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Michael Ignatieff, rector of the Central European University gestures during a news conference in Budapest, Hungary, on Dec. 3, 2018.BERNADETT SZABO/Reuters

The Central European University is being pushed out of Hungary, a sign of a growing threat to democracy in that country, university president Michael Ignatieff said Monday.

CEU’s legal status has been in limbo for more than a year since changes to a higher education law that critics of Hungarian Prime Minister Viktor Orban’s government say deliberately targeted CEU. The university set a December deadline to resolve the dispute in order to give incoming students certainty about where they will be studying next year, but has not yet reached a deal with the government.

Mr. Ignatieff said the university, founded by U.S.-based billionaire George Soros and which is accredited in the United States and Hungary, was forced out by the government. He called the move unprecedented, saying it was the first time a U.S. institution had been driven out by a NATO ally. In a statement, the university described it as a dark day for Europe.

“We fought a battle of principle to defend academic freedom,” Mr. Ignatiefff said in a phone interview from Budapest on Monday. “We thought democracy was secure in Europe and now we’re looking at democratic backsliding of a serious kind in Hungary.”

CEU will establish a new campus in Vienna that will open next fall. Mr. Ignatieff said all new students will attend classes in Vienna, but he hopes to maintain a Budapest campus.

Canadian Foreign Affairs Minister Chrystia Freeland called the development a “terrible loss.”

“This forced move is a blow to academic freedom, which is a fundamental right, and all the more troubling given that Hungary is a NATO and EU member state,” Ms. Freeland said in a statement.

The university was founded by Mr. Soros in 1991 after the collapse of communism in Eastern Europe. CEU has approximately 1,500 graduate students from more than 90 countries around the world and is considered one of the top universities in the region. About 30 Canadians are currently at CEU, Mr. Ignatieff said.

Mr. Soros, who was born in Hungary and now lives in the United States, has been a frequent target for Mr. Orban whose vision for an “illiberal democracy” in Hungary clashes with the liberal, internationalist vision championed by Mr. Soros.

Mr. Ignatieff, former leader of the Liberal Party of Canada, and a prominent writer and academic, said his task now is to lead the institution to “safety.”

“The challenge for us is to maintain our academic quality while we recover from this political attack,” he said.

Mr. Ignatieff said he has not spoken to Mr. Soros about the university’s decision but had been consulting with the university’s board of trustees.

“We’re part of a bigger story, which is the process of slow consolidation of single-party rule in this country, and that should worry us,” Mr. Ignatieff said. “[Mr. Soros] and other Hungarian intellectuals set up this university basically to help the country transition from single-party rule to democracy. Now the country is sliding back the other way. It’s an ironic and in many ways tragic commentary on what’s happened in Central and Eastern Europe.”

Hungary’s government dismissed the university’s move on Monday as a “Soros-style bluff.”

Mr. Ignatieff said he believes the university has a legal basis to continue to operate in Hungary, but it’s not clear what stance the Hungarian government will take.

He said at times over the last 18 months, as students protested and academics and politicians around the world rallied to the cause of the university, it seemed a solution might be possible.

“In the end I think the Prime Minister just determined that he was going to push us out,” Mr. Ignatieff said.

With a report from Reuters