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Friday, October 06, 2006

Hungarian PM wins key vote, protesters gather

BUDAPEST (Reuters) - Hungarian Prime Minister Ferenc Gyurcsany convincingly won a confidence motion in parliament on Friday but a crowd of over 50,000 opposition supporters gathered in front of the building to demand he quit.

Gyurcsany, who secured the votes of 207 MPs with 165 against, had told parliament he would not bow to opposition "blackmail" and vowed to stick to his tough economic program.

Protesters from the opposition Fidesz party, many waving the Hungarian flag, rallied in front of the neo-gothic parliament to the sound of folk music, to demand he resign for lying to voters about the economy to win April's election.

Analysts said that despite rallies planned until the Oct 23 anniversary of Hungary's failed uprising against Soviet rule, the opposition would not be able to oust the government.

Earlier in parliament, Gyurcsany said he would carry out plans to slash Hungary's budget deficit, the biggest in the European Union, by 2009, reducing the risk of a market crisis and bringing the country closer to euro membership.

"I call on parliament not to give in to threats and street blackmail organized by the opposition," he said in a speech before the confidence vote, the first since democracy was restored in Hungary in 1990 after decades of communist rule.

Gyurcsany once again apologized for the tone of his leaked comments, on a profanity-ridden tape, at a meeting with Socialist MPs in May, and for not being brave enough to tell the truth in the election campaign.

"We must stick to this program ... balance is needed, reforms are needed and development is needed for this country," he told parliament on Friday.


Gyurcsany and his Socialist-led government campaigned on tax cuts but, after retaining power, introduced big tax rises to reduce a budget deficit which has ballooned to 10.1 percent of gross domestic product under Socialist rule since 2002.

The budget deficit target for 2006 was 4.7 percent of GDP, using European Union accounting methodology and despite the overshoots under the Socialists, investors believe Gyurcsany offers the only chance of tackling overspending.

The forint rallied to 272.55 to the euro from 273.70 prior to the vote as it seemed he had come away from the vote with a stronger hand.

"Gyurcsany's position has strengthened as (opposition leader Viktor) Orban has to gone to the limits of constitutional means. It is the next parliamentary election which can overwrite the outcome of a parliamentary election," said Zoltan Lakner of Vision Consulting.

The main opposition Fidesz party said the prime minister had not allowed people to vote in April based on the facts and this was shown by the tape, leaked on September 17, in which he said "we lied in the morning, we lied in the evening" about the economy.

That tape and tax rises and subsidy cuts have caused almost three weeks of protests outside parliament.

"You lied in the election campaign, you based your election campaign on lies," Fidesz parliament group leader Tibor Navracsics said.

Demonstrators said they would not give up after the vote.

"I think Gyurcsany is wrong in expecting the people to give up, we have to stick together," said Miklos Nemeth, aged 71, calling the prime minister "ruthless" and "self obsessed".
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