VZCZCXRO0617
RR RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0825/01 1111244
ZNY CCCCC ZZH
R 211244Z APR 06
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC 9043
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000825 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/NCE 
 
E.O. 12958: DECL: 04/20/2016 
TAGS: KDEM PREL PGOV HU
SUBJECT: HUNGARY'S ELECTIONS:  ROUND TWO SCENESETTER 
(C-RE6-00145) 
 
REF: STATE 22644 
 
Classified By: DCM Philip T. Reeker.  Reasons 1.4 (b) and (d). 
 
------- 
Summary 
------- 
 
¶1. (U) On Sunday, April 23, Hungary will conduct round two of 
its 2006 national elections.  This cable reviews the 
electoral math and the U.S. interests involved.  Following a 
strong performance in round one, the governing coalition 
parties MSZP and SZDSZ appear poised to carry the day, 
although an opposition (FIDESZ) victory is technically 
possible.  Whatever the outcome, the USG will be able to work 
constructively with the party or parties that come to power. 
Post will report round two results septel. 
 
--------- 
Mechanics 
--------- 
 
¶2. (U) Hungary's electoral system assigns mandates as 
individual constituencies, party-list seats and national-list 
seats:  In round one on April 9, only those 
individual-constituency races where one candidate won an 
outright majority were decisive.  That happened in 66 of the 
176 individual-constituency contests.  In the remaining 110 
individual-constituency races, round one's top vote-getters 
will face off this Sunday.  In round two's races, the 
candidate winning a plurality will take the seat.  In order 
for a given district race to be valid, there must be a 
minimum 25 percent turnout, and turnout is widely expected to 
exceed 25 percent in every district, as it did in the 2002 
elections. 
 
¶3. (U) It is technically possible --but unlikely, as 
independent computer-modeling analyses confirm-- that the 
chief opposition party FIDESZ will win enough seats in the 
second round to form the next government.  Of the 110 races 
at stake in round two, the governing MSZP led in 61 and 
FIDESZ in 48 at the end of round one.  (In one district, a 
local, county-based party is in the lead.)  The governing 
coalition parties MSZP and SZDSZ made immediate, 
post-round-one efforts to cement their lead over FIDESZ: 
under an April 11 agreement, MSZP withdrew its candidates in 
favor of SZDSZ in three of the 61 districts where it leads, 
while SZDSZ threw its support to MSZP in 55.  (The agreement 
does not extend to the remaining three of the sixty-one 
races.) 
 
¶4. (SBU) Following round one, FIDESZ President Viktor Orban 
announced that his party would attempt to capture 75 of the 
110 seats still up for grabs in the second round.  In fact, 
according to the FIDESZ-friendly Szazadveg Foundation, the 
party would need to win 81 of the 110 second-round contests 
in order to govern alone, and 66 seats in order to govern in 
tandem with the junior opposition party MDF. In addition to 
the apparent MSZP-SZDSZ lead in individual mandate races 
discussed above, the lack of a FIDESZ-MDF cooperation 
agreement will make winning even 66 seats an unlikely 
proposition.  In addition, while it is true that several 
individual MDF candidates have either withdrawn from their 
races or openly thrown their support to FIDESZ, it is not 
clear that MDF voters would cast their ballots for FIDESZ, 
even if asked to do so by the withdrawing MDF candidate.  (As 
of April 20, twenty-one MDF candidates were planning to 
remain in the race, 15 were withdrawing and 11 had not yet 
made up their minds.) 
 
¶5. (U) Even after the conclusion of round two, it will still 
be some weeks before the next government is formed. 
President Solyom is not likely to invite any party to form a 
government until after all absentee ballots are counted and 
the final, certified results are announced on Saturday, April 
¶29. 
 
------------- 
USG Interests 
------------- 
 
¶6. (C) On the whole, USG interests are probably best served 
by a continuation of the current coalition.  In many ways, 
Hungary is a success story and the Socialist-led government 
has been a supportive partner of the U.S.  It has deployed 
troops to both Iraq and Afghanistan, and seems poised to 
field a Provincial Reconstruction Team in Afghanistan should 
it remain in power.  The GOH has cooperated actively in 
U.S.-led efforts to combat international terrorism and 
organized crime through intelligence sharing and law 
 
BUDAPEST 00000825  002 OF 002 
 
 
enforcement cooperation.  There is sizable U.S. investment in 
the Hungary, and the country's continued, healthy growth rate 
and good location make it likely that U.S. participation in 
the Hungarian market will only continue to grow. 
 
¶7. (C) While Hungary has not realized earlier hopes that it 
would act as the key stabilizing force in the Balkans, it has 
largely refrained in recent months from inflammatory rhetoric 
about the treatment of ethnic Hungarians in Serbia.  Under 
the rubric of the EU's Neighborhood Policy and as a member of 
the Visegrad Group, the GOH has worked in a low-key but 
constructive manner in Ukraine, and recently has shown signs 
that it is willing to be more active in Belarus.  Its 
relations with Russia are keyed to energy, and it can be 
expected that a MSZP-SZDSZ government will do little that 
would jeopardize the hard-won good relations it has developed 
with Moscow.  Having SZDSZ in the coalition should ensure 
that strong transatlantic ties remain central to the new 
GOH's foreign policy thinking. 
 
¶8. (C) Should it be returned to power on April 23, the MSZP 
will likely concentrate on its domestic agenda, where 
accomplishments to date have been modest. MSZP and Gyurcsany, 
goaded on in some respects by SZDSZ, have indicated a 
willingness to take on such mega-projects as local government 
reform --effectively, a diminution of the party's political 
base in the provinces-- in service of the larger goal of 
righting the country's finances.  The task of debt reduction, 
however, can be expected to limit Hungary's scope for action, 
and may further reinforce the GOH's tendency to defer to 
Brussels foreign policy issues of interest to the U.S. 
 
¶9. (C) Although FIDESZ was at the helm when Hungary joined 
NATO, today it would likely be a more difficult partner -- 
especially without the moderating influence of former 
coalition partner MDF.  In the course of this campaign, 
FIDESZ's populist rants have drowned out its earlier 
conservatism.  Still, FIDESZ decisionmakers have told Embassy 
that a FIDESZ government would continue to attach a high 
value to the bilateral relationship with the U.S., even while 
adopting a more assertive stance when defending perceived 
Hungarian interests.  FIDESZ interlocutors have said as well 
that they would work to restore funding to the military and 
support the PRT mission first proposed by the MSZP-SZDSZ 
government.  The FIDESZ picture on commercial issues is more 
cloudy.  FIDESZ President Viktor Orban has called past 
privatizations into question, and repeatedly pledged to 
protect domestic business against the encroachments of 
foreign capital.  The party justified its December 2004 
decision to withhold support for mandate extension for 
Hungary's OIF troops by claiming widespread popular 
opposition here to the U.S. presence in Iraq.  The Orban-era 
decision to buy Gripen fighter jets, a purchase with limited 
utility for Hungary's ties to the EU and none for its ties to 
NATO, serves as an unsettling reminder of the party's 
capacity to surprise.  Even if the party's nativist forces 
were ultimately neutralized, the FIDESZ campaign has made 
extravagant pledges for domestic programs, and it is unlikely 
that the party would be able to finance them while 
maintaining the country's international commitments. 
 
------- 
Comment 
------- 
 
¶10. (C) The USG will find common ground with whichever party 
or parties come to power with the April 23 elections. 
Embassy has observed a strict neutrality during the campaign, 
reaching out to all parties and engaging with contacts across 
the political spectrum.  The omens are auspicious for a 
return of the current coalition.  A less likely scenario is 
that MSZP will win an outright majority.  FIDESZ does not 
appear at this juncture strong enough to win a majority, 
either with or without support from the MDF.  Embassy will 
report the results of round two septel. 
 
¶11. (U) Visit Embassy Budapest's classified website: 
www.state.sgov.gov/p/eur/budapest/index.cfm 
WALKER