For decades Hungary was one of Eastern Europe's most democratic nations, leading former Soviet countries in adopting the political and economic norms of the free world.
But a series of restrictive new laws passed by the new populist, center-right government are sparking widespread concerns about Hungary's democratic credentials as it prepares to assume the presidency of the European Union on Saturday and become the EU's public face for the next six months.
A media law passed this month allows a hand-picked authority to take newspapers and broadcast outlets to court and seek fines of up to $1 million for reports it considers unbalanced. People who do not move private pension funds into a state-run program can now be penalized financially.
Prime Minister Viktor Orban and his Cabinet also have curtailed the powers of the respected constitutional court. And they are seeking to push out the head of the traditionally independent central bank in a struggle over who controls fiscal policy of the deeply indebted nation.
The media law has come under the strongest criticism from other EU nations, with Luxembourg Foreign Minister Jean Asselborn saying the law "raises the question whether such a country is worthy of leading the EU."
German deputy Foreign Minister Werner Hoyer warned of "serious concern if there is only the smallest suspicion" of media freedoms being restricted, and a spokesman for German Chancellor Angela Merkel warned that her government is following the media law "with great attention."
Orban is defiant, telling Hungarian TV last week that despite foreign criticism, "we are not even considering" changing the media law
That comment is not surprising. It was Orban who said "Hungary shouldn't have to adapt to the European Union, the EU should adapt to Hungary," while in his first term as prime minister 11 years ago, as Hungary was still knocking on the EU's door.
Orban sailed into power seven months after defeating an unpopular Socialist government with a more than two-thirds majority.
Critics have accused him of seeking a one-party system, particularly after he said this year that he envisions Hungary being run by a "major ruling party, a centrally dominated political power capable of tackling national issues" without the distractions of "constant (political) debate."
Insiders, meanwhile, say that senior officials of the European Commission — the EU government — are extremely displeased both with Orban's deeds and defiant words.
Laszlo Kovacs, the EU's former commissioner for taxation and customs union, says that former colleagues "were privately very critical" during his recent visit to the Belgian capital, which is also the EU's headquarters.
"The general tone was that 'the Hungarian government should refrain from sending arrogant messages to Brussels," says Kovacs, who has served as Hungarian foreign minister and is now deputy head of the opposition Socialist party.
Major European newspapers are less circumspect.
"What can Orban, shackler of the media, say about human rights and media freedoms in Belarus, in Russia, in China and elsewhere?" wrote the German daily "Frankfurter Rundschau." He can't say a thing, he can't even utter a peep."
Disappointment within the EU is palpable considering Hungary's past.
It was the most liberal of all Soviet bloc nations, and hastened the fall of the Iron Curtain by permitting hundreds of thousands of East Germans to use it as the conduit to the West in 1989. That bold move hastened the fall of the Iron Curtain by emboldening citizens elsewhere in communist East Europe to press for change.
In the immediate post-communist years, it was the East European nation that appeared most eager to adopt the political and economic norms of the free world and was among the first former Soviet bloc countries to join two of the West's key pillars, the EU and NATO.
But such accomplishments are being eclipsed by concern over Hungary's suitability to serve as EU president, a position meant as a beacon of democracy and free-market economic principles.
The push on citizens to shift their pensions from private to state plans could result in access to more than 10 billion euros ($14 billion) to cut the budget deficit without having to enact unpopular structural reforms and cost cutting measures.
Economists and EU experts say that such tough measures are needed. But Orban seeks to avoid them so as not to stir popular discontent in a country where one in three are below the poverty line and millions are fighting default on debts denominated in Swiss francs or other strong foreign currencies.
So in another unorthodox move to raise revenues as it fights to reduce government debt — at about 80 percent of the GDP the highest in the region — his government has imposed windfall taxes on banks and telecommunications companies and other enterprises, most of them foreign owned.
The companies affected have cried foul, claiming discrimination in a letter to the EU Commission. The pension scheme, meanwhile, has added to foreign skepticism about Hungary's commitment to enact sound economic measures, with the credit rating agency recently Fitch downgrading the nation's foreign currency credit rating to just above junk status, shortly after a downgrade from Moody's.
Some moves of the Orban government — like the windfall tax on mostly foreign companies — could be contested as discriminatory at the European court of Justice, Kovacs said, while the media law could also be challenged as violating the EU Treaty and its Charter of Rights.
"Ultimately they will not be able to defeat Brussels," Kovacs said of the Orban government.
Some of the shine is also fading from Orban back home, with a poll conducted by the Median organization early this month showing 48 percent of 1,200 respondents saying that the country was moving in the wrong direction, compared to 39 percent two months before. The survey had a margin of error between 2 and 5 percentage points.
Still, Orban's moves continue to play well among most supporters receptive to his nationalist message of Hungarians first, ready to embrace his view that foreign companies think of little else than profit margins and looking first and foremost for a firm hand to lead the country.
"Of course some of Orban's moves have hurt our image abroad," said taxi driver Gyula Toth, 50. "But he needs to set his course — you cannot rebuild what the Socialists wrecked over eight years without bashing some heads.
"They know better what needs to be done than we do, and we elected them."
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