FIDESZ ROLLS OUT ITS AGENDA TO THE DIPLOMATIC CORPS

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000829 SIPDIS DEPARTMENT FOR EUR/CE JAMIE MOORE. STATE PASS TO NSC FOR JEFF HOVENIER E.O. 12958: DECL: 11/19/2012 TAGS: PGOV ECON EINV ENRG HU SUBJECT: FIDESZ ROLLS OUT ITS AGENDA TO THE DIPLOMATIC CORPS REF: A. BUDAPEST 819 ¶B. BUDAPEST 794 Classified By: Political Counselor Paul C. O'Friel for reasons 1.4 (b) and (d). ¶1. (U) SUMMARY. Opposition party Fidesz, clearly confident of victory in next April's elections, rolled out its economic and foreign policy agenda to members of the diplomatic community November 18. With no margin of maneuver on fiscal policy, Fidesz intends to use monetary policy to help generate employment. Planned reforms include slashing the bureaucracy. Fidesz plans to extend Hungary's structural adjustment program backed by the International Monetary Fund, and asked the assembled ambassadors for their assistance in promoting foreign direct investment. On foreign policy issues, Fidesz addressed energy security, the new EU structures, the Middle East, and Turkey. Finally, Fidesz condemned recent Magyar Garda provocations in the countryside. END SUMMARY. CONFIDENT FIDESZ ROLLS OUT AGENDA -------------- ¶2. (SBU) The opposition Fidesz party triumvirate of Foreign Affairs Committee Chairman Zsolt Nemeth, Parliamentarian and former (and rumored future) Minister of Economy Gyorgy Matolcsy, and former (and, again, widely touted future) Foreign Minister Janos Martonyi rolled out Fidesz's future economic and political agenda in a November 18 briefing to assembled members of the diplomatic corps. The Fidesz team is clearly confident of victory in next April's national elections. ECONOMIC POLICY: FIDESZ VIRTUE VERSUS SOCIALIST VICE -------------- ¶3. (SBU) Matolcsy's highly polished presentation focused heavily on contrasting the alleged virtues of the previous 1998-2002 Fidesz government with the supposed vices of its Socialist successors. Given Socialist mismanagement, the new government, he said, would have "no margin for maneuver" when it comes to fiscal policy. Fidesz would look instead to monetary policy, and use the National Bank to free up credit to generate employment. Using the refrain, "reform/reform/reform," Matolcsy said Fidesz would focus on cutting government bureaucracy, streamlining taxes, improving vocational education, and battling corruption. Cutting bureaucracy by 25 percent could generate 7 percent GDP growth, he stated. Matolcsy predicted Fidesz would need to extend Hungary's International Monetary Fund/World Bank/European Union structural support program. ¶4. (U) Encouraging foreign direct investment, Matolcsy said, was a major Fidesz goal. The primary targets would be the health, construction, energy, agriculture, water, waste management, auto, and business service sectors. "We want to put Hungary on the global investment map and make it a new success story in Central Europe," Matolcsy asserted, adding, "We've got a vision of Hungary at the center of the region." FOREIGN POLICY FOCUS ON ENERGY INDEPENDENCE -------------- ¶5. (U) On foreign policy issues, Martonyi said Fidesz was pleased at the ratification of the Lisbon Treaty, which would lead to a stronger Europe, but unhappy about Czech President Vaclav Klaus' effort to attach an "opt-out" clause to the treaty. Martonyi emphasized that a major Fidesz foreign policy objective would be energy independence. Central Europe needed to cooperate on energy issues, he said. "Central Europe must become a driving force on EU energy policy." ¶6. (U) Nemeth added that Fidesz was committed to a two-state solution to the Israeli-Palestinian conflict, with guarantees for Israel's security. He said the party attached great importance to Hungary's historic relationship with Turkey, and supported faster negotiations regarding Turkey's accession to the EU. Looking ahead to Hungary's January 2011 rotation in the EU presidency, Nemeth stated that he expected the question of EU enlargement would be "back on the table," and that Hungary hoped to play an important role in the process. DOMESTICALLY: "NO CROWNING OF A KING" -------------- BUDAPEST 00000829 002 OF 002 ¶7. (U) Regarding domestic issues, Martonyi categorically denied that party leader Viktor Orban had any ambitions to modify Hungary's constitution to introduce a presidential system in place of the current prime ministerial structure. "There will be no crowning of a king, no sultan, nor any dictatorship." He did state that Fidesz, should it receive the two thirds majority needed to change the constitution, would reduce the number of parliamentarians (currently 386) and cut the number of public entities, including local governments. Nemeth, addressing recent clashes between the far-right Magyar Garda and Roma citizens in the rural village of Sajobabony (ref A),pointed to Orban's public comments condemning the Garda and its efforts to subvert police authority. The Garda's actions, Nemeth said, were absolutely unacceptable and against the rule of law. ¶8. (C) COMMENT. Matolcsy's economic presentation did not go into the details he provided us privately (ref B). He notably stayed away from any in-depth discussion of Fidesz's tax proposals. His economic figures brought to mind Mark Twain's famous quip about statistics, since they were carefully constructed to bolster the Fidesz argument that only they had been fiscally responsible. Given the reaction of the audience, Fidesz clearly faces some skepticism about its pro-business/pro-investment rhetoric. Fidesz will have to provide concrete examples that its "new direction" slogan is backed by deeds, as well as words. LEVINE