Hungary: Crackdown on Civil Society à la Russe Continues
May 18, 2017
By Péter Krekó
Closing space at a record pace
On April 4, 2017, Hungary made headlines when the nation’s parliament passed a law enabling the government to tightly regulate foreign universities. Most analysts believe that the legislation was motivated by the government’s determination to shut down the Central European University (CEU) – a university founded and funded by George Soros.
This move fits into the general political trajectory of Hungary. Since his re-election as Prime Minister in 2014, Viktor Orbán has turned his back on the West and pursued a decidedly illiberal vision. As a result, democratic values and principles have declined significantly. It was noted in Freedom House’s latest report that “democratic governance in Hungary, a pioneer of ‘illiberal democracy,’ has further deteriorated.” The decline of democracy in Hungary coincides with the dramatic increase of corruption – the main driving force for Orbán’s regime. As explained by Miklós Ligeti, the legal director of Transparency International Hungary, “[t]hose in power regard public funds in Hungary as their own.”
The law targeting CEU is only one among many steps towards a more closed and government-controlled political and social model. In fact, authorities plan to pass a bill (scheduled for May 30) similar to the foreign agent law in Russia. The proposed law stipulates that civil society organizations will be under legal obligation to disclose their foreign funding, register themselves as foreign-funded organizations in the courts, and display this label on all of their public materials and outreach; otherwise, they may face legal consequences that could lead to their closure. History has shown that such requirements have a devastating effect on the civil society sector. The Russian foreign agent law, for instance, led many organizations to voluntarily terminate their operations rather than accept the label of a foreign agent, which is equivalent to being deemed a traitor or a spy.
The case in Hungary will not be any different. The objective of this bill is not only to demonize local civil society organizations financially supported by international organizations and the values they represent, but also to weaken those non-governmental organizations (NGOs) that are critical of the government. This move is nothing more than a government-sponsored smear campaign, seeking to discredit local organizations in the eyes of the populace and cut their links to local constituencies.
CSIS’s report The Kremlin Playbook, published last year, summarized the Hungarian situation well: “[i]n Hungary, Prime Minister Viktor Orbán has directly credited Russia as a model for his own set of illiberal reforms (which include the creation of a new Hungarian constitution). This has been particularly evident in Hungary for the past six years, where leaders have diminished the independence of democratic institutions, such as the media, the judiciary, and the central bank, to regain control.” The shutdown of CEU and the proposed foreign agent bill show that civic space in Hungary is closing at a record pace. As in the case of weakening the independence of other institutions, the government’s systematic attempts to shrink the space for civil society are inspired, and in some cases even directed, by Moscow.
Foreign agents everywhere!
As outlined in the draft of the proposed foreign agent bill, a Hungarian civil society organization receiving foreign financial support amounting to more than HUF 7.2 million, approximately $25,000 USD, is obliged to declare this amount at the courts. The court would then attach this declaration to the organization’s registration information. The NGO is further required to publicly announce that it is “foreign funded” on all of its public materials (e.g., press releases, reports, etc.). This in turn means that the NGO has to wear this “badge of dishonor” permanently.
Any organization that fails to declare its foreign support and register itself at the relevant regional court could face financial penalties. If the organization receives two warnings for failing to provide financial information and to register, the Prosecutor’s Office may request the court to dissolve the organization.
The organization must also provide a detailed list to the registration court of every financial transaction it undertakes. The court could then forward the declaration to the government-operated Civil Information Portal that will publish all this information. We can expect that the government-controlled media and pro-government politicians will use this information in harsh smear campaigns to destroy the credibility of these organizations and sever their ties with local constituencies.
Of course, the government is careful not to include organizations linked to its political allies and supporters. Churches and sports organizations, party foundations, and public foundations would not fall under the scope of the law. These exceptions are not inconsistent with the rationale behind the bill, which is predicated on the government’s desire to create transparency, combat money-laundering, and defend national security. As such, if the Russian Federation supports a church, a sports club, a university, or a party foundation in Hungary, these organizations will not be subject to new legal impediments.
Moreover, any financial support originating from the European Union (EU) will not be considered funding from abroad as long as it is received and distributed by the Hungarian state. This is to keep government-affiliated NGOs out of the scope of the bill and not to subject them to “transparency” requirements. These organizations usually receive a huge amount of money from the government, often EU funds. At the same time, per the proposed bill, independent NGOs receiving direct support from EU institutions will be listed as foreign-funded organizations. This is significant given that Hungary is a member of EU, and EU funds are partially composed of Hungarian taxpayers’ money.
The foreign agent bill, expected to be passed in the Parliament by the governmental majority in the coming weeks, is not without precedent. And, the plan to close civic space was signaled well in advance. Prime Minister Viktor Orbán, who found himself without almost any domestic political opposition in the aftermath of the 2014 elections, where he gained a two-thirds majority of parliamentary seats for the second time in a row, articulated his plans in a 2014 speech in Baile Tusnád. In this speech, he highlighted the extensive strategy of building up a “workfare state” that must “abandon liberal methods and principles of organizing a society, as well as the liberal way to look at the world.” He identified his main enemies as the “liberals” in the West, and directly mentioned the United States, the European Union, and NGOs as the agents that he believed would constrain his power. He noted that:
[W]e have to deal with paid political activists here. And these political activists are, moreover, political activists paid by foreigners(…) It is vital, therefore, that if we would like to reorganize our nation state instead of the liberal state, that we should make it clear, that these are not civilians coming against us, opposing us, but political activists attempting to promote foreign interests. Therefore, it is very apt that a committee was being formed in the Hungarian parliament that deals with constant monitoring, recording and publishing foreign attempts to gain influence, so that all of us here, you as well, will know who the characters behind the masks are.
Following this speech, NGOs receiving foreign funds were targeted by authorities, particularly those supported by the Norwegian Fund. On September 8, 2014, Hungarian police raided the offices of two NGOs, Ökotárs Foundation and DemNet Hungary, in addition to searching the homes of their leaders and seizing documents and data. While no legal charges have been brought, they were accused of illegal party financing and money laundering. In reality, Ökotárs Foundation and DemNet Hungary sub-granted funds to other local NGOs that promote democracy, civil society, environmental awareness, and independent media, in legal cooperation with the Norwegian Fund. It was Viktor Orbán himself who officially ordered the investigation against these NGOs. While a court in Budapest found the raids illegal, the pressure on receiving foreign funds remains. The government constantly threatens local NGOs with the suspension of their tax number, which could force these organizations to halt their operations and activities at any time.
Prime Minister Orbán is following in the footsteps of Russian leadership on tightening the space for civil society organizations. In the aforementioned speech, Orbán mentioned mainly non-democratic countries as models – chief among them Russia. He often calls the Kremlin to establish “friendly” relations with Moscow. As in the Russian Federation, Hungary is employing a three-layered, systematic attack against civil society actors to make their work impossible:
- Publicly discrediting NGOs as enemies of the people. Pro-government politicians often label NGOs that critique government policies as “foreign agents.” This naming, blaming, and shaming strategy is used as a pretext to crack down on these NGOs. It also serves as a method for rhetorical self-defense. The “foreign agent” label gives the government a convenient way to dismiss the credibility or ignore the reports by international organizations domestically. For example, the Hungarian government rejected Transparency International’s findings on the increasing level of corruption in the country on the basis that it is on the Russian list of “foreign agents” and is part of the “Soros organized corruption scheme.”
Additionally, the government incites violence against members of civil society organizations and engages the public in these actions. Prime Minister Viktor Orbán implicitly indicated the need to attack certain NGOs, noting “many people’s palms are itching – even the palms of those who otherwise are peaceful and upright Christians.” Many pro-government opinion-makers made statements that are eerily similar to the Prime Minister’s words. Following the peaceful protest against the proposed bill on foreign agents, Zsolt Bayer, a controversial pro-government publicist, said that “next time, if needed, their [the protestors] face should be beaten to a pulp. Because this is the Parliament of Hungary, and not the public toilet where they belong.” These kinds of comments provoke no legal consequences or official rebuke.
- Cutting off financial resources. In Russia, the foreign agent law and the ban on undesirable organizations reduced financial resources essential to the functioning and survival of civil society organizations. Like the Russian regime, the Orbán government uses bureaucratic measures to harass and disrupt the work of NGOs. This campaign has already had a chilling effect on funding. A number of donors have terminated their grant making activities in Hungary or are being more “cautious” when selecting their grantees, which in turn has adversely impacted the operation of these NGOs. Furthermore, the government is determined to undermine the sustainability of civil society work although such action might cause a suspension of financial support it receives from foreign governments. Because of the debates around the Norwegian support for the civil sector, in 2014, the Norwegian government temporarily suspended all of its assistance to Hungary. Further, these restrictive measures and the government’s interference in NGO funding have led the Norwegian government to indicate the possibility of suspending its financial support now as well. This would be an even bigger tragedy for the whole country – 90 percent of the money would go to the government to spend on development projects, while only 10 percent would go to civil society organizations.
- Building up a government-controlled NGO and think-tank sector. Orbán’s administration has followed Russia’s lead in creating and funding an alternative network of civil society organizations that serve as the domestic and international mouthpieces for the government. Government-organized NGOs (GONGOs) such as Civil Összefogás Fórum organize pro-governmental rallies in Hungary and in Brussels. While party-organized non-governmental organizations (PANGOS) such as “Alapjogokért Központ” try to defend the government’s position legally, governmental think-tanks such as Századvég provide supportive “analysis” of the validity of government’s policies and strategies.
The possible impact of the new bill
The name, shame, and blame logic of the foreign agent bill will not only have negative impact on the work of civil society actors but also will be extended to donors, including foreign embassies. Among the bilateral donors affected will be the United States, which is a primary contributor of funds to NGOs working on human rights in the region. As a result, the government and its proxies could accuse embassies and donors organizations, such as George Soros and the National Endowment for Democracy, of interfering in domestic affairs and violating the country’s sovereignty.
Additionally, such a bill – as is the case in Russia – would generally serve the purpose of facilitating the introduction of further legal impediments beyond the lengthy registration process. As the government does not cooperate with the organizations that are registered as foreign agents, in any form, they cannot receive public money and cannot rent a public property. Further legal barriers can be expected.
Clearly, the rationale behind the proposed bill is not to create a transparent modus operandi for civil society. The 2011 Law on the Registration of Civil Society Organizations already places legal obligations on NGOs to publish information on financial foreign support they receive – and most of the organizations do so on a regular basis.
The legislative proposal seeks to fit the Russian model into the framework of the Hungarian and European legal order. However, it raises a number of questions on its legality and non-compliance with the rights to the freedom of association, to the freedom of expression, and with the fundamental goals of European integration and the free movement of capital within the EU. If the government can push it though, further legislative actions can come – such as passing the equivalent of the law against donors, “undesirable organizations” in Russia. It could become impossible for truly independent NGOs to operate in Hungary. The government would be able to achieve its goal while NGOs await a regional or international legal remedy – such as filing a complaint in the Strasbourg Court or undertaking an infringement procedure within the EU – to annul this bill.
The United States does the same, doesn’t it?
The Hungarian government often uses, domestically and internationally, rhetoric that this proposed bill is practically the same–or even milder–as the United States Foreign Agents Registration Act (FARA). This is deliberately misleading. Ironically, this is also inspired by the Kremlin, which claimed, when introducing its law on foreign agents, that it is the same as the American FARA. Nothing can be farther from reality.
FARA was created in between the two World Wars, when foreign agency and espionage was a question of life or death. Hungary, luckily, besides some joint external military missions with the United States, is not at war with any other states. Furthermore, while the Russian and Hungarian proposal is likely to have serious legal consequences for the operation of the entire civil society sector, this is not the case with FARA, which is invoked rather occasionally. The subjects of the two regulations are also totally different: FARA is limited to agents of a foreign principal seeking to influence public opinion, policy, or laws, while the Hungarian regulation is about all non-governmental organizations receiving foreign funds. In the United States, receiving funds from foreign sources, even governments, is insufficient for registering an organization as foreign agent. The organization must be acting in the interest or at the behest of a foreign power. In contrast, in Russia, practically any type of NGO that receives or intends to receive funding from any foreign source (not just from a state) and that conducts or intends to conduct political activities is labeled as a foreign agent – and the Hungarian bill follows this line. Also, FARA does not allow authorities to suspend organizations in violation of the act, whereas the Hungarian and Russian bills enable governments to dismantle organizations that fail to register themselves.
While the government repeatedly argues that the new bill will defend the interest of Hungary and Hungarians, it could jeopardize the existence of ethnic Hungarian communities in neighboring countries. Six months ago, the Hungarian opposition party Jobbik recommended the adoption of a law regulating foreign funded organizations. A member of parliament of Fidesz argued against the regulation in a parliamentary committee, claiming that it was “horrible” and goes against the interests of the nation. In the own words of Róbert Répássy, member of the Fidesz group in the parliament:
I agree with the need for transparency, but I do not agree with the stigmatization of these institutions that the bill proposes. The Hungarian state, for historical reasons, and due to its geographical position... finances quite a lot of foreign organizations. These are all Hungarian organizations outside Hungary. This... is important for national political considerations. Furthermore, these are not private foundations, but the... Hungarian state itself that supports Hungarians in Ukraine, Slovakia, Romania and Serbia. Now let’s... imagine that, encouraged by your bill, the Slovakian Parliament or the Romanian Parliament would make...a bill, stigmatizing these institutions as foreign agent organizations....[I]n Transylvania for example, the ... Sapientia University and several other organizations receive direct funding from the Hungarian State..... So, I can only say that while transparency is needed, but what you propose afterwards, is simply horrible.
It is clear that Fidesz’s bill on CEU and the proposed one on NGOs can cause damage not only to NGOs in Hungary but also to institutions of ethnic Hungarians in surrounding countries, setting a dangerous precedent across the region. Former Prime Minister Victor Ponta of Romania, inspired by the new law on CEU in Hungary, wrote a Facebook post that praised the law and recommended similar legislation to be developed in his country, which would make the operating environment of Hungarian Universities in Romania restrictive. Also, similar bills on foreign agents in surrounding countries would put organizations financed by the Hungarian state in jeopardy.
This leads to a somber conclusion. The government’s efforts to close civic space serve to defend the security of a state – not of Hungary, but of the Russian Federation. The democratic erosion and the spillover has a multiplier effect. If this law is passed in Hungary, similar laws are likely to be adopted in various countries in the region. It would be a great victory for Vladimir Putin, and a big loss for the United States and Europe. As the EU seems to be hesitant and lacks tools to step up against Hungary, it is imperative for the United States to defend the goals upon which it bases its relationship with Hungary, namely, building “stability in the Balkans and promoting democracy in Europe’s East.” The United States, a key contributor to Hungary’s military assistance, has a special responsibility to stop the political Putinization of Central Eastern Europe by linking assistance to the Hungarian government with lifting restrictions on civic space and with advancement of human rights.
is Senior Associate at Political Capital Institute, a think-tank in Budapest, and currently a Fulbright Visiting Professor at the Central Eurasian Studies Department at Indiana University.