CRUEL SUMMER: POLITICS IN SLOW MOTION

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000778 SIPDIS DEPARTMENT FOR EUR/CE; PLEASE PASS TO NSC FOR ADAM STERLING E.O. 12958: DECL: 08/01/2013 TAGS: PGOV ECON KDEM HU SUBJECT: CRUEL SUMMER: POLITICS IN SLOW MOTION REF: A) BUDAPEST 731 B9 BUDAPEST 588 Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) ¶1. (C) There are few signs of life during Hungary's long summer break. Government and party officials have departed en masse for vacation ) leaving one staffer in the Prime Ministry to question exactly who is acting in Prime Minister Gyurcsany's absence ) and one contact notes that political debate has been reduced to "one headline a day." PARALYSIS BY ANALYSIS? ¶2. (C) For the Gyurcsany government, this lull is welcome news but not necessarily good news. Although not a day has passed without some story advancing the government's "narrative" of economic progress (citing issues ranging from pharmaceutical reform to e-government),draft legislation for the fall session of Parliament seems to be moving slowly ) if at all ) within the Ministries. In comments on July 31, Finance Minister Veres denied press reports of a government decision to raise the VAT rate while lowering taxes on food and energy. Although he has made increasingly positive noises regarding the elimination of the "solidarity tax" on businesses, he notes that over two dozen draft tax plans are still under consideration within the Ministry. ¶3. (C) MSzP Deputy Faction Leader Attila Mesterhazy fears that the party's current leadership has reached "intellectual exhaustion" after "six years in power." He has pressed Gyurcsany in private to end "politics by public relations," arguing that the government must "stop worrying about controlling tomorrow's headlines" and start "admitting our mistakes and finally finishing something that we start." As he ruefully admits, the government has earned its public reputation for "digging holes we can't fill in." ¶4. (C) Much of this, Mesterhazy argues, is due to a management style that lets in very few opinions and very little fresh air. "The party leadership's ideas sound great ( to the party leadership," he complains, "but that should not be a substitute for consultation." Mesterhazy fears that the government is going down this path again with welfare reform (ref a),turning what should be the centerpiece of its legislative agenda into another potential liability if the public perceives another attempt to impose a solution without inviting consensus. ONE MAN'S CRISIS IS ANOTHER'S OPPORTUNITY ¶5. (C) Mesterhazy's former professor, FIDESZ Parliamentary Faction Leader Tibor Navracsics, senses the same stagnation within the government. He believes the Prime Minister has "devastated" the MSzP, leaving only "pensioners and those who believe the hysteria about the far right." As he admits, however, that base still seems sufficiently loyal to Gyurcsany to prevent his removal in the near term. Although Navracsics and other senior party officials continue to maintain that "you never know" what will happen in the months ahead, both FIDESZ MPs and leaders in the party's youth organizations - described by conservative commentator Ivan Baba as "the opposition within the opposition" - tell us privately that talk of early elections is just that. Ultimately, they expect Gyurcsany will remain too weak to introduce reforms but too strong to remove. ¶6. (C) The result, Navracsics charges, is "the complete breakdown in governance" in Hungary. Joking that he can no longer remember the names of the cabinet ministers or even the recently-reorganized ministries, Navracsics suggested that the constant organizational flux has been designed to "keep the Prime Minister's rivals on the move" and to "distract the public's attention" from the lack of substantive accomplishment. "They simply can't fix what they've broken," he concludes. ¶7. (C) With his own party polling at 60 percent among decided voters, Navracsics assesses that Party President Viktor Orban's position is "unquestioned" even if it is "not what it was in 2006." He perceives "some hesitation in the rank and file and some willingness on Viktor's part to build a more collective leadership." Navracsics also takes obvious pride in the emergence of a "new generation" of "professionals" being groomed at the local level. (Comment: Not coincidentally, many of these rising stars are closely aligned with Navracsics. End Note.) ¶8. (C) Although he sees "no factionalism" within FIDESZ, Navracsics believes that the party "must make strategic decisions later this year ) even though they will cost us points with the public." Ironically, this admission tracks BUDAPEST 00000778 002 OF 002 closely with the comment of Agriculture Minister and MSzP insider Jozsef Graf, who notes that "every time FIDESZ says anything they lose five points in the polls." Still, Navracsics notes that FIDESZ can always use its coalition partner KDNP to stake out slightly different positions and thus attract a broader voter base. "The KDNP is not an autonomous political force," he stated with remarkable candor, indicating that "FIDESZ will set the policy" and use the KDNP "for the politics." SzDSz: HAMLET: KING-MAKER ... OR SUICIDE? ¶9. (C) The prospects for continued gridlock will place greater scrutiny on the SzDSz and its "constructive opposition" (ref b). Pressured by the MSzP to return to the coalition and by FIDESZ to "walk through the fire" of early elections, newly-elected SzDSz President Fodor has done neither. As Navracsics observes with evident frustration, "I like Gabor very much, but he's done nothing because he's not a doer." Former SzDSz President Janos Koka agrees, commenting that his recent loss in the party elections is "good for me ( but bad for the party." ¶10. (C) But Fodor's indecision may not stay the hand of others within the party. As he himself admits, the MSzP will be eager to "make friends ( or buy them" from the SzDSz's ranks in order to ensure a majority in Parliament on key votes. Some within the party are openly questioning his leadership, including a local mayor who has publicly supported the Magyar Garda, citing the inability of "Budapest" to appreciate local problems such as crime. Although Navracsics minimizes the Garda's national strength and believes "only leftist intellectuals can make (MG leader) Vona a hero," other contacts assess support for ideas once deemed extremist as up to 10 percent. A SLOW COLLISION WITH A SLIGHT IMPACT ¶11. (C) Comment: However slow-moving, these forces will collide as Parliamentary debate turns to the 2009 budget in September. Both MSzP and FIDESZ officials predict that the SzDSz ) or enough individual SzDSz MPs ) will ultimately support the government's draft. As Navracsics warns, however, there will likely be "a chaotic debate leading to a chaotic budget" (septel). Despite the long summer break, officials here are already hoping for a short fall session of Parliament. The government will set very modest legislative goals, likely focusing on the budget, social welfare reform, and political party financing. They sense little public desire for further steps, and Navracsics admits that the opposition has no interest in "making the government feel any stronger" by handing it legislative victories. This combination of stasis from the government, strategic calculation from FIDESZ, and stalling from the SzDSz may combine to make little difference between the fall session and the summer vacation. End Comment. Levine