GYURCSANY - OUT AS PRIME MINISTER, OUT AS PARTY

C O N F I D E N T I A L BUDAPEST 000250 SIPDIS DEPARTMENT FOR EUR/FO AND EUR/CE JAMIE LAMORE. PLEASE PASS TO NSC JEFF HOVENIER AND KHELGERSON E.O. 12958: DECL: 03/29/2014 TAGS: PGOV PINS HU SUBJECT: GYURCSANY - OUT AS PRIME MINISTER, OUT AS PARTY PRESIDENT REF: BUDAPEST 234 AND PREVIOUS Classified By: Acting P/E Counselor Jon Martinson, reasons 1.4 (b,d) ¶1. (U) Summary. The Socialist and Free Democrats have agreed on a new Prime Ministerial candidate, Economic Minister Gordon Bajnai, with a constructive vote-of-no-confidence planned for April 14. With the largest opposition Fidesz and the extreme right-wing Jobbik parties continuing their call for new elections, an increase in civil unrest prior to April 14 is possible. Prime Minister Ferenc Gyurcsany announced March 28 that he is stepping step down as Socialist Party President, one week after he announced he will leave as Prime Minister. Elections for a new Socialist Party President are set for April 5. End summary. ¶2. (U) In another surprising move, just one week after he was reelected as Socialist Party (MSzP) President with 85 percent support and a standing ovation, Ferenc Gyurcsany resigned as Party President on March 28. His decision was preceded by growing criticism within the party for what some MSzP MPs called the "scandalous hunt for a Prime Ministerial candidate" (reftel). Gyurcsany's decision to step down as Party President followed an extraordinary session of the Socialist Party leadership on Saturday, March 28, when the nineteen county MSzP leaders were called to Budapest. This followed former Socialist Minister for Privatization and current MP Tamas Suchman's public statements on March 27 calling for the PM's resignation as Party President. ¶3. (C) A special MSzP Congress will convene on April 5 to endorse the nomination of current Economic Minister Gordon Bajnai as the next Prime Minister (septel),as well as electing Gyurcsany's replacement as Party President. First Vice President and Defense Minister Imre Szekeres and Party Vice President and Chancellery Minister Peter Kiss are the two most likely candidates to replace Gyurcsany as Party President. (Comment. PM nominee Bajnai has indicated that he plans on keeping Szekeres and Kiss in his new Cabinet. With the events of the past week - called by Fidesz President Viktor Orban as a "Banana Republic" atmosphere - eroding MSzP's reputation, we anticipate that only one name will be put forward as MSzP President in order to show party unity. Szekeres has indicated privately that he is interested in the NATO Secretary General position, and the outcome of this week's NATO summit to reach consensus on that position may influence Szekeres' decision whether to stand for Party President. End comment.) ¶4. (C) Comment. Weekend negotiations between the MSzP and the Free Democrats (SzDSz) leadership ended a tumultuous search for a PM candidate that eventually included 14 possible candidates. Assuming the April 5 MSzP Party Congress officially endorses Bajnai's candidacy, the MSzP will present the constructive vote-of-no-confidence motion to Parliament on April 8 and the vote is anticipated on Tuesday, April 14, following the Easter holiday. Fidesz Party President Viktor Orban and the extreme right-wing Jobbik party continue to call for early elections, but it is unlikely that any Fidesz motion to dissolve parliament would be successful pending the outcome of the April 14 no-confidence vote. As the MSzP is six votes short of the simple majority needed to elect Bajnai, they will need SzDSz's support to pass the constructive vote-of-no-confidence. That said, with press reporting indicating that Bajnai will propose further reforms to address the current economic crisis (septel),Socialist MPs will have to decide whether to support Bajnai and further social welfare cuts or face the likelihood of early elections. Current polling indicates that, if elections were held now, Fidesz would potentially win two-thirds of the seats in Parliament, giving the party significant sway over a number of key issues. Foley