Members of the Club

All the drama surrounding Europe’s debt crisis has prompted a great deal of discussion about which countries are fit for membership in the club –should Greece stay, should it go from the Eurozone., etc. But the economic crisis has both overshadowed and exacerbated problems of another sort in Europe - whether countries meet the minimum requirements of a democracy to belong to Europe.

Yesterday a referendum was held in Romania to try to oust center-right President Traian Basescu, organized by his rival, the center-left Prime Minister, Victor Ponta. It failed only because it was unable to attract 50% of the voters but 80% of those who did vote were in favor of recall, at least in part because of unhappiness of the dire economic situation in Romania which has seen tax increases, a currency losing value against the Euro, and a 2009 bailout by the IMF with heavy conditionality.

The political turmoil has in turn exacerbated the economic situation since the uncertainty over governance has frightened international and domestic investors in a country where investments depend on the backing of the state. More important, however, is the way in which politics are being conducted. The political machinations that have undermined the Constitutional Court, intimidated the judiciary, and led to emergency decrees to place the recall on the ballot, have called into question the rule of law in Romania.

In a scathing report by the EU published 10 days ago, the Commission noted:

"[T]his report is adopted at a time when important questions are raised with regard to respect for rule of law and the independence of the judiciary in Romania. Overall progress [in terms of judicial reform and anti-corruption] has to be assessed in the context of a wider social recognition of key principles such as the rule of law, and the independence of the judicial process as part of the checks and balances of a well-functioning democracy. A well functioning, independent judicial system, and respect for democratic institutions are indispensible for mutual trust within the European Union, and for gaining the confidence of citizens and investors.

The Commission considers that recent steps by the Romanian Government raise serious concerns about the respect of these fundamental principles. These steps took place in an overly polarised political system where mistrust between political entities and accusations are a common pattern; however this political context cannot explain the systematic nature of several actions. While certain actions may be partly explained by this political polarisation, they raised serious doubts about the commitment to the respect of the rule of law or the understanding of the meaning of the rule of law in a pluralist democratic system… The Commission is in particular extremely concerned by the indications of manipulations and pressure which affect institutions, members of the judiciary, and eventually have a serious impact on society as a whole. [T]he current controversies pose a serious threat to the progress achieved so far and raise serious questions as to the future of the reforms already launched."

Romania is the second country (after Hungary) where alarm bells have gone off about a recent entrant's commitment to democratic principles that in theory are part of the admission price to the EU club.  Calls for increased monitoring and report writing by Brussels only serve to highlight the fact that as with EMU, the EU lacks any real mechanisms for persuading countries to follow the rules of a club to which they were admitted prematurely in the first place.

Magyar Mayhem

One of the questions prompted by the Eurocrisis, notably with respect to Greece, is whether there are mechanisms for a country that is not complying with the obligations of membership to be sent packing from EMU. Today, though, Hungary makes us wonder what might happen to a country that isn’t living up to expectations of EU membership, such as being a democracy.

Trouble has been brewing for some time. A number of constitutional changes that were passed by the Hungarian Parliament last year went into effect yesterday that have not just the opposition and human rights groups worried about their non-democratic nature but also the EU and the State Department concerned as well.  The ruling party, Fidesz, led by Prime Minister Viktor Orbán, governs with a two-thirds majority (but received only 53% of the vote) and pushed through a constitution that has been called a clear departure from shared European standards for liberal democracy.

Most alarming to observers are changes to electoral rules and the independence of the judiciary, limits on the freedom of religion, and restrictions on the press. The cumulative effect of these is to ensure that Fidesz will be very hard to remove from power, even as they lose support from 40% of those who voted for them. Even if they were to be voted out of office, the bars for future changes will now be impossibly high for a government with anything but a super majority, an unlikely electoral outcome. These constitutional reforms are on top of other measures such as the law passed in the last parliamentary session of the year last week that effectively destroys the independence of the Central Bank and which caused EU and IMF officials to break off talks on an aid package for Eastern Europe’s sickest economy.

But its not just about ensuring that Fidesz has a vice grip on power; they are waging a culture war that is at odds with many contemporary European and cosmopolitan values by acts such as enshrining the definition of marriage as the union of a man and woman in the constitution or the appointment of outspokenly anti-Semitic management at one of the country’s leading theaters who have banned non-Hungarian works from the New Theater’s repertoire.  Even the official name change of the country from the Republic of Hungary to simply Hungary has a somewhat ominous feel.

While the current Constitutional Court (whose sitting members will surely change with the new measures) two weeks ago unexpectedly struck down certain parts of the constitutional changes like withdrawal of official recognition of all but fourteen Churches and some aspects of the press restrictions, both the US and the EU are clearly worried.

Hillary Clinton has been voicing her concerns about Hungary’s drift away from democracy for six months and just last week sent a letter to Orbán. The US Ambassador and other State Department officials have also been publicly expressing frustration and dismay with the country’s trajectory. For its part, the EU is plainly apoplectic about the changes to the Central Bank.  Before the passage of the laws restructuring the bank’s authority, EU Commission head José Manuel Barroso sent Orbán a letter urging him to withdraw the bills, saying the Commission had serious doubts about whether these laws would be compatible with the EU treaty.

But aside from burying the Prime Minister in correspondence, it’s not clear what options the US and the EU have.  Too much pressure and they play into the hands of Orbán who will use the interference from foreigners in his nationalist rhetoric. And, while it has in no way come to it in the case of Hungary, kicking a country out of the EU would be as hard as out of EMU, which is to say, pretty much impossible as a widely cited ECB paper has argued. 

Yet for the EU, Hungary raises the question of what to do with countries that behave badly in terms of their politics rather than simply their finances. If Hungary continues down a truly non-democratic path as its critics fear, one hopes that the EU will be capable of providing some meaningful answers to that question.