Hungary taken to task

Treaty articles

Article 7 of the Lisbon treaty sets out the procedure for establishing whether a member state has committed, or runs a “clear risk” of committing, a “serious breach” of the EU's fundamental democratic principles. These principles are defined in Article 6 of the treaty as the “rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union”. 

One-third of EU member states, the European Parliament or the European Commission can make a proposal to the Council of Ministers, asking it to determine whether there is a “clear risk of a serious breach” of the EU's democratic principles by a member state.

The Council can, with the backing of four-fifths of its the member states and with the approval of the European Parliament, decide whether there is a risk of a serious breach of fundamental rights, and make recommendations for corrective action to the member state.

The Council has an obligation to listen to the member state and may call on independentexperts to draw up a report. EU governments, meeting at leaders' level, can decide by unanimity (not taking into account the member state under examination), acting on a proposal by one-third of member states, or by the Commission and with the backing of the Parliament, that a serious breach has occurred.  

The Council, acting by weighted majority, can decide to suspend some of the rights of the member state concerned, including the loss of voting rights. The Council can revoke the measures with a weighted majority vote.Approval of the Parliament for triggering Article 7 and deciding that a serious breach of rights has occurred requires a two-thirds majority of votes cast.The Article 7 procedure was introduced under the Nice treaty, which was agreed in December 2000.

It was a response to a decision by Wolfgang Schüssel, the leader of the Austrian People's Party (ÖVP), to form a coalition in January 2000 with the far-right Freedom Party, led by Jörg Haider. The EU imposed a freeze on appointing Austrians to international posts in protest. The measures were lifted in September that year after a group of independent experts warned that they were increasing anti-EU sentiment in Austria.

As part of the negotiations on the Nice treaty, member states wanted to create a mechanism that would warn a member state at risk of committing a serious breach of the EU's core democratic values and threaten sanctions.

Under the Amsterdam treaty, which applied before Nice, agreement that a member state has committed a serious breach needed the unanimous support of all member states, giving the country under scrutiny a veto. The procedure for deciding whether a member state is at risk of a breach of fundamental principles and on sanctions was carried over into the Lisbon treaty. 

ECB

Under Articles 127 and 282 of the Lisbon treaty, national authorities are required to consult the European Central Bank on legislation that affects the ECB's competences. The ECB gave its opinion on a first draft of the legislation concerning Hungary's central bank on 14 December.

The Hungarian authorities asked the ECB for an opinion on a revised version of the law on 13 December. The ECB said that it had not been asked to give its opinion on part of the constitution that proposes merging the national bank with the Hungarian financial markets supervisory authority. It added that this was a breach of the Hungarian authorities' obligation to consult the ECB. 

On 22 December, the ECB gave an opinion on the independence of Hungary's central bank, saying it had concerns that provisions in a draft law could undermine the bank's independence. It highlighted concerns over plans to appoint a president of the central bank with authority over the bank's governor.