First Time as Tragedy, Second Time as Farce

In December 2023 the Hungarian Parliament speedily adopted the Act on the Protection of National Sovereignty (PNSA) and by February 2024 the government had already designated the Sovereignty Protection Office (SPO) for its enforcement. The history repeats itself, first time as tragedy, second time as farce. The quick and effective response in 2017 has managed to repeal the Law on the Transparency of Organization Supported from Abroad and the subsequent 2018 Stop Soros Package. The current activities of the SPO in 2024, however, exemplify the Hungarian government’s ongoing efforts to undermine free and independent society. It is crucial for the Union and European civil society to once again act swiftly to prevent the harassment of journalists and the potential disappearance of NGOs like Transparency International Hungary.

Introduction

The Sovereignty Protection Office is a new agency tasked with investigating specific activities carried out in the interest of another State or a foreign body, organization or natural person, if they are likely to violate or jeopardize the sovereignty of Hungary; and organizations whose activities using foreign funding may influence the outcome of elections or the will of voters.

As Karl Marx famously wrote in The Eighteenth Brumaire of Louis Napoleon in 1852, history repeats itself: the first time as tragedy, with Napoleon I seizing power during the French Revolution, and the second time as farce, when his nephew, Napoleon III, proclaimed himself emperor. In the latter case, economic and social conditions allowed a mediocre individual to play the role of a hero. Similarly, the adoption of the PNSA is not the first attempt on the Hungarian government’s behalf to substantiate the political assumption that the foreign funds received by Hungarian NGOs and watchdog organizations undermine their objectivity and turn them into “obedient mouthpieces of the donors.”

While it appears that the Hungarian government is deliberately attempting to provoke various European institutions again, by presenting new challenges to human rights and democracy with its newly adopted PNSA, history seems to repeat itself. When in 2017 the Hungarian government first adopted the Law on Transparency of Organizations that Receive Support from Abroad, this law immediately raised international concerns and was seen as a tragedy requiring immediate action especially from EU institutions. The Sovereignty Protection Office in 2024 is a farce, particularly if the undemocratic activities of the SPO go unnoticed at the time when Orbán’s government leads the European Council with the much criticized Hungarian Presidency that began on July 1, 2024.

The Challenge to Free Speech and Media Pluralism in Hungary

Under the PNSA, the government has the power to investigate and identify civil society organizations that have received foreign funding aimed to influence voters, but individuals and organizations are not required to register. Without exceptions, nearly all individuals and legal entities, except for the members of the diplomatic corps, can be investigated regarding foreign influence and foreign funding. Individuals and organizations that are “named and shamed” are not entitled to due process or transparency surrounding the investigation and may not appeal against defaming assertions.

Not surprisingly, the PNSA was strategically adopted before the European Parliament elections of June 2024. Despite the concerns triggered by the PNSA and the creation of the SPO, voiced by the European Parliament resolution in April 2024, the Commission approved the release of up to €10,2 billion in frozen EU cohesion funds, which led to a rare judicial action by the EP against the European Commission before the European Court of Justice of the EU. While the EP elections confirmed the victory of Victor Orbán and his “propaganda factory”, it was also a major loss to the Fidesz party due to a rising opposition by Péter Magyar’s center-right TISZA party that sits with the EPP and is committed to an anti-corruption agenda.

In its timely opinion on the PNSA in March 2024, the Venice Commission denounced the failure to “provide sufficient guarantees of the [Sovereignty Protection] Office’s independence”, noting that this administrative organ, whose President is appointed and dismissed by the executive branch, is by no means an independent agency. Due to the vaguely and broadly defined powers of the Sovereignty Protection Office (SPO), which allowed it to publicly target any legal or natural person without any oversight mechanism, the Venice Commission concluded that “the establishment and activities of the [Sovereignty Protection] Office will have a chilling effect on the free and democratic debate in Hungary.”

Equally concerned was the European Commission, which in February 2024 declared that it would start an infringement procedure against Hungary for adopting the PNSA. The Commission considered that the Hungarian legislation is in violation of “the democratic values of the Union; the principle of democracy and the electoral rights of EU citizens; several fundamental rights enshrined in the EU Charter of Fundamental Rights, such as the right to respect for private and family life, the right to protection of personal data, the freedom of expression and information, the freedom of association, the electoral rights of EU citizens, the right to an effective remedy and to a fair trial, the privilege against self-incrimination and the legal professional privilege; the requirements of EU law relating to data protection and several rules applicable to the internal market.” This infringement, once it reaches the CJEU, could illustrate how the Commission has shifted from a narrow focus to a more systemic litigation approach in addressing rule of law violations in Hungary.

However, it is worrisome that on July 26, when releasing its Rule of Law Report on Hungary, the Commission raised a variety of challenges – including the limits to the freedom of expression and the low remuneration of judges – but only briefly mentioned the SPO’s threats to democracy and free speech, a fact that was highlighted in Transparency International Hungary’s recent report on Hungary’s PNSA (hereinafter TI-Hungary Report).

First Time as Tragedy

In 2017, when the Hungarian government first adopted the Law on Transparency of Organizations that Receive Support from Abroad, this law immediately raised international concerns and was seen as a tragedy requiring immediate action. First, an opinion of the Venice Commission highlighted the problems with a law that portrayed NGOs receiving foreign funding as acting against the interest of the Hungarian society. The Commission identified several problematic aspects of the Draft Law that would undermine constitutional rights including freedom of association, freedom of expression and the right to privacy.

In 2018, following an infringement procedure initiated by the European Commission against the Hungarian government, the Court of Justice of the European Union (CJEU) held that the Law on Transparency of Organizations that Receive Support from Abroad “introduced discriminatory and unjustified restrictions on foreign donations to civil society organizations.” Consequently, this legislation was repealed. However, despite this ruling, the political determination to expose certain civil society organizations to potential sanctions prevailed. Shortly thereafter, the government adopted the so-called “Stop Soros” legislation, “which served to outlaw people who assist asylum-seekers to claim asylum by threatening them with punishments of up to one year in prison.” In 2021, a second CJEU decision, prompted by another infringement procedure, held that Hungary, also through the introduction of the Soros law, had failed to fulfill numerous asylum and international protection obligations under several EU directives.

Preceding the CJEU’s ruling, the Venice Commission voiced severe criticism, too, in an opinion which it concluded by calling on Hungary’s government the repeal the “Stop Soros” law. Because of sustained pressure from the European Union and the Council of Europe, Hungary was compelled to significantly amend the most intrusive provisions of the “Stop Soros” law, including those that criminalized assistance to asylum-seekers.

The enactment of the PNSA in 2024, as the TI-Hungary Report puts it, “serves as a testament to the Hungarian government’s continuous efforts to undermine the credibility of critical civil society organizations, thereby increasing reputational risks and administrative burdens for these groups.” Our concern is that, much like in Marx’s novel, social, political and economic conditions are allowing such law – which appears as a farce and a mere transfer of the Russian Foreign Agents Act – to go under the radar in Hungary, in the EU and worldwide.

The Chilling Effects on the Hungarian Civil Society

Despite its recent adoption, the Hungarian law has already a profound chilling effect on civil society members, whether it is organization working on anti-corruption issues, individual journalists reporting on sensitive topics, or a third-party entity that is being requested to provide information to aid in SPO’s investigations. Although local entities are not required to register with the SPO, the law is intentionally written in an ambiguous and arbitrary way so the public would be kept in the state of intimidation and suspense anticipating potential threats of upcoming investigations and harassments.

Since starting its work in February 2024, SPO has already began to send out inquiry letters to entities openly advocating for transparency, rule of law and freedom of expression. For example, one of the first letters the SPO sent out was a letter to Hungary’s Transparency International (TI), an organization contributing to mitigating corruption, promoting transparency and accountability in the public sphere of decision-making processes. In this letter, SPO informed TI-Hungary about “initiating a specific – and comprehensive – investigation” into activities of organization. TI-Hungary believes that SPO based its investigation on an allegation that TI engaged in and was supporting activities funded from “subsidies from abroad” and thus influencing “the decisions by the electorate”. In the letter, SPO asked 62 questions requesting to provide information within 30 days.

TI-Hungary responded by underlining that the intention of the government is to use the law in order to intimidate citizens and civil organizations that are critical of the government. TI-Hungary added that it was targeted because of their work on fighting corruption which is a sensitive topic for the government because Hungary was designated as the most corrupt country in the European Union in 2022. Additional reason for this investigation was TI’s complaint filed with Constitutional Court arguing that the law is in a violation of the fundamental right to a legal remedy and a fair trial, i.e. people and organisations subjected to the SPO’s procedures cannot seek judicial or other legal remedies against the actions and declarations of the SPO.

While sending inquiry letters is an official way of intimidating the NGOs, the SPO is also using more latent methods of putting pressure on individuals who are perceived to be working on sensitive topics for the government. For instance, in May, 2024, SPO published a report where it provided a data listing a number of entities and individuals who, according to SPO, had foreign influence on the internal politics and acted on behalf of foreign powers.

In this report, SPO listed several individuals including Benjamin Novak, a former New York Times reporter based in Budapest Hungary who wrote critical articles of Viktor Orban’s government, including judicial independence, Hungary’s stance on Russia’s oil export to Europe, Russia’s war in Ukraine, and EU sanctions against Russia. The report hinted that Novak, as a foreign funded reporter, was advancing foreign interests and undermining internal politics by influencing political processes.

SPO is also spreading its influence by requesting third parties to report and provide information that SPO can use in its investigations. For example, SPO sent a letter to the Hungarian Bar Association requesting members of the Bar to provide information about situations “that conflicts with the law on the protection of sovereignty [which] should be brought to the attention of the Office.” Further, the SPO requested the Bar to issue a resolution to lawyers requesting them to report information related to the “protection of sovereignty,” and provide SPO with point of contact at each regional or city bar association’s office. SPO later elaborated on its Facebook page that the office was reaching out to a several government entities and non-governmental organizations to establish cooperation for the “protection of Hungarian sovereignty”. The Bar Association promptly responded that such reporting would go against professional legal standards of attorney-client privilege.

These are just a few examples of the SPO’s recent activities that have already created an atmosphere of fear and intimidation within civil society. The government is intentionally using this law as a political tool to limit public expression of dissent of individuals, journalists and civil society organizations.

More than a Farce: Why should the EU act quickly in Hungary?

As we have highlighted, the dangers and threats that the PNSA poses to independent media, NGOs and even bar associations are enormous and some of these dangers are already materializing by creating major disruption by attempting to eliminate the few independent outlets that have become important critics of the Orbán’s government. While the prompt response of the Venice Commission and the European Commission to what appeared to be a crisis in 2017 was commendable, the situation in 2024, with the European Parliament elections and Hungary’s presidency of the Council of the EU, is concerning. The Commission’s inertia – having announced an infringement action but not yet bringing it before the Court’s registrar – could lead to disastrous consequences for Hungarian media and NGOs.

In fact, infringement actions have proven effective when used as a “stick” against the Orbán government, particularly in a recent case where the CJEU went even further than the Commission in imposing harsher penalties on Hungary. Another judicial tool that has shown its effectiveness is offering a “carrot” to judges who have bravely referred preliminary questions to Luxembourg, despite facing intimidation and disciplinary procedures. In 2021, the CJEU, in its IS case, a ruling by the Grand Chamber, held that “Article 267 TFEU must be interpreted as precluding disciplinary proceedings from being brought against a national judge on the ground that he or she has made a reference for a preliminary ruling to the Court of Justice under that provision.” This ruling was an important signal of support from the Court to Hungarian judges, who receive extremely low salaries and live under tremendous pressure from the government. Hence, the EU has to combat laws that violate Article 2 TEU, as brilliantly articulated by several NGOs, and the urgency to act quickly is paramount. To prevent the harassment of journalists and the potential disappearance of NGOs like Transparency International, the Union and European civil society must take action sooner rather than later.

The views expressed represent the opinions of the authors. They have not been reviewed or approved by the House of Delegates or the Board of Governors of the American Bar Association and, accordingly, should not be construed as representing the position of the Association or any of its entities.