STRESS FRACTURES: MP'S CROSS PARTY LINES ... AND

C O N F I D E N T I A L BUDAPEST 001818 SIPDIS SIPDIS DEPARTMENT FOR EUR/NCE; PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 11/06/2012 TAGS: PGOV ECON KDEM HU SUBJECT: STRESS FRACTURES: MP'S CROSS PARTY LINES ... AND THE GOVERNMENT REF: BUDAPEST 1756 Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (SBU) A rare breakdown in party discipline occurred during Parliament's session on November 5, when MPs from the governing MSzP broke ranks to oppose a measure proposed by the Gyurcsany government regarding the imposition of property taxes. Making matters even stranger, opposition MPs rushed to fill the void, joining the SzDSz to provide sufficient votes to ensure the passage of the proposal and thus introduce a system of assessment based on actual value rather than physical area. ¶2. (SBU) The battle lines shifted improbably throughout the day's debate. FIDESZ and MSzP MPs united to reject a government proposal to combine various individual taxes, but the vote on a separate measure governing taxes for banks saw FIDESZ align with the SzDSz to oppose a government proposal supported by the MSzP. Although SzDSz leader Janos Koka has been quoted as calling for the PM to "control his own party," SzDSz spokesmen have hastened to add that the coalition remains intact and committed to governing. (Note: There is a degree of irony here, as Koka became the first Minister in the history of post-transition Hungary to vote against a government measure in a vote earlier this year. End Note.) There was even a rare show of consensus across the political spectrum with the agreement of all the parties to establish an independent Budget Office to confirm the validity of government data. ¶3. (SBU) Still, the stress fractures may spread to the long-running debate over health care, an issue of particular importance to the SzDSz ( and particular ire for many Socialists. The influential MSzP party caucus has moved to submit a number of motions regarding the government's health care reform package before formal debate on the floor, and a former MSzP Health Minister has stated publicly that he expects "over a hundred" proposed amendments to follow. After months of debate reduced the government's plan to an awkward combination of private investment and public ownership, another round of amendments may render an already incomprehensible package wholly irrelevant. ¶4. (SBU) The waters have been muddied further by the recent criticism of the Prime Minister by Parliamentary Speaker Katalin Szili, who has stated that the party will risk its future by continuing on the path of "reform without public support." Szili, a long-time rival of Gyurcsany, was called to the carpet at a private meeting of the MSzP leadership on November 6, where other officials reportedly told her that "the party has enough enemies without working to destroy itself." COMMENT: BEHIND OPEN DOORS ¶5. (C) In a political culture where votes are always along party lines and internal disputes kept strictly within the family, these events are, as one AmCham official observed, little short of mayhem. Although issue-based coalitions would encourage compromises over the long-standing pattern of imposition and confrontation, this week's events seem unlikely to be a great leap forward in Hungary's democratic discourse. Indeed, the MSzP votes against the government's proposal likely have far less to do with overhauling the tax system - itself an important component of reform and improved competitiveness - than with personal enmity for the Prime Minister. Particularly after Gyurcsany's brinksmanship over party finance reform (reftel),this may well be the party's equal and opposite reaction. End Comment. FOLEY