Under-fire Orban seeks end to damaging row with Brussels

(BRUSSELS) - Under-fire Hungarian premier Viktor Orban on Tuesday sought a way out of a row with Brussels over controversial new laws that have snarled Budapest's bid for much-needed credit and set off EU legal action.

Orban's government is facing court action failing the reversal within a month of legislation that the European Commission says will threaten the independence of three key institutions -- the central bank, judiciary and data protection authority.

The laws adopted by Orban's large parliamentary majority last month have sent tens of thousands of protestors into Hungary's streets and impeded a bid to secure a 20-billion-euro ($25-billion) credit from the International Monetary Fund and the European Union.

Brussels is also concerned over the fate of opposition radio station Klubradio, which is being taken off the air by the powerful pro-Orban media authority.

Orban, who faces a dire economic crisis, has offered to row back on parts of the legislation and has said he expects a deal Tuesday in talks with both EU president Herman Van Rompuy and Commission president Jose Manuel Barroso.

"I see no particularly difficult issues," Orban said last week of the talks in Brussels.

Hungary's currency strengthened to a seven-week high Monday on hopes of a breakthrough in talks between Orban and the EU officials.

At a fiery debate in the European parliament last week, Orban rejected charges of authoritarianism.

But angry MEPs accused his government of flouting basic democratic values, likening him to Cuba's Fidel Castro or Venezuela's Hugo Chavez.

Barroso pledged before the parliament that his executive commission would honour its role as guardian of EU values in talks with Hungary. "We have to be clear on values, firm on principles," he said.

"Hungary is a key member of the European family," Barroso also 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."

On Friday, Orban backed down from plans to merge the central bank and the regulatory authority and demote the central bank head, a move strongly criticised by Brussels.

The two institutions "have been operating separately until now, they will be all right separately in the future," Orban said.

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.

But Budapest would not compromise on a salary ceiling for public servants or an oath of office for the central bank leadership, he added.

The Commission last week also called on the bloc's finance ministers, who were also in Brussels on Tuesday, to impose sanctions on crisis-hit Hungary for failing to act to reduce its deficit in line with agreed targets.

The Commission said Hungary, which is outside the eurozone, has taken "no effective action" to get its deficit back within the EU's 3.0 percent of gross domestic product threshold.

The Commission "proposes to move to the next stage of the Excessive Deficit Procedure," it said, calling on ministers to slap sanctions that nonetheless stop short of hard cash penalties for non-euro states.