Identifier
Created
Classification
Origin
08BUDAPEST392
2008-04-17 08:42:00
CONFIDENTIAL
Embassy Budapest
Cable title:  

BELABORING THE POINT: COALITION CRISIS IN SLOW

Tags:  PGOV ECON KDEM HU 
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VZCZCXRO0441
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0392/01 1080842
ZNY CCCCC ZZH
P 170842Z APR 08
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 2821
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 BUDAPEST 000392 

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 04/13/2013
TAGS: PGOV ECON KDEM HU
SUBJECT: BELABORING THE POINT: COALITION CRISIS IN SLOW
MOTION


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

C O N F I D E N T I A L SECTION 01 OF 03 BUDAPEST 000392

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 04/13/2013
TAGS: PGOV ECON KDEM HU
SUBJECT: BELABORING THE POINT: COALITION CRISIS IN SLOW
MOTION


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


1. (C) Summary: Although the governing coalition continues
to move through what one observer has termed "the
slowest-moving crisis in history," both insiders and outside
observers believe that several possible scenarios are
gradually emerging. They include a protracted period of
minority government, a rapprochement between the MSzP and
SzDSz, and a resort to the appointment of an "apolitical
expert" as Prime Minister. Though a constitutionally remote
prospect and widely regarded as "assisted suicide" by both
the MSzP and the SzDSz, new elections also continue to factor
into discussions. MSzP insiders believe Prime Minister
Gyurcsany could hang on or walk away, but agree that his
impulsive and opaque style means he will likely give little
advance notice of his intentions in either event. His rivals
in the MSzP may band together to deny him the right to make
the decision, but for now the party's intentions remain
opaque. End Summary.

MORE OF THE SAME (


2. (C) Despite a reportedly bruising session of the MSzP's
executive leadership this weekend, Prime Minister Gyurcsany
is widely regarded as a fighter and many predict he will not
go quietly. Former SzDSz President Gabor Kuncze ) no
admirer of the Prime Minister ) still believes a weaker
minority government led by a weakened Gyurcsany government is
the most likely scenario. The PM continues to talk about
"reform without austerity," and the government is reportedly
moving forward with plans to replace the outgoing SzDSz
Ministers. As Political Scientist Zoltan Kiszelly commented,
"Gyurcsany's weakest day is still better than (former PM)
Medgyessey's strongest day." That said, Gyurcsany has left
himself some latitude with repeated statements that he would
step down if he becomes "the problem." As one critic
retorted, "after all, it's not as if he needs the money."


3. (C) As Kuncze explains and even MSzP MP Vilmos Szabo
admits, the Socialists have few viable leadership
alternatives. The most likely successors from the party's

core, Defense Minister Imre Szekeres, Cabinet Minister Peter
Kiss, and Parliamentary Speaker Katalin Szili, are dismissed
by one SzDSz MP as "the communist, the coward, and the clown."

ONLY DIFFERENT?


4. (C) But they may yet have the last laugh. Following
another tense meeting of the MSzP executive this weekend,
Szekeres intimated to us that "Gyurcsany could stay on
another two years ( or walk away in another two weeks." The
PM, he concludes, "simply doesn't care," and Szekeres
believes "whatever happens will come as a surprise" given the
complete lack of consultation between Gyurcsany and other
party leaders. If Gyurcsany does step down, Szekeres adds,
there is already an informal agreement that Szekeres and
Peter Kiss will divide the Prime Ministership and the Party
Presidency.


5. (C) Ironically, Szekeres' conjecture dovetails in part
with Viktor Orban's. The FIDESZ leader believes Gyurcsany's
days are numbered, judging that "the people would not believe
a miracle if Gyurcsany were the one who delivered it." He
believes the PM will not be able to rebound from a reform
agenda that alienated his own party base, and dismisses a
minority government as an invitation to scandal as the MSzP
would have to "buy votes on every bill." Ultimately, he
doubts that any MSzP PM will have the public trust to survive
in the longer term.


6. (C) Sources inside the MSzP beg to differ. Former Chief
of Staff Zoltan Gal concedes that Gyurcsany may have "only 20
percent of the party leadership and only half the MPs," but
emphasizes that he still has the loyalty of "80 percent of
the grass roots." Although Gal has privately advised
Gyurcsany to "put all options on the table," he thinks a
minority government could function as more than an interim
measure. (Note: Former Minister of Justice and Law
Enforcement Albert Takacs agrees, estimating that Hungary
could make due with "20 pieces of legislation a year instead
of 120." End Note.) Gal also believes the PM would continue
to hold the MSzP Presidency even if he steps down as PM, thus
giving him the opportunity to "rebuild the party" ( and even
to return as the Prime Ministerial candidate in 2010.

(UN)HAPPILY (RE)MARRIED?


7. (C) Despite Koka's public line that the SzDSz's return to
the coalition is "inconceivable," Kuncze believes an
agreement is still a possibility ... though not necessarily

BUDAPEST 00000392 002 OF 003


under their present leadership. Although Gyurcsany's
departure could provide the SzDSz with the means to return to
the coalition, Kuncze admits that the problem goes beyond
personalities: there is no MSzP leader more likely to pursue
the reforms on which the SzDSz insists.


8. (C) Kuncze minimizes talk around town of the MSzP "buying
enough SzDSz votes to maintain a narrow majority" as "false
confidence," but others believe MSzP threats to dismiss
lower-level SzDSz appointees from their patronage positions
could cause some to blink. There is already an emerging
conflict in Budapest, with the central government taking its
time in response to SzDSz Mayor Demsky's request for support
to continue the city's controversial metro expansion project.



9. (C) Kuncze strongly suspects that Minister of Environment
Fodor would broker a new coalition agreement if he wins the
June SzDSz party elections, and MDF Party President Ibolya
David believes the MSzP will wait in hopes of a Fodor
victory. Fodor has privately expressed his anger at the
current impasse, describing the situation as "bad for the
party, bad for the coalition, bad for the government, and bad
for the people." He intimated that he is in contact with the
MSzP, and Kuncze believes Fodor would even consider leading a
small core of his supporters out of the SzDSz and into
coalition with the MSzP if he loses the upcoming party
elections. "Then we'll find out," he concludes with
asperity, "what you get when you mix Reds with a Green."


10. (C) Orban believes a rapprochement between the MSzP and
the SzDSz is an option, hinting that Socialist Parliamentary
Faction Leader Ildiko Lendvai is already working to broker an
agreement. He allows that a new coalition might become
possible with a new Prime Minister, but in his view the SzDSz
only has a matter of weeks in which it could return, and then
only with the pretext of a new partner and a new partnership
accord. This timelines tracks with the judgment of both
corporate players and MSzP insiders, who continue to press
for a new agreement before the end of April.

A BRAND NEW (PUNCHING) BAG?


11. (C) The third broad option is the appointment of an
"apolitical expert" as Prime Minister. While truly
apolitical experts are hard to find, contacts across the
spectrum believe that a respected figure ) ideally from
outside government ) could govern until the next elections
on a platform of "crisis management."


12. (C) National Bank President Simor's name is most often
mentioned in this regard, but Orban believes that "you can't
imagine how many Hungarians would kill to be PM only for only
matter of hours." Other names in circulation are former
Finance Minister Bekesi and Agriculture Minister Graf, both
of whom are respected and regarded as having no personal
political ambitions.


13. (C) Kuncze believes an "apolitical government" is the
best option, noting that an outsider could arrive at a
"cease-fire" to move forward on key reforms. He admits,
however, that it is the least likely scenario given the
degree of political gridlock.

SURRENDER DOROTHY


14. (C) Early elections continue to loom over the entire
debate. Though constitutionally restricted to extraordinary
circumstances that one MSzP member likened to "assisted
suicide," some FIDESZ members believe the public will insist
on "a new start and not just a new face." They make the case
that the Socialists should prefer "a loss now to annihilation
later."


15. (C) Orban tells us that he believes early elections
after a failed attempt at minority government are more likely
than two years of limbo, putting the odds at 50 percent. In
his mind, the government's current straits are about the
MSzP's "historic decline" as well as the Prime Minister's
political decisions. With voters frustrated and investors
nervous, he believes the MSzP will see that it has no chance
of winning back an alienated base and no option but to
abandon ship in order to "reinvent itself." By his own
admission, however, Orban still has "no clear way" to arrive
at his preferred outcome.

AVOIDANCE GOALS


16. (C) Comment: With his decision-making notoriously
impulsive and his inner circle rapidly shrinking, it is more

BUDAPEST 00000392 003 OF 003


difficult than ever to divine Gyurcsany's intentions. (As
Kuncze commented, "Gyurcsany always loved to play favorites
) it's just that now the only favorite left is himself.")
The PM is, in our view, capable of hanging on or of walking
away, and likely to keep his own counsel until the last
minute in either case. As Szekeres' comments indicate,
others in the party are considering life without Gyurcsany.
Still, the atmosphere within the MSzP strikes us as curiously
resigned to a period of suspended animation. Indeed, some
Socialist MPs continue to suspect that the entire spectacle
has been "arranged" between Gyurcsany and Koka. Public
opinion polls, meanwhile, continue to show that the public
expects - but does not prefer - minority government. The
idea of an "outsider" taking over is gaining currency,
motivated in no small part by the MSzP's belief (and the
SzDSz's concurrence) that early elections ) their
opposition's first choice - remain their third rail. End
Comment.

FOLEY