VZCZCXRO6380
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #2531/01 3630942
ZNY CCCCC ZZH
P 290942Z DEC 06
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 0583
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 002531 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PLEASE PASS TO NSC FOR ADAM STERLING 
 
E.O. 12958: DECL: 12/28/2011 
TAGS: PGOV KDEM HU
SUBJECT: ANNO HORRIBILIS: HUNGARY ENDS 2006 WITH RELIEF BUT 
ENTERS 2007 WITH TREPIDATION 
 
REF: A) BUDAPEST 2161 B) BUDAPEST 2505 C) BUDAPEST 2517 
 
Classified By: POL/C ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) 
 
¶1.  (C) Summary: Winter has imposed a temporary cease-fire in 
Hungary's running political battles, allowing the parties to 
regroup in preparation for what all anticipate will be a busy 
year ahead.  Prime Minister Gyurcsany is using the winter 
months to reach out to the opposition and to shore up his 
position within the MSZP before the full economic impact of 
the austerity measures hits home.  Allies as well as 
opponents expect FIDESZ to return to the disruptive tactics 
of the past months in the New Year.   Both the junior 
coalition partner SZDSZ and the center-right MDF will face 
hard questions about their ability to survive in an 
atmosphere dominated by the major parties, and all the 
parties will have to confront a public that is increasingly 
inclined to consider all politicians as part of the problem. 
End Summary. 
 
A SERIES OF UNFORTUNATE EVENTS 
 
¶2.  (C) The ruling MSZP will not miss 2006.  Despite PM 
Gyurcsany's solid victory in the April elections, the events 
of the autumn took a significant toll on the government's 
credibility.  The PM is betting that time will heal these 
wounds by allowing his austerity measures to work, but most 
in the party recognize that things will likely get worse 
economically - and hence politically - before they get 
better. 
 
¶3.  (C) Professing confidence that he will "win back whatever 
support we lose," Gyurcsany is moving forward on his reform 
agenda with renewed - if not completely restored - confidence 
(ref a).  He has been careful to offer the opposition the 
opportunity to discuss - but not derail - issues including 
the allocation of EU development funds.  If this has not won 
him the moral high ground, it has at least helped level the 
playing field. 
 
¶4.  (C) Gyurcsany is also reportedly using the winter months 
to consider internal reforms (ref b).  After repeated 
indications of dissatisfaction with his government's 
staffing, structure, and communications strategy, observers 
now predict changes in the cabinet in the spring.  As one 
party official noted, "there has been enough time for some 
cabinet ministers to demonstrate their incompetence." 
 
¶5.  (C) The PM has made his survival a strength, and now 
seems poised to win the MSZP presidency in the spring. 
Although continued grumbling from the party's more 
traditional elements is expected, most see no better 
alternative to Gyurcsany.  Indeed, some see the advantage of 
letting him take the heat for now ... and perhaps take the 
fall before the next elections. 
 
2010 ALREADY? 
 
¶6.  (C) The next elections are already looming large for the 
MSZP's junior coalition partner, the SZDSZ.  In many ways, 
the past months have been the hardest on the SZDSZ, with the 
October local elections bringing significant setbacks.  2007 
will likely see the party debating its future direction and 
preparing to fight for its future survival in Parliament in 
the elections of 2010 (ref c). 
 
NOTHING SUCCEEDS LIKE ... FAILURE? 
 
¶7.  (C) The government has been fortunate in its opposition. 
FIDESZ proved unable to translate its significant successes 
in the October local elections into a decisive victory, and 
has now failed to defeat Gyurcsany as a weak candidate or a 
wounded Prime Minister.  Few doubt, however, that it will 
continue its tactics to disrupt his governing agenda, 
particularly after party president Viktor Orban's recent 
advice to the party faithful to "rest up" for a busy spring. 
Some other party leaders believe that "Orban knows no other 
way," and friends and foes expect renewed efforts to bring 
the people to the streets in the spring even though such 
tactics have provided more heat than light in the past 
months. 
 
¶8.  (C) Although its new influence at the local level should 
be a source of new blood - and is already reportedly a source 
of income for FIDESZ's depleted electoral coffers - Orban 
appears intent on maintaining his personal control over both 
policy and personnel decisions.  Given Orban's recent record, 
that may be worse news for Hungary than for Gyurcsany. 
Indeed, MSZP MP Vilmos Szabo confided to us that FIDESZ's 
victories at the local level will make it easier for the 
 
BUDAPEST 00002531  002 OF 002 
 
 
Prime Minister to do what he has wanted to do all along: 
reduce the public sector by consolidating government services 
at the regional level. 
 
LONELY IN THE MIDDLE 
 
¶9.  (C) The small center-right MDF continues to cling to its 
independence by opposing both the government and FIDESZ, but 
has little realistic prospect of realizing its moderate 
agenda in 2007.  Although the MDF would likely win an 
election within the diplomatic community, their public appeal 
is still very much in question.  The recent publication of an 
internal strategy paper widely criticized as amateurish hurt 
the party, and one political scientist who advises the MDF 
admits to wondering "whether there's any there there." 
 
PUBLIC MOOD: THE SAME ... ONLY MORE SO 
 
¶10.  (C) Comment: Although the MDF hopes to attract voters 
from both sides of the spectrum in the longer term, polls 
show that Hungarians are less inclined to turn to a new party 
than to simply turn away from politics altogether.  The 
events of 2006 have done little to overcome the reflexive 
pessimism of the Hungarian public, which saw its suspicions 
regarding the system seemingly confirmed by lies at the top 
and violence in the streets.  The public debate has focused 
less on the future than on the past, with heavy emphasis 
placed on the legacy of 1956 and the "lost victory" of 1989 
rather than the challenges of the 21st century.  As one local 
commentator noted, Hungary's entry to the European Union has 
made it less united in its national priorities and less 
European in its political norms.  Both trends are likely to 
continue in 2007.  End Comment. 
 
 
 
FOLEY