Hungary PM backs down
Krisztina Than And Jan Strupczewski
January 20, 2012
BUDAPEST/BRUSSELS (Reuters) - Prime Minister Viktor Orban abandoned plans on Friday to merge Hungary's central bank and markets regulator, the first concrete evidence that he is backing down in a dispute with the European Union that threatens to block a deal on financial aid
Orban's conservative Fidesz party has been criticized by the international community for introducing a swathe of measures that threaten the independence of the media, the judiciary and the central bank since sweeping to power in 2010.
Hungary's financial markets have taken a hammering in recent weeks as a result, and while some analysts remain suspicious that Orban may try to hold out to impress his domestic political audience, they say the government now looks ready to give in.
Friday's move was the first specific commitment since Orban made a broad pledge to the European Parliament earlier this week to compromise.
He said he expected to secure a political agreement with European Commission President Jose Manuel Barroso on the disputed laws next week and said he was ready to modify nearly all contested legislation to meet the EU's demands.
"If we take stock of the issues that have emerged, I do not see any particularly difficult issues," Orban told Hungarian Kossuth radio. "Naturally, several laws may have to be modified, but the government cannot do it, this can be done only by parliament, and we will make proposals to this end."The planed merger of the central bank and financial regulator had been a key point of contention. Orban later added that Budapest also no longer insisted on a government member being present at Monetary Council meetings as an observer.
Austrian Vice Chancellor Michael Spindelegger, who visited Budapest for talks on Friday, told a joint news conference with Orban that the prime minister planned "a very clear timetable and very clear solutions regarding legal issues" for next week's meeting with Barroso.
EU Economic and Monetary Affairs Commissioner Olli Rehn, who had a meeting on Friday with Tamas Fellegi, Hungary's minister in charge for aid negotiations, said the government would need to take concrete steps to ensure central bank independence as a condition for formal talks to start on a financing deal.