Pressure builds on Hungary over economy, constitution

European Commission head Jose Manuel Barroso said Thursday he would do everything in his power to get Hungary to abide by EU laws, amid arm wrestling with Budapest over its new constitution. But European Central Bank chief Mario Draghi expressed serious concern over the independence of Hungary\'s own central bank under the controversial new legislation. \"We\'ll use all our powers to make sure that Hungary complies with the rules of the EU,\" Barroso told a news conference in Copenhagen marking the start of Denmark\'s European Union presidency. Barroso said he was encouraged by signs that Hungarian Prime Minister Viktor Orban\'s conservative government was ready to discuss the most contentious points. But the 47-member Council of Europe\'s commissioner for human rights, Thomas Hammarberg, said that Budapest had adopted major changes without consideration of crucial rights principles. Orban\'s detractors say the new constitution, which came into force on January 1, undermines the independence of key state institutions while altering the electoral system in his party\'s favour and curbing press freedoms. Barroso\'s comments came a day after the European Commission threatened to drag Budapest to court unless it amends legislation seen as threatening the independence of the central bank, judiciary and data protection authority. Official warning letters on those three areas would be ready to be sent if necessary next week, according to an EU source, and if Hungary fails to abide it will be brought before the European Court of Justice. Ensuring the central bank\'s independence is a condition if cash-strapped Hungary wants to resume negotiations with the EU and the International Monetary Fund (IMF) for credit of up to 20 billion euros ($25 billion). \"Frankly, I have to say that we are really very concerned,\" Draghi told reporters after the ECB\'s monthly rate-setting meeting in Frankfurt. \"We are really very concerned because the ECB is extremely careful... about signs of pressure being put by the decision-making bodies of any (European Union) member state on their NCBs (national central banks),\" he added. \"I think these pressures are inconsistent with the spirit of the treaty.\" But Hungary\'s Economic Minister Janos Martonyi said in an interview with an Austrian newspaper to appear on Friday that Hungary would not go bankrupt and that he was optimistic of a deal with the IMF. \"State bankruptcy is totally ruled out,\" Martonyi told the Kurier newspaper. \"We will achieve a result as quickly as possible, negotiations will succeed.\" Hungarian negotiator Tamas Fellegi is due to meet IMF chief Christine Lagarde later Thursday. Meanwhile, some European parliamentarians are pushing for the EU to go further in sanctions against Hungary over the wide-ranging new laws that have been condemned by critics as undemocratic. There have been calls to use a clause in Article 7 of the European treaty, making it possible to suspend an EU member country\'s voting rights in the case of an ongoing and serious violation of the bloc\'s fundamental values. The European Commission has however as a whole rejected the prospect of taking such harsh measures. \"The situation is not ready for a move like Article 7,\" an EU source told AFP. Even if the EU wanted to hit Budapest with such harsh sanctions, \"26 heads of state and government out of 27 must agree, or in other words unanimity minus the targeted country,\" the source said. \"And for the time being, very few have given their opinion and none have said outright that Hungary has violated the treaty. Hammarberg said that Hungary\'s decisions \"affecting the independence of the judiciary, freedom of expression and freedom of religion raise serious concerns\". Hammarberg also faulted Hungary\'s restrictions on the media, including the erosion of confidential source protection, and he slammed the decision to lower the retirement ages of judges, noting more than 200 new judges would have to be appointed. Their jobs would be handed out by a single, politically appointed individual. \"The approach... gives rise to serious reservations,\" Hammarsberg said. \"The judiciary must be protected from undue political influence.\"