Hungary in EU’s hot water

Hungary’s Prime Minister Viktor Orbán has backed down from a proposal to merge the country’s central bank with the financial regulator, diffusing a standoff between his government and the European Union (EU).

After Hungary’s new constitution came into effect on 1 Jan., the EU Commission threatened legal action against three infractions of European law: a new central bank law susceptible to political control, judicial reforms forcing hundreds of judges into early retirement, and doubts over the new data protection ombudsman.

After the Commission formally declared legal action on 17 Jan., Orbán agreed to meet with Commission President José Manuel Barroso to negotiate a solution.

The standoff was the most memorable in EU history since Austria challenged the Union's fundamental principles in 2000 by forming a coalition government with right-wing politician Jörg Haider.