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3 May 2017

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.