The European Union is struggling to respond to a poster campaign by the Hungarian government that vilifies the financier and philanthropist George Soros in a manner that seems to recall wartime anti-Semitic propaganda.

Large posters of the Hungarian-American billionaire, who has Jewish roots, have appeared in Hungary in recent days, with the text “Don’t let Soros have the last laugh” beside his head. Some posters have been daubed with anti-Semitic graffiti. Mr Soros, 86, who supports open immigration and human rights groups, said he was distressed by use of “anti-Semitic imagery as part of its deliberate disinformation campaign”.

EU officials have condemned the 5.7 billion forints (£16m) anti-immigration campaign for its ugly tone. But they admit there is little they can do to restrain the hard-right government from measures like demonising Mr Soros as a champion of illegal immigration.

Relations between the firebrand Hungarian Prime Minister Viktor Orbán and the EU mainstream have become frayed in recent years. The European Commission has warned Mr Orban about his increasingly restrictive laws on the judiciary, media, academia and NGOs. The government has continued to harden legislation concerning refugees, and Freedom House, a US NGO, has downgraded Hungary to a “semi-consolidated democracy”. However, Hungary is not alone in attacking Mr Soros, or in imposing strict limits on the judiciary and media. Liviu Dragnea, who heads Romania’s ruling Social Democratic Party, says Mr Soros and his work “have fed evil in Romania”.

Mr Soros has spent around £10 billion since the 1990s, mostly through his Open Society Foundations, on initiatives to reduce poverty and support universities around the world, especially Eastern Europe. Although they were once close friends, Mr Orban has railed against Mr Soros in recent years. In April, the Hungarian government passed a bill to close the Central European University, founded by Mr Soros, sparking mass protests in Budapest. When MEPs voted a resolution in May condemning the “serious deterioration” in Hungary’s rule of law and fundamental rights, Foreign Minister Peter Szijjarto, said it was a “new attack on Hungary by George Soros’ network.”

Meanwhile the right-wing government in Poland is echoing Hungary in imposing more authoritarian laws, including limiting the independence of the Constitutional Tribunal, the country’s highest court.

Zsuzsanna Végh, a researcher at the European University Viadrina, in Frankfurt, says democratic backsliding in Hungary has created a dangerous precedent with spill-over effects of in Poland. “Letting it continue unchecked severely undermines the normative foundations of the European Union itself, at a time when its future is already under threat,” she says.

Yet although Hungary and Poland’s drift is rubbing Brussels the wrong way, there is little the EU can do about it. Once in the bloc, it is hard for the EU to enforce the rules. The Commission last year opened an unprecedented investigation into the rule of law in Poland, a procedure that is started when there are concerns that a country is going against the EU’s democratic values. But little has happened since then.

That may be changing. MEPs now talk of stripping Hungary of its voting rights through a procedure known as Article 7 action. The European People’s Party (EPP), the big group of centre-right MEPs, is threatening to kick Mr Orban’s Fidesz party out of their club. And there are even suggestions that the EU could use upcoming budget negotiations to prompt change. Hungary receives nearly €6 billion a year in EU funding, and more than 95% of public investment projects in Hungary are co-financed by the EU.

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