Identifier
Created
Classification
Origin
08BUDAPEST122
2008-02-06 17:01:00
CONFIDENTIAL
Embassy Budapest
Cable title:  

GET THE REF OUT: THE PARTIES APPROACH THE REFERENDUM

Tags:  PGOV ECON KDEM HU 
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VZCZCXRO0970
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0122/01 0371701
ZNY CCCCC ZZH
P 061701Z FEB 08
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 2467
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000122 

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NCE: PLEASE PASS TO NSC FOR ADAM STERLIG

E.O. 12958: DECL: 01/31/2013
TAGS: PGOV ECON KDEM HU
SUBJECT: GET THE REF OUT: THE PARTIES APPROACH THE REFERENDUM


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


THE IRE THIS TIME

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000122

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NCE: PLEASE PASS TO NSC FOR ADAM STERLIG

E.O. 12958: DECL: 01/31/2013
TAGS: PGOV ECON KDEM HU
SUBJECT: GET THE REF OUT: THE PARTIES APPROACH THE REFERENDUM


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


THE IRE THIS TIME


1. (C) Summary: The parties are getting an early start on
the spring political season by finalizing preparations for a
March 9 referendum on key elements of the government's
austerity package. Riding high on recent polling data, the
opposition is casting the referendum as a de facto vote of no
confidence in Prime Minister Gyurcsany. In response, the
government and the ruling MSZP are working to minimize
expectations and to make clear that the referendum does not
require - and will not result in - new elections. Even so,
the referendum will dominate the political landscape for the
coming months and may begin the "permanent campaign" many
expect in anticipation of the 2009 European Parliamentary and
2010 national elections. Likely with that in mind, there are
disturbing signs that the government will lapse into another
spending binge, potentially risking the progress made to
date. End Summary.


2. (C) A FIDESZ initiative to both increase pressure on
Prime Minister Gyurcsany and to mobilize its own political
base, the referendum will allow voters to express their
opposition to the government's recent institution of fees for
education and health care. With the date set for March 9,
early polling indicates that it will receive the 50 percent
turnout required to validate the results, and that a clear
majority of voters will express their opposition to the
government's policies. Some polls put the odds of success at
3 - 1. (Note: Even in the absence of a 50 percent turnout,
the law allows for the results to be valid if 25 percent of
registered voters - about 2 million people - vote the same
way on any question. End Note.) Our contacts ) even within
the coalition ) privately concede that the only question
will be the margin of their defeat.


THEN WHAT?


3. (C) That is only partially true. The referendum will
expose a major loophole in the Constitution, which does not
definitively mandate that the government act in accordance

with the referendum's results. After a year of legal appeals
regarding the referendum, the Gyurcsany government has
publicly committed to honor the results, which should avert
another protracted legal debate. Economically, insiders tell
us the revenue losses from the cessation of the fees will be
manageable ) particularly if the government introduces
comparable fees for other services.


4. (C) The political consequences are less predictable but
potentially more serious. Many in the opposition believe
that a major public repudiation of Gyurcsany's policies will
serve as a de facto vote of no confidence and give his
internal rivals the pretext to depose him. MSzP MPs,
including party praesidium member Attila Mesterhazy, dismiss
this scenario, assuring us the party will circle the wagons
around the PM despite major differences over the pace and
direction of reform.


5. (C) Others are not so sure. The recent departure of key
aides from the Prime Minister's Office and renewed talk of a
cabinet reshuffle have made the government look rudderless
during the winter recess. Minister of Economy Kakosy (SzDSz)
has expressed doubt as to whether the MSzP will even stand by
the government's health care legislation when it comes up for
a revote when Parliament returns February 11, and Gyurcsany's
closed-door address to a skeptical party leadership last week
reportedly won no new converts. FIDESZ MP Jozsef Szajer
believes "Gyurcsany's hardest problem is not convincing the
country ) it is convincing his own party." At a minimum,
many here expect another cabinet reshuffle to install more
traditional Socialists and isolate progressives.


THE COALITION: MSZP MINIMIZING; SZDSZ MOBILIZING


6. (C) While emphasizing that the referendum is not an
election, the MSzP has undertaken a modest "information
campaign" to improve public awareness on education and health
care (and been criticized by the opposition for spending
public funds in the process). Political analyst Krisztian
Szabados observes that the party may use the referendum to
subtly distance itself from the Gyurcsany government, and
early indications are that the PM will not take a leading
role in the government's referendum campaign. Szajer
believes the MSzP's goal is to blunt the impact of the
referendum by discouraging turnout or exaggerating
predictions of the outcome in order to limit the perceived
damage. As one observer commented, the party "won't rock the
boat for reform and won't rock the vote for the referendum."


7. (C) By contrast, the junior coalition partner SzDSz is
attempting to make the case for reform, billing the referedum
as an opportunity to "banish the last vestiges of Socialism."
Although political scientist Zoltan Kiszelly believes "not
even the SzDSz believes a majority will actually vote to pay
more," he suspects they want to target those who do as
potential converts to bolster their thinning ranks in
preparation for the next national elections. With polls
still showing them at - or below - the 5 percent figure
required for representation in Parliament, the SzDSz is in
dire need of broader public support just as polls indicate
record numbers of voters disenchanted with all political
parties.


FIDESZ: POLITICS OR POLICY?


8. (C) FIDESZ's approach to the referendum campaign remains
unclear. Despite more than a year of moving the referendum
over a series of legal hurdles, the date strikes some party
leaders as too soon. Parliamentary Faction Leader Tibor
Navracsics speaks for many in commenting that the opposition
wanted the public to have "as many high heating bills as
possible before going to the polls." The date is also less
than ideal from the government's perspective. As the PM's
Foreign and Security Policy Advisor remarked, a referendum
just one week before the March 15 anniversary of the 1848
Revolution could invite demonstrations "to celebrate if the
opposition wins or to protest if they lose."


9. (C) Ambassador Foley found Party President Orban
confident in a January 30 meeting, commenting that "not even
a Gyurcsany trip to Washington" would impact on the results.
He reportedly told a party gathering this week that FIDESZ
will "have the game in hand" if it manages to mobilize its
traditional base. After three days of consultations with
party leaders and outside consultants in the eastern
stronghold of Debrecen, FIDESZ will be prepared to roll out
its referendum blitz in the middle of February with a "state
of the nation" address by Orban, reportedly followed by
door-to-door campaigning.


10. (C) Kiszelly believes the party is still struggling to
resolve differences between "those who want to emphasize
policy and those who want to emphasize politics (ironically
the same word in Hungarian)." As polling shows almost a
third of Hungarians ready for "a third force" in politics,
FIDESZ will have to calibrate its approach carefully to get
out enough voters without creating unrealistic expectations.
They will likely look closely at last week's by-election in
one of Budapest's municipalities, where the FIDESZ mayoral
candidate won 68 percent ... of the 38 percent who turned
out. Although they will make the moral argument against
Gyurcsany, presenting the referendum as what former FM
Martonyi called "the only chance for the people to voice
their opposition to the government," FIDESZ is not looking
for a mere moral victory.


LONG-TERM MYOPIA


11. (C) Comment: As Szajer observed, the referendum will
compress the event horizon here as the parties prepare for
March 9. But they may remain short-sighted for a long time.
With signatures being collected for a fall referendum on
health care and elections scheduled in 2009 and 2010, the
"permanent campaign" may be underway already. Conceding that
Gyurcsany is a far better campaigner that a chief executive,
FIDESZ insiders know their full court press is a calculated
risk. Unfortunately, the real risk may be more economic than
political: if the government opts for another spending binge
in an attempt to win back voters, it will fall into the
destructive pattern that made the reforms necessary in the
first place. Recent expenditure overshoots point in this
direction. Whoever wins the referendum, Hungary may end up
losing what it can least afford: more time. End Comment.


FOLEY