Identifier
Created
Classification
Origin
07BUDAPEST1298
2007-08-09 12:47:00
CONFIDENTIAL
Embassy Budapest
Cable title:  

KOKA ON REFORM, RUSSIA, AND VISION FR FUTURE

Tags:  PREL ECON HU EU RU 
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PP RUEHAG RUEHROV
DE RUEHUP #1298/01 2211247
ZNY CCCCC ZZH
P 091247Z AUG 07
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 1718
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW 0607
RUEHFSI/DIR FSINFATC WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 001298 

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NCE, EB/IFD/OMA, AND INR/EC
TREASURY FOR ANNE ALIKONIS

E.O. 12958: DECL: 08/09/2017
TAGS: PREL ECON HU EU RU
SUBJECT: KOKA ON REFORM, RUSSIA, AND VISION FR FUTURE

REF: BUDAPEST 1237

Classified By: DCM Jeff Levine for Reasons 1.4 (B) and (D)
C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 001298

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NCE, EB/IFD/OMA, AND INR/EC
TREASURY FOR ANNE ALIKONIS

E.O. 12958: DECL: 08/09/2017
TAGS: PREL ECON HU EU RU
SUBJECT: KOKA ON REFORM, RUSSIA, AND VISION FR FUTURE

REF: BUDAPEST 1237

Classified By: DCM Jeff Levine for Reasons 1.4 (B) and (D)

1.(C) Summary and Comment: Economic Minister Koka presented
a confident view of the future in a far-reaching discussion
with Ambassador Foley. Upon his resignation expected by
December, Koka plans to gear into campaign mode as party
leader while remaining part of an intimate Prime Minister
Gyurcsany Cabinet-level steering group. Koka promises to
retain a lead role in transparency/anti-corruption issues,
and appears more determined than ever to lead his party with
a reform-, competition-, and human rights-oriented,
transatlanticist program. Koka reflected both on the strong
ideological basis of his party and on the very pragmatic
considerations that give liberal democrat SzDSz and the
Socialists every reason to maintain their governing
coalition. He supports basing C-17 aircraft at Papa.
Koka exhibited not only a steely determination to
succeed in the current coalition and next election cycle, but
a strong commitment to deep reform, transparency/ fighting
government corruption, and working for alternatives to
Russian dominance in energy and other areas. End Summary and
Comment.

Coalition: Big Picture and Harsh Realities

2.(C) Minister of Economics and SzDSz party president Janos
Koka, Member of European Parliament and SzDSz foreign affairs
chief Istvan Szent-Ivanyi, and Economic State Secretary and
Ambassador-designee to Italy Miklos Merenyi set a strong
ideological tone in a relaxed August 2 lunch with Ambassador
Foley. With both the Socialists (MSzP) and leading
opposition party Fidesz "populist parties," Koka argued that
minority parties are the only hope for sensible, principled
governance in Hungary. Highlighting "liberal"
ideals--competitive markets; transparent government; broad
support for human rights; and a transatlantic orientation
building on existing commitments to NATO and the EU--Koka
described his personal and party's role as advocates for
reform. Reluctant to give specifics on future reform

prospects, Koka claimed he would be able to complete energy
liberalization by the end of the year.

3.(C) Because of various ideological differences with MSzP,
Koka held that, while each party needs the other, the
coalition is based on compromise. Koka acknowledged the risk
in being heavily associated with transparency and reform, but
believes he provides the essential cover for Prime Minister
Gyurcsany to support the reform agenda, an agenda that SzDSz
is not powerful enough to enact on its own. In return, SzDSz
provides essential votes for a Parliamentary majority. Koka
attributes the SzDSz party vote condemning the slow pace of
reforms as the prime motivator behind recent movement on
health care and energy reform. Progress on reform is an
existential issue, then, for SzDSz, and the reform vote came
when it might have pulled out of the coalition if further
action was not taken. All agreed that Gyurcsany lacks
support of his full party, as MSzP officials are comfortable
with a corrupt status quo. Koka painted the picture of a
strong bond between himself and the Prime Minister that forms
the essence
of the coalition, but then described this as a "working
relationship," underscoring his portrayal of a decidedly
independent SzDSz.

4.(C) Szent Ivanyi called close calls on breaking up the
coalition "surprisingly frequent." Koka spoke in grave terms
about more overt cooperation with Russia, a possibility in
MSzP circles that is nearly a make-or-break issue for SzDSz.
Presumably, the Prime Minister is well aware of these issues,
and has consciously cast his lot with SzDSz. In a worst case
scenario where SzDSz felt it must withdraw from the
coalition, both Koka and Szent Ivanyi said that MSzP has
"bought" enough votes to maintain a slim majority in
Parliament.

Russia, Nabucco, Accountability( It's Ideological

5.(C) Despite occasionally being called an "American agent,"
Koka argued it would be mistaken to assume SzDSz based its
policies more on an alliance with the US than upon its
liberal ideals. "Hungary has made its choice for NATO and the
European Union," and because "there is no third way," SzDSz
policies would therefore promote more transparent values and
preclude special accommodations for Russia. At the European
Parliament, Szent Ivanyi proudly highlighted his own
involvement in a pro-Nabucco caucus. On a serious note, Koka

BUDAPEST 00001298 002 OF 002


described the reluctance until now to look into secret files
from the prior regime as symptomatic of a systemic problem,
while at the same time welcoming any current efforts to open
the files. SzDSz would support basing of C-17 aircraft at
Papa, although the MSzP Ministry of Defense has the lead on
this issue.

Continuity, Consolidation of Power

6.(C) In discussing his announced resignation by December,
Koka candidly revealed that he has selected his Chief of
Cabinet Csaba Kakosy (strictly protect) as his replacement,
but also revealed plans to delay naming him for fear of
giving opponents time to launch a successful campaign against
Kakosy before he takes office. Describing Kakosy as "more
operational than political," Koka plans to retain key
government responsibilities while also significantly
upgrading the portfolio of his deputy minister, Abel
Garemhegyi. Throughout all the changes, all three SzDSz
officials pledged uninterrupted ongoing cooperation with the
US on shared interests, notably transparency.

7.(C) Koka emphasized that his goal in government is to be
involved with steering major, long-term strategic decisions.
To that end, he currently is part of a "cabinet within a
cabinet" or "steering committee" consisting of PM Gyurscany,
Ministers Kiss, Szekeres and Veres, and Gyurcsany chief of
staff Gyorgy Szilvasy, and plans to retain this role even as
he leaves the ministry. He plans to retain certain
portfolios such as transparency, and said he would continue
to lead Ministry policy on "big issues." When Merenyi
departs for his ambassadorial duties in Rome, Garemhegyi will
take on his international trade and business development
duties. More striking, Koka plans to centralize authority in
Garemhegyi for all trade, export, and tourism promotion,
currently shared with the Ministries of Agriculture and
Municipalities.

Polling, Strategies

8.(C) Koka and Szent-Ivanyi each described voter outreach and
campaign-orientation as their main priorities. Koka plans to
spend one to two days a week in the countryside, while
Szent-Ivanyi has shifted his home base back to Budapest from
Brussels as he assumes the party role of foreign policy
chief. Acutely aware of the five per cent threshold for
Parliamentary representation, Koka noted that SzDSz polled
only 3.2 per cent of the vote when they in fact reached the
threshold in the 2006 elections. He sees his ministry and
party as being a bridge between "old style politicians" of
MSzP and younger voters, not least because Koka himself is a
younger politician than most of his MSzP colleagues.
Contrasting SzDSz with Fidesz, Koka estimated that SzDSz had
a potential of reaching 25 per cent of the electorate for
whom liberal ideals resonated, but that they are modestly
targeting eight to ten per cent of the electorate for the
2010 general elections. Koka believes he was elected SzDSz
president not because he
was a great politician, but because he had the skill and
vision to re-organize and re-energize SzDSz going into the
next election cycle.

Referendum

9.(C) Accusing Fidesz of "attacking an essential instrument
of Hungarian democracy," Koka nonetheless detailed a strategy
to win the referendum, focusing on rewording some of the
questions, apparently a reference to a non-partisan linguist
who rephrased each of the Fidesz questions into more
pro-coalition formulations. This, combined with better
public outreach on all issues, including a bid to reduce the
size of Parliament, would present a significant resource
challenge to both sides. Preparing for the worst, Koka said
that no referendum result could turn back any of the reforms.
Koka discounted the possibility that the PM or even the
coalition would fall following a bad referendum outcome.
Koka and Szent-Ivanyi agree that the real test of the
coalition will come after the European Parliament elections
several months before the 2010 general election.
FOLEY