Conceding ground
January 20, 2012
Hungarian Prime Minister Viktor Orban abandoned plans on Friday to introduce controversial reforms to Hungary's central bank. It was the prime minister's first sign of compromise over a series of disputed laws which threatened to thwart a deal for financial aid with the European Union.
Addressing parliament, Orban said he no longer planned to merge the National Bank of Hungary and the country's markets regulator. The law had sparked a legal clash with the EU over fears it would limit the central's banks independence.
"If this were to seriously harm Hungarians' interests, we would naturally be unable to accept it," Orban said during a joint press conference after a meeting with Austrian Vice Chancellor Michael Spindelegge in Budapest.
Since these were not considered "crucial issues," he said there were no "obstacles" blocking the way to changes.
Since coming to power in 2010, Orban's conservative Fidesz party has been criticized both at home and abroad for introducing controversial legislation seen as threatening to the independence of the media and the judiciary.
Hungary is currently seeking a precautionary stand-by loan from the EU and the International Monetary Fund to prop up its struggling economy. The European Union warned on Friday, however, that the independence of Hungary's justice and banking systems was a precondition to bailout talks.
"Hungary must take concrete steps to ensure the full independence of the central bank and the reliable functioning of the judicial system," a spokesman for EU Economy Commissioner Olli Rehn told reporters.
Clear solution to demands
Orban is expected to meet European Commission President Jose Manuel Barroso next week to secure a political agreement over the contested legislation.
Austrian Vice Chancellor Michael Spindelegger told the joint news conference on Friday that Orban had planned "a very clear timetable and very clear solutions regarding legal issues" ahead of the meeting with Barroso.
Uncertainty over the governing Fidesz party's economic program has caused the country's financial markets to suffer in recent weeks. Hungary's currency, the forint, sunk to all-time lows against the euro earlier this month and pushed yields on Hungarian bonds above 10 percent.
Author: Charlotte Chelsom-Pill (dpa, AP, Reuters)
Editor: Andrew Bowen