"NO ILLUSIONS" ON REFORM FROM FORMER PM HORN

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 002322 SIPDIS SIPDIS DEPARTMENT PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 11/15/2011 TAGS: PGOV PREL ECON KDEM HU SUBJECT: "NO ILLUSIONS" ON REFORM FROM FORMER PM HORN REF: BUDAPEST 2269 AND PREVIOUS Classified By: POL/C ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (C) Meeting with Ambassador Foley November 16, former PM and MSZP MP Gyula Horn wasted no time in addressing the challenge of implementing the Gyurcsany government's convergence program. He asked us facetiously "not to say reform - because everyone will think we're talking about more cutbacks," and said MSZP officials "go to bed every night and wake up every morning" thinking about health care. This will be "the hardest issue of them all," and he believes the party is "set on the principle" but is still discussing "minor issues" regarding implementation. ¶2. (C) Referring to recent polls showing relative gains for the MSZP, Horn remarked wryly that these "confirm that Hungarians are masochists." Although he sees the need for reform is a regional problem, he described the past few months of demonstrations as "unusual" in Hungary, a country unaccustomed to political discord. He has "no illusions" about the long uphill battle ahead, commenting flatly that the government does not have broad public support for its reform agenda. The man on the street "still sees only the short-term negative impact," and the government must balance its reforms with provisions for social welfare. He candidly expressed his hope that the MSZP "will not go down in the process." ¶3. (C) Responding to the Ambassador's question, Horn noted that there are "the usual fissures" within the MSZP but said the party's collapse has been often predicted but never realized. He was, however, distinctly cool toward the Prime Minister, expressing his hope that the party will not be "forced" into another confidence vote. He commented that "Gyurcsany is neither simple nor easy to deal with," and referred to "much hesitation" among "some within the party" regarding the likelihood that Gyurcsany will run for the MSZP presidency. He is stretched thin as PM, Horn suggested, and it would be better for the party to maintain "its own identity." Horn suggested that "any" of the other leading contenders (Defense Minister Szekeres, Parliamentary Speaker Szili, and Labor Minister Kiss - all stalwarts of the party's more traditional wing) could serve as party leader. Referring briefly to the succession within the SZDSZ following party president Gabor Kuncze's expected departure, Horn expressed a willingness to work with "whoever" their next leader is to maintain the governing coalition, but stated that the SZDSZ would only resent any MSZP interference in its own "housekeeping." ¶4. (C) Turning to the opposition, Horn remarked that FIDESZ is "doing all it can to help the MSZP win the 2010 elections" by employing obstructionist tactics that will ultimately backfire with the public. He expressed his respect for Viktor Orban personally (but "not for his party"),describing him as "a smart man ... but one who sure likes power." (Comment: This is praise from Caesar. End Comment.) He minimized the impact of Orban's recent attacks on alleged MSZP corruption (reftel),noting that FIDESZ is hardly immune to similar charges dating back to Orban's time as Prime Minister. He is advising the government to investigate all charges thoroughly, even though "95% of them amount to nothing." He is also working quietly - though perhaps vainly - to remain in contact with FIDESZ representatives in search of the "lowest common denominator of cooperation." ¶5. (C) In a brief discussion of foreign affairs - his "labor of love" - Horn emphasized the importance of diversifying Hungary's sources of energy but underscored Hungary's dependence on Russia by stating "we would have no agricultural sector without the Russian market. He believes Russian policy is now driven by core economic interests rather than ideology, and saw the fundamental solution as Russia's agreement to provide energy at stable prices in exchange for high technology from the West. Hungary could rely on Austria for short-term shortfalls, and in the longer-term pipelines through Croatia and/or Serbia would help "bring the Balkans fully into Europe." ¶6. (C) Comment: Horn retains considerable influence as an MSZP insider and is clearly deeply involved with evolving policy issues and internal political developments. His remarks contrast sharply with those of former President Arpad Goncz (father of FM Kinga Goncz),who told the Ambassador earlier this week that he "only knows what he hears on the news." Horn's comments re Orban - and contacts with the opposition - are surprising given his reputation as a hold-over from the old system, but his faint praise for Gyurcsany speaks volumes about the PM, whose leadership within the party may owe more to a fear of the opposition BUDAPEST 00002322 002 OF 002 than to any personal affection from other MSZP members. End Comment. ¶7. (C) Bio Note: Though fully in command of the substantive issues, Horn's health has been the subject of comment of late. His hands did tremble throughout the meeting, and rumors are afoot that he may have Parkinson's disease ... or a drinking problem. FOLEY