Tel. +44 (0)20 7287 4414
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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

The Interesting Finances of the European Union


There's nothing very surprising when the EU spends money in individual member States to enhance its standing, and to influence people in those States to work in what the EU sees as its interests. That's known as old-fashioned pork-barrelling. But when the EU argues that the bankrolling of political organisations within a State by those outside it is a matter of civic virtue, and expresses itself in favour of obscuring where that money comes from, it is worth a comment. And doubly so when the European Court of Justice agrees with this promotion of dark money and orders the state not to act to prevent it.

The member State, you may have guessed, is Hungary. Three years ago in 2017 the Hungarian government, suspicious that outside interests were actively bankrolling organisations hostile to Viktor Orbán's ruling Fidesz party, passed a Transparency Law. This required all civil society organisations in receipt of more than a small amount of money from abroad to declare the fact, together with the names and city of origin of donors: failure to do so was an offence, and could lead ultimately to the dissolution of the organisation. The law seems to have tapped a deep well of popularity: in 2018, following an election where the theme of foreign dark money loomed large, Orban got a thumping parliamentary majority.

Not surprisingly, the EU detests Orbán and Fidesz with a vengeance. Not only do they keep up an annoying (and popular) attachment to the nation state and national religious traditions rather than doing as Western Europe tells them; they also have a habit of disagreeing with rules of EU law they see as over-intrusive. As soon as the Transparency Law was passed, the EU Commission called on Hungary to revoke it; when Hungary refused, it put the matter in the hands of the European Court.

A couple of weeks ago the court obliged. Although the Hungarian law did not prevent outside donations, by requiring their registration with the Hungarian bureaucracy it amounted to an illegal limit on freedom of capital movement from countries outside Hungary. True, transparency and democracy were fundamental principles on which the EU order rested, and might justify restrictions on who was allowed to provide money to Hungarian political organisations: but no country could act in a way likely to discourage the inflow of foreign money as such. For good measure, the Court then said that the measure infringed human rights as restated in the European Charter of Rights: the rights of Hungarians to freely associate, and, if you please, the right of foreigners to privacy (because of the obligation to disclose the source of funds).

This will, of course, be portrayed as simply the EU's proper insistence on the application of the rule of law throughout its territory. But it's not as simple as that. The EU Commission doesn't sift through every law passed in a member State to find possible infractions of EU law, with a view to pouncing on it immediately. It is an almost irresistible inference that it deliberately chose to make an example of Hungary by throwing the book at it. Nor does it seem, despite the well-oiled prose of the court's judgment, that the finding of illegality by the Court was a foregone conclusion. There was quite enough wiggle-room, for example in the doctrine of the "margin of appreciation" (i.e. the respect paid to a state's estimate of the balance of interests) for the court to say, had it wished to, that Hungary's desire to preserve its democracy free from foreign untraceable funds justified what it had done. And it seems likely that the same goes for the human rights issues. No human rights case had actually held that the human right to privacy must embrace the right to give money to political organisations in foreign countries: it would have been entirely plausible to deny that it went that far.

There was, in other words, nothing inevitable about the result of the spat between the EU and Hungary. This was a clear instance of a political shot across the bows of a member State, made possible by a combination between a European Commission with a very obvious political axe to grind, and a Court with a finger sagely held up at most times to gauge the political wind.

This time the technique seems to have worked: Hungary has grumpily said it will comply. Whether it will continue to do so in future is anyone's guess. At least, however, this is the kind of decision that the UK will not be having to take at all after the end of this year. 

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Director : Robert Oulds
Tel: 020 7287 4414
Chairman: Barry Legg
The Bruges Group
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Founder President :
The Rt Hon. the Baroness Thatcher of Kesteven LG, OM, FRS 
Vice-President : The Rt Hon. the Lord Lamont of Lerwick,
Chairman: Barry Legg
Director : Robert Oulds MA, FRSA
Washington D.C. Representative : John O'Sullivan CBE
Founder Chairman : Lord Harris of High Cross
Head of Media: Jack Soames