Hungarian PM in Trouble After Leaking of Tape Exposing Government Lies

A leaked recording that caught Hungary's prime minister admitting the government had lied about the economy — keeping it afloat through "tricks" and relying on "divine providence" — has prompted protests outside parliament and calls for his resignation.

By nightfall, the number of protesters had grown into the thousands for a second day. The crowd was mostly peaceful — although bottles occasionally were thrown toward police dressed in riot gear — and continued to demand Socialist Prime Minister Ferenc Gyurcsany's dismissal.

A few hundred protesters marched to the nearby headquarters of state television, demanding to be allowed to proclaim their demands on a live broadcast. Police used tear gas and water cannons to repel dozens of mostly young men — many with shaved heads — who stormed the building's main entrance.

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At least two cars were set on fire outside the television headquarters and protesters kept charging the building and throwing rocks at police inside. A nearby stone memorial to Soviet troops which ousted the Nazis from Hungary at the end of World War II was also vandalized.

The tape which sparked the protests was made at a closed-door meeting in late May, weeks after Gyurcsany's government became the first in post-communist Hungary to win re-election.

It seemed to confirm the worst accusations leveled at him by the center-right opposition during the campaign — that Hungary's state budget was on the verge of collapse and that Gyurcsany and his ministers were concealing the truth in an effort to secure victory.

Adding spice to the scandal, Gyurcsany's comments were full of crude remarks and called into doubt the abilities of some of Hungary's most respected economic experts.

"We screwed up. Not a little, a lot," Gyurcsany was heard saying. "No European country has done something as boneheaded as we have."

"I almost died when for a year and a half we had to pretend we were governing. Instead, we lied morning, evening and night," he told his fellow Socialists.

The 45-year-old Gyurcsany, his party's golden boy since he was elected prime minister in late 2004, said the economy had been kept afloat only through "divine providence, the abundance of cash in the world economy and hundreds of tricks."

Confronted with initial excerpts of the 25-minute recording which Hungarian state radio put up on its Web site Sunday afternoon, Gyurcsany not only acknowledged their authenticity but seemed relieved they had been made public — leading to speculation that the leak came from sources close to him.

"It deflates pent-up tensions regarding the reforms and ... can be used to support the government's position that they are urgent and inevitable," said political analyst Zoltan Kiszelly.

Others said the leak was an attempt — which may have misfired — by Gyurcsany's Socialist rivals to block his aspirations to become party chairman.

"In the long term, I think Gyurcsany's words will have a stabilizing, cathartic effect, both politically and economically," said political commentator Laszlo Seres. "At least to his own voters, Gyurcsany can argue that he shouldn't be punished for his sincerity — that he said these things to stop the lies."

Gyurcsany appeared on two live television shows Sunday night, trying to turn the focus of the debate away from his government into a wider discussion about the failings of Hungary's political elite since the 1990 end of communism.

He also defended his foul language, saying it had been used in the context of a meeting of friends and colleagues and that he was proud of his "passionate speech."

"The real issue in Hungarian politics today is not who lied and when, but who is able to put an end to this ... who can face up to the lies and half-truths of the past 16 years," Gyurcsany wrote in the Sunday night entry of his blog, introducing a lengthy transcript of his May speech.

"The lies are the sins of the whole Hungarian political elite."

But on Monday the political mood was against Gyurcsany. Opposition parties demanded his resignation, while President Laszlo Solyom chastised the prime minister for "knowingly" jeopardizing people's faith in democracy and asked Gyurcsany to publicly recognize his error.

A timely trip to Russia on Monday to meet with President Vladimir Putin allowed Gyurcsany to briefly escape the turmoil.

Upon his return late Monday, he met with members of the Socialists' parliamentary group, who voted unanimously to back the prime minister and his program.

"I agree (with Solyom) that the strengthening of the rules of the democratic institutions and the restoration of public trust are the most important tasks," Gyurcsany said.

With nationwide municipal elections coming up Oct. 1, significant gains by the center-right opposition could weaken resolve within his party regarding the tax hikes and other austerity measures the government is counting on to balance the bloated budget.

Throughout the campaign, the government insisted Hungary's budget gap in 2006 would be around 4.7 percent of gross domestic product, only for Gyurcsany to admit upon taking office for his second term that even with spending cuts and more taxes, the gap would rise to over 10 percent of GPD.

While Sunday's leak shocked Hungarians, Gyurcsany has been making smaller admissions for months. Earlier, he admitted that to have a better chance to win last April's elections, the government covered up the true size of the state budget deficit and said a law introducing tax cuts was a mistake.

Plans to meet the economic criteria needed to adopt the euro by 2010 have also fallen by the wayside and analysts say it is unlikely the country can begin using the EU's currency before 2014.