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Welcome to 2011. The year begins with a question. Is Hungary fit to assume

It may appear an arcane concern. The presidency is a less influential role than it used to be. Few voters understand its purpose beyond giving every country a six-month turn to be the face of the EU.

And then there is the muddle over Europe's string of presidents. (There is a President of the European Parliament, a President of the Council, a President of the Commission.)

Perhaps because of their number these presidents compete for attention. It is one of the certainties of covering Europe that when there is a significant international event my e-mail will ping into life as the various presidents vie with each other for attention.

Now for these officials Hungary poses a dilemma. Its leader is Viktor Orban, a populist politician who was once a fierce anti-communist. Last year he surfed to power on a wave of distaste for the self-confessed lies of the Socialist government and their mismanagement of the economy.

His government has just passed a new media law which empowers a watchdog council to impose fines on coverage it considers "unbalanced" or offensive to "human dignity". This council has five members and is dominated by government supporters.

Journalists can be forced to identify their sources when they write stories about national security or public safety. The right to secrecy will only be upheld if it is in the public interest. There will be limits on "crime-related news". The fines can be close to a million dollars and have to be paid up-front before an appeal process can begin.

There is much that is vague and undefined about this legislation, but some of Hungary's papers have responded by publishing blank pages. One left-leaning paper this week declared on its front page that "freedom of the press in Hungary comes to an end".

Others, like , warned that the new law is an attempt to "exert control over public broadcasters".

A prominent liberal MEP, Guy Verhofstadt, says "the time of Pravda is over - this new law is unacceptable. Hungary must explain and the [EU] Commission must act."

The Foreign Minister of Luxembourg, Jean Asselborn, questioned whether Hungary was fit to take on the EU presidency.

And most importantly, Chancellor Angela Merkel's spokesman said that "as a country that is about to take over the EU presidency, Hungary will have a special responsibility for the whole union's image in the world".

In the face of such criticism Mr Orban says he doesn't have wobbly knees. The law, his government insists, is to ensure balanced reporting. Budapest has hit back at the criticism. It says it "remains committed to freedom of the press and in no way wishes to stifle the opposition's views".

The EU - in a letter - has asked for clarification. But it has all come rather late. This week the EU caravan heads for Budapest to celebrate the start of the Hungarian EU presidency.

So here is the rub. What will the EU's various presidents, commissioners and High Representative say? How will they respond to the Luxembourg question - is Hungary fit to lead the EU? Or the implied German question - are these the values that the EU wants to present to the world?

There is another sore point. Hungary is targeting new taxes at foreign companies. . Others say that it is illegal to go after foreign investors in a single market.

In the end the tax issue is about rules and markets. Media freedom is more difficult to judge. But Hungary is in the spotlight and the awkward questions won't go away.

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