BUDAPEST (Reuters) - Hungary’s crackdown on foreign-funded NGO’s is spilling over into a tightening of rules on foreign universities, which could shutter Budapest’s Central European University (CEU), a stalwart of liberal international education in the country.

Michael Ignatieff, rector of the Central European University, talks during a news conference after the government of Prime Minister Viktor Orban tabled a new bill that could force the 25-year-old school out of Hungary, in Budapest, Hungary March 29, 2017. REUTERS/Bernadett Szabo

The law “strikes at the heart” of CEU, founded by American financier and philanthropist George Soros, the institution said in a statement. CEU Rector Michael Ignatieff told an emergency town hall forum that the law must be withdrawn.

“It is not an issue in which compromise is possible,” Ignatieff told students and faculty. “We want guarantees of our academic freedoms.”

Right-wing Prime Minister Viktor Orban has criticized civil society organizations funded by Soros, which espouse an Open Society model at odds with Orban’s own preferred “illiberal democracy”. One flashpoint has been migration.

Orban, who has toughened his anti-migration rhetoric ahead of 2018 elections, says NGOs that receive funding from abroad meddle in Hungarian affairs.

Under the bill submitted to parliament on Tuesday, foreign universities must have a campus in Budapest and in their home country. CEU, which only operates in the capital, is the only international college with no arm elsewhere.

“The amendments would require CEU to open an additional campus in the state of New York. Forcing CEU to do so would have no educational benefit and would incur needless financial and human resource costs,” the university said.

Universities must comply with the law by Feb. 15, 2018 or cease accepting new students from Sept. 2018.

U.S. EMBASSY “VERY CONCERNED”

Slideshow ( 8 images )

Education Secretary Laszlo Palkovics told a news conference that dozens of foreign universities operate in Hungary and they all must comply with the law, insisting CEU was not singled out. But the new requirements make CEU’s position uniquely hard.

Universities from outside the European Union must secure a agreement from their governments and the Hungarian government, plus show that they have a physical campus in their home country.

Palkovics said Hungary wanted to make sure CEU fulfils all the requirements and keeps its license, but added the international conditions were out of his hands.

“The goal is for the USA to stand behind such cooperation (allowing CEU to operate in Hungary). If the current administration supports it then so will we.”

There are doubts whether the administration of U.S. President Donald Trump, who has exchanged tough words with Soros several times in the past few years, will support such an agreement.

On Wednesday, the U.S. Embassy said it was “very concerned” about the legislation.

“The University...enjoys strong bipartisan support in the U.S. Government. The United States opposes any effort to compromise the operations or independence of the University,” Charge d’ Affaires David Kostelancik said in a statement.

While insisting the law was not geared against CEU, Palkovics acknowledged CEU was the only international university in Hungary without a campus in its home country.

CEU, founded in Budapest in 1991 following the collapse of communism, has 1,400 students.

Open Society Foundations have been active in Hungary for three decades and Soros has financed foreign scholarships for Fidesz politicians, including Orban at the time when communism collapsed.

“To me it’s clear this is not about foreign universities in general,” Laszlo Bari, a history PhD student at CEU, said. “This is about CEU in particular and especially about Soros. Something is wrong and now they need a diversion, a scapegoat.”