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07BUDAPEST1190 2007-07-24 08:23:00 SECRET Embassy Budapest
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1. (S) Summary: Prime Minister Gyurcsany's Foreign and
Security Policy Advisor, Karoly Banai, briefed Ambassador
Foley on the July 19 Finno-Ugric Summit in Saransk, Russia,
privately acknowledging the negative optics of the event but
making every effort to downplay the discussion of political
issues. Banai conceded his personal opposition to the
Saransk trip, indicating that the PM now recognizes the
importance of making clear his commitment to the
Euro-Atlantic community and predicting that he is "ready and
determined to do so." Banai noted, however, that visible
progress "may take time." He also echoed comments by other
senior Hungarian officials suggesting a delineation between
Hungary's economic ties with Russia and its political
orientation with the West. End Summary.


2. (S) Following through on his commitment to provide a
read-out on PM Gyurcsany's attendance at the Finno-Ugric
Summit in Saransk July 19, Banai described the event as
having been "positive with regard to the rights of the
Finno-Ugric minority" in Russia, highlighting President
Putin's commitment to respect "the rights of all communities
in Russia." The Hungarian delegation had pressed for broader
provisions for the use of native languages in education and
also announced its intention to open 10 "Hungarian Points"
(roughly equivalent to American Corners in Banai's
description) in Finno-Ugric speaking regions.

3. (S) Banai worked hard to deflect the issue of Estonia's
effective exclusion from the event, noting that Tallinn
"never requested that we not attend" and underscoring that PM
Gyurcsany had remained in close contact with his Estonian
counterpart before and after the event. The PM had, Banai
said, noted in his one-minute address his hope that Estonia
would be able to participate in future cultural fora without
regard to "political issues."

4. (S) At a late-night fifty-minute bilat at the airport,
Gyurcsany and Putin had affirmed their readiness to further
develop economic ties. Banai reported that Gyurcsany had
asked Putin directly about alleged Russian involvement in OMV
moves against MOL in order to "lay down a clear marker"
regarding his commitment to defend Hungary's strategic
industries. He received Putin's "laughing" assurances in
response. (Note: Banai reported that Putin had also smiled
in response to a comment by one Hungarian academic regarding
the declining birthrate of the Finno-Ugric communities,
noting that "the Russian population too" is in decline. End

5. (S) Gyurcsany and Putin had also agreed to:

Form a Ministerial-level inter-governmental committee to
discuss "agricultural, economic and other issues" in Moscow
in September or October. (Note: Banai suggested that
Minister for Cabinet Affairs Peter Kiss would lead the
Hungarian delegation and categorically ruled out Putin's
attendance at the event. End Note.)

Convene a bilateral Joint Economic Committee in Budapest
September 18. Banai believes that Economy Minister Koka
would lead the Hungarian delegation ... if he is still in
office (Ref A).

6. (S) On energy, Putin reportedly responded to Gyurcsany's
questions re "pipelines in the pipeline" by referring to a
pending "cost-benefit analysis" of the various options due
out in 2 months. Putin referred to ongoing contacts with
Italy, Bulgaria, Greece, Serbia, and Austria but provided few
specifics. He was negatively disposed toward Ankara's
interest in "controlling and reselling" gas flowing through


7. (S) Trilateral discussion of Kosovo over dinner produced
no breakthroughs, with Putin categorically rejecting "any
UNSCR which would violate state sovereignty based on
self-determination." Although both Gyurcsany and Finnish
President Hallonnen had solicited Putin's ideas for
acceptable language in a draft resolution, they found him
completely unyielding, "not saying veto" but "making clear
that no resolution would be successful."

BUDAPEST 00001190 002 OF 002


8. (S) Responding to Ambassador Foley's question regarding
Putin's critical statements re the UK while in Gyurcsany's
company, Banai noted that he had "given the PM our position -
the EU line" on the Litvinenko issue. Questions on the case
had not been posed to Gyurcsany, Banai concluded, but it
"should be clear what the PM would have said, both as an EU
partner and a NATO ally."

9. (S) Asking us to go off the record, Banai continued
candidly that he had advised the PM to "knock off" the
meetings with Putin. Banai confessed that he had inherited
the Saransk trip and been unable to convince the PM to
reconsider his attendance despite the risk of a negative
reaction in Washington and elsewhere. (Note: This tracks
precisely with what we've heard from opposition figures, who
respect Banai and have established contact with him in his
new position. End Note.) Gyurcsany, he explained, has
focused on the economic benefits of trade with Russia and is
"only now seeing the political consequences." Helping him do
so, he concluded, is "why I was selected for this job."
Although "it will take time" to see "visible progress," Banai
believes the PM understands the gravity of the situation and
predicted that we will not see "more meetings with Putin in
the near term." "Our economic relationship with Rusia is
one thing," he concluded, "but if it is a zero-sum game then
our political Alliance is with the West."

10. (S) Comment: Expecting close questioning on the PM's
trip, Banai delivered his points effectively and made his
personal appeal for time to "turn the Prime Minister around"
earnestly. Following A/S Fried's trip (Ref B), Gyurcsany
knows his statements are being scrutinized and that his
actions will be the ultimate metric. We share Banai's hope
that the Saransk trip will be the last of the recent summits
with Putin, which - at best - put him in a position of
implicitly endorsing what Putin says and does. We will also
keep a close eye on how Budapest defines the emerging
delineation of its economic ties with Russia and its
political relationship with the West, knowing that Moscow may
draw no polite distinction between the two. End Comment.