HUNGARIAN CONSTITUTION : COMMISSION 'STUDYING' BUDAPEST'S RESPONSE, WEIGHING LEGAL OPTIONS.

The European Commission received, on 3 January, the English and French translations of the legislation that accompanies the new Hungarian constitution and is "studying the document". The legal analysis, which aims to assess whether the independence of the central bank, the independence of judges and the independence of the national data protection supervisor are respected, is "ongoing". Prior to adoption of the latter pieces ofalegislation, on 30 December, "serious doubts" were raised by the Commission about their compatibility with EU law and fundamental rights. After the media law controversy a year ago, Hungary is once again in the eye of the storm.

A new Hungarian constitution was adopted last April and entered into force on 1 January. To complement it, approximately thirty 'cardinal laws', which require two-thirds majority to be changed, were passed through the Hungarian parliament. The latest package, including a law that concerns the national central bank, was approved on 30 December.

Reacting to the draft legislation, European Commission President Jose Manuel Barroso and Economic and Monetary Affairs Commissioner Olli Rehn sent letters, in mid-December, to the Hungarian leaders to underline several concerns. In one of the letters that was leaked, Barroso "strongly" advised Hungarian Prime Minister Viktor Orban to withdraw the cardinal law concerning the national central bank. The European Central Bank (ECB) was also very critical.

Changes to the draft legislations were thus made before they went through parliament. "Now that the laws were adopted we will be able to verify whether they are in line with Community law," said a Commission spokesperson.aThe new law enables an increase in the number of people on the bank's interest rate setting board, creates a new vice-governor post and opens the door to a merger of the central bank and a financial regulator. The latter point could result in the subordination of the bank governor to the chief of the new entity. Yet, Orban has assured Barroso that this will not happen before the central bank governor, Andras Simor, whose mandate runs until March 2013, steps down. The College of Commissioners is likely to discuss the matter as early as next week.

Were the texts found to be in breach of EU law, the Commission would have little choice but to launch an infringement procedure. Indeed, the independence of national central banks is enshrined in Article 130 of the Treaty on the Functioning of the...