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What next as Hungary PM says ready to step aside

  Hungarian Prime Minister Ferenc Gyurcsány said on Saturday he was ready to step aside to make way for a new government under a new prime minister to lead Hungary out of the economic crisis.

He plans to organize a “constructive vote of no confidence” in parliament.

Here are some clues to what may happen next:

GYURCSÁNY STEPS ASIDE, SELECTS HIS SUCCESSOR

After being confirmed as Socialist party chairman on Saturday, Gyurcsány initiates “constructive vote of confidence”. At least one-fifth of the 386 MPs are needed to propose a no confidence vote in parliament. Parliament then votes the incumbent out and an agreed successor in, without an election. Gyurcsány’s successor must be acceptable to the Free Democrats, who have 19 seats and whose support is needed to have parliament approve the candidate.

The Free Democrats insist on a more radical package with deeper cuts in taxes and state spending to help the ailing economy. They would only likely agree to a candidate whom they see as an effective crisis manager and who would embrace bolder spending cuts. The Socialists, polling only 16-17% support, may be reluctant to agree to deeper social spending cuts as job losses mount and trade unions plan protests, so it may be hard to find a compromise candidate.

The Socialists could seek a new alliance or coalition with the Free Democrats and the Hungarian Democratic Forum.

GYURCSÁNY RESIGNS AS PRIME MINISTER

If Gyurcsány formally resigns, the government’s mandate ends. If a new prime minister nominated by President László Sólyom is not approved by parliament within 40 days, Sólyom has the right to call new elections.

POSSIBLE CANDIDATES FOR NEW PM

GYÖRGY SURÁNYI, 55, regional head of Italy’s Intesa Sanpaolo SpA, was twice governor of the Hungarian central bank (MNB) in the 1990s. He was a co-author of the 1995 austerity package which helped Hungary cut its bloated current account and budget deficits and laid the foundations for robust economic growth. He has support within the Socialist party and its former ally, the Free Democrats, but was criticized as MNB chief under a government led by the current main opposition party Fidesz.

LAJOS BOKROS, 54, former finance minister credited with Hungary’s economic turnaround in 1995. His austerity measures included a gradual devaluation of the forint, a wage freeze, plus reforms of social benefits and speedy privatization.

Politically divisive, Bokros has recently criticized the Gyurcsány government for what he said was a lack of systemic thinking and urged deep reforms. He said on Saturday he would accept the office if asked.

JÚLIA KIRÁLY, 51, respected economist, central bank deputy governor in charge of financial stability since July 2007.

LÁSZLÓ BÉKESI, 66, respected economist, finance minister in 1989-1990 and in Gyula Horn’s Socialist-Free Democrat government in 1994. He was co-author of a radical cost-cutting reform program recently drafted by a civil group called the Reform Alliance, comprised of economists and business leaders.

PÉTER KISS, 49, head of the powerful Prime Minister’s Office. Has a reputation as a smooth operator behind the scenes, making him fit to lead the unruly Socialists. Kiss is popular among Socialists as he played a key role in the party’s birth from the ashes of the ruling Communist Party in the early 1990s.

IMRE SZEKERES, 58, deputy head of the Socialists and defense minister. A powerful party man and member of the leadership for over a decade. He has been a critic of the independent central bank.

JÓZSEF GRÁF, 62, agriculture minister since 2005. Seen as a gifted manager who pacified a formerly belligerent farm sector and helped it work within the EU. A founder of the Socialist Party in 1989, has a solid political base in southern Hungary.

GORDON BAJNAI, 41, economy minister. Nominated to a government post in June 2007 after a successful business career. Recently called for deeper economic reforms than those planned, and urged speedy entry into the euro zone. (Reuters)