An international controversy over nonprofits funded by progressive Hungarian-American billionaire George Soros has created a vulnerability in the NATO alliance, the State Department warned.

Secretary of State Rex Tillerson's spokesperson urged Hungarian leaders to scrap legislation mandating that Hungarian nonprofits supported by foreign contributors identify their donors. The bill is the latest development in nationalist Prime Minister Viktor Orban's ongoing campaign against Soros, but his domestic and international critics regard it also as a step toward Russian President Vladimir Putin.

"If signed into law, this would be another step away from Hungary's commitments to uphold the principles and values that are central to the [European Union] and NATO," State Department spokeswoman Heather Nauert said Monday.

Hungary joined NATO in 1999, when Orban was in the midst of a four-year run as prime minister. Since returning to the post in 2010 the midst of an economic crisis that required an international bailout, Orban has had a fraught relationship with the European Union. The 2015 refugee crisis created additional strain, and human rights groups criticized his efforts to constrict the flow of asylum-seekers into Hungary.

Orban responded by attacking Soros, a campaign that hasn't ended. "There is an important element in public life in Hungary which is not transparent and not open and that is the Soros network, with its mafia-style operation and its agentlike organizations," he said in June.

The State Department contradicted that assessment and suggested that Orban is enabling corruption. "The United States is concerned by the Hungarian parliament's passage of legislation that unfairly burdens and targets Hungarian civil society, which is working to fight corruption and protect civil liberties," Nauert said.

The Hungarian leader's skepticism of the EU and "globalist" refugee policies, perhaps aided by Soros' status as a prominent progressive donor, has endeared him to some American conservatives who see a likeness to Trump.

But Orban's domestic opponents see shades of Putin. Orban criticized Western sanctions imposed on Russia in response to Putin's annexation of Crimea and destabilization of eastern Ukraine. And Putin has implemented legislation requiring international nonprofits to register as "foreign agents" and giving him the authority to shut down foreign nonprofits.

"We should not be afraid of the NGOs but rather of the members of Parliament who represent Russian interests," said an opposition lawmaker, per The New York Times.

Hungary also passed legislation designed to shutter Central European University, one of the most prominent institutions in the country, due to funding from Soros. But, though Orban has praised Trump, the new president's administration opposed that bill and continued to criticize his hostility to the nonprofits.

"By portraying groups supported with foreign funding as acting against the interests of Hungarian society, this legislation would weaken the ability of Hungarians to organize and address concerns in a legitimate and democratic manner," Nauert said.

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State Department warns Hungary: Anti-Soros law 'another step away' from NATO - Washington Examiner