VZCZCXRO6276
RR RUEHAST
DE RUEHUP #1175/01 1531526
ZNR UUUUU ZZH
R 021526Z JUN 06
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC 9354
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 04 BUDAPEST 001175 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/NCE MICHELLE LABONTE 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM SOCI PINR HU
SUBJECT: HUNGARY:  PM ANNOUNCES NEW CABINET (C-RE6-00145) 
 
REF: STATE 22644 
 
BUDAPEST 00001175  001.2 OF 004 
 
 
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SUMMARY 
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¶1. (U) On Friday, June 2 in Parliament, PM Gyurcsany 
announced his new cabinet, setting the stage for 
much-anticipated administrative and fiscal reforms.  The 
number of ministers will slip from 17 to 12, with eight 
ministers from coalition leader Hungarian Socialist Party 
(MSZP), three from junior coalition partner Alliance of Free 
Democrats (SZDSZ) and one independent. 
 
--------------------------- 
MINISTRY OF FOREIGN AFFAIRS 
--------------------------- 
 
¶2. (SBU) Kinga Goncz, currently Minister of Youth, Family, 
Social Affairs and Equal Opportunity, is the surprise choice 
for Foreign Minister (FM).  The only independent in the 
cabinet, she is described by Embassy contacts as highly 
personable and possessed of the right instincts to fill the 
foreign policy position.  Goncz became political state 
secretary at the Ministry of Health in May 2002, and later 
 
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Minister of Equal Opportunity in June 2004.  Goncz became 
Minister of Youth, Family, Social Affairs and Equal 
Opportunities with a convergence of responsibilities from 
other ministries in October 2004.  A psychiatrist by training 
(MD Semmelweis University of Medicine 1972) and former 
university professor, Goncz worked at the National Institute 
of Medicine between 1982 and 1989.  She has long played an 
active role in shaping educational and organizational 
development policies of social agencies in Hungary.  Dr. 
Goncz has traveled and lectured in the U.S. including 
visiting scholar positions at the University of Michigan and 
Case Western University.  Her most recent visit to the U.S. 
was in February 2006 when she represented Hungary at the UN 
Commission on the Status of Women.  Born in Budapest in 1947, 
Dr. Goncz is the daughter of former Hungarian President Arpad 
Goncz (a revered figure, who served two terms as the first 
president of the newly democratic Republic of Hungary). 
 
--------------------------------- 
MINISTRY OF ECONOMY AND TRANSPORT 
--------------------------------- 
 
¶3. (SBU) Responsibility for information technology (IT) now 
becomes the province of Economy and Transport Minister Janos 
Koka, with the merging of his ministry and the Ministry of 
Informatics.  Koka, whose recent focus has been shaping GOH 
energy and energy security policies, will continue to direct 
the Hungarian economy as he has since October 2004.  Koka is 
widely viewed as a possible successor to Gabor Kuncze for 
SZDSZ party president in 2007.  A wealthy IT entrepreneur who 
won his parliament seat under the SZDSZ banner, Koka is 
viewed by some in his party as a "non-liberal" for his close 
personal friendship with PM Gyurcsany and his high standard 
of living.  The youngest member of the cabinet, Koka will be 
34 years old in July 2006.  Koka accompanied Ambassador 
Walker on U.S. trade and investment trips and is close to the 
Embassy. 
 
------------------ 
MINISTRY OF HEALTH 
------------------ 
 
¶4. (SBU) SZDSZ's Lajos Molnar, a doctor and former hospital 
administrator, takes over the Ministry of Health in the new 
Gyurcsany government amidst boisterous calls for reform in 
his sector.  The SZDSZ party made health care a key plank of 
its campaign and reportedly put up a significant fight for 
the post during coalition talks.  Molnar's party advocates a 
privatized health-insurance structure and the 
decentralization of hospital administration, possibly to 
contracted hospital administrators.  It is too early to 
speculate whether PM Gyurcsany will allow Molnar to make bold 
changes in health care.  At 60 years of age, Molnar is 
entering Parliament as a first-time MP. 
 
--------------------------------------------- ------------ 
MINISTRY OF ENVIRONMENTAL PROTECTION AND WATER MANAGEMENT 
--------------------------------------------- ------------ 
 
¶5. (SBU) Environmental Protection Minister Miklos Persany was 
reportedly the final SZDSZ ministerial pick, chosen in lieu 
of the Foreign Minister slot.  A biologist by training and a 
specialist in environmental protection, Persany is perceived 
as an issue expert rather than a politician.  He served for 
ten years as director of the National Zoo and is perhaps the 
most prepared of any cabinet member for his position. 
 
BUDAPEST 00001175  002.2 OF 004 
 
 
Persany is a returning member of the Gyurcsany government, 
having been chosen previously by Medgyessy to head the 
ministry.  The Embassy (particularly through our ES&T Hub and 
work with the Regional Environmental Center) has excellent 
relations with the 56-year-old Persany. 
 
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MINISTRY OF DEFENSE 
------------------- 
 
¶6. (SBU) Imre Szekeres takes over the Ministry of Defense and 
inherits an organization already severely pressed by budget 
constraints, with 1.2 percent of GDP and falling.  Meanwhile, 
the Defense Ministry must support Hungarian contingents to 
international missions, chiefly in the Balkans, Afghanistan 
and Iraq.  In the fall of 2006, Hungary is planning to field 
a Provincial Reconstruction Team (PRT) to Afghanistan, most 
likely to Pol-e-Khomri in the north -- but plans to use 
troops already on the ground in Kabul to form the base of 
that mission.  Szekeres possesses no particular military 
expertise.  The 56-year old Szekeres is a founding member of 
MSZP, former party caucus leader (1994-1998) and former party 
vice president.  He is a frequent Embassy contact who is well 
plugged in to internal MSZP party affairs.  He now serves as 
the chair of the MSZP economic section. 
 
--------------------------------- 
MINISTRY OF EDUCATION AND CULTURE 
--------------------------------- 
 
¶7. (SBU) Former MSZP party president Istvan Hiller is tapped 
to head the newly merged Ministry of Education and Culture, 
in a move that he has sought privately for months.  His 
tenure as MSZP party president was long of image and short on 
substance as PM Gyurcsany personally managed the 2006 MSZP 
campaign, keeping Hiller on the sidelines for public 
relations events.  The 40-year-old Hiller has served in 
Parliament since 2002.  A former college professor, Hiller 
served previously as political state secretary in the (then 
separate) ministries of education and culture. 
 
--------------------------------------------- ---------- 
MINISTRY OF LOCAL GOVERNMENTAL AND REGIONAL DEVELOPMENT 
--------------------------------------------- ---------- 
 
¶8. (SBU) Former Interior Minister Monika Lamperth will head 
the newly-minted Ministry of Local Governmental and Regional 
Development.  The organization is regarded by many as "the 
only completely new ministry" for its new name, and new 
line-up of responsibilities.  Lamperth's ministry will play a 
key role in implementing administrative reforms by 
reorganizing services on a regional, rather than local level. 
 The responsibilities Lamperth retains in the new ministry 
include oversight of local governments, public administration 
(i.e. local infrastructure and services) and elections. 
Police and law enforcement functions of the defunct Interior 
Ministry now come under the Justice and Law Enforcement 
Ministry's control.  New duties siphoned from other 
ministries include sports affairs and tourism.  Initially 
tapped as Interior Minister in the Medgyessy government, 
Lamperth has never been considered a close ally of PM 
Gyurcsany.  An MSZP party member since its founding in 1989, 
Lamperth is popular with her constituents, having been 
elected by individual mandate in Kaposvar each term since 
¶1998.  She is 49 years of age. 
 
--------------------------------------- 
MINISTRY OF JUSTICE AND LAW ENFORCEMENT 
--------------------------------------- 
 
¶9. (SBU) Originally named by Gyurcsany in 2004, Jozsef 
Petretei will serve a second term as Justice Minister, with 
the new responsibility of law enforcement, formerly under the 
Ministry of Interior.  Changes of significance in the law 
enforcement portfolio include  oversight of police and border 
guards, asylum and refugee cases and maintaining the 
governments collection of personal records (i.e. name, 
address, birth date, etc.).  Though not well defined as yet, 
Petretei will also play a role in ethnic Hungarian issues and 
Hungarian citizenship.  Sources consider Petretei a 
"conscientious, well-prepared member of the administration 
who has the PM's ear" (Note:  His connection Gyurcsany goes 
back to the communist youth movement in Pecs in the early 
1980s.)  Petretei taught at Pecs University Law School in the 
1990s and is an established expert on constitutional law, 
state structures and separation of powers. 
 
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MINISTRY OF FINANCE 
------------------- 
 
 
BUDAPEST 00001175  003.2 OF 004 
 
 
¶10. (SBU) Janos Veres remains at the Ministry of Finance 
(MOF), a post he has held only since April 2005.  A founding 
member of the MSZP, Veres has served in Parliament 
continuously since 1994.  He was elected from the Bereg 
county party list three times before winning an individual 
mandate in 2006.  He served as mayor of Nyirbator from 2002 
to 2003, when he left to become MOF political state 
secretary.  He moved briefly to serve as political state 
 
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secretary in the Prime Minister's Office (PMO) in October 
 
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2004, before being named as Minister of Finance last April. 
 
------------------------------------ 
MINISTRY OF SOCIAL AFFAIRS AND LABOR 
------------------------------------ 
 
¶11. (SBU) Peter Kiss from the MSZP will head the Social 
Affairs and Labor Ministry.  This organization is the fusion 
of two former ministries: The Ministry of Youth, Family, 
Social Affairs and Equal Opportunity; and the Ministry of 
Employment and Labor. The ministry retains the functions of 
the old organizations, under one minister, including 
vocational training programs, drug information programs, 
unemployment benefits and family welfare services.  Formerly, 
Kiss has served as the Head of the Prime Minister's Office 
under Medgyessy and Gyurcsany.  He was reported to be a rival 
to Gyurcsany for the Prime Ministership in 2004.  He has 
served as an MP since 1992 and was Minister of Labor in the 
Horn administration from 1995-1998.  He returned briefly to 
the Labor Ministry from 2002-2003 before taking up his 
current job in the PMO under the Medgyessy administration in 
2003, where he remained under PM Gyurcsany. 
 
--------------------------------------------- 
MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT 
--------------------------------------------- 
 
¶12. (SBU) Current MSZP Agriculture Minister Joszef Graf will 
take the Ministry of Rural Development post.  The ministry 
retains all the functions from the Agriculture Ministry and 
has an enhanced responsibility for rural development.  From 
Agriculture, Graf keeps responsibility for farming, game and 
fish management, forestry, and plant and animal sciences. 
Under his new "rural development hat," Graf is expected to 
play a key role in shaping Hungary's EU Agricultural policy, 
though the specifics of his role are not well defined now. 
Graf was the first cabinet member PM Gyurcsany announced 
would remain in his post, during the 2006 national elections, 
because of his popularity and close relationship with the PM 
(and his good handling of farmer protests).  Graf did not 
seek reelection to Parliament, where he served from 2002 to 
2006, so will serve as Minister without a parliamentary seat. 
 He is 60 years old and was a founding member of the MSZP in 
¶1989.  Graf gained popularity among farmers for protecting 
Hungary's interests regarding EU agricultural policy, and for 
promoting Hungarian products over imported "products of 
unknown origin."  A good friend of the Embassy, but not an 
English speaker, he is a pig farmer from southern Hungary. 
 
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MINISTER IN CHARGE OF THE OFFICE OF THE PRIME MINISTER 
--------------------------------------------- --------- 
 
¶13. (SBU) Gyorgy Szilvasy, a close confidant of PM Gyurcsany, 
will serve as Minister for the Prime Minister's Office.  He 
will likely deal with EU budget and fiscal allocation issues 
that are now controlled directly by the PM's office (Note- 
Responsibility for EU policy and planning, formerly a 
separate ministerial position in the PMO, now falls under the 
purview of the MFA).  Though not confirmed, numerous press 
reports indicate that oversight of Hungary's intelligence 
services will reside in the PMO.  Szilvasy's will also lead 
e-governance initiatives that make available information and 
services such as on-line tax filing.  A former business 
partner of PM Gyurcsany, Szilvasy was cabinet chief in 2005. 
He is considered a career politician and served from 2004 to 
2005 as Interior Ministry state secretary, from 2003 to 2004 
in the Ministry of Culture, from 2002 to 2003 in the Ministry 
of Sports, and from 1995 to 1998 in the Ministry of 
Environmental Protection. 
 
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COMMENT 
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¶14. (SBU) In theory, fewer ministries should make the GOH 
less unwieldy, and this down-sizing allows Budapest to set a 
good example for provincial governments that may soon face 
consolidation themselves.  Time will judge the wisdom of 
combining responsibility for law enforcement and the 
judiciary in one ministry.  Defense will, in all likelihood, 
face additional budget cuts, regardless of who is at the 
 
BUDAPEST 00001175  004.2 OF 004 
 
 
helm.  Yet all ministries will face hard choices -- as PM 
Gyurcsany announced on May 31, the 7,500 central state 
administration employees face cuts of 1,400 by year's end, 
and an additional 10 percent in 2007. 
REEKER