Hungary’s Sovereignty Protection Sham
Silencing Dissent and Dodging the EU Funding Conditionality Mechanism
Hungary’s persistent rule of law and corruption shortcomings have led the EU to freeze EUR 27.8 billion in funding under various conditionality regimes. Prime Minister Orbán, who relies on these funds to maintain his political machinery and reward loyalists, has wielded Hungary’s veto in the Council to unlock this funding, a manoeuvre that garnered significant media attention. Far less noticed, however, is a more troubling development: Orbán’s regime is quietly working to silence activists exposing corruption to the European institutions, to eliminate EU scrutiny entirely. For that purpose, Hungary adopted the Act LXXXVIII of 2023 on the protection of national sovereignty (Sovereignty Law), which sets up the Sovereignty Protection Office (SPO), a state entity created to defend Hungarian sovereignty. Or to be more precise, Fidesz’s conception of it. This post examines the Sovereignty Law and calls the EU to effectively halt the SPO’s activities and prevent this model from spreading elsewhere.
Fidesz’s Sovereignty Protection Office
The SPO is designed to carry out invasive investigations against anyone deemed to be pursuing a foreign interest. The law is written in broad and undefined terms, a constant element in the fear strategy of Fidesz, so that it is impossible to foresee what can trigger an SPO investigation. Nonetheless, the choice of the SPO president already gives some hints. The entity is led by Mr. Tamás Lanczi, a former Orbán speechwriter, under whose command the outlet Figyelő published the “Soros mercenaries” list: a list with names of NGO workers, professors and journalists. In March this year he suggested in a television interview modifying the crime of treason to imprison those “working to deprive Hungary of the subsidies it is entitled to” – or, in other words, civil society working with the Rule of Law cycle and EU funding conditionality.
The SPO investigations are unfettered. They cover activities both in Hungary and abroad, as well as those that occurred before the Sovereignty Law’s enactment. The SPO can access and gather information from all state and local authorities – from the intelligence services to the tax administration – and publish it, labelling the investigated person or entity as a threat to Hungarian sovereignty. Moreover, the SPO functions in the absence of procedural safeguards or judicial review. The investigations are coupled with state harassment, as the SPO can forward its findings to law enforcement authorities. On top of this, it can recommend legislative changes and influence the conduct of the public administration. The SPO has no less than 80 workers with the plan to increase the number up to 120.
In its short-lived existence, the SPO has been prolific in attacking anyone cooperating with the EU institutions or deviating from Orbán’s pro-Russian narrative. It has preyed on the opposition MEPs’ for their actions and voting records on EU fund conditionality. Moreover, it launched a probe into Transparency International, treating it similarly as in Russia, before Putin banned the organisation entirely. It has discredited independent journalists while justifying Orbán’s pro-Russian stance on Ukraine, blaming the supporters of the assistance to the invaded country of buying the ideas of Commission President von der Leyen or the High Representative Borrell. The Sovereignty Law was designed to instil fear, and it is effective in its aim. In February, before the SPO began operating, one in six civil society organisations said they were changing their activities as a result of the adoption of the Law.
Silencing criticism has no place in EU Law
As RECLAIM analysed in its legal opinion, Sovereignty Law is incompatible with the EU legal order. The CJEU has consistently maintained that Member States cannot adopt measures that deter from the exercise of the free movement rights – unless they pursue a legitimate aim and are proportional.
Yet, that is exactly what the Law does: it deters the cross-border provision of goods, services, workers and capital, particularly in market sectors like media or civil society. That is the case when Hungarian NGOs change activities to avoid applying for foreign (EU) funding. Similarly, one can imagine that companies will be deterred from using the advertising services of those outlets . And the list of examples could go on. The SPO is designed to convert critics of Orbán into pariahs and to instil self-censorship.
The Sovereignty Law also infringes the EU Charter of Fundamental Rights, violating the freedoms of expression and association, the rights to privacy and data protection and the right to an effective remedy. It is a gratuitous and disproportionate restriction of rights. As the Venice Commission has acknowledged, there is no need in Hungary for an entity like the SPO in addition to the “existing system of security services […], parliamentary committees, law enforcement authorities and courts”.
Due to the serious and systemic breaches of the rights and freedoms protected by the Treaties, the Sovereignty Law generates a chilling effect that undermines the participation of citizens in democratic life, infringing the values of Articles 2 and 10 of the TEU. There is no democratic pluralism if citizens fear speaking up against the government, if they are afraid of state surveillance for joining an association or when they cannot challenge breaches of their civil rights before a court.
When democracy in one Member State is threatened, the system coined in the EU Treaties starts to tremble. If the European elections are tweaked in one Member State, that corrupts the composition of the whole European Parliament. Similarly, if a Member State breaches the principle of democracy, that undermines the correct functioning of the Council, which can get captured in unanimity votes by an undemocratic ruler. That is precisely the case of Hungary, which the European Parliament and NGOs have qualified as an electoral autocracy.
Fortunately, the European Commission has acknowledged the seriousness with which the Sovereignty Law violates the EU legal order – including the democratic values of the EU – and in February initiated infringement proceedings against it. However, the Commission has not acted in a manner commensurate to the severity of the case, providing Hungary with the usual (long) pre-infringement deadlines to repeal its law. It did so ignoring the calls of civil society, who asked for swift action due to the impact of SPO’s smear campaigns against Orbán’s opposition over the results of the EU elections, or about the spread of self-censorship in civil society after the probe on anti-corruption activists. The pre-infringement deadlines have now expired, but the Berlaymont has not yet filed the case before the CJEU. It has also not activated EU funding conditionality rules which the adoption of the Sovereignty Law justifies, as we have explained at RECLAIM. Will the next meeting of the College of Commissioners of September 4 be up to the task and refer Hungary to the Court? And just as importantly, will the Commission request interim measures to suspend the Law and address the rampant spread of the chilling effect in the country?
Another brick in the autocrat’s wall
The adoption of measures against civil society, independent journalism, opposition parties and vulnerable minorities are not isolated events. They belong to a Kremlin-styled autocratic playbook which is spreading fast in Europe. We saw it in Georgia, with its foreign agents’ law. We are witnessing it in Slovakia with a similar law in the pipeline. And we saw it in Bulgaria, where a foreign agents’ bill has been introduced twice in the past four years. Orbán’s Hungary has not only been blocking EU action to stop this undemocratic trend, but rather fuelling the fire of illiberalism from within.
Like the Sovereignty Law, most of the measures of the autocratic playbook violate EU law. In fact, Hungary’s 2017 foreign agents’ law was already declared incompatible with EU law for its breaches of the free movement of capital and the freedom of association. However, the Commission has not always been coherent nor fast when bringing these measures to the CJEU, allowing the measures to encroach on democracy within the Member States.
In this new institutional mandate, the EU should address its past failures in the defence of democracy. And the best way to start would be to develop infringement guidelines to uphold Article 2 TEU the EU Charter of Fundamental Rights in a fast, depoliticised, foreseeable and effective way. Bringing more cases like the Sovereignty Law before the Court will develop red lines that other Member States will not be able to cross. Such case-law would, in turn, provide authoritative guidance to the European policymakers when applying other instruments of the EU toolbox, like EU funding conditionality.
The past decade has evidenced the fragility of democracy, and it is in the Union’s founding mandate and in its best interest to use all means at its disposal to preserve it.
