VZCZCXYZ0001
PP RUEHWEB

DE RUEHUP #0381/01 1461445
ZNR UUUUU ZZH
P 261445Z MAY 09
FM AMEMBASSY BUDAPEST
TO RUEHKV/AMEMBASSY KYIV PRIORITY 0164
RUEHC/SECSTATE WASHDC PRIORITY 4195
INFO RUEHSF/AMEMBASSY SOFIA PRIORITY 0811

UNCLAS BUDAPEST 000381 
 
SENSITIVE 
SIPDIS 
 
EUR/CE FOR LAMORE; H FOR LSHANE AND CAUSTIN; H PLEASE PASS 
TO REP POE'S OFFICE; EMBASSY KYIV PLEASE PASS TO CODEL POE 
 
E.O. 12958: N/A 
TAGS: PGOV OREP PREL EFIN OTRA HU
SUBJECT: SCENESETTER FOR CODEL POE TO BUDAPEST, MAY 29-30, 
2009 
 
REF: STATE 53051 
 
¶1. (U) Embassy Budapest warmly welcomes the visit of CODEL 
Poe to Budapest from May 29-30, 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 
Hungary's ability to finance its public and private debt, the 
Hungarian government in November 2008 negotiated a USD 25 
billion stabilization loan package with the IMF, the EU and 
the World Bank.  In April 2009, the Hungarian government 
re-commenced government bond auctions following a six-month 
suspension, based on improved investor confidence. 
 
¶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 6.7 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) After attempting for one year to govern without a 
Parliamentary majority and consistently trailing the 
opposition FIDESZ party in public opinion polls, Socialist 
Prime Minister Gyurcsany resigned in April 2009 and was 
replaced by Prime Minister Bajnai.  An unaffiliated 
technocrat who had previously served as Minister of 
Development and Economy, Bajnai promised a "government of 
experts" with a one-year mandate to deal with the country's 
economic crisis.  Critics, however, note that members of 
Gyurcsany's political circle still occupy a number of top 
jobs, while the government relies on the support of the 
Socialists and the free-market oriented Free Democrats to 
pass its agenda. 
 
¶5. (SBU) In the coming months, PM Bajnai will attempt to 
muster political support for his USD 4.6 billion economic 
recovery plan, which involves substantial cuts to social 
welfare programs, ministry budgets, and public sector 
workers' benefits.  The plan also includes shifting the tax 
burden away from labor to wealth and consumption.  Analysts 
are cautiously optimistic, noting that if Bajnai is able to 
successfully implement the plan, it will enable Hungary to 
reduce its budget deficit and improve its competitiveness. 
Bajnai faces an uphill battle, however, as FIDESZ and public 
sector labor unions strongly oppose key elements of the plan, 
while the Socialists will probably be increasingly reluctant 
to vote for measures that negatively impact their core 
constituents as 2010 elections approach. 
¶6. (SBU) The campaign for the European Parliament is 
currently underway with elections scheduled for June 7. 
FIDESZ is attempting to cast the election as a referendum on 
the Socialist government.  The Socialists--almost certain to 
do poorly--are attempting to downplay the significance of the 
election.  A disturbing element in this election is the 
presence of Jobbik, a far-right party espousing a divisive 
mix of anti-Roma, anti-Semitic, and anti-globalization 
ideology.  Polling indicates Jobbik may garner the necessary 
5 percent to enter the European Parliament. 
 
COOPERATION ON DEFENSE, COUNTER-TERRORISM, AND LAW ENFORCEMENT 
 
¶7. (SBU) Although focused largely on the state of the economy 
and the domestic political situation, Hungary is a regular 
contributor to NATO missions in the Balkans, Afghanistan, and 
Iraq.  Hungary has committed to keep 1,000 troops abroad 
serving in various alliance and coalition (NATO, EU, OSCE, 
UN) missions, the third largest contingent as a proportion of 
force strength, behind the U.S. and the UK.  Hungarian 
soldiers currently participate in 21 missions outside of 
Hungary, half of whom are in the Balkans.  Hungary has led a 
Provisional Reconstruction Team in northern Afghanistan since 
 
2007, assumed control of Kabul International Airport last 
fall, and will send a 40-man infantry platoon to support 
Afghan elections in August.  In January 2009, Hungary and the 
Ohio National Guard deployed a Hungarian-led combined 
infantry Operational Mentoring and Liaison Team to train an 
Afghan National Army battalion.  Hungary also maintains a 
small presence in Iraq, with three soldiers on the ground 
training Iraqi staff officers under NATO Training 
Mission-Iraq.  Defense spending, however, remains well below 
the NATO target of 2 percent of GDP as public spending under 
Hungary's strained government budget tends to focus on social 
welfare and infrastructure development. 
 
¶8. (SBU) NATO's Strategic Airlift Capability C-17 Consortium 
is preparing to base its operations at Papa Air Base in 
Western Hungary.  The U.S. presence will include 60 Air Force 
personnel and 90 U.S. contractors.  Boeing will conduct all 
maintenance on the three aircraft to be based at Papa.  The 
first C-17 is slated to arrive in July. 
 
¶9. (SBU) Hungary remains a committed partner in the fight 
against terrorism and has worked hard to bring its legal 
regime concerning counter-terrorist financing up to 
international standards.  Hungary is a member of the Council 
of Europe's MONEYVAL, and Hungary's small but active 
Financial Intelligence Unit 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. 
 
¶10. (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. 
 
¶11. (SBU) The International Law Enforcement Academy (ILEA) in 
Budapest was established in 1995 as part of an international 
network of law enforcement academies intended to combat 
international drug trafficking, criminality, and terrorism 
through strengthened international cooperation.  ILEA 
Budapest is supported by the Hungarian Ministry of Justice 
and Law Enforcement, the U.S. Department of State, U.S. law 
enforcement agencies, as well as law enforcement agencies 
from throughout Western and Central Europe.  ILEA Budapest 
provides a core eight-week course as well as shorter courses 
for mid-level officers from 27 Central and East European and 
Central Asian countries.  The majority of the instructors are 
active officers of U.S. federal law enforcement agencies. 
Over the past 14 years, training has been conducted in more 
than 16 languages to over 13,000 police officers. 
 
YOUR MEETINGS IN BUDAPEST 
 
¶12. (SBU) On Saturday, May 30, your day will begin with a 
briefing by key members of the country team, led by Charge 
d'Affaires Levine.  The briefing will cover essential 
elements of Hungary's political and economic situation as 
well as aspects of our cooperation with Hungary on defense 
and counter-terrorism. 
 
¶13. (SBU) Following the briefing, you will meet at our 
Embassy with Ambassador Karoly Banai, State Secretary for 
Foreign and Security Policy in the Prime Minister's Office 
and a rough equivalent of our National Security Advisor.  An 
extremely effective career diplomat, Banai is the senior 
official in the PMO responsible for defense and security 
policy and is a valuable interlocutor to the Embassy on a 
range of issues beyond his foreign and security policy 
portfolio, including domestic economic reforms and energy 
security.  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 terrorism and support for NATO's operation in 
Afghanistan. 
 
¶14. (SBU) We are working to arrange a meeting with an 
appropriate official from the Ministry of Defense. 
 
¶15. (SBU) After meeting with Hungarian officials, we have 
 
arranged for you to visit ILEA Budapest, where ILEA Director 
Penny Hoback will guide you on a tour of the facility and 
provide additional detail on U.S.-Hungarian cooperation in 
law enforcement and counter-terrorism. 
 
¶16. (SBU) When you return to your hotel, you will meet Peter 
Dunai, a journalist from Nepszabadsag, Hungary's largest 
circulation newspaper, for a short interview. 
 
ADMINISTRATIVE DETAILS 
 
¶17. (U) The Control Officer will be Economic Officer Jeff 
Jordan.  Office tel: ( 361) 475-4226; cell: ( 36-30) 
274-4180; fax: ( 361) 475-4027; e-mail: jordanjm@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. 
 
¶18. (SBU) Hotel reservations have been made for the CODEL 
party at the Hotel Intercontinental Budapest, Apaczai Csere 
Janos u. 12-14, 1052 Budapest, telephone number: ( 361) 
327-6355, fax number: ( 361) 327-6655.  The room rate is USD 
153, including taxes, service and breakfast. 
 
¶19. (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. 
 
¶20. (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. 
 
¶21. (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 on 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. 
 
¶22. (U) We look forward to greeting you in person on May 29. 
Levine