Hungary Bows to EU Demands on Disputed Laws

Posted January 20th, 2012 at 12:40 pm (UTC-5)
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Hungary is bowing to European Union demands that it change several of its laws that called into question the independence of its central bank, the judiciary and media.

Hungary’s dispute with the EU threatened to derail the eastern European nation’s bid to secure a $25 billion credit line from the EU and the International Monetary Fund. But Prime Minister Viktor Orban said Friday he expects to reach “a political agreement” with the EU at a meeting Tuesday in Brussels with European Commission President Jose Manuel Barroso. Orban said he does not see “any particularly difficult issues.”

Analyst Peter Kreko of the London-based Political Capital Institute said the Budapest government did not have much choice but to accede to the EU demands.

“The government is afraid that if we don’t take some measures to reduce the public deficit, some of the funds will be frozen by the European Union. And this is what the Hungarian government wants to avoid. So I would say that the government has acknowledged that they have to make compromises with the European Union, even if they are not really happy with that.”

The planned merger of the Hungarian central bank and financial regulator has been a key point of contention, along with the retirement age of judges and the independence of the data protection authority.

Elsewhere in Europe, Greek officials were set to resume negotiations Friday night with their private creditors in an effort to complete a deal to eliminate about $127 billion of the debt the Athens government owes them. A deal has proved elusive, but Greek officials say they need to reach an agreement in order to secure a new $165 billion international bailout and avoid a March default on the country’s financial obligations.

Greece is seeking to cut 50 percent of the face value of the debt it owes private creditors, loans held by banks and other large investors. But the creditors could actually sustain up to a 70 percent loss on their holdings under a plan being negotiated that would extend Greece’s repayment of the remaining debt over a lengthy period of time.

Three countries — Greece, Ireland and Portugal — have been forced to secure international bailouts in the last two years, and Greece’s new rescue package would be its second. But European leaders have said they will not agree to the new bailout unless the Greek government works out the debt relief plan with its private creditors and imposes more unpopular austerity measures.