Brussels, 20/12/2011 (Agence Europe) - European Commission President José Manuel Barroso has called on the Hungarian prime minister to withdraw his controversial plans for reforming the national central bank. In a rather dryly-worded letter Barroso stated that he believed that these plans would impinge on the bank's independence. “I recommend that you immediately withdraw the two draft basic laws now in front of Parliamentary”, so that discussions can be begin to ensure that the texts are compatible with European law, explained Mr Barroso in this missive published in the press on Tuesday 20 December.
The president of the European Commission added that the two legal texts, “contain elements that may contravene the treaty” of the EU. “The Commission has serious doubts about the compatibility of the current version” of the two Bills with EU legislation.
The independence of the national central bank is one of the criteria that need to be respected when joining the euro zone. When the country is ready to join, this will indeed be an obligation that the country will be required to meet. Hungary is currently participating in consultation mechanisms with different central banks of the Monetary Union, which presuppose that its own central bank is independent. Barroso warned that, “if the laws adopted are incompatible with European law, they will have to be amended”.
The reform at issue of the Hungarian central bank removes the prerogative of the head of the Monetary Institute (MNB) to appoint his deputies. This decision would, henceforth, be made by the prime minister. A second Bill aims to merge the central bank with the supervisory authority for the financial institutions (PSZAF) and also risks watering down the powers of the MNB head, with whom Orban is widely known to be in dispute. The head of the MNB, Andras Simor, explains that the Bills are seeking “a total takeover of the central bank's power” by the government. Due to these disagreements, the European Commission and the IMF decided to cut short the delegation sent to Hungary on Friday, which was due to discuss financial aid to the country, estimated at between €15-20 billion.
The status of the central bank is not the only area of disagreement. The European Commission has also expressed concerns about the independence of the justice system and is worried that an amendment to the Constitution, which stipulates that any important changes to the country's fiscal affairs (for example, interest rates), have to be approved by a two thirds majority. The European Commission believes that this risks limiting the way in which future Hungarian governments could respond to cases of slippage in the deficit and debt.
On Tuesday 20 December, the joint leaders of the Greens/EFA at the European Parliament, Rebecca Harms and Daniel Cohn-Bendit, sent a letter to Barroso in which they expressed their deep concerns about the possible effects of the laws on legislative procedures. According to the two MEPs, the reforms sought by the leader of the Hungarian government, “do not respect the values on which the EU is founded”. In their letter they point out that the EP has, on several occasions, condemned the anti-democratic methods of the Orban government. They are concerned, however, that Hungarian citizens are beginning to doubt the fact that the EU takes its own principles seriously. They are therefore calling on the European Commission to do all in its power to ensure that Hungary respects the basic principles of the European Union. (LC/transl.fl)