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Hungary places measures in context of Ukraine war

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Government has previously sought budget contributions

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Plans to send back foreign funds given to Hungarian media

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Orban met Xi on Monday, Putin on Friday

(Updates throughout with media funding legislation; adds

paragraphs 1-2, 6-9)

By Boldizsar Gyori and Anita Komuves

BUDAPEST, July 8 (Reuters) - Hungary's government laid

out what it called an "anti-war" action plan on Monday, seeking

contributions from banks, energy and multinational firms and

taking aim at foreign funding of media that it accused of

supporting the war in Ukraine.

Prime Minister Viktor Orban has been an outspoken critic of

Western military supplies to help Ukraine fight Russia's

invasion, and he has the warmest relations of any European Union

leader with Russian President Vladimir Putin.

Hungary is not involved in the Ukraine conflict, but Orban's

chief of staff, Gergely Gulyas, said the government would seek a

contribution to a "defence fund" from banks, energy firms and

multinational companies earning extra profit amid current

"wartime" conditions.

He did not specify what the money would be spent on. The

government has previously imposed windfall taxes from large

companies for budget coffers. Hungary's budget deficit is well

above EU limits, averaging nearly 7% of economic output over the

past four years.

A surge in inflation partly driven by fuel price rises due

to Western sanctions on Russian energy over the war in Ukraine

led to greater profits for banks as the central bank - along

with others in Europe - pushed up interest rates to contain the

trend.

Electricity price rises have also boosted energy firms'

earnings.

Speaking at a news briefing, Gulyas said Hungary would keep

existing windfall taxes on retailers and multi-national

companies this year instead of phasing them out as expected. A

portion of those taxes would also go to the "defence fund" he

said.

The state would also tax banks' foreign currency

transactions and hike transaction fees, he said.

Hungary's OTP Bank and the Hungarian Banking

Association did not immediately reply to emailed questions from

Reuters. OTP's shares were down 2.3% at 12:49 GMT,

underperforming the wider market.

Shares in energy producer MOL were down 2.3% at

12:49 GMT. MOL, which operates refineries in Hungary, Slovakia

and Croatia, is Hungary's largest revenue earner and imports

most of the crude it needs from Russia via the Druzhba pipeline.

The windfall tax imposed last year siphoned off nearly all

profit earned by MOL on cheaper oil imported from Russia.

Gulyas said the government would examine whether media

outlets use foreign funds and propose legislation to prevent

such funding spreading what he called "pro-war propaganda".

"Hungary's (government) reserves the right to send back

funds used for pro-war propaganda these media received from

abroad to the sender," Gergely Gulyas said.

The EU and pro-democracy groups have long accused Orban's

government of curbing media and other freedoms, a charge it has

repeatedly denied.

Gulyas said the regulation would primarily concern funding

received from outside the EU, with which Orban's government has

repeatedly clashed over what the EU says are violations of the

rule of law.

Orban has tightened his government's grip over state media

in the past decade, as well as private media via ownership

changes. Advertising money channelled to pro-government outlets

has also helped to create more loyal media coverage.

He visited Moscow to meet Putin last week, drawing a rebuke

from some fellow-European Union members, and on Monday met

Chinese President Xi Jinping on what he has said was a Ukraine

peace mission. The initiative does not have authorisation from

the EU or Ukraine.