By Krisztina Than and Marton Dunai
BUDAPEST (Reuters) - Hungary's ruling party is set to push through law changes on Monday that critics say will limit the powers of the constitutional court, one of the few institutions that has stood up to Viktor Orban, the combative prime minister.
Parliament, dominated by Orban's party, was scheduled to vote on a set of government-backed constitutional amendments, despite warnings from the European Union, the U.S. government and human rights groups that the changes could undermine Hungary's democracy.
Since taking power with a super-majority in parliament in 2010, Orban has pushed through changes that Brussels says risk undermining the independence of the media, central bank, judiciary and other institutions.
The dispute underscores the limited ability of the European Union to rein in its members, even when Brussels believes they risk breaching the EU's founding principles of rule of law and respect for human rights.
Orban's loyalists launched a counter-attack on Monday, saying the real issue was that Hungary was making foreign power companies cut the prices they charge households, so angering powerful international business interests.
"Hungary won't just let this happen," Antal Rogan, head of the parliamentary faction of Orban's Fidesz party, said in a speech in the chamber on Monday.
"We won't allow either any international business lobby or the political forces that speak on their behalf to interfere with the decisions of the Hungarian parliament."
The forint currency fell more than one percent against the euro to new 9-month lows because of concerns about the vote in parliament and steps by Orban to cement his control over the central bank.
At the weekend, several thousand Orban opponents protested in the capital against the changes to the constitution, and a new protest was planned for Monday evening. The opposition though is too weak and divided to mount a serious challenge.
Parliamentary officials said that the vote on the constitutional amendments was on the legislature's timetable for Monday afternoon. Legislators did not heed appeals from the EU and others for a postponement.
AUTOCRAT OR DEMOCRAT?
The package of changes has revived suspicions among Orban's opponents, and some foreign states, that the 49-year-old prime minister is eroding Hungary's system of checks and balances so he can rule without challenge.
A powerfully built, soccer-playing father of five who came to prominence as a handsome young democracy activist in the last days of Communist rule, Orban is charismatic, very intelligent and forceful, say people who have met him.
He has already been accused of risking economic stability after imposing hefty "crisis taxes" on foreign-owned businesses, of stacking institutions with his loyalists, and of stoking nationalist sentiment to win votes.
Orban's government denies doing anything undemocratic. It says it has the right to use its parliamentary mandate to reform a constitution it calls a hangover from Communist rule.
The planned amendments include allowing the court to challenge laws only on procedural grounds, not on their substance, and scrapping all decisions made by the court before 2012, discarding a body of case law often used as reference.
The focus on the court is significant because earlier this year it blocked a Fidesz proposal to change voter registration rules. That was one of the few occasions when Orban has been forced to drop one of his initiatives.
Asked about the vote in the Hungarian parliament, German Foreign Minister Guido Westerwelle said on Monday European countries should respect the continent's values.
"It is not only about constitutions and rights, written on paper - one has to live up to it," he said in Brussels.
In a phone call on Friday, European Commission President Jose Manuel Barroso told Orban that his government and the parliament should address concerns "in accordance with EU democratic principles".
But the outside world's levers of influence on Hungary are limited. Its biggest vulnerability has been its status as central Europe's most indebted nation. But earlier this month the government sold $3.25 billon worth of bonds, removing any need to call on Brussels or the International Monetary Fund for financial help in the near term.
(Additional reporting by Ilona Wissenbach in Brussels; Writing by Krisztina Than and Christian Lowe; Editing by Peter Graff)