Why the EU May Be Ready to Rein in Hungary’s Orban

(Bloomberg) -- Three decades after the fall of the Iron Curtain, tensions are again threatening to divide Europe. Populist movements have roiled politics from Britain to Italy and, most recently, Sweden. But they’ve made their greatest gains in Hungary and Poland, where leaders are challenging what seemed like settled norms of democracy in the European Union. The EU is now fighting back. Last year, its executive recommended using Article 7, the so-called nuclear option, against Poland to force it to reverse perceived violations of the rule of law. On Wednesday, the European Parliament votes on whether to do the same against Hungary. They’re part of Europe’s battles against populists that will culminate in elections next year, where the direction of the EU will be decided.

1. What’s Article 7?

Article 7 of the EU treaty is a mechanism for the EU to steer wayward members back toward the values on which the world’s largest trading bloc were founded, including respect for freedom, democracy and the rule of law. If a member state is seen as being at risk of breaching these values, EU institutions, including the European Parliament, can recommend triggering a process that can ultimately end with the suspension of a government’s voting rights.

2. Why is Hungary targeted?

After his election in 2010, Prime Minister Viktor Orban quickly set about transforming Hungary, pushing through a new constitution over opposition protests, curtailing the power of courts, appointing allies to head formerly independent institutions and changing the electoral system in ways that would help him keep power. Throughout those first years, the European Commission, the EU’s executive, tried to restrain his consolidation of power but ultimately settled on compromises that failed to prevent what Orban in 2014 called the end of liberal democracy and the creation of an “illiberal state” with few checks on his power.

3. Why is Hungary back in the spotlight?

The European Parliament’s proposal says it’s time to step in to stem the erosion of Hungary’s democracy. Since his re-election in 2014 and again in April of this year, Orban has continued with a campaign to silence dissent. He’s led a crackdown against non-governmental organizations, the press, universities and is now once again honing in on the judiciary. Beyond Hungary, the 55-year-old leader has become an inspiration for populists around Europe for his nationalist rhetoric and his targeting of immigrants, particularly Muslims, whom he’s called “invaders.” To protect what he calls “Christian Europe,” he built a border fence and forced asylum-seekers into detention camps after a flood of Middle East refugees arrived in 2015.

4. Is Hungary being singled out?

No. Having learned its lesson on Hungary, the European Commission last year recommended using Article 7 against Poland after two years of negotiations failed to dissuade the nationalist government in Warsaw from moving ahead with a judicial revamp that’s forcing out about two-fifth of Supreme Court justices. The Polish ruling party has cited Orban as a model for its overhaul of the most populous eastern EU member, including its attacks on the courts, the media and other fixtures of democratic governance.

5. What do the leaders of Hungary and Poland say about this?

Hungary has called the EU procedure a “witch hunt,” saying it’s driven by an outdated liberal agenda backing a federalist vision of the EU. That’s at odds with Orban’s goal to have national leaders retain the most important decisions. Orban has also said the procedure is meant to pressure him to reverse his anti-immigrant policies. Poland has insisted the EU mind its own business and has said it won’t buckle to EU demands.

6. So will Hungary and Poland lose their votes in the EU?

That’s unlikely. The road to actual sanctions is long and winding and ultimately it requires a unanimous decision to open the way for the suspension of a member state’s voting rights. Hungary and Poland have already pledged to cast a veto if necessary to shield one another from such an outcome.

7. Then what’s the point of going through the motions?

In the EU, processes can be as important as ultimate decisions because there is a political cost in the bloc to being a pariah. Article 7 is a mechanism of last resort but even so, there are plenty of exit ramps before the ultimate penalty may be applied. The aim is not to reach the end of the road but to convince member states along the way to reach a compromise that’s in line with the EU’s core values.

8. What if no one blinks?

Increasingly there’s recognition that the EU must be prepared for that eventuality. The European Commission has proposed linking the bloc’s funding to certain rule-of-law criteria in the next budget cycle, which runs from 2021 to 2027. EU grants for poorer, ex-communist members like Hungary and Poland are vital as they’re net recipients of billions of euros that they use for everything from infrastructure upgrade to supporting startups. The Article 7 process could well serve as a future benchmark for which countries are seen as breaching EU values.

9. How will European elections influence all this?

At the end of the day, voters may well get the final say. Elections to the European Parliament will be held next year and it’s shaping up to be a showdown between centrists -- whether green, liberal, socialist or conservative -- and populist forces. The stakes are high because lawmakers elected to the EU legislature will end up picking the next head of the European Commission, who will set the agenda and direction of the EU going forward.

The Reference Shelf

• The European Parliament’s proposal on Hungary and the text of Article 7.
• QuickTake explainer on populism’s rise and Poland’s battles with the EU.
• A Bloomberg News story on how the populist right is redrawing the map of Europe.
• Orban’s 2014 speech in which he argued for the need to end liberal democracy.
• Hungarian government official’s article calling the EU probe a “witchunt.”
• The Atlantic on the "metamorphosis" of Orban, a onetime student champion of democracy.

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, John O'Neil

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