HUNGARY: PM ANNOUNCES NEW CABINET (C-RE6-00145)

UNCLAS SECTION 01 OF 04 BUDAPEST 001175

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STATE FOR EUR/NCE MICHELLE LABONTE

E.O. 12958: N/A
TAGS: PGOV KDEM SOCI PINR HU
SUBJECT: HUNGARY: PM ANNOUNCES NEW CABINET (C-RE6-00145)

REF: STATE 22644

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SUMMARY
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1. (U) On Friday, June 2 in Parliament, PM Gyurcsany
announced his new cabinet, setting the stage for
much-anticipated administrative and fiscal reforms. The
number of ministers will slip from 17 to 12, with eight
ministers from coalition leader Hungarian Socialist Party
(MSZP),three from junior coalition partner Alliance of Free
Democrats (SZDSZ) and one independent.

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MINISTRY OF FOREIGN AFFAIRS
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2. (SBU) Kinga Goncz, currently Minister of Youth, Family,
Social Affairs and Equal Opportunity, is the surprise choice
for Foreign Minister (FM). The only independent in the
cabinet, she is described by Embassy contacts as highly
personable and possessed of the right instincts to fill the
foreign policy position. Goncz became political state
secretary at the Ministry of Health in May 2002, and later

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Minister of Equal Opportunity in June 2004. Goncz became
Minister of Youth, Family, Social Affairs and Equal
Opportunities with a convergence of responsibilities from
other ministries in October 2004. A psychiatrist by training
(MD Semmelweis University of Medicine 1972) and former
university professor, Goncz worked at the National Institute
of Medicine between 1982 and 1989. She has long played an
active role in shaping educational and organizational
development policies of social agencies in Hungary. Dr.
Goncz has traveled and lectured in the U.S. including
visiting scholar positions at the University of Michigan and
Case Western University. Her most recent visit to the U.S.
was in February 2006 when she represented Hungary at the UN
Commission on the Status of Women. Born in Budapest in 1947,
Dr. Goncz is the daughter of former Hungarian President Arpad
Goncz (a revered figure, who served two terms as the first
president of the newly democratic Republic of Hungary).

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MINISTRY OF ECONOMY AND TRANSPORT
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3. (SBU) Responsibility for information technology (IT) now
becomes the province of Economy and Transport Minister Janos
Koka, with the merging of his ministry and the Ministry of
Informatics. Koka, whose recent focus has been shaping GOH
energy and energy security policies, will continue to direct
the Hungarian economy as he has since October 2004. Koka is
widely viewed as a possible successor to Gabor Kuncze for
SZDSZ party president in 2007. A wealthy IT entrepreneur who
won his parliament seat under the SZDSZ banner, Koka is
viewed by some in his party as a "non-liberal" for his close
personal friendship with PM Gyurcsany and his high standard
of living. The youngest member of the cabinet, Koka will be
34 years old in July 2006. Koka accompanied Ambassador
Walker on U.S. trade and investment trips and is close to the
Embassy.

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MINISTRY OF HEALTH
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4. (SBU) SZDSZ's Lajos Molnar, a doctor and former hospital
administrator, takes over the Ministry of Health in the new
Gyurcsany government amidst boisterous calls for reform in
his sector. The SZDSZ party made health care a key plank of
its campaign and reportedly put up a significant fight for
the post during coalition talks. Molnar's party advocates a
privatized health-insurance structure and the
decentralization of hospital administration, possibly to
contracted hospital administrators. It is too early to
speculate whether PM Gyurcsany will allow Molnar to make bold
changes in health care. At 60 years of age, Molnar is
entering Parliament as a first-time MP.

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MINISTRY OF ENVIRONMENTAL PROTECTION AND WATER MANAGEMENT
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5. (SBU) Environmental Protection Minister Miklos Persany was
reportedly the final SZDSZ ministerial pick, chosen in lieu
of the Foreign Minister slot. A biologist by training and a
specialist in environmental protection, Persany is perceived
as an issue expert rather than a politician. He served for
ten years as director of the National Zoo and is perhaps the
most prepared of any cabinet member for his position.

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Persany is a returning member of the Gyurcsany government,
having been chosen previously by Medgyessy to head the
ministry. The Embassy (particularly through our ES&T Hub and
work with the Regional Environmental Center) has excellent
relations with the 56-year-old Persany.

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MINISTRY OF DEFENSE
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6. (SBU) Imre Szekeres takes over the Ministry of Defense and
inherits an organization already severely pressed by budget
constraints, with 1.2 percent of GDP and falling. Meanwhile,
the Defense Ministry must support Hungarian contingents to
international missions, chiefly in the Balkans, Afghanistan
and Iraq. In the fall of 2006, Hungary is planning to field
a Provincial Reconstruction Team (PRT) to Afghanistan, most
likely to Pol-e-Khomri in the north -- but plans to use
troops already on the ground in Kabul to form the base of
that mission. Szekeres possesses no particular military
expertise. The 56-year old Szekeres is a founding member of
MSZP, former party caucus leader (1994-1998) and former party
vice president. He is a frequent Embassy contact who is well
plugged in to internal MSZP party affairs. He now serves as
the chair of the MSZP economic section.

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MINISTRY OF EDUCATION AND CULTURE
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7. (SBU) Former MSZP party president Istvan Hiller is tapped
to head the newly merged Ministry of Education and Culture,
in a move that he has sought privately for months. His
tenure as MSZP party president was long of image and short on
substance as PM Gyurcsany personally managed the 2006 MSZP
campaign, keeping Hiller on the sidelines for public
relations events. The 40-year-old Hiller has served in
Parliament since 2002. A former college professor, Hiller
served previously as political state secretary in the (then
separate) ministries of education and culture.

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MINISTRY OF LOCAL GOVERNMENTAL AND REGIONAL DEVELOPMENT
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8. (SBU) Former Interior Minister Monika Lamperth will head
the newly-minted Ministry of Local Governmental and Regional
Development. The organization is regarded by many as "the
only completely new ministry" for its new name, and new
line-up of responsibilities. Lamperth's ministry will play a
key role in implementing administrative reforms by
reorganizing services on a regional, rather than local level.
The responsibilities Lamperth retains in the new ministry
include oversight of local governments, public administration
(i.e. local infrastructure and services) and elections.
Police and law enforcement functions of the defunct Interior
Ministry now come under the Justice and Law Enforcement
Ministry's control. New duties siphoned from other
ministries include sports affairs and tourism. Initially
tapped as Interior Minister in the Medgyessy government,
Lamperth has never been considered a close ally of PM
Gyurcsany. An MSZP party member since its founding in 1989,
Lamperth is popular with her constituents, having been
elected by individual mandate in Kaposvar each term since

1998. She is 49 years of age.

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MINISTRY OF JUSTICE AND LAW ENFORCEMENT
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9. (SBU) Originally named by Gyurcsany in 2004, Jozsef
Petretei will serve a second term as Justice Minister, with
the new responsibility of law enforcement, formerly under the
Ministry of Interior. Changes of significance in the law
enforcement portfolio include oversight of police and border
guards, asylum and refugee cases and maintaining the
governments collection of personal records (i.e. name,
address, birth date, etc.). Though not well defined as yet,
Petretei will also play a role in ethnic Hungarian issues and
Hungarian citizenship. Sources consider Petretei a
"conscientious, well-prepared member of the administration
who has the PM's ear" (Note: His connection Gyurcsany goes
back to the communist youth movement in Pecs in the early
1980s.) Petretei taught at Pecs University Law School in the
1990s and is an established expert on constitutional law,
state structures and separation of powers.

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MINISTRY OF FINANCE
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10. (SBU) Janos Veres remains at the Ministry of Finance
(MOF),a post he has held only since April 2005. A founding
member of the MSZP, Veres has served in Parliament
continuously since 1994. He was elected from the Bereg
county party list three times before winning an individual
mandate in 2006. He served as mayor of Nyirbator from 2002
to 2003, when he left to become MOF political state
secretary. He moved briefly to serve as political state

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secretary in the Prime Minister's Office (PMO) in October

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2004, before being named as Minister of Finance last April.

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MINISTRY OF SOCIAL AFFAIRS AND LABOR
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11. (SBU) Peter Kiss from the MSZP will head the Social
Affairs and Labor Ministry. This organization is the fusion
of two former ministries: The Ministry of Youth, Family,
Social Affairs and Equal Opportunity; and the Ministry of
Employment and Labor. The ministry retains the functions of
the old organizations, under one minister, including
vocational training programs, drug information programs,
unemployment benefits and family welfare services. Formerly,
Kiss has served as the Head of the Prime Minister's Office
under Medgyessy and Gyurcsany. He was reported to be a rival
to Gyurcsany for the Prime Ministership in 2004. He has
served as an MP since 1992 and was Minister of Labor in the
Horn administration from 1995-1998. He returned briefly to
the Labor Ministry from 2002-2003 before taking up his
current job in the PMO under the Medgyessy administration in
2003, where he remained under PM Gyurcsany.

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MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT
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12. (SBU) Current MSZP Agriculture Minister Joszef Graf will
take the Ministry of Rural Development post. The ministry
retains all the functions from the Agriculture Ministry and
has an enhanced responsibility for rural development. From
Agriculture, Graf keeps responsibility for farming, game and
fish management, forestry, and plant and animal sciences.
Under his new "rural development hat," Graf is expected to
play a key role in shaping Hungary's EU Agricultural policy,
though the specifics of his role are not well defined now.
Graf was the first cabinet member PM Gyurcsany announced
would remain in his post, during the 2006 national elections,
because of his popularity and close relationship with the PM
(and his good handling of farmer protests). Graf did not
seek reelection to Parliament, where he served from 2002 to
2006, so will serve as Minister without a parliamentary seat.
He is 60 years old and was a founding member of the MSZP in

1989. Graf gained popularity among farmers for protecting
Hungary's interests regarding EU agricultural policy, and for
promoting Hungarian products over imported "products of
unknown origin." A good friend of the Embassy, but not an
English speaker, he is a pig farmer from southern Hungary.

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MINISTER IN CHARGE OF THE OFFICE OF THE PRIME MINISTER
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13. (SBU) Gyorgy Szilvasy, a close confidant of PM Gyurcsany,
will serve as Minister for the Prime Minister's Office. He
will likely deal with EU budget and fiscal allocation issues
that are now controlled directly by the PM's office (Note-
Responsibility for EU policy and planning, formerly a
separate ministerial position in the PMO, now falls under the
purview of the MFA). Though not confirmed, numerous press
reports indicate that oversight of Hungary's intelligence
services will reside in the PMO. Szilvasy's will also lead
e-governance initiatives that make available information and
services such as on-line tax filing. A former business
partner of PM Gyurcsany, Szilvasy was cabinet chief in 2005.
He is considered a career politician and served from 2004 to
2005 as Interior Ministry state secretary, from 2003 to 2004
in the Ministry of Culture, from 2002 to 2003 in the Ministry
of Sports, and from 1995 to 1998 in the Ministry of
Environmental Protection.

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COMMENT
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14. (SBU) In theory, fewer ministries should make the GOH
less unwieldy, and this down-sizing allows Budapest to set a
good example for provincial governments that may soon face
consolidation themselves. Time will judge the wisdom of
combining responsibility for law enforcement and the
judiciary in one ministry. Defense will, in all likelihood,
face additional budget cuts, regardless of who is at the

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helm. Yet all ministries will face hard choices -- as PM
Gyurcsany announced on May 31, the 7,500 central state
administration employees face cuts of 1,400 by year's end,
and an additional 10 percent in 2007.
REEKER