BUDAPEST (Reuters) – The United States criticised Hungary’s new sovereignty law as being anti-democratic after the Sovereignty Protection Office launched an investigation into two anti-corruption watchdogs.

The law, which was passed in December 2023, bans foreign financing for parties or groups running for election and carries a punishment of up to three years in prison. The law also set up an office to monitor risks of political interference.

The Sovereignty Protection Office launched an investigation on Tuesday into the Hungarian branch of the anti-corruption watchdog Transparency International (TI) and an online investigative outlet, that focuses on corruption.

A statement by the U.S. state department said that it was “deeply concerned” by the investigations and called them “draconian actions.”

“The Hungarian government’s attempt to harass, intimidate, and punish independent organisations runs counter to the principles of democratic governance rooted in the rule of law,” the statement said.

“This law places no limit on this entity’s ability to target the human rights and fundamental freedoms of its own citizens and puts at risk any country, business entity, or individual that chooses to engage with them,” they added.

The law had been criticised by the U.S. State Department, as well as by a panel of constitutional law experts from the Council of Europe, a human rights watchdog, which said it could have “a chilling effect” on free and democratic debate in Hungary.

The European Commission launched an infringement procedure over the law in February this year, citing its potential to undermine the union’s democratic values and fundamental rights.

Hungarian Prime Minister Viktor Orban, in power since 2010 and with a two-thirds majority in parliament that allows his Fidesz party to change any legislation, has denied accusations he was undermining democracy in Hungary after the law passed.

(Reporting by Anita Komuves; Editing by Sharon Singleton)