Last night's Tonight with Vincent Browne debated the Irish government's (and Taoiseach Enda Kenny's) ability to negotiate in the EU. Key to this was an exchange in the Dáil where Michael Martin (the Leader of the Opposition) questioned Kenny's approach at the December summit for not meeting with David Cameron. Kenny replied that he'd been at the EPP pre-summit meeting in Marseilles, and he'd spoken to him by phone.
It was a very strange point to make - that Kenny was incompetent at negotiations because he didn't meet with Cameron, when it's Cameron who's opted out of the EPP (which controls the Council, Commission and is the largest party in the European Parliament), and that Cameron's own skill in negotiations has been seriously questioned since the December veto. The implication seems to be that a clever Irish premier would have been able to steer the British PM right and keep him in negotiations (though if having the pro-EU Lib Dems and a Deputy with plenty of personal European connections couldn't keep Cameron in negotiations, it's hard to see how Kenny could have).
Much more serious is the sense that the Irish government has no European vision or policy because it's absorbed in questions over the EU/IMF/ECB deal. There has been some debate in the media over Ireland's European direction (including the suggestion that Ireland should consider focusing less on aligning itself with a Britain that's flaky on European issues), but politicians haven't been able (or willing) to take up the debate on what kind of Eurozone/EU they want. This really goes for the opposition as well as the government, because the opposition has been focusing on criticising the government for this lack, while not coming up with much itself.
It's a serious defect in our politics that we've not been willing to have a robust debate on the kind of EU and Euro that we want. Do we want Eurobonds and a transfer union? Would we be willing to be major contributors to other Member States under those same conditions in any future crisis 30 years down the road? If we argue for investment-tempered austerity, we should ask ourselves the question: would we be willing to loan billions to, say, Slovakia, in order to invest in its infrastructure to revive its economy and reduce its deficit? Under what conditions, and with what common political institutions?
Without politicians (and enough citizens) taking up this debate, we'll probably find ourselves voting in a referendum a few months from now on the new fiscal compact, rushing ourselves through a low-quality debate and being asked to decide on a fundamental question of Ireland's European direction...
Wednesday, 18 January 2012
Friday, 13 January 2012
Brussels v Brussels: Belgium and the EU clash over the budget
The Commission’s scrutiny of Belgium’s draft budget has caused a political backlash from PS (PES) government minister Paul Magnette:
This was sparked by the Commission’s intervention through its budgetary surveillance role:
Although the Commission has given Belgium a clean bill of health for its budget, how far the Commission should influence how Member States stick within the rules remains an issue. It’s up to Member States to meet their budget targets, but they’re free to do so however they want – it looks like the actual issue here was the credibility of the forecasts that the Belgian government built its budget on. Clearly the forecasts will have to be credible (if Member States could pluck numbers out of thin air or pick and force the Commission to accept them, then the rules would lose much of their force), but the political argument is over the democratic legitimacy of the Commission to involve itself in the sensitive area of national budgets. The Commission has rebutted the argument that it doesn’t have the democratic legitimacy to oversee the budgets:
From the Commission’s point of view (and that of its supporters), it is applying the technical criteria set by the Parliament and Council (see three of the “six pact” acts for enforcement here, here and here [all PDFs]). But Magnette’s frustration goes further – he says the EU’s policies will cause a 15 year long recession, and that the Commission is a bastion of the “right and ultra liberal”. The Commission is dominated by the EPP, and it is a very political institution. But what’s happened with the “six pack” legislation on budgetary monitoring is that the political and economic assumptions behind the EU’s current direction have been enshrined in the technical rules governing the economic union. The Commission can say that it’s just applying the rules passed by the Member States and the democratically elected Parliament because, well, that’s what’s happening. However the Commission proposed these laws and it was politically active in shaping them and guiding them through the Union legislature – if Magnette (or indeed any government ministers or parliamentarians) want to push for different rules or attack the Commission for its political direction, it’s better done during the passage of legislation or when building a coalition for new legislation.
Like the new fiscal compact, there’s a problem for the left here. For there to be the necessary trust to build an economic union with more solidarity, there needs to be a certain level of discipline: it cannot be a one-sided bargain between those (currently) with deficit problems and the (current) core creditors. Magnette is right that the Commission is highly political (though we should distinguish between its political and technical functions), but those opposed to its political direction need to be equally political back. There needs to be support for Commission proposals for them to pass and the left will need a clearer strategy and narrative if it’s to build a coherent and effective opposition. Somehow I don’t expect it to be built around Di Rupo’s socialist-led government...
And Di Rupo? He distanced himself from Magnette’s remarks, citing Belgium’s pro-European traditions.
““Wie kent Olli Rehn? Wie heeft ooit het gezicht van Olli Rehn gezien? Wie weet waar hij vandaan komt en wat hij heeft gedaan? Niemand. Terwijl hij zegt hoe wij onze economische politiek moeten voeren.”
[“Who knows who Olli Rehn [Commissioner for Economic and Monetary Affairs] is? Who has seen Olli Rehn’s face? Who knows where he comes from and what he’s done? Nobody. Yet he tells us how we should conduct our economic policy.”]”
This was sparked by the Commission’s intervention through its budgetary surveillance role:
“The commission caused a flurry in Belgian political circles over the weekend by warning that the country needed to curb this year's spending. Rehn suggested the government's calculations that the budget deficit for 2012 would be 2.8 percent were too optimistic and asked for a cut of between €1.2 billion and €2 billion.
Belgium eventually settled on freezing €1.3 billion in spending, a move that saw it escape the threat of monetary sanctions on Wednesday (11 January) when the commission assessed the matter.”
Although the Commission has given Belgium a clean bill of health for its budget, how far the Commission should influence how Member States stick within the rules remains an issue. It’s up to Member States to meet their budget targets, but they’re free to do so however they want – it looks like the actual issue here was the credibility of the forecasts that the Belgian government built its budget on. Clearly the forecasts will have to be credible (if Member States could pluck numbers out of thin air or pick and force the Commission to accept them, then the rules would lose much of their force), but the political argument is over the democratic legitimacy of the Commission to involve itself in the sensitive area of national budgets. The Commission has rebutted the argument that it doesn’t have the democratic legitimacy to oversee the budgets:
“"De regels zijn regels die zijn goedgekeurd door het Europees parlement en door alle lidstaten", reageerde woordvoerder Amadeu Altafaj. "De 3 procent (de grens voor begrotingstekorten, nvdr) is dus geen dictaat van de Europese Commissie."
[“The rules are rules passed by the European Parliament and by Member States,” said spokesman Amadeu Altafaj. “The 3 procent (the limit for the budget deficit, nvdr) is therefore not a diktat from the European Commission.”]”
From the Commission’s point of view (and that of its supporters), it is applying the technical criteria set by the Parliament and Council (see three of the “six pact” acts for enforcement here, here and here [all PDFs]). But Magnette’s frustration goes further – he says the EU’s policies will cause a 15 year long recession, and that the Commission is a bastion of the “right and ultra liberal”. The Commission is dominated by the EPP, and it is a very political institution. But what’s happened with the “six pack” legislation on budgetary monitoring is that the political and economic assumptions behind the EU’s current direction have been enshrined in the technical rules governing the economic union. The Commission can say that it’s just applying the rules passed by the Member States and the democratically elected Parliament because, well, that’s what’s happening. However the Commission proposed these laws and it was politically active in shaping them and guiding them through the Union legislature – if Magnette (or indeed any government ministers or parliamentarians) want to push for different rules or attack the Commission for its political direction, it’s better done during the passage of legislation or when building a coalition for new legislation.
Like the new fiscal compact, there’s a problem for the left here. For there to be the necessary trust to build an economic union with more solidarity, there needs to be a certain level of discipline: it cannot be a one-sided bargain between those (currently) with deficit problems and the (current) core creditors. Magnette is right that the Commission is highly political (though we should distinguish between its political and technical functions), but those opposed to its political direction need to be equally political back. There needs to be support for Commission proposals for them to pass and the left will need a clearer strategy and narrative if it’s to build a coherent and effective opposition. Somehow I don’t expect it to be built around Di Rupo’s socialist-led government...
And Di Rupo? He distanced himself from Magnette’s remarks, citing Belgium’s pro-European traditions.
Thursday, 12 January 2012
Shifts on the New Fiscal Compact
The EU Observer has reported some changes in the drafts on the new fiscal compact:
The "golden rule" on deficits will no longer have to be inserted into constitutions, so the final deal could simply require an act of parliament to ensure governments don't spend over a certain limit. This would get around the need for referendums in several Member States, but it could open up political problems in the future if budgets passed by parliaments are being challenged by other EU countries in the courts - a potentially politically toxic situation.
France's position on the Commission's powers is revealing and worrying for the credibility of the pact. Given that it's simply a Stability and Growth Pact Plus, further entrenching the current rules, the institutional and political credibility of the mechanisms actually working was the key problem. Of course, if any contracting country can take another to court, then it's more likely to happen than under the current system which requires a vote in Council. Still, France wants the Commission to be kept away from this position of power because diplomacy could still influence the outcome - and this would be much more advantageous to larger Member States who could throw their weight around more. The potential for differences in treatment echo the complaints from the smaller Member States that France and Germany were among the first to break the Stability and Growth Pact in the last decade. Also, the value of integrating the deal into the current treaties for the European Parliament is questionable if the Commission's role is minimal, since there would be little for the EP to act on.
Finally, setting the minimum number of Member States at 12 for the treaty to come into effect will, if it's in the final draft, have a big effect in the parliamentary votes and referendum campaigns as it ensures that even some Eurozone states could reject it (and stay outside it), and the deal wouldn't be completely stopped. The fear of exclusion (and the effect of this on the economies of the excluded Eurozone States) will make opposing the deal more problematic, and it will be a major feature of the Yes campaigns.
UPDATE: Honor Mahony has written a good blog on the problems these shifts reveal for the future of the negotiations.
"The role of the EU commission in taking debt sinners to court for not properly transposing the golden rule into national law, an idea introduced in the second draft at the demand of the European Parliament, has also been watered down to the commission "issuing a report" at the demand of another country adhering to the pact.
The power of taking countries to court is instead to reside with countries - a u-turn going back to the first draft - after French worries the commission risks becoming too powerful.
[...]
Another watering down of earlier drafts rules out introducing new sanctions for countries that break rules on overall public debt, opting instead to limit such penalties to ballooning budget deficits.
[...]
The 'working group' which is pumping out the texts - a mixed bag of member states' officials led by a Luxemburger - kept another EU parliament demand, to enshrine the intergovernmental pact in EU Treaty law in the next five years.
But it also changed the threshold of countries needed to ratify the pact for it to come into force from 15 to 12. In the first draft, the threshold was even lower, at nine countries."
The "golden rule" on deficits will no longer have to be inserted into constitutions, so the final deal could simply require an act of parliament to ensure governments don't spend over a certain limit. This would get around the need for referendums in several Member States, but it could open up political problems in the future if budgets passed by parliaments are being challenged by other EU countries in the courts - a potentially politically toxic situation.
France's position on the Commission's powers is revealing and worrying for the credibility of the pact. Given that it's simply a Stability and Growth Pact Plus, further entrenching the current rules, the institutional and political credibility of the mechanisms actually working was the key problem. Of course, if any contracting country can take another to court, then it's more likely to happen than under the current system which requires a vote in Council. Still, France wants the Commission to be kept away from this position of power because diplomacy could still influence the outcome - and this would be much more advantageous to larger Member States who could throw their weight around more. The potential for differences in treatment echo the complaints from the smaller Member States that France and Germany were among the first to break the Stability and Growth Pact in the last decade. Also, the value of integrating the deal into the current treaties for the European Parliament is questionable if the Commission's role is minimal, since there would be little for the EP to act on.
Finally, setting the minimum number of Member States at 12 for the treaty to come into effect will, if it's in the final draft, have a big effect in the parliamentary votes and referendum campaigns as it ensures that even some Eurozone states could reject it (and stay outside it), and the deal wouldn't be completely stopped. The fear of exclusion (and the effect of this on the economies of the excluded Eurozone States) will make opposing the deal more problematic, and it will be a major feature of the Yes campaigns.
UPDATE: Honor Mahony has written a good blog on the problems these shifts reveal for the future of the negotiations.
Monday, 9 January 2012
The Orbarony of Hungary
This weekend saw, rightly, a wave of stories about Hungary (see yesterday's Week in Bloggingportal for some blog articles). The new constitution came in for a strong attack by the Party of European Socialists president Sergei Stanishev:
The PES counts the opposition MSZP party among its members. The changes brought about by the new constitution are:
The governing Fidesz party is part of the European People's Party, which controls the Commission and the Council of the EU, and is the biggest party in the European Parliament. The Economist has called for the EPP to be tough on its wayward member:
The only communication I can find from the EPP on the issue was this press release, stating that they would support whatever decision the Commission took on the constitution's compatibility with EU law - but this is not simply a matter of compliance with EU legal requirements (though The Economist points out that the Commission should stand firm on the requirement for an independent central bank). This is a question about European values and the standards of democracy that a Member State should be held accountable to. Candidate countries have to measure up to a certain democratic standard: so should current members.
While the EPP may control the Commission and play up its central role in European politics (every press release ends with a note to the editor on the size and influence of the Europarty), but as a political and parliamentary group it seems content to accept the decisions of the Commission and Council - no rebellious backbenchers, these. The press release shows the party trying to have it both ways, stating that they would support technical corrections, but using language supporting Orban's post-Communist narrative of the new constitution:
The EU cannot work if we don't stick to our common values: what happens to the trust that cooperation and common rules have to be founded on to work, if we don't feel that some members aren't following the same basic standards? It's an issue that we need to be strong enough to take on. Not only when it comes to Hungary, but for all members.
"Hungarian democracy is under siege. The actions of the conservative Fidesz government under Prime Minister Viktor Orbán have resulted in an unprecedented attack on basic international democratic standards. It is an extraordinary thing to say in the year 2012, but the cold hard fact is that the European Union could now be said to include a non-democratic state as one of its members.
Now it is a test for European leaders and institutions of their commitment to democratic values when democracy is at stake. It is not a matter of internal policy but rather the question of whether the EU will preserve one of its core values and features. A new constitution has been in place in Hungary since January 1 this year. It contains set of provisions that are an attempt to institutionalise authoritarian rule. The measures have been, accurately, described as a 'constitutional coup'.
[...]
The essential point is this: there does not seem to be any end-point to the actions of Fidesz. Their actions indicate a consistent and quickening slide towards authoritarian rule. Those responsible have not listened to rational requests and they have not heeded eloquent calls to respect democracy. Therefore the international community must look at more robust measures."
The PES counts the opposition MSZP party among its members. The changes brought about by the new constitution are:
"- The Constitutional Court has been stripped of its powers
- The government can decide which judges will review which cases
- The supervision of elections is overseen by a new Council of Government party appointees
- A'media board' of government appointees has been given power to decide what constitutes "balanced" media coverage and has been allowed to impose fines which only be appealed after payment
- Tax and fiscal policy, including a new flat tax, can only be changed by a two-thirds majority.
- The government can appoint a deputy governor to the central bank
- Provisions to protect citizens from discrimination based on sexual orientation have been deleted."
The governing Fidesz party is part of the European People's Party, which controls the Commission and the Council of the EU, and is the biggest party in the European Parliament. The Economist has called for the EPP to be tough on its wayward member:
"Mr Orban’s fellow centre-right leaders, who include Germany’s Angela Merkel and France’s Nicolas Sarkozy, have more leverage over him than other European politicians, and therefore a particular responsibility to take him to task. Fidesz is proud to belong to their umbrella group, and the biggest political family within the EU, the European People’s Party. Threatening to chuck Mr Orban out of the EPP could be the best way of steering him off the path towards autocracy."
The only communication I can find from the EPP on the issue was this press release, stating that they would support whatever decision the Commission took on the constitution's compatibility with EU law - but this is not simply a matter of compliance with EU legal requirements (though The Economist points out that the Commission should stand firm on the requirement for an independent central bank). This is a question about European values and the standards of democracy that a Member State should be held accountable to. Candidate countries have to measure up to a certain democratic standard: so should current members.
While the EPP may control the Commission and play up its central role in European politics (every press release ends with a note to the editor on the size and influence of the Europarty), but as a political and parliamentary group it seems content to accept the decisions of the Commission and Council - no rebellious backbenchers, these. The press release shows the party trying to have it both ways, stating that they would support technical corrections, but using language supporting Orban's post-Communist narrative of the new constitution:
""The Hungarian Parliament adopted on 18 April 2011 a new constitution that replaced a Stalinist-type constitution, which dated from 1949. Hungary was the only country in Central Europe which could not draft a new fundamental law since the fall of communism. The new constitution has incorporated the Charter of Fundamental Rights and also a new, fairer electoctal system was established which offers the possibility for minorities to be represented in Parliament," said [EPP Leader and EP Group Chairman] Martens and Daul.
"At the same time, we are well aware that the European Commission has raised issues on some pieces of legislation and is currently examining the English and French translations to determine if they comply with EU law. [...] Needless to say, the EPP will back the Commission’s recommendations that will ensure Hungary’s full compliance with EU law.""
The EU cannot work if we don't stick to our common values: what happens to the trust that cooperation and common rules have to be founded on to work, if we don't feel that some members aren't following the same basic standards? It's an issue that we need to be strong enough to take on. Not only when it comes to Hungary, but for all members.
Sunday, 8 January 2012
"The European Citizen" - Three Today!
The European Citizen has now been going for three years! This year has been the quietest so far on the blog, even if it's been packed full of crises in the real world. Still, some of 2011 in the EU has been reflected here.
First, there was the long-awaited Irish election as the government collapsed over the need to go to the EU and IMF for loans to keep the country running. Along with Stephen Spillane, I helped follow it here and on MSN.ie with a blogging round-up series. The new governing parties have come up with a lot of constitutional reform ideas, and with the new constitutional convention coming up this year, delivery will be a key issue. Internationally, the EU was taken by surprise (like everyone else) by the Arab spring.
In the UK one of the most memorable debates was over prisoners' voting rights and (suggested from some quarters) withdrawal from the European Convention on Human Rights. I backed the loosing side in the AV referendum in April: British ethusiasm for First Past the Post is still confusing for me, though perhaps I just grew up in a different political atmosphere (Northern Ireland/Ireland), where the (proportional) Single Transferable Vote would have to be pried from voters' cold, dead hands (what voter would want to give up the power proportional representation gave them?). I also blogged about the debate on parliamentary sovereignty in the UK Parliament and what the difference is between a free trade area and the common market. But then it's sometimes hard to understand what kind of Free Trade the Tories believe in...
Citizenship was a big issue legally in the Court of Justice in Luxembourg - with the Zambrano case promising a new approach, before the law was cruelly reversed (if it ever had been changed) in McCarthy. This was probably the most legal I got all year! Old, more political chestnuts returned, like debates on European democracy and the values of referendums on the EU.
Barroso delivered his Commissarial Speech in September, showing just how much the EPP have shifted leftwards (or at least, how far their leaders have) - this was perhaps symbolised by the revival of debate around a Financial Transaction Tax. I also followed the PES and attended their Re:New conference (You can read my posts here, here, and here).
The year's end highlighted the two central questions we'll face this year: how many member states will join together and integrate further (sparked by the UK's veto and it's effects), and what kind of Eurozone do we want - and how will the left respond to the New Fiscal Compact?
This year I hope to be a bit more active - it looks like there'll be plenty to cover.
Hope you've a good 2012!
First, there was the long-awaited Irish election as the government collapsed over the need to go to the EU and IMF for loans to keep the country running. Along with Stephen Spillane, I helped follow it here and on MSN.ie with a blogging round-up series. The new governing parties have come up with a lot of constitutional reform ideas, and with the new constitutional convention coming up this year, delivery will be a key issue. Internationally, the EU was taken by surprise (like everyone else) by the Arab spring.
In the UK one of the most memorable debates was over prisoners' voting rights and (suggested from some quarters) withdrawal from the European Convention on Human Rights. I backed the loosing side in the AV referendum in April: British ethusiasm for First Past the Post is still confusing for me, though perhaps I just grew up in a different political atmosphere (Northern Ireland/Ireland), where the (proportional) Single Transferable Vote would have to be pried from voters' cold, dead hands (what voter would want to give up the power proportional representation gave them?). I also blogged about the debate on parliamentary sovereignty in the UK Parliament and what the difference is between a free trade area and the common market. But then it's sometimes hard to understand what kind of Free Trade the Tories believe in...
Citizenship was a big issue legally in the Court of Justice in Luxembourg - with the Zambrano case promising a new approach, before the law was cruelly reversed (if it ever had been changed) in McCarthy. This was probably the most legal I got all year! Old, more political chestnuts returned, like debates on European democracy and the values of referendums on the EU.
Barroso delivered his Commissarial Speech in September, showing just how much the EPP have shifted leftwards (or at least, how far their leaders have) - this was perhaps symbolised by the revival of debate around a Financial Transaction Tax. I also followed the PES and attended their Re:New conference (You can read my posts here, here, and here).
The year's end highlighted the two central questions we'll face this year: how many member states will join together and integrate further (sparked by the UK's veto and it's effects), and what kind of Eurozone do we want - and how will the left respond to the New Fiscal Compact?
This year I hope to be a bit more active - it looks like there'll be plenty to cover.
Hope you've a good 2012!
Friday, 6 January 2012
Send in the Junior Ministers
Given the talk about the UK and the infamous veto and what it means for British diplomacy, it might be worth puzzling over the French use of its Junior Ministers.
French EU Affairs minister Jean Leonetti made a strong prediction for the Financial Transaction Tax being passed this year as France and Germany had decided it:
This obviously will rub the other Member States up the wrong way, but it's not the first time France's junior ministers have mouthed off, and last month saw a big spat between the UK and France over the UK's credit rating. It's an astonishing way to do politics, and you have to wonder at the tactics behind it (or the political control and coherence in the heart of government). Britain might have shot itself in the foot last month, but France would be a fool if it thinks this behaviour won't impact on its diplomatic success.
French EU Affairs minister Jean Leonetti made a strong prediction for the Financial Transaction Tax being passed this year as France and Germany had decided it:
"He added: "France and Germany have already agreed on it. And I believe the new Italian government, with which we have been in contact, is not opposed. Twenty six out of 27, in fact all the EU countries except Great Britain have no objections to the idea, and except Sweden, which had a bad experiment in this area.""
This obviously will rub the other Member States up the wrong way, but it's not the first time France's junior ministers have mouthed off, and last month saw a big spat between the UK and France over the UK's credit rating. It's an astonishing way to do politics, and you have to wonder at the tactics behind it (or the political control and coherence in the heart of government). Britain might have shot itself in the foot last month, but France would be a fool if it thinks this behaviour won't impact on its diplomatic success.
Hungary for change
Last year when Hungary was taking over the rotating Council presidency, the Fidesz government was bringing in a controversial media law which we launched a blogging action over. Though the law was revised after discussions with the EU, EU law in the area is mostly market-based. This time around the independence of the Hungarian Central Bank is under threat and is the source of a dispute between Hungary and the IMF:
The markets haven't reacted well to Hungary's course either:
At the moment Orban's government seems intent on sticking to it's course despite protests and pressure from the EU and IMF - perhaps the plan is to use the bank to print more money to avoid the necessity for the IMF loan. Fidesz's two-thirds majority in the Hungarian parliament allows it to change the constitution, and it's been making full use of the opportunity. Orban has made it clear that he sees these changes as the end-point of Hungary's post-Communist path:
It seems pretty odd to be portraying the rapid expansion of executive power as an anti-Communist evolution, particularly when former Communist dissidents are protesting against Fidesz's constitutional changes. Orban's rhetoric also smacks of Hungarian exceptionalism and is reminiscent of the talk of differing values and rights from the media law debates last year (not that anyone explained how Hungarian rights should differ from those set out in the European Convention on Human Rights or the values in the EU treaties).
As the EU deals mostly with internal market, security and environmental matters, and the Council of Europe's Convention and Court of Human Rights deals with human rights law and standards, the EU isn't well equipped or experienced enough to deal with Member States drifting away from the standards required for membership. Article 7 TEU gives us a nuclear option of sanctioning a Member State who risks breaching the values of the EU, but it would require a four-fifths majority of Member States and a majority in the European Parliament, which is unlikely to be reached (and would need to be focused on the health of Hungary's democracy and media rather than the central bank).
It does raise an interesting question though: what "red lines" should the EU have for Article 7 action, and how much constitutional change can be brought about before the EU starts questioning whether a country is still membership material?
"Hungary, the EU's most indebted eastern member, already saw its credit rating downgraded to junk in December and initiated talks for a standby loan from the International Monetary Fund (IMF).
But the centre-right government led by Viktor Orban has pursued controversial legal changes to some of the country's independent institutions, including the central bank and media bodies, prompting IMF negotiators to walk out of talks.
The laws came into force on 1 January, prompting tens of thousands of people to take to the streets on Monday and repeated warnings from the EU commission that it may take Hungary to court."
The markets haven't reacted well to Hungary's course either:
"The forint fell to 319.4 against the euro, a record low after a gradual depreciation of 20 percent in the last six months, while 10-year bond yields spiked to 10.5 percent, the highest since April 2009."
At the moment Orban's government seems intent on sticking to it's course despite protests and pressure from the EU and IMF - perhaps the plan is to use the bank to print more money to avoid the necessity for the IMF loan. Fidesz's two-thirds majority in the Hungarian parliament allows it to change the constitution, and it's been making full use of the opportunity. Orban has made it clear that he sees these changes as the end-point of Hungary's post-Communist path:
"In Orban's view, the new legal text "marks the end of the country’s transition to democracy from Communism" - as he explained in an interview with the Magyar Nemzet newspaper on 24 December.
Foreign journalists are "right when describing what happens in Hungary not just as simple governance, but a regime change," he told the newspaper.
"They say this in a disparaging way but I think this is a compliment. We Hungarians have failed for over a hundred years to show western Europe our own virtues.""
It seems pretty odd to be portraying the rapid expansion of executive power as an anti-Communist evolution, particularly when former Communist dissidents are protesting against Fidesz's constitutional changes. Orban's rhetoric also smacks of Hungarian exceptionalism and is reminiscent of the talk of differing values and rights from the media law debates last year (not that anyone explained how Hungarian rights should differ from those set out in the European Convention on Human Rights or the values in the EU treaties).
As the EU deals mostly with internal market, security and environmental matters, and the Council of Europe's Convention and Court of Human Rights deals with human rights law and standards, the EU isn't well equipped or experienced enough to deal with Member States drifting away from the standards required for membership. Article 7 TEU gives us a nuclear option of sanctioning a Member State who risks breaching the values of the EU, but it would require a four-fifths majority of Member States and a majority in the European Parliament, which is unlikely to be reached (and would need to be focused on the health of Hungary's democracy and media rather than the central bank).
It does raise an interesting question though: what "red lines" should the EU have for Article 7 action, and how much constitutional change can be brought about before the EU starts questioning whether a country is still membership material?
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