VZCZCXRO0240
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHUP #0069/01 0171423
ZNY CCCCC ZZH
P 171423Z JAN 07
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 0637
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BUDAPEST 000069 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PLEASE PASS TO NSC FOR ADAM STERLING 
 
E.O. 12958: DECL: 01/07/2017 
TAGS: PREL RU HU PGOV ECON
SUBJECT: COLD COMFORT: POLITICAL DEBATE HIGHLIGHTS 
HUNGARY'S AMBIVALENT DEPENDENCE ON RUSSIA 
 
Classified By: POL/C ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D) 
 
¶1.  (C) The shut-off of the oil pipeline from Russia and 
renewed sparring between the Gyurcsany government and the 
opposition have placed Hungary's ambivalent relationship with 
Moscow at center stage as the government returns from its 
holiday break. 
 
"THE MERRIEST BARRACKS IN GAZPROM" 
 
¶2.  (U) In a lengthy interview published in the weekly Magyar 
Demokrata January 4 (during a long vacation that has made him 
all but incommunicado), FIDESZ leader Viktor Orban reviewed a 
host of issues (septel).  In a rare foray into foreign 
affairs, Orban denounced the Gyurcsany government's Russia 
policy, charging that Gyurcsany's pursuit of "separate pacts" 
with Russia risk turning Hungary into the "merriest barracks 
in GAZPROM."  (Note: This is particularly evocative phrase 
which raises the specter of Communist times, when Hungary was 
often referred to as "the merriest barracks in the Warsaw 
Pact.  End Note.) 
 
¶3.  (C) FM Goncz's immediate public response cast the 
government's policy in the context of its "strategic 
priority" of energy security, but was in turn rebutted by 
Parliamentary Foreign Affairs Committee Chair Zsolt Nemeth 
(FIDESZ), who criticized the government for breaking with EU 
solidarity and maintained that his objections to GAZPROM are 
based not on nationality but on a lack of transparency and 
reliability. 
 
¶4.  (C) The GoH found itself further undercut by Russia's 
suspension of the pipeline flow January 8.  Scrambling to 
react, the MFA convoked both the Russian ambassador and the 
Belorussian CDA, requesting responses from their capitals 
within 24 hours.  With Minister of Economy Koka serving as 
the principal public spokesperson, the GoH authorized release 
of supplies from Hungary's national reserves and, in a move 
seemingly designed to project confidence, announced plans to 
move forward with a previously planned price reduction 
(Budapest Daily January 9). 
 
OIL ON THE FLAMES 
 
¶5.  (C) The debate is a rare substantive exchange over 
foreign policy, made rarer still in that both sides can claim 
to be the realists.  The Gyurcsany government rationalizes 
that it is recognizing - and trying to reduce - Hungary's 
unwelcome but obvious dependence on Russian energy.  For its 
part, the opposition can cast the government's policy as 
appeasement (and ineffective appeasement at that) by casting 
justifiable doubts on a "special" relationship with Moscow. 
 
¶6.  (C) Orban's attack on the Russian front is consistent 
with his running campaign against the Gyurcsany government. 
Although Orban still has work to do in restoring his own 
transatlantic bona fides and explaining his frequently 
alarmist attitude toward foreign corporations, few Hungarians 
doubt his anti-Russian credentials.  As always, many FIDESZ 
members will follow wherever Orban leads, even when he has 
few practical alternatives to offer. 
 
¶7.  (C) On this issue, however, others may follow as well. 
At a minimum, they are listening.  Orban has shrewdly 
assessed the government's vulnerability on this issue.  His 
GAZPROM sound bite has deep resonance, and despite increased 
exports to Russia, many Hungarians feel Gyurcsany is simply 
"too close to Moscow."  The Prime Minister's pre-election 
invitation to Putin and his September visit to Sochi 
disturbed even moderates who understand the economic 
realities, and some see Gyurcsany going so far in his 
relationship with Putin that he risks making a vice of a 
necessity. 
 
GUILT BY ASSOCIATION ... AND BY INACTION? 
 
¶8.  (C) FIDESZ's attempts to link Gyurcsany and Putin further 
their goal of tarring the Prime Minister by association. 
Their rhetoric increasingly portrays the PM as kleptocrat who 
took advantage of the transition to make his fortune ... and 
is now taking advantage of his fortune to cement his power. 
 
¶9.  (C) This is an uncomfortable charge for Gyurcsany, who 
has long been hounded by the perception of ill-gotten gains. 
It is also a charge even his practiced outline of present and 
planned steps to reduce Hungary's energy dependence cannot 
completely refute.  Although Hungary may not have any 
immediate alternatives to Russian energy, nor has it made 
significant progress on diversification since last winter's 
cut-off.  With senior officials now admitting to "consistent 
 
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threats from Moscow," the PM's private assurances that he has 
"no illusions" regarding Russia remain subject to question - 
even, reportedly, within his own cabinet.  FM Goncz has 
apparently advised the PM that Russian behavior has been 
"unacceptable," and others in the MFA are awakening to the 
realization that diversification is "not a question of 
opinion about Russia" but a matter of "economic necessity." 
Gyurcsany may well have to answer more questions on this 
issue in the coming weeks, diverting attention from his 
planned focus on domestic reform. 
 
WE TOLD YOU SO ... BUT WE CAN'T TELL YOU HOW TO FIX IT 
 
¶10.  (C) Comment: By highlighting Hungary's relationship with 
Russia, FIDESZ is also making a rare (and welcome) policy 
argument.  Although the brief cut-off underscored their point 
about the perils of exclusive dependence on Russia, FIDESZ 
has diagnosed the problem without offering realistic 
prescriptions.  Nemeth, for example, has expressed his desire 
to find a solution ... but ruled out any bilateral course of 
action.  This makes for better politics than policy. 
Although many of our contacts have informally expressed 
concern over their perceptions of growing Russian investment 
- and influence - in Hungary, their idea of a solution is too 
often limited to asking "why doesn't America do something 
about it?"  It would be unfortunate if the opposition views a 
chance to engage in a substantive and important debate as 
merely another target of opportunity in its political 
campaign.  It will be irresponsible if the government does 
not take this second warning seriously and redouble its 
efforts to address Hungary's energy security priorities. 
End Comment. 
 
 
 
FOLEY