* Opposition MPs chained themselves to parliament barrier
* Ruling Fidesz party passes laws on elections and economy
* IMF/EU talks in limbo: new deal key to market confidence
By Krisztina Than and Gergely Szakacs
BUDAPEST, Dec 23 Thousands of Hungarians
protested outside parliament on Friday, hours after opposition
lawmakers chained themselves to barriers in a failed effort to
block legislation they call a blow to democracy.
Among the lawmakers protesting was former Socialist Prime
Minister Ferenc Gyurcsany, who was briefly detained along with
several other opposition lawmakers.
Parliament, where the ruling centre-right Fidesz party of
Prime Minister Viktor Orban has a two-thirds majority, passed a
financial stability law despite objections by the European
Union, which could jeopardise talks about a new financing deal
with international lenders.
Hungary is trying to secure the deal with the International
Monetary Fund and the EU to retain access to market funding next
year, but informal talks have collapsed, leading to a downgrade
in Hungary's debt rating to "junk" by Standard and Poor's.
Parliament also passed an election law that critics say will
change the electoral system in favour of Fidesz.
Andras Schiffer, head of the small LMP opposition party
whose deputies chained themselves outside parliament, told a
crowd of around 3,000 Orban had betrayed voters' confidence.
"Viktor Orban wants to cement an economic policy that will
push Hungary into default," Schiffer told the crowd gathered in
Teacher Erzsebet Nagy said: "We thought we had to come here
as we believe democracy is in jeopardy."
Former PM Gyurcsany, who headed two previous Socialist
governments and is now a member of parliament, was forcibly
removed from the morning protest along with the LMP lawmakers.
Police later detained several Socialist lawmakers who tried
to prevent LMP activists being taken away from outside. Those
detained were later released.
"Orban's autocracy can no longer tolerate even peaceful
opposition and protest," Gyurcsany told Reuters after he was
MP Gabor Scheiring told Reuters: "I have come here as it's a
shame for the governing majority that people have to defend
parliamentary democracy with their own bodies."
A vice chairman of Fidesz said the protests were a
Police said that by chaining themselves to the barriers,
protesters blocked the entry of MPs to parliament and did not
obey requests to leave, and that is why police intervened.
The government's financial stability law cements a flat
personal income tax, which the opposition says would tie the
hands of any future administration, but the government says it
would improve the economy's competitiveness in the long run.
Peter Kreko, political analyst at think tank Political
Capital, said the police action was unacceptable. "These
pictures which show police removing opposition lawmakers, well,
we see such photos in undemocratic countries."
"What the government can achieve with this is that its
isolation from the West can become much stronger both
economically and politically."
Since it swept to power in 2010, Orban's government has
tightened its grip on the media, curbed the rights of the top
Constitutional Court, renationalised private pension assets and
dismantled an independent budget oversight body.
The United States has urged Orban's administration to
respect democratic freedoms.
EU OPPOSES TWO LAWS
On Thursday Orban rejected a European Commission request to
withdraw two disputed laws in a move that could derail talks
with lenders about the new financial deal. Analysts say the
issue could trigger a full-blown market crisis.
European Commission President Jose Manuel Barroso had asked
Orban to scrap two laws, the financial stability law and one on
the central bank which the European Central Bank says infringes
on the central bank's independence.
The Commission said it was assessing Hungary's response.
The government said the financial stability law was key to
stable budgets and debt reduction.
Parliament passed several amendments to the central bank
bill on Friday to bring the legislation in line with the
European Central Bank's requests, but left some contentious
parts in, such as the expansion of the Monetary Council.
Parliament is due to vote on the central bank bill next week.