VZCZCXYZ0005
PP RUEHWEB

DE RUEHUP #0142/01 0561304
ZNR UUUUU ZZH
P 251304Z FEB 09
FM AMEMBASSY BUDAPEST
TO SECSTATE WASHDC PRIORITY 3910

UNCLAS BUDAPEST 000142 
 
SENSITIVE 
SIPDIS 
 
EUR/CE FOR LAMORE; H FOR DRICH; H PLEASE PASS TO REP 
LYNCH'S OFFICE 
 
E.O. 12958: N/A 
TAGS: PGOV OREP PREL EFIN OTRA HU
SUBJECT: VISIT OF CODEL LYNCH TO BUDAPEST, MARCH 2-3, 2009 
 
REF: STATE 16397 
 
¶1. (U) Embassy Budapest grants country clearance and warmly 
welcomes the visit of CODEL Lynch to Budapest from March 2 - 
3, 2009.  We look forward to your visit and would like to 
provide the following information in preparation for your 
arrival. 
 
ECONOMIC AND POLITICAL CLIMATE IN HUNGARY 
 
¶2. (SBU) The global financial crisis hit Hungary in October 
2008, when global deleveraging and investor risk aversion 
caused a "freezing up" of the government bond market and 
interbank lending.  Although Hungary's banking sector had 
little exposure to toxic assets, the government's fiscal 
mismanagement in recent years - including a budget deficit 
approaching 10 percent in 2006 - caused Hungary to be hit 
harder than many of its neighbors in Central Europe.  In 
order to help restore investor confidence and ensure the 
ability to finance its public and private debt, in November 
the Hungarian government negotiated a USD 25 billion 
stabilization loan package with the IMF, the EU and the World 
Bank. 
 
¶3. (SBU) The economic downturn in Western Europe is impacting 
the real economy in Hungary.  Hungary's open economy relies 
heavily on Western European markets as a destination for its 
exports, and the poor economic forecast in Western Europe is 
contributing to an expected 3 to 3.5 percent economic 
contraction for Hungary in 2009.  As the Government imposes 
expenditure cuts in order to meet commitments made to the IMF 
to accelerate the reduction of its budget deficit, Hungary 
cannot use fiscal stimulus to help mitigate the effects of 
the economic downturn. 
 
¶4. (SBU) Governing without a Parliamentary majority and 
consistently trailing well behind the opposition FIDESZ party 
in public opinion polls, Prime Minister Gyurcsany's 
government has worked hard to present itself as managing 
crises that they did not create.  The Government's recently 
announced reforms were viewed by many commentators as steps 
"in the right direction," but at the same time being "too 
little, too late" to address the structural issues necessary 
to restore growth and to prevent a protracted economic 
downturn.  Although most observers believe that the 
government will complete its mandate in 2010 its emphasis on 
survival make serious reforms unlikely. 
 
COUNTER TERRORISM FINANCE AND ANTI-MONEY LAUNDERING 
 
¶5. (SBU) Although focused largely on the state of the economy 
and the domestic political situation, Hungary remains a 
committed partner in the fight against terrorism financing 
and anti-money laundering.  Hungary has worked hard to 
improve its legal regime in the area of anti-money laundering 
and counter-terrorist financing to meet international 
standards.  Hungary is a member of the Council of Europe's 
MONEYVAL, and Hungary's small but active FIU has been a 
member of the Egmont Group since 1998.  Although Hungary does 
not maintain a separate domestic list of suspected terrorists 
and terrorist organizations, it fully implements the UN 1267 
Sanctions Committee and EU lists. 
 
¶6. (SBU) Bilateral cooperation in the area of law enforcement 
is excellent.  For example, for the past nine years, the FBI 
has led a unique joint organized crime task force with the 
Hungarian National Bureau of Investigation.  The task force's 
primary mission is the investigation of Eurasian organized 
crime groups with a nexus to Hungary and the United States. 
Moreover, the task force has engaged in joint investigations 
with regional partners throughout Europe, targeting organized 
crime groups, money laundering, and cyber fraud. 
 
YOUR MEETINGS IN BUDAPEST 
 
¶7. (SBU) As Finance Minister Veres is scheduled to answer 
questions before Parlament during the time of your visit, 
your delegation is expected to meet instead with Ministry of 
Foreign Affairs State Secretary Laszlo Varkonyi.  An 
extremely effective career diplomat, Varkonyi is the senior 
official at the MFA responsible for the United States and 
"extra-European Affairs" issues.  As Hungary will assume its 
presidency of the European Union during the first half of 
2011, you may consider inquiring whether Hungary has thought 
about ways to use its presidency to promote further 
cooperation in the fight against the financing of terrorism 
and money laundering. 
 
¶8. (SBU) This meeting will then be expanded to a roundtable 
discussion with experts from various ministries and offices 
responsible for combating money laundering and the financing 
of terrorism in Hungary, including representatives of the 
Ministry of Foreign Affairs, the Ministry of Finance, the 
Ministry of Justice and Law Enforcement, the Financial 
Intelligence Unit, the Financial Supervisory Authority, and 
the Office of the Prosecutor General. 
 
¶9. (SBU) We are also preparing a reception in your honor at 
the Ambassador's residence that evening, which will include 
Members of Parliament, officials from related ministries, and 
local opinion leaders. 
 
ADMINISTRATIVE DETAILS 
 
¶10. (U) The Control Officer will be Economic Officer Steven 
Weston.  Office tel: (361) 475-4295; cell: (36-30) 
251-2655; fax: (361) 475-4027; e-mail: westons@state.gov. 
The Embassy is located at Szabadsag Ter 12, District 5.  The 
Embassy's telephone number is (361)475-4400.  Control Officer 
will meet and assist upon arrival. 
 
¶11. (U) Hotel reservations have been made for the CODEL party 
at the Marriott Hotel Budapest, Apaczai Csere Janos u. 4, 
1052 Budapest, telephone number: (361) 486-5000, fax number: 
(361) 486-5005.  The room rate is Euro 117, which is 
approximately USD 153 at current rates. 
 
¶12. (U) For U.S. citizens, visas are not/not required in 
diplomatic, official, or tourist passports for stays in 
Hungary of less than 90 days.  A visa is needed in any type 
of passport for stays over 90 days. 
 
¶13. (U) There have been no acts of terrorism directed against 
U.S. interests in Hungary.  However, the U.S. Government 
remains deeply concerned about the security of U.S. citizens 
overseas. 
 
¶14. (U) Although appreciably low by U.S. standards, Budapest 
has petty thefts and pickpockets like most urban centers. 
Budapest visitors are cautioned to be wary of currency scams. 
 Routine scams include overcharging at clubs, cafes, and 
restaurants around Vaci Street (the central pedestrian area), 
fake police officers requesting to inspect the money in your 
wallet, and local ladies offering to practice their English 
language skills at a local pub with drinks which are 
outrageously overpriced.  Specific clubs and restaurants 
engaging in unethical business practices and local nightspots 
of questionable reputation should be avoided and have been 
identified in the Budapest Embassy web site, 
www.usembassy.hu.  Violent criminal acts are rare; visitors 
can best ensure their personal safety by exercising the same 
common sense security precautions and good judgment that one 
would employ in any other large, cosmopolitan area. 
 
¶15. (U) We look forward to greeting you in person on March 2. 
Foley