CENTRIFUGAL FORCE: STRAIN WITHIN THE COALITION

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000732

SIPDIS

SIPDIS

DEPARTMENT PLEASE PASS TO NSC FOR ADAM STERLING

E.O. 12958: DECL: 05/09/2017
TAGS: PGOV ECON HU
SUBJECT: CENTRIFUGAL FORCE: STRAIN WITHIN THE COALITION

REF: BUDAPEST 550

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


1. (C) Summary: Surveying the current state of play within
the governing coalition, outgoing SZDSZ party president Gabor
Kuncze told Ambassador Foley that there is perceptible
distance - and potential conflict - between Prime Minister
Gyurcsany and newly-elected SZDSZ leader Janos Koka. Kuncze
believes Gyurcsany's ability to reach out to the public has
been limited and his ability to maintain discipline within
the MSZP significantly reduced, but he sees no obvious
replacement around whom opposition can coalesce. He believes
the differences within the coalition over health care reform
are deep, and raised the possibility of the SZDSZ formally
leaving the coalition. He emphasized, however, that the
party would continue to vote with the MSZP in order to
maintain a governing majority in practice in order to avoid a
likely FIDESZ victory in early elections. End Summary.

LOSING CREDIBILITY INSIDE AND ACCESS OUTSIDE


2. (C) In a private meeting May 9, former SZDSZ party
president Gabor Kuncze described serious divisions within the
governing coalition and within the MSZP itself. He noted
that the previous weekend's negotiations over health care
reform between the MSZP and SZDSZ had reflected a fundamental
difference of opinion over the way forward and revealed PM
Gyurcsany's limited ability to keep his party in line.
According to Kuncze, Gyurcsany personally agrees with the
SZDSZ's proposal to introduce a multi-player health care
system, but is unable to reach out to the public or to compel
other MSZP power-brokers to follow his lead. (Note:
Gyurcsany's public appearances have been marred by
counter-demonstrations, including an egg-throwing crowd at
his public appearance at a Budapest event May 9. The PM is
now accompanied by umbrella-toting bodyguards at his public
appearances. End Note.)


3. (C) Indeed, Kuncze believes Gyurcsany's position is
deteriorating both internally and internationally. He
suggested that the SZDSZ had initially underestimated the
public and international impact of the PM's infamous "lies"
speech last year. Combined with significant losses in the
local elections and consequent reductions in their patronage
network, MSZP members are "getting madder instead of getting
over it." Kuncze also notes that Gyurcsany has not received
a bilateral invitation in months - except for his trip to
Russia. He believes that this may have contributed to
Gyurcsany's "mistakes" on energy security.

NO ALTERNATIVES ... OR ALLIES


4. (C) Ultimately, Kuncze concludes that Gyurcsany's
greatest asset may be the dearth of alternatives within the
MSZP. Although potential rivals include Parliamentary
Speaker Katalin Szili, Defense Minister Imre Szekeres, and
Minister of Labor Peter Kiss, none has the support to unseat
Gyurcsany. "If there were a good alternative to Gyurcsany,"
he stated, "we would call for his replacement immediately."


5. (C) The debate over health care has also highlighted the
distance between Gyurcsany and newly-elected SZDSZ president
Janos Koka. Kuncze noted that the two had been all but
inseparable, commenting that Gyurcsany never travelled or
made a decision without Koka in the past. Those days, Kuncze
indicated, are gone. Although he believes there is no
element of personal animosity between Gyurscany and Koka, he
believes that the potential for conflict has grown now that
there is "no friendship to smooth over differences of
opinion." He believes these differences include a
fundamental disagreement on transparency, where Koka has
taken the lead in promoting reform.

THE PARTIES OR THE PARTY?


6. (C) Koka has problems of his own. Kuncze, who supported
Koka's candidacy and was reportedly instrumental in lining up
votes for the tie-breaker round of the SZDSZ party elections,
believes Koka is still "a young man ... with an even younger
girlfriend." In his view, Koka needs to make a clear
commitment to the party's life over his own night life.
Kuncze complained in particular about Koka's lack of
preparedness for key events.


7. (C) He will also have to keep an eye on the SZDSZ
executive committee, warns Kuncze. As a result of what he
described as furious deal-making by Koka's opponent, MP Gabor
Fodor, many of the committee's new members are not loyal to
Koka's platform. They are, Kuncze believes, inexperienced,
unsophisticated, and less able to provide Koka with the

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intellectual support he needs. (Note: In one possible
response to offset the "mediocritization" of the executive
committee is Koka's creation of an "SZDSZ cabinet," announced
May 10 and intended to ensure the SZDSZ enters cabinet
debates with a unified position. End Note.)

WALKING OUT ... BUT NOT FAR?


8. (C) Kuncze warns, however, that the SZDSZ's continued
presence in the coalition should not be taken for granted.
Echoing comments made by Hungarian Democratic Forum (MDF)
leader Ibolya David, he regards Gyurcsany's approach as "more
revenue enhancement than substantive reform," and suggested
that the SZDSZ could leave the coalition if the impasse over
health care continues. "Without this," Kuncze asked, "what
do we have to show for being in the coalition?"


9. (C) That said, Kuncze hastened to add that the party
would continue to vote with the MSZP in practice, if only to
avoid early elections, which he believes would result in
"FIDESZ winning a two-thirds majority." Indeed, his
worst-case scenario is FIDESZ using such a majority to make
constitutional changes, including the strengthening of the
institution of the presidency ... and Orban's installation in
the office.


10. (C) Comment: Long known as one of Hungary's sharpest -
and sharpest-tongued - politicians, Kuncze is agreeing with a
growing number of our contacts who see the PM as increasingly
isolated and the coalition as increasingly unstable. With
health care as an important litmus test for future - and
likely harder - reforms, the impasse within the coalition
does not bode well. Kuncze's suggestion that the SZDSZ would
end its alliance with the MSZP in principle but maintain its
association in practice is consistent with the party's
tendency toward principled positions but also cognizant of
the fact that early elections now would mean political
extinction given their current poll numbers. Even without a
formal break with the SZDSZ, however, Gyurcsany appears to be
under siege from within and under attack from without. End
Comment.


FOLEY