Hungarian Premier Appeals for Calm After Riots in Budapest

Sept. 19 (Bloomberg) -- Hungarian Prime Minister Ferenc Gyurcsany called for an end to violence as Budapest braces for a possible second night of rioting following his admission that he misled voters about spending before April elections.

Gyurcsany appealed to citizens to shun riots and not join protesters who are gathering for a third day in front of parliament. About 10,000 demonstrators yesterday hurled stones and bottles at a police cordon, set fire to cars and beat back an attempt to clear the area, injuring about 200.

``A majority of people could feel nothing else but repulsion, rejection and astonishment by what happened last night,'' Gyurcsany said. ``I ask all Hungarians to not support any illegal acts. To participate in the events as responsible citizens, not as vandals.''

Gyurcsany's Socialist Party won April elections with promises to boost social spending after the opposition Fidesz party moved ahead in pre-election polls. At the same time, the government was under growing pressure by the European Union to slash its burgeoning budget deficit, the EU's largest compared with the size of its economy, so it can adopt the euro.

The protests were sparked by an expletive-laden recording that was leaked to several media outlets on Sept. 17 in which Gyurcsany said the government lied about the economy. He later published the full text in his Internet diary. He was calling for the start of a cleansing process in Hungarian politics, he said.

`Screwed Up'

``We screwed it up, big time,'' Gyurcsany said on the leaked tape of the meeting. ``No country in Europe has been so blatant. We obviously lied throughout the past 1 1/2 to 2 years. And meanwhile, we didn't do a thing for four years. Nothing.''

Protestors said they would remain at parliament, which was cordoned off today by a ring of police officers, until the government steps down.

``We know that all politicians are liars,'' said Balint Pethes, 27, standing outside the legislature holding a Hungarian flag. ``They insulted us. That is why we are here. We are going to stay here until he resigns.''

The forint fell to 273.45 by 1:46 p.m. in Budapest from 270.71 late yesterday. Hungary's benchmark BUX stock index fell 1.34 percent. The yield on the nation's five-year bond rose 14 basis points.

The number of demonstrators increased through yesterday and the crowd moved to the nearby television building at about 10 p.m. last night, demanding airtime to broadcast their grievances. They were led by a group of soccer hooligans and political extremists, Gyurcsany said today.

Injured Police

A total of 114 policemen had been injured by the time they cleared the building of protesters at 4:30 a.m., said police spokesman Pal Nemeth. The area around TV headquarters was cordoned off this morning and is peaceful now. State television was back on the air at 5:23 a.m. this morning, four hours after breaking off.

Police have arrested eight people and ordered investigators to find people caught on taped broadcasts, said police spokeswoman Eva Tafferner. They also closed down the square in front of the television building, home to the U.S. Embassy, the central bank and the headquarters of several commercial banks.

Gyurcsany, speaking to reporters today in Budapest, said he will give police all available resources to conserve peace.

``We are past one of the longest and darkest nights of the third Hungarian republic,'' he said. ``The institution of the republic itself was under attack.''

He reiterated yesterday's pledge not to step down. He said yesterday that he can't be forced out of power unless his parliamentary majority turns against him. The Socialist Party and coalition partner, the Free Democrats' Alliance, pledged their support yesterday.

President Laszlo Solyom denounced Gyurcsany's comments on the leaked tape. He said that he had no constitutional rights to act, even after several people urged him to dissolve parliament and call new elections.

`Moral Crisis'

There's a ``moral crisis in Hungary,'' Solyom said yesterday. ``The premier's reactions only deepened that. If it becomes the norm that a good goal justifies all means, then the credibility of democracy is at stake.''

He also condemned last night's violence at a press conference today.

``These are criminal acts,'' Solyom said. ``We must stand up against them in the strictest way, and from which the state must use its whole power to protect its citizens and institutions. We have to make a clear distinction between freedom of expression, freedom of assembly and criminal acts.''

The parliamentary opposition called for Gyurcsany's resignation.

`Flood of Lies'

``Gyurcsany is part of the problem, not the solution,'' said Tibor Navracsics, the head of the Fidesz parliamentary group, on the party's Web site yesterday. ``Gyurcsany has become persona non grata in Hungarian politics. The flood of lies they told in the election campaign has been uncovered.''

Justice Minister Jozsef Petretei offered his resignation following the riots, which Gyurcsany didn't accept, government spokeswoman Emese Danks said in a phone interview.

To contact the reporter on this story: Balazs Penz in Budapest at bpenz@bloomberg.net .