Hungary says it is committed to the rule of law

(BUDAPEST) - Hungary said Wednesday it was committed to the rule of law, after Brussels threatened legal action unless Budapest reverses legislation that critics say undermines democracy in the EU member state.

"Hungary continues to be open to continue consultations on issues raised by the European Commission," a spokesman for Prime Minister Viktor Orban said in a statement. "It is ready for discussions and searching for solutions."

Hungary, which saw major demonstrations against Orban last week, would "wait for and consider the outcome of the analysis of the commission, trusting its thoroughness and unbiased nature," the spokesman added.

"Hungary is a country with a rule of law, the government is committed to universal European values."

On January 1 a new constitution came into effect that Orban's detractors say undermine the independence of key state institutions, while altering the electoral system in his party's favour and curbing press freedoms.

Hungary also revamped its central bank, prompting the International Monetary Fund and the European Union to suspend preliminary talks about a much-needed 15-20-billion-euro ($20-25-billion) credit line last month.

The EU executive said Wednesday it has "raised concerns on the compatibility of these laws with European Union law."

"As guardian of the Treaties, the commission remains preoccupied that a number of the new provisions may violate EU law," it said in a statement.

The Commission said it would continue an analysis of the new Hungarian legislation and would decide next Tuesday whether or not to launch legal action.

The Hungarian opposition socialist party MSZP said Brussels had given Orban "one week to restore democracy" and demanded an early recall of parliament from winter recess -- due to end on February 13 -- next Monday.

Hungary's economy ministry, meanwhile, said it was open to any proposals from the Commission on reining in its budget deficit but insisted its overspend would be within EU limits in both 2012 and 2013.

The EU executive on Wednesday called on EU finance ministers to slap sanctions on Hungary for taking "no effective action" to trim its deficit below the EU threshold of 3.0 percent of gross domestic product (GDP).

Although Hungary's deficit was expected to stay under three percent in 2011 and 2012, the EU executive said this was "only thanks to one-off measures."

The resulting figure "masks... a severe deterioration in the underlying structural balance," it added, predicting instead a shortfall of 3.25 percent of output in 2013.

"The numbers speak for themselves: for the first time since our EU accession, the public deficit will be under three percent in 2012," Hungary's economy ministry shot back.

"We are going to keep the deficit under three percent in 2013 as well."

Gabor Vona, the president of Jobbik, a far-right eurosceptic opposition party in Hungary's parliament, said Brussels's "ultimatum" was "a rude attack on Hungary's sovereignity."

"This is ... kicking a country while it is down -- in the head," he said.

Peter Kreko from the think-tank Political Capital said that Orban has "manoeuvred himself into a dead-end street."

"Now he has only bad options to choose from, and his decision will be about an immediate fall or a fall in the medium term," he told AFP.

"The government reacted as if nothing has been said today," said Kornelia Magyar, head analyst of Hungarian Progressive Institute. "They seem not to have grasped the message."