EU launches legal action against Hungary

(STRASBOURG) - The European Union executive launched legal proceedings Tuesday against Hungary, demanding it scrap disputed reforms that breach "the letter and spirit" of EU law or face court action.

European Commission president Jose Manuel Barroso said the 27 members of the executive had decided to take action against Hungary over threats to the independence of its central bank and data protection authority.

The commission was also requesting further information from Budapest on the independence of the judiciary, he told journalists.

"Hungary is a key member of the European family," he said. "We do not want the shadow of doubt on respect for democratic principles and values to remain over the country any longer.

"The quicker that this is resolved the better."

Barroso said the decision to send letters of warning to Prime Minister Viktor Orban's government followed "a sound legal analysis" by commission experts of amendments to the constitution which came into effect on January 1.

"We hoped that the Hungarian authorities would make the changes necessary to guarantee respect of EU law. This has not been the case so far, therefore we have decided to begin infringement proceedings," he said.

"The decisions we have taken today are a reflection of our determination to make sure that EU law, both in letter and in spirit, are fully respected."

Anger over the legislation sent tens of thousands of Hungarians on to the streets in protest this month, while causing the suspension of talks with the EU and IMF to secure a credit line of up to 20 billion euros ($25 billion) for the cash-strapped nation.

Orban, dubbed "Viktator" by opponents because of the disputed reforms, will defend his government during a European parliamentary debate on Wednesday. He will then travel to Brussels next Tuesday to meet Barroso.

"Our aim is to give satisfactory and comprehensive answers to the questions raised, and to find a solution for the problematic issues as soon as possible, preferably without going through the full infringement procedure," his government said in Budapest.

"Hungary is ready to sort out all emerging issues in the course of the technical dialogue with the European Commission," Communications Minister Zoltan Kovacs added at the European Parliament in Strasbourg, France.

Kovacs said Orban's administration was "confident" it would reach an agreement before the row deteriorates further.

The ultimatum is the first step in a potentially lengthy legal process that eventually could see Hungary dragged before the European Court of Justice for violating fundamental European rights.

Under EU procedures, the executive must first issue a warning letter before embarking on infringement proceedings.

Standard procedure is to give a member state two months to rewrite contested legislation, but for Hungary the period is one month, an EU official said on condition of anonymity.

Orban said this week Hungary was ready to address "some" criticisms from the International Monetary Fund and the EU.

"Concerning the points made... over the new law on the central bank, the Hungarian government agrees with some of them and I see no obstacle to adopting them," Orban said. "However, there are other points where our positions are still far apart."

Ensuring the central bank's independence is crucial to Hungary's bid to conclude talks with the EU and IMF for credit to stabilise its struggling economy.

IMF head Christine Lagarde has said that support of the European authorities and institutions would be critical to discussing a new rescue programme.