VZCZCXRO6275
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #2489/01 3491152
ZNY CCCCC ZZH
P 151152Z DEC 06
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 0548
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 002489 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR/NCE MICHELLE LABONTE, PLEASE PASS TO NSC 
FOR ADAM STERLING 
 
E.O. 12958: DECL: 12/05/2011 
TAGS: PGOV KDEM HU
SUBJECT: FAMILY FEUD: COALITION DEADLOCKED IN BUDAPEST 
 
REF: BUDAPEST 2004 
 
Classified By: POL/C ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) 
 
¶1.  (C) Ambassador Foley met with Budapest Mayor Gabor 
Demszky December 6 as Demszky's SZDSZ party remained 
deadlocked with coalition partner MSZP over the appointment 
of the municipal leadership.  The conflict comes as the 
coalition clings to a one-vote majority in the municipal 
assembly following what one SZDSZ official described as 
"stunning" setbacks in the October local elections.  The 
tension has been further heightened by Mayor Demszky's very 
public refusal to accept the MSZP's Erzsebet Nemeth as one of 
his Deputy Mayors, and the MSZP's counter that they will 
nominate a person from "other parties" if Demszky does not 
relent (NOTE: Building on Demszky's promise to accept "anyone 
but Nemeth," MSZP sources have been quoted in the press 
saying they will nominate a person from a third party if 
Demszky refuses the Nemeth nomination). 
 
DYSFUNCTION JUNCTION? 
 
¶2.  (C) Although Demszky has maintained that his opposition 
is rooted in Nemeth's refusal to accept responsibility for 
supervising health care issues and her "confrontational" 
nature (an opinion the majority of the MSZP representatives 
on the city council reportedly share behind closed doors), 
talk around town suggests that Demszky's position is also 
driven by his personal conflict with Andras Bohm, an SZDSZ 
official romantically involved with Nemeth.  He told the 
Ambassador explicitly that he had long warned the MSZP that 
he would not work with Nemeth and indicated that he is even 
ready to give the MSZP more positions in return for its 
withdrawal of her nomination.  His adamant position, he 
continued, may be contrary to "political correctness" but 
remains "fully within my rights."  He noted pointedly that 
"PM Gyurcsany should understand," as Gyurcsany had similarly 
rejected Demszky's close friend Balint Magyar as Minister of 
Education. 
 
¶3.  (C) After weeks of downplaying the deadlock, party 
officials are now conceding that "there is no dysfunction yet 
... but it is on the horizon."  With the media observing that 
the dispute is "no longer a local affair," PM Gyurcsany 
continues to publicly urge the SZDSZ to accept Nemeth. 
Demszky noted to the Ambassador that "this has been the worst 
press I've gotten in years," thanks to the "MSZP's influence 
over the media," but reiterated that he is "willing to pay 
the price for my veto" and concluded that there is "light at 
the end of the tunnel." 
 
FIDESZ WAITING IN THE WINGS? 
 
¶4.  (C) With complaints about the city, and particularly its 
long-time mass transit problems, as constant background 
noise, this latest rift has made the five-time mayor look 
petty to supporters and vulnerable to opponents.  His strong 
support of Budapest Police Commissioner Gergenyei - in the 
face of strong criticism from the opposition - has also 
helped keep the story of the October violence in the news. 
We note that all of the applicants interviewed for our recent 
LES vacancy in the Political Section - all young, 
professional Budapest natives who had grown up during 
Demszky's tenure - were uniformly cynical regarding the 
Mayor, often taking municipal corruption for granted. 
 
¶5.  (C) Political scientist Zoltan Kiszelly predicts that the 
race to succeed Demszky - and to control the city's estimated 
3,000 patronage positions - is already on.  He believes the 
real competition is within FIDESZ.  Several of the party's 
most promising younger members, including Zoltan Pokorni, 
Antal Rogan, and Tamas Gabor Nagy are now district mayors in 
Budapest and are reportedly angling for the party's 
nomination in the next election. 
 
TROUBLE IN PARADISE? 
 
¶6.  (C) Though certainly compounded by the personalities 
involved, the clash in Budapest could be a symptom of broader 
troubles within the governing coalition.  The SZDSZ emerged 
as the clear loser of the October local elections (reftel), 
and both party insiders and outside observes believe the 
party paid heavily for its dogged loyalty to the coalition 
with the MSZP despite the fallout from the "Gyurcsany tape." 
Indeed, some joke that "the SZDSZ died for Gyurcsany's sins." 
 
¶7.  (C) Last rites may be premature, but retirements are not. 
 Demszky has stated that he will not run for another term, 
and Party President Gabor Kuncze will step down from his 
leadership position in the Spring.  The succession battle for 
 
BUDAPEST 00002489  002 OF 002 
 
 
the party leadership will likely pit Minister of Economy 
Janos Koka against MP Gabor Fodor.  Koka, personally close to 
Gyurcsany and already responsible for a host of high-profile 
issues including energy, may have difficulty taking on yet 
another task.  Fodor recently told poloff that within the 
party he is "stronger now than in the past" but has not yet 
decided whether or not to seek the position.  By his demeanor 
Fodor was clear that there is little love between him and 
Koka.  Demszky (among others) believes Koka's reputation as a 
"liberal ... but not socially sensitive millionaire" will be 
a disadvantage in the race, and former PM Medgyessey believes 
Koka is "still five years away from being ready for the job." 
 Fodor, a founding FIDESZ member (and one-time room-mate of 
Viktor Orban) who later broke with the party over its move to 
the right in the 1990s, is seen as an intellectual lacking 
the strong connection to the party's liberal economic 
tradition.  Nonetheless, diverse observers including Demszky 
and Orban like his chances as he is moving to the center and 
less associated with the party's "nomenklatura."  Most 
observers see the race as too close to call at this point, 
although Labor Minister Kiss spoke for many in commenting 
that "neither Koka nor Fodor is Kuncze's equal."  Kiss 
suggested that the two rivals should divide responsibility as 
party and parliamentary faction leader in order to avoid a 
drawn-out struggle. 
 
YOU ONLY HURT THE ONES YOU LOVE 
 
¶8.  (C) Such a struggle could hurt the MSZP as well.  SZDSZ 
officials have been critical of some elements of the 
government's agenda, and Koka recently became the first 
minister in Hungary's recent history not to support the 
government's position when he voted against a measure to 
revise pension regulations.  Current polling projects the 
SZDSZ as unable to meet the 5% threshold required for 
representation in Parliament in the next elections, and as 
the competition within the SZDSZ increases the candidates 
will be tempted to distance themselves not only from each 
other but also from the MSZP.  Many in the SZDSZ feel taken 
for granted by the Gyurcsany government, and careless talk 
from MSZP officials about pursuing the center-right MDF as 
its new coalition partner have only exacerbated the 
situation. 
 
¶9.  (C) Demszky believes the "strange" but long-standing 
coalition between the SZDSZ and the MSZP will remain a "fixed 
point" in Hungary's political constellation, provided the 
Gyurcsany government maintains its commitment to reform. 
Even then, there will be differences of opinion.  Demszky 
cautioned that the government will have to pay careful 
attention to "consequence management" as it moves forward on 
austerity measures in order to prevent "the people - and not 
just the hooligans" from "taking to the streets."  He also 
suggested that a majority of the party's members would look 
toward a centrist political alliance with a "moderate, 
responsible conservative party like the MDF" given their 
common anti-communist traditions. 
 
¶10.  (C) Comment: Although Kuncze tells us privately that he 
believes a face-saving compromise is possible, resolving the 
present impasse in Budapest will not solve the SZDSZ's 
longer-term dilemma.  With its traditional agenda largely 
expropriated by Gyurcsany, it is now facing a cycle of 
decline and - they hope - renewal that has been a feature of 
Hungarian political culture.  The MSZP and the MDF have been 
through similar periods, and many expect FIDESZ to confront a 
similar tipping point.  But with its last stronghold in 
Budapest reduced to the narrowest of margins and its two most 
visible leaders planning to step down, it appears to be the 
SZDSZ's turn to remake itself ... or face the consequences. 
End Comment. 
FOLEY