Hungary’s bill on civil society funding is a harsh blow for European democracy

Protestors hold banners saying ‘No to the stigmatisation of civilians’ at a meeting of the Hungarian parliament’s justice committee. Laszlo Balogh/Reuters

Has Hungary become Europe’s first “illiberal democracy”, as promised by its Prime Minister Viktor Orban?

In an unprecedented move for a European Union member state, the Hungarian government last month submitted legislation to the parliament targeting NGOs in Hungary.

According to the draft law – On the Transparency of Organisations Supported from Abroad – organisations that receive more than 7.2 million Hungarian forints (around £19,500, which is a substantial sum in Hungary) annually from foreign institutions or individuals will be placed on a register and have to publicly state that they receive “foreign funding”.

The proposed law also includes financial sanctions for failure to comply, and requires that foreign donors be individually identified. Non-compliant organisations face being shut down.

Thousands marched in Budapest against the law and in support of civil society in mid April.

The crackdown comes at a time when Poland is similarly seeking to control funds that come to domestic NGOs.

Display of authoritarianism

Orban’s tactic is to target civil society with debilitating laws and regulations that are presented as little more than “technical requirements” necessary to promote transparency or national security.

Similar provisions implemented in other parts of the world reveal that this move often represents a sneaking authoritarianism. It limits freedom of association and of expression, silencing critical voices.

In January, Szilárd Németh, a right-wing politician, Fidesz MP and a deputy chair of parliament’s national security committee, was actually cited in the Guardian newspaper and in Reuters as stating openly that these measures were intended to target NGOs that receive funding from organisations related to American-Hungarian businessman and philanthropist George Soros. His Open Society Foundations supports pro-democracy groups around the world.

George Soros is an American-Hungarian businessman and known philanthropist. World Economic Forum/Wikimedia, CC BY-SA

On April 25, government spokesperson Zoltán Kovács referred to the “danger” of “so-called NGOs”, specifically mentioning Open Society Foundations-funded groups working on immigration issues.

The bill comes shortly after a fast-track law targeting the Soros-founded Central European University , which may force the prestigious academic institution to leave Budapest.

An age-old tactic

Targeting funding is becoming an increasingly widely used tactic to restrict civil society. The International Centre for Non-Profit Law found that 36% of restrictive civil society laws enacted globally between 2012 and 2015 targeted international funding.

International standards require that associations should be free to seek, receive and use foreign or international funding, and not be stigmatised for doing so.

People protest against the bill that would undermine Central European University on April 9 2017. Bernadett Szabo/Reuters

A UN Human Rights Council Resolution adopted in 2016 had already expressed concerns about the trend in funding restrictions. Thomas Carothers of the Carnegie Endowment for Peace, an expert in the field, describes the attacks on foreign funding as usually being the “leading edge of wider crackdowns on civil society”.

In the Hungarian government’s approach, the “foreign” tag is a stigma for both the funders and the NGOs, according to the group Transparency International. It implies that “everything that is ‘foreign’ is necessarily against the Hungarian nation” and might be representing foreign interests

For Amnesty International, whose branch in Hungary is directly impacted by the legislation, the bill has echoes of the draconian foreign agents law adopted under Russian President Vladimir Putin, which has restricted, closed down or silenced almost 150 Russian human rights and social justice organisations since 2012.

As noted in 2013 by Maina Kiai, UN Special Rapporteur on the rights to freedom of peaceful assembly and of association, the term for “foreign agent” in Russian is synonymous with the phrase for “foreign spy”.

The 2012 Russian law has been followed by increasingly harsh legal measures against civil society organisations. This has included the adoption of an “undesirables” law in 2015, that allows organisations to be banned and individuals fined or imprisoned for violating the law.

Seven non-profit organisations have been declared “undesirable” since, including The National Endowment for Democracy, Open Society Foundations, International Republican Institute and the National Democratic Institute for International Affairs, and an organisation run by former Russian prisoner of conscience Mikhail Khodorkovsky, which was banned in April 2017.

The European Union reacts

The European Commission and European Parliament vice president have both expressed concerns about the draft Hungarian law’s incompatability with EU laws.

A recent analysis jointly carried out by the European Centre for Non-Profit Law and the Hungarian Civil Liberties Union, among other NGOs, argues that the draft law violates EU law on anti-money laundering and terrorist financing, as well as provisions enabling the free movement of capital. It asserts that the government has “provided no evidence” that NGOs are at risk of money laundering or terrorist financing or demonstrated that existing national transparency measures are inadequate.

Viktor Orban defends his draft law in front of the European parliament on April 26. Eric Vidal/Reuters

Across the globe, the situation for activists is increasingly dangerous: they face threats, physical assaults and assassination. Writing in the Guardian on April 25, the head of the international organisation CIVICUS declared the situation of civil society a “global emergency”.

Allowing restrictive legislation within the EU itself will severely lessen the bloc’s moral authority to influence countries that restrict freedom of expression and association.

Despite all evidence to the contrary, speaking at the European Parliament on April 26, the Hungarian Prime Minister Viktor Orban reiterated that the law was drafted to promote increased transparency, saying it follows the example of an American law.

But as Human Rights Watch noted, this argument, which Russia also invoked in 2012, refers to the US Foreign Agent Registration Act, which “covers those organisations and individuals that operate ‘under direction and control of a foreign principle’”. It does not relate to advocacy-oriented NGOs with international donors.

If the EU is to claim to that it’s a democratic region based on democratic values, it has to be a safe and open space for critical thinking, freedom of expression and association. In its consideration of the situation in Hungary, including the infringement proceedings announced by the European Commission on 26 April, the Commission and European Parliament must continue to emphasise the importance of these fundamental freedoms in their current engagements with the Hungarian government.

The EU must do more than just voice its concern. It must ensure that within its own borders, freedom of expression and freedom of association are protected and defended. Allowing a member state to severely weaken these rights through anti-civil society laws will seriously undermine the EU’s credibility both in the eyes of its own citizens, and that of the world.