Identifier
Created
Classification
Origin
08BUDAPEST720
2008-07-22 11:03:00
CONFIDENTIAL
Embassy Budapest
Cable title:  

HUNGARY'S RUSSIA POLICY: RETHINKING ... OR

Tags:  PREL HU 
pdf how-to read a cable
VZCZCXRO3148
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0720/01 2041103
ZNY CCCCC ZZH
P 221103Z JUL 08
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 3199
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000720 

SIPDIS

DEPARTMENT FOR EUR DAS MERKEL AND EUR/CE; PLEASE PASS TO
NSC FOR ADAM STERLING

E.O. 12958: DECL: 07/20/2018
TAGS: PREL HU
SUBJECT: HUNGARY'S RUSSIA POLICY: RETHINKING ... OR
REPHRASING?

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

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000720

SIPDIS

DEPARTMENT FOR EUR DAS MERKEL AND EUR/CE; PLEASE PASS TO
NSC FOR ADAM STERLING

E.O. 12958: DECL: 07/20/2018
TAGS: PREL HU
SUBJECT: HUNGARY'S RUSSIA POLICY: RETHINKING ... OR
REPHRASING?

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


1. (C) Throughout the course of recent briefings, GoH
officials have changed their tune slightly with regard to
Hungary's Russia policy. Increasingly, their approach
appears to be one which admits Hungary's economic interest in
expanding trade but which underscores Budapest's enduring
commitment to the West. This attempt to distinguish between
trading partners and strategic allies represents a new
approach but not necessarily a real change, especially when
the traded commodity is energy. Ultimately, only Hungary's
actions will demonstrate whether this is a rhetorical or a
practical shift in its policy.

"IMPLEMENTING OUR (ECONOMIC) INTERESTS"


2. (C) In a meeting with Ambassador Foley July 15,
newly-installed MFA State Secretary Gyorgy Giljan began his
overview of Hungary's Russia policy with the frank statement
that "our focus is on implementing our interests )
especially those of our business community." Exports to
Russia have increased seven-fold within the past five years,
he continued, now representing six percent of Hungary's total
export volume with an estimated value of USD 3 billion. But
Hungary's trade deficit remains enormous given its energy
dependence on Russia, and business dealings with Russia tend
to be concentrated in very select hands. Multi-millionaire
businessman Sandor Demjan, for example, has pointedly
announced that he will no longer invest in Hungary but rather
only in Russia.


3. (C) But Hungarian officials have been at pains to
distinguish between economic advantage and strategic
commitment. Both MFA State Secretary Laszlo Varkonyi as well
as the PM's Foreign and Security Policy Advisor, Karoly
Banai, assure us that Hungary's place remains with the West.
Giljan also professed few illusions about the situation in
Russia, defining his "hope" that "Medvedev will be even a
little bit more liberal than Putin."

SYMPATHY OR SUPPORT?


4. (C) That said, Hungary's position will likely be
characterized by sympathy more than vocal support. Giljan
noted that any criticism of Russia's record on democracy and
human rights would be "within the context of the EU." Nor
would Giljan be drawn on Medvedev's proposal to pursue "new

security structures." He commented that Budapest could not
comment on "something so vague," and deflected questions
regarding developments in Russian oil supplies to the Czech
Republic, referring to the issue as one about which he had
"requested more information."


5. (C) Calculations regarding Russia could also cast a pall
over broader security issues. MFA Political Director
Szent-Ivanyi was typically cautious in meeting with
Ambassador Foley on July 8, outlining Hungary's commitment to
continued engagement in Afghanistan and the Balkans but
avoiding definitive commitments on NATO enlargement.
Although he stated that Hungary believes in "no Russian
vetoes," he hastened to add that Budapest must "recognize
that this is a consensual decision" for the Alliance. Even
though Banai tells us that the PM hopes to travel to Georgia
later this year in an expression of support for their NATO
aspirations, the current situation is troublesome. In
principle, they support MAPs for both Georgia and Ukraine,
but from a foreign policy perspective their stronger
political and geographic ties to Ukraine make an invitation
to Kyiv more important. Although our MFA contacts tell us
they do not support the French/German position on the issue,
Hungary may ) once again ) take no for an answer from other
European capitals when it comes to a vote on MAP.

RUSSIA POLICY? NOT INVENTED HERE.


6. (C) We also note that many of our contacts in the foreign
affairs hierarchy are playing dumb on Russia. Both Banai -
who has made the economic argument in the past - and senior
MFA officials have pointedly referred us to the Ministry of
Finance as the lead on South Stream and perhaps, by
extension, on Russia. Finance Minister Janos Veres noted
this with a smile during a July 21 meeting with the
Ambassador, remarking "where do things stand on South Stream?
The key word is 'stand.' I haven't heard from Moscow in
three months."

MAKING A DISTINCTION OR MAKING A DIFFERENCE?


7. (C) Comment: If true, Veres' comment should underscore

BUDAPEST 00000720 002 OF 002


the short-sighted nature of Hungary's strategy. Hungary's
exports to Russia are still modest ) and far exceeded by
both its exports to the EU as well as its energy imports.
They may look significant to a government which knows that
exports are leading a very sluggish economy (Veres openly
noted that exports have increased by double-digit increments
in each of the past 3 years),but they give Budapest little
leverage in its bilateral relationship. Moreover, no matter
how hard Hungarian officials try to separate foreign trade
from foreign policy, Hungary remains vulnerable to pressure
on a host of issues where Russian interests are served by
Hungarian silence. It will be Hungary's actions on these
fronts which determine whether the GoH is rethinking its
Russia policy ( or merely rephrasing it. End Comment.


8. (C) Biographic Note: Recently arrived from the Prime
Minister's Office, Giljan has also worked at the Ministry of
Economy. Deliberate in presentation and thorough by
reputation, he is responsible for commercial issues as well
as Europe "from Croatia to Russia." He is also widely
expected to move on to Moscow as Hungary's next Ambassador in
the near future.
Foley