CENTRIFUGAL FORCE: QUESTIONING THE COALITION

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000317

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E.O. 12958: DECL: 03/25/2013
TAGS: PGOV PREL KDEM HU
SUBJECT: CENTRIFUGAL FORCE: QUESTIONING THE COALITION

REF: BUDAPEST 270 AND PREVIOUS

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

TOIL AND TROUBLE IN THE COALITION


1. (C) Strains within ) and between - the MSzP and the
junior coalition partner SzDSz are becoming visible as they
approach their respective spring meetings.


2. (C) Ironically, Prime Minister Gyurcsany may be the less
lame duck despite the results of the March 9 referendum
(reftel). Despite continuing rancor with party insiders like
Defense Minister Szekeres, a combination of public resolve
and private contrition appears to have staved off the
prospect of an immediate move against him by his rivals
within the party. That said, Political Scientist Zoltan
Kiszelly observes that the PM seems to be on probation. MSzP
MPs are going public with their intention to win the 2010
national elections "with Gyurcsany or without him." The
Prime Minister reportedly pledged to work more closely with
the parliamentary faction at a closed-door meeting March 23,
and the latest thinking is that the party will reserve
judgment until later this year or early 2009.


3. (C) Political Scientist Kornelia Magyar believes that
tempers within the MSzP will cool, characterizing the
immediate reaction following the referendum as "panic by
those who didn't realize that defeat was inevitable." She
sees little chance of a move against Gyurcsany in the
near-term, but believes the PM will have to continue his
"penance" at the party's upcoming congress on March 29. The
majority of our contacts agree, but do not discount the
possibility of a "revolt" at this weekend's meeting, perhaps
to force Gyurcsany to step down as Party President.


4. (C) The space to watch, both Szekeres and Magyar advise,
is the brewing conflict within the SzDSz and the potential
rupture of the coalition.

DEATH OF A SALESMAN?


5. (C) Long-standing allegations of irregularities during
last year's election of Janos Koka as SzDSz Party President
have snowballed into a major challenge to his leadership.
Although the charges of fraudulent voting during last year's
party congress remain under investigation, Koka's public
comments that he "would have won anyway" have prompted
Minister of Environment Gabor Fodor ) who lost the party
presidency to Koka by a handful of votes ) to "suspend" his
membership in the party. Fodor has been joined by several
other SzDSz officials, including MEPP (and aspiring Foreign
Minister) Istvan Szent-Ivanyi, and even long-time Budapest
Mayor and SzDSz icon Gabor Demszky may follow suit. At this
point, SzDSz National Council member Laszlo Csozik believes a
new election may be necessary to clear the air. Koka has
called for an extraordinary meeting of party delegates to
discuss the issue, and Csozik expects the SzDSz's National
Council to clear the way for a revote later this summer when
it convenes on April 4.


6. (C) The scandal comes at a terrible time for Koka, who
has little to show for his year at the helm. His ambitious
reorganization of the party bureaucracy is still a work in
progress. Health care reform legislation, a key priority for
the SzDSz which Koka has made a condition of their continued
participation in the coalition, appears to be moving toward
either a public referendum in the fall or preemptive revision
by the MSzP. Having left the Ministry of Economy to focus on
his party responsibilities, Koka has lost his bureaucratic
base to weigh in on issues ranging from transparency to
energy security (though many in the business community remain
underwhelmed by his performance and opposition officials feel
poorly done by Koka's perceived grandstanding on the energy
issue).


7. (C) Worse still, the party's poll numbers continue to
hover below the five percent threshold required for
representation in Parliament. Conservative commentator Ivan
Baba believes the party rank-and-file have no sentimental
reason to support Koka, a doctor-turned-entrepeneur widely
regarded by older SzDSz hands as a "sky-diver" who joined the
party without any real ideological connection to its base.
(Note: In contrast to Koka's high profile, Fodor has
cultivated an intellectual air very much in keeping with the
party's self-image. His supporters seem willing to overlook
persistent questions regarding his work ethic ... to say
nothing of his original membership in FIDESZ and his
relationship with President Solyom, and MSzP members seem to
regard him as more "reasonable" when it comes to health care
reform. End Note.)

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DON'T LET THE DOOR HIT YOU (


8. (C) Many in the MSzP will not bother to conceal their
glee at Koka's troubles. As one MP commented, "even if there
isn't a crisis in the coalition, there is a need for one."
For the Socialist bedrock, the "agitation" of the SzDSz on
reform has led the coalition to the brink of electoral
disaster. Although the MSzP continues to take a beating in
the polls, the much smaller SzDSz is facing extinction. With
that threat in the air, the Socialists may throttle back
further on reform, effectively daring the SzDSz to walk out
of the coalition ( and into presumed oblivion. Although
neither side wants new elections, the MSzP senses a relative
advantage in that it would lose but at least survive. Their
calculation - and Csozik's confidential admission - is that
either a damaged Koka or a new replacement would likely prove
a more docile partner. (That might entail, Csozik tells us,
giving up the Ministry of Health in exchange for the MFA,
thus putting the controversial issue of health care reform in
more "reliable" Socialist hands.) Even if the coalition does
split, some Socialists insist, the MSzP could pursue an
agreement with the independent Hungarian Democratic Forum
(MDF),or even hold a narrow majority in Parliament without
the SzDSz (while still counting on them to support the
government should the opposition initiate a vote of
no-confidence).

THE TORCH HAS BEEN DROPPED


9. (C) Comment: High dudgeon nothwitstanding, inertia and
self-interest still argue for the coalition to hold together
- especially with the opposition polling at record highs.
Csozik believes that the coalition will survive this latest
strain as it weathered the crisis of Prime Minister
Medgyessey's replacement in 2005, and Szekeres admits that
"the MSzP cannot move until the SzDSz puts its house in
order." Although that may take time, the walls appear to be
closing in on Koka. With his departure ) or his defeat in a
special election ) the MSzP and the SzDSz might be able to
broker a new agreement. But the coalition can no longer be
taken for granted by either party. Nor, if the SzDSz's poll
numbers are any guide, can the public appeal of their message
of a trans-Atlantic foreign policy and a pro-reform domestic
agenda. End Comment.
FOLEY