PREVIEW: Under a cloud, Hungary to take the EU's helm

By Ben Nimmo Dec 30, 2010, 2:06 GMT

Brussels - Hungary is to take the European Union's rotating presidency for the first time on Saturday, but it does so under a cloud amid concerns over its press-freedom credentials and finances.

Hungary will be expected to steer EU policy for six months on issues from financial reform to climate change. The controversies are likely to weaken its hold on EU politics just when the bloc is looking for strong leadership in the wake of the economic crisis.

'Hungary is about to start its first EU presidency. In that function it not only needs to accept and endorse, but also defend, all democratic principles that we commonly share,' warned Guy Verhofstadt, one of the most influential members of the European Parliament and a former prime minister of Belgium.

Top of the list of priorities for the presidency is the passage into EU law of a raft of proposals aimed at strengthening the EU's economic policing, so that member states can never again run up the kind of deficits seen in countries such as Greece and Ireland.

The proposals are 'the strongest measures since the beginning of the launch of the euro, and bringing this to a good end is really key' to the presidency, said the president of the council of EU member states, Herman Van Rompuy, on December 17.

Van Rompuy chairs all EU summits, while the bloc's foreign policy chief, Catherine Ashton, chairs meetings of foreign ministers. Hungary will therefore be responsible for running other meetings, most importantly those of finance and justice ministers.

But its credibility on both justice and finance are under attack. First, on December 20 the Hungarian parliament backed a law granting a state media control body sweeping new powers to crack down on independent outlets, and stacked it with members of the ruling party.

That move led to widespread criticism, with top officials in the Czech Republic, Germany and Luxembourg among those to complain.

'As a future EU president, Hungary naturally has a special responsibility for the image of the EU as a whole,' said Christoph Steegmans, a spokesman for German Chancellor Angela Merkel.

Then, on December 23, the Fitch agency cut Hungary's rating to one step above junk, arguing that its budget, passed the same day, was more likely to push the country into trouble than pull it out of it.

The spending plans go in 'the wrong direction for further fiscal consolidation,' Fitch wrote. All three major agencies now rate Hungarian debt as a step above junk.

Hungarian officials have tried to shrug off the criticism, with Prime Minister Viktor Orban saying he 'wouldn't even dream' of changing the media law, and finance ministry officials quoted as saying that the Fitch downgrade ignored a plan to cut debt in 2011.

A pre-presidency briefing led by Foreign Minister Janos Martonyi in Brussels on December 20 sidestepped the issues, emphasizing fiscal regulation, efforts to complete Croatia's membership talks, a push to bring Bulgaria and Romania into the passport-free Schengen zone, and a Hungarian call for a discussion on 'family values.'

Orban is also expected to help lead a summit on energy and innovation, in Brussels on February 4, and one with six former- Communist states, from Belarus to Georgia, in Budapest in May.

But as Hungary takes over the presidency from Belgium, it looks as if its first problem will be to mend its image among its EU peers.

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