building after Prime Minister Peter Medgyessy refused to resign despite his admittance that he served the feared Communist secret Service.

The revelations, which shocked former persecuted Christians and dissidents, have lead to Hungary’s most serious political crisis in recent memory, analysts said.

However Medgyessy told a meeting of his Socialist Party he "always worked in the interests of Hungary." He told his supporters on Thursday, June 20, that as a counter intelligence officer between 1977 and 1982 he tried to edge Hungary away from the Soviet Union by preparing the country to join the International Monetary Fund secretly in 1982.

RUSSIAN KGB

Medgyessy stressed that during this period he had tried to prevent foreign spies, including the Russian KGB, from stopping Hungary’s integration into the Western world. He strongly denied reports that he also monitored anti-government activity in Hungary’s finance ministry and at two state financial institutions in the late seventies.

The prime minister said he saw therefore no reason to resign, and stressed that he wants to serve his entire four year term. He also was expected to present a draft law to Parliament to publish the names all people who worked for the dreaded secret police known as the III/III Department of the Interior Ministry.

"Hungary deserves more quietness and prosperity," he said adding that his Socialist led cabinet wanted to provide "stability and the rule of law," to Hungary. He announced his decision to stay on as prime minister after talks throughout the week between his Socialist Party and the Alliance of Free Democrats.

FORMER DISSIDENTS

Many Free Democrats are former dissidents and some were tortured by secret police agents and even sentenced to death before receiving an amnesty for their role in the 1956 anti-Soviet revolution.

But the Free Democrats leader, Gabor Kuncze, said it is "common knowledge" that former secret service staff members are still working in public life and that it is time to look towards the future.

However opposition supporters told BosNewsLife that they have called for a week of demonstrations in front of the spectacular parliament building overlooking the Danube river.

COMMUNIST LEADERSHIP

"He was in the leadership of the Communist party in the past. And he was in the secret police. That’s why I think he has to leave, because it is not a democratic thing, his past," said 27 year old demonstrator Kristian, who refused to give his surname.

Another demonstrator, 34 year old Imre Kocsis agree. Kocsis, who leads the ‘Conscience ’88’ activist group, is among those on a seven day hunger strike. "The recent Parliamentary elections (in April) were marked by fraud and cheating," he explained. "However the responsible officials refused to investigate the hundreds of complaints."

Some Western officials and analysts say that the political turmoil could undermine foreign investments in Hungary and overshadow its negotiations about possible European Union membership in 2004.

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