Hungary: Rapidly shrinking civic freedoms - what business can do

In 2017, the Hungarian Government has moved to limit the influence of civil society organizations (CSOs) that promote democracy, human rights and the rule of law. In June, Hungary’s Parliament adopted the “Law on the Transparency of Organizations Supported from Abroad” (i.e., foreign funded organizations), legislation widely viewed as a major obstacle to the work and freedom of Hungarian CSOs. This is the first law of its kind in a European Union (EU) country. Limits to the free flow of capital may eventually affect not only CSOs, but international companies as well.

The government has also been targeting independent academic institutions. According to the Central European University (CEU), the proposed amendments to Act CCIV of 2011 on National Higher Education, tabled in Hungarian Parliament on 28 March, “would make it impossible for the University to continue its operations as an institution of higher education in Budapest, CEU's home for 25 years”. CEU is a private institution that significantly contributes to the economy through taxes and job creation – if CEU can be pushed out of Hungary for ideological reasons, any other business can be forced to do so as well. Concerned companies can sign the #I Stand with CEU petition.

In recent months many people and institutions, including the Venice Commission, Council of Europe, EU Parliament, UN Special Rapporteurs, and German and US Governments, have warned that the law is contrary to international standards. April saw the biggest anti-government protest in Hungary since Viktor Orban came to power. In July, the European Commission announced it was launching infringement proceedings against Hungary over the country's law on foreign-funded NGOs. The Commission also decided to take a second step in its infringement procedure regarding Hungary's Higher Education Law.

However, the government appears undeterred and determined in its efforts. A Washington Post article on 18 April said "The only key players to have remained silent are the many European and U.S. multinational corporations" operating in the country. Now is the moment for business to act.

Enabling environments for civil society is the same as it is for business. Businesses have a particularly important role to play in protecting civic freedoms: the United Nations and the 2017 World Economic Forum’s Global Risks Report call upon businesses to do so. The following arguments make a strong case for companies to privately and/or publicly denounce the Hungarian Government’s actions:

  • The Government is questioning the legitimate role of civic organizations to formulate opinion on government policies because no one elected them. Such definition of stakeholder status would render all chambers of commerce and business and professional associations illegitimate;
  • The Government is questioning the legitimate role of civic organizations which receive some of their funding from abroad, using the term foreign agent to label them. The suggestion that the legitimacy of organizations operating partially or fully using funding coming from a donor or parent company in another nation questions the security of all foreign direct investments in the country;
  • Representatives of the governing party repeatedly identified foreign corporations as having opposing interests with Hungarians and threatened that civic groups that “serve the interests of foreign powers and the international big business as opposed to Hungarians, have nothing to do here”;
  • By raising these issues with the government and by showing their support for CEU and for civil society organizations, businesses can respond to the concerns of their consumers and employees, establish themselves as responsible leaders in their sectors, and be a powerful driver in reversing the trend.

Below we provide a compilation of materials evidencing the steps taken by the Hungarian Government against civil society, and the main public responses to these steps (by UN experts, Council of Europe, leaders of philanthropic organizations, and citizens), as background materials.

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Article
13 March 2017

Hungary: Parliament likely to introduce restrictive legislation on foreign-funded NGOs

Author: Lili Bayer, Politico

"Hungarian law targets Soros, foreign-backed NGOs", 7 Mar 2017

The Hungarian government is moving to limit the influence of nongovernmental organizations that promote democracy and the rule of law, seemingly buoyed by...Donald Trump’s election victory and the ascendance of the alt right... [P]arliament is expected to introduce legislation on foreign-funded NGOs. The...bill,...yet to be made public, will likely require groups to register how much funding they receive from foreign sources. The government argues [it] is intended to counter foreign meddling in the country’s politics. Critics contend it is just the latest move to restrict political freedom in a country where the ruling party already controls much of the media and judiciary...Prime Minister Viktor Orbán has long been critical of the Open Society and foreign-funded NGOs, but...attacks have intensified of late... “I began funding dissidents in countries that were under communist rule in the 1980s and helped seed the development of civil society organizations within the former Soviet empire,” Soros [who founded Open Society foundations said]... “Their goal is to hold governments accountable to their people, the majority of whom are motivated by the same impulse that led the fall of the Berlin Wall — the desire for freedom.”

Article
8 October 2016

Thousands rally after Hungary's leading leftist newspaper unexpectedly shuts

Author: Reuters

Around 2,000 Hungarians protested in Budapest on Saturday against the closure of the country's leading leftist newspaper Nepszabadsag, saying press freedom was under threat. Owner Mediaworks said on Saturday it had suspended the newspaper and its employees after the publication piled up significant losses despite cost cuts. It said it would revamp the organisation. But civil rights groups said the newspaper had been shut down because it had published stories critical of right-wing Prime Minister Viktor Orban's government and called for the demonstration in front of the parliament building..."Sudden closure of Nepszabadsag sets a worrying precedent. I stand in solidarity with Hungarians protesting today," European Parliament President Martin Schulz tweeted...Mediaworks, owned by Austrian firm Vienna Capital Partners, said it was working on a new business model for Nepszabadsag (People's Freedom), which has been in publication since November 1956...

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Report
16 March 2016

"Russia's bad example": Report on global spread of laws restricting civic space, freedom of association & expression

Author: Melissa Hooper with assistance from Grigory Frolov, Free Russia Foundation & Human Rights First

"Russia's bad example", February 2016

Since...2000, Russian authorities have been continually reducing the public and legal space for civil society institutions, particularly human rights groups, NGOs, opposition movements, media outlets, and journalists...[S]ince...2012 the number of laws and policies restricting freedom of assembly and association, freedom of expression, the right to liberty and personal and information security has dramatically increased...This example was followed not only by other post-Soviet countries traditionally influenced by Moscow, but also by the Eurosceptic governments of several Eastern European countries, and a diverse range of countries worldwide, led by Egypt in the Middle East, Venezuela in Latin America, China in Asia, and Uganda and Ethiopia in Africa. The list of countries that are analyzed in this paper includes Azerbaijan, Kyrgyzstan, Tajikistan, Kazakhstan, Armenia, Bosnia, Egypt, Ethiopia, Uganda, China, Cambodia, Venezuela, Ecuador, though it is expanding every day, and could now include India, Kenya, Hungary, Poland, or even Israel.

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Article
10 July 2015

UN expert highlights inconsistency between govt. restrictions on civil society & liberalisation of business; calls for "fair, transparent & impartial” approach to both

Author: Maina Kiai, UN Special Rapporteur on freedom of assembly & association; Maria Leissner, Secretary General of the Community of Democracies

"The clampdown on resourcing: comparing civil society and business", 

At first glance, the business and civil society sectors may seem strange bedfellows for comparison. Conventional wisdom tells us that these two entities are distinct, warranting separate rules and treatment. The basis for this treatment seems to boil down to one dividing point: one exists to make a profit; the other is non-profit. But beyond their dissimilar profit motives, just how different are businesses and civil society? And how differently should governments treat them? [The] overall the trend in business investment seems to be toward liberalisation, with governments typically enabling more foreign investment in more sectors with fewer restrictions. The trend in civil society is the opposite: less foreign funding with more restrictions...

Civil society is diverse, ranging from service delivery groups that work hand-in-hand with governments to accountability watchdogs that aim to keep power in check. Yet throughout history, the progressive changes that we enjoy are a direct result of civil society. Remember the anti-slavery movement? The anti-apartheid movement? The civil rights movement? Trade union movements? The women’s movement?...A CSO working to expose corruption, impunity or election fraud, despite the immense public good it does, is not seen as slavishly supporting the ruling elite. As we’ve found thus far, it is more likely to see its funding sources attacked...

We...advocate for what the Special Rapporteur has referred to in a number of his reports as ‘sectoral equity’ - in other words, a fair, transparent and impartial approach...Businesses and civil society - in all of its incarnations - actually do have a strong convergence of interests when it comes to levelling the playing field. The rule of law is preferable to the rule of power. Predictability trumps disorder. Fairness is better than corruption. These statements ring as true for business as they do for civil society. Stable, balanced environments are better for everyone, whether they be a multinational corporation, a grassroots activist group, or a major international CSO working on health issues.

[Refers to Egypt, Ethiopia, Hungary, India, Oman, Russia and Rwanda]

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