SPRING TRAINING: SCOUTING REPORTS FOR 2008

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000041 SIPDIS SIPDIS DEPARTMENT FOR EUR/NCE; PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 01/08/2013 TAGS: PGOV KDEM ECON HU SUBJECT: SPRING TRAINING: SCOUTING REPORTS FOR 2008 Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (SBU) Although Parliament will not return until February 11, early signals from the parties indicate that the long winter recess will lead to an active spring. RULE NOTHING OUT ( EVEN THE RULES? ¶2. (C) In a meeting with visiting Ambassador Richard Holbrooke January 8, FIDESZ Party President Viktor Orban noted sharp differences within his party regarding its approach to the Gyurcsany government. Describing the government's position as "very fragile," Orban predicted that this spring's referendum will be followed by a second in the fall, which will focus on the government's social security reforms. Although he believes this will increase the pressure on the government, he does not believe the MSzP will replace Gyurcsany, maintaining that "the Socialists have already pulled that trick with Medgyessey" and suggesting that no viable replacements are on hand. ¶3. (C) While acknowledging that "legally speaking" the opposition could not force early elections, Orban believes the environment is such that "we cannot rule anything out." He characterized early elections as a possibility despite the MSzP's interest in closing ranks. ¶4. (C) He admitted, however, that the current situation has the opposition thinking. "Many in the party," he conceded, prefer to leave Gyurcsany under siege but in office. FIDESZ Parliamentary Faction leader Tibor Navracsics seems prepared for a protracted conflict, and other MPs have told us off-line that they expect "no changes before 2010." ¶5. (C) Though acknowledging what he called a "strategic debate" within the party, Orban came down clearly on te side of a more activist approach. "This is not a government that is doing the right thing and suffering from short-term problems," he asserted, but rather "a government that is doing the wrong thing and which will only cause more damage if it remains in office." These remarks echo his charges at the December roll-out of the party's new "A Stronger Hungary" platform, when he argued that the Gyurcsany government was not misguided but rather making progress toward its goal of a "permanent underclass." PREPARING TO INHERIT THE WIND ¶6. (C) Given what he sees as the risks of two more years of the present government, Orban confided his concerns that "Hungary's next government will find it easier to win the election than to govern the country." He specifically highlighted the stability of the forint as an issue, noting that any loss of international confidence based on "perceptions that we are populists" could prompt "mass bankruptcy." GOVERNMENT QUARTER HALF-BAKED ¶7. (C) If Orban is thinking about longer-term problems, the government has had only a temporary reprieve during the parliamentary recess. The opposition's referendum is undergoing its final legal review in the Constitutional Court, and sources in the Sandor Palace tell us that a sympathetic President Solyom is likely to take quick action to set the date for the voting ) perhaps as early as March. Although the MSzP and SzDSz have discussed an affirmative campaign to drum up public support for their tuition and medical fees, Socialist insiders admit that their best hope remains low turn-out to prevent the validity of the results. ¶8. (C) The cabinet's January 8 announcement of its decision to suspend work on the proposed government quarter in Budapest is another retreat. Although there is broad consensus that abandoning the controversial initiative is the right outcome, MSzP MP's see the government limiting damage that they should have avoided entirely. We sense there are many in the party who agree with Navracsics' assessment that "losing Gyurcsany would gain the MSzP five points in the polls." SQUEEZING THE DOG ¶9. (C) Comment: Early signs point to heat ) but no thaw - in the spring. The MSzP has not embraced Gyurcsany's policies, but appears resigned to Gyurcsany's continued presence in the near-term. Orban's admission of serious debate within FIDESZ is another sign of his growing willingness to accept more diverse views, but his own preference is clearly for direct challenges to a government he paints as not just different in its views but dangerous. BUDAPEST 00000041 002 OF 002 His chances of success are less clear: the opposition has no constitutional mechanism to force early elections if the MSzP refuses to blink. Nor can it engage in brinksmanship without risking its inroads among centrist voters or trying the patience of loyalists tired of protests without payoffs. FIDESZ continues to confront a dilemma ) in Hungarian idiom a "dog squeezer." With weeks left before Parliament returns, however, Orban appears inclined to be the one doing the squeezing. End Comment. LEVINE