THAT WHICH GOVERNS LEAST: HOW WOULD A MINORITY

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000401 SIPDIS SIPDIS DEPARTMENT FOR EUR/NCE; PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 04/17/2013 TAGS: PGOV PREL KDEM HU SUBJECT: THAT WHICH GOVERNS LEAST: HOW WOULD A MINORITY GOVERNMENT WORK? REF: BUDAPEST 392 Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (SBU) The atmosphere remains ONE of uncertainty regarding "the day after" the break-up of the coalition even as the SzDSz's April 27 departure date approaches. WHIPPING A MINORITY GOVERNMENT INTO SHAPE ¶2. (C) Barring a dramatic outcome to what has been a very ponderous crisis, Hungary will enter the uncharted waters of minority government armed with no precedent and exactly ONE think-tank study. In the current acrimony, the fact that the think-tank piece was commissioned before the break-up of the coalition has been seized on by the SzDSz as "proof" that the MSzP had considered - perhaps deliberately courted - the break-up. ¶3. (C) In practice, minority government will likely mean a significant expansion of lobbying and a significant contraction of legislative output. Former Minister of Justice and Law Enforcement Takacs predicts the government will do as much as possible by executive agreement in an effort to keep issues off the floor of Parliament. He estimates that the "real priorities" amount o only one-sixth of the Parliament's output. "We make Hungary look even harder to govern than it is," quipped ONE observer. ¶4. (C) But coming to closure on even a limited agenda may prove exponentially harder. With two MPs unable to serve for medical reasons, the MSzP will have 188 representatives ) 6 shy of the 50 percent plus 1 required to pass most measures in Parliament. Although this requirement pertains only to members present and voting (i.e. even absences and abstentions by the SzDSz would help give the MSzP a majority if its members continue to vote en masse),most insiders tell us that the party whips ) and likely the party bag-men - will be earning their salaries in the weeks ahead, when mobilizing the party factions will be critical. FIDESZ leader Viktor Orban characterized a minority government as "government by bribery." ¶5. (C) The division in Parliament will likely be reflected at the local and regional level. There have already been open exchanges regarding the MSzP's reconsideration of its support for SzDSz Mayor Demszky in the Budapest City Council, and our sense is that the Socialists will need the patronage positions currently held by the SzDSz at all levels, both to keep its own members in line and as leverage in its recurring quest for votes from beyond its ranks. IN THEORY ( ¶6. (C) Although Political Scientist Gabor Gyuri (who wrote the now-infamous think-tank study) notes that the end of the coalition could be the beginning of broader consultation across party lines, even talk of multi-party consensus has not been cheap thus far. Discussions regarding the Hungarian Democratic Forum's proposal to institute a flat tax were short-lived, and the government's "New Ownership Initiative" is already being dismissed as dead on arrival. Cabinet Minister Peter Kiss told a select group of Ambassadors last week that the government needs to improve its communication and coordination with all parties, but it should not expect a lifeline from the right. FIDESZ President Orban has assured us privately that key foreign policy issues such as Afghanistan will continue to receive the opposition's full support, but on domestic issues the lines remain quite stark. ¶7. (C) In theory, a minority government could survive through the next elections. Even the failure to approve a 2009 budget would not prove fatal, as the provision exists for the automatic continuation of the previous year's spending levels in the absence of a new budget. But there is no deus ex machina to rescue the reform agenda. A minority government would likely lack the political capital to revisit health care reform and the financial capital to consider tax reform. HIGHER RPM'S; LESS TORQUE ¶8. (C) Comment: Ironically, the very lack of consensus might be Hungary's best insurance against the fiscal irresponsibility that has characterized previous administrations late in their terms. As former SzDSz President Gabor Kuncze points out, a deadlock on the budget under a minority government "might be the best way to stick to the Convergence Plan and to prevent pre-election spending increases." But a minority government will find itself BUDAPEST 00000401 002 OF 002 running much faster just to stand still. It will have to hold the various factions of the MSzP in line before it can even begin to work ) and likely work hard ) for the additional handful of votes it needs in Parliament for the issues it considers to be priorities. That will require the patience, the consensual approach, and the resources the government has not exhibited to date. End Comment. FOLEY