FURIOUS MANEUVERING ON ANTI-CORRUPTION: PARTIES

C O N F I D E N T I A L SECTION 01 OF 03 BUDAPEST 001756

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NCE; PLEASE PASS TO NSC FOR ADAM STERLING

E.O. 12958: DECL: 10/19/2012
TAGS: PGOV KDEM HU
SUBJECT: FURIOUS MANEUVERING ON ANTI-CORRUPTION: PARTIES
APPROACH REFERENDUM ... AND CONSENSUS?

REF: BUDAPEST 1723 AND PREVIOUS

Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D)


1. (C) Summary: Prime Minister Gyurcsany has tabled a broad
array of anti-corruption reforms before Parliament ... with
the explicit threat of moving to a public referendum in the
absence of their support. Despite continued complaints
within his governing coalition that he is trying to divert
attention from the ongoing Zuschlag scandal (reftel),the
MSzP has given its grudging support on key elements of his
proposal and even endorsed some of the parallel
recommendations from the opposition. Sources close to the PM
indicate that he feels confident enough to throw down the
gauntlet on corruption. He is also clever enough to see the
potential political advantage in drowning out the
opposition's planned referendum. If the parties refuse to
back down, public interest - and public expectations of
progress - could continue to rise. Perhaps inadvertently,
the parties are now actively debating issues which were the
excessive province of the International Community and foreign
investors a few short months ago, and we will continue to
promote progress on reforms as a national priority rather
than a political pretext. End Summary.

SOME CONCILIATION; SOME ESCALATION


2. (C) Furious maneuvering continues in response to rival
(albeit broadly consistent) anti-corruption proposals from
the government and opposition (reftel). Prime Minister
Gyurcsany has presented Parliament with a broad package of
measures spanning five separate bills ( and has also
submitted 20 referendum questions to the National Election
Commission (NEC) as a first step toward an appeal to the
public in case his measures fail to receive the necessary
two-thirds support in Parliament.


3. (C) Gyurcsany's moves are widely seen by observers as an
attempt to lift the debate beyond the immediate political
problem of the Zuschlag scandal (ref a) and toward the
broader issue of systemic reforms. Although this tactic is
consistent with his successful effort last fall to shift the
public's focus from his "lies" speech to the question of
constitutional order, polls indicate his efforts to date have
failed to dislodge the scandal as the issue of principal
interest to the public.


4. (C) Moreover, his latest moves have further aggravated
many within the coalition. Members of the SzDSz continue to
publicly distance themselves from a potential referendum, and
ranking members fume to us privately that "FIDESZ is right:
the PM is trying to distract attention from his own scandals
(reftel)" at the risk of "upsetting the political elite."
Another MP expressed confidence that Parliament could dig in
its heels and take "at least a year" to respond to any
referendum. (Note: Given the ambiguity of Hungarian law,
Parliament's obligation to respond to any referendum is
unclear. End Note.)


5. (C) Within the MSzP ranks, there is talk of forming a
"local government caucus" to represent the MPs who also hold
local and regional offices. Combined with serious discussion
of a gender quota which would require that fifty percent of
candidates standing for election from party lists be women,
talk of limiting access to elected offices leaves many MPs
concerned that there won't be a chair for them when the music
stops. As one resident diplomat here commented, "it's almost
as if the Prime Minister doesn't like his own party."
Indeed, one MSzP MP reportedly became so agitated in a recent
meeting with Gyurcsany on this issue that a doctor was called
to examine him for a heart attack. Another commented
publicly that "the Prime Minister works for the Parliament;
Parliament does not work for the Prime Minister."

NOT STUCK ON GYURCSANY, BUT STUCK WITH HIM?


6. (C) That said, the party has given grudging support to
the PM's latest package. In a closed meeting October 16,
MSzP MPs ) minus those who are also mayors ) expressed
their support for ending the practice of holding multiple
offices by 2011. They have also endorsed in principle
FIDESZ's attempts to revive a long-standing proposal to
reduce Parliament from its current 386 members to 200.


7. (C) Tibor Desseweffy, a center-left intellectual close to
the PM, sees Gyurcsany's actions as a sign of strength ) not
desperation. He believes the Prime Minister is "tired of
being a progressive liberal politician leading a party that
is neither," and sees the latest package of anti-corruption
measures as a shot across the bow of the MSzP's

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traditionalists. Although he predicts the PM will continue
to "keep a close eye on (Defense Minister) Szekeres and
(Cabinet Minister) Kiss," Desseweffy commented that "the PM
knows he has no serious rivals ( and so does the rest of the
party." Deputy Speaker and MSzP MP Mandur admits as much,
ruefully noting that "we chose Gyurcsany because we felt he
could match Orban's ability to communicate directly to the
public ( and now that's just what's he's doing."


8. (C) Desseweffy also sees a more comfortable and confident
PMO behind the recent initiative, giving credit to the senior
staff Gyurcsany brought in over the summer months to upgrade
the office's policy and communications team (if not its
political consultations). The word has clearly gone out from
the PMO to prioritize anti-corruption initiatives, with
working-level Ministry representatives on our Transparency
Working Group telling us candidly that they have been given
express orders to engage.

OPPOSITION SEES OPPORTUNITY


9. (C) The opposition tells a different story. Center-right
intellectual Tamas Magyarics tells us talk of Kiss replacing
Gyurcsany as Prime Minister continues, and FIDESZ
parliamentary faction leader Tibor Navracsics indicates that
his party has had contacts regarding a potential coalition
with the SzDSz. (Comment: This is a long shot but not an
impossibility. Both parties trace their roots to Hungary's
dissident movement, but have diverged sharply over time and
now frequently engage in rhetorical clashes in the press and
in Parliament. Even if it did occur, however, it would not
give FIDESZ the votes to secure a governing majority. End
Comment.) Navracsics and others have also returned to last
year's proposal regarding a "government of experts" to
succeed Gyurcsany pending the 2010 elections.


10. (C) FIDESZ is also stepping up preparations for its
referendum drive, and collected over 300,000 signatures in
the first 48 hours of its campaign. That said, referendum
campaign still lacks a high-profile political figure as its
leader. Moreover, there is concern among the opposition that
Gyurcsany's 20 questions would drown out their original
questions, which have focused intentionally on the imposition
of fees for education and medical services. FIDESZ leaders
have accordingly expressed their readiness to submit their
8-point program for a public referendum if the PM does so
with his 7 points. Their preference, however, appears to be
for negotiations among the parties that would lead to a
compromise - and keep Gyurcsany's proposals from going to a
public referendum. Magyarics notes that what SzDSz President
Koka called "the referendum tsunami" reflects the degree of
the political gridlock here but also risks "turning Hungary
from a representative democracy into a plebiscite."


11. (C) Civil servants responsible for confirming the
signatures FIDESZ will submit confide to us that the process
will put them ) uncomfortably ) in the limelight. Although
the NEC will have 45 days to complete its review, officials
there believe "working too quickly will make us look as if we
are favoring the opposition ( and working too slowly will
make it seem as if we are favoring the government." (Note:
By contrast, the government would not require the public
signatures to move forward on its referendum questions, and
could thus attempt to hitch its questions to the FIDESZ
referendum when it is scheduled. End Note.) The NEC's
timing will factor significantly in the scheduling of the
referendum, as most analysts believe a quick turn-around
would allow Parliament to act before its winter recess, thus
paving the way for President Solyom to schedule the date of
the referendum in early 2008.

DARING AND DOUBLE-DARING


12. (C) Desseweffy believes that the parties are effectively
daring each other to blink first with respect to
anti-corruption measures. He sees FIDESZ's call to reduce
the size of Parliament as an attempt to foment
dissatisfaction within the MSzP, and candidly admits that
Gyurcsany's call to make party financing public is likely a
challenge to Orban's reported control over FIDESZ's coffers
as the party works to refill coffers running low after six
years out of power. Some of the recommendations on both
sides, such a proposed ban on all political advertising, are
likely non-starters but attest to the pressure the parties
feel to take the high ground on reform.

COMMENT: STUMBLING TOWARD THE MIRROR?


13. (C) As one Hungarian political scientist observed with
regard to the lack of self-examination since the system

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change of 1990, "the problem is that those who refuse to look
in the mirror eventually refuse to bathe." Whatever the
sincerity of their intentions, in debating the issue of
corruption the parties are taking a step toward the mirror
now. Their respective ideas ) ranging from public
disclosure of elected officials' income to stronger oversight
on party financing - are broadly constructive and broadly
complementary. Indeed, the public may not see a need to
choose from among them. They may, however, expect the
political elite to move forward. Students with whom we've
met recently, for example, tell us that they're "not
interested in politics as usual" but that they do support
efforts to "clean our own house." Nor should the diplomatic
community have to choose sides. The debate has moved
significantly in the past months, with the parties now
joining in discussing topics that were perceived as only of
interest to foreign embassies and foreign companies just
months ago. We will continue our efforts to advocate for
reform to become a national priority rather than a political
football by encouraging the parties to follow through on this
latest round of rhetoric. End Comment.


FOLEY