Hungary backtracks on contested reforms after EU pressure

By Gergely Szakacs BUDAPEST (Reuters) - Hungary's parliament has approved changes to the constitution, removing restrictions on political media campaigns ahead of next year's election and backtracking on other legal aspects the European Union has said may conflict with its principles. The EU, the United States and human rights groups have accused Prime Minister Viktor Orban's government of using constitutional amendments to limit the powers of Hungary's top court and weaken democracy in the former Soviet satellite. Lawmakers late on Monday approved the amendments drafted by the government after the European Commission threatened to take legal action against the steps, some of which it said could run against EU norms and the principle of the rule of law. Orban, 50, whose ruling Fidesz party faces a parliamentary election in the first half of next year, had earlier dismissed criticism that the reforms were anti-democratic and promised full cooperation with Brussels to address its concerns. The government reasoning attached to the amendments said Budapest put forward the remedies to defuse potential conflicts over the constitution after a number of clashes in past years over laws affecting the judiciary and the central bank. It said the changes were proposed "so that certain constitutional matters cannot be used as a pretext for further attacks against Hungary going forward". The amendments will allow political parties to run campaigns in both state-funded and private media ahead of parliamentary and European Parliament elections due next year, removing a prior restriction for such adverts to state outlets only. But the law still says such advertisements must be published free of charge. The amendments also remove a constitutional provision enabling the government to launch new taxes due to "unexpected payment obligations" brought on by international court rulings on public finances, a clause that the European Commission had flagged as particularly worrisome. The new legal provisions also lay the groundwork for the merger of the financial markets regulator into the National Bank of Hungary, led by Governor Gyorgy Matolcsy, Orban's close ally and his former economy minister. Orban says he has saved Hungary from a Greek-style economic collapse, his reforms are democratic because he won a huge majority in a 2010 election, and he is under attack because he threatens the interests of foreign business lobbies. His ruling Fidesz party maintained a double-digit lead over the main opposition Socialists in a survey by pollster Ipsos last month but nearly half of the country's 8 million voters are still undecided as the 2014 vote approaches. ($1 = 226.68 Hungarian forints) (Editing by Alison Williams)