure on Viktor Orban's government to cease violating EU values and EU Laws by immediately suspending all EU funding for Hungary in line with the applicable legislation to protect the Union’s financial interest," more than two dozen EU parliamentarians wrote in a letter to the European Commission on May 20.

Vegh said that while some funds for Hungary had already been cut there was no precedent of the EU cutting all funding marked for a member state.

However, Teona Lavrelashvili, a visiting fellow with the Wilfried Martens Center in Brussels, said this could be done.

"Yes, the European Union can suspend funds to Hungary if its new transparency bill — or any law — undermines the rule of law or threatens the EU's financial interests. This power comes from the Rule of Law Conditionality Mechanism."

She contended that a law that weakens civil society also undermines the EU's overall economic interests.

What can the EU do next?

The EU also has other options that it can resort to before cutting funds intended to aid economic development in Hungary and thus to benefit the general population.

Back in 2017, it managed to dissuade Hungary from introducing a similar transparency law by initiating an infringement procedure, a multilayered process through which the EU expressed its displeasure to Hungary. Upon no change in Budapest's attitudes, Brussels eventually took Hungary to the Court of Justice of the European Union (EU)

The court concluded that Hungary had "introduced discriminatory and unjustified restrictions on foreign donations to civil society organizations."

Since the new bill was tabled last week, the EU has refrained from scolding Hungary and merely said it is waiting to see whether it is enacted into law.

Vegh believes another infringement procedure is the EU's likely next step.

But the fact that Hungary is trying to push through the law again, may require the EU to change its approach and take a more stern stand.