HUNGARY: Hungarian Public Foundation Rejects NGO Application for EU Funding over Unlawful Foreign Agent Law (UPDATED)

Update April 2021: The Commission sent a formal notice warning Hungary over its failure to respect the ECJ’s ruling on its anti-NGO law and asking to “reply to the concerns raised by the Commission” within a period of two months. In case of non-compliance, Hungary may face financial sanctions.



Article originally published by Autocracy Analyst on 30 September 2020.

In June, the highest court in the European Union ruled that Hungary’s Foreign Agent Law requiring NGOs with foreign funding to self-identify and disclose their donors was unlawful. A few months later, a Hungarian public foundation operated by the government denied Power of Humanity Foundation, a human rights education NGO, EU funding over noncompliance with the same law. The NGO is asking the European Commission to investigate.

Law No LXXVI of 2017 – dubbed the Hungarian foreign agent law – requires Hungarian NGOs receiving at least 22,000 Euros a year from outside of Hungary to declare themselves as foreign-funded organizations on a public website created by the Ministry of Human Resources. A group of NGOs, including the Power of Humanity Foundation, together with the Rights Reporter Foundation (the NGO operating the Autocracy Analyst blog) refused to comply with this law and filed a lawsuit at the European Court of Justice against the government. In it, they argued that he law was not intended to improve transparency, but to stigmatise NGOs receiving foreign funding, many of whom have previously been targeted by the hate-propaganda of the government.

In June of this year, the European Court of Justice found that the Hungarian law was indeed unlawful.

The ruling caused an uproar in government circles, and the Court was accused of being manipulated by George Soros, a philanthropist who has been frequently targeted by government propaganda in Hungary. Prime Minister Viktor Orbán accused NGOs funded by Open Society Foundations, Soros’s grantmaking organization of doing the bidding of foreign powers, and hinted at Soros’s influence over the European Court of Justice. Power for Humanity is one of the Hungarian OSF grantees and was previously harshly criticised by the pro-government media.

Two months later, Tempus, a public foundation established by the Hungarian governmentto distribute international funding, rejected an EU grant application from the Power of Humanity Foundation (PHF, Emberség Erejével Alapítvány,) over noncompliance with the same law. Although the Tempus acknowledged that PHF’s application reached their eligibility threshold to receive the Erasmus+ grant they applied for, they rejected the application because the NGO did not comply with the requirement to self-identify as a foreign-funded organization.

“We were shocked to learn that a grant established to promote European values was denied to us because we refused to comply with regulations that go against the same EU values”.

Zoltán Mester, the Power of Humanity Foundation

“To declare ourselves as foreign funded NGOs was out of the question for us,”  says Zoltán Mester, PHF’s communications coordinator. “We decided to boycott this law as an act of civil disobedience because we respect European values and human rights unconditionally.” PHF would have used the grant was to translate and adapte their award-winning DEMO citizenship simulator to the languages and legal and cultural contexts of other countries, explains Mester to Autocracy Analyst. “DEMO is a strategic board game that excitingly develops students’ social and civic competencies. Players face various social problems, the possible solutions present a wide range of civic activity.”

PHF disputed the decision in a letter to Tempus, and pointed out that the legal provisions concerned have been found to be in violation of EU law and as such, they are inapplicable in member states. Therefore the request to make a declaration is unlawful, and PHF’s refusal to do so is justified. In its response Tempus informed them that their Board of Trustees decided “that only organisations operating lawfully, observing domestic law could receive funding.” The Power of Humanity Foundation has sent a letter to the European Commission in protest, asking it to investigate the case and ensure that the primacy of EU law is to be upheld.

A warning to the guardians

Analysis by András Kristóf Kádár, co-chair of the Hungarian Helsinki Committee, published in Euractiv on 26 October 2020.

It will not come as a shock for those following the destruction of the rule of law in Hungary that the Government has not done anything to implement the Court’s judgment since it was delivered earlier this June.

In fact, it has begun applying the law; firstly in the field of EU funding distribution: a Government-established public foundation rejected an NGO’s EU grant application over non-compliance with the impugned legislation.

According to information at the Hungarian Helsinki Committee’s disposal, the concerned NGO was not the only one from which a statement on being registered as a foreign-funded organisation was demanded as a precondition for access to EU funds.

In other words, in response to a judgment from the EU’s top court stating that a Hungarian law is in breach of EU acquis, Hungary has begun applying the unlawful legislation to the distribution of EU funds.

One would expect that amidst the debates about introducing rule of law conditions to EU funds, the ongoing Article 7 procedures against Hungary and Poland, and a fresh rule of law report painting a bleak picture of the situation in a number of member states, the guardians of the Treaty would condemn Hungary’s behaviour in the harshest tone and take immediate steps to enforce the EU Court’s judgment and to protect EU funds.

However, the Commission has not yet said a word on this issue.

The silence of the Commission is particularly frustrating. Not only is it their responsibility to ensure the proper implementation of the binding judgments of the Court of Justice, it is also their prerogative, and theirs alone.  

After a decade of the wilful destruction of checks and balances and the rule of law in Hungary, the Commission still conducts its affairs with the Orbán Government as if it is business as usual.

Failure to implement the Court’s judgment about the anti-NGO law clearly proves that Hungary is not violating EU law accidentally.

Apart from the obvious step of bringing Hungary back to the Court to impose fines, the Commission must also initiate infringement procedures against Hungary based on its own Annual Rule of Law Report, use interim measures where there is a risk of irreversible harm, and closely monitor implementation of judgments.

Simply, if they do not do so, no one else can.