Hungary has been accused of trying to "suffocate" civil society amid mounting international criticism over a new law that could force an acclaimed international university to shut its doors in Budapest.
The move by the Viktor Orban, the Hungarian prime minister, is being seen as the latest act of defiance by Mr Orban against Brussels and Berlin which both moved to condemn the law.
"I am deeply concerned about the recent legislative changes to the Hungarian national higher education act," said Carlos Moedas, European Commissioner for research, science and innovation, in a statement issued on Wednesday.
"I am concerned that this development may be in direct opposition to the freedom of scientific research, and our common values of openness."
The American embassy in Budapest expressed its dismay over the law while Frank-Walter Steinmeier, the German president, said: "Europe cannot remain silent when civil society organisations or the academic world are being suffocated, as is happening right now in Budapest at the Central European University."
Regional analysts said that despite the condemnation from Brussels and Berlin, Mr Orban would likely continue his move towards illiberal democracy unless checked by concerted action from Washington and Brussels.
"The move constitutes a power play to test the US and the EU’s appetite to check Orban’s domestic agenda," said Mujtaba Rahman, head of Europe practice at the Eurasia Group, a risk consultancy.
"If successful, Orban will feel emboldened and intensify his crackdown on the liberal opposition and multinational business interests."
The decision to target the Central European University (CEU) is seen by critics of Mr Orban as as a significant escalation in an apparent battle for academic freedom and liberal democracy now being waged in Hungary.
Under the new law, which was rushed through the Hungarian parliament on Tuesday, the American-registered CEU will not be allowed to enroll students for any courses come January 1, 2018.
It could remain open if an agreement is struck between the American and Hungarian governments but few consider this likely given Budapest's apparent hostility to the institution.
A particular motive for the Hungary to target the CEU appears to be the university's funding by George Soros, the Hungarian-born billionaire financier.
Mr Soros helped found the university in 1991, but he has become the scourge of the Orban government, which has accused him of trying to undermine democracy.
"It is not in our interests to have players in the background who are conspiring against the democratically elected government or for example to support Soros-organisations," said Zoltan Balog, Hungary's human resources minister. "Soros’s organisations are not above the law.”
Officials at the CEU have vowed to fight the law, and have called for Janos Ader, the Hungarian president, to refuse to give his consent to it.