VZCZCXYZ0002
PP RUEHWEB

DE RUEHUP #0855/01 3351058
ZNY CCCCC ZZH
P 011058Z DEC 09
FM AMEMBASSY BUDAPEST
TO RUEHC/SECSTATE WASHDC PRIORITY 4707
INFO RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY

C O N F I D E N T I A L BUDAPEST 000855 
 
SIPDIS 
 
DEPARTMENT FOR EUR/CE JAMIE MOORE. PLEASE PASS TO JEFF 
HOVENIER AT THE NSC 
 
E.O. 12958: DECL: 11/29/2014 
TAGS: PGOV PREL NATO ENGR AF HU
SUBJECT: DAS QUANRUD'S VISIT TO BUDAPEST 
 
REF: A. BUDAPEST 847 
     ¶B. BUDAPEST 845 
     ¶C. STATE 120288 
 
Classified By: Political Officer Jon Martinson, reasons 1.4 (b,d) 
 
¶1. (SBU) Summary.  During a November 24-25 visit to Budapest, 
EUR DAS Pamela Quanrud met with the Prime Minister, other 
senior Hungarian government officials, the opposition party's 
senior foreign policy expert, and media representatives to 
discuss USG priority issues.  The Prime Minister indicated 
that he hoped to raise in his December 4 meeting with the 
Vice-President: Hungarian support in Afghanistan; current 
budgetary challenges; energy security, and regional issues. 
The MFA's Political Director presented a "food for thought" 
proposal to strengthen the Visegrad Four-U.S. relationship, 
and the former, and likely-to-be, future Fidesz Foreign 
Minister outlined an outward-looking foreign policy if Fidesz 
wins the election in 2010.  End Summary. 
 
--------------------------------- 
PRIME MINISTER'S DECEMBER 4 VISIT 
--------------------------------- 
 
¶2. (C) Prime Minister Bajnai told DAS Quanrud that he looks 
forward to his December 4 meeting with the Vice-President, 
where he will underscore the "value-based," pro transatlantic 
policies of his administration (ref A).  The PM mentioned 
that he planned to raise the following areas for discussion: 
continuing Hungarian support for operations in Afghanistan; 
Hungarian acceptance of a Guantanamo detainee; the steps his 
government has taken in response to the economic crisis that 
called for enormous sacrifice of the Hungarian people; the 
Western Balkans; energy; and plans to meet with President 
Putin in the near future to discuss areas of disagreement. 
Bajnai specifically mentioned to DAS Quanrud that, if 
possible, a positive statement from the Vice-President's 
office on the measures taken by the Bajnai government to 
address the economic crisis 'would be helpful." 
 
 
----------- 
AFGHANISTAN 
----------- 
 
¶3. (C) In DAS Quanrud's meeting with Prime Minister Bajnai 
(underscored in separate meetings with the PM's Foreign 
Policy Advisor, MOD and MFA interlocutors) Bajnai said that 
Hungary is waiting for the President's announcement on Afghan 
strategy and is ready to be as positive as possible, but the 
primary factor in determining the level of support will be 
the current economic crisis.  MOD State Secretary Jozsef Bali 
reiterated his concerns expressed to the Charge November 24 
(ref B), that Hungary will be hard pressed to increase its 
Afghan troop levels over the projected 450 in 2010. 
 
¶4. (C) Addressing the issue of caveats, DAS Quanrud said that 
more needs to be done and allies need to step up.  She asked 
the Hungarians to seriously consider removing caveats on 
their PRT and OMLT in Baghlan Province.  Responding, Bali 
noted that, first and foremost, the question of caveats is a 
political issue, but there are also technical issues related 
to equipping Hungarian soldiers that would have to be 
addressed as well.  MFA State Secretary and Political 
Director Gabor Iklody separately reconfirmed the strong 
Hungarian political support for operations in Afghanistan, 
commenting that Hungary looks forward to the President's 
Afghan strategy in order to determine how it can best respond 
and restructure its military and civilian presence in 
Afghanistan. 
 
------------------------------------------ 
ECONOMY - THE FIRE IS OUT; TIME TO REBUILD 
------------------------------------------ 
 
¶5. (C) Assessing Hungary's current economic situation, 
Hungarian National Bank Governor Andras Simor told DAS 
Quanrud that as a result of the reforms undertaken by the 
Bajnai government, "the fire has been extinguished," but 
added that "now the house must be rebuilt."  Given Hungary's 
reliance on economic recovery in Germany and elsewhere in 
Western Europe to boost Hungarian exports, Simor predicts 
that "Hungary will be slower to emerge from the economic 
crisis than most of its neighbors."  That said, he noted that 
structural reforms enacted since the crisis have put the 
country on a more sustainable economic path, and could have 
Hungary achieving growth rates of three to four percent by 
¶2011.  For this reason, he agreed that Fidesz, the likely 
winner of next April's national elections, will be the 
primary beneficiary of the Bajnai government's reforms. 
Despite growing rhetoric from Fidesz leaders that Simor 
describes as "not very encouraging," Simor told DAS Quanrud 
he remains "cautiously optimistic" that the macroeconomic 
policy of a Fidesz government will not differ radically from 
that of the current government. 
 
¶6. (C) Regarding euro adoption, both Simor and Finance 
Ministry State Secretary Almos Kovacs agree that the 
government's continued fiscal consolidation in response to 
the economic crisis is helping Hungary move closer to meeting 
the Maastrict criteria.  Given Hungary's history of setting 
and then missing euro adoption target dates, however, Kovacs 
noted that the government will not set a specific target date 
until Hungary is close to meeting ERM-II requirements.  Simor 
speculated that if the next government focuses on euro 
adoption as a priority, Hungary could join the Eurozone by 
¶2014. 
 
------------------------------ 
ENERGY - BETTER THAN LAST YEAR 
------------------------------ 
 
¶7. (C) The Prime Minister's Security and Foreign Policy 
Advisor, David Koranyi, told DAS Quanrud that Hungary is in a 
better position than last year to face any potential gas 
shut-off from the Ukraine.  Although Koranyi doubted that 
Russia would shut off gas supplies to the Ukraine before 
national elections, which in his view would "hurt pro-Russia 
candidates," Koranyi said that Hungary currently has a 70 day 
reserve and "we are much better off than last year."  He 
stated that Hungary is also ready to help Serbia through any 
potential gas shutoff shortage, commenting that Prime Minster 
Tadics was in Budapest two weeks ago and the GOH promised to 
arrange a contractual agreement for such support.  However, 
Koranyi raised concerns about Bulgaria's and Bosnia's ability 
to weather a winter gas cutoff and the need for a broader 
regional approach to address concerns. 
 
¶8. (C) As such, Koranyi said that Hungary will continue its 
proactive engagement on energy issues in the region, 
planning, as the current Visegrad Four (V-4) President, an 
energy conference for January 2010.  He said that the V-4 
will also invite Croatia and Slovenia to participate.  DAS 
Quanrud suggested that the group also invite Bulgaria and 
Romania, and expressed support if the V-4 requested USG 
representation.  During a luncheon with representatives from 
the four major political parties, Janos Koka, the Free 
Democrats' faction leader who heads Parliament's Nabucco 
Committee, told DAS Quanrud that he is working within the V-4 
structure to establish an international Nabucco Board, and 
encouraged U.S. participation. 
 
------------------ 
V-4/U.S. RELATIONS 
------------------ 
 
¶9. (C) In his meeting with DAS Quanrud, MFA Political 
Director Iklody presented a "food for thought" proposal to 
strengthen V-4-U.S. relations.  The proposal contains three 
basic focus areas: high level contacts to include meetings 
between the V-4 Foreign Ministers and the Secretary; yearly 
structured political dialogue at the Political Directors 
level modeled on the U.S. Baltic and Nordic countries 
meetings; and closer thematic cooperation in such areas as 
the Western Balkans, the Eastern Neighborhood, the new NATO 
strategy, energy security, and seminars and conferences on 
the advancement of V-4-U.S. relations. 
 
------------------- 
OPPOSITION THOUGHTS 
------------------- 
 
¶10. (C) DAS Quanrud also met with former Foreign Minister 
Janos Martonyi, who is expected to again serve in that 
capacity in the anticipated Fidesz-led government in 2010. 
Thanked by the DAS for Fidesz's quiet support to accept a 
Guantanamo detainee, Martonyi said it was the right thing to 
do, although he did not know why some in the party were not 
supportive.  Turning to broader issues, Martonyi said that 
Hungary's transatlantic relationship is maturing and now is 
time, 20 years after the political transition, for the 
country to look outward, specifically mentioning assisting 
the Balkans in their integration efforts.  He also suggested 
that Hungary needs to strengthen regional "north-south" 
connectivity in energy, transportation, and politically, with 
the V-4 providing a stronger voice for central European 
countries in the EU - a voice with which France and Germany 
"have a problem."   He expressed strong support for Turkey's 
integration in the EU, but doubts that it will happen any 
time soon.  On Russia, Martonyi said that, while there will 
be commercial relations with emphasis on transparent 
investments, Fidesz has redlines concerning foreign policy 
and intervention in internal political affairs. 
 
¶11. (U) DAS Quanrud cleared this cable. 
LEVINE