By Paul Taylor
BRUSSELS (Reuters) - Hungarian Prime Minister Viktor Orban took it as a joke but his supporters at home were furious when European Commission President Jean-Claude Juncker saluted him with an audible "hello dictator" before the world's cameras last month.
The unorthodox greeting at a summit with the European Union's eastern partners in Riga on May 22 was one of those rare moments when the underside of politics appears fleetingly on the surface. Banter aside, the EU authorities have proved largely ineffective in curbing the conservative nationalist Orban's drive to tighten his grip on the central European state.
"Juncker has Orban on his watch list," says an aide to the head of the EU executive, which is in charge of upholding the bloc's treaties, including civil rights.
But Orban, who espouses "illiberal democracy", has mostly outfoxed efforts to restrain his reshaping of the judiciary, data protection, media and non-governmental organizations, EU and Hungarian officials say.
He used his two-thirds parliamentary majority to ram through a new constitution, shrugging off warnings from EU colleagues against using his supermajority powers.
He relishes confrontation with his critics in the European Parliament, seizing the opportunity of a debate on the situation in Hungary to flaunt his economic success, sweeping electoral mandates and contempt for the EU's migration policies.
Viviane Reding, who spearheaded legal action against Orban's government until last year as the EU's justice commissioner, is frank about what her activism achieved.
"I prevented worse," she said in an interview. "It did not change dramatically the nationalistic course of the Hungarian prime minister, but at least it stopped him dismantling the independence of the courts and the independent data authority."
The Hungarian government rejects accusations that it has taken authoritarian steps, saying its parliamentary majority and
popular support allowed it to make constitutional changes.
"Hungary can be regarded as the European Union member state which has been screened more than any other by the X-ray machine of constitutionality," Orban told EU lawmakers.
The fact that his ruling Fidesz party sits in the European People's Party (EPP), the biggest center-right group in the European Parliament, has shielded Orban from harsher condemnation over alleged breaches of rights.
"It was always the political parties which helped the prime ministers I was acting against - the Socialists with (Romanian Prime Minister Victor) Ponta, and the EPP when I acted against Hungary," said Reding, herself now an EPP lawmaker.
There has been informal discussion in the EPP of suspending or expelling Fidesz, she said, but no action.
Juncker's aide said Fidesz's EPP membership gave leaders like Germany's Angela Merkel a lever to exert pressure in private and to keep Orban out of the arms of Russian President Vladimir Putin, with whom he has friendly ties.
Reding won two cases against Hungary in the European Court of Justice over the enforced mass retirement of judges at 60 and the dismissal of the independent data protection supervisor. But the judges and the watchdog were not reinstated, and Reding had to use age discrimination rules because the EU had no legal basis at the time for sanctioning a member state over the independence of the judiciary.
Objections from Brussels have led Budapest to amend other legislation, including parts of a media law that critics say inhibits media freedom.
Rights campaigners are pressing the Commission to take stronger action by triggering a Framework for the Protection of Fundamental Rights, created under Reding, that would entail an audit of civil rights in Hungary, a structured dialogue with Budapest and possibly issuing EU recommendations.
Iverna McGowan, acting director of Amnesty International's EU office, accused Brussels of doing too little, too late and of taking a technocratic approach.
"Why have they not invoked Article VII of the treaty which allows sanctions to be taken in case of breaches of fundamental rights?" McGowen asked in an interview, noting that the EU was tougher with third countries than with its own.
Reding said Article VII, which can lead to the suspension of a state's EU voting rights, was a "nuclear option". She also insisted that the EU needed a strong legal case before prosecuting a member state for rights abuses.
EU governments are haunted by the precedent of a French-led boycott of high-level bilateral contacts with Austria in 2000 after the far-right People's Party of the late Joerg Haider joined a ruling coalition.
The snub backfired, boosting public support for Haider and was dropped after an expert panel reported the government had not taken any action that contravened European values.
Orban's EU critics thought they had finally found an issue on which to nail him when he called last month for a renewed discussion of the death penalty, abolished under EU and Council of Europe charters. But he quickly assured European Parliament President Martin Schulz he had no intention of restoring it.
The sensitive task of trying to rein in Hungary now falls to Commission Vice-President Frans Timmermans, a Dutch Socialist who co-signed a 2013 letter by four foreign ministers calling for a more effective mechanism to safeguard fundamental values, including cutting off EU funds.
Timmermans told Orban in the European Parliament: "You cannot use an electoral victory or economic success as a condition to say we don't then have to observe the rule of law."
Campaigners say would-be autocrats in neighboring countries are watching how Hungary is treated. But experts say the EU's tools to influence members' behavior remain weak.
(Editing by Jeremy Gaunt)