NEVER A BOAST OR A BRAG: WHAT WE (OVER)HEARD AT

C O N F I D E N T I A L BUDAPEST 001097 SIPDIS SIPDIS DEPARTMENT PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 07/04/2012 TAGS: PGOV PREL ECON EFIN ENRG HU SUBJECT: NEVER A BOAST OR A BRAG: WHAT WE (OVER)HEARD AT THE FOURTH OF JULY Classified By: ACTING DCM ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (SBU) Post's commitment to active but non-partisan outreach was rewarded with a stellar turn-out by contacts across the political spectrum at the Fourth of July reception. ¶2. (SBU) Prime Minister Gyurcsany attended his first July 4th reception as PM, the latest signal of his desire to affirm his commitment to our bilateral relationship and to the broader transatlantic alliance. Arriving to find the Hungarian Air Force band playing on the EMR lawn, Gyurcsany quipped "are we going to dance?", making fun of the criticism directed at him for a video clip in which he apes Hugh Grant in a scene from "Love Actually." As the PM posed for pictures with the MSG, his wife, Dr. Klara Dobrev, commented on the change of venue this year to the EMR grounds, noting that "everything is different this year - especially the atmosphere." ¶3. (SBU) The opposition also turned out in full force, led by FIDESZ parliamentary faction leader Tibor Navracsics, who commented that he "would not have missed" the reception. There were some welcome signs of communication across the aisle, though the comments were often barbed. FIDESZ MP Zsolt Nemeth and MSZP MP Vilmos Szabo, chair and deputy chair of the Foreign Affairs Committee, joked that they were going on an upcoming trip to China together because they "don't trust the other to go alone." In a reference to the ongoing feud with the SZDSZ over health care and taxation, MSZP MP Jozsef Kozma remarked wryly "now that we're in recess we only have our coalition partners to fight with." Though noting his satisfaction with the government's intention to make a nominal increase in defense spending, Defense Minister Szekeres made clear that he is less happy with Gyurcsany's choice to serve as his deputy, MSZP MP (and outspoken MOD critic) Agnes Vadai. ¶4. (SBU) These jibes aside, there was strong consensus on energy security, with officials from all parties expressing their resolution to stave off the OMV takeover of MOL. One energy expert noted that the issue should serve as a "wake-up call" for Hungary. ¶5. (SBU) Other analysts remarked on the divide between the economic and the business communities' perceptions of the economy, with the former decidedly positive on deficit reduction efforts and the latter focused on concerns regarding transparency, taxation, and competitiveness. One pro-opposition analyst remarked that economic performance would exceed the government's projections, a prospect that has some of our FIDESZ contacts concerned. Despite their huge lead in recent polling, many in the party recall previous come-from-behind victories by the MSZP and fear that "they've got us right where they want us ... again." Several observers from the diplomatic corps commented on FIDESZ's commitment to mending fences with the international community in general and the US in particular, though they noted that Orban has continued to send mixed messages, particularly regarding foreign investment. ¶6. (C) Comment: As Dr. Dobrev observed, everything was different this year. The OMV takeover bid has many looking to the West - and not to Brussels - for support. Our initiative on climate change has silenced - or converted - many critics, and contacts from all parties are emphasizing the importance of continued U.S. engagement in the Balkans. With the opposition turning out in force, in part to demonstrate their alignment with the US on key issues, the MSZP also marshalled a strong showing in order to prevent FIDESZ from carrying the day. With the size of the crowd and the diversity of representation, we were the clear winner from this competition. End Comment. FOLEY