Unveiled by the European Commission in Strasbourg on Tuesday, the planned law would require the bloc’s 27 countries to ensure organisations and individuals lobbying on behalf of non-EU countries declare their activities and the funding they receive in a public register.

It has been criticised by non-governmental organisations who fear it could be used to silence critical voices in the bloc.

But European Commission vice-president Věra Jourová assured that the law does not amount to a so-called foreign agents law as there will be “no criminal sanctions, no banning of any activities nor a possibility to add discriminatory labels.”

The proposed law was unveiled as part of a raft of new measures aimed at bolstering EU democracy six months before voters head to the polls in the highly-anticipated European elections.

Think tanks, PR firms, research institutes, media, civil society organisations or individuals providing services to entities outside the EU aimed at influencing the bloc’s policy or “public life” would be affected.

Non-compliance could result in sanctions amounting to no more than 1% of annual turnover for companies, and a maximum €100 for natural persons.

It follows similar legislation in Australia and the United States. Washington’s Foreign Agents Registration Act (FARA) imposes strict transparency requirements for all lobbying activities. 

The EU’s plans come amid mounting fears that electoral interference in the form of cyberattacks and disinformation could undermine the European elections in June. A December poll suggests 81% of EU citizens are concerned about the threat of foreign interference to the bloc’s democracy.

“It would be naïve to think that democracy does not need any protection – in today’s world, it is quite the opposite,” Jourová said. “We should not let Putin or any other autocrat covertly interfere (in) our democratic process.”

“We cannot ignore the risk to democracy coming from abroad,” she added.

In what seems to be a rowing back on previous proposals that had alarmed non-government organisations and civil society, organisations will not be required to declare all foreign funding they receive under the planned rules.

A senior European Commission official insisted that the new measures were “about transparency and transparency only.” Criminal sanctions in case of non-compliance will be explicitly excluded, meaning it “does not compare at all to foreign agents laws,” the official added.

“No one will be branded a foreign agent,” he added.

NGOs point to EU hypocrisy

Brussels has in the past fiercely condemned similar national laws targeting foreign-funded organisations as being incompatible with EU values. 

A bill adopted in March by Georgia, a potential EU candidate, targeting media and non-governmental organisations receiving more than 20% of their funding from abroad was decried in Brussels for its “chilling” effect on the freedom of speech. The bill was swiftly retracted following mass protests and international backlash.

In 2017, The European Commission referred Hungary to the Court of Justice for its anti-NGO law, aimed at increasing the transparency of foreign-funded groups. 

Yet on Tuesday, the Hungarian parliament adopted the highly controversial ‘sovereignty law’, aimed at silencing opposition voices and curbing foreign funding for NGOs. Transparency advocates fear the law could be used to further stifle critical voices and freedom of speech. Hungarian Prime Minister Viktor Orbán has in the past repeatedly criticised media and civil society groups backed by Brussels.

Brussels has not yet given its opinion on the plans.

Non-governmental organisations believe the Commission’s latest proposal could undermine the EU’s geopolitical credibility.

“If the Commission really wanted to protect democracy, it would cast the net wide and raise transparency standards for all interest representatives—foreign-funded or not—rather than proposing a misguided foreign agent law that may well cause more problems than provide solutions,” Vitor Teixeira, Senior Policy Officer at Transparency International EU, said.

Transparency advocates also say the law does little to tackle undue influence within the bloc. 

The so-called Qatargate cash-for-influence scandal, where senior EU lawmakers were accused of accepting hundreds of thousands of euros from Qatari and Moroccan officials in exchange for influencing EU decisions, has forced the bloc to confront its lax rules on transparency.

An NGO set up by former MEP Pier Antonio Panzeri, the presumed ringleader in the corruption case, was used to launder illicit money received from Qatari and Moroccan officials.

Nick Aiossa, Acting Director at Transparency International EU, said the Commission ought instead to “introduce a comprehensive act that would include all interest representatives and close loopholes, truly addressing both foreign and internal malign elements.”

The Commission also presented recommendations to buttress the EU’s electoral processes ahead of next year’s European elections.

They include proposals to protect election-related infrastructure against cyber-attacks and spyware, fight against propaganda and electoral disinformation, and ensure elections are accessible to all, including people with disabilities.