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The European Commission has initiated legal action against the government of Hungary, a member state, with regard to a new higher education law that Central European University says would force it to close its Budapest campus. The commission said its review of Hungary's new higher education law concluded that it “is not compatible with the fundamental internal market freedoms, notably the freedom to provide services and the freedom of establishment, but also with the right of academic freedom, the right to education and the freedom to conduct a business as provided by the Charter of Fundamental Rights of the European Union, as well as with the union's legal obligations under international trade law.”

The commission has sent a formal notice to Hungary, which has a month to respond to the legal concerns. The New York Times described the notice as a warning and said that while it could, in principle, be followed by sanctions, those sanctions would be subject to veto by other E.U. states such as Romania, which has often sided with Hungary.

The law affecting CEU, an American-accredited institution founded in 1991 by the liberal financier George Soros, has been widely seen as an attack on liberal values and academic freedom in Hungary, motivated in part by the government's antipathy to Soros. In an address at the European Parliament Wednesday, Hungarian Prime Minister Viktor Orbán railed against Soros and defended the law on universities as a "minor amendment" that "unifies the rules that apply to them, closes the possibility of speculations and abuses, demands transparency, and eliminates the privileged position these institutions enjoyed over European universities," according to the Times.

CEU disputed the prime minister's assertion that the new law eliminates privileges and loopholes. "For weeks now, we have been asking the government to name the specific privileges possessed in the past by CEU and the rights given now to all Hungarian universities," the university said in a statement. "Unfortunately the prime minister failed to answer these questions again."