BUDAPEST (Reuters) - Hungary defied the EU and human rights groups on Tuesday by approving strict new rules for non-governmental organisations with foreign funding that further escalates Budapest's conflict with billionaire philanthropist George Soros.
The law drafted by right-wing populist Prime Minister Viktor Orban's government requires NGOs that get money from abroad to register with the authorities.
The government says it wants to ensure greater transparency and protect Hungary from foreign influence, but NGOs say the bill stigmatises them and is intended to stifle independent voices in the central European country.
Orban, 54, has especially focused on NGOs funded by Soros, an American-Hungarian, calling them a "mafia-like" network with paid political activists who threaten national sovereignty.
His government recently passed a law tightening controls over foreign universities in Hungary, which critics say is aimed at the Central European University founded by Soros.
"It is of vital public interest that society and citizens clearly see what interests these organisations represent," the NGO law's authors said in their reasoning. "Foreign interest groups strive to take advantage of civil organisations."
Orban, who plans to seek re-election in April 2018, has taken control of much of the Hungarian media, curbed the powers of the constitutional court and placed loyalists in top jobs at public institutions since coming to power in 2010.
Along with his tough anti-immigrant rhetoric, such attacks on Soros fit well with Orban's political agenda. His Fidesz party has a firm lead over the opposition in opinion polls.
One of the NGOs affected, the Hungarian Civil Liberties Union (TASZ), said it would not comply with the law and would take any legal challenge to international courts.
"The law is a targeted attack and attempt to silence TASZ and all other organisations which have the courage to help those who are oppressed," it said in a statement.
TASZ receives large contributions from Soros' Open Society Foundations, as does another human rights group, the Hungarian Helsinki Committee, which also said it would boycott the law.
The laws regulating NGOs and foreign universities have triggered mass protests in recent months in Hungary, and the European Parliament has launched a process that could theoretically deprive Hungary of its EU voting rights - though in practice its ally Poland would be likely to veto such a move.
Orban has gained a reputation in Europe as a maverick leader who holds the liberal West in contempt while forging closer ties with Russia, which will build and finance a big new nuclear power polant in central Hungary.
Russian President Vladimir Putin is expected to visit Hungary for the second time this year in August for a judo world championship. Critics have often seen parallels between Orban's policies and Putin's moves in cracking down on his own opposition.
Guy Verhofstadt, president of the liberal group in the European Parliament, urged EU action to protect the rights of civil society in all member states.
"The attempts by some EU governments to silence NGOs are shameful and contrary to the values of the European Union," he wrote. "The European Commission should ... do more to support NGOs inside the EU who face censorship."
Last week Hungary backtracked on parts of the NGO legislation to meet some of the objections from the Council of Europe's advisory panel, the Venice Commission.
However, Human Rights Watch (HRW) dismissed the amendments as "cosmetic" and said the law was about "silencing critical voices in society".
"The amendments do not remove the provision to stigmatize organizations as 'foreign funded,' nor the risk of an organization being legally dissolved by the courts if it does not register as 'foreign funded'," HRW said in a statement.
Soros's Open Society Foundations, which disburse funding to several prominent NGOs in Hungary, also warned on Monday that the law posed serious risks to democracy in the country.
The law "attacks Hungarians who help fellow citizens challenge corruption and arbitrary power," OSF director Goran Buldioski said.
The European Parliament adopted a resolution last month condemning Hungary for the "serious deterioration" in the rule of law and fundamental rights, and called on the government to withdraw the bill on foreign-funded NGOs.
Additional reporting by Alastair Macdonald in BRUSSELS, Editing by Tom Heneghan and Gareth Jones