COALITION OF THE UNWILLING: THE MSZP AND THE SZDSZ

C O N F I D E N T I A L BUDAPEST 000950

SIPDIS

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

E.O. 12958: DECL: 09/23/2013
TAGS: PGOV HU
SUBJECT: COALITION OF THE UNWILLING: THE MSZP AND THE SZDSZ
TAKE A STEP CLOSER

REF: BUDAPEST 899 AND PREVIOUS

Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D)

A "NOALITION" IS BORN?


1. (SBU) Following a succession of publicized meetings and a
series of private contacts, the MSzP and the SzDSz appear to
have moved from open conflict to ambiguous accord.


2. (U) In public comments following a meeting with SzDSz
Party President Gabor Fodor September 23, Prime Minister
Gyurcsany indicated that the parties had "more or less"
reached an agreement to cooperate on "key issues."


3. (U) Although Fodor ruled out a formal return to a
Gyurcsany-led cabinet in his public remarks, emphasizing only
his willingness to cooperate on "intelligent issues," FIDESZ
Party President Viktor Orban commented that the SzDSz appears
to be "moving again from supporting a cabinet of technocrats
(reftel) toward the coalition." Fodor ally Laszlo Csozik
believes that the party will not return to a formal
coalition, but suspects that the SzDSz faction may simply
absent itself from upcoming votes on the government's draft
budget and tax package in order to give the MSzP a majority
of voting members.

WHAT'S IN IT FOR ME?


4. (C) Observers and party insiders anticipate that there
will be unspecified changes to the government's tax proposal
to accommodate some SzDSz concerns ) likely deficit
reduction and further reform for corporations. But, as MSzP
MP Attila Mesterhazy observes, "it's difficult to negotiate
with the SzDSz because they don't know what they want ... or
even who's in charge." Although Mesterhazy emphasizes that
some in the MSzP leadership want to be "empathetic," he
believes that "our voters hate the SzDSz and now Gyurcsany
hates Fodor."


5. (C) As a result, he believes that there will be clear
limits to the MSzP's willingness to fly in the face of
"social solidarity." They have, for example, refused to walk
away from their proposal to introduce a controversial 8
percent "Robin Hood" tax on energy companies to subsidize
heating costs, and they are unlikely to reduce the projected
increases in pension benefits given their reliance on votes
from retirees. As DEMOS Foundation President and Gyurcsany
confidante Tibor Desszewffy comments, "we need two parties on
the left to win an election, but there's little desire to
help the SzDSz - and even less money in the budget to do so."

IT WALKS LIKE A COALITION, IT QUACKS LIKE A COALITION (


6. (C) COMMENT: Fodor's critics ) and there are many )
will argue that he received very little in return for his
prolonged brinksmanship. Under increasing pressure from
within the party to end his "kamikaze approach," Fodor may
have been persuaded that even an informal (and as yet
ill-defined) understanding with the MSzP is preferable to
continuing on the SzDSz's collapsing orbit. Even so,
Desszewffy believes that Fodor has "devastated the party" and
"lost 20 years of credibility in 2 weeks." Csozik and
Mesterhazy agree, wiht the latter concluding that Fodor has
"lost face ... and lost his way." Having blinked, Fodor now
risks appearing both less principled and less-than-resolute.
By contrast, analysts including conservative commentator
Istvan Stumpf believe that even this ambiguous entente with
the SzDSz will shore up the PM's position - perhaps through

2010. Although Mesterhazy says a formal coalition is "out of
the question," if this tactical agreement holds, the
government can look forward to surviving the upcoming votes
on its budget and tax proposals, further extending
Gyurcsany's unlikely streak as Hungary's long-serving
post-transition Prime Minister. End Comment.
Foley