Identifier
Created
Classification
Origin
08BUDAPEST930
2008-09-23 13:29:00
CONFIDENTIAL
Embassy Budapest
Cable title:  

CONTINUOUS LOOP: HUNGARY TWO YEARS AFTER "THE

Tags:  PGOV KDEM ECON HU 
pdf how-to read a cable
VZCZCXRO9378
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0930/01 2671329
ZNY CCCCC ZZH
P 231329Z SEP 08
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 3407
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000930 

SIPDIS

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

E.O. 12958: DECL: 09/21/2013
TAGS: PGOV KDEM ECON HU
SUBJECT: CONTINUOUS LOOP: HUNGARY TWO YEARS AFTER "THE
SPEECH"

Classified By: P/E COUNSELOR ERIC V. GAUDIOSI

First Hungarian: How are you?

Second Hungarian: Well.

First Hungarian: Could you elaborate?

Second Hungarian: Not well.

THE SPEECH IN THE ECHO CHAMBER

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000930

SIPDIS

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

E.O. 12958: DECL: 09/21/2013
TAGS: PGOV KDEM ECON HU
SUBJECT: CONTINUOUS LOOP: HUNGARY TWO YEARS AFTER "THE
SPEECH"

Classified By: P/E COUNSELOR ERIC V. GAUDIOSI

First Hungarian: How are you?

Second Hungarian: Well.

First Hungarian: Could you elaborate?

Second Hungarian: Not well.

THE SPEECH IN THE ECHO CHAMBER


1. (C) This old joke remains unfortunately topical. Two
years after the public disclosure of Prime Minister
Gyurcsany's notorious "lies" speech, the political debate
remains heated in tone but largely frozen in time. The
lingering specter of the speech remains, as do lasting public
suspicions regarding the Prime Minister.


2. (C) Neither is likely to dissipate. Gyurcsany's flagship
reforms in education and health care have been rolled back,
and even his success in deficit reduction has been undermined
by a weak economy and an excessive reliance on revenue
enhancement rather than fiscal discipline. To the derision
of its opponents and often to the frustration of its
ambitious supporters, the government does continue to
generate plans. (They are, as one contact quips, one of the
few growth industries in Hungary.) Whether good or bad,
these initiatives have proven largely irrelevant, often
slow-rolled by a resistant bureaucracy and soon rolled over
by the next wave of ideas.

STILL STANDING ( BUT STANDING STILL


3. (C) Yet Gyurcsany continues to survive. "Ferenc is a
fighter," sums up long-time friend Klara Akots, and he has
been able to weather a series of crises by marshaling support
from a party that still sees him as the best option in the
face of its long-time opponents in FIDESZ ( and its recent
coalition allies in the SzDSz.


4. (C) Without a governing majority in Parliament, however,
Gyurcsany may be unable to do more than survive. The
government's recent tax package ) which analysts pointedly
refuse to call "tax reform" ) is emblematic of the
government's modus operandi. Conceived in secret, announced
in the media, and criticized from all sides for its
unrealistic assumptions and its unreasonable burden on the
corporate sector, the plan now joins many others on the rocks
in Parliament. Indeed, some AmCham officials believe the PM

may have "lost control of his own party," suggesting that
more hard-line elements in the Socialist party may be letting
Gyurcsany reign but not rule.

ALL FOR NOTHING; NOTHING FOR ALL


5. (C) Although the government cannot execute its plans, the
opposition has been unable to expel the Prime Minister.
While Gyurcsany remains the principal target of public
frustration (posters proclaiming "Its All Gyurcsany's Fault"
dot the city),he is not the only target. MDF Faction Leader
Herenyi has railed against both "our clumsy government and
our clumsy opposition," and FIDESZ Party President Orban
admits that the opposition's "failure" to remove the PM has
put them in the firing line as well. The far-right press,
for instance, has dramatically increased its criticism of
FIDESZ in the past months. Disturbingly, much of the
criticism accuses FIDESZ of being "too moderate" and "too
pro-American."


6. (C) As the parties remain in what MDF Party President
Ibolya David ridicules as "the political sandbox," extremist
elements remain visible as well as vocal. Groups ranging
from the "Goy Riders" Motorcycle Club to the irredentist "64
Counties Movement" have organized often-overlapping protests
since Parliament's return on September 15, including a major
demonstration on September 20 which ended in clashes with the
police in downtown Budapest (septel). Centrist political
analyst Krisztian Szabados believes that the inroads made by
the far right in the past year represent the greatest threat
to Hungary, and believes that the current trend could lead to
open confrontation between extremists and the Roma community.
One contact recently arrived in the capital from eastern
Hungary expected to find "more diversity and more tolerance"
in Budapest but believes the situation is bad ( and getting
worse.

COMMENT: SHARPENING A DULL KNIFE?


7. (C) Hungary is balanced on the edge of a dull knife.

BUDAPEST 00000930 002.2 OF 002


Although the issues confronting the country are strategic,
the debate and the decisions remain primarily tactical as the
parties jockey for advantage. With consensus an inch wide
and an inch deep, many Hungarians are tempted to believe the
hyperbole that their country is not only "ungoverned" but
ungovernable. As former SzDSz President Janos Koka stated in
frustration, "let's face it: we do not agree, we will not
agree, we cannot agree." With consensus neither in the
streets nor the corridors of power, the atmosphere is at once
tense and tedious.


8. (C) And the opportunity costs are mounting. Investors
are increasingly concerned about the future of the economy
but the government has been reduced to "modest" (read
"minute") actions on the margins of the major issues of the
day. One corporate rep warns that "thousands of negative
decisions are being made about Hungary every day," and one
resident Ambassador concludes that "the parties can agree for
five minutes ( but not for six." Two years after "the
speech," frustration with the government ) and increasingly
with the political class - remains high. The atmosphere,
admits Finance Minister Veres, is "highly anti-reform," and
many of our contacts share the impression that various
disparate grievances are metastasizing in the absence of
clear, credible, and consensual leadership. That will
certainly continue to limit the attention Hungary will pay to
foreign affairs. It may also increase the attention we must
pay to Hungary.

END COMMENT.
Foley