area handbook series

Hungary

a country study



Hungary

a country study

Federal Research Division

Library of Congress

Edited by

Stephen R. Burant Research Completed

September 1989
On the cover: Esztergom, 1916

Second Edition, 1990; First Printing, 1990.

Library of Congress Cataloging-in-Publication Data

Hungary: A Country Study.

Area Handbook Series, DA Pam 550-165

"Research completed September 1989."

Bibliography: pp. 275-301.

Includes index.

Supt. of Docs. no. : D 101.22:550-165/991

1. Hungary I. Burant, Stephen R., 1954- . II. Keefe, Eugene

K. Area Handbook for Hungary. III. Library of Congress. Federal

Research Division. IV. Series. V. Series: Area Handbook Series: DA Pam 550-165.

DB906.H86 1990 943.9—dc20 90-6426 CIP

Headquarters, Department of the Army

DA Pam 550-165

For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
Foreword

This volume is one in a continuing series of books now being

prepared by the Federal Research Division of the Library of Congress under the Country Studies—Area Handbook Program. The

last page of this book lists the other published studies.

Most books in the series deal with a particular foreign country,

describing and analyzing its political, economic, social, and national

security systems and institutions, and examining the interrelationships of those systems and the ways they are shaped by cultural

factors. Each study is written by a multidisciplinary team of social

scientists. The authors seek to provide a basic understanding of

the observed society, striving for a dynamic rather than a static portrayal. Particular attention is devoted to the people who make

up the society, their origins, dominant beliefs and values, their com- mon interests and the issues on which they are divided, the nature

and extent of their involvement with national institutions, and their

attitudes toward each other and toward their social system and

political order.

The books represent the analysis of the authors and should not

be construed as an expression of an official United States government position, policy, or decision. The authors have sought to adhere to accepted standards of scholarly objectivity. Corrections,

additions, and suggestions for changes from readers will be welcomed for use in future editions.

Louis R. Mortimer

Acting Chief

Federal Research Division

Library of Congress

Washington, D.C. 20540

111

Acknowledgments

The authors wish to express their appreciation to a number of

people who assisted in the preparation of this study. Paul Marer

of Indiana University furnished his considerable expertise on the

Hungarian economy. Thanks go to Sharon Schwartz, who edited

the chapters, and to Cissie Coy, who performed the final pre- publication review. The index was prepared by Shirley Kessell.

Malinda B. Neale of the Library of Congress Composing Unit pre- pared the camera-ready copy under the supervision of Peggy Pixley.

A number of members of the Federal Research Division of the

Library of Congress made significant contributions to the preparation of this book. Special thanks are owed to Richard F. Nyrop,

who supplied help and suggestions on chapters 1 through 4, and

to Sandra W. Meditz, who reviewed Chapter 5. The authors are

also grateful to Raymond E. Zickel, who assisted in research and

writing. Martha E. Hopkins ably oversaw editing, and Marilyn

Majeska managed production of the book. Elizabeth A. Yates,

Barbara Edgerton, and Izella Watson assisted in numerous phases

of manuscript preparation. Helen Fedor gathered and helped select the photographs, and Walter R. Iwaskiw assembled the materials

for the maps. Invaluable graphics support was given by David P. Cabitto, assisted by Sandra K. Ferrell (who did the cover and chapter illustrations) and Kimberly A. Lord. Stanley M. Sciora fur- nished information on the ranks and insignia of the Hungarian

armed forces. Finally, the authors wish to note the generosity of those individuals who provided photographs for this book. All photographs are

original work not previously published.

v

Contents

Page Foreword iii Acknowledgments v Preface xiii Country Profile xix Introduction xxvii Chapter 1. Historical Setting 1 Charles Sudetic

EARLY HISTORY 3 MEDIEVAL PERIOD 5 Christianization of the Magyars 5 Stephen I 6

Politics and Society under Stephen's Successors 8

Reconstruction 9

RENAISSANCE AND REFORMATION 11 Golden Era 11 Reign of Ulaszlo II and Louis II 14

Partition of Hungary 16 End of the Partition 19 HUNGARY UNDER THE HABSBURGS 19 Reign of Leopold II 19 Reign of Charles VI and Maria Theresa 20

Enlightened Absolutism 22

Economic and Social Developments 23

The Revolution of March 1848 26

Aftermath of the Revolution 27 DUAL MONARCHY 28

Constitutional and Legal Framework 28

Rise of the Liberal Party 29

Social Changes 31

Political and Economic Life, 1905-19 34

TRIANON HUNGARY 37

Postwar Political and Economic Conditions 37

Bethlen Government 38

Economic Development 39

The Great Depression 41 Radical Right in Power 42

vii
World War II 44

POSTWAR HUNGARY 46

Coalition Government and Communist Takeover .... 46

Rakosi's Rule 49

Revolution of 1956 53

Kadar's Reforms 54

New Economic Mechanism 57

Chapter 2. The Society and Its Environment . 63

Becky Gates

PHYSICAL ENVIRONMENT 67

Topography 67

Climate 71 POPULATION 71

Historical Trends 71 Structure 72 Settlement Patterns 73

THE HUNGARIAN PEOPLE 74

Origins and Language 75 Minority Groups 76

SOCIAL STRUCTURE 78 Interwar Period 79

Postwar Societal Transformation 80

Social Relations in the 1980s 82

SOCIAL INSTITUTIONS 86

The Family 86

Mass Organizations 88

Religion and Religious Organizations 91 EDUCATION 96

HEALTH AND WELFARE 99

Health 99

Welfare 102

Housing 103

DISSENT AND FREEDOM OF EXPRESSION 104

Chapter 3. The Economy 109

Charles Sudetic

RESOURCE BASE 112

Energy Resources 112

Mineral Resources 113

Land, Climate, and Forests 113

Environmental Problems 114

LABOR FORCE 115

Work Force 115

viii
Underemployment and Unemployment 116

Labor Turnover 117 Women in the Work Force and Foreign Workers .... 117 ECONOMIC SYSTEM AND CONTROL MECHANISMS . . 118

Role of Party and Government Bodies 118

Ownership 119

Planning 120

Economic Regulators 121 Finance 125

Industrial Organization 129

Agricultural Organization 131

Private Activity 135

Conflict-Resolution Mechanisms 135

ECONOMIC SECTORS 136

Industry 137

Agriculture 142

Construction 143

Transportation and Telecommunications 143

Private Sector 147 The Third Economy 148

FOREIGN TRADE 149

Organization of Foreign Trade 150

Cooperation Agreements and Joint Ventures 150

Trade Volume and Structure 152

Trade Partners 152

DOMESTIC CONSUMPTION 155

Domestic Trade Sector 155

Standard of Living 156

ECONOMIC POLICY AND PERFORMANCE, 1945-85 ... 157

THE SEVENTH FIVE-YEAR PLAN, 1986-90 162

Chapter 4. Government and Politics 167

Stephen R. Burant

CONSTITUTIONAL DEVELOPMENT 170

Constitution of 1949 170

Amendments of 1972 171 Constitutional Law Council 173

STATE APPARATUS 174

Council of Ministers 177

Presidential Council 178

National Assembly 180

Elections to the National Assembly 181 County and District Government 185

Judicial Organs 187

ix
HUNGARIAN SOCIALIST WORKERS' PARTY 188

Ideology 189

Democratic Centralism 191 Party Structure 192

Discipline 199

Membership 200

Social Composition of the Party 201

Patriotic People's Front 202

MASS MEDIA 203

FOREIGN POLICY 205

Principles of Foreign Policy 206

Relations with the Soviet Union 208

Relations with Other Communist Neighbors 210

Relations with the West 215

Relations with Selected Non-Western Countries 218

Hungary and the Soviet Model 220

Chapter 5. National Security 221

Kenneth E. Nyirddy

HISTORICAL AND POLITICAL SETTING 223

Historical Background and Traditions 224

The Postrevolutionary Period 233

Government and Party Control 234

Soviet Influence 237

External Threats to National Security 239

THE HUNGARIAN ARMED FORCES 241

Ground Forces 241

Air Force 244

Manpower 245

Conscientious Objection 245

Education and Training 246

Uniforms and Rank Insignia 251

INTERNAL SECURITY AND PUBLIC ORDER 253

National Police 253

Security Police 255

Border Guard 255

Workers' Guard 257

CRIMINAL JUSTICE SYSTEM 257

Incidence of Crime 257

Penal Code and Criminal Procedure 259

Military Justice 259

Penal System 260

Reaction to Political Dissent 260

x
Appendix. Tables 265

Bibliography 275

Glossary 303

Index 305

List of Figures

1 Administrative Divisions of Hungary, 1989 xxiv

2 Hungary in A.D. 1200 10

3 Hungary During the Period of Partition, 1541-1699 18 4 The Dual Monarchy of Austria-Hungary, 1867-1918 30

5 Trianon Hungary, 1920 40

6 Topography and Drainage 70

7 Transportation System, 1989 144

8 Government System, 1986 176

9 Organizational Structure of the Hungarian

Socialist Workers' Party, 1988 190

10 Structure of the County Committee Apparatus, 1986 200

11 Military Ranks and Insignia, 1989 254

xi

Preface

Since the mid-1970s, few countries in the world have experienced

such rapid and extensive change as Hungary. The political sys- tem has moved from an authoritarian regime dominated by the

Hungarian Socialist Workers' Party (HSWP) to a multiparty republic. The HSWP itself split, in October 1989, and most of its leaders organized a new party, the Hungarian Socialist Party. In the

late 1980s, relations with Western countries improved dramatically,

and the Hungarians also received significant support for their re- form efforts from the Soviet Union. By contrast, until late 1989

tensions between Hungary and Romania were rising over the lat- ter' s treatment of its Hungarian minority, but, after the December 1989 revolution in Romania, the chances for the resolution of

that problem improved. Although sporadic efforts had been undertaken since the late 1960s to introduce elements of a market econ- omy into a socialist command economy, Hungarian leaders in 1989

declared their intention to create a full-fledged capitalist economy.

The government has also reduced the defense budget, and it has

taken steps to make the police apparatus accountable to the people and to their elected representatives. Yet, the discontent that

emerged from pressures stemming from the economy's precipitous

decline continued. This discontent, coupled with the regime's need

to widen its support to sustain the transition from a state socialist to capitalist economy, led the Hungarian regime to undertake political reform efforts. These changes have necessitated a new edition of Hungary: A

Country Study, which supersedes the edition published in 1973. Virtually everything discussed in the previous edition has been over- taken by events. Like the earlier edition, this study attempts to present the dominant historical, social, economic, political, and

national security aspects of Hungary. Sources of information in- cluded books and scholarly journals, official reports of governments

and international organizations, foreign and domestic newspapers,

and numerous periodicals. A brief annotated bibliographic note on sources recommended for further reading appears at the end

of each chapter, and more detailed chapter bibliographies appear

at the end of the book. Measurements are given in the metric sys- tem; a conversion table is provided to assist those readers who are unfamiliar with metric measurements (see table 1 , Appendix). A

glossary is also provided.

Xlll
The Hungarian people are descendants of the Magyars, an

Asiatic tribe whose origins lie in what is today central Russia. The

word Hungary appears to derive from a Slavicized form of the Turkic

words on ogur, meaning "ten arrows," which may have referred

to the number of Magyar tribes. Unlike most Europeans, Hungarians do not speak an Indo-European language. Hungarian is a member of the Finno-Ugric language family, which also includes

such languages as Estonian and Finnish.

The illustration on the cover and those that introduce each chapter merit a word of explanation. These drawings were adapted from

Andre Kertesz's poignant photographs of his native land, which

were published in Hungarian Memories: Nineteen Twelve to Nineteen

Twenty-Five.

xiv
Table A. Chronology of Important Events

Date Events EARLY HISTORY

ca. A.D. 100-600 Magyar tribes, a pagan Finno-Ugric people, begin migration from Urals south onto Russian steppes and continue west, to area be- tween Don and lower Dnepr rivers, where

they fall under the sway of the Bulgar-Turkish

people.

ca. A.D. 600-900

MEDIEVAL PERIOD

Arpad Dynasty

ca. 900-1301

RENAISSANCE AND

REFORMATION

1301-1699

Magyars fall under the control of the Khazars

but are later freed from Khazar rule in the ninth century. Magyars join Byzantine armies

to fight the Bulgars in 895. Magyars migrate

farther west into the Danube-Tisza Basin, 895

or 896. Arpad is chosen as chieftain; his male

descendants become hereditary heirs of this kingdom, which became known as Hungary.

Magyars besiege Europe and the Byzantine Empire but are defeated by Moravian and Ger- man armies in 955. Chieftain Geza (972-97)

is baptized into Roman Catholic Church.

Geza's son, Stephen I (997-1038), is recog- nized by Pope Sylvester II as king of Hungary, ensuring independence from Byzantium and the Holy Roman Empire. Latin alphabet

is devised for Hungarian language. Magyars

occupy Transylvania. Laszlo I (1077-95) oc- cupies Slavonia in 1090, and Kalman I (1095-1 1 16) takes the title of king of Croatia

in 1103. Under Bela 111 (1173-96), Hungary

becomes one of the leading powers in southeastern Europe. Nobles force Andrew II (1205-35) to sign Golden Bull (1222) limit- ing crown's power. Mongols rout Hungarian army at Mohi in 1241 . Mongols withdraw in 1242. Arpad line expires in 1301. Charles Robert (1308-42) wins prolonged suc- cession struggle. Dynastic marriages link Hungary to Naples and Poland. Louis I (1343-82) reconfirms Golden Bull. First university is founded in 1367. Hungary's for- tunes begin to decline under Sigismund

(1387-1437). Social turmoil erupts because of higher taxes and pressures from the magnates on the lesser nobles. Wars against Ottoman

Turks are waged in reigns of Albrecht V

(1437-39) and Ulaszlo I (1439-44). Janos Hunyadi rules Hungary as regent for infant king, Laszlo V. Hunyadi defeats the Turks

in Transylvania in 1442 and in Serbia in 1443,

is defeated at Varna in 1444, and defeats the Turks again in 1456 near Belgrade. Nobles crown Hunyadi's son Matyas Corvinus

(1458-90) king. Matyas enacts numerous

XV
Table A. —Continued

Date Events

reforms. After the death of Matyas, an oligar- chy of magnates takes control, and the country remains in a state of anarchy until 1526, when the Turks defeat Hungary at Mohacs. Hungary is partitioned between the Turks and

the Habsburgs in 1541. Habsburgs invade Transylvania in 1591. Habsburgs rout a Turkish army in 1664 at St. Gotthard in Hungary. Hungarians rebel against Habsburg rule in 1681. Turks attack Habsburgs but are routed near Vienna in 1683. Western campaign drives Turks from Hungary, and Turks

lose almost all Hungarian possessions in Peace

of Karlowitz (1699), which ends partition. HUNGARY UNDER THE

HABSBURGS

1700-1867

Vienna assumes control of Hungary's foreign

affairs, defense, and tariffs, and it treats Transylvania as separate from Hungary. Peasant

rebellion in 1703 provokes an eight-year uprising led by Ferenc Rakoczi against Habs- burg rule. Treaty of Szatmar (1711) ends

rebellion. Under Pragmatic Sanction (1723), Habsburg monarch agrees to rule Hungary

as a king subject to restraints of Hungary's

constitution and laws. Under Charles VI

(1 71 1-40) and Maria Theresa (1740-80), the economy declines. Joseph II (1780-90), an en- lightened despot, attempts various changes, but the nobles resist and thus inspire a renais- sance of Hungarian culture. Leopold I (1790-

92) softens Habsburg policy. Under Francis

I (1792-1835), Hungary stagnates. Toward

the end of Francis's rule, liberal reformers

Istvan Szechenyi and Lajos Kossuth emerge;

they increasingly press their demands under

Ferdinand V (1835-48). In March 1848, a

revolution against the absolute monarchy

breaks out in Vienna and quickly spreads to Budapest. The Hungarians declare indepen- dence in April 1849, but with the help of Russian troops the Habsburgs reimpose control. Franz Joseph (1848-1916) revokes the Hungarian constitution and assumes absolute power. Austria is defeated by Sardinia and

France in 1859 and by Prussia in 1866, result- ing in the Compromise of 1867, which creates the Dual Monarchy of Austria-Hungary,

also known as the Austro-Hungarian Empire.

DUAL MONARCHY

1867-1918 Under the Dual Monarchy, the Habsburg emperor reigns as king of Hungary. A Hungarian government administers domestic

affairs, while Vienna manages foreign policy, defense, and finance. Croatia gains autonomy

XVI
Table A. —Continued

Date Events from Hungary over its domestic affairs in 1868. Kalman Tisza serves as prime minister 1875-90. Economic modernization begins, ac- companied by rise of a middle class. Istvan Tisza serves as prime minister 1903-05 and

1912-17. The June 28, 1914, assassination of Archduke Franz Ferdinand precipitates World War 1(1914-18). Bourgeois-democratic revolution in Budapest, October 31, 1918. Mihaly

Karolyi, a liberal, assumes power. Hungary

loses territory to Yugoslavia, Romania, Austria, and Czechoslovakia. A coalition of Social Democrats and communists takes power. Hungarian Soviet Republic is proclaimed un- der Bela Kun, March 21, 1919. Romanian

forces occupy Budapest. Anticommunist

government seizes control and imposes "white

terror." TRIANON HUNGARY

1920-45 Admiral Miklos Horthy is named regent of Hungary, March 21, 1920. Under Treaty of Trianon (June 4, 1920), Hungary loses more

than two-thirds of its prewar territory, 60 per- cent of its prewar population, and most of its natural-resource base. Count Istvan Bethlen

serves as prime minister, 1921-31. Hungary

joins League of Nations in 1922. Bethlen pro- motes industrial development, but economic

progress is halted by Great Depression, 1929. Gyula Gombos, a right-wing dictator, is in power, 1932-36. Gombos forges close ties with Germany and Italy. Right-wing governments

are in power under Kalman Daranyi (1936-

38) and Bela Imredy (1938-39). Pal Teleki

serves as prime minister, 1939-41. Hungary

joins Hitler's invasion of the Soviet Union in June 1941 and declares war against the Western Allies in December 1941. Laszlo Bardossy prime minister, 1941-42, followed by Miklos Kallay, 1942-43. Nazi Germany

occupies Hungary in April 1943. Pro-Nazi Dome Sztqjay serves as prime minister, April 1943-August 1944, followed by Geza Lakatos, August-October 1944. Leader of fascist Arrow Cross Party, Ferenc Szalasi, serves as prime minister, October 1944-April 1945.

Soviet troops drive all German troops out of Hungary by April 4, 1945. POSTWAR HUNGARY

1945-

Allied Control Commission, with Soviet, American, and British representatives, holds sov- ereignty in Hungary, with Soviet chairman

in absolute control. Second, expanded Provisional National Assembly chosen in which

XVII
Date Events communists enjoy absolute majority, April

1945. Left-leaning coalition governments rule Hungary 1945-47. Treaty of Paris (February

10, 1947) ended World War II for Hungary.

Social Democratic Party merges with Hungarian Communist Party in June 1948 to form Hungarian Workers' Party. Soviet-style Constitution is ratified and Hungarian People's Republic is proclaimed, August 1949. Stalinist

political, economic, and social systems are imposed, 1949-53. Imre Nagy becomes prime

minister and implements New Course in economy, 1953. Nagy loses power in 1955.

Disaffection mounts in 1955-56, culminating in Revolution of 1956 in October. Janos Kadar is installed in power by Soviet invaders; Hungarian Workers' Party is renamed Hungarian Socialist Workers' Party (HSWP).

Harsh repression is followed by pragmatic at- tempts at reform, 1956-66. New Economic

Mechanism (economic reform) is put in place, 1968-72. Opposition to reform mounts, and economy is recentralized, 1971-78. Further economic reforms take place, 1979-80. New

electoral law is passed in 1983. Hungary begins to establish semi-independent foreign

policy in 1984. Semicompetitive National As- sembly and local council elections are held in 1985. Thirteenth Party Congress of the HSWP meets in 1985. Kadar loses party

leadership to Karoly Grosz at Third Party Conference, May 1988. Laws are passed al- lowing multiparty system, 1988-89.
Country Profile

Formal Name: Republic of Hungary (the name was Hungarian

People's Republic from August 1949 until October 1989).

Short Form: Hungary.

Term for Citizens: Hungarian(s).

Capital: Budapest.

Geography

Size: Approximately 92,103 square kilometers.

Topography: Lies in the central Danube Basin. Rolling foothills in the west; hilly region north of Budapest; remainder of the country

to the east and south has a variety of terrains. Highest point: Mount

Kekes, 1,008 meters. Climate: Continental and mild.

Society

Population: Approximately 10.6 million in 1989; average annual

growth rate, negative 0.2 percent.

Ethnic Groups: Magyars more than 95 percent of population.

Minorities include Gypsies, Germans, Jews, Slovaks, Serbs, Slo- venes, Croats, Romanians, and Greeks.

Language: Modern Hungarian spoken by all. Various dialects used

at home. Minorities bilingual.

Religion: Religious freedom guaranteed by Constitution. About

67.5 percent Roman Catholic, 20 percent Reformed (Calvinist), 5 percent Lutheran, and 5 percent unaffiliated. Small numbers of

other Protestant sects, Uniates, Orthodox, and Jews.

Education: Free, compulsory education from ages six to sixteen.

About half of students get vocational and technical training. About

10 percent of population aged eighteen to twenty-two enrolled in regular daytime courses in higher education.

Welfare: Social insurance program includes free health care, unemployment compensation, and retirement benefits. Health care good,

with decline in infant mortality and incidence of communicable

diseases. High proportion of elderly; pensions low relative to wages.

xix
Economy

Gross National Product: Estimated at US$84 billion in 1986;

US$7,910 per capita, with 1.3 percent growth rate. Energy and Mining: Country energy deficient; relies on imported

crude oil and natural gas from Soviet Union and domestic lignite.

Coal reserves plentiful, but energy a major problem for the 1990s.

Dependent on imports for iron and nonferrous metals.

Industry: Manufacturing and chemicals predominate, with light

industry and food processing also important. Emphasis on heavy

industry in postwar period.

Agriculture: Largely collectivized, but with decentralized, loose

restrictions on self-financing, much emphasis on private-plot

production, and no obligatory targets. Very efficient by East Euro- ean standards; net exporter of grain, meat, and meat products.

Foreign Trade: Most important trading partner Soviet Union, but

about half of foreign trade with Western countries. Principal imports: fuels, raw materials and semifinished products, agricultural

and forestry products, light industrial goods. Principal exports:

agricultural products, pharmaceuticals, bauxite, machine tools, and

lighting equipment. Balance of trade negative in 1986: exports

US$9.2 billion; imports US$9.6 billion. Exchange Rate: Exchange rate in July 1989 about sixty-two forints per US$1.

Fiscal Year: Calendar year. Fiscal Policy: Central planning with market reforms in the late 1980s to decentralize economic decision making and broaden scope

for private ownership.

Transportation and Communications

Railroads: 7,769 kilometers total in 1986, of which 7,513 kilometers

standard gauge, 221 narrow gauge, and 35 kilometers broad gauge;

1,128 kilometers double-tracked and 1,918 kilometers electrified. Roads: 140,163 kilometers total in 1986, of which 29,796 kilometers

concrete, asphalt, and stone block.

Inland Waterways: 1,622 kilometers in 1986.

Pipelines: 1,204 kilometers in 1986 for crude oil; 600 kilometers

in 1986 for refined products; and 3,800 kilometers in 1986 for natural gas.

xx
Ports: Budapest's Csepel the principal port; also Dunaujvaros.

Airports: Eighty total in 1986, with ten having permanent sur- face runways. Budapest's Ferihegy the principal airport and only

international airport.

Telecommunications: 770,200 telephones in 1986, or about 145

per 1,000 persons. Severe shortage of telephone lines. Government and Politics

Politics: Monopolized by Hungarian Socialist Workers' Party

(HSWP), the communist party. Other parties reappeared in liber- alized conditions of late 1980s, including Independent Smallholders'

Party and Social Democratic Party. Opposition Roundtable en- gaged in talks with HSWP to reform political system.

Government: Constitution of 1949 substantially amended in 1972.

National Assembly met infrequently but was gaining importance

in 1989. Presidential Council and Council of Ministers principal

government bodies. Important posts occupied by high-ranking

HSWP members.

Foreign Relations: Diplomatic relations with most countries. Allied with Soviet Union in international affairs. Relations with United States throughout postwar period; since late 1970s, these relations

have warmed considerably and in late 1980s have blossomed.

International Agreements: Participation in Council for Mutual

Economic Assistance (Comecon), Warsaw Pact, and United Nations. Signatory to Helsinki Accords and Mutual and Balanced

Force Reduction Agreement.

National Security

Armed Forces: Hungarian People's Army in 1989 included ground

forces (77,000 with 58 percent conscripts); air force (22,000 with

36 percent conscripts); Danube Flotilla (700); and Border Guards

(11,000 with 70 percent conscripts). All forces organized under

Ministry of Defense. Soviet Southern Group of Forces stationed

in Hungary numbered 65,000 troops.

Ground Forces: Three corps, with combined total of five tank

brigades and ten motorized rifle brigades; independent artillery and

surface-to-surface missile brigades; one airborne battalion; one anti- tank regiment; one antiaircraft regiment; and surface-to-air missile regiments. Danube Flotilla had eighty-two vessels in 1988.

xxi
Air Force: One air division and one air defense division. Air division had three fighter or fighter-bomber regiments, one helicopter

regiment, and one reconnaissance squadron. Air defense division

had three surface-to-air regiments in late 1980s.

Equipment: Primarily Soviet.

Paramilitary: Included Security Police apparatus (15,000) and

Workers' Guard (60,000) in 1988. Both forces received some military training.

xxn

48

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S/x cities have megye (county) status and also serve as administrative centers for surrounding megyes.

25 50 Kilometers J 1 50 Mile:

XXV

Introduction

THE HUNGARIAN PEOPLE'S REPUBLIC came into existence

in 1949 when, with Soviet support, the Hungarian Workers' Party

(HWP) eliminated the last of its rivals and proclaimed the country a "people's democracy." The proclamation of the Hungarian

People's Republic was part of Soviet dictator Joseph Stalin's plan

to enforce total Soviet domination over the countries in Eastern

Europe that Soviet armies had occupied in their war against Nazi

Germany.

Like other countries in Eastern Europe, Hungary was completely

Sovietized. The Constitution of 1949 established the leading role of the HWP in all aspects of Hungarian life. In turn, the HWP

took its orders from Stalin. Hungary was also forced to adopt the

Soviet model in its economy and society. Hungary embarked on

an ambitious drive to industrialize its economy, and the new re- gime collectivized agriculture. The property of the prewar ruling

classes was expropriated, and the regime undertook a reign of ter- ror against its perceived political enemies, who eventually included

a number of prominent communists. The Hungarian military was

subordinated to the Soviet military, and the regime established a

large secret police force, which answered to Moscow, not Budapest.

On October 23, 1989, the Hungarian People's Republic came

to an end. Acting President Matyas Szuros proclaimed the new

republic: "As provisional president of our Republic, I greet . . . the citizens of our country, our friends abroad. I ceremonially an- nounce that, with the declaration of the Constitution amended by

the National Assembly, as from today, October 23, 1989, our country's state form and name is the Republic of Hungary." New

amendments to the Constitution asserted "the values of both bourgeois democracy and democratic socialism," eliminated the clause

of the Constitution that established the leading role of the communist party in government and society, and proclaimed a regime

based on the rule of law. These new amendments followed the Fourteenth Party Congress of the Hungarian Socialist Workers' Party

(HSWP—the Hungarian Workers' Party had been renamed the

Hungarian Socialist Workers' Party on November 1, 1956), in

which the party split between reformers and conservatives. Out

of this congress, which had convened October 6, a new party

emerged—the Hungarian Socialist Party (HSP)—which was modeled on the socialist parties of Western Europe and was designed

to operate within a multiparty system. Thus, in 1989 Hungary

xxvn
experienced a political transformation. With Poland, it was in the

forefront of communist countries attempting to reform their polity,

economy, and social relations.

A number of internal economic and social factors led to the crisis that brought about this transformation. A Soviet leadership it- self attempting to carry through far-reaching reforms allowed

Hungary to implement radical reforms. The example of wideranging political and economic reforms in Poland also spurred Hungary 's leaders to action.

The economic crisis had been brewing since the mid-1970s. Beginning in 1973, world oil prices rose precipitously, having a devastating effect on Hungary, which was almost completely dependent on foreign energy suppliers, mainly the Soviet Union.

Hungary's leaders responded to higher energy prices with a plan

to accelerate economic growth and launched a number of major

economic projects, but they could not carry them out efficiently.

These efforts were designed to produce goods that could be exported

in return for energy. Moreover, spending on consumption and in- vestment also rose. To cover the costs of energy, consumption, and

investment, Hungary borrowed from abroad, but, because its exports were unable to cover the costs of its hard-currency borrowings, the country ran up a large foreign currency deficit. Conservatives in the leadership used these problems to win support for the reversal of economic reforms that had been instituted in the

late 1960s.

Similar problems arose in the late 1970s and early 1980s. Again,

world energy prices rose, and Western banks limited the flow of

credits as a result of the crackdown on the Solidarity labor move- ment in Poland and the insolvency in Romania. Increases in in- terest rates caused problems for Hungary's balance of payments.

Hungary joined the International Monetary Fund (IMF—see Glossary) and the World Bank (see Glossary) in 1982. These in- stitutions compelled Hungary to introduce a new stabilization program, which called for reductions in spending on investment and

consumption. Although by 1985 spending on investment was 21.8

percent less than it had been in 1981, prices rose. The Sixth FiveYear Plan (1981-85) called for economic growth of 14 percent to 17 percent over the previous plan period, but in fact growth rose only 7 percent. Industrial production increased a mere 12 percent,

although the plan called for growth of 19 percent to 22 percent.

Exports were to rise 37 to 39 percent but in fact rose only 27 percent.

Performance fell far short of the plan in the late 1980s as well. In 1986 national income, industrial production, and agricultural

production did not meet the levels called for in the plan. In 1987

xxviii
the economy fared somewhat better, but in 1988 inflation far ex- ceeded the rate for the previous year. Hungary's foreign currency

debt rose from US$8.6 billion in 1985 to US$18 billion by December

1987. In 1989 the country's economic problems continued. By the end

of 1989, Hungary had a state budget deficit of approximately 62.2

billion forints (for value of the forint—see Glossary), more than

three times the planned budget deficit of 19.5 billion forints. The

foreign debt stood at US$20 billion. Hungary had to cut its deficit or forego the last installment of a loan it had obtained from the

IMF in May 1988. Inflation continued as well. Wages rose 12 to 13 percent rather than the planned 6 to 7 percent. Prices rose 15

to 16 percent rather than the planned 12 to 15 percent. From January through September 1989, industrial production was only 98.4

percent of what it had been during the same period in 1988. Output of the manufacturing sector fell 5.1 percent. Exports rose by

about 22 percent in 1989, but the need to increase exports to the

West forced enterprises to forego profitability in the interests of

earning hard currency. As a result, bills owed to Hungarian firms

went unpaid. In 1989 domestic debt stood at 950 billion forints. Society felt the effects of the country's economic problems. To

make ends meet, most Hungarians had to work very hard; in many

cases, they worked more than one job. Western analysts estimated

that between 25 and 40 percent of the population lived below the

poverty level (about 5,200 forints per month). Average monthly

wages were a mere 6,000 forints. Official statistics classed between

1.5 million and 3 million people (out of a population of 10.6 million) as "socially poor." This group included a large share of re- tired persons, about half of families with two children, and 70 to 90 percent of families with three or more children. Single heads

of households and people working on less productive collective farms

or living on isolated homesteads were also likely to be living below

the poverty line. Economic problems took their toll on the family. In the 1980s,

every third marriage ended in divorce, and single parents headed

about 12 percent of all families. In addition to the heavy work load

needed to achieve a decent standard of living, another source of

strain on the family was the shortage of housing, especially for young

families. Having reduced its direct role in the provision of housing, the government encouraged private individuals to construct

their own homes. By the late 1980s, most new housing units were

privately constructed, but the country had a long way to go to meet

the housing needs of its citizens.

xxix
In 1989 the government took steps to solve these problems. In

contrast to the Soviet reaction to the 1956 uprising in Hungary

and the 1968 Prague Spring in Czechoslovakia, when it invaded

these countries to ensure continued communist party domination,

the Soviet Union in 1989 announced support for Hungary's political and economic reform efforts. Such reforms included the in- troduction of a capitalist market economy and the emergence of a multiparty system, anathema to the old communist system.

In addition, Hungary could count on Poland to join it in a proreform bloc within the Warsaw Pact alliance (see Glossary). In June

1989, the first free elections in the history of postwar Eastern Europe took place in Poland. These elections eventually brought to power a Solidarity-led government that intended to institute many

of the same political and economic reforms in Poland that Hungary's leaders, as well as Hungary's opposition groups, envisaged

for their country. In late 1989, the reform bloc within the Warsaw

Pact was strengthened as the German Democratic Republic (East

Germany), Bulgaria, and Czechoslovakia began their own reform

efforts. Although the most important steps toward creating a democracy

were taken in late 1989, the effort actually began with a number

of measures in the first half of the year. On January 11, 1989, the

National Assembly passed laws on associations and assembly, the

first in a series of steps aimed at introducing a multiparty system

in Hungary. On March 15, 1989, for the first time in postwar his- tory, the government allowed commemoration of the anniversary

of the 1848 revolt against the Habsburg Empire. About 100,000

people attended the demonstration in Budapest, and smaller demonstrations took place throughout the country. The demonstrators

called for government recognition of civil and political rights and

political pluralism. Shortly thereafter, Imre Mecs, a member of

the dissident Committee for Historical Justice, said that a return

to the old ways of ruling the country would be very difficult

4 'after hundreds of thousands of people throughout the country have

shouted out demands for their rights." On March 22, 1989, the

National Assembly passed a law that granted the right to strike

(although within strictly defined limits).

The reburial of Imre Nagy and his associates on June 1 6 marked

the most important symbolic break with Hungary's past in the first half of 1989. Most Hungarians had never accepted the regime's

verdict that the events of 1956 represented a counterrevolution

against Marxism-Leninism. The massive attendance at the reburial and the millions who watched the events on television showed

xxx
that Hungarians rejected the regime that had been placed in power

by Soviet troops in 1956.

The media were becoming more open as a consequence of the

reforms. In late 1988, a number of independent publications had

been established, including Kapu (Gate), which had a circulation

of more than 35,000 by January 1989; Reform, part of a joint venture with media magnate Axel Springer's conglomerate in the Federal Republic of Germany (West Germany), which by early 1989

had a circulation of 256,000; and Hitel (Credit), which covered social and political issues and literature.

It was the HSWP that set the stage for more profound changes.

Party leaders Imre Pozsgay and Rezso Nyers sought to manage

the country's severe economic, social, and political problems by

sharing power with organizations representing other sectors of the

population. Indeed, the party's reformist wing—which was headed

by Pozsgay and Nyers—had accepted the ideas and program of

the opposition.

The strength of the reformers became apparent at a February

10, 1989, plenum of the Central Committee of the HSWP. At that

plenum, the party set as its goal the achievement of popular

sovereignty and a constitutional state. At a February 20 plenum,

the party Central Committee approved a draft of a new constitution that contained no clause on the leading role of the party. At

its March 1989 plenum, the party Central Committee came out

in support of a multiparty system, free elections, and independent

trade unions; recognized certain individual freedoms; and called

for the creation of a state governed by a democratic socialist constitution and characterized by an independent judiciary, representative democracy, and depoliticized military. The party's new

Action Program "offered cooperation and agreement on national

issues of vital importance to all citizens and organizations that think

in a progressive manner and accept responsibility for the country.

In line with its changed outlook, the Central Committee gave up

its nomenklatura (see Glossary) authority. According to one party

spokesman, this right had become "obsolete." Indeed, on May

10, 1989, the National Assembly approved a government reshuffle involving five ministers and one state secretary with ministerial rank. Chairman of the Council of Ministers Miklos Nemeth

himself, rather than the Central Committee of the HSWP, selected

the new officials. The Central Committee also outlined a reform program for the

economy. At its February 10 plenum, the Central Committee determined to end the country's "economic, political, and moral cri- sis" by creating a market economy based on mixed ownership. On

xxxi
May 4, 1989, the Central Committee released its "Proposal for a Three-Year Transformation and Stabilization Program," which

called for opening up Hungary to world markets and trade and

maintaining the country's solvency and creditworthiness. The

proposal advocated a change from state ownership to stock companies and limited partnerships and "the sale of state-owned [enterprises] to foreigners and private individuals." State subsidies

to enterprises would be drastically reduced. The proposal stressed

the importance of small- and medium-sized companies. For agriculture, the proposal advocated private ownership, easy lease terms,

and the purchase of land by private individuals.

The new legislation on political parties and the liberalized at- mosphere in the country led to the formation of many new political parties. Indeed, with the decisions made by the HSWP in the

late winter of 1988 and spring of 1989, it was clear that the HSWP

was taking many aspects of its own reform program from the programs of other parties and organizations promoting fundamental

political and economic changes. Many of these parties were not

altogether new, however; they were revivals of historical parties

that had been disbanded in the late 1940s. Other parties were in- deed new, formed largely by dissident intellectuals and students.

The first historical party to reemerge after years of inactivity was

the Independent Smallholders' Party, which was refounded in

November 1988. In August 1989, the Smallholders had an esti- mated 6,000 members grouped into 230 chapters. The party called

for privatization of the economy and free enterprise; returning land

to the peasants from whom it had been seized during Hungary's

campaign to collectivize agriculture in the late 1940s; free elections

in a pluralistic multiparty political system; and a new constitution

that would include a clause establishing Hungary's neutrality.

Another historical party that reestablished itself was the Hungarian Independence Party, which was refounded on April 24, 1989.

The members of the original Hungarian Independence Party had

broken with the Smallholders' Party in 1947 because they believed

that the Smallholders were too willing to cooperate with the Hungarian Communist Party. In 1989 the main political goal of the

Hungarian Independence Party was "the purest democracy." It advocated government recognition of individual political and civil rights; the removal of communist party control over the army,

police, and judiciary; the expansion of legislative power at the ex- pense of the executive; a free market system; strong support for private sector entrepreneurship; tax relief to encourage entre- preneurs; the reprivatization of agriculture; and "perpetual neutrality" for Hungary. xxxn
The Democratic People's Party was active in Hungarian politics in the late 1940s but was banned in 1949. In 1989 this party

reappeared as the Christian Democratic People's Party, which grew

out of the Aron Marton Association (named after a Catholic bishop

in Transylvania). The draft program of the Christian Democratic

People's Party defined it as "a political organization with a Christian worldview that is, however, independent of the Churches."

It called for multiparty democracy, parliamentary government, full guarantees for human and civil rights, and autonomy for local communities. For the economy, this party advocated free enterprise

combined with a welfare system to help those disadvantaged by

a free market system. In foreign policy, the Christian Democratic

People's Party called for accelerating Hungary's integration into

Europe and the country's return to the fold of Christian civilization. Finally, among the historical parties, the Social Democratic Party was refounded on January 9, 1989. Originally founded in 1890,

the Social Democratic Party was forced to merge with the Hungarian Communist Party in June 1948 to create the Hungarian

Workers' Party. Leaders of the reemergent Social Democratic Party

claimed 30,000 members, but the actual figure was closer to 3,000.

The party was weakened by a split between those who had belonged

to the party before 1948 and younger members who sought leadership positions. The Social Democratic Party advocated a West

European-style social democracy for Hungary.

Of the new political parties, the largest at the end of 1989 was

the Hungarian Democratic Forum, which was founded on September 27, 1987. In November 1989, the forum had approximately

20,200 members organized into 327 local organizations in 306

localities across Hungary. This party was largely the creation of

the provincial intelligentsia and was closely identified with Hungarian populism (an interwar political movement that distrusted

Western capitalism and favored an economy based on small agricultural producers and independent peasant entrepreneurs; it also in- cluded antirationalist and anti-semitic strains). It advocated free and democratic elections, a multiparty system, an increase in funding for education and culture, improvement of social security, and

a greater role for the church in providing social services. The Hungarian Democratic Forum came out for a "third road" for the econ- omy: an economy neither capitalist nor socialist. It proposed

dismantling the state sector in a " socially controlled and economically rational way" and encouraging the emergence of an entre- preneurial stratum. However, the entrepreneurs were to be groups,

not individuals.

xxxiii
The Alliance of Free Democrats was founded on December 1 3

,

1988. In July 1989, the alliance had about 3,000 members, who

were organized into twenty chapters in Budapest and fifteen in the

counties. This party was largely the creation of the Budapest intelligentsia. Two ideological strains made up the alliance: democratic socialists, who favored state intervention in the economy and

a mixture of both state and private property; and classical liberals,

who supported an unrestrained free market and the denationalization of the economy. The party's program called for a new constitution to end the communist party's monopoly of power, to secure the sovereignty of the people, and to limit the power of the state by separating the powers of the executive, legislature, and judiciary.

In the economic realm, the alliance's program called for the "denationalization of the economy," the expansion of private ownership,

cuts in military expenditure, and state assistance to the poorest

members of the population to minimize poverty. In foreign policy, the alliance advocated neutrality for Hungary and the withdrawal of Soviet troops.

The Federation of Young Democrats, founded in 1988, was made

up of 4,000 to 5,000 members between the ages of sixteen and thirtyfive. Members were mainly college and university students. The

party advocated a multiparty system, political and military independence, the evolution of the Warsaw Pact into a political alliance,

and the privatization of economic assets. In the spring of 1989, several opposition parties joined together

to form the Opposition Roundtable to establish new rules for the

conduct of politics as Hungary entered the era of reform. The

roundtable was made up of the Alliance of Free Democrats, the

Hungarian Democratic Forum, the Social Democratic Party, the

Independent Smallholders' Party, the Hungarian People's Party,

the Federation of Young Democrats, and the Endre BajcsyZsilinszky Society (an organization dedicated to environmental

protection and the defense of Hungarian minority rights in Romania). (The Democratic League of Free Trade Unions had observer status at the roundtable.) The Opposition Roundtable had two

basic objectives: to enter into talks with the HSWP to determine

the principles and rules that would govern the transition to a

pluralist democracy, and to discuss the means necessary to over- come Hungary's social and economic crisis. In June 1989, the Opposition Roundtable entered into formal

talks with the HSWP and the so-called "third side," which was made up of the Patriotic People's Front, the National Council of

Trade Unions, and other organizations allied with the HSWP. In

the negotiations, one committee dealt with political matters,

xxxiv
including constitutional changes, establishment of a presidency,

setting of a date for elections to the National Assembly, revisions

of the penal code, creation of a new law on information, and secur- ing of guarantees against a violent rollback of the reform process. A second committee dealt with economic problems, including the

reform of property rights, the introduction and strengthening of

market mechanisms in the economy, and, most generally, "strategic questions of dealing with the economic crisis" and the means

of treating the social consequences of the crisis. The Opposition Roundtable and the party had different objectives in the negotiations. The former negotiated on the premise

that the roots of the economic crisis lay in the political system; it therefore sought to emphasize constitutional changes and overall

political reform. By contrast, the HSWP emphasized measures to

alter the economy. Thus, the party sought to make the opposition

groups in the roundtable share responsibility for the dislocations,

unemployment, and inflation that would accompany the effort to pull Hungary out of its economic crisis. The party hoped to share

political responsibility and yet give up as little power as possible.

The HSWP hoped to exact agreement to its economic reform program by threatening to effect political reforms without the participation of the Opposition Roundtable. About 75 percent of the

delegates to the National Assembly were HSWP members, and

the party leadership believed it could ram through reforms using

its vast majority in the legislature.

The parties that made up the Opposition Roundtable represented

only a very small fraction of the population. Further, the HSWP,

although numbering several hundred thousand members, had lit- tle claim to legitimacy within society. The members of the "third

side" also had little support among society as a whole. Thus, in

the summer of 1989 a number of critics complained that the population as a whole had no say in the negotiations that were determining Hungary's political and economic future.

In several elections to fill seats in the National Assembly that

had been vacated, the population did have the chance to make its voice heard. The HSWP lost every election.

On July 22, 1989, Gabor Rozsik was the first opposition candidate elected to the National Assembly. He ran for election in the

town of Godollo, near Budapest, and won 69.5 percent of the vote. Rozsik was a candidate of the Hungarian Democratic Forum but

also had the support of the Alliance of Free Democrats and the

Federation of Young Democrats.

In other elections held on July 22, either less than the required

50 percent of the eligible voters of the election district participated xxxv
or else none of the candidates managed to receive a majority of

the votes cast. In Szeged the Hungarian Democratic Forum's candidate won 59.4 percent of the vote, but the turnout was less than

the required 50 percent. In the repeat election on August 5, the

Hungarian Democratic Forum's candidate won with about 62 per- cent of the vote, while the HSWP's candidate received 22 percent

of the vote. In Kecskemet no candidate received the majority of

votes, but in the August 5 runoff election, the Hungarian Democratic Forum's candidate won with about 70 percent of the vote. In the July 22 election in Kiskunf-elegyhaza, 61 percent of the people voted, but no candidate received a majority. The HSWP's candidate, however, won 44.7 percent of the votes, the highest vote

total. In the repeat election, only 46 percent of eligible voters participated, and the result was therefore invalid.

Finally, in a September 16 election for a National Assembly seat in Zala County, the HSWP candidate received less than one-third

of the votes cast. The Hungarian Democratic Forum, the Alliance

of Free Democrats, and the Federation of Young Democrats all supported the winner, who received more than 59 percent of the

vote. These elections demonstrated serious weaknesses on the part of

the HSWP. In all locales, despite almost a total monopoly of the

media and overwhelming advantages over the opposition in funds

available to run campaigns, HSWP candidates showed poorly.

These elections served as yet another reminder that the HSWP had

either to transform itself fundamentally or to resign itself to a marginal role in Hungary's new political system.

Other evidence for the lack of support for the HSWP came from

poll data. A survey conducted by Janos Simon and Laszlo Bruszt

of the Sociological and Social Science Institute of the Hungarian

Academy of Sciences found that only 36.5 percent of those sur- veyed would vote for the HSWP. Most of that support came in

the villages and small towns. The support of the remainder of those

surveyed was divided among the Social Democratic Party (13 percent); the Hungarian Democratic Forum (11.4 percent); the Alli- ance of Free Democrats (5.6 percent); the Smallholders' Party (5.4

percent); the Hungarian People's Party (4.3 percent); and the

Christian Democratic People's Party (4.3 percent).

The lack of public support for the HSWP did not deter it from

attempting to carry through its objectives in negotiations with the

Opposition Roundtable. In September an agreement was signed

that seemed at least in the short run to have met the HSWP's objectives. In addition, this agreement caused a split in the roundtable itself, thereby seeming to bring additional benefits to the party.

xxxvi
The agreement between the HSWP and the Hungarian

Democratic Forum, the Independent Smallholders' Party, the Hungarian People's Party, and the Endre Bajscy-Zsilinszky Society was

to establish "the political and legal conditions for a peaceful transition to a multiparty system." It contained six draft laws dealing

with the following issues: the establishment of a constitutional court

to ensure the constitutionality of legislation; the acceptance by the

HSWP of the values of bourgeois democracy and democratic so- cialism; a draft electoral law; amendments to the penal code and

criminal code to ensure that they "conform to the accepted norms

of human and civil rights"; an increase in the amount of state aid

for election campaigns from 35 million forints to 100 million forints; and the surrender by the HSWP of some 2 billion forints of its assets to finance other political parties.

The agreement also called for the creation of a presidency that

would embody the unity of the nation, exercise authority through

the Council of Ministers, and act as commander in chief of the

armed forces in peacetime. Any party or group with 50,000 supporting signatures could nominate candidates for president and vice

president. The winning candidate would have to receive at least half the votes with a minimum turnout of half to two-thirds of the

electorate. If no candidate received the necessary number of votes, a second round of voting would be held. According to the agreement, the presidential election was to take place before new elec- tions to the National Assembly.

The Alliance of Free Democrats and the Federation of Young

Democrats did not sign the agreement. First, they argued that it failed to require the withdrawal of the HSWP from the workplace,

a presence that lay at the basis of the party's substantial control over the economy. Second, these two parties maintained that the

agreement did not call upon the HSWP to render a full accounting of its finances and property. Third, the Alliance of Free

Democrats and the Federation of Young Democrats also believed

that the agreement was inadequate because it did not call for the

dissolution of the Workers' Guard, the HSWP's private army.

Fourth and perhaps most important, the Alliance of Free

Democrats and the Federation of Young Democrats held that the

agreement was seriously flawed in setting the elections for president before the elections to the National Assembly. The HSWP

wanted the elections for president to be held relatively quickly be- cause its candidate—Imre Pozsgay—was the most popular politi- cal figure in the country at the time. For its part, the Hungarian

Democratic Forum minimized the importance of Pozsgay's can- didacy because of the difficulty of even a well-known politician's

xxxvii
winning an absolute majority, the damage already caused to Pozsgay's candidacy by his role in the HSWP leadership, and the

fact that Pozsgay could not count on the support of the conservative and centrist factions of the HSWP. The Alliance of Free

Democrats argued, by contrast, that election of a president before

the elections to the National Assembly would distort the parliamentary elections, that only the new National Assembly should have

the power to define the role of the elections to the National Assembly, and that the new president could unduly influence the out- come of the elections to the National Assembly. Finally, the Alliance

of Free Democrats and the Federation of Young Democrats underscored the dangers of electing a communist president in a fledgling democracy.

The Alliance of Free Democrats and the Federation of Young

Democrats decided to call for the resolution of these four issues

by a popular referendum. According to a law passed on June 15,

1989, 100,000 signatures would be sufficient to call for a binding

popular referendum on matters subject to political dispute. The

two parties managed to collect almost 200,000 signatures, and a referendum was scheduled for November 26. The Alliance of Free

Democrats and the Federation of Young Democrats both urged

Hungarians to render a vote of "yes' ' on the following issues: dis- banding the Workers' Guard, abolishing party cells in the workplace, demanding that the HSWP give a full account of its assets, and requiring that the newly elected National Assembly elect the

president.

On September 18, 1989, negotiations on the economy began between the Opposition Roundtable and the HSWP. Talks were

quickly suspended in the third committee, which was charged with

discussing changes in ownership and determining how many enterprises should remain under state control. Talks proceeded in

the other five committees, which dealt with the state budget deficit,

major state investments, social welfare, land reform, and ownership reform.

HSWP losses in the four valid National Assembly elections, the

agreement with elements of the Opposition Roundtable, and the

widespread dissatisfaction with the agreement reached between the

roundtable and the party set the stage for the Fourteenth Party

Congress of the HSWP, which began on October 6, 1989. These

events demonstrated that Hungary had entered a new political era

in which the methods and structure of a Marxist-Leninist party were no longer relevant. The decisions reached at the Fourteenth

Party Congress marked an attempt by the party leadership to adapt

to this new era. xxxvm
The party had undergone some significant changes prior to the congress. The most important among these changes was the emergence of factions within the party. Marxist-Leninist parties had

long condemned factions within their ranks; decision making was

carried out via democratic centralism, which required a unified

party position in support of the leadership on all issues of theory

and practice. In late 1988 and 1989, factions did indeed arise within the party,

whose leadership was split between reformers (who encouraged the

rise of factions) and conservatives (who condemned the incipient

factions). Factions in support of reforms within the party—known

as the "reform circles" —had been growing rapidly since November 1988, when the first groups were organized by Jozsef Geczi

of the Department of Political Theory at Attila Jozsef University

in Szeged. The first national conference of reform circles took place

in Szeged on May 21-22, 1989, and was attended by more than

400 representatives of 110 reform groups. The manifesto produced

by the conference maintained that problems in Hungary were part

of a "crisis of Asiatic despotism." The document called for the

building of a new organization based on the values of the Hungarian progressive movement, the socialist movement, progressive

bourgeois traditions, and Hungarian populism. The manifesto

demanded the reform of the HSWP. The reform circles also held a second conference in Budapest on September 2-3 to prepare for the party congress.

By contrast, the Ferenc Miinnich Society (named after the

minister of the armed forces and internal affairs who came to power

with Janos Kadar in 1956) was a faction formed by party conservatives in November 1988. Retired army officers, retired state security officers, members of the Workers' Guard, and conservative

party members predominated among its 10,000 to 20,000 members. According to Robert Ribanszki, who was one of the society's leaders, "the primary goal of the [Ferenc Miinnich Society]

is to stop the further deterioration of socialist achievements . . . and to lend support to the development and strengthening of so- cialism." The Ferenc Miinnich Society sought the retention of the

HSWP's leading role in social, economic, and governmental in- stitutions. It strongly criticized the reform circles and the party's

reform leaders, chiefly Pozsgay and Nyers.

Delegates to the Fourteenth Party Congress of the HSWP came

from the different party factions. In fact, the rules for election of

delegates expressly called for the representation of these factions

at the congress. Every party member could "propose delegates and

be eligible for election." The guidelines stressed that members were

xxxix
to acquaint themselves with the views of candidates prior to the

election of delegates, so they could vote for the representatives of

the faction of their choice. At the congress itself, Pozsgay stated

that "our party will respect the freedom of platforms and trends,

and respect the protection of minority rights more strongly" than

the former party. The guidelines for delegate selection and Pozsgay' s sentiments starkly contrasted with election procedures for previous congresses.

To be sure, party leaders did not always follow the guidelines

in carrying out the delegate selection. Nevertheless, a number of

platforms were strongly represented at the congress. At the beginning of the proceedings, the Reform Alliance had 464 delegates;

the People's Democratic Platform (a centrist grouping), 68 delegates; the For the Equality of Chances of the Provinces Platform,

35 delegates; the For the HSWP Platform, 35 delegates; the Young

People's Platform, 28 delegates; and the Agricultural and Food

Processing Platform, 28 delegates. In addition, in another departure from previous congresses, delegates from districts south of Lake

Balaton and the southwest met to decide on a common approach

to the interests of their regions (see fig. 1). The Reform Alliance was the best organized of the factions, and

it had the most elaborate program. By the end of the second day

of the congress, the Reform Alliance had 511 members, about 40

percent of the total. This faction played an important role in the

outcome of the congress. It called for an open break with the past, as well as for a repudiation of the HSWP's crimes and mistakes,

and it sought to staff leadership positions with new personnel who

would promote new kinds of policies. The Reform Alliance also

advocated the democratization of party decision making.

Indeed, in large measure the congress produced the new policies called for by the Reform Alliance. To begin with, the party

changed its name to the Hungarian Socialist Party (HSP). The

party's statutes still defined it as a "Marxist political organization,"

but it fully accepted "the values of human development, humanism, freedom, and democracy." The term Leninist did not appear

in any of the documents emanating from the congress.

The HSP's manifesto dedicated the organization to building a "democratic, law-governed state marked by direct democracy" and

the creation of a "market-based economy." The party also called

for a social welfare policy to moderate extreme differences in liv- ing standards but at the same time advocated a system of wages

and salaries to reward productivity. The party's program sought an "undisturbed and balanced relationship" with the Soviet Union

but at the same time obligated the party to work for mutually

xl
advantageous political and economic relations with every country and with every "integrating and cooperative organization."

Finally, the HSP came out firmly in support of minority rights

within Hungary and castigated the violation of the rights of Hungarians elsewhere.

The HSP's rejection of Leninist organizational principles was

clearly apparent in its new organizational structure. The bylaws

allowed freedom of choice in joining or leaving the party; freedom

of conscience, expression, and action; and tolerance of different

views, opinions, and trends within the party. It also located in the

will of the membership the source of every decision and action by

the party. According to the bylaws, any minority view that had

the support of at least 10 percent of the membership was to be stated along with the position of the majority. Terms of office for party

officials were to be decided by the electing forum; nominations were

to take place by open ballot, and elections were to be held by secret

ballot. The party congress was to be the HSP's highest representative

and decision-making organ. The National Steering Committee

replaced the Central Committee to act as "the party membership's

representative and control organ between the congresses." The National Presidium, consisting of twenty-five people, was to lead the

party between congresses. Except for the chairman of the HSP,

members of the National Presidium could not be members of the

Steering Committee. The party leader, called the chairman, was

to be elected by a secret ballot of the party congress. Rezso Nyers was elected chairman of the HSP with 87 percent of the vote. The

chairman and the leader of the party's bloc in the National Assembly served as ex officio members of the National Presidium;

all others were elected from a slate of candidates prepared by the

delegates to the congress, by a nominating committee, or by the

chairman. The National Conciliation Committee was set up to protect party members' rights and to ensure that the actions of national and local party organs conformed to the HSP's bylaws. The

Central Financial Committee was established to manage the party's

finances and property.

At the bottom of the HSP's organizational pyramid were the

basic organizations, which required a minimum of three members.

Local organizations were to be set up in election districts throughout the country. Regional party organs were to be established at the county level and in Budapest. According to the bylaws, these

party organs were independent of the national organization. They

were to decide on their own which candidates to nominate for elec- tion to local representative bodies within their jurisdictions, and

xli
they could nominate candidates from their jurisdictions for elec- tion to the National Assembly.

At the Fourteenth Party Congress, the leadership gave each

HSWP member until October 31, 1989, to decide whether or not

to accept membership in the new party. The HSWP's membership had declined throughout 1989. In mid- 1988 the HSWP had

approximately 817,000 members; by September 1989, its membership stood at 725,000. However, relatively few members of the

old party decided to join the new organization. As a result, the

leadership decided to extend the deadline for old HSWP members

to December 31. As of mid-December, the HSP claimed about

51,000 members.

Reactions of Hungary's opposition groups to the changes in the

HSWP were decidedly mixed. The Hungarian Democratic Forum

stated that ''reform of the ruling party is a long-awaited and important event" but believed that the party had failed to make a

clear break with the past. The Alliance of Free Democrats feared

that "the setting up of the HSP does not mean genuine change.

The first resolutions of the new party and the composition of its presidium do not indicate, for the time being, a break away from

its past as a state party." The Social Democratic Party stated that

it "did not consider the new socialist party, which carries certain

social democratic features, a real political rival" and that free elec- tions would show whether the public considered the changes to be

credible.

Conservative party members decided to maintain the existence

of the HSWP. Former General Secretary Karoly Grosz was to become a member, as was Janos Berecz, the former HSWP ideology

secretary. The conservatives held their own Fourteenth Party Congress of the HSWP in mid-December 1989. The HSWP leadership dedicated itself to creating a "unified Marxist party of workers,

peasants, and intellectuals" to retain the achievements of the past

four decades, to overcome the country's "stifling crisis," and to find paths leading to the realization of socialist ideals. Shortly after the HSP congress, the National Assembly took ac- tion on three measures that were the subject of the November 26

referendum called for by the Alliance of Free Democrats and the

Federation of Young Democrats. In a session on October 17-18,

the National Assembly voted to ban all party organizations from

the workplace. At the same session, the legislature passed a law on political parties, which called for redistribution of some of the

HSP's assets to other political parties and the selling off of other

party assets to help finance the government's health and education systems. Finally, on October 20 the National Assembly

xlii
disbanded the Workers' Guard, without naming a successor or- ganization. In October the National Assembly also passed a number of other measures that would have a significant impact on Hungary's political future. The country's name was changed to the Republic

of Hungary. A new amendment to the Constitution vested legislative power solely in the National Assembly, which henceforth

would have the power to draft and enact laws, confirm the government, and pass a budget. A second new amendment abolished the

Presidential Council and in its place established the presidency.

The president of the republic, who was given a term of office of

four years, was granted extensive powers: to serve as commander

in chief of the armed forces; to declare war or a state of emergency

if the National Assembly were prevented from doing so; to represent

Hungary in foreign relations; to sign international agreements; and

to nominate the president of the Supreme Court (who then required

confirmation by the National Assembly).

A third amendment created the Constitutional Court to review

the constitutionality of laws. It was to have power to annul laws

deemed unconstitutional. Individuals and institutions could turn

to the court with grievances against the state. The Constitutional

Court consisted of fifteen judges, who were to be nominated by

a committee of the National Assembly made up of representatives

of various parties and then confirmed by the whole National Assembly.

Yet another amendment stated that "the Hungarian Republic

recognizes the inalienable and inviolable rights of man" and that

the state's foremost duty is to protect those rights. The Constitution explicitiy endorsed the freedoms of speech, press, and assembly.

Finally, an amendment on the economic system defined it as "a

market economy that also makes use of the advantages of economic

planning, and in which public and private property are equal and

receive equal protection." More detailed legislation that would

transform the economy from a command system to a market-based

system was to be dealt with later. Other laws concerned the election system. A party assets law

stipulated that party assets must be paid for exclusively through

membership fees, state support, and after-tax profits of companies

and limited companies founded by the parties. All parties repre- sented in the National Assembly were to be entitled to state budget

support: 25 percent of the funds were to be shared equally, while

75 percent of the funds were to be divided according to the number of seats held by each party. The amount of funds would be

determined by the availability of money in the budget.

xliii
According to the new electoral law, the National Assembly to be elected in 1990 will have 386 members chosen in a two-part secret

ballot. One ballot will elect 176 deputies from individual electoral

districts each having about 350,000 people. Parties and individuals

nominate candidates for these seats. If no candidate wins a majority

in a given district, a second round of balloting is held. Those parties that are able to enter candidates in at least 25 percent of the

electoral districts in a given county (and in Budapest, which has

the status of a county) can nominate a party list for that county

(or for Budapest). In the second ballot, voters will choose a party

as such, that is, they will cast a ballot for one of the county-level

lists, from which another 152 deputies will be elected. Parties that are able to put forward seven or more of these lists or that win 66

percent of the vote for the county-level list in any given county

can enter a slate for the national list of deputies. Fifty-eight deputies

will be named from the national list; seats will be distributed in

proportion to the total number of votes secured by losing parties on the county-level ballot. However, those parties that fail to win

at least 4 percent of the votes cast for the county-level lists will not

qualify for party representation in the National Assembly, although

their individual members could win seats in the district-level elections.

Approximately one month after the National Assembly enacted

these momentous changes, the national referendum called for by

the Alliance of Free Democrats and the Federation of Young

Democrats was held. The questions on the removal of the HSP

from the workplace, the nature of the HSP's assets, and the dis- banding of the Workers' Guard were moot at this point because

the National Assembly had already passed laws resolving these

issues. However, 50.1 percent of those who voted supported the

proposition that the presidential election should take place after the

elections to the National Assembly. Subsequently, district elections

to the National Assembly were set for March 25, 1990.

Hungary's political transformation during 1989 was reflected in

military and foreign policy developments. In May Hungary re- moved the barbed wire fence that marked the border with Austria. In September Hungary proposed establishment of a border

security zone with Austria and Yugoslavia, as well as a number

of steps to reduce its military presence along the borders with these

two countries. Specifically, the proposal called for a fifty-kilometerwide "confidence building zone" on either side of the boundaries

with Austria and Yugoslavia. The number of tanks in these areas would be halved, and Austria and Yugoslavia would be given details of Hungary's deployments. Military exercises would be

xliv
curtailed, and the Austrians and Yugoslavs would be invited to observe any exercises that were held.

The budget deficit led to defense budget cuts. In 1990 the military budget was to be reduced by 30 percent compared with 1989. In addition, the Ministry of Home Affairs—responsible for the

police and the Border Guards—was to have a 1990 budget of 900

million forints less than it asked for. Armed forces were to be

reduced from about 100,000 troops to less than 80,000 troops by

1991. Also beginning in 1991, military service was to be cut from

eighteen months to one year. HSP organizations were withdrawing from the armed forces and attempting to set up organizations

in residential areas. These budget cuts and reductions in force levels were accompanied by the reorganization of the Ministry of Defense. First, the

Main Political Administration (see Glossary), which supervised political and ideological work in the military, was disbanded. New

education officers were to work side by side with commanders and

to train soldiers in civics and educate them about social policy

problems. Second, some of the functions of the Ministry of Defense were transferred to the new "Command of the Hungarian People's Army," which was to assume responsibility for actual military assignments. A smaller Ministry of Defense continued to function, but it had responsibility for military policy and other administrative and theoretical matters only. The minister of defense was accountable to the prime minister, and the commander of the

Hungarian People's Army was responsible to the president, who

was commander in chief of the armed forces. On February 2, 1990, following talks between the Soviet Union

and Hungary, Moscow agreed to withdraw all of its troops from

Hungary. The communique that resulted from the talks stated that

the two sides "agreed that the withdrawal of Soviet troops will be

carried out on the basis of an intergovernmental agreement to be

concluded within the shortest possible time." On March 10, 1990,

Budapest and Moscow signed an agreement for the withdrawal of

all Soviet forces from Hungary by June 30, 1991 . The withdrawal

began on March 11, 1990, and two-thirds of Soviet troops and

equipment were to be removed by the end of 1990.

In foreign policy, Hungary continued to adhere to its semiindependent stance within the Warsaw Pact. In the early 1980s,

Hungary had attempted to halt the deterioration of relations between East and West by seeking constructive relations with the leading states of the North Atlantic Treaty Organization (NATO).

Hungary also attempted to develop relations with some states considered pariahs by other members of the Warsaw Pact, notably the

xlv
Republic of Korea (South Korea) and Israel, both of which it recog- nized in 1989. Moreover, in the late 1980s the Soviet Union also

liberalized many of its own foreign policy positions in an effort to resolve a number of disagreements with Western countries and to seek help for its ailing economy. As part of this approach, Moscow

allowed its East European allies much more leeway in foreign policy

than it had in the past. Hungary managed to take great advantage

of this new Soviet approach.

One of the most significant foreign policy events of the late 1980s was the visit of United States president George Bush to Hungary

from July 11 to 13, 1989. President Bush gave moral and material

support to Hungary's reform efforts. Four agreements resulted from

Bush's visit: the Hungarian airline MALEV won approval to fly

into and out of Los Angeles and Chicago; Hungary gained per- mission to open a consular office on the West Coast of the United

States; the two countries signed an agreement on agricultural

cooperation; and the two countries signed an agreement for a US$750,000 study by the University of Pittsburgh of the financial

operations of Borsod-Abauj-Zemplen County and its outdated

steelworks.

President Bush also agreed to ask other Western countries to help

Hungary and to request that the United States Congress make

money available to assist the private sector in Hungary. The ser- vices of the United States Peace Corps were also to be made available to Hungary. Perhaps most important for Budapest, President

Bush said he would ask Congress to give most-favored-nation sta- tus to Hungary on a permanent rather than on a yearly basis. On

October 27, the president announced that Hungary would be per- petually granted most-favored-nation status. Relations with the Soviet Union continued to prosper, as they

had since Mikhail S. Gorbachev became Soviet leader in March

1985. Significantly, in 1989 Budapest and Moscow agreed to switch

to dollar- accounted trade beginning in 1991. Hungary was to pay

the Soviet Union for its energy and raw materials using dollars

and applying current Western price rates. Hungary was to receive

hard currency for its manufactures sold to the Soviet Union. Hungary would have to compete with Western firms for the Soviet market, but Hungary's leaders believed that such competition would

help bring their country's industry up to world standards.

The move to trade in hard currency with the Soviet Union was

expected to resolve the problem of Hungary's huge trade surplus

with that country. In the first half of 1989, the surplus amounted

to 800 million rubles. These rubles were not a convertible currency

and therefore were of little use to Hungary. The surplus amounted

xlvi
to an interest-free loan to the Soviet Union, and the Hungarian

economy could not afford this burden.

Hungary had more serious problems with three other Warsaw

Pact allies —East Germany, Czechoslovakia, and Romania. East

Germans traveling or vacationing in Hungary used Hungary's open

border with Austria to flee to that country en route to West Germany. East Berlin had vociferously protested the Hungarian decision to allow the East Germans to leave for Austria. The official East German news agency called the decision "an organized trade

in humans under the pretense of humanitarian considerations."

However, after the emergence of a reform government in East Germany and the opening of the Berlin Wall in early November 1989,

relations between the two countries warmed considerably.

Relations with Czechoslovakia became problematic when Hungary suspended work on the Gabokovo-Nagymaros Dam project on May 1 3 . The Hungarian government took this action in response

to public protests over the environmental damage caused by the

project and in light of a recommendation by a panel of experts that

the project be abandoned. In turn, Czechoslovakia charged that

Hungary's suspension of the project was politically motivated and

a violation of international law. On November 15, Hungary an- nounced that the Nagymaros section of the dam "will not be built."

The new reform government that took power in Czechoslovakia

in late 1989 was drafting plans to suspend and halt its part of the

project, which had also raised environmental concerns in that

country.

Until the overthrow of Romanian leader Nicolae Ceau§escu in

late December 1989, Hungary's relations with Romania had

progressively worsened over the course of the year. The number

of refugees from Romania who settled in Hungary steadily increased

in 1989, and, significantly, the number of ethnic Romanians among

the refugees rose to about 20 percent of the total. In an attempt to resolve outstanding problems between the two

countries, Rezso Nyers, together with Foreign Minister Gyula Horn

and Prime Minister Miklos Nemeth, met Ceau§escu in Bucharest on July 8. The Hungarians sought a radical improvement in the

treatment of ethnic Hungarians in Romania—the most important

source of friction between Budapest and Bucharest. The Hungarians rejected Ceausescu's claim that the nationality issue was strictly

Romania's internal affair. The Hungarian delegation also called

for easing travel restrictions between the two countries and appealed

for a halt to Ceau§escu's plan to raze 7,000 to 8,000 villages and

relocate their inhabitants in large apartment complexes. The

xlvii
meeting produced no result, as Ceausescu again expressed the view

that he had ''solved" all nationality problems in his country.

The Romanian government's threats to the lives of Laszlo Tokes, an ethnic Hungarian Reformed minister in Timi§oara, Romania,

and his family initiated the revolution in Romania that brought

Ceau§escu's ouster and execution in December 1989. In response

to the violence perpetrated by the Ceau§escu regime on its citizens

in an effort to stem the popular revolt, the Hungarian government

took several measures. Hungary called on the United Nations Security Council to involve itself in the Romanian affair. Hungary canceled the 1948 Treaty of Friendship and Cooperation between the

two countries. Hungary also closed the border between Hungary

and Romania and formally protested the events in Romania to Romanian representatives in Hungary.

As fighting broke out between the Romanian army, which was

supporting the revolutionary Council of National Salvation Front,

and Ceau§escu's secret police organization—the Securitate

Hungary extended support to the new regime in Romania. Hungary was the first foreign government to recognize the Council of

National Salvation Front as the legitimate government of Romania. The Hungarian army maintained constant contact with the

Romanian army. The radio locator units of the Hungarian army

established the locations of several secret Securitate radio trans- mitters and relayed that information to the Romanian military

leadership. The Hungarians offered ammunition to the Romanian

army, but that offer was turned down. Finally, both the Hungarian government and private citizens and political parties proffered

food and medical aid to the beleaguered Romanians.

The revolution in Romania promised an immediate improvement in relations between Budapest and Bucharest. The new Romanian government ended the Ceau§escu regime's harsh measures

against its population, including the notorious resettlement program. The two governments agreed to reopen consulates in the

Romanian city of Cluj and the Hungarian city of Debrecen and

to open cultural institutes in Budapest and Bucharest.

As this account shows, in 1989 and early 1990 Hungary had ex- perienced a dizzying series of political changes. Noncommunist political parties were poised to assume political power. A number of

significant steps had been taken to establish the rule of law in Hungary, although the opposition parties made it clear that this process

had only just begun. The communist party—in whatever acronymic

guise—was dwindling in importance. Soviet troops were beginning

their withdrawal from Hungary. The government was pressing

toward Hungary's opening to the noncommunist world with vigor

xlviii
and determination. Hungary was indeed in the throes of a revolution, albeit a peaceful one, accompanied by its Central European

neighbors on the road to a new political future.

March 13, 1990

* * * On March 25, 1990, round one of the first free parliamentary

elections in forty-three years took place in Hungary. In the 152

district elections, only five candidates succeeded in winning a

majority. Among the winners was former Prime Minister Miklos

Nemeth, who ran as an independent. Runoff elections on April 8 were to decide the outcome of the other 147 district races. In balloting for the county-level lists, the Hungarian Democratic

Forum gained 24.7 percent of the vote, which translated into 40

seats in the National Assembly. The Alliance of Free Democrats

won 21 .39 percent of the vote for thirty-four seats, and the Independent Smallholders' Party 1 1 .73 percent for sixteen seats. Other parties winning the necessary 4 percent threshold for representation

in the National Assembly were the Hungarian Socialist Party with

10.89 percent of the vote, the Federation of Young Democrats with

8.95 percent of the vote, and the Christian Democratic People's

Party with 6.46 percent of the vote. Among the many parties fail- ing to reach the required threshold were the Social Democratic Party

and the Hungarian Socialist Workers' Party.

The Hungarian Democratic Forum emerged as the clear win- ner after the second round of elections held on April 8 in those

electoral districts where no candidate gained a majority in the first round of voting. The forum gained a total of 164 seats in the National Assembly in the two rounds of voting. Second was the Alli- ance of Free Democrats with ninety-two seats. The Hungarian

Democratic Forum chose to form a government together with the

Independent Smallholders' Party, which won forty-four seats, and

the Christian Democratic People's Party, which won twenty-one

seats. Hence, the governing coalition held 229 seats at about 60

percent of the 394 total. (On March 1 , the National Assembly had

added 8 seats to its previous total of 386, 1 each for the country's

Gypsy, Croatian, Serbian, Romanian, Slovak, Slovenian, German,

and Jewish minorities. Nominations for these seats were to be pre- pared by an interparty committee within the National Assembly

or by the National Assembly as a whole.)

The new National Assembly convened for the first time on May 2, 1990. At that meeting, it elected Arpad Goncz, a writer

xlix
jailed for six years following the Revolution of 1956, as president

of the National Assembly, which made him interim president of

the republic. Goncz was actually a founder of the Alliance of Free

Democrats. In return for the Hungarian Democratic Forum's support for Goncz, the Alliance of Free Democrats agreed to support

a series of amendments to the Constitution that were to secure the

establishment of "an independent democratic constitutional state"

in Hungary and provide the legal basis for a market economy.

Another amendment agreed to by the two parties would require

only a simple majority in the National Assembly to approve legislation for all matters except those of the highest political importance (such matters included a law on referendums, a nationalities

law, a citizenship law, legal provisions concerning the freedom of

conscience and religion, and other issues). The two parties also

agreed to an amendment according to which the president would

be elected to a four-year term by the National Assembly rather than

be elected by the population as a whole. Yet another amendment

would change the method for the representation of national minorities in the government and in the National Assembly.

On May 23, 1990, Jozsef Antall of the Hungarian Democratic

Forum became the prime minister. Other government ministers

included Balazs Horvath of the Hungarian Democratic Forum, who

became minister of the interior; Ferenc Jozsef Nagy of the Independent Smallholders' Party, who became minister of agriculture; Lajos

Fur of the Hungarian Democratic Forum, who became minister

of defense; Geza Jeszenszky of the Hungarian Democratic Forum,

who became minister of foreign affairs; and Peter Akos Bod of the

Hungarian Democratic Forum, who became minister of trade and

industry.

The elections and the formation of a new noncommunist government took place against the backdrop of crisis situations in the econ- omy and in foreign relations with Romania. In January 1990, prices

of meat, poultry, flour, milk and other dairy products, and cooking fat and oil rose an average of 32 percent; car prices rose 25

percent; and prices of beer, cigarettes, and gasoline also rose. On

February 1 , rents for state-owned apartments increased an aver- age of 35 percent, while bus and train fares rose 45 percent, and

railroad fares rose 20 percent. The drastic price increases resulted

from a reduction in government spending to reduce the budget

deficit from 50 billion forints in 1989 to 10 billion forints in 1990.

To meet this objective, the government cut many price subsidies

and decontrolled most producer prices.

On March 18 and 19, severe anti-Hungarian violence erupted

in the Romanian town of Tirgu Mure§. In the clashes between

1
Romanians and Hungarians, 3 people died and 269 were injured.

This violence led to a rapid deterioration of relations between Hungary and Romania. Prime Minister Miklos Nemeth addressed a note of protest to Romanian Prime Minister Petre Roman. Hungarian Foreign Minister Gyula Horn addressed a letter to United

Nations Secretary General Xavier Peres de Cuellar and to Jan

Martenson, head of the UN Human Rights Committee, asking

that the committee mediate the dispute without delay. For its part,

the Romanian government responded by holding the Hungarian

government responsible for the bloodshed in Tirgu Mure§, and

called upon Hungary to refrain from interfering in Romania's in- ternal affairs. In response to these charges, the Hungarian government stated that accusations of Hungarian interference were

unfounded, and that the source of the tragic events lay in the Romanian government's hesitancy to take resolute action to stem the rise of national chauvinism in Romania. The Hungarian government

called for talks between the two governments on all issues as a means

to reduce tension.

May 25, 1990 Stephen R. Burant

Chapter 1. Historical Setting
Refugee writing a letter, Esztergom, 1916
THE HUNGARIAN PEOPLE'S REPUBLIC emerged in 1949

after the Hungarian Workers' Party eliminated its rivals and as- sumed control of the state. Soviet control of Eastern Europe after World War II had enabled a minuscule communist party lacking

popular support to gain power in the country and gradually

eliminate its political rivals. Under Matyas Rakosi, the party consolidated its control and radically transformed the country economically, socially, and politically.

In the mid-1950s, after the Soviet Union had somewhat relaxed

its control of Eastern Europe, Hungarian society began to mobilize against the regime, culminating in the Revolution of 1956.

Soviet troops crushed the rebellion, leaving power in the hands of

Janos Kadar. After consolidating his authority, Kadar embarked

on a program of economic reform in the mid-1960s.

Like other countries of Eastern Europe, Hungary has a history

of class, religious, and ethnic conflicts that were intensified and

sometimes decided by the actions of larger, more powerful neighbors. Beginning in the tenth century, German and Bohemian missionaries converted the Magyars. In the early eleventh century,

Bavarian knights helped Stephen I eliminate rivals and quash

peasant revolts. Siileyman the Magnificent 's Ottoman armies con- quered and partitioned the country with the Habsburgs in the six- teenth century, expediting the spread of Protestant faiths. Habsburg

rulers colonized Hungary with non-Magyars, repressed its Protestants, stifled its economic development, and attempted to Germanize its people. The Entente powers carved up Hungary after World War I and distributed most of the land to new nation- states. Finally, dictator Joseph Stalin enforced Soviet domination over post- war Hungary.

Despite internal divisions, strong foreign influence, and outright

attempts to force the Hungarians to assimilate into other cultures,

Hungarian nationalism has thrived throughout the nineteenth and

twentieth centuries. Nationalism drove Hungary to ally itself with

Nazi Germany to regain territories lost after World War I. Nationalism also inspired Hungarians to revolt against the Stalinist

political order in October 1956.

Early History

The Hungarian nation traces its history to the Magyars, a pagan

Finno-Ugric tribe that arose in central Russia and spoke a language

3
Hungary: A Country Study

that evolved into modern Hungarian. Historians dispute the exact

location of the early Magyars' original homeland, but it is likely to be an area between the Volga River and the Ural Mountains.

In ancient times, the Magyars probably lived as nomadic tent- dwelling hunters and fishers. Some scholars argue that they en- gaged in agriculture beginning in the second millennium B.C.

Before the fifth century A.D., the Magyars' ancestors gradually

migrated southward onto the Russian steppes, where they wandered into the lands near the Volga River bend, at present-day

Kazan', as nomadic herders. Later, probably under pressure from

hostile tribes to the east, they migrated to the area between the

Don and lower Dnepr rivers. There they lived close to, and perhaps were dominated by, the Buigar-Turks from about the fifth to the

seventh century. During this period, the Magyars became a semisedentary people who lived by raising catde and sheep, planting

crops, and fishing. The Bulgar-Turkish influence on the Magyars

was significant, especially in agriculture. Most Hungarian words

dealing with agriculture and animal husbandry have Turkic roots. By contrast, the etymology of the word Hungary has been traced

to a Slavicized form of the Turkic words on ogur, meaning ' 'ten arrows," which may have referred to the number of Magyar tribes. The Magyars lived on lands controlled by the Khazars (a Turkish

people whose realm stretched from the lower Volga and the

lower Don rivers to the Caucasus) from about the seventh to the

ninth century, when they freed themselves from Khazar rule. The

Khazars attempted to reconquer the Magyars both by themselves

and with the help of the Pechenegs, another Turkish tribe. This

tribe drove the Magyars from their homes westward to lands between the Dnepr and lower Danube rivers in 889. In 895 the

Magyars joined Byzantine armies under Emperor Leo VI in a war

against the Bulgars. However, the Bulgars emerged victorious.

Their allies, the Pechenegs, attacked the weakened Magyars and

forced them westward yet again in 895 or 896. This migration took

the Magyars over the Carpathian Mountains and into the basin

drained by the Danube and Tisza rivers, a region that corresponds

roughly to present-day Hungary. Romans, Goths, Huns, Slavs,

and other peoples had previously occupied the region, but at the

time of the Magyar migration, the land was inhabited only by a

sparse population of Slavs, numbering about 200,000.

Tradition holds that the Magyar clan chiefs chose a chieftain

named Arpad to lead the migration and that they swore by sipping from a cup of their commingled blood to accept Arpad' s male

descendants as the Magyars' hereditary chieftains. The Magyars

probably knew of the lands in the Carpathian Basin because from

4
Historical Setting

892 to 894 Magyar mercenaries had fought there for King Arnulph

of East Francia in a struggle with the king of Moravia. Estimates

are that about 400,000 people made up the exodus, in seven Magyar, one Kabar, and other smaller tribes. The Carpathian Basin and parts of Transylvania south-southwest

of the basin had been settled for thousands of years before the

Magyars' arrival. A rich Bronze Age culture thrived there until

horsemen from the steppes destroyed it in the middle of the thir- teenth century B.C. Celts later occupied parts of the land, and in

the first century A.D. the Romans conquered and divided it between the imperial provinces of Pannonia and Dacia. In the fourth

century, the Goths ousted the Romans, and Attila the Hun later made the Carpathian Basin the hub of his short-lived empire. Thereafter, Avars, Bulgars, Germans, and Slavs settled the region. In

the late ninth century A.D. , only scattered settlements of Slavs oc- cupied the Carpathian Basin. The Magyar forces, light cavalrymen who used Central Asian- style bows, quickly conquered the

Slavs, whom they either assimilated or enslaved.

Romanian and Hungarian historians disagree about the ethnicity

of Transylvania's population before the Magyars' arrival. The

Romanians establish their claims to Transylvania by arguing that

their Latin ancestors inhabited Transylvania and survived there

through the Dark Ages. The Hungarians, by contrast, maintain

that Transylvania was inhabited not by the ancestors of the Romanians but by Slavs and point out that the first mention of the Romanians' ancestors in Hungarian records, which appeared in the

thirteenth century, described them as drifting herders.

Medieval Period

In the four centuries after their migration into the Carpathian

Basin, the Magyars gradually developed from a loose confederation of pagan marauders into a recognized kingdom. This kingdom, which became known as Hungary, was led by the Arpad

Dynasty and was firmly allied to the Christian West. Eventually

the Arpad line died out, however, and Hungary again descended

into anarchy, with the most powerful nobles vying for control.

Christianization of the Magyars

The bonds linking the seven Magyar tribes grew frail soon after the migration into the Carpathian Basin. At that time, Europe was weak and disunited, and for more than half a century Magyar bands

raided Bavaria, Moravia, Italy, Constantinople, and lands as far away as the Pyrenees. Sometimes fighting as mercenaries and sometimes lured by spoils alone, the Magyar bands looted towns and

5
Hungary: A Country Study

took captives for labor, ransom, or sale on the slave market. The

Byzantine emperor and European princes paid the Magyars an- nual tribute. In 955, however, German and Czech armies under

the Holy Roman Empire's King Otto I destroyed a Magyar force near Augsburg. The defeat effectively ended Magyar raids on the

West, and in 970 the Byzantines halted Magyar incursions toward

the East. Fearing a war of extermination, Chieftain Geza (972-97), Arpad's

great-grandson, assured Otto II that the Magyars had ceased their

raids and asked him to send missionaries. Otto complied, and in

975 Geza and a few of his kinsmen were baptized into the Roman

Catholic Church. Geza consented to baptism more out of political

necessity than conviction. He continued to offer sacrifices to the

pagan gods and reportedly bragged that he "was rich enough for

two gods." From this time, however, missionaries began the gradual

process of converting and simultaneously westernizing the Magyar

tribes. Geza used German knights and his position as chief of the

Magyars' largest clan to restore strong central authority over the

other clans. Hungary's ties with the West were strengthened in

996 when Geza's son, Stephen, who was baptized as a child and

educated by Saint Adalbert of Prague, married Gisela, a Bavarian

princess and sister of Emperor Henry II. Stephen I Stephen (997-1038) became chieftain when Geza died, and he

consolidated his rule by ousting rival clan chiefs and confiscating

their lands. Stephen then asked Pope Sylvester II to recognize him

as king of Hungary. The pope agreed, and legend says Stephen was crowned on Christmas Day in the year 1000. The crowning

legitimized Hungary as a Western kingdom independent of the Holy

Roman and Byzantine empires. It also gave Stephen virtually absolute power, which he used to strengthen the Roman Catholic

Church and Hungary. Stephen ordered the people to pay tithes

and required every tenth village to construct a church and support a priest. Stephen donated land to support bishoprics and

monasteries, required all persons except the clergy to marry, and

barred marriages between Christians and pagans. Foreign monks

worked as teachers and introduced Western agricultural methods.

A Latin alphabet was devised for the Magyar (Hungarian)

language.

Stephen administered his kingdom through a system of counties, each governed by an ispdn, or magistrate, appointed by the

king. In Stephen's time, Magyar society had two classes: the free- men nobles and the unfree. The nobles were descended in the male

6
St. Stephen

Courtesy Sam and Sarah Stulberg

7
Hungary: A Country Study

line from the Magyars who had either migrated into the Carpathian

Basin or had received their tide of nobility from the king. Only

nobles could hold office or present grievances to the king. They

paid tithes and owed the crown military service but were exempt

from taxes. The unfree—who had no political voice—were slaves,

freed slaves, immigrants, or nobles stripped of their privileges. Most

were serfs who paid taxes to the king and a part of each harvest

to their lord for use of his land. The king had direct control of the

unfree, thus checking the nobles' power.

Clan lands, crown lands, and former crown lands made up the

realm. Clan lands belonged to nobles, who could will the lands to family members or the church; if a noble died without an heir,

his land reverted to his clan. Crown lands consisted of Stephen's

patrimony, lands seized from disloyal nobles, conquered lands, and

unoccupied parts of the kingdom. Former crown lands were properties granted by the king to the church or to individuals.

Politics and Society under Stephen's Successors

Stephen died in 1038 and was canonized in 1083. Despite pagan

revolts and a series of succession struggles after his death, Hungary grew stronger and expanded (see fig. 2). Transylvania was

conquered and colonized with Magyars, Szekels (a tribe related

to the Magyars), and German Saxons in the eleventh and twelfth

centuries. In 1090 Laszlo I (1077-95) occupied Slavonia, and in

1103 Kalman I (1095-1116) assumed the title of king of Croatia.

Croatia was never assimilated into Hungary; rather, it became an

associate kingdom administered by a ban, or civil governor.

The eleventh and twelfth centuries were relatively peaceful, and

Hungary slowly developed a feudal economy. Crop production

gradually supplemented stock breeding, but until the twelfth cen- tury planting methods remained crude because tillers farmed each

plot until it was exhausted, then moved on to fresh land. Gold,

silver, and salt mining boosted the king's revenues. Despite the

minting of coins, catde remained the principal medium of exchange.

Towns began developing when an improvement in agricultural

methods and the clearing of additional land produced enough sur- plus to support a class of full-time craftsmen. By the reign of Bela

III (1173-96), Hungary was one of the leading powers in southeastern Europe, and in the thirteenth century Hungary's

nobles were trading gold, silver, copper, and iron with western

Europe for luxury goods.

Until the end of the twelfth century, the king's power remained

paramount in Hungary. He was the largest landowner, and in- come from the crown lands nearly equaled the revenues generated

3
Historical Setting

from mines, customs, tolls, and the mint. In the thirteenth century, however, the social structure changed, and the crown's absolute power began to wane. As the crown lands became a less important source of royal revenues, the king found it expedient

to make land grants to nobles to ensure their loyalty. King Andrew

II (1205-35), a profligate spender on foreign military adventures

and domestic luxury, made huge land grants to nobles who fought

for him. These nobles, many of whom were foreign knights, soon made up a class of magnates whose wealth and power far outstripped

that of the more numerous, and predominantly Magyar, lesser nobles. When Andrew tried to meet burgeoning expenses by rais- ing the serfs' taxes, thereby indirectly slashing the lesser nobles'

incomes, the lesser nobles rebelled. In 1222 they forced Andrew

to sign the Golden Bull, which limited the king's power, declared

the lesser nobles (all free men not included among the great Barons

or magnates) legally equal to the magnates, and gave them the right

to resist the king's illegal acts. The lesser nobles also began to present

Andrew with grievances, a practice that evolved into the institu- tion of the parliament, or Diet.

Andrew IPs son Bela IV (1235-79) tried with little success to reestablish royal preeminence by reacquiring lost crown lands. His

efforts, however, created a deep rift between the crown and the

magnates just as the Mongols were sweeping westward across Russia toward Europe. Aware of the danger, Bela ordered the magnates and lesser nobles to mobilize. Few responded, and the

Mongols routed Bela's army at Mohi on April 11, 1241 . Bela fled

first to Austria, where Duke Frederick of Babenberg held him for ransom, then to Dalmatia. The Mongols reduced Hungary's towns

and villages to ashes and slaughtered half the population before news arrived in 1242 that the Great Khan Ogotai had died in

Karakorum. The Mongols withdrew, sparing Bela and what re- mained of his kingdom.

Reconstruction

Bela realized that reconstruction would require the magnates'

support, so he abandoned his attempts to recover former crown

lands. Instead, he granted crown lands to his supporters, reor- ganized the army by replacing light archers with heavy cavalry,

and granted the magnates concessions to redevelop their lands and

construct stone-and-mortar castles that would withstand enemy

sieges. Bela repopulated the country with a wave of immigrants,

transforming royal castles into towns and populating them with

Germans, Italians, andJews. Mining began anew, farming methods

improved, and crafts and commerce developed in the towns. After

9
10
Historical Setting

Bela's reconstruction program, the magnates, with their new fortifications, emerged as Hungary's most powerful political force. However, by the end of the thirteenth century, they were fighting

each other and carving out petty principalities.

King Bela IV died in 1270, and the Arpad line expired in 1301

when Andrew III, who strove with some success to limit the magnates' power, unexpectedly died without a male heir. Anarchy

characterized Hungary as factions of magnates vied for control.

Renaissance and Reformation

After the Arpad Dynasty ended, Hungary's nobles chose a series of foreign kings who reestablished strong royal authority. Hungary and the adjacent countries prospered for several centuries as Central Europe experienced an era of peace interrupted only by

succession struggles. But over time, the onslaughts of the Turks

and the strife of the Reformation weakened Hungary, and the country was eventually partitioned by the Turks and the Habsburgs.

Golden Era

Hungary's first two foreign kings, Charles Robert and Louis I of the House of Anjou, ruled during one of the most glorious periods

in the country's history. Central Europe was at peace, and Hungary and its neighbors prospered. Charles Robert (1308-42) won

the protracted succession struggle after Andrew Ill's death. An

Arpad descendant in the female line, Charles Robert was crowned

as a child and raised in Hungary. He reestablished the crown's

authority by ousting disloyal magnates and distributing their estates to his supporters. Charles Robert then ordered the magnates to recruit and equip small private armies called banderia. Charles

Robert ruled by decree and convened the Diet only to announce

his decisions. Dynastic marriages linked his family with the ruling

families of Naples and Poland and heightened Hungary's standing abroad. Under Charles Robert, the crown regained control of

Hungary's mines, and in the next two centuries the mines produced more than a third of Europe's gold and a quarter of its silver. Charles Robert also introduced tax reforms and a stable currency.

Charles Robert's son and successor Louis I (1342-82) maintained

the strong central authority Charles Robert had amassed. In 1351

Louis issued a decree that reconfirmed the Golden Bull, erased all legal distinctions between the lesser nobles and the magnates, stan- dardized the serfs' obligations, and barred the serfs from leaving

the lesser nobles' farms to seek better opportunities on the magnates' estates. The decree also established the entail system (see

Glossary). Hungary's economy continued to flourish during Louis's

11
Hungary: A Country Study

reign. Gold and other precious metals poured from the country's

mines and enriched the royal treasury, foreign trade increased, new

towns and villages arose, and craftsmen formed guilds. The

prosperity fueled a surge in cultural activity, and Louis promoted

the illumination of manuscripts and in 1367 founded Hungary's

first university. Abroad, however, Louis fought several costly wars and wasted time, funds, and lives in failed attempts to gain for

his nephew the throne of Naples. While Louis was engaged in these

activities, the Turks made their initial inroads into the Balkans.

Louis became king of Poland in 1370 and ruled the two countries

for twelve years. Sigismund (1387-1437), Louis's son-in-law, won a bitter struggle for the throne after Louis died in 1382. Under Sigismund, Hungary's fortunes began to decline. Many Hungarian nobles despised

Sigismund for his cruelty during the succession struggle, his long

absences, and his costly foreign wars. In 1401 disgruntled nobles

temporarily imprisoned the king. In 1403 another group crowned

an anti-king, who failed to solidify his power but succeeded in sell- ing Dalmatia to Venice. Sigismund failed to reclaim the territory.

Sigismund became the Holy Roman Emperor in 1410 and king

of Bohemia in 1419, thus requiring him to spend long periods

abroad and enabling Hungary's magnates to acquire unprecedented

power. In response, Sigismund created the office of palatine (see

Glossary) to rule the country in his stead. Like earlier Hungarian

kings, Sigismund elevated his supporters to magnate status and

sold off crown lands to meet burgeoning expenses. Although Hungary's economy continued to flourish, Sigismund' s expenses out- stripped his income. He bolstered royal revenues by increasing the

serfs' taxes and requiring cash payment. Social turmoil erupted

late in Sigismund' s reign as a result of the heavier taxes and renewed

magnate pressure on the lesser nobles. Hungary's first peasant revolt erupted when a Transylvanian bishop ordered peasants to pay tithes in coin rather than in kind. The revolt was quickly checked, but

it prompted Transylvania's Szekel, Magyar, and German nobles

to form the Union of Three Nations, which was an effort to defend their privileges against any power except that of the king.

Additional turmoil erupted when the Ottoman Turks expanded

their empire into the Balkans. They crossed the Bosporus Straits

in 1352, subdued Bulgaria in 1388, and defeated the Serbs at Kosovo Polje in 1389. Sigismund led a crusade against them in

1396, but the Ottomans routed his forces at Nicopolis, and he barely

escaped with his life. Tamerlane's invasion of Anatolia in 1402-03

slowed the Turks' progress for several decades, but in 1437 Sultan

Murad prepared to invade Hungary. Sigismund died the same year,

12
Mdtyds Corvinus

Courtesy Kenneth Nyirddy

and Hungary's next two kings, Albrecht V of Austria (1437-39)

and Wladyslaw III of Poland (1439-44), who was known in Hungary as Ulaszlo I, both died during campaigns against the Turks.

After Ulaszlo, Hungary's nobles chose an infant king, Laszlo V,

and a regent, Janos Hunyadi, to rule the country until Laszlo V

came of age. The son of a lesser nobleman of the Vlach tribe,

Hunyadi rose to become a general, Transylvania's military governor, one of Hungary's largest landowners, and a war hero. He

used his personal wealth and the support of the lesser nobles to win the regency and overcome the opposition of the magnates.

Hunyadi then established a mercenary army funded by the first tax ever imposed on Hungary's nobles. He defeated the Ottoman

forces in Transylvania in 1442 and broke their hold on Serbia in

1443, only to be routed at Varna (where Laszlo V himself perished) a year later. In 1456, when the Turkish army besieged Belgrade,

Hunyadi defeated it in his greatest and final victory. Hunyadi died

of the plague soon after. Some magnates resented Hunyadi for his popularity as well as

for the taxes he imposed, and they feared that his sons might seize

the throne from Laszlo. They coaxed the sons to return to Laszlo 's court, where Hunyadi's elder son was beheaded. His younger son, Matyas, was imprisoned in Bohemia. However, lesser nobles loyal

to Matyas soon expelled Laszlo. After Laszlo' s death abroad, they

paid ransom for Matyas, met him on the frozen Danube River,

13
Hungary: A Country Study

and proclaimed him king. Known as Matyas Corvinus (1458-90),

he was, with one possible exception (Janos Zapolyai), the last Hungarian king to rule the country.

Although Matyas regularly convened the Diet and expanded the

lesser nobles' powers in the counties, he exercised absolute rule over Hungary by means of a secular bureaucracy. Matyas enlisted

30,000 foreign mercenaries in his standing army and built a net- work of fortresses along Hungary's southern frontier, but he did

not pursue his father's aggressive anti-Turkish policy. Instead,

Matyas launched unpopular attacks on Bohemia, Poland, and Austria, pursuing an ambition to become Holy Roman Emperor and

arguing that he was trying to forge a unified Western alliance strong

enough to expel the Turks from Europe. He eliminated tax ex- emptions and raised the serfs' obligations to the crown to fund his court and the military. The magnates complained that these measures reduced their incomes, but despite the stiffer obligations, the

serfs considered Matyas a just ruler because he protected them from

excessive demands and other abuses by the magnates. He also reformed Hungary's legal system and promoted the growth of Hungary's towns. Matyas was a true renaissance man and made his

court a center of humanist culture; under his rule, Hungary's first books were printed and its second university was established.

Matyas's library, the Corvina, was famous throughout Europe.

In his quest for the imperial throne, Matyas eventually moved to Vienna, where he died in 1490.

Reign of Ul£szl<5 II and Louis II Matyas's reforms did not survive the turbulent decades that fol- lowed his reign. An oligarchy of quarrelsome magnates gained control of Hungary. They crowned a docile king, Vladislav Jagiello

(the Jagiellonian king of Bohemia, who was known in Hungary

as Ulaszlo II, 1490-1516), only on condition that he abolish the taxes that had supported Matyas's mercenary army. As a result,

the king's army dispersed just as the Turks were threatening Hungary. The magnates also dismantled Matyas's administration and

antagonized the lesser nobles. In 1492 the Diet limited the serfs' freedom of movement and expanded their obligations. Rural dis- content boiled over in 1514 when well-armed peasants under

Gyorgy Dozsa rose up and attacked estates across Hungary. United

by a common threat, the magnates and lesser nobles eventually

crushed the rebels. Dozsa and other rebel leaders were executed

in a most brutal manner.

Shocked by the peasant revolt, the Diet of 1514 passed laws that

condemned the serfs to eternal bondage and increased their work

14
Historical Setting

obligations. Corporal punishment became widespread, and one

noble even branded his serfs like livestock. The legal scholar Stephen

Werboczy included the new laws in his Tripartitum of 1514, which

made up Hungary's legal corpus until the revolution of 1848. The

Tripartitum gave Hungary's king and nobles, or magnates, equal

shares of power: the nobles recognized the king as superior, but

in turn the nobles had the power to elect the king. The Tripartitum also freed the nobles from taxation, obligated them to serve

in the military only in a defensive war, and made them immune

from arbitrary arrest. The new laws weakened Hungary by deepening the rift between the nobles and the peasantry just as the Turks

prepared to invade the country.

When Ulaszlo II died in 1516, his ten-year-old son Louis II (1516-26) became king, but a royal council appointed by the Diet

ruled the country. Hungary was in a state of near anarchy under

the magnates' rule. The king's finances were a shambles; he borrowed to meet his household expenses despite the fact that they

totaled about one-third of the national income. The country's

defenses sagged as border guards went unpaid, fortresses fell into

disrepair, and initiatives to increase taxes to reinforce defenses were

stifled. In 1521 Sultan Suleyman the Magnificent recognized Hungary's weakness and seized Belgrade in preparation for an attack on Hungary. In August 1526, he marched more than 100,000

troops into Hungary's heartland, and at Mohacs they cut down

all but several hundred of the 25,000 ill-equipped soldiers whom

Louis II had been able to muster for the country's defense. Louis

himself died, thrown from a horse into a bog.

After Louis's death, rival factions of Hungarian nobles simultaneously elected two kings, Janos Zapolyai (1526-40) and Ferdinand (1526-64). Each claimed sovereignty over the entire country

but lacked sufficient forces to eliminate his rival. Zapolyai, a Hungarian and the military governor of Transylvania, was recognized

by the sultan and was supported mostly by lesser nobles opposed

to new foreign kings. Ferdinand, the first Habsburg to occupy

the Hungarian throne, drew support from magnates in western

Hungary who hoped he could convince his brother, Holy Roman

Emperor Charles V, to expel the Turks. In 1538 George Martinuzzi,

Zapolyai' s adviser, arranged a treaty between the rivals that would

have made Ferdinand sole monarch upon the death of the thenchildless Zapolyai. The deal collapsed when Zapolyai married and

fathered a son. Violence erupted, and the Turks seized the opportunity, conquering the city of Buda and then partitioning the country in 1541.

15
Hungary: A Country Study

Partition of Hungary

The partition of Hungary between the Ottoman and Habsburg

empires lasted more than 150 years. Habsburg Austria controlled

Royal Hungary, which consisted of counties along the Austrian

border and some of northwestern Croatia (see fig. 3). The Ottomans annexed central and southern Hungary. Transylvania became an Ottoman vassal state, where native princes, who paid the

Turks tribute, ruled with considerable autonomy. After the Hungarian defeat at Mohacs, the Protestant Reformation took hold in

Hungary. Initially, German burghers in Transylvania and Royal

Hungary adopted Lutheranism; later, John Calvin's works con- verted many Magyars in Transylvania and central Hungary. The

Reformation spread quickly, and by the early seventeenth century

hardly any noble families remained Catholic. Archbishop Peter

Pazmany reorganized Royal Hungary's Roman Catholic Church

and led a Counter-Reformation that reversed the Protestants' gains

in Royal Hungary, using persuasion rather than intimidation.

Transylvania, however, remained a Protestant stronghold. The

Reformation caused rifts between Catholic Magyars, who often

sided with the Habsburgs, and Protestant Magyars, who developed

a strong national identity and became rebels in Austrian eyes. Chasms also developed between Royal Hungary and Transylvania

and between the mostiy Catholic magnates and the mainly Protestant lesser nobles.

Royal Hungary

Royal Hungary became a small part of the Habsburg Empire

and enjoyed little influence in Vienna. The Habsburg king directly

controlled Royal Hungary's financial, military, and foreign affairs,

and imperial troops guarded its borders. The Habsburgs avoided

filling the office of palatine to prevent the holder's amassing too much power. In addition, the so-called Turkish question divided

the Habsburgs and the Hungarians: Vienna wanted to maintain

peace with the Turks; the Hungarians wanted the Ottomans ousted.

As the Hungarians recognized the weakness of their position, many

became anti-Habsburg. They complained about foreign rule, the

behavior of foreign garrisons, and the Habsburgs' recognition of

Turkish sovereignty in Transylvania. Protestants, who were per- secuted in Royal Hungary, considered the Counter-Reformation

a greater menace than the Turks, however.

Ottoman Hungary

Central Hungary became a province of the Ottoman Empire

ruled by pashas living in Buda. The Turks' only interest was to

16
Historical Setting

secure their hold on the territory. The Sublime Porte (a term used

to designate the Ottoman rulers) became the sole landowner and

managed about 20 percent of the land for its own benefit, apportioning the rest among soldiers and civil servants. The new landlords were interested mainly in squeezing as much wealth from

the land as quickly as possible. Wars, slave-taking, and the emigration of nobles who lost their land depopulated much of the

countryside. However, the Turks practiced religious tolerance and

allowed the Hungarians living within the empire significant

autonomy in internal affairs. Towns maintained some self- government, and a prosperous middle class developed through

artisanry and trade.

Transylvania

Transylvania, an Ottoman vassal state, functioned for many

years as an independent country. In 1542 Martinuzzi revived the

1437 Union of Three Nations to govern the land, and the Transylvanian nobles regularly met in their own Diet. In 1572 the Diet

created freedom of worship and equal political rights for members

of Transylvania's four "established" religions: Roman Catholic,

Lutheran, Unitarian, and Calvinist. The Eastern Orthodox Romanian serfs were permitted to worship, but the Orthodox Church

was not recognized as an "established" religion, and the Romanians did not share political equality.

In 1591 the Habsburgs invaded Transylvania under George

Basta, who persecuted Protestants and expropriated estates illegally

until Istvan Bocskay, a former Habsburg supporter, mustered an army that expelled Basta' s forces in 1604-05. In 1606 Bocskay con- cluded the Peace of Vienna with the Habsburgs and the Peace of

Zsitvatorok with the Turks. The treaties secured his position as prince of Transylvania, guaranteed rights for Royal Hungary's Protestants, broadened Transylvania's independence, and freed the

emperor of his obligation to pay tribute to the Ottomans. After

Bocskay' s death, the Ottomans compelled the Transylvanians to accept Gabor Bethlen as prince. Transylvania prospered under

Bethlen's enlightened despotism. He stimulated agriculture, trade,

and industry; sank new mines; sent students to Protestant universities abroad; and prohibited landlords from barring children of

serfs from an education. Unfortunately, when Bethlen died in 1629,

the Transylvanian Diet abolished most of his reforms. After a short

succession struggle, Gyorgy Rakoczi I (1648-60) became prince.

Under Rakoczi, Transylvania fought with the Protestants in the

Thirty Years' War (1618-48) and was mentioned as a sovereign

state in the Peace of Westphalia. Transylvania's golden age ended

17
Hungary: A Country Study

18
Historical Setting

after Gyorgy Rakoczi II (1648-60) launched an attack on Poland

without the prior approval of the Ottomans or Transylvania's Diet.

The campaign was a disaster, and the Turks used the opportunity

to rout Rakoczi 's army and take control of Transylvania.

End of the Partition

The Ottoman Empire gradually weakened after Suleyman's

death in 1559. The Ottoman occupation of Hungary continued,

however, not so much because of the Turks' strength but because

of the West's disunity and lack of resolve. Hungarian nobles grew

impatient with the Habsburgs' persecution of Protestants and reluc- tance to take steps to drive out the Turks. Their discontent ex- ploded after the Habsburg imperial army routed a Turkish force

at St. Gotthard in 1664. Instead of pressing for concessions, Emperor Leopold I (1657-1705) concluded the Treaty of Vasvar in

which he conceded to the Turks more Hungarian territory than

they had ever possessed. After Vasvar, even many Catholic magnates turned against the Habsburgs.

After a failed Hungarian plot to throw off Habsburg rule,

Leopold suppressed the Hungarian constitution, subjected Royal

Hungary to direct absolute rule from Vienna, and harshly repressed

Hungarian Protestants, handing over Protestant ministers who

refused to deny their faith to work as galley slaves. Hungarian dis- content deepened. In 1681 Imre Thokoly, a Transylvanian nobleman, led a rebellion against the Habsburgs and forced Leopold

I to convoke the Diet and restore Hungary's constitution and the

office of palatine. Sensing weakness, the Turks made their strike

against Austria, but Polish forces routed them near Vienna in 1683.

A Western campaign then gradually drove the Turks from Hungary, and the sultan surrendered almost all of his Hungarian and

Croatian possessions in the Peace of Karlowitz in 1699.

Hungary under the Habsburgs

The Habsburgs ruled autocratically on almost all questions ex- cept taxation and relegated Hungary to the status of a colony, a

factor that, together with other factors, stifled economic development. After more than a century of stagnation, the lesser nobles,

under increasing economic pressure and prompted by nascent Hungarian nationalism, pressed for reform. The crescendo of discontent climaxed in the March 1848 revolution. Russian troops quashed

the rebellion, enabling Austrian emperor Franz Joseph to impose

absolute control for almost two decades.

Reign of Leopold II As the Habsburgs gained control of the country, the ministers

19
Hungary: A Country Study

of Leopold I argued that he should rule Hungary as conquered

territory. One even said Vienna should first make the Hungarians

beggars, then Catholics, and then Germans. At the Diet of Press- burg in 1687, the emperor promised to observe all of Hungary's

laws and privileges. Hereditary succession of the Habsburgs was

recognized, however, and the nobles' right of resistance was

abrogated. In 1690 Leopold began redistributing lands freed from

the Turks. Protestant nobles and all other Hungarians thought dis- loyal by the Habsburgs lost their estates, which were given to foreigners. Vienna controlled Hungary's foreign affairs, defense,

tariffs, and other functions, and it separated Transylvania from

Hungary, treating it as a separate imperial territory.

The repression of Protestants and the land seizures embittered

the Hungarians, and in 1703 a peasant uprising sparked an eightyear national rebellion aimed at casting off the Habsburg yoke.

Disgruntled Protestants, peasants, and soldiers united under Ferenc

Rakoczi, a Roman Catholic magnate who could hardly speak Hungarian. Most of Hungary soon supported Rakoczi, and the joint

Hungarian-Transylvanian Diet voted to annul the Habsburgs' right to the throne. Fortunes turned against the rebels, however, when

the Habsburgs made peace in the West and turned their full force

against Hungary. The rebellion ended in 1711, when moderate

rebel leaders concluded the Treaty of Szatmar, in which the Hungarians gained little except the emperor's agreement to reconvene

the Diet and to grant an amnesty for the rebels. Reign of Charles VI and Maria Theresa

Leopold's successor, Charles VI (1711-40), began building a workable relationship with Hungary after the Treaty of Szatmar.

Charles needed the Hungarian Diet's approval for the Pragmatic

Sanction, under which the Habsburg monarch was to rule Hungary not as emperor but as a king subject to the restraints of Hungary's constitution and laws. He hoped that the Pragmatic Sanction

would keep the Habsburg Empire intact if his daughter, Maria

Theresa, succeeded him. The Diet approved the Pragmatic Sanction in 1723, and Hungary thus agreed to became a hereditary

monarchy under the Habsburgs for as long as their dynasty existed.

In practice, however, Charles and his successors governed almost

autocratically, controlling Hungary's foreign affairs, defense, and

finance but lacking the power to tax the nobles without their approval. The Habsburgs also maintained Transylvania's separation

from Hungary.

Charles organized Hungary's first modern, centralized administration and in 1715 established a standing army under his

20
Historical Setting

command, which was entirely funded and manned by the nonnoble

population. This policy reduced the nobles' military obligation

without abrogating their exemption from taxation. Charles also banned conversion to Protestantism, required civil servants to profess Catholicism, and forbade Protestant students to study

abroad.

Maria Theresa (1740-80) faced an immediate challenge from

Prussia's Frederick II when she became head of the House of Habsburg. In 1741 she appeared before the Hungarian Diet holding

her newborn son and entreated Hungary's nobles to support her.

They stood behind her and helped secure her rule. Maria Theresa

later took measures to reinforce links with Hungary's magnates.

She established special schools to attract Hungarian nobles to Vienna. During her reign, the members of the magnate class lost their Hungarian national identity, including their knowledge of

the Hungarian language.

Under Charles and Maria Theresa, Hungary experienced fur- ther economic decline. Centuries of Ottoman occupation, rebellion, and war had reduced Hungary's population drastically, and

large parts of the country's southern half were almost deserted.

A labor shortage developed as landowners restored their estates. In response, the Habsburgs began to colonize Hungary with large

numbers of peasants from all over Europe, especially Slovaks, Serbs,

Croatians, and Germans. ManyJews also immigrated from Vienna

and the empire's Polish lands near the end of the century. Hungary's population more than tripled to 8 million between 1720 and

1787. However, only 39 percent of its people were Magyars, who

lived mainly in the center of the country.

A complex patchwork of minority peoples emerged in the lands

along Hungary's periphery. Droves of Romanians entered Transylvania during the same period. The Protestant and Catholic Hungarians and Germans who had been there for years had considered

the Orthodox Romanians inferior and relegated them to serfdom.

In the eighteenth century, leaders of the Orthodox Church began

arguing that Romanians were descendants of the Roman Dacians

and thus Transylvania's original inhabitants. The Orthodox leaders

demanded, without success, that the Romanians be recognized as Transylvania's fourth "nation" and the Orthodox Church as its fifth "established" religion.

In the early to mid-eighteenth century, Hungary had a primitive agricultural economy that employed 90 percent of the population. The nobles failed to use fertilizers, roads were poor and rivers

blocked, and crude storage methods caused huge losses of grain.

Barter had replaced money transactions, and little trade existed

21
Hungary: A Country Study

between towns and the serfs. After 1760 a labor surplus developed.

The serf population grew, pressure on the land increased, and the

serfs' standard of living declined. Landowners began making greater

demands on new tenants and began violating existing agreements.

In response, Maria Theresa issued her Urbarium of 1767 to protect the serfs by restoring their freedom of movement and limiting

the corvee (see Glossary). Despite her efforts and several periods

of strong demand for grain, the situation worsened. Between 1767

and 1848, many serfs left their holdings. Most became landless farm

workers because a lack of industrial development meant few opportunities for work in the towns.

Enlightened Absolutism

Joseph II (1780-90), a dynamic leader strongly influenced by

the Enlightenment, shook Hungary from its malaise when he in- herited the throne from his mother, Maria Theresa. Joseph sought

to centralize control of the empire and to rule it by decree as an

enlightened despot. He refused to take the Hungarian coronation

oath to avoid being constrained by Hungary's constitution. In 1781

Joseph issued the Patent of Toleration, which granted Protestants and Orthodox Christians full civil rights and Jews freedom of worship. He decreed that German replace Latin as the empire's offi- cial language and granted the peasants the freedom to leave their

holdings, to marry, and to place their children in trades. Hungary,

Croatia, and Transylvania became a single imperial territory under one administration. When the Hungarian nobles again refused to waive their exemption from taxation, Joseph banned imports of

Hungarian manufactured goods into Austria and began a survey

to prepare for imposition of a general land tax. Joseph's reforms outraged Hungary's nobles and clergy, and the

country's peasants grew dissatisfied with taxes, conscription, and

requisitions of supplies. Hungarians perceived Joseph's language

reform as German cultural hegemony, and they reacted by insist- ing on the right to use their own tongue. As a result, Hungarian

lesser nobles sparked a renaissance of the Magyar language and

culture, and a cult of national dance and costume flourished. The

lesser nobles questioned the loyalty of the magnates, of whom less than half were ethnic Magyars, and even those had become Frenchand German-speaking courtiers. The Magyar national reawakening subsequently triggered national revivals among the Slovak,

Romanian, Serbian, and Croatian minorities within Hungary and

Transylvania who felt threatened by both German and Magyar

cultural hegemony. These national revivals later blossomed into

22
Historical Setting

the nationalist movements of the nineteenth and twentieth centuries

that contributed to the empire's ultimate collapse.

Late in his reign, Joseph led a costly, ill-fated campaign against

the Turks that weakened his empire. On January 28, 1790, three

weeks before his death, the emperor issued a decree canceling all of his reforms except the Patent of Toleration, peasant reforms,

and abolition of the religious orders.

Joseph's successor, Leopold II (1790-92), recognized Hungary

again as a separate country under a Habsburg king and reestablished Croatia and Transylvania as separate territorial entities. In 1791 the Diet passed Law X, which stressed Hungary's status as an independent kingdom ruled only by a king legally crowned

according to Hungarian laws. Law X became the basis for demands

by Hungarian reformers for statehood in the period from 1825 to 1849. New laws again required approval of both the Habsburg king

and the Diet, and Latin was restored as the official language. The

peasant reforms remained in effect, however, and Protestants remained equal before the law. Leopold died in March 1792 just

as the French Revolution was about to degenerate into the Reign

of Terror and send shock waves through the royal houses of Europe.

Enlightened absolutism ended in Hungary under Leopold's successor, Francis I (1792-1835), who developed an almost abnormal

aversion to change, bringing Hungary decades of political stagnation. In 1795 the Hungarian police arrested an abbot and several

of the country's leading thinkers for plotting a Jacobin kind of revolution to install a radical democratic, egalitarian political system

in Hungary. Thereafter, Francis resolved to extinguish any spark

of reform that might ignite revolution. The execution of the al- leged plotters silenced any reform advocates among the nobles, and

for about three decades reform ideas remained confined to poetry

and philosophy. The magnates, who also feared that the influx of

revolutionary ideas might precipitate a popular uprising, became

a tool of the crown and seized the chance to further burden the

peasants.

Economic and Social Developments

By the turn of the nineteenth century, the aim of Hungary's

agricultural producers had shifted from subsistence farming and

small-scale production for local trade to cash-generating, large-scale

production for a wider market. Road and waterway improvements

cut transportation costs, while urbanization in Austria, Bohemia,

and Moravia and the need for supplies for the Napoleonic wars

boosted demand for foodstuffs and clothing. Hungary became a major grain and wool exporter. New lands were cleared, and yields

23
Hungary: A Country Study

rose as farming methods improved. Hungary did not reap the full benefit of the boom, however, because most of the profits went to the magnates, who considered them not as capital for investment

but as a means of adding luxury to their lives. As expectations rose, goods such as linen and silverware, once considered luxuries, be- came necessities. The wealthy magnates had little trouble balancing their earnings and expenditures, but many lesser nobles, fearful of losing their social standing, went into debt to finance their

spending.

Napoleon's final defeat brought recession. Grain prices collapsed

as demand dropped, and debt ensnared much of Hungary's lesser

nobility. Poverty forced many lesser nobles to work to earn a liveli- hood, and their sons entered education institutions to train for civil service or professional careers. The decline of the lesser nobility

continued despite the fact that by 1820 Hungary's exports had sur- passed wartime levels. As more lesser nobles earned diplomas, the

bureaucracy and professions became saturated, leaving a host of

disgruntied graduates without jobs. Members of this new intelligentsia quickly became enamored of radical political ideologies emanating from Western Europe and organized themselves to effect changes in Hungary's political system.

Francis rarely called the Diet into session (usually only to re- quest men and supplies for war) without hearing complaints. Economic hardship brought the lesser nobles' discontent to a head by

1825, when Francis finally convoked the Diet after a fourteen-year

hiatus. Grievances were voiced, and open calls for reform were made, including demands for less royal interference in the nobles'

affairs and for wider use of the Hungarian language.

The first great figure of the reform era came to the fore during

the 1825 convocation of the Diet. Count Istvan Szechenyi, a magnate from one of Hungary's most powerful families, shocked the

Diet when he delivered the first speech in Hungarian ever uttered

in the upper chamber and backed a proposal for the creation of a Hungarian academy of arts and sciences by pledging a year's

income to support it. In 1831 angry nobles burned Szechenyi's book

Hitel (Credit), in which he argued that the nobles' privileges were

both morally indefensible and economically detrimental to the

nobles themselves. Szechenyi called for an economic revolution and

argued that only the magnates were capable of implementing re- forms. Szechenyi favored a strong link with the Habsburg Empire

and called for abolition of entail and serfdom, taxation of landowners, financing of development with foreign capital, establishment of a national bank, and introduction of wage labor. He

inspired such projects as the construction of the suspension bridge

24
The National Library, Budapest

Courtesy Scott Edelman

linking Buda and Pest. Szechenyi's reform initiatives ultimately

failed because they were targeted at the magnates, who were not

inclined to support change, and because the pace of his program

was too slow to attract disgruntled lesser nobles.

The most popular of Hungary's great reform leaders, Lajos

Kossuth, addressed passionate calls for change to the lesser nobles.

Kossuth was the son of a landless, lesser nobleman of Protestant background. He practiced law with his father before moving to Pest. There he published commentaries on the Diet's activities, which

made him popular with young, reform-minded people. Kossuth was imprisoned in 1836 for treason. After his release in 1840, he

gained quick notoriety as the editor of a liberal party newspaper.

Kossuth argued that only political and economic separation from

Austria would improve Hungary's plight. He called for broader

parliamentary democracy, industrialization, general taxation, eco- nomic expansion through exports, and abolition of privileges and

serfdom. But Kossuth was also a Magyar chauvinist whose rhetoric

provoked the strong resentment of Hungary's minority ethnic

groups. Kossuth gained support among liberal lesser nobles, who

constituted an opposition minority in the Diet. They sought re- forms with increasing success after Francis's death in 1835 and the

25
Hungary: A Country Study

succession of Ferdinand V (1835-48). In 1843 a law was enacted

making Hungarian the country's official language over the strong

objections of the Croats, Slovaks, Serbs, and Romanians.

The Revolution of March 1848

In March 1848, revolution erupted in Vienna, forcing Austria's

Chancellor Klemens von Metternich to flee the capital. Unrest broke

out in Hungary on March 15, when radicals and students stormed

the Buda fortress to release political prisoners. A day later, the Diet's

liberal-dominated lower house demanded establishment of a national government responsible to an elected parliament, and on March 22 a new national cabinet took power with Count Louis

Batthyany as chairman, Kossuth as minister of finance, and

Szechenyi as minister of public works. Under duress, the Diet's

upper house approved a sweeping reform package, signed by

Ferdinand, that altered almost every aspect of Hungary's economic,

social, and political life. These so-called April Laws created independent Hungarian ministries of defense and finance, and the new

government claimed the right to issue currency through its own

central bank. Guilds lost their privileges; the nobles became subject to taxation; entail, tithes, and the corvee were abolished; some

peasants became freehold proprietors of the land they worked; free- dom of the press and assembly were created; a Hungarian national

guard was established; and Transylvania was brought under Hungarian rule. The non-Magyar ethnic groups in Hungary feared the nationalism of the new Hungarian government, and Transylvanian Germans and Romanians opposed the incorporation of Transylvania

into Hungary. The Vienna government enlisted the minorities in

the first attempt to overthrow the Hungarian government. Josip

Jelacic—a fanatic anti-Hungarian—became governor of Croatia on March 22 and severed relations with the Hungarian government a month later. By summer the revolution's momentum began to wane. The Austrians ordered the Hungarian Diet to dissolve,

but the order went unheeded. In September Jelacic led an army

into Hungary. Batthyany resigned, and a mob lynched the imperial

commander in Pest. A committee of national defense under Kossuth

took control, authorized the establishment of a Hungarian army,

and issued paper money to fund it. On October 30, 1848, imperial

troops entered Vienna and suppressed a workers' uprising, effec- tively ending the revolution everywhere in the empire except

Hungary, where Kossuth's army had overcome Jelacic 's forces. In December Ferdinand abdicated in favor of Franz Joseph

(1848-1916), who claimed more freedom of action because, unlike

26
Historical Setting

Ferdinand, he had given no pledge to respect the April Laws. The

Magyars, however, refused to recognize him as their king because

he was never crowned.

The imperial army captured Pest early in 1849, but the revolutionary government remained entrenched in Debrecen. In April

a "rump" Diet deposed the Habsburg Dynasty in Hungary,

proclaimed Hungary a republic, and named Kossuth governor with

dictatorial powers. After the declaration, Austrian reinforcements were transferred to Hungary, and in June, at Franz Joseph's re- quest, Russian troops attacked from the east and overwhelmed the

Hungarians. The Hungarian army surrendered on August 13, and

Kossuth escaped to the Ottoman Empire. A period of harsh repres- sion followed. Batthyany and about 100 others were shot, several

society women were publicly whipped, and the government out- lawed public gatherings, theater performances, display of the national colors, and wearing of national costumes and Kossuth-style

beards.

Aftermath of the Revolution

After the revolution, the emperor revoked Hungary's constitution

and assumed absolute control. Franz Joseph divided the country into four distinct territories: Hungary, Transylvania, CroatiaSlavonia, and Vojvodina. German and Bohemian administrators

managed the government, and German became the language of

administration and higher education. The non-Magyar minorities

of Hungary received little for their support of Austria during the

turmoil. A Croat reportedly told a Hungarian: "We received as a reward what the Magyars got as a punishment."

Hungarian public opinion split over the country's relations with

Austria. Some Hungarians held out hope for full separation from

Austria; others wanted an accommodation with the Habsburgs,

provided that they respected Hungary's constitution and laws.

Ferencz Deak became the main advocate for accommodation. Deak

upheld the legality of the April Laws and argued that their amendment required the Hungarian Diet's consent. He also held that

the dethronement of the Habsburgs was invalid. As long as Austria ruled absolutely, Deak argued, Hungarians should do no more

than passively resist illegal demands.

The first crack in Franz Joseph's neo-absolutist rule developed

in 1859, when the forces of Sardinia and France defeated Austria

at Solferno. The defeat convinced Franz Joseph that national and

social opposition to his government was too strong to be managed

by decree from Vienna. Gradually he recognized the necessity of

concessions toward Hungary, and Austria and Hungary thus moved

27
Hungary: A Country Study

toward a compromise. In 1866 the Prussians defeated the Austrians,

further underscoring the weakness of the Habsburg Empire. Negotiations between the emperor and the Hungarian leaders were in- tensified and finally resulted in the Compromise of 1867, which

created the Dual Monarchy of Austria-Hungary, also known as the Austro-Hungarian Empire.

Dual Monarchy

The Compromise of 1867, which created the Dual Monarchy,

gave the Hungarian government more control of its domestic af- fairs than it had possessed at any time since the Battle of Mohacs

(see fig. 4). However, the new government faced severe economic

problems and the growing restiveness of ethnic minorities. World

War I led to the disintegration of Austria-Hungary, and in the after- math of the war, a series of governments—including a communist

regime—assumed power in Budapest (in 1872 the cities of Buda

and Pest united to become Budapest).

Constitutional and Legal Framework

Once again a Habsburg emperor became king of Hungary, but

the compromise strictly limited his power over the country's in- ternal affairs, and the Hungarian government assumed control over

its domestic affairs. The Hungarian government consisted of a prime minister and cabinet appointed by the emperor but responsible to a bicameral parliament elected by a narrow franchise. Joint

Austro-Hungarian affairs were managed through "common"

ministries of foreign affairs, defense, and finance. The respective

ministers were responsible to delegations representing separate

Austrian and Hungarian parliaments. Although the "common"

ministry of defense administered the imperial and royal armies,

the emperor acted as their commander in chief, and German re- mained the language of command in the military as a whole. The

compromise determined that commercial and monetary policy,

tariffs, the railroad, and indirect taxation were "common" concerns to be negotiated every ten years. The compromise also

returned Transylvania, Vojvodina, and the military frontier to Hungary's jurisdiction.

At Franz Joseph's insistence, Hungary and Croatia reached a similar compromise in 1868, giving the Croats a special status in Hungary. The agreement granted the Croats autonomy over their internal

affairs. The Croatian ban would now be nominated by the Hungarian prime minister and appointed by the king. Areas of

"common" concern to Hungarians and Croats included finance,

currency matters, commercial policy, the post office, and the railroad.

28
Historical Setting

Croatian became the official language of Croatia's government,

and Croatian representatives discussing "common" affairs before

the Hungarian Diet were permitted to speak Croatian.

The Nationalities Law enacted in 1868 defined Hungary as a

single nation comprising different nationalities whose members en- joyed equal rights in all areas except language. Although non- Hungarian languages could be used in local government, churches,

and schools, Hungarian became the official language of the central government and universities. Many Hungarians thought the

act too generous, while minority- group leaders rejected it as in- adequate. Slovaks in northern Hungary, Romanians in Transylvania, and Serbs in Vojvodina all wanted more autonomy, and

unrest followed the act's passage. The government took no fur- ther action concerning nationalities, and discontent rose. Anti-Semitism appeared in Hungary early in the century as a

result of fear of economic competition. In 1840 a partial emancipation of the Jews allowed them to live anywhere except certain

depressed mining cities. The Jewish Emancipation Act of 1868 gave

Jews equality before the law and effectively eliminated all bars to their participation in the economy; nevertheless, informal barriers

kept Jews from careers in politics and public life. Rise of the Liberal Party

Franz Joseph appointed Gyula Andrassy—a member of Deak's

party—prime minister in 1867. His government strongly favored

the Compromise of 1867 and followed a laissez-faire economic policy. Guilds were abolished, workers were permitted to bargain for wages, and the government attempted to improve education and

construct roads and railroads. Between 1850 and 1875, Hungary's

farms prospered: grain prices were high, and exports tripled. But

Hungary's economy accumulated capital too slowly, and the

government relied heavily on foreign credits. In addition, the national and local bureaucracies began to grow immediately after the

compromise became effective. Soon the cost of the bureaucracy

outpaced the country's tax revenues, and the national debt soared.

After an economic downturn in the mid- 1870s, Deak's party suc- cumbed to charges of financial mismanagement and scandal.

As a result of these economic problems, Kalman Tisza's Liberal Party, created in 1875, gained power that same year. Tisza

assembled a bureaucratic political machine that maintained control through corruption and manipulation of a woefully unrepresentative electoral system. In addition, Tisza's government had to withstand both dissatisfied nationalities and Hungarians who

thought Tisza too submissive to the Austrians. The Liberals argued

29
Hungary: A Country Study
Historical Setting

that the Dual Monarchy improved Hungary's economic position

and enhanced its influence in European politics.

Tisza's government raised taxes, balanced the budget within

several years of coming to power, and completed large road, rail- road, and waterway projects. Commerce and industry expanded

quickly. After 1880 the government abandoned its laissez-faire eco- nomic policies and encouraged industry with loans, subsidies,

government contracts, tax exemptions, and other measures. The

number of Hungarians who earned their living in industry doubled to 24.2 percent of the population between 1890 and 1910, while

the number dependent on agriculture dropped from 82 to 62 percent. However, the 1880s and 1890s were depression years for the

peasantry. Rail and steamship transport gave North American

farmers access to European markets, and Europe's grain prices fell by 50 percent. Large landowners fought the downturn by seeking

trade protection and other political remedies; the lesser nobles,

whose farms failed in great numbers, sought positions in the still- burgeoning bureaucracy. By contrast, the peasantry resorted to subsistence farming and worked as laborers to earn money.

Social Changes

Hungary's population rose from 13 million to 20 million between

1850 and 1910. After 1867 Hungary's feudal society gave way to a more complex society that included the magnates, lesser nobles,

middle class, working class, and peasantry. However, the magnates continued to wield great influence through several conservative parties because of their massive wealth and dominant position

in the upper chamber of the parliament. They fought modernization and sought both closer ties with Vienna and a restoration of

Hungary's traditional social structure and institutions, arguing that

agriculture should remain the mission of the nobility. They won

protection from the market by reestablishment of a system of entail and also pushed for restriction of middle-class profiteering and

restoration of corporal punishment. The Roman Catholic Church

was a major ally of the magnates.

Some lesser-noble landowners survived the agrarian depression

of the late nineteenth century and continued farming. Many others

turned to the bureaucracy or to the professions.

In the mid- 1800s, Hungary's middle class consisted of a small

number of German and Jewish merchants and workshop owners who employed a few craftsmen. By the turn of the century, however,

the middle class had grown in size and complexity and had be- come predominantiy Jewish. In fact, Jews created the modern econ- omy that supported Tisza's bureaucratic machine. In return, Tisza

31
Hungary: A Country Study

not only denounced anti-Semitism but also used his political

machine to check the growth of an anti-Semitic party. In 1896 his successors passed legislation securing the Jews' final emancipation.

By 1910 about 900,000 Jews made up approximately 5 percent of

the population and about 23 percent of Budapest's citizenry. Jews

accounted for 54 percent of commercial business owners, 85 per- cent of financial institution directors and owners, and 62 percent

of all employees in commerce. The rise of a working class came naturally with industrial development. By 1900 Hungary's mines and industries employed

nearly 1.2 million people, representing 13 percent of the population. The government favored low wages to keep Hungarian

products competitive on foreign markets and to prevent impoverished peasants from flocking to the city to find work. The

government recognized the right to strike in 1884, but labor came

under strong political pressure. In 1890 the Social Democratic Party was established and secretiy formed alliances with the trade unions.

The party soon enlisted one-third of Budapest's workers. By 1900

the party and union rolls listed more than 200,000 hard-core members, making it the largest secular organization the country had

ever known. The Diet passed laws to improve the lives of industrial workers, including providing medical and accident insurance,

but it refused to extend them voting rights, arguing that broadening the franchise would give too many non- Hungarians the vote

and threaten Hungarian domination. After the Compromise of

1867, the Hungarian government also launched an education re- form in an effort to create a skilled, literate labor force. As a result,

the literacy rate had climbed to 80 percent by 1910. Literacy raised

the expectations of workers in agriculture and industry and made

them ripe for participation in movements for political and social

change.

The plight of the peasantry worsened drastically during the

depression at the end of the nineteenth century. The rural population grew, and the size of the peasants' farm plots shrank as land was divided up by successive generations. By 1900 almost half of

the country's landowners were scratching out a living from plots too small to meet basic needs, and many farm workers had no land

at all. Many peasants chose to emigrate, and their departure rate reached approximately 50,000 annually in the 1870s and about

200,000 annually by 1907. The peasantry's share of the population dropped from 72.5 percent in 1890 to 68.4 percent in 1900.

The countryside also was characterized by unrest, to which the

government reacted by sending in troops, banning all farm-labor

organizations, and passing other repressive legislation.

32
The 1896 Millennial Monument in Budapest

Courtesy Robert Lisbeth

In the late nineteenth century, the Liberal Party passed laws that

enhanced the government's power at the expense of the Roman

Catholic Church. The parliament won the right to veto clerical ap- pointments, and it reduced the church's nearly total domination

of Hungary's education institutions. Additional laws eliminated

the church's authority over a number of civil matters and, in the

process, introduced civil marriage and divorce procedures.

The Liberal Party also worked with some success to create a unified, Magyarized state. Ignoring the Nationalities Law, it enacted

laws that required the Hungarian language to be used in local government and increased the number of school subjects taught in that

language. After 1890 the government succeeded in Magyarizing educated Slovaks, Germans, Croats, and Romanians and co-opting them

into the bureaucracy, thus robbing the minority nationalities of an

educated elite. Most minorities never learned to speak Hungarian,

but the education system made them aware of their political rights,

and their discontent with Magyarization mounted. Bureaucratic pres- sures and heightened fears of territorial claims against Hungary after the creation of new nation-states in the Balkans forced Tisza to oudaw

"national agitation" and to use electoral legerdemain to deprive the

minorities of representation. Nevertheless, in 1901 Romanian and

Slovak national parties emerged undaunted by incidents of electoral violence and police repression.

33
Hungary: A Country Study

Political and Economic Life, 1905-19

Tisza directed the Liberal government until 1890, and for fourteen years thereafter a number of Liberal prime ministers held

office. Agricultural decline continued, and the bureaucracy could no longer absorb all of the pauperized lesser nobles and educated

people who could not find work elsewhere. This group gave its political support to the Party of Independence and the Party of FortyEight, which became part of the "national" opposition that forced a coalition with the Liberals in 1905. The Party of Independence

resigned itself to the existence of the Dual Monarchy and sought

to enhance Hungary's position within it; the Party of Forty-Eight,

however, deplored the Compromise of 1867, argued that Hungary

remained an Austrian colony, and pushed for formation of a Hungarian national bank and an independent customs zone. Franz Joseph refused to appoint members of the coalition to the

government until they renounced their demands for concessions

from Austria concerning the military. When the coalition finally

gained power in 1906, the leaders retreated from their opposition

to the Compromise of 1867 and followed the Liberal Party's eco- nomic policies. Istvan Tisza—Kalman Tisza' s son and prime

minister from 1903 to 1905—formed the new Party of Work, which

in 1910 won a large majority in the parliament. Tisza became prime

minister for a second time in 1912 after labor strife erupted over an unsuccessful attempt to expand voting rights.

World War I

On June 28, 1914, a Bosnian Serb assassinated Archduke Franz

Ferdinand, heir to the Austrian throne. Within days AustriaHungary presented Serbia with an ultimatum that made war in- evitable. Tisza initially opposed the ultimatum but changed his

mind when Germany supported Austria- Hungary. By late August,

all the great European powers were at war. Bands playing military music and patriotic demonstrators expecting a quick, easy vic- tory took to Budapest's streets after the declaration of war. However, Hungary, was ill prepared to fight. The country's ar- maments were obsolete, and its industries were not prepared for a war economy.

In 1915 and 1916, Hungary felt the full impact of the war. Inflation ran rampant, wages were frozen, food shortages developed,

and the government banned export of grain even to Austria. Franz

Joseph died in 1916, and Karl IV (1916-18) became Hungary's

new king. Before being crowned, however, Karl insisted that

Hungarians have expanded voting rights. Tisza resigned in

34
Historical Setting

response. By 1917 the Hungarian government was slowly losing

domestic control in the face of mounting popular dissatisfaction

caused by the war. Of the 3.6 million soldiers Hungary sent to war,

2.1 million became casualties. By late 1918, Hungary's farms and

factories were producing only half of what they did in 1913, and

the war-weary people had abandoned hope of victory.

On October 31, 1918, smoldering unrest burst into revolution

in Budapest, and roving soldiers assassinated Istvan Tisza. Pres- sured by the popular uprising and the refusal of Hungarian

troops to quell disturbances, King Karl was compelled to appoint

the "Red Count," Mihaly Karolyi, a pro-Entente liberal and leader

of the Party of Independence, to the post of prime minister.

Chrysanthemum-waving crowds poured into the streets shouting

their approval. Karolyi formed a new cabinet, whose members were drawn from the new National Council, composed of representatives of the Party of Independence, the Social Democratic Party,

and a group of bourgeois radicals. After suing for a separate peace,

the new government dissolved the parliament, pronounced Hungary an independent republic with Karolyi as provisional president, and proclaimed universal suffrage and freedom of the press

and assembly. The government launched preparations for land re- form and promised elections, but neither goal was carried out. On

November 13, 1918, Karl IV surrendered his powers as king of

Hungary; however, he did not abdicate, a technicality that made

a return to the throne possible.

The Karolyi government's measures failed to stem popular dis- content, especially when the Entente powers began distributing slices of Hungary's traditional territory to Romania, Yugoslavia, and

Czechoslovakia. The new government and its supporters had pinned

their hopes for maintaining Hungary's territorial integrity on abandoning Austria and Germany, securing a separate peace, and ex- ploiting Karolyi 's close connections in France. The Entente,

however, chose to consider Hungary a partner in the defeated Dual

Monarchy and dashed the Hungarians' hopes with the delivery

of each new diplomatic note demanding surrender of more land.

On March 19, 1919, the French head of the Entente mission in

Budapest handed Karolyi a note delineating final postwar boundaries, which were unacceptable to all Hungarians. Karolyi resigned

and turned power over to a coalition of Social Democrats and communists, who promised that Soviet Russia would help Hungary

restore its original borders. Although the Social Democrats held

a majority in the coalition, the communists under Bela Kun immediately seized control and announced the establishment of the

Hungarian Soviet Republic.

35
Hungary: A Country Study

Hungarian Soviet Republic

The rise of the Hungarian Communist Party (HCP) to power

was swift. The party was organized in a Moscow hotel on November 4, 1918, when a group of Hungarian prisoners of war and communist sympathizers formed a Central Committee and dispatched

members to Hungary to recruit new members, propagate the party's

ideas, and radicalize Karolyi's government. By February 1919, the

party numbered 30,000 to 40,000 members, including many

unemployed ex- soldiers, young intellectuals, and Jews. In the same

month, Kun was imprisoned for incitement to riot, but his popularity skyrocketed when a journalist reported that he had been beaten

by the police. Kun emerged from jail triumphant when the Social

Democrats handed power to a government of ''People's Commissars," who proclaimed the Hungarian Soviet Republic on March 21, 1919.

The communists wrote a temporary constitution guaranteeing

freedom of speech and assembly; free education; language and cul- tural rights to minorities; and other rights. It also provided for

suffrage for people over eighteen years of age except clergy, "former

exploiters," and certain others. Single-list elections took place in

April, but members of the parliament were selected indirectly by

popularly elected committees. On June 25, Kun's government

proclaimed a dictatorship of the proletariat, nationalized industrial

and commercial enterprises, and socialized housing, transport,

banking, medicine, cultural institutions, and all landholdings of more than 40.5 hectares. Kun undertook these measures even though the Hungarian communists were relatively few, and the

support they enjoyed was based far more on their program to re- store Hungary's borders than on their revolutionary agenda. Kun

hoped that the Soviet Russian government would intervene on Hungary 's behalf and believed that a worldwide workers' revolution was imminent. In an effort to secure its rule in the interim, the

communist government resorted to arbitrary violence. Revolutionary tribunals ordered about 590 executions, including some for

"crimes against the revolution." The government also used "red

terror" to expropriate grain from peasants. This violence and the

regime's moves against the clergy also shocked many Hungarians.

In late May, Kun attempted to fulfill his promise to restore Hungary's borders. The Hungarian Red Army marched northward and

reoccupied part of Slovakia. Despite initial military success, however, Kun withdrew his troops about three weeks later when

the French threatened to intervene. This concession shook his

popular support. Kun then unsuccessfully turned the Hungarian

36
Historical Setting

Red Army on the Romanians, who broke through Hungarian lines on July 30, occupied and looted Budapest, and ousted Kun's Soviet

Republic on August 1, 1919. Kun fled first to Vienna and then

to Soviet Russia, where he was executed during Stalin's terror against foreign communists in the late 1930s.

Counterrevolution

A militantiy anticommunist authoritarian government composed

of military officers entered Budapest on the heels of the Romanians. A "white terror" ensued that led to the imprisonment, tor- ture, and execution without trial of communists, socialists, Jews,

leftist intellectuals, sympathizers with the Karolyi and Kun regimes,

and others who threatened the traditional Hungarian political order

that the officers sought to reestablish. Estimates placed the number of executions at approximately 5,000. In addition, about 75,000

people were jailed. In particular, the Hungarian right wing and

the Romanian forces targeted Jews for retribution. Ultimately, the

white terror forced nearly 100,000 people to leave the country, most

of them socialists, intellectuals, and middle-class Jews.

Trianon Hungary

After World War I, a conservative government ruled Hungary

and made some progress toward economic modernization. The

Great Depression, however, brought economic collapse, and the

country's mood shifted to the far right. An alliance with Nazi Germany resulted, and Hungary fought on the Axis side in World War

II. Again Hungary experienced defeat, and the country was oc- cupied by the Soviet Red Army.

Postwar Political and Economic Conditions

In 1920 and 1921, internal chaos racked Hungary. The white

terror continued to plague Jews and leftists, unemployment and

inflation soared, and penniless Hungarian refugees poured across the border from neighboring countries and burdened the floundering economy. The government offered the population littie succor. In January 1920, Hungarian men and women cast the first secret ballots in the country's political history and elected a large

counterrevolutionary and agrarian majority to a unicameral parliament. Two main political parties emerged: the socially conservative Christian National Union and the Smallholders' Party, which

advocated land reform. In March the parliament annulled both

the Pragmatic Sanction of 1723 and the Compromise of 1867,

and it restored the Hungarian monarchy but postponed electing a king until civil disorder had subsided. Instead, Miklos Horthy

37
Hungary: A Country Study

(1920-44)—a former commander in chief of the Austro-Hungarian

navy—was elected regent and was empowered, among other things,

to appoint Hungary's prime minister, veto legislation, convene or

dissolve the parliament, and command the armed forces. Hungary's signing of the Treaty of Trianon on June 4, 1920,

ratified the country's dismemberment, limited the size of its armed

forces, and required reparations payments. The territorial provisions of the treaty, which ensured continued discord between Hungary and its neighbors, required the Hungarians to surrender more

than two-thirds of their prewar lands (see fig. 5). Romania acquired

Transylvania; Yugoslavia gained Croatia, Slavonia, and Vojvodina; Slovakia became a part of Czechoslovakia; and Austria also

acquired a small piece of prewar Hungarian territory. Hungary

lost about 60 percent of its prewar population, and about one-third

of the 10 million ethnic Hungarians found themselves outside the

diminished homeland. The country's ethnic composition was left almost homogeneous. Hungarians constituted about 90 percent of

the population, Germans made up about 6 to 8 percent, and Slovaks, Croats, Romanians, Jews, and other minorities accounted

for the remainder.

New international borders separated Hungary's industrial base

from its sources of raw materials and its former markets for agricultural and industrial products. Its new circumstances forced Hungary to become a trading nation. Hungary lost 84 percent of its timber resources, 43 percent of its arable land, and 83 percent of

its iron ore. Because most of the country's prewar industry was

concentrated near Budapest, Hungary retained about 51 percent

of its industrial population, 56 percent of its industry, 82 percent

of its heavy industry, and 70 percent of its banks.

Bethlen Government

Horthy appointed Pal Teleki prime minister in July 1920. His

right-wing government set quotas effectively limiting admission of

Jews to universities, legalized corporal punishment, and, to quiet

rural discontent, took initial steps toward fulfilling a promise of major

land reform by dividing about 385,000 hectares from the largest es- tates into smallholdings. Teleki' s government resigned, however,

after the former emperor, Karl IV, unsuccessfully attempted to re- take Hungary's throne in March 1921 . King Karl's return marked

a split between conservatives who favored a Habsburg restora- tion and nationalist right-wing radicals who supported election

of a Hungarian king. Istvan Bethlen, a nonaffiliated, right-wing

member of the parliament, took advantage of this rift by convincing members of the Christian National Union who opposed Karl's

38
Historical Setting

reenthronement to merge with the Smallholders' Party and form

a new Party of Unity with Bethlen as its leader. Horthy then ap- pointed Bethlen prime minister.

As prime minister, Bethlen dominated Hungarian politics between 1921 and 1931 . He fashioned a political machine by amending the electoral law, eliminating peasants from the Party of Unity,

providing jobs in the bureaucracy to his supporters, and manipulating elections in rural areas. Bethlen restored order to the country

by giving the radical counterrevolutionaries payoffs and government jobs in exchange for ceasing their campaign of terror against

Jews and leftists. In 1921 Bethlen made a deal with the Social

Democrats and trade unions, agreeing, among other things, to legal- ize their activities and free political prisoners in return for their

pledge to refrain from spreading anti- Hungarian propaganda, call- ing political strikes, and organizing the peasantry. In May 1922,

the Party of Unity captured a large parliamentary majority. Karl

IVs death, soon after he failed a second time to reclaim the throne

in October 1921, allowed the revision of the Treaty of Trianon

to rise to the top of Hungary's political agenda. Bethlen's strategy

to win the treaty's revision was first to strengthen his country's

economy and then to build relations with stronger nations that could

further Hungary's goals. Revision of the treaty had such a broad

backing in Hungary that Bethlen used it, at least in part, to deflect criticism of his economic, social, and political policies. However,

Bethlen's only foreign policy success was a treaty of friendship with

Italy in 1927, which had little immediate impact.

Economic Development

When Bethlen took office, the government was bankrupt. Tax

revenues were so paltry that he turned to domestic gold and foreigncurrency reserves to meet about half of the 1921-22 budget and

almost 80 percent of the 1922-23 budget. To improve his country's economic circumstances, Bethlen undertook development of

industry. He imposed tariffs on finished goods and earmarked the revenues to subsidize new industries. Bethlen squeezed the agricultural sector to increase cereal exports, which generated foreign cur- rency to pay for imports critical to the industrial sector. In 1924,

after the white terror had waned and Hungary had gained admission to the League of Nations (1922), the Bethlen government se- cured a US$50 million reconstruction loan from the league, which

restored the confidence of foreign creditors. Foreign loans and

domestic capital that had been removed from Hungary during the

communist revolution flowed back into the country, further fuel- ing industrial development.

39
Hungary: A Country Study
Historical Setting

By the late 1920s, Bethlen's policies had brought order to the

economy. The number of factories increased by about 66 percent,

inflation subsided, and the national income climbed 20 percent.

However, the apparent stability was supported by a rickety framework of constantly revolving foreign credits and high world grain

prices; therefore, Hungary remained undeveloped in comparison

with the wealthier western European countries.

Despite economic progress, the workers' standard of living re- mained poor, and consequently the working class never gave Bethlen its political support. The peasants fared worse than the working

class (see Interwar Period, ch. 2). In the 1920s, about 60 percent

of the peasants were either landless or were cultivating plots too small to provide a decent living. Real wages for agricultural workers remained below prewar levels, and the peasants had practically no political voice. Moreover, once Bethlen had consolidated his

power, he ignored calls for land reform. The industrial sector failed

to expand fast enough to provide jobs for all the peasants and university graduates seeking work. Most peasants lingered in the villages,

and in the 1930s Hungarians in rural areas were extremely dissatisfied. Hungary's foreign debt ballooned as Bethlen expanded

the bureaucracy to absorb the university graduates who, if left idle,

might have threatened civil order.

The Great Depression

In 1929 the New York Stock Exchange crashed. As a result, world

grain prices plummeted, and the framework supporting Hungary's

economy buckled. Hungary's earnings from grain exports declined

as prices and volume dropped, tax revenues fell, foreign credit sources dried up, and short-term loans were called in. Hungary

sought financial relief from the League of Nations, which insisted on a program of rigid fiscal belt-tightening, resulting in increased

unemployment. The peasants reverted to subsistence farming. Industrial production rapidly dropped, and businesses went bankrupt

as domestic and foreign demand evaporated. Government workers

lost their jobs or suffered severe pay cuts. By 1933 about 18 per- cent of Budapest's citizens lived in poverty. Unemployment leaped

from 5 percent in 1928 to almost 36 percent by 1933.

As the standard of living dropped, the political mood of the country shifted further toward the right. Bethlen resigned without warning amid national turmoil in August 1931. His successor, Gyula

Karolyi, failed to quell the crisis. Horthy then appointed a reac- tionary demagogue, Gyula Gombos, but only after Gombos agreed

to maintain the existing political system, to refrain from calling

elections before the parliament's term had expired, and to appoint

41
Hungary: A Country Study

several Bethlen supporters to head key ministries. Gombos publicly renounced the vehement anti-Semitism he had espoused earlier,

and his party and government included some Jews.

Radical Right in Power

Gombos' s appointment marked the beginning of the radical

right's ascendancy in Hungarian politics, which lasted with few

interruptions until 1945. The radical right garnered its support from

medium and small farmers, former refugees from Hungary's lost territories, and unemployed civil servants, army officers, and university graduates. Gombos advocated a one-party government,

revision of the Treaty of Trianon, withdrawal from the League of

Nations, anti-intellectualism, and social reform. He assembled a

political machine, but his efforts to fashion a one-party state and

fulfill his reform platform were frustrated by a parliament composed mostly of Bethlen's supporters and by Hungary's creditors,

who forced Gombos to follow conventional policies in dealing with

the economic and financial crisis. The 1935 elections gave Gombos

more solid support in the parliament, and he succeeded in gaining

control of the ministries of finance, industry, and defense and in

replacing several key military officers with his supporters. In September 1936, Gombos informed German officials that he would

establish a Nazi-like, one-party government in Hungary within two

years, but he died in October without realizing this goal.

In foreign affairs, Gombos led Hungary toward close relations

with Italy and Germany; in fact, Gombos coined the term Axis,

which was later adopted by the German-Italian military alliance.

Soon after his appointment, Gombos visited Italian dictator Benito

Mussolini and gained his support for revision of the Treaty of

Trianon. Later, Gombos became the first foreign head of government to visit German chancellor Adolf Hitier. For a time, Hungary

profited handsomely, as Gombos signed a trade agreement with

Germany that drew Hungary's economy out of depression but made

Hungary dependent on the German economy for both raw materials

and markets. In 1928 Germany had accounted for 19.5 percent

of Hungary's imports and 11.7 percent of its exports; by 1939 the

figures were 52.5 percent and 52.2 percent, respectively. Hungary's

annual rate of economic growth from 1934 to 1940 averaged 10.8

percent. The number of workers in industry doubled in the ten years after 1933, and the number of agricultural workers dropped

below 50 percent for the first time in the country's history. Hungary also used its relationship with Germany to chip away at the

Treaty of Trianon. In 1938 Hungary openly repudiated the treaty's

restrictions on its armed forces. With German help, Hungary

42
Drumming on Saint Stephen's Day in Borsod County,

1929 [Sdndor Gbnyey; Ethnographic Museum, Budapest]

Courtesy Harriet Gerber

extended its territory four times and doubled in size from 1938 to 1941. It regained parts of southern Slovakia in 1938, CarpathoUkraine in 1939, northern Transylvania in 1940, and parts of

Vojvodina in 1941.

Hitler's assistance did not come without a price. After 1938 the

Fiihrer used promises of additional territories, economic pressure, and threats of military intervention to pressure the Hungarians into

supporting his policies, including those related to Europe's Jews,

which encouraged Hungary's anti-Semites. The percentage ofJews

in business, finance, and the professions far exceeded the percentage of Jews in the overall population. The 1930 census showed

that Jews made up only 5.1 percent of the population but provided

54.5 percent of its physicians, 31.7 percent of its journalists, and

49.2 percent of its lawyers. Jews controlled an estimated 19.5 per- cent to 33 percent of the national income, four of the five leading

banks, and 80 percent of Hungary's industry. After the depression struck, anti-Semites made the Jews scapegoats for Hungary's

economic plight.

Hungary's Jews suffered the first blows of this renewed anti- Semitism during the government of Gombos's successor, Kalman

Daranyi, who fashioned a coalition of conservatives and reactionaries

43
Hungary: A Country Study

and dismantled Gombos's political machine. After Horthy publicly dashed hopes of land reform, discontented right-wingers took

to the streets denouncing the government and baiting the Jews.

Daranyi's government attempted to appease the anti-Semites and

the Nazis by proposing and passing the first so-called Jewish Law,

which set quotas limiting Jews to 20 percent of the positions in cer- tain businesses and professions. The law failed to satisfy Hungary's

anti-Semitic radicals, however, and when Daranyi tried to appease

them again, Horthy unseated him in 1938. The regent then appointed the ill-starred Bela Imredy, who drafted a second, harsher

Jewish Law before political opponents forced his resignation in

February 1939 by presenting documents showing that Imredy's

own grandfather was a Jew.

Imredy's downfall led to Pal Teleki's return to the prime

minister's office. Teleki dissolved some of the fascist parties but

did not alter the fundamental policies of his predecessors. He

undertook a bureaucratic reform and launched cultural and educational programs to help the rural poor. Illiteracy dropped to about

7 percent by 1941. But Teleki also oversaw passage of the second

Jewish Law, which broadened the definition of ' 'Jewishness," cut

the quotas on Jews permitted in the professions and in business,

and required that the quotas be attained by the hiring of Gentiles or the firing ofJews. By the June 1939 elections, Hungarian public opinion had shifted so far to the right that voters gave the Arrow

Cross Party—Hungary's equivalent of Germany's National Socialist German Workers' Party (the Nazi Party)—the second highest

number of votes. In September 1940, the Hungarian government

allowed German troops to transit the country on their way to Romania, and on November 20, 1940, Hungary signed the Tripartite

Pact, which allied Germany, Italy, and Japan.

World War II In December 1940, Teleki signed a short-lived Treaty of Eter- nal Friendship with Yugoslavia. The Yugoslav government,

however, was overthrown on March 27, 1941, two days after it succumbed to German and Italian pressure and joined the pact.

Hitler considered the overthrow a hostile act and grounds to in- vade. Again promising territory in exchange for cooperation, he

asked Hungary to join the invasion by contributing troops and

allowing the Wehrmacht (German armed forces) to march through

its territory. Unable to prevent the invasion, Teleki committed sui- cide on April 3. Three days later, the Luftwaffe mercilessly bombed

Belgrade without warning, and German troops invaded. Shortly

thereafter, Horthy dispatched Hungarian military forces to occupy

44
Historical Setting

former Hungarian lands in Yugoslavia, and Hungary eventually

annexed sections of Vojvodina.

Horthy named the right-wing radical Laszlo Bardossy to suc- ceed Teleki. Bardossy was convinced that Germany would win the war and sought to maintain Hungary's independence by appeasing Hitler. Hitler tricked Horthy into committing Hungary to join

his invasion of the Soviet Union in June 1941, and Hungary entered the war against the Western Allies the following December.

In July 1941, the government deported the first 40,000 Jews from

Hungary, and six months later Hungarian troops, in reprisal for resistance activities, murdered 3,000 Serbian and Jewish hostages near Novi Sad in Yugoslavia. By the winter of 1941-42,

German hopes of a quick victory over the Soviet Union had faded.

In January the German foreign minister visited Budapest asking

for additional mobilization of Hungarian forces for a planned spring

offensive and promising in return to hand Hungary some terri- tory in Transylvania. Bardossy agreed and committed one-third

of Hungary's military forces. Horthy grew dissatisfied with Bardossy, who resigned in March

1942, and named Miklos Kallay, a conservative veteran of Bethlen's government, who aimed to free Hungary from the Nazis' grip.

Kallay faced a terrible dilemma: if he broke with Hitler and

negotiated a separate peace, the Germans would occupy Hungary

immediately; but if he supported the Germans, he would encourage

further pro-Nazi excesses. Kallay chose duplicity. In 1942 and 1943,

pro-Western Hungarian government officials promised British and

American diplomats that the Hungarians would not fire on their

aircraft, sparing for a time Hungarian cities from bombardment.

In January 1943, the Soviet Red Army annihilated Hungary's

Second Army during the massive counterattack on the Axis troops

besieging Stalingrad. In the fighting, Soviet troops killed an esti- mated 40,000 Hungarians and wounded 70,000. As anti-Axis pres- sure in Hungary mounted, Kallay withdrew the remnants of the

force into Hungary in April 1943, and only a nominal number of

poorly armed troops remained of the country's military contribution to the Axis Powers. Aware of Kallay 's deceit and fearing that

Hungary might conclude a separate peace, Hitler ordered Nazi

troops to occupy Hungary and force its government to increase

its contribution to the war effort. Kallay took asylum in the Turkish legation. Dome Sztojay, a supporter of the Nazis, became the

new prime minister. His government jailed political leaders, dis- solved the labor unions, and resumed the deportation of Hungary's

Jews.

45
Hungary: A Country Study

While Kallay was prime minister, the Jews endured economic

and political repression, but the government protected them from

the "final solution." The government expropriated Jewish property;

banned the purchase of real estate by Jews; barred Jews from working as publishers, theater directors, and editors of journals;

proscribed sexual relations between Jews and non-Jews; and out- lawed conversion to Judaism. But when the Nazis occupied Hungary in March 1944, the deportation of the Jews to the death camps

in Poland began. Horthy used the confusion after the July 20, 1944,

attempt to assassinate Hitier to replace Sztojay in August 1944 with

General Geza Lakatos and halt the deportation of Jews from

Budapest. Of the approximately 725,000 Jews residing within Hungary's expanded borders of 1941, only about 260,500, mostly from

Budapest, survived. In September, Soviet forces crossed the border, and on October

15 Horthy announced that Hungary had signed an armistice with

the Soviet Union. However, the Germans abducted the regent and

forced him to abrogate the armistice, depose the Lakatos government, and name Ferenc Szalasi—the leader of the Arrow Cross

Party—prime minister. Horthy abdicated, and soon the country

became a battlefield. Hungary was sacked first by the retreating

Germans, who demolished the rail, road, and communications sys- tems, then by the advancing Soviet Red Army, which found the

country in a state of political chaos. Germans held off the Soviet

troops near Budapest for seven weeks before the defenses collapsed,

and on April 4, 1945, the last German troops were driven out of

Hungary.

Postwar Hungary

In the aftermath of World War II, a victorious Soviet Union

succeeded in forcing its political, social, and economic system on

Eastern Europe, including Hungary. But the Hungarians never

reconciled themselves to Soviet hegemony over their country and

rebelled against the Soviet Union and its Hungarian vassals in 1956.

That revolution was crushed by Soviet tanks, but it brought to power Janos Kadar. who then attempted to institute a milder form

of communist rule. Coalition Government and Communist Takeover

The Hungarian Communist Party (HCP) enjoyed scant popular support after the toppling of Bela Kun's short-lived Hungarian Soviet Republic in 1919 and the subsequent white terror. During

World War II. a communist cell headed by Laszlo Rajk, a veteran

46
Historical Setting

of the Spanish Civil War (1936-39) and a former communist student

leader, operated underground within the country. Matyas Rakosi

led a second, Moscow-based group whose members were later called the "Muscovites." After the Soviet Red Army invaded Hungary

in September 1944, Rajk's organization emerged from hiding, and

the Muscovites returned to their homeland. Rakosi 's close ties with

the Soviet occupiers enhanced his influence within the party, and

a rivalry developed between the Muscovites and Rajk's followers.

Between the invasion and the end of the war, party membership

rose significantly. Although party rolls listed only about 3,000 names

in November 1944, membership had swelled to about 500,000 by

October 1945.

Hungary's postwar political order began to take shape even before

Germany's surrender. In October 1944, Britain's Prime Minister

Winston Churchill and Foreign Minister Anthony Eden agreed with

Stalin that after the war the Soviet Union would enjoy a 75 per- cent to 80 percent influence in Hungary, Bulgaria, and Romania,

while the British would have a 20 percent to 25 percent share. On

December 22, 1944, a provisional government emerged in Debrecen that was made up of the Provisional National Assembly, in

which communist representatives outnumbered those of the other

"antifascist" parties, and a cabinet, whose members included a

general and two other military officers of the old regime, two communists, two Social Democrats, two members of the Smallholders'

Party, one member of the National Peasant Party, and one unaffiliated member. The provisional government concluded an ar- mistice with the Soviet Union on January 20, 1945, while fighting

still raged in the western part of the country. The armistice established the Allied Control Commission, with Soviet, American, and

British representatives, which held complete sovereignty over

the country. The commission's chairman, Marshal Kliment

Voroshilov, a member of Stalin's inner circle, exercised absolute

control.

Stalin decided against an immediate communist seizure of power

in Hungary; rather, he instructed HCP leaders to take a gradualist approach and share power with other parties in freely elected

coalition governments. Stalin informed Rakosi that a communist

takeover would be delayed ten to fifteen years in order to deflect Western criticism of rapid communist takeovers in Poland, Bulgaria, Romania, and the Soviet zone of Germany. Stalin desired a quick return to normal economic activity to rebuild the Soviet

Union and sought to avoid a confrontation with the Allies, who

still had troops in Europe. The members of the HCP who had

worked underground during the war opposed Stalin's gradualist

47
Hungary: A Country Study

approach and argued for immediate establishment of a dictatorship of the proletariat. In April 1945, after Soviet troops had rid Hungary of the Nazis,

the government moved from Debrecen to Budapest, and a second,

expanded Provisional National Assembly was chosen. With the sup- port of representatives of the trade unions and the Social Democratic

Party, the HCP enjoyed an absolute majority of the assembly's

495 seats. The provisional government remained in power until

November 15, 1945, when voters dealt the HCP an unexpected

setback in a free election. The Smallholders' Party won 245 seats in the National Assembly; the HCP, 70; the Social Democratic

Party, 69; the National Peasant Party, 21 ; and the Civic Democratic

Party, 2. The National Assembly proclaimed the Hungarian

Republic on February 1, 1946, and two Smallholder-led coalitions

under Zoltan Tildy and Ferenc Nagy governed the country until

May 1947.

The HCP soon formed a leftist alliance with the Social Democratic Party and the National Peasant Party and gained control of several key offices, including the leadership of the security police and

the army general staff. Voroshilov vetoed an agreement reached

by the coalition members to name a member of the Smallholders'

Party to head the Ministry of Interior. A National Peasant Party

member loyal to the HCP won the post and made the police a powerful tool of the communists. The National Assembly undermined freedoms guaranteed in Hungary's constitution when it banned statements that could be interpreted as hostile to the

democratic order or the country's international esteem. Later, as Hungary's democratic order became identified with HCP policies,

the law was used to silence legitimate opponents.

In the immediate postwar period, the government pursued eco- nomic reconstruction and land reform (see Postwar Societal Transformation, ch. 2). Hungary had been devastated in the last years

of World War II. About 24 percent of its industrial base was destroyed. Many of the large landowners and industrialists fled Hungary in advance of the Soviet Red Army. Reconstruction proceeded

rapidly, expedited by gradual nationalization of mines, electric plants, the four largest concerns in heavy industry, and the ten

largest banks. In 1945 the government also carried out a radical

land reform, expropriating all holdings larger than fifty-seven hectares and distributing them to the country's poorest peasants.

Nevertheless, the peasants received portions barely large enough

for self-sufficiency. Finally, the government introduced a new

currency—the forint—to help curb high inflation.

48
Historical Setting

Using methods Rakosi later called "salami tactics," the HCP

strengthened its position in the coalition by discrediting leaders of

rival parties as "reactionaries" or "antidemocratic," forcing their

resignation from the government and sometimes prompting their

arrest. In 1945 ex-members of Horthy's regime lost their positions.

A year later, members of the Smallholders' Party and the Social

Democratic Party were ousted from power. In late 1946, leaders

of the Smallholders' Party were arrested. In 1947 the Soviet Union

ordered the arrest of Bela Kovacs, the secretary general of the Smallholders' Party, on the false charge of plotting to overthrow the

government. The Smallholders' Party was dissolved after Ferenc

Nagy resigned his position as prime minister. The leftist bloc gained

a small lead over its rivals in the 1947 general elections. The HCP

tallied only 22 percent of the vote, but fraud tainted the election,

and suspicions arose that the party actually enjoyed less support.

The Treaty of Paris, signed on February 10, 1947, required Hungary to pay US$200 million in reparations to the Soviet Union,

US$50 million to Czechoslovakia, and US$50 million to Yugoslavia.

Hungary also had to transfer a piece of territory to Czechoslovakia,

leaving Hungary with slightly less territory than it had had after the Treaty of Trianon. Stalin had already returned Transylvania

to the Romanians to reinforce the position of the procommunist

Prime Minister Petru Groza. Thereafter, the Romanians' treat- ment of the Hungarian minority in Transylvania became an irri- tant in relations between the two countries (see Relations with Other

Communist Neighbors, ch. 4).

Rdkosi's Rule

In 1947 the postwar cooperation between the Soviet Union and

the West collapsed, marking the beginning of the Cold War and

the beginning of the end for Hungary's democratic coalition government. Having seen communist parties seize power in Poland,

Romania, Bulgaria, and Yugoslavia and a communist insurgency

threaten Greece, the Western powers dedicated themselves to containing Soviet influence. In May communists were expelled from

the governments of Italy and France, and a month later the United

States promulgated the Marshall Plan for the economic reconstruction of Europe, which was appealing to the East European governments.

Stalin feared a weakening of the Soviet Union's grip on Eastern

Europe. Anticommunist forces in the region remained potent, and

most of the communist governments were unpopular. In addition,

East European parties began taking positions independent of

Moscow; for example, communists in the Polish and Czechoslovak

49
Hungary: A Country Study

governments favored participation in the Marshall Plan, and

Yugoslavia and Bulgaria broached the idea of a Balkan confederation. By September Stalin had abandoned gradualism and reversed

his earlier advocacy of independent, "national roads to socialism."

He now pushed for tighter adherence to Moscow's line and rapid

establishment of Soviet-dominated communist states in Hungary

and elsewhere. The policy shift was indicated in September 1947

at the founding meeting of the Cominform, an organization link- ing the Soviet communist party with the communist parties of

Eastern Europe, France, and Italy.

The HCP proceeded swifdy to assume full control of the government. First Secretary Rakosi became the country's most powerful

official and dictated major political and economic changes. In

October 1947, noncommunist political figures were told to cooperate

with a new coalition government or leave the country. In June 1948,

the Social Democratic Party merged with the HCP, forming the

Hungarian Workers' Party (HWP). In 1949 the regime held a

single-list election, and on August 20 of that year the government

ratified a Soviet-style constitution (see Constitution of 1949, ch. 4). The official name of the country became the Hungarian People's

Republic, and the HWP's control of the government was assured.

In 1952 Rakosi also became prime minister.

In 1948 Yugoslavia was expelled from the Cominform, and the

Soviet-Yugoslav rift broke into the open. Almost overnight it be- came treasonous for communists to display any approval of Yugoslav leader Josip Broz Tito or to advocate national roads to socialism. Beginning in 1949, the Soviet Union unleashed a fouryear reign of terror against "Titoists" in Eastern Europe. Rakosi

purged members of the party's wartime underground, potential

rivals, and hundreds of others. Rajk, who continued to support

a Hungarian road to socialism, "confessed" to being a Titoist and

a fascist spy and was hanged in 1950. Another victim was future

party chiefJanos Kadar, who was jailed and tortured for three years. Between 1948 and 1953, the Hungarian economy was reor- ganized according to the Soviet model (see Economic Policy and

Performance, 1945-85, ch. 3). In a campaign reminiscent of the

Soviet Union's forced collectivization of agriculture in the 1930s,

the regime compelled most peasants to join collective farms and

required them to make deliveries to the government at prices lower

than the cost of production. The regime accelerated nationalization of banking, trade, and industry, and by December 1949 nearly

99 percent of the country's workers had become state employees.

The trade unions lost their independence, and the government in- troduced Soviet-style central planning. Planners neglected the

50
Historical Setting

production of consumer goods to focus on investment in heavy in- dustry, especially steel production, and economic self-sufficiency. In January 1949, Hungary joined the Council for Mutual Economic Assistance (Comecon—see Glossary), an organization

designed to further economic cooperation among the Soviet Union's

satellites. The authorities also agreed to form joint-stock companies with the Soviet Union. These companies allowed the Soviet

Union to dominate Hungary's air and river transportation, as well

as its bauxite, crude oil, and refining industries and other sectors. With the opposition parties disbanded and the trade unions col- lared, the churches became the communists' main source of opposition. The government had expropriated the churches' property

with the land reform, and in July 1948 it nationalized church

schools. Protestant church leaders reached a compromise with the

government, but the head of the Roman Catholic Church—Cardinal Jozsef Mindszenty—resisted. The government arrested him

in December 1948 and sentenced him to life imprisonment. Shortly

thereafter, the regime disbanded most Catholic religious orders,

and it secularized Catholic schools (see Religion and Religious

Organizations, ch. 2). Stalin died in March 1953. The new Soviet leadership soon per- mitted a more flexible policy in Eastern Europe known as the New

Course. In June, Rakosi and other party leaders—among them

Imre Nagy—were summoned to Moscow, where Soviet leaders

harshly criticized them for Hungary's dismal economic perfor- mance. Soviet communist party Presidium member Lavrenti Beria

reportedly upbraided Rakosi for naming Jews to Hungary's top

party positions and accused him of seeking to make himself the

"Jewish King of Hungary." (Communists of Jewish origin had

dominated the party leadership and the secret police for a decade

after the war, and every party leader from Bela Kun to Erno Gero

had Jewish roots.) Rakosi retained his position as party chief, but

the Soviet leaders forced the appointment of Nagy as prime

minister. He quickly won the support of the government ministries and the intelligentsia. Nagy also ended the purges and began

freeing political prisoners. In his first address to the National Assembly as prime minister, Nagy attacked Rakosi for his use of ter- ror, and the speech was printed in the party newspaper.

Nagy charted his New Course for Hungary's drifting economy

in a speech before the Central Committee, which gave the plan

unanimous approval (see Party Structure, ch. 4). Hungary ceased

collectivization of agriculture, allowed peasants to leave the col- lective farms, canceled the collective farms' compulsory production

51
Hungary: A Country Study

quotas, and raised government prices for deliveries. Government

financial support and guarantees were extended to private

producers, investment in the farm sector jumped 20 percent in the

1953-54 period, and peasants were able to increase the size of their

private plots. The number of peasants on collective farms thus

shrank by half between October and December 1953. Nagy also slashed investment in heavy industry by 41.1 percent in 1953-54

and shifted resources to light industry and the production of con- sumer goods. However, Nagy failed to fundamentally alter the planning system and neglected to introduce incentives to replace

compulsory plan targets, resulting in a poorer record of plan ful- fillment after 1953 than before. Rakosi used his influence to dis- rupt Nagy's reforms and erode his political position. In 1954 Soviet

leaders who favored economic policies akin to Nagy's lost a Kremlin

power struggle. Rakosi seized the opportunity to attack Nagy as a right-wing deviationist and to criticize shortcomings in the econ- omy. Nagy was forced to resign from the government in April 1955

and was later expelled from the Politburo, Central Committee, and

finally the party itself. Thus, the Central Committee that had lauded

the New Course in June 1953 unanimously condemned its architect

less than two years later. After Nagy's fall, collectivization and development of heavy in- dustry again became the prime focus of Hungary's economy. The

purges did not resume, however, as Rakosi did not enjoy the same amount of power or Soviet support that he did while Stalin was

alive. Moreover, he now had to contend with many outspoken opponents within the party, including numerous victims of the purges

who had been readmitted to the HWP on Moscow's orders. A

schism soon split the party leadership from the rank and file, and

the party organization within the Writers' Association became a forum for intraparty opposition. In 1955 a rapprochement between

the Soviet Union and Yugoslavia produced the Belgrade Declaration, in which Moscow confirmed that each nation had the right

to follow its own road to socialism. One year later, Soviet leader

Nikita S. Khrushchev denounced Stalin in his "secret speech" before the Twentieth Party Congress of the Soviet communist party.

These external events shook Rakosi, who was a strong opponent

of Titoism and the instigator of Hungary's purges.

HWP members opposed to Rakosi compelled him to admit that

the purges involved abuse of power and that Rajk and others had

been its innocent victims. Rakosi ordered an investigation, but it cleared him and blamed the state security police instead. This result not only inflamed the party opposition but also alienated Rakosi

from the police. In June 1956, Rakosi 's position became untenable.

52
Historical Setting

The party press printed open attacks. The Writers' Association,

the newly created Petofi Circle (see Glossary), and student organizations clamored for Rakosi's ouster and arrest. On June 30, the

Central Committee dissolved the Petofi Circle and expelled intellec- tuals from the party. By mid-July, however, Soviet leaders began

to fear outright revolution and called for Rakosi to step down. He

resigned after a meeting of the Central Committee on July 17. Gero,

Rakosi's deputy, was appointed first secretary. Moscow hoped to introduce a slow liberalization, but Gero was too closely identified

with Rakosi, and party discipline subsequently broke down completely.

Revolution of 1956

On October 23, a Budapest student rally in support of Polish

efforts to win autonomy from the Soviet Union sparked mass

demonstrations. The police attacked, and the demonstrators fought

back, tearing down symbols of Soviet domination and HWP rule,

sacking the party newspaper's offices and shouting in favor of free elections, national independence, and the return of Imre Nagy to power. Gero called out the army, but many soldiers handed their

weapons to the demonstrators and joined the uprising (see Historical Background and Traditions, ch. 5). Soviet officials in Budapest

summoned Nagy to speak to the crowd, but the violence continued.

At Gero's request, Soviet troops entered Budapest on October 24. The presence of these troops further enraged the Hungarians, who

battled the troops and state security police. Crowds emptied the

prisons, freed Cardinal Mindszenty, sacked police stations, and

summarily hanged some members of the secret police. The Central Committee named Nagy prime minister on October 25 and

selected a new Politburo and Secretariat; one day later, Janos Kadar

replaced Gero as party first secretary.

Nagy enjoyed vast support. He formed a new government consisting of both communists and noncommunists, dissolved the state security police, abolished the one-party system, and promised free elections and an end to collectivization, all with Kadar' s support.

But Nagy failed to harness the popular revolt. Workers' councils

threatened a general strike to back demands for removal of Soviet

troops, elimination of party interference in economic affairs, and

renegotiation of economic treaties with the Soviet Union. On October 30, Nagy called for the formation of a new democratic, multiparty system. Noncommunist parties that had been suppressed

almost a decade before began to reorganize. A coalition government emerged that included members of the Smallholders' Party,

Social Democratic Party, National Peasant Party, and other parties,

53
Hungary: A Country Study

as well as the HWP. After negotiations, Soviet officials agreed to remove their troops at the discretion of the Hungarian government,

and Soviet troops began to leave Budapest. Nagy soon learned,

however, that new Soviet armored divisions had crossed into

Hungary.

In response, on November 1 Nagy announced Hungary's decision to withdraw from the Warsaw Pact (see Glossary) and to declare

Hungary neutral. He then appealed to the United Nations and

Western governments for protection of Hungary's neutrality. The

Western powers, which were involved in the Suez crisis and were

without contingency plans to deal with a revolution in Eastern

Europe, did not respond.

The Soviet military reacted to Hungarian events with a quick

strike. On November 3, Soviet troops surrounded Budapest and

closed the country's borders. Overnight they entered the capital

and occupied the National Assembly building. Kadar, who had

fled to the Soviet Union on November 2 , assembled a Temporary

Revolutionary Government of Hungary on Soviet soil just across

the Hungarian border. On November 4, the formation of the new

government was announced in a radio broadcast. Kadar returned

to Budapest in a Soviet armored car; by then, Nagy had fled to the Yugoslav embassy, Cardinal Mindszenty had taken refuge in

the United States embassy, Rakosi was safely across the Soviet

border, and about 200,000 Hungarians had escaped to the West.

With Soviet support, Kadar struck almost immediately against

participants in the revolution. Over the next five years, about 2,000

individuals were executed and about 25,000 imprisoned. Kadar

also reneged on a guarantee of safe conduct granted to Nagy, who

was arrested on November 23 and deported to Romania. In June

1958, the Hungarian government announced that Nagy and other

government officials who had played key roles in the revolution

had been secretly tried and executed.

Kadar's Reforms

The Revolution of 1956 discredited Hungary's Stalinist politi- cal and economic system and sent a clear warning to the leadership that popular tolerance for its policies had limits, and that if these limits were exceeded, popular reaction could threaten communist control. In response, regime leaders decided to formulate

economic policies leading to an improvement of the population's

standard of living. Pragmatism and reform gradually became the

watchwords in economic policy-making, especially after 1960, and

policymakers began relying on economists and other specialists

rather than ideologists in the formation of economic policies. The

54
Historical Setting

result was a series of reforms that modified Hungary 's rigid, centrally planned economy and eventually introduced elements of a

free market, creating a concoction sometimes called "goulash com- munism" (see Economic Policy and Performance, 1945-85, ch. 3). In late 1956, the party named a committee of mostly reformminded experts to examine Hungary's economic system and make

proposals for its revision. The committee's report marked the first step on Hungary's road to economic reform. Its proposals presaged

many of the changes implemented a decade later, including elimination of administrative direction of the economy, introduction of

greater enterprise autonomy, cooperation between private and col- lective sectors in agriculture, economic regulation using price and

credit policies, and central planning focused only on long-term objectives. However, the committee's proposals were never really implemented. Some observers suggested that the party had solidified

its power so quickly that it no longer needed to enact such drastic measures; others claimed that Soviet leaders opposed such reform

until they ensured that the party (on November 1, 1956, renamed

the Hungarian Socialist Workers' Party—HSWP) had consolidated

its power and demonstrated a clear need for a fundamental eco- nomic change. During the chaos of the revolution, Hungary's col- lective farms lost about two-thirds of their members. Many left to become private farmers. In July 1957, Kadar appeased hard-liners

in Hungary and abroad by agreeing to recollectivize agriculture,

and in early 1959 the drive began in earnest. The regime combined force and economic coercion with persuasion and incentives

to drive peasants back to the collective farms (see Agricultural

Organization, ch. 3). The government abolished compulsory

production quotas and delivery obligations and substituted voluntary contracts at good prices. It also permitted profit-sharing

schemes and programs to promote technical innovation. The re- gime allowed peasants to retain sizable private plots and ample

livestock and to choose between collective or cooperative farms.

The farms also received substantial government investments. As

a result, Hungary became the only country with a centrally planned

economy where crop output increased as a result of collectivization. By 1962 more than 95 percent of all farmland had been col- lectivized either in the form of state farms or cooperatives. The

collectivization drive deflected the hard-liners' criticism of Kadar

for his advocacy of reform, and problems with the program's implementation, including excessive coercion of the peasants, later helped Kadar oust the hard-line agriculture minister.

By the early 1960s, Hungary was ripe for a political shake-up.

Khrushchev had consolidated his position in the Kremlin and had

55
Hungary: A Country Study

begun a second wave of de-Stalinization, thus leading Kadar to believe that the Soviet leadership would support political changes

in Hungary. Kadar replaced Ferenc Munnich as prime minister

(who had served in that position since January 28, 1958), and as- sumed the top government post, together with the leadership of

the HSWP. He then dismissed other hard-line officials. Kadar'

consolidation of power led to a more flexible, pragmatic atmosphere

in which persuasion took on greater importance than coercion.

Kadar relaxed government oppression and released most of those

imprisoned for participating in the revolution. Soon Hungary be- came the leader of the reform movement within the Soviet alliance

system. Kadar intended to provide the regime with some legitimacy

and political stability based on solid economic performance. The

Soviet Union demonstrated its support with its decision to withdraw its advisers to the Hungarian government.

Kadar next sought a modus vivendi with the population, summarizing the new policy with the slogan "He who is not against us is with us." As part of this "alliance policy," in 1961 he denounced the practice of making party membership a prerequisite

for jobs demanding specialization and technical expertise. Kadar

sought to remove opportunists who had joined the party solely for the status and economic benefits that membership conferred.

Rather, Kadar wanted to open the government and economic enter- prises to talented people who were prepared to cooperate without

adhering to party discipline or compromising their political beliefs. At the Eighth Party Congress of the HSWP in November 1962,

Kadar supporters replaced Stalinists and incompetent officials in

leading party positions. The congress also called for higher party

recruitment standards, for elimination of political and class considerations in university admissions, and for allowing nonparty

members to compete for leading public positions. Although the party

still had influential conservative members after 1962, the Eighth

Party Congress removed them from the party's policy-making core. As a result of these changes, by 1963 Kadar had acquired genuine

popular support.

Plans for reforming the centrally planned economy steadily took

shape after the Eighth Party Congress. Central Committee secre- tary Rezso Nyers, who supported a comprehensive reform rather

than continued piecemeal adjustments to the economic system, took

charge of economic affairs. The regime also appointed committees to prepare reform proposals. By 1964 the government had identified problems in the economy, including excessive investment,

decreases in output and labor shortages in agriculture, misuse of

inputs, hoarding of materials, and production of unsalable goods.

56
Historical Setting

Since the Treaty of Trianon, Hungary had depended on foreign

trade, and in the early 1960s the government placed top priority on improving trade with the West and the Comecon countries.

Despite improving the terms of trade, however, by 1964 Hungary

had accumulated a serious trade deficit, and the government could

not slow imports without cutting material supplies and personal

consumption. Officials realized that because Hungary had to boost

exports, it would have to meet the needs, quality standards, and

technological requirements of the world economy.

New Economic Mechanism

Khrushchev's ouster in October 1964 failed to weaken Hungary's

desire for reform. Kadar responded to the change in the Kremlin

by affirming that "the political attitude of the HSWP and the

government of the Hungarian People's Republic has not changed

one iota, nor will it change." In December 1964, a Central Committee plenum approved the basic concept of economic reform and

formed a committee to provide fundamental guidelines.

Economic problems also continued to underscore the need for reform. Agricultural output fell by 5.5 percent. In addition, the

government increased production quotas, cut wages, and an- nounced price hikes. Popular discontent rose as a result. In May 1966, the Central Committee approved a sweeping re- form package known as the New Economic Mechanism (NEM).

Although many of its elements could be phased in during a preparation period, the central features of the reform could be implemented only with the introduction of a new price system, which was set for January 1, 1968. With the NEM, the government sought

to overcome the inefficiencies of central planning, to motivate

talented and skilled people to work harder and produce more, to make Hungary's products competitive in foreign markets, especially in the West, and, above all, to create the prosperity that would

ensure political stability.

The NEM decentralized decision making and made profit, rather

than plan fulfillment, the enterprises' main goal. Instead of set- ting plan targets and allocating supplies, the government was to influence enterprise activity only through indirect financial, fiscal,

and price instruments known as "economic regulators." The NEM

introduced a profit tax and allowed enterprises to make their own

decisions concerning output, marketing, and sales. Subsidies were

eliminated for most goods except basic raw materials. The government decentralized allocation of capital and supply and partially

decentralized foreign trade and investment decision making. The

economy's focus moved away from heavy industry to light industry

57
Hungary: A Country Study

and modernization of the infrastructure. Finally, agricultural col- lectives gained the freedom to make investment decisions. The

NEM's initial results were positive. In the 1968-70 period, plan

fulfillment was more successful than in previous years. The stan- dard of living rose as production and trade increased. Product variety broadened, sales increased faster than production, inventory

backlogs declined, and the trade balance with both East and West

improved. In practice, however, the reform was not as sweeping

as planned. Enterprises continued to bargain with government

authorities for resources from central funds and sought preferential treatment. The reform also failed to dismantle the highly concentrated industrial structure, which was originally established to

facilitate central planning and which inhibited competition under

the NEM.

The Kadar regime failed to understand that real economic decentralization required political reform to resolve conflicts that

naturally arose between different interest groups. The government's

problem was to expand "socialist democracy," that is, to build a system that would simultaneously resolve conflicts and maintain

the HSWP's political monopoly. In fact, the government attempted some incremental changes. The courts gained greater independence

in administering justice, and changes were introduced in parliament as deputies on committees of the National Assembly were

instructed to examine and debate legislation more effectively. A

1966 electoral law created single-representative constituencies and

contained a provision for elections with multiple candidates.

However, the Patriotic People's Front (PPF) retained control of

nominations (see Patriotic People's Front, ch. 4). Even after a sec- ond electoral law in 1970 made it legal for other groups to nominate

individuals, few multiple candidacies actually arose (see Elections

to the National Assembly, ch. 4). These minimal changes quickly

encountered resistance from entrenched party officials. The 1968

Soviet invasion of Czechoslovakia and suppression of the reform

program there had also discouraged the HSWP from pursuing fur- ther political changes. However, Kadar was able to work out a modus vivendi with the Soviet leadership. The Soviet Union al- lowed Kadar leeway to implement economic reforms, develop some

economic contacts with the West, and permit Hungarians to travel

abroad as long as Budapest accepted Moscow's hegemony in

Eastern Europe and adhered to Soviet foreign policy positions.

The Kadar regime gave serious attention to implementing the

NEM from 1968 to 1972. In 1971, however, counterreform forces were gathering strength and calling for the return of central controls. The opposition arose from government and party bureaucrats

58
Historical Setting

and was supported by large enterprises and some workers. The

bureaucrats perceived the NEM as a threat to their privileged positions. The large enterprises saw their income drop after the in- troduction of the NEM and were troubled by competition for materials and labor from smaller enterprises. Disaffected workers

who were on the payrolls of outdated, inefficient industries resented

the higher incomes earned by workers in more modern firms. This

opposition successfully reversed the reform a few months after Moscow expressed reservations about the NEM and concern about

"petit bourgeois tendencies" in Hungary.

In November 1972, the Central Committee introduced a package of extraordinary measures to recentralize part of the economy,

but the regime did not formally abandon the NEM. Fifty large enterprises, which produced about 50 percent of Hungary's industrial output and 60 percent of its exports, came under direct

ministerial supervision, supported by special subsidies. New re- strictions applied to small enterprises and agricultural producers.

Wages rose, prices came under central control, and the regime in- troduced price supports. In the following years, the government

also merged many profitable small firms with large enterprises.

The 1973 world oil crisis and the subsequent recession in the

West caused a drastic deterioration of Hungary's terms of trade

and strengthened opposition to the reform. Inflation threatened,

and counterreformers argued for protecting the living standard of

the working class from an economic shock in the capitalist world.

The government intervened by raising taxes on successful firms

and increasing government purchases and subsidies. Consumer

prices eventually fell below the level of producer prices, and Hungary accepted credits from Western banks. Centralized material

allocation was reintroduced. After the oil crisis arose, ideological

opposition to the NEM and to "bourgeois attitudes" emerged as

well. A clampdown on intellectuals began, and Nyers lost his Polit- buro position in 1974.

By 1978 Hungary's dismal economic performance made it clear even to the counterreformers in the leadership that a "reform of

the reform" was necessary. Return to central control had only re- warded inefficiency and stifled innovation and initiative. Enterprises ignored market signals, and shortages plagued producers.

Large amounts of money were invested in poorly conceived projects,

and a trade deficit accumulated. Hungary's hard-currency debt

reached US$7.5 billion by 1978 and had jumped to US$9.1 bil- lion by 1980.

In 1978 the government admitted that its attempt to shield Hungary from world economic conditions could not be continued.

59
Hungary: A Country Study

Hoping to improve its trade balance with the West and avoid forced

rescheduling of its debt, the government announced its intention

to boost exports. This policy change marked the beginning of a new wave of reforms. First, the price system was restructured to bring consumer prices gradually in line with world market prices

and to ease the burden of subsidies on the state budget. Next,

producer prices were reformed to bring about more rational use

of energy and raw materials. Finally, the government overhauled

exchange-rate and foreign-trade regulations.

In 1979 and 1980, the government implemented a number of

institutional reforms. The new reforms abolished branch ministries and replaced them with a single Ministry of Industry intended

to act as a policy-formulating body without direct authority over

enterprises. Large enterprises were broken up into smaller firms.

In 1982 the government legalized the formation of small private

firms, including restaurants, small shops, and service companies,

and it permitted workers to lease enterprise equipment, use it on

their own time, and keep the earnings from their products. In 1984

the regime introduced new forms of enterprise management, in- cluding supervisory councils that would include worker-elected

representatives. New financial institutions also emerged, and a 1983

government decree allowed enterprises, cooperatives, financial in- stitutions, and local governments to issue bonds.

In the early and mid-1980s, Kadar had encouraged a limited

amount of political liberalization. The HSWP maintained its monopoly on political power, but the norms of democratic centralism were looser than in other countries of Eastern Europe (see

Democratic Centralism, ch. 4). County party secretaries acquired

the freedom to make decisions of local importance, including control of personnel. The government again exhorted delegates of the

National Assembly to scrutinize laws and government policies more

critically. In 1983 a new electoral law required a minimum of two

candidates for each national and local constituency in general elec- tions. Trade unions began to defend workers' interests more energetically. Journalists were urged to expose low- and mid-level

corruption and abuse of power, although they could not criticize the regime's basic tenets. The leadership also bolstered economic

reforms of the early 1980s with a foreign policy geared to a greater

degree than before on trade with the West, and it maintained

this course during the deterioration of superpower relations in the

early 1980s. Thus, the economic reforms of the late 1960s had also come to provoke a measure of political reform and changes in for- eign policy. These new departures were inspired in large measure by Hungarian nationalism, a force that had long encouraged

60
Historical Setting

Hungarians to control their own destiny and to resist the hegemony

of their larger, more powerful neighbors.

* * * Two brief histories of Hungary are Denis Sinor's History ofHungary and C.A. Macartney's Hungary: A Short History. Robert A. Kann

discusses Hungary against the backdrop of the Austrian empire

in A History of the Habsburg Empire, 1526-1918. Erik Fiigedi's Castle and Society in Medieval Hungary (1000-1437) provides an intriguing

analysis of the impact of casde-building on Hungary's development.

For further reading on Hungary in the nineteenth century, George

Barany's Stephen Szechenyi and the Awakening of Hungarian Nationalism, 1791-1841 is an excellent account of the reform leader's early

years; Andrew C. Janos's The Politics of Backwardness in Hungary,

1825-1945 offers a detailed analysis of Hungary's economic, social, and political history; and John Paget 's Hungary and Transylvania is an interesting travelogue. Paul Kecskemeti's The Unexpected

Revolution provides a compelling analysis of the Revolution of 1956,

and Charles Gati's Hungary and the Soviet Bloc describes the communist takeover of Hungary and Hungary's relations with the

Soviet Union. Detailed information on the origins and development of Hungary's economic reform programs is found in Judy

Batt's Economic Reform and Political Change in Eastern Europe and Paul

Marer's " Economic Reform in Hungary." (For further information and complete citations, see Bibliography.)

61

Chapter 2. The Society and Its Environment
A peasant girl, Esztergom, 1918
THE PEOPLE'S REPUBLIC OF HUNGARY lies in the central Danube Basin. With 92,103 square kilometers of territory, it is the sixteenth largest European country. The country's terrain

consists largely of plains and hill country and is divided into three

major geographic areas: the Great Plain, covering the central part

of the country, the Transdanube in the west, and the Northern

Hills along the northern border. The climate is mild and continental, although great contrasts in temperatures can occur. In 1988 the country had about 10.6 million inhabitants. Population had grown slowly since the late 1970s and had begun to decline in 1981. In 1986 about 19.2 percent of the population lived

in Budapest, the country's cultural, political, and economic center. Beginning in 1978, for the first time in the country's history, more

people lived in urban centers than in rural areas. By 1988 about

62 percent of the populace lived in urban centers with populations

exceeding 10,000.

In the late 1980s, more than 96 percent of the people were eth- nic Magyars. The minority, or non-Magyar, population was small

and included Germans, Slovaks, Serbs, Croats, Slovenes, Romanians, Jews, Gypsies, and Greeks. Most non-Magyars were bilin- gual, speaking both their own language and Hungarian.

The combined impact of World War II and the communist

takeover in 1947 brought about great changes in the social structure. For more than a decade, the new communist government

sought to create a classless society through various forms of social

engineering. Beginning in the 1960s, these efforts gave way to more

indirect methods of social and economic control. The pace of change

slowed, and a social structure took shape that once again contained

clearly stratified groups. In its new form, society did not display

the extremes of wealth and poverty characteristic of the interwar

period. However, as the country's economic difficulties increased

in the 1980s, tensions appeared to build between the wealthy elites and the sizable disadvantaged groups in society. Public discussion

acknowledged these growing tensions and debated methods for over- coming them.

The family remained the basic social unit. The state recognized

marriage as a secular institution and held the stability of families

to be a desirable social goal. However, observers in the 1980s identified a number of sources of family stress that appeared to contribute to a high rate of divorce.

65
Hungary: A Country Study

After the communist assumption of power in the late 1940s, several mass organizations—official trade unions, the National Council

of Hungarian Women, and the Communist Youth League—were

established to interpret for various segments of the population the

social and political goals of the Hungarian Socialist Workers' Party,

to mobilize support for it, and to serve as centers of a collective

social life. But in the late 1980s, these organizations were losing

members, and they faced growing competition from new unofficial groups that emerged in the relaxed political atmosphere.

According to Western estimates, in the late 1980s about 67.5

percent of the population was Roman Catholic, 20 percent was Reformed (Calvinist), 5 percent was Lutheran, and 5 percent was

unaffiliated. The country also contained smaller groups of Uniates

(Catholics of the Eastern Rite), Greek Orthodox, various small Protestant sects, and Jews. In 1989 the government abolished

the State Office for Church Affairs, which had supervised the

churches. A proposal for new law submitted for public discussion

in 1989 was intended to eliminate almost all restrictions on the

churches.

The country's education system provided free, compulsory

schooling for young people from six to sixteen years of age. About

half of all students attended general schools (also known as ele- mentary schools) for eight years and then completed their education through vocational training. The remainder continued their

studies in a four-year gymnasium (a secondary school for university preparation) or trade school. The general schools' curriculum

stressed technical and vocational training. In the 1980s, almost 10

percent of the population aged eighteen to twenty-two was enrolled in regular daytime courses of study at institutions of higher

learning. In the late 1980s, the state health care and pension systems were

highly centralized. Medical care was free to all citizens. However,

many physicians maintained private practices, and people who

could afford to receive care on a private basis often preferred to do so. Availability of medical personnel and hospital beds was high

by international standards. The country's pension system, although

extensive, was the object of considerable criticism in the 1980s be- cause of the low levels of support provided to many retirees. In the late 1980s, the bounds of permissible expression in Hungary suddenly had become wide by East European standards.

Authorities had lifted most traditional prohibitions. Opposition

groups were able to function legally. Consequently, the country

experienced a quickening and enlivening of cultural and intellec- tual life.

66
The Society and Its Environment

Physical Environment

With a land area of 92, 103 square kilometers, Hungary is roughly

the size of the state of Indiana. It measures about 250 kilometers

from north to south and 524 kilometers from east to west. It has some 2,258 kilometers of boundaries, shared with Austria to the

west, Yugoslavia to the south and southwest, Romania to the

southeast, the Soviet Union to the northeast, and Czechoslovakia

to the north.

Hungary's modern borders were first established after World

War I when, by the terms of the Treaty of Trianon in 1920, it lost more than two-thirds of what had formerly been the Kingdom

of Hungary and 58.5 percent of its population (see Trianon Hungary, ch. 1). With the aid of Nazi Germany, the country secured some boundary revisions at the expense of parts of Slovakia in 1938

and Carpatho-Ukraine in 1939 and at the expense of Romania in

1940. However, Hungary lost these territories again with its defeat

in World War II. After World War II, the Trianon boundaries were restored with a small revision that benefited Czechoslovakia.

Topography

Most of the country has an elevation of fewer than 200 meters

(see fig. 6). Although Hungary has several moderately high ranges

of mountains, those reaching heights of 300 meters or more cover

less than 2 percent of the country. The highest point in the country is Mount Kekes (1,008 meters) in the Matra Mountains northeast of Budapest. The lowest spot is 77.6 meters above sea level,

located in the Hortobagy.

The major rivers in the country are the Danube and Tisza. About

one-third of the total length of the Danube River lies in Hungary;

the river also flows through parts of the Federal Republic of Germany (West Germany), Austria, Czechoslovakia, Yugoslavia, and

Romania. It is navigable within Hungary for 418 kilometers. The

Tisza River is navigable for 444 kilometers in the country. Less

important rivers include the Drava along the Yugoslav border, the

Raba, the Azamos, the Sio, and the Ipoly along the Czechoslovak

border. Hungary has three major lakes. Lake Balaton, the largest,

is 78 kilometers long and from 3 to 14 kilometers wide, with an

area of 592 square kilometers. Hungarians often refer to it as the

Hungarian Sea. It is Central Europe's largest freshwater lake and

an important recreation area. Its shallow waters offer good sum- mer swimming, and in winter its frozen surface provides excellent

opportunities for winter sports. Smaller bodies of water are Lake

67
Hungary: A Country Study

Velence (26 square kilometers) in Feher County and Lake Ferto

(Neusiedlersee—about 82 square kilometers within Hungary).

Hungary has three major geographic regions: the Great Plain

(Nagy Alfold), lying east of the Danube River; the Transdanube,

a hilly region lying west of the Danube and extending to the foothills of the Austrian Alps; and the Northern Hills, which is a mountainous and hilly country beyond the northern boundary of the

Great Plain.

The Great Plain contains the basin of the Tisza River and its branches. It encompasses more than half of the country's territory.

Bordered by mountains on all sides, it has a variety of terrains,

including regions of fertile soil, sandy areas, wastelands, and

swampy areas. Hungarians have inhabited the Great Plain for at least a millennium. Here is found the puszta, long an uncultivated expanse (the most famous such area still in existence is the

Hortobagy), with which much Hungarian folklore is associated.

In earlier centuries, the Great Plain was unsuitable for farming

because of frequent flooding. Instead, it was the home of massive

herds of cattle and horses. In the last half of the nineteenth century, the government sponsored programs to control the riverways

and expedite inland drainage in the Great Plain. With the danger

of recurrent flooding largely eliminated, much of the land was placed

under cultivation, and herding ceased to be a major contributor

to the area's economy.

The Transdanube region lies in the western part of the country, bounded by the Danube River, the Drava River, and the re- mainder of the country's border with Yugoslavia. It lies south and

west of the course of the Danube. It contains Lake Ferto and Lake

Balaton. The region consists mostly of rolling foothills of the Austrian Alps. However, several areas of the Transdanube are flat, most notably the Little Plain (Kis Alfold) along the lower course

of the Raba River. The Transdanube is primarily an agricultural

area, with flourishing crops, livestock, and viticulture. Mineral

deposits and oil are found in Zala County close to the border of

Yugoslavia.

The Northern Hills lie north of Budapest and run in a northeasterly direction south of the border with Czechoslovakia. The

higher ridges, which are mostly forested, have rich coal and iron

deposits. Minerals are a major resource of the area and have long

been the basis of the industrial economies of cities in the region.

Viticulture is also important, producing the famous Tokay wine.

The country's best natural resource is fertile land, although soil quality varies greatly. About 70 percent of the country's total ter- ritory is suitable for agriculture; of this portion, 72 percent is arable

68


The Society and Its Environment

land. Hungary lacks extensive domestic sources of the energy and raw materials needed for industrial development (see Resource

Base, ch. 3). Climate

Temperatures in Hungary vary from -28°C to 22°C. Average

yearly rainfall is about sixty-four centimeters. Distribution and fre- quency of rainfall are unpredictable. The western part of the country

usually receives more rain than the eastern part, where severe droughts may occur in summertime. Weather conditions in the

Great Plain can be especially harsh, with hot summers, cold winters,

and scant rainfall. By the 1980s, the countryside was beginning to show the effects of pollution, both from pesticides used in agriculture and from in- dustrial pollutants. Most noticeable was the gradual contamination of the country's bodies of water, endangering fish and wildlife. Although concern was mounting over these disturbing threats to the environment, no major steps had yet been taken to arrest them

(see Environmental Problems, ch. 3). Population

Since World War II, Hungary has exhibited several population

trends that parallel those in other advanced societies. Population

leveled off after the war and even began to decline. The birth rate

fell, and people flocked from the countryside to the cities, especially to the major urban areas. Historical Trends

Trianon Hungary emerged from World War I with reduced

borders roughly coterminous with Hungary's present-day borders.

In 1920 Hungary had about 8 million inhabitants, and by 1941

the population had grown to approximately 9.3 million (see table 2, Appendix). But the country lost about 5 percent of its population

in World War II, so as of 1949 the population was only about 8.8

million. Thereafter, the growth rate of the population fluctuated

substantially. Until the mid-1950s, high fertility and declining mortality caused rapid population growth. In 1954 the highest post- war live-birth rate was reached, at 23 births per 1 ,000 population.

Subsequently, until the mid-1960s the birth rate declined, but the

mortality rate was also low. In the late 1960s and early 1970s, the

birth rate again rose, partly because of demographic measures in- troduced by the government in 1967 and 1973 (see Health and Welfare, this ch.). Because the overall population had begun to age,

71
70

Hungary: A Country Study

the mortality rate also increased during this period, but it was

counterbalanced by the higher rate of live births.

Structure

Beginning in the late 1970s, the birth rate declined and mortality increased. By the early 1980s, Hungary's growth rate had become one of the lowest in the world. More ominously, beginning

in 1981, deaths outnumbered births. Over the 1980s, population

decreased absolutely after peaking at a post-World War II high

of 10.7 million in 1980. Thus, the 1988 census reported that about

10.6 million people lived in the country.

In 1986 the birth rate was 12.1 per 1 ,000 population, up slighdy

from the postwar low of 11.8 per 1,000 in 1984. However, as re- cently as 1975 the birth rate had been 18.4 per 1 ,000, and in 1948

the birth rate had been 21 per 1,000. One major reason for the

overall decline of the birth rate appeared to be the increasing number of highly educated and economically active women who, as in

other countries, tended to have fewer children. Age appeared to play no role in the declining birth rate. In 1986 women married

at an average age of 24.6 years, a figure only slightly higher than

in 1948, when the average age was 24.5. In the 1980s, the typical

family had only two children (reflecting a dramatic decrease from

the final decades of the nineteenth century, when the average number of children per family had been five).

Overall, the population of the country was aging. A growing

proportion of the population was aged fifty-five or older, increasing from 19.6 percent of the population in 1960 to 24.5 percent

in 1988. By contrast, in 1988 the proportion of the population under

fifteen was about 21 percent, which reflected a decrease of about

4 percent since 1949 and resulted from the declining birth rate. Marriage rates fell steadily from the mid-1970s to the mid-1980s

(see table 3, Appendix). In 1975 the marriage rate was 9.9 per

1,000. By 1986 that number had declined to 6.8 per 1,000.

Moreover, in 1980 for the first time, the number of marriages that

ended because of death or divorce outnumbered the number of marriages that took place. In 1980 the number of "marriages ceased"

because of death and divorce was 9.2 per 1,000 population. That

number rose to 9.3 by 1983, then fell slighdy back to 9.2 by 1986.

Death rates were relatively high, and they were rising. In 1986

the death rate was 13.8 per 1,000, as compared with 12.4 per 1,000

in 1975. In 1986 life expectancy averaged sixty-eight years, up from

about sixty- six years in 1975. For women in 1986, the average life span was almost seventy-two years; for men, it was just under sixty- five years.

72
Lake Balaton

Courtesy Scott Edelman

Settlement Patterns

In 1945 only 35 percent of the population lived in urban areas. After 1945 much of the population moved from the country's less developed counties to Budapest and later to its suburbs and to the

industrial counties of Hajdu-Bihar and Borsod-Abauj-Zemplen. The

number of urban dwellers grew by more than 50 percent from 1949

to 1984. In 1978, for the first time in the country's history, more

people lived in urban centers than in rural areas. In 1949 the population density was about 100 persons per square kilometer. By the

1980s, that figure had climbed to about 117 persons per square

kilometer.

In the late 1980s, nine cities had populations greater than

100,000. Budapest, the country's focal point for government, cul- ture, industry, trade, and transport, was by far the largest city,

with 2.1 million inhabitants, or 19.2 percent of the country's population. Other major population centers were Debrecen, with 217,000

inhabitants; Miskolc, with 210,000; Szeged, with 188,000; Pecs,

with 182,000; Gyor, with 131,000; Nyiregyhaza, with 119,000;

Szekesfehervar, with 113,000; and Kecskemet, with 105,000. In

1988 the country had a total of 143 urban centers with more than

73
Hungary: A Country Study

10,000 inhabitants, where about 62 percent of the population

lived.

As of 1988, the country had 2,915 settlements with fewer than

10,000 inhabitants, where 38 percent of the people made their

homes. Beginning in the 1950s, the smallest villages, or those with

fewer than 5,000 inhabitants, tended to lose their residents.

However, the number of people leaving the villages decreased every

year after 1960. Whereas in 1960 about 259,000 people left the

villages permanently, that number declined to about 129,000 in

1986. The number of people leaving the villages exceeded the number coming to the countryside by approximately 52,000 people in

1960. That number had declined to 37,769 in 1980 and 20,814

in 1986. In the 1980s, a substantial number of persons of Hungarian origin

lived outside the country. Many of these lived in neighboring countries (see Relations with Other Communist Neighbors, ch. 4). Others had moved even farther from their homeland. In the three

decades before World War I, some 3 million ethnic Hungarian

peasants had fled to the United States to escape rural poverty (see

Social Changes, ch. 1). During and after the Revolution of 1956,

about 250,000 people left the country, traveling first to Austria and

Yugoslavia and eventually emigrating to Australia, Britain, Canada, France, Switzerland, the United States, and West Germany.

In the late 1980s, about 40 percent of all persons of Hungarian

origin were living outside Hungary.

The Hungarian People

As a result of population transfers after World War II, Hungary became one of the most ethnically homogeneous countries in

Eastern Europe. Unlike most Europeans, Hungarians trace their

lineage to the Finno-Ugric people—an Asiatic tribe. For this rea- son, Hungarians have long felt themselves to be distinct from the

other peoples who live in their midst.

Ethnic discrimination—except toward the Gypsies—was almost

nonexistent in Hungary in the 1980s. Particularly after the late 1960s, the government had made great efforts to ensure fair and

equal treatment for minority nationalities. Foreign policy considerations partially explained this liberal policy toward minorities. The

Romanian and, to a lesser extent, the Czechoslovak governments

subjected Hungarians in their countries to many kinds of discrimination. To provide these governments with incentives to relax their pressure against Hungarian minorities, Budapest pursued very liberal policies toward its own national minorities and sought to make its minority policies a model for other countries in Eastern Europe.

74
Square in downtown Szeged

Courtesy Scott Edelman

Origins and Language

The Hungarian people are thought to have originated in an ancient Finno-Ugric population that originally inhabited the forested area between the Volga River and the Ural Mountains. Sometime

between the first and fifth centuries A.D. , after the Ugric and Finnic

peoples had split, Ugric tribes in the eastern portion of the terri- tory moved farther south, intermingling with nomadic BulgarTurkish peoples (see Early History, ch. 1). Some of these tribes

settled in the Carpathian Basin in the ninth century A.D. and be- came the direct ancestors of today's inhabitants of Hungary. The

proper name for the largest ethnic group in Hungary is Magyar.

The word is a derivative of Megyeri, supposedly the name of one

of the original ten Magyar tribes. Magyar refers specifically to both

the language and the ethnic group. The words Hungary and Hungarian are derivatives of a Slavicized form of the Turkic words on

ogur, meaning "ten arrows," which may have referred to the number of Magyar tribes. Hungarian is the country's only official language. It is a member of the Finno-Ugric family of languages, unrelated to the IndoEuropean language family, which contains the major European

75
Hungary: A Country Study

languages. Within Europe, Hungarian is related to Finnish, Esto- nian, Komi, and several lesser-known languages spoken in parts

of the Ural Mountains region in the Soviet Union. It has a heavy

admixture of Turkish, Slavic, German, Latin, and French words.

Hungarian is written in Latin characters. The various dialects are

intelligible to all Hungarians throughout the country.

Minority Groups

In the 1980s, more than 96 percent of the population consisted

of ethnic Magyars. Major transfers of population had occurred after World War II. Substantial numbers of Germans, Czechs, and Slovaks were resettled in neighboring countries, and many Hungarians outside the country's borders moved to Hungary. Today

Hungary has few ethnic minority inhabitants. In the 1980s, the

population included roughly 230,000 Germans; slightly more than

100,000 Slovaks; about 100,000 Serbs, Croats, and Slovenes (often

grouped together as South Slavs); and about 30,000 Romanians.

In the late 1980s, the Romanian population in the country increased

significantly as thousands of Romanians fled conditions in their

homeland and sought refuge in Hungary. About one-third of these

emigres were ethnic Romanians, and the remainder were ethnic

Hungarians. In addition, about 500,000 Gypsies, 150,000 Jews,

and 4,000 Greeks lived in Hungary. The Jewish community was

a mere remnant of the Jewish population that had lived in the country before World War II. During the war, as many as 540,000 Jews

and 60,000 Gypsies were deported to Nazi extermination camps

(see World War II, ch. 1). Most of the non-Magyar nationalities were bilingual, speaking

both their own language and Hungarian. In the 1980 census, less than 1 percent of the population actually registered as members

of national minorities, although a far greater number expressed

interest in aspects of their ethnic culture. National minorities did

not usually form separate communities but lived interspersed among

the entire population.

The Constitution, as well as a sizable body of law, guarantees

the cultural rights of recognized national minorities. The Constitution promises them equal rights as citizens, protection against

discrimination, and access to education in their own language from

kindergarten to university level (see Constitutional Development,

ch. 4). Minorities have been able to promote their national cul- tures through freedom of association in federations, ethnic clubs,

and artistic endeavors. They have been able to use their own language in official procedures and could publish newspapers and periodicals, and broadcast radio and television programs in their own

76
Dohdny Synagogue in Budapest

Courtesy Sam and Sarah Stulberg

tongue. Actual government policy in the 1980s was fairly consis- tent with these promises. In 1984 approximately 55,000 minority

students were receiving instruction in their mother tongue in

elementary and secondary schools, up from 21,615 students in 1968.

When ethnic students did not find the requisite opportunities at domestic institutions of higher education, they could study at appropriate foreign universities. All national minorities had weekly

newspapers and other publications and sponsored various cultural

activities. As public discussion in the late 1980s noted, however,

the minorities had not shared equally in the economic advances

of recent decades.

Jews and Gypsies were not officially recognized as national

minorities, being defined rather as a "religious community" and

an "ethnic community," respectively. However, the Jews occupied

a more favorable position in Hungary than they did in other states in Eastern Europe. The country's 150,000 Jews formed the third

largest Jewish community on the European continent, being smaller

than the Jewish communities in the Soviet Union and France. They

maintained a high school, library, museum, kosher butcher shops, an orphanage, a home for the elderly, a rabbinical seminary, a fac- tory producing matzo, and about thirty synagogues. Several publications, including newspapers, served the Jewish population.

The situation of the half million Gypsies, traditionally a poor

and marginal element in society and subject to discrimination, was

77
Hungary: A Country Study

far less favorable. In 1987 about 75 percent of the Gypsies were

living at or below the poverty level. About half of them lived in

settled conditions, holding down jobs. Most spoke Hungarian. The

Gypsy population had a birth rate that was more than twice as high

as that of the rest of the population. This circumstance, and the

fact that the Gypsy crime rate was disproportionately high, contributed to an apparently growing hostility to Gypsies among the

Hungarian population. Many citizens perceived the government's

special programs for Gypsies as undeserved favoritism that deprived

the rest of the population of needed resources. In the mid-1980s, in contrast to its earlier policy of encouraging

cultural assimilation, the government began to foster a Gypsy ethnic

and cultural identity and a sense of community and tradition to enhance the self-esteem of the Gypsy population. In mid- 1985 the

government established the National Gypsy Council to represent

Gypsy concerns to the government and to assist in carrying out measures involving the Gypsies. In 1986 the Cultural Association

of Gypsies in Hungary was founded to help preserve and foster Gypsy culture. In 1987 a Gypsy newspaper was established. Despite

these signs of progress, Gypsies remained particularly vulnerable

as the economic climate deteriorated in the 1980s. With minimal

skills, education, and training, they were among the first to lose

their jobs as unemployment increased. Their health and living stan- dard remained well below the national average.

Social Structure

Before World War II, Hungarian society was characterized by

striking inequalities in economic and social status (see Social

Changes, ch. 1). Landownership was the principal source of wealth,

because the country was still predominantly rural and agricultural.

The poverty of millions of landless laborers stood in stark contrast

to the wealth of a small elite of landowners, bankers, and prominent businessmen. Early efforts at industrialization provided few

alternative employment opportunities for the impoverished agricultural labor force. The destruction and turmoil of World War II greatly disrupted

the traditional social structure. After the communists assumed

power in 1947, society was in flux for almost two decades (see Post- war Hungary, ch. 1). The aim of the new government was to replace

the old order with a new social structure that was in line with

Marxist-Leninist ideology. The pace of change slowed in the early

1960s as the government reduced its efforts at social engineering.

By the early 1970s, society had settled into a discernible pattern

in which clear-cut social strata were beginning to reemerge. Changes

78
The Society and Its Environment

that continued to affect the social system during the 1970s and 1980s

resulted largely from economic growth and urbanization rather than

from the efforts of communist social planners.

Interwar Period

Until World War II, striking inequalities distinguished the dis- tribution of wealth, power, privilege, and opportunity among social groups. The various social strata had different codes of behavior

and distinctive dress, speech, and manners. Respect showed to per- sons varied according to the source of their wealth. Wealth derived

from possession of land was valued more highly than that coming

from trade or banking. The country was predominantiy rural, and

landownership was the central factor in determining the status and

prestige of most families. In some of the middle and upper strata of society, noble birth was also an important criterion as was, in some cases, the holding of certain occupations. An intricate sys- tem of ranks and titles distinguished the various social stations.

Hereditary titles designated the aristocracy and gentry. Persons

who had achieved positions of eminence, whether or not they were

of noble birth, often received nonhereditary titles from the state. The gradations of rank derived from titles had great significance

in social intercourse and in the relations between the individual

and the state. Among the rural population, which consisted largely

of peasants and which made up the overwhelming majority of the

country's people, distinctions derived from such factors as the size of a family's landholding; whether the family owned the land and

hired help to work it, owned and worked the land itself, or worked

for others; and family reputation. The prestige and respect accom- panying landownership were evident in many facets of life in the

countryside, from finely shaded modes of polite address, to special church seating, to selection of landed peasants to fill public

offices. On the eve of World War II, about 4 percent of the population

owned more than half the country's wealth. Landowners, wealthy

bankers, aristocrats and gentry, and various commercial leaders

made up the elite. Together, these groups accounted for only 13

percent of the population. Between 10 and 18 percent of the population consisted of the petite bourgeoisie and the petty gentry, var- ious government officials, intellectuals, retail store owners, and

well-to-do professionals. More than two-thirds of the remaining

population lived in varying degrees of poverty. Their only real chance for upward mobility lay in becoming civil servants, but such

advancement was difficult because of the exclusive nature of the

education system (see Education, this ch.). The industrial working

79
Hungary: A Country Study

class was growing, but the largest group remained the peasantry,

most of whom had too little land or none at all. Although the interwar years witnessed considerable cultural and

economic progress in the country, the social structure changed lit- tle. A great chasm remained between the gentry, both social and

intellectual, and the rural "people." Jews held a place of promi- nence in the country's economic, social, and political life. They

constituted the bulk of the middle class. During the first four decades of the twentieth century, Jews made up more than one-fifth

of the population of Budapest. They were well assimilated, worked

in a variety of professions, and were of various political persuasions.

Postwar Societal Transformation

Even before the communists came to power in 1947, the turbulent years of World War II had weakened or eliminated much of

the old stratified society. Devastation from the fighting in 1944 and

1945, land reforms instituted by the government in 1945, and the

nationalization of commerce and industry between 1948 and 1953

destroyed the economic base of the old social system. The country

lost about 300,000 Jews, including much of the Jewish business

community, to various war-related causes—deportation, massacre,

disease, and hunger. Only about 260,500, mostly from Budapest,

survived (see World War II, ch. 1). After the communist takeover, the traditional ruling class was

virtually eliminated. More extensive land reform undertaken by

the new regime eventually collectivized the majority of the peasantry. In the countryside, anti-kulak measures and compulsory deliveries of produce to the state at extremely low prices destroyed the

prosperous peasant class. (In 1948 the term kulak came to be defined officially as anyone who owned more than seven hectares of

land or had a landed income roughly approximating such ownership. Political conditions caused many with less property also to

feel threatened.) Rampant inflation disrupted all aspects of eco- nomic life. In keeping with Marxist-Leninist ideology, during the first decade of communist rule the government sought to create a classless society through policies such as equalization of incomes,

collectivization of agriculture, expropriation of property, and tight

control over educational opportunities (see Rakosi's Rule, ch. 1). On the remaining peasants with average incomes and on prosper- ous peasants, the government imposed steeply progressive income

taxes and requisitioned large amounts of produce. Collectivization

in the early 1950s caused many peasants to seek alternatives to agriculture. Many retained their rural residences but commuted

80
The Society and Its Environment

daily or weekly to other jobs, leaving part of the family to continue some agricultural work. Others moved to entirely new jobs,

as government policies promoted rapid development of heavy in- dustry (see Economic Policy and Performance, 1945-85, ch. 3). The social and economic changes that took place after World

War II promoted social mobility. During the early years of forced

industrialization and continuing to a lesser extent until the early

1960s, the prewar worker strata and peasant strata had enhanced

opportunities to rise into white-collar positions. Large numbers of

peasants entered the industrial labor force, and the bureaucracy,

which grew as a result of centralized planning, was open to per- sons from all social groups.

Some downward mobility also occurred. Disincentives for for- merly independent professionals, crafts people, and merchants were

overwhelming. Opportunities also dwindled for prewar executives

and managers. Members of the old elite lost property and political

power and were forced into the middle or lower class. A large per- centage of the prewar elite left the country.

Despite such mobility in the early 1950s, an inegalitarian social

system remained in place. The new political elite enjoyed material and symbolic privileges, such as access to special stores containing scarce goods or the free use of secluded and well-guarded

villas, that separated it from the rest of the population. A second

stratum of the elite consisted of valuable persons such as directors

of large enterprises and of the best collective farms. They too lived

in comparative luxury. The new elite also included intellectuals

who endorsed the party and its interests. Their task was to provide legitimacy for the new regime. In return, they enjoyed living

standards superior to those of the working class. In the aftermath of the Revolution of 1956, career restrictions on the prewar middle class and intellectuals began to ease some- what as the government ceased most of its social engineering ef- forts (see Revolution of 1956, ch. 1). Among workers and peasants,

political loyalty, although important, could no longer serve as a

vehicle for upward mobility in the absence of other qualifications; a person also needed to have appropriate educational credentials or skills. However, political considerations remained paramount

for persons who ,wanted to be part of the ruling political elite. As the economic reforms introduced in the 1960s increasingly

affected all aspects of society, stratified social groups again made

their appearance. By the mid-1970s, the regime's objective of a

classless society appeared to be increasingly unattainable. To reconcile ideology with these realities, ideologists began modifying

Marxist theory. The regime all but abandoned the goal of a classless

81
Hungary: A Country Study

society, ideologists arguing that in a socialist industrial society cer- tain skills and occupations were more necessary than others. Thus,

those persons with greater skills and responsibilities should receive more compensation than those making less valuable contributions.

Ideologists rationalized society's inequalities by maintaining that

socioeconomic distinctions that evolved under a communist sys- tem were qualitatively different from those found in capitalist

countries.

Social Relations in the 1980s

In the 1980s, society was complex and highly differentiated. Social

scientists agreed that the traditional Marxist-Leninist description

of the workers, peasants, and intellectuals all cooperating to build

socialism did not accurately depict modern society. They actively

sought new categories to account for the great diversity of life-styles

and income sources but as of the late 1980s had not reached a con- sensus concerning modifications in traditional theories.

Most sociologists spoke of the existence of three major strata in

society: white-collar workers engaged in mental labor; manual

laborers; and peasants. The white-collar category comprised every- one not involved in physical labor—party and government leaders,

intellectuals, professionals and teachers, collective farm managers,

artists, business persons, traders, shop owners, and specialists such

as building contractors. This category constituted 30.3 percent of

active earners in 1987, with 14.5 percent classified as professionals.

The manual labor category encompassed 61.4 percent of the work

force and included skilled, semiskilled, and unskilled blue-collar

workers of all ranks and degrees of training and prosperity. The

peasantry working on both cooperative and state farms made up

8.3 percent of earners. About 4.6 percent of the work force were

also "small-scale producers" of various types.

A survey taken in 1981 revealed the surprisingly widespread nature of small-scale agricultural production among virtually all social categories and occupations; 62.7 percent of active earners lived

in households that cultivated at least small gardens of fruit trees or vegetables. A smaller but still substantial number of active earners were involved in animal husbandry (see Agricultural Organization, ch. 3). Sociologists were uncertain about whether or not this phenomenon was a temporary phase in industrial development or a new category of agricultural worker.

The Elite

Persons with some claim to elite status made up no more than

15 percent of the population in the early 1980s. The elite consisted

82
The Society and Its Environment

of three identifiable groups in the 1980s: political, technocratic,

and intellectual. The political elite consisted of top party and government leaders. Although some members of this group flaunted their status and privileges, most were not highly visible and did not advertise their special status. Members appeared to be relatively sensitive to their public image and did not indulge in conspicuous

consumption. The technocrats included managers, directors,

economists, and researchers who supported the regime. The benefits

they derived from the system were more visible, in the form of

bonuses and salaries and of the autombiles, villas, apartments, and

other special advantages that these financial windfalls made possible. The intellectual elite, composed of academicians, scientists,

musicians, artists, writers, journalists, and actors, included many

persons who were comfortably placed, although others lived in rela- tively humble circumstances. They were leaders in setting both social and political trends. Members of these favored groups often

possessed, in addition to relative wealth, the important commodity

of influence or ''connections." This form of influence gave them

and their families access to scarce items and limited opportunities,

such as quality higher education.

Additional occupations that were likely to be financially rewarding

included medicine, engineering, and, in some cases, skilled technicial jobs, such as electrical work, house painting, plumbing, and

building contracting. These technicians might have several income

sources from their private work in addition to salaried work. Intellectuals who lacked high salaries but supplemented their income

through various types of consulting work, such as editing, translating, and so forth, were also financially secure. Prosperous individuals enjoyed a very comfortable standard of

living. Families who could afford private holiday and weekend

houses built them on the shores of Lake Balaton, along rivers, and

in mountain areas. From 1981 through 1987, a total of 30,397 pri- vate "holiday houses" were built. As more people owned their own

automobiles, weekend trips became increasingly popular. During

the 1970s, more people, even those in relatively modest circumstances, began to travel abroad. In 1981 a record 5.5 million Hungarians traveled outside Hungary. Of these, about 477,000 traveled

to capitalist countries, in Europe or overseas. As a result of financial constraints, the number of travelers dropped somewhat in the

mid-1980s. Regulations concerning the exchange of foreign cur- rency permitted travel to capitalist countries no more than once

a year on organized tours or once every three years on an individual

basis. If a traveler had access to additional sources of foreign cur- rency, however, he or she could travel more frequently.

83
Hungary: A Country Study

The Disadvantaged

To achieve an acceptable living standard or to improve their

modest circumstances, most Hungarians had to work hard; often

they held more than one job. Continuing inflation in the 1980s

created additional pressures on families with moderate income.

Although the government introduced the five-day workweek

throughout the economy between 1980 and 1985, more persons

worked extended workdays to increase household income. It was

estimated that three families in four had some source of additional

income not resulting from work in state or collective sources. Many

families were thus able to achieve a comfortable, if still modest,

life-style.

A number of disadvantaged groups also tried to make ends meet.

Western analysts estimated that between 25 and 40 percent of the

population lived below the poverty level, which, in the mid-1980s, was defined as a monthly income below 5,200 forints (for value

of the forint—see Glossary). Average monthly wages (6,000 forints) were only 10 to 15 percent above this level. In 1988, according

to data issued by the Central Statistical Office, between 1.5 million and 3 million people qualified as "socially poor" (out of a population of 10.6 million). These figures included 40 to 50 percent of

all retired persons on pensions, about half of families with two chil- dren, and from 70 to 90 percent of families with three or more chil- dren. Other poor groups were low-paid employees of the state and

industry, such as postal employees, various semiskilled and unskilled workers, and minor bureaucrats. Some of these people

supplemented their income through second jobs. Single heads of

households were often poor. In addition, persons working on less productive collective farms and those living on isolated homesteads

(tanyas) far from rural centers and even villages, were likely to have

scanty incomes.

Although Hungary's living standard was higher than that found

in neighboring socialist states in the 1980s, the sharp disparities

became the subject of investigative reports, letters to newspaper

editors, and various radio and television talk shows. Economic

problems were clearly causing concern and some demoralization

among the people. The government adopted a variety of austerity measures in response to the country's economic stagnation and staggering foreign debt. These measures included increases in the prices

of basic items, such as flour, bread, gasoline, and household energy,

and various consumer items such as cigarettes. A new value-added

tax (see Glossary) on most goods and services and a stricter income

tax law were also introduced (see Economic Regulators, ch. 3).

84
The Society and Its Environment

In 1988 official sources reported an inflation rate of 17 percent.

Western analysts estimated that the inflation rate could be as high

as 25 to 30 percent. By 1989 the average real wage had dropped

to its 1973 level. Since the mid-1970s, considerable tension has emerged between

the rich and the poor, partially because of the long-professed

egalitarian views of the regime. During the immediate postwar

period, the leadership had advocated (although it had never fully

practiced) a general egalitarianism that, combined with the prevailing scarcity, led people to elevate self-denial as a socialist virtue.

When conditions subsequently improved, the leadership and the

population both were confused about what form the proper socialist way of life should take. The younger generation in particular took

pleasure in the increasing comforts of life, but some members of

the older generation feared a resurgence of a "bourgeois" life-style

and "consumerism." Although poverty remained widespread,

socialism's sponsorship of rapid economic development had offered

many persons a chance to change their way of life and socioeconomic

position in a manner that was unimaginable before the war. As

living standards improved, the conviction had grown among significant segments of the population that economic growth and ris- ing standards were inevitable and that ongoing problems—poverty

and unequal opportunity—were remnants of the old order, cer- tain to be overcome. Then in the mid-1970s, economic growth had

slowed. Although inequalities were much reduced from the prewar

scale, they still existed. They were less pronounced in salary differ- ences than they were in working conditions, working hours (including their flexibility), housing conditions, possession of durable consumer items, and, most of all, general life-style. Even more trou- bling was the appearance of new inequalities, with favored groups

consolidating their advantageous positions. The regime had few

concrete answers for these problems. Leaders could only point out

that the country had no models to follow in developing a socialist system to meet its needs.

In the late 1980s, the worsening economic conditions were a dis- appointing contrast to the successes and significant improvements

in living standards achieved in the 1960s and 1970s. In 1987 the

official news agency estimated the number of unemployed per- sons to be 30,000 to 40,000. In 1988 the press began reporting frankly on the noticeable numbers of beggars and homeless

persons on the streets of Budapest. The media also noted that squatters were becoming a problem, especially families coming from the

countryside seeking employment and moving into vacant apartments.

85
Hungary: A Country Study

Social Institutions

In the 1980s, severe social and economic problems took their

toll on the family. Harsh economic conditions meant that most

women had to work and most men had to hold second and even

third jobs. These factors, combined with a housing shortage, subjected the family to considerable stress. Yet the harsh economic

conditions also forced many people to turn inward, and they found

in their families a refuge from the difficult economic realities. In the postwar period, the regime had designed its mass organizations to take over some of the traditional socialization functions

of the family. Thus, the mass organizations served as "transmission belts," attempting to inculcate regime values, and relaying

and interpreting the policies of the Hungarian Socialist Workers'

Party (HSWP) to rank-and-file members and to the general public (see Hungarian Socialist Workers' Party, ch. 4). In the late 1980s, some Western observers considered the mass organizations

sponsored by the regime to be in a moribund state, hopelessly out- classed by newer, more spontaneous collective efforts (see Dissent

and Freedom of Expression, this ch.). In response, some mass or- ganizations liberalized their programs and distanced themselves

from the regime.

Early in its history, the communist party considered the churches

as competitors for the allegiance of the people. Therefore, the re- gime actively persecuted the churches, especially the Roman Catholic Church. After the Revolution of 1956, the regime relaxed its pressure on the churches, viewing them more as partners than as

adversaries. By the late 1980s, the government allowed the churches

wide latitude and eliminated virtually all legal and institutional re- strictions on church activities. The Family

In traditional Hungary, the family served as the basic social unit.

It had multiple functions, providing security and identity to in- dividuals and reinforcing social values. In rural areas, it was also

the basic economic unit—all members worked together for the

material well-being of the whole family. Even before World War

II, however, family cohesion began to decrease as members be- came increasingly mobile. But the process of change quickened after the communist takeover. Intensive industrialization and forced col- lectivization prompted many of the younger peasants to leave

agriculture for industrial work or other jobs in the cities, some com- muting long distances between home and work (see Postwar Societal Transformation, this ch.). Patterns of family life changed. A

86
The Society and Its Environment

growing number of women worked outside the home, and chil- dren spent much of their time in school or in youth organization

activities. Family members spent less time together. The emphasis in daily life shifted from the family to the outside world. Most

members of the extended family came together only for important

ceremonies, such as weddings or funerals, and other special oc- casions.

Changes in the traditional roles of family members were dramatic. The dominance of the male head of the family diminished.

The remaining family members had greater independence. Most

notably, the role of women changed. By 1987 about 75 percent

of working- age women were gainfully employed. Even peasant

women became wage earners on the collective farms. This fact al- tered women's status in the family and the community. However,

most observers agreed that in the 1980s males were still viewed

as the head of most households, if only because of their generally

higher incomes.

As women increasingly worked outside the home, their husbands

and children assumed some domestic functions, helping with household chores more than they had before. Outside institutions such

as schools and nurseries also took over tasks formerly carried out

by women within the home. Nevertheless, time budget studies in- dicated that women were still responsible for most of the child rear- ing and housework despite their employment outside the home.

Women usually worked longer hours than men. Working women

spent an average of more than four hours each day on household

chores, including child care, while men averaged ninety- seven minutes in such activities. However, the time spent by women in

outside employment was not correspondingly shorter than that of

men, averaging only 1 .5 hours less than men. Women devoted less time than men to leisure activities, such as watching television, so- cializing, and engaging in sports. (According to the same studies,

women did read approximately as many books as men but spent

much less time on newspapers and periodicals.)

The state viewed marriage as a secular matter, governed by civil law. A civil marriage was mandatory, but couples were allowed

to supplement the procedure with a religious ceremony. The greatest

number of both men and women married between the ages of

twenty and twenty-four (44.6 percent of all men and 41.3 percent

of all women for those marrying in 1987). The law assigned equal

rights and obligations to both partners in a marriage.

In the 1980s, social analysts considered the family to be an in- stitution under considerable stress. Statistics supported this contention. From 1975 to 1986, the divorce rate increased from 2.5

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Hungary: A Country Study

to 2.8 per 1,000 population. In the 1980s, every third marriage

ended in divorce. The rate of remarriage also dropped significantly.

In 1987 about 66,000 marriages were performed, and about 95,600

marriages were terminated as a result of death or divorce. Almost

12 percent of all families were headed by a single parent.

A primary source of stress within families, according to many

observers, was the scarcity of adequate housing, especially for young

families (see Health and Welfare, this ch.). In many families, members faced the pressures and exhaustion of trying to hold down multiple jobs. Another source of tension within families was the

prevalence of commuting. Although in 1960 one in every eight

workers commuted, in the 1980s one in every four commuted. One

million or more villagers commuted to the cities to work. This figure

did not include long-distance commuters who lived in temporary

quarters near their workplaces and returned home weekly or more

infrequently. In 1980 such workers numbered about 270,000, bringing the total number of commuters to about 1.5 million.

Despite the statistics, most observers found that the cohesive force

of the family remained relatively strong in the 1980s. For many

people, the family continued to be a source of personal comfort

and reassurance in the face of worsening economic conditions. The

traditional sense of family loyalty and responsibility also seemed

to survive. Family members continued to help each other in finding jobs or housing, in gaining admission to schools, and in providing for each other in times of need.

Mass Organizations

Until the late 1980s, the law contained no provision for voluntary, independent associations of people interested in influencing

social or political policy. Potential independent groups had no concrete channels by which to gain regime approval. During four decades of communist rule, clear legal status belonged only to such mass organizations as the Communist Youth League, official trade

unions, the National Council of Hungarian Women, and a variety of nonpolitical associations catering to narrow, special interests

of the population. Until the late 1980s, authorities actively dis- couraged the formation of unofficial groups.

Trade Unions

In the mid-1980s, official trade unions had almost 4.4 million

members, or about 96 percent of all persons living on wages and

salaries. The growth of trade unions was mainly a post-World War

II phenomenon; before the war, unions had a total membership

of only about 100,000 (mostly crafts people). After the communist

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The Society and Its Environment

takeover, the unions were supervised by the National Council of

Trade Unions (Szakszervezetek Orszagos Tanacsa—SZOT),

elected by a national congress. SZOT had nineteen officially recog- nized unions, organized by industrial branch. Trade unions theoretically had great powers, but they traditionally had made little use of them. For example, SZOT had a legal right to veto decisions made by the government concerning the workers. In practice, the unions' historic inability to strike made this authority

meaningless. The government specified overall policy concerning

work requirements and wages. Most day-to-day decisions about

hiring and firing were made by the management staffs of enterprises and collective farms. Unions did have great influence in the use of the social and cultural funds of enterprises and in industrial

safety issues. Trade unions also controlled the administration of

health care and holiday resorts. However, in the 1980s subsidies

from the central government for these purposes were diminishing,

so that maintaining even the existing level of services and amenities was difficult. In 1985, in a move to increase its appeal to the country's youth,

SZOT set up its own organization to represent young people,

separate from the Communist Youth League. This organization was the first, other than the Communist Youth League itself, to

officially represent young people. According to the authorities, the

Communist Youth League was to remain the only political mass

organization for youth, while the trade union youth would focus on issues of the workplace, social and cultural programs, and other

traditional concerns of trade unions. Trade union members under

thirty years of age could be members of the unions' new youth

sections.

In the late 1980s, Western analysts detected a significant easing

of restrictions on trade union activity in general. The official unions

became increasingly outspoken, criticizing such practices as the re- quirement for overtime work and other austerity measures. In public discussions, both critics and union representatives openly

admitted that the unions as constituted inspired little confidence

in workers. In 1988 the press began reporting some brief strikes

among workers in officially recognized unions, revealing that the

outcomes of the strikes had been favorable to the workers. At the same time, some professionals and blue-collar workers made ef- forts to form independent unions that were not subordinate to SZOT. In May 1988, the Democratic Union of Scientific Workers, the first independent trade union established in Eastern Europe

since Poland's Solidarity, was founded. Social scientists at research

institutes of the Academy of Sciences, the country's premier research

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Hungary: A Country Study

organization, were the first members of the new union. The union's

program included a call for the end of discrimination against professionals based on their political views. Additional researchers and

teachers from other institutions soon joined, raising the number

of members to more than 4,000 by December 1988. Several smaller

unions also came into existence. Initially, the membership of such

independent organizations appeared to be limited to white-collar

workers. The success of these fledgling attempts was uncertain, but

after initial hostility from authorities, the groups were permitted

to function.

Women

In the 1980s, the principal women's organization was the National Council of Hungarian Women. Its official role was to educate women socially and politically and to participate in devising

new laws and regulations that affected women. The organization

had a network of local and regional committees, whose members

engaged in voluntary social work. In 1985 the council had about

32,000 designated female "stewards," and about 160,000 women

were said to be active in the organization.

Youth

The Communist Youth League (Kommunista Ifjusagi Szovetseg—KISZ) catered to young people. KISZ was the HSWP's offi- cial youth organization (see Hungarian Socialist Workers' Party,

ch. 4). It claimed to represent all the country's youth and sought

to educate young people politically and to supervise political as well

as some social activities for them. KISZ was the most important

source of new members for the party. Its organizational framework

paralleled that of the HSWP and included a congress, central committee, secretariat, and regional and local committees. Membership was open to youth from the ages of fourteen to twenty-six years, but most of the full-time leaders of the organization were well over

the age limit. In the 1980s, KISZ had about 800,000 members.

Membership was common, if rather pro forma, among university

students (96 percent of whom were members) but was lower among

young people already working (31 percent). In the late 1980s, KISZ undertook sweeping reforms of its own

organizational structure. In April 1989 delegates to the organization's national congress voted to change the name of the organization to the Democratic Youth Federation. According to declarations

adopted by the congress, the newly refashioned federation would

be a voluntary league of independent youth organizations and would

not accept direction from any single party, including the HSWP.

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The Society and Its Environment

A separate organization within KISZ, the Association of Young

Pioneers, was formed for youngsters in elementary school. Membership was open to children from six to fourteen years of age. The

Young Pioneers served many of the same functions as the Boy

Scouts and Girl Scouts in the West. The organization also attempted

to explain to children the basic tenets of the Marxist-Leninist worldview. Joining the Young Pioneers was a matter of course for most

youngsters in elementary school. Most meetings took place in class- rooms of primary schools. Bands of Young Pioneers could be seen on many ceremonial occasions, dressed in the organization's characteristic white shirts and red ties. The summer camps sponsored

by the organization were a highlight of the year for many children.

Other Popular Groups

In addition to the traditional mass organizations, a myriad of

other officially approved clubs and associations focused narrowly on such areas as agriculture, architecture, history, mathematics,

music, the sciences, and so forth. A survey in the early 1980s

counted 6,570 cultural, professional, and sports associations (63

percent of which had been established after 1945), ..1th a total of

2.3 million members. The largest associations were the Hungarian Autoclub, with about 291,000 members in late 1982, and the

National Association of Stamp Collectors, with approximately

157,000 members. Also worthy of note was the Home Defense Sport

Federation, which promoted physical fitness for the masses and

sponsored premilitary training for young people. Many Hungarians were also avid sports fans and participants. In 1985 more than

1.2 million persons belonged to the country's 3,860 sports clubs.

The most popular sport was soccer. Chess was also widely played.

Religion and Religious Organizations

Particularly during the early years of communist rule, the

churches had faced extensive harassment and persecution by the

regime. Many clergy had been openly hostile to the new government at its inception. The new secular authorities, for their part,

denounced such attitudes as traitorous, and they mistrusted the

churches as a source of opposition.

The most protracted case of tension and open conflict involved

the Roman Catholic Church. In 1945 the church lost its landed

property in the first postwar land reform, which occurred before

the communist takeover. Most Catholic religious orders (fifty-nine

of a total of sixty-three groups) were dissolved in 1948, when reli- gious schools were also taken over by the state. Most Catholic as- sociations and clubs, which numbered about 4,000, were forced

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Hungary: A Country Study

to disband. Imprisoned and prosecuted for political resistance to the communist regime were a number of clergy, most notably Jozsef

Cardinal Mindszenty. primate of the Catholic Church in Hungary

(see Postwar Hungary, ch. 1). In 1950 about 2.500 monks and

nuns, about one-quarter of the total in Hungary, were deported.

Authorities banned sixty-four of sixty-eight functioning religious

newspapers and journals. .Although in 1950 the Catholic Church

accepted an agreement with the state that forced church officials to take a loyalty oath to the Constitution, relations between the

church and the state remained strained throughout the decade.

During the 1960s, the two sides gradually reached an accommodation. In 1964 the state concluded a major agreement with the

Vatican, the first of its kind involving a communist state. The document ratified certain episcopal appointments already made by the

church, although it did not settle Mindszenty' s long-standing case. As before, the agreement mandated that certain individuals in positions in the church were obliged to take an oath of allegiance to the Constitution and the laws of the country. But this oath was

to be binding only to the extent that the country's laws were not

in opposition to the tenets of the Catholic faith. The church con- ceded the state's right to approve selection of high church officials. Under the agreement, the Hungarian Roman Catholic Church

could staff its Papal Institute in Rome with priests endorsed by

the government, and each year even* diocese in the country would

send a priest to Rome to attend the institute. For its part, the

government promised not to interfere with the institute's work.

Following the agreement, many vacant church posts were filled. Gradually, the organizational structure of the church was reestablished, and congregations became active again. The church began

to take a role in the ceremonial life of the country. Relations between church and state warmed particularly after 1974. when the

Vatican removed Mindszenty from his office (in 1971 Mindszenty

had received permission to leave the country after spending many

years in the American embassy in Budapest, where he had fled

to escape detention by the authorities). The new primate, Laszlo

Cardinal Lekai. who held office from 1976 to 1986. sponsored a

policy of "small steps." through which he sought to reconcile differ- ences between church and state and enhance relations between the

two through "quiet, peaceful dialogue." He urged Catholics to be loyal citizens of the state and simultaneously to seek personal

and communal salvation through the church.

Evidence suggests that a serious falling away from religion among

Catholics (especially a drop in attendance at church services) oc- curred only during the 1960s and 1970s, ironically during the period

92
when the government no longer energetically persecuted the church.

Some observers have suggested that in the 1950s the church earned

popularity as an anticommunist institution because of widespread

dissatisfaction with material, political, and cultural trends within

the country. As conditions improved, the church no longer served

as a focal point for the disaffected. Some Catholics, both lay and

clerical, felt that Lekai, in his eagerness to smooth relations between church and state, went too far in compromising the church's

position.

The Catholic Church of the 1980s had difficulty providing adequate services to all communities. Its clergymen were aging and

decreasing in number. Whereas in 1950 the church had had 3,583

priests and 1 1 ,538 monks and nuns, in 1986 it had only about 2,600

priests and a mere 250 monks and nuns. It was clear by this time,

however, that the church was reaping tangible benefits from its relationship with the state. For example, in the 1980s the Catholic

orders of the Benedictines, the Franciscans, the Piarists, and Our

Lady's School Sisters were again functioning in limited numbers.

A new order of nuns, the Sisters of Our Lady of Hungary, received

permission to organize in 1986. In the 1980s, the church had six seminaries for training priests and a theological academy in

Budapest.

After the communist takeover, the historic Protestant churches

became even more thoroughly integrated into the new state system

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Hungary: A Country Study

than did the Catholic Church. They were not a source of organized

dissent. The Reformed (Calvinist), Unitarian, and Lutheran

churches all reached accommodation with the government in the

late 1940s (as did the small Greek Orthodox and Jewish communities). These agreements guaranteed the Protestants the right to worship and brought about some financial support (contingent after 1949 on the loyalty oath). Some Protestant leaders praised the agree- ments as heralding a new era in which all religions would be treated

equally. However, a number of Reformed clergy and followers be- came active supporters of the Revolution of 1956. After the Revolution failed, many of these people joined "free churches" (including

the Baptist, Methodist, and Seventh-Day Adventist churches),

which functioned apart from the historic Protestant churches.

In 1986, according to Western estimates, about 67.5 percent of

the population was Roman Catholic, 20 percent was Reformed

(Calvinist), 5 percent was unaffiliated, and 5 percent was Lutheran

(its members were in particular the German and Slovak minorities but also included many ethnic Magyars). Other Christian

denominations included Uniates, Orthodox, and various small Protestant groups, such as Baptists, Methodists, Seventh-Day Adventists, and Mormons. Most of these smaller groups were affiliated with the national Council of Free Churches and were dubbed free churches as a group. The country also had 65,000 to 100,000 practicing Jews. The remainder of the population did not subscribe to any religious creed or organization. Nor was any single church or

religion particularly associated with the national identity in the

popular mind, as was the Catholic Church in Poland.

Western observers concluded that although the country possessed

about 5 million practicing believers, religion did not provide a viable

alternative value system that could compete with the predominant

secularism and materialism promoted both by the government and

by trends within an increasingly modern society. Thus, religion was unlikely to become a vehicle for dissent as in Poland or, in a more limited way, in the German Democratic Republic (East

Germany).

A noteworthy phenomenon of the early 1980s was the appear- ance of thousands of intensely active prayer and meditation groups

within Catholic and Protestant congregations. Some of these groups came into conflict with the church hierarchies over military ser- vice and other aspects of cooperation with the government (see Dissent and Freedom of Expression, this ch.).

The Constitution guarantees freedom of conscience and religion.

Until 1989, however, these guarantees were severely circumscribed

94
Village church in Mindszentpuszta

Courtesy John Tarafas

by the State Office for Church Affairs, which regulated the activities of the churches. On June 15, 1989, the government abolished

this office. In its place, the government planned to establish a "National Church Council" that would act as a "consultative organization," not as an instrument for the control of the churches. In

addition, the Ministry of Culture assumed responsibility for church

affairs. Also in 1989, the government submitted for public debate

new "Principles of a Law on Freedom of Conscience, the Right

of Free Exercise of Religion, and Church Affairs." The document,

prepared by representatives of the churches, banned discrimination against believers, acknowledged the churches as legal entities,

and recognized their equality before the law. Yet in the late 1980s,

the state's financial support of all major churches continued to give

it considerable leverage in influencing church affairs. Between 1945 and 1986, religious communities erected or re- paired 306 Roman Catholic, 46 Calvinist (Reformed), 33 Lutheran,

and 23 Uniate churches. Congregations of the free churches built

185 new structures, and the Jewish community built a new synagogue. The various denominations maintained their own modest

publishing organs that produced newspapers, periodicals, and

books. Occasionally, religious services were broadcast over radio.

The various churches and denominations each supported (collectively, in the case of the free churches) at least one theological academy or college for the training of clergy. However, the number

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Hungary: A Country Study

of students was small; 75 students graduated out of a total of 648

students enrolled in such institutions in 1987.

Education

Before the communist assumption of power in 1947, religion was

the primary influence on education. The Roman Catholic Church

sponsored and controlled most schools, although some other reli- gious denominations (Reformed, Lutheran, and Unitarian) as well

as the government ran some schools (see Religion and Religious

Organizations, this ch.). The social and material status of students

strongly influenced the type and extent of schooling they received.

Education above the elementary level was generally available only

to the social elite of the country. In secondary and higher-level

schools, a mere 5 percent of the students came from worker or peasant families. Only about 1 or 2 percent of all students entered

higher education.

Before the communist educational reforms, secondary education was traditional. The curriculum stressed the humanities, often at the expense of the sciences. Technical education received relatively

little attention, despite the existence of technical and vocational

schools.

In 1946 the government established the principle of free education as a right of all citizens, even before the communist assumption of power. In 1948 the new communist government secularized

almost all schools and placed them under state control, giving oversight to the Ministry of Education. The churches retained only a few institutions to train their clergy.

The Marxist-Leninist government made major changes in the

education system. Its goal was to mold citizens to work for the

benefit of society. The reforms stressed technical and vocational

training. Political education also became a high priority. Young

people were to receive a thoroughly Marxist- Leninist education

both within and outside the school framework (see Ideology, ch. 4). Education also sought to promote a thorough understanding of the

political system, an understanding fostered also by youth organizations functioning outside the formal educational process. Russianlanguage study became compulsory from the upper levels of the

general school (also known as the elementary school) through the

university. Many Soviet professors taught at Hungarian universities, many textbooks were adaptations of the work of Soviet authors,

and Russian-language clubs were established.

Marxism-Leninism had become the backbone of the curriculum

by the early 1950s. A brief period of liberalization followed the death

of Soviet dictator Joseph Stalin in 1953 (see Rakosi's Rule, ch. 1).

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The Society and Its Environment

After the failure of the Revolution of 1956, authorities reverted

to their former emphasis on Marxist-Leninist indoctrination.

However, they did modify the earlier policy of Sovietization in favor

of a more Hungarian orientation.

The regime's ideology also dictated the need to increase the total number of students enrolled in higher education, primarily through

recruitment from the working class and the peasantry. Whereas

in 1939 only 13,000 students were enrolled in higher education,

by 1970 this number had grown to 86,000. To be sure, some of

these students were participating in correspondence or evening

courses rather than regular daytime classwork. Adults were en- couraged to study through schools at the workplace and correspondence courses. Authorities also tried to expand the proportion of

students from lower social strata by setting a worker and peasant

quota of about 60 percent at all places available in higher education. Students seeking admission to these institutions were assessed

according not only to their abilities but also to their social origins;

the children of families belonging to the formerly privileged classes rarely were given the opportunity to study. When students from

modest socioeconomic backgrounds lacked the requisite academic

training, one-year remedial courses were available to assist them.

In 1963 this class-oriented system of recruitment was abandoned.

Nevertheless, political considerations continued to play a role in

admissions procedures at secondary schools and universities.

In 1986 the country had 3,540 elementary schools, 587 secon- dary schools, 278 apprentice schools, and 54 institutions of higher

education, of which 18 were universities with several faculties and

programs extending five or more years. Of the latter, four were

general universities, three were technical universities, six were

agricultural universities, four were medical universities, and one was a university of economics. The country had five specialized

university-level institutes for the arts and physical education.

Attendance at school was mandatory from age six to sixteen. All

students attended general schools for at least eight years. Tuition was free for all students from age six up to the university level. Most students actually began their schooling at five years of age;

in 1986 approximately 92 percent of all children of kindergarten

age attended one of the country's 4,804 kindergartens. By 1980

every town and two-thirds of the villages had kindergartens. Parents paid a fee for preschool services that was based on income,

but such institutions were heavily subsidized by the local councils or enterprises that sponsored them.

By 1980 only 29 percent of males aged fifteen years or older and

38 percent of females aged fifteen years and older had not completed

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Hungary: A Country Study

eight years of general school, compared with 78 percent of such

males and 80 percent of such females in 1949. About half of the

students who completed the general schools subsequently completed

their education in two years, through vocational and technical train- ing. The remaining students continued their studies in a four-year

gymnasium or trade school. In 1985 about 98,500 undergraduate students attended the country's higher educational institutions. Almost 10 percent of the population aged eighteen to twenty-two was enrolled in regular daytime

courses at institutions of higher education. In the 1980s, about 40

percent of regular students came from worker or peasant families.

Most of these students either were exempt from tuition payments

or, more often, received financial assistance. In the 1980s, applicants

outnumbered places available in the colleges and universities. As

a result, many persons enrolled in evening and correspondence

courses, although these courses were not considered to be equal

in quality to regular day instruction. In the 1985-86 academic year, about 2,500 foreign students

studied full time in Hungary. About half were European students;

the remainder came from developing countries. In the same year, about 1,300 Hungarian students were studying in foreign institu- tions of higher education, most of them in neighboring countries. In the 1980s, the average educational attainments of Hungarians ranked in the middle, in comparison with those of citizens of

other European countries. The quality of Hungary's education sys- tem was substantially inferior to those of East Germany, Czechoslovakia, and Sweden and was somewhat lower than those of

Austria, Belgium, Finland, Norway, Poland, and West Germany.

Many Hungarians voiced concerns about the quality of their

schools. Critics noted, among other things, that although Switzerland spent 18.8 percent of its national budget on education, Brazil

18.4 percent, and Japan 19.2 percent, Hungary allotted only 6.6

percent of its state budget to education. In the 1980s, the country

experienced shortages of both classrooms and teachers, so that

primary- school classes sometimes contained up to forty children.

In many areas, schools had alternate morning and afternoon school

shifts in order to stretch facilities and staff. Moreover, not all teachers received proper training.

At the university level, in the late 1980s some students and faculty were calling for greater autonomy for institutions of higher education and were demanding freedom from ideological control by both

the government and the party. They decried the prominence given

to the study of Marxism-Leninism and the Russian language in

university curricula. The public was also distressed over the fact

98
The Society and Its Environment

that, despite the government's remedial measures during previ- ous decades, in the 1980s children of the intelligentsia had a far greater chance of entering institutions of higher learning than did

the children of agricultural workers and unskilled industrial workers.

Health and Welfare

After the communist government assumed power in Hungary,

it devoted much attention to meeting the specific health care and

social security needs of the population. In comparison with prewar

standards, the average citizen received far better health care and

social assistance as a result of the government's policy. Such improvements did not extend to housing; like other countries in

Eastern Europe, Hungary has faced a severe housing shortage since

the late 1940s. However, unlike most other countries in Eastern

Europe, since the mid-1970s the government has encouraged

citizens to build their own housing. This policy has eased the short- age somewhat, but as of 1989 the lack of adequate housing remained

a serious problem.

Health

The modern social welfare system was largely a product of the

1970s and 1980s, although setting of goals, initial planning, and more modest coverage for citizens began in previous decades.

Amendments to the Constitution in 1972 guaranteed universal as- sistance for the ill, the aged, and the disabled. The Public Health

Act of 1972 specifically guaranteed that beginning in 1975 all per- sons would have free medical care as a right of citizenship. The

Social Insurance Act of 1975 provided that insurance conditions

and benefits, which had been different for various occupational

groups, become uniformly applied to all citizens. In 1982 even those

persons involved in private economic activity became eligible for

full social insurance coverage (including generous sickness and dis- ability pay), instead of being limited to pension and accident

coverage.

The social welfare system expanded steadily. According to offi- cial statistics, the percentage of the population's income represented

by social benefits in cash (including social insurance payments) and

kind (including free health care) was 17.4 percent in 1960, 22.8

percent in 1970, 27.3 percent in 1975, and 32 percent in 1980.

The state health care system was highly centralized. Increasingly

specialized and sophisticated services were available at the level of the district (the country had 4,374 districts in 1984), municipality, county, region, and nation. Each district had a designated physician to whom its inhabitants first turned for care under the public

99
Hungary: A Country Study

health system. If an ailing person required a specialist, the district physician made the appropriate referral. In the 1980s, the availability of physicians, nurses, and hospital beds was high by international standards. In 1986 the country had 31,154 physicians, or about one physician per 299 inhabitants (up from one physician

per 909 inhabitants in 1950, one per 637 inhabitants in 1960, one

per 439 inhabitants in 1970, and one per 398 inhabitants in 1974).

The country had 100 hospital beds per 10,000 inhabitants (up from

55.8 beds per 10,000 inhabitants in 1950, 71.1 in 1960, and 85.5

in 1974). The country had 3,801 dentists and dental surgeons,

43,579 nurses, 57,277 other health personnel, and 4,506 pharmacists.

Although by the 1980s about 99 percent of the population participated in the social insurance system and could receive free medical services and hospital care, much private practice was allowed.

In 1984 more than 3,600 health service doctors engaged in private

practice, treating private patients during their free time. Many of

them had very lucrative private practices. Many persons in upperincome groups, who could afford the high price of private medical

care, chose to use the services of a private physician rather than one assigned to them by the health service. Public opinion considered the care given by private physicians to be of higher quality

than that provided by the health service.

In the 1980s, the public engaged in much frank and apparently

uncensored discussion about serious shortcomings in health care. Complaints concerned the aging of hospital facilities, the disrepair

of their equipment, the shortages of basic medications, and the in- adequate training of low-paid medical personnel. Western analysts

estimated that Hungary spent only 3 . 3 percent of its gross national

product specifically on health service (the 6 percent figure listed in most statistical data actually included some social services). This

percentage was the lowest of any East European country except

Romania (in comparison, the United States spent 11 percent of

GNP on health care). Critics judged the health system to be substandard, unreliable, and increasingly tainted by the practice of

offering gratuities to medical personnel to ensure quality care. They

warned that the achievements of past years were jeopardized by

the current neglect.

Certain trends in the general health of the population indeed

gave health authorities reason for concern in the 1980s. Life ex- pectancy at birth was the lowest among thirty-three developed countries rated by the World Health Organization. In 1986 the infant

mortality rate was 19 per 1,000 live births (see table 4, Appendix). This figure showed an improvement over the 1970 rate of

100
The Society and Its Environment

35.9 per 1,000. However, the infant mortality rate remained among

the highest for industrialized countries with developed health sys- tems. In 1985, according to Minister of Defense Ferenc Karpati,

10 to 11 percent of young males were unfit for military service,

and another 4 to 5 percent could not undergo strenuous physical

training. Among conscripts accepted for service, 3 to 4 percent were

discharged before the end of their training for health reasons, primarily because of physical or nervous disorders.

Health authorities had other special concerns less directly related

to the health care system. One such problem was the country's high

suicide rate. In the mid-1980s, the suicide rate was 44 per 100,000

inhabitants, the highest suicide rate in the world. (The country with

the second highest suicide rate, Austria, reported 26.9 suicides per

100,000 inhabitants in 1984.) The very high suicide rate had a lengthy history, confirmed by statistics dating back more than a

century. Since the late 1960s, however, the rate had risen noticeably. Hungarian experts cited as factors contributing to the trou- bling situation alcoholism, mental illness, the growing number of

elderly people, the disorienting effect of urban life, stress, and the

weakening of family and community bonds as a result of rapid

modernization. The high suicide rate among people over age sixty was thought to result from the economic stagnation and inflation

of the 1980s, which made it difficult for people to subsist on small

pensions.

In the mid-1980s, the authorities were also discussing the growing incidence of substance abuse. The incidence of alcoholism had

increased during the previous generation, and a high percentage

of suicide victims were alcoholics. As of 1986, consumption of

alcohol per person per year was 11.7 liters; consumption of hard

liquor (4.8 liters per person) was the second highest in the world.

Authorities had increased the price of hard liquor five times between 1973 and 1986, but despite these measures, excessive alco- hol consumption remained a problem. Although less salient than

alcoholism, drug addiction was also becoming a source of some

concern and was discussed in the press. Acquired immune defi- ciency syndrome (AIDS), a serious health threat associated with

drug use in many countries, was not a major health concern in

Hungary in the late 1980s. According to government statistics released in early 1989, the first AIDS patient entered a Budapest

hospital in 1985. During the following four years, the country had

twelve AIDS-related deaths.

In the 1980s, another source of anxiety for both health authorities and the general public was the downward trend projected for the country's population (see Structure, this ch.). As early as 1973,

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Hungary: A Country Study

concern about the slowdown in population growth had led to the

introduction of a comprehensive population policy. Supplemental

provisions had broadened the coverage in subsequent years. The

policy mandated generous pregnancy and maternity allowances.

Working mothers enjoyed a twenty-week maternity leave with full pay. After the twenty weeks had elapsed, the mother could receive an allowance to enable her to raise the child at home until it reached

the age of three: the amount of the allowance varied according to the number of children and amounted to about 25 to 40 percent

of national average earnings per month. In addition, working

mothers had access to unpaid days off (prorated according to the

number and ages of the children involved) or other benefits to enable

them to take care of a sick child. Additional ongoing family allow- ances were available for families with two or more children. In spite

of this assistance, child rearing was a large expense to families. The

various forms of assistance, while clearly beneficial to young families, actually amounted to only 15 to 20 percent of child-rearing

costs. Welfare

In the late 1980s, the country's pension system covered about

85 percent of the population falling within pensionable ages. Male

workers could qualify for pensions at the age of sixty, female workers at the age of fifty-five. The number of pensioners had increased

rapidly since the end of World War II as people lived longer and

as pension coverage expanded to include additional segments of

the population. In the early 1950s, the country had had only 12

to 13 pensioners for every 100 active workers. In the late 1980s,

however, the country had 50 pensioners for every 100 active workers. This trend placed a heavy burden on the government, the main

source of pension funds.

The amount of a person's pension depended upon earnings and

number of years of employment. In 1989 the minimum monthly

pension was 3.340 forints (about US$54). Yearly cost-of-living in- creases had failed to keep up with inflation. In 1979 the government introduced major pension increases for the lowest-paid

pensioners in an effort to improve the situation. The most vulnerable pensioners tended to be women, whose pensions averaged 25

percent less than men's pensions. More women had small pensions

than men because women generally had worked fewer years. and

earned lower salaries. About 20 percent of all pensioners, or about

400.000 persons, worked to bring in additional income, usually

undertaking part-time or seasonal work. In the 1980s, pensioners constituted a significant segment of the country's poor. The

102
Private home in Mezokdvesd

Courtesy Sam and Sarah Stulberg

unfortunate circumstances of many elderly citizens and the need

to reform the pension system were the subjects of considerable press commentary.

Housing

For many years, the housing conditions in Hungary were only

a peripheral concern of the communist regime. The housing that

existed before World War II had many shortcomings. Most pre- war apartments had only one room and a kitchen area, and these

facilities, already overcrowded and expensive, had been heavily

damaged during the war. In 1949 the country had 265 inhabitants

for every 100 rooms. After 1949 the government confiscated exist- ing housing and redistributed it. The government chose not to invest

heavily in housing, although many buildings were reconstructed.

The new regime affirmed the right of all inhabitants to decent housing, prohibited evictions, and regulated rents, but these measures

did not accelerate construction. During the early years of communist

rule, economic planning gave priority to the building of new plants

and other industrial installations rather than to new housing. Thus,

construction of housing did not keep pace with urban industrial

expansion, which had attracted large numbers of workers from

the villages into the cities. Not until the Fourth Five-Year Plan

(1971-75) did the housing problem receive serious, sustained

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Hungary: A Country Study

attention. Progress then became more rapid, and the government

experimented with various approaches to the problem. Because of

budget constraints, the government abandoned its goal of providing low-rent apartments for all citizens. Instead, it urged people

to invest in their own housing and made available low-interest loans

for the construction of cooperative apartment buildings and pri- vate homes. This policy spurred construction and helped to reduce

the overall housing shortage. However, most new housing units were built for the higher-income groups. Families with lower in- comes continued to rely on state-financed or industry-financed lowrent housing, which usually had long waiting lists of prospective

tenants. In the 1980s, housing remained a major concern for families at

all status and income levels. As the government's direct role in

providing housing diminished, many families tried to use any sur- plus income they had to acquire modern, spacious, well-equipped

dwellings. For private individuals wishing to build dwellings, the

most important resources were family and friends (for labor) and

loans (usually sponsored by the government at 3 percent interest

for up to 70 percent of the total construction cost and repayable over a maximum of thirty-five years). As of 1983, only about 22.3

percent of the country's dwellings were state owned, down from

33.9 percent in the first half of the 1970s. The remaining units were

privately owned. In 1986 approximately 69,430 dwellings were constructed, 7,620 by the state and 61 ,800 by private individuals (the vast majority of whom received some state funding). However,

despite significant gains, housing was still not sufficient for the country's needs.

Dissent and Freedom of Expression

In the late 1980s, numerous signs pointed to an enlivening of

cultural and intellectual life. The bounds of permissible expression

became wider as authorities eased restrictions on artistic, intellec- tual, and political expression.

Until the mid-1980s, outright opposition to the regime and its social, political, and cultural policies was undertaken primarily by

intellectuals. However, the relative success of the economy after 1968 made it difficult for dissidents to attract broad followings. The

working class was politically quiescent, being the beneficiary of full employment and generous welfare provisions. The government's

response to its critics was to acknowledge their existence but also

to stress their small numbers and irrelevance. Few official punitive actions such as arrests or trials took place, but the authorities

did use low-level police harassment, surveillance, and other forms

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The Society and Its Environment

of indirect pressure. Prominent individuals found their movements

watched and occasionally hindered by the police. Less eminent people sometimes received threats to their jobs and careers. Authorities denied some individuals permission to travel abroad or, at the

other extreme, urged them to emigrate. The police conducted oc- casional house searches and levied fines for illicit printing or dis- tribution of unauthorized publications (samizdat). Most dissidents

faced only sporadic repression but also minimal public response.

In addition to the continuing efforts of dissident intellectuals,

several groups of protesters pursued specific social or political goals

in the early 1980s. The law did not recognize conscientious objection and prescribed up to five years' imprisonment as punishment

for refusal to perform military service. Beginning in 1977, however,

members of certain small Christian sects, such as the Nazarenes,

Jehovah's Witnesses, and Seventh-Day Adventists, were allowed

to perform unarmed military service (see Conscientious Objection,

ch. 5). This privilege was not available to Roman Catholics and

members of larger Protestant denominations, whose church hierarchies had a history of supporting the establishment. As of 1986,

Amnesty International reported that as many as 150 Hungarian

conscientious objectors were in prison, most of them Jehovah's Witnesses who refused to perform even the alternative military ser- vice available to them. In the early 1980s, an independent peace

movement of significant proportions developed (called Peace Group

for Dialogue, or Dialogus), made up primarily of university stu- dents and recent university graduates. Facing official hostility and

unable to initiate a dialogue with the authorities, the organization

disbanded in 1983. Its members and other persons formed other

smaller groups and engaged in small-scale independent activity.

Under pressure from the authorities, some of these small groups

eventually merged with the officially recognized National Peace

Council.

In the mid-1980s, the ecology, or "Green," movement was the

largest independent movement. Its supporters opposed the joint

project of the Czechoslovak and Hungarian governments, financed

partially by the Austrian government, to build the GabcikovoNagymaros Dam at the border where the Danube River crosses from Czechoslovakia to Hungary (see Relations with Other Communist Neighbors, ch. 4). Demonstrations attracted as many as 20,000 people. Several smaller environmental organizations also

engaged in small-scale public awareness campaigns. The environmental groups often sought to maintain distance between themselves and dissident political groups, both to legitimize their

viewpoint vis-a-vis the government and to attract wider support.

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Hungary: A Country Study

Environmentalists were very cautious in their response to the 1986

accident at the Chernobyl' nuclear power plant in the Soviet Union,

which was a politically sensitive issue. The government criticized

independent environmental groups, accusing activists of pandering to nationalist sentiments and permitting foreign agitators to intrude. The official press generally ignored the activities and state- ments of the environmentalists. Occasionally, the police harassed

their leaders. Nevertheless, environmental issues appeared to be

of great interest to the public, many of whom signed protest petitions and attended meetings in significant numbers.

In the late 1980s, opportunities for self-expression expanded

greatly and abruptly. The party itself was planning to establish a

limited multiparty political system in the country (see Amendments

of 1972, ch. 4). Increasingly, party members acknowledged public criticism of conditions in society and responded to them. And

in the late 1980s, for the first time in decades, the authorities oc- casionally permitted demonstrations calling for changes in policy.

However, signals sent by the government to the public were some- what mixed; occasional arrests and mistreatment of dissidents continued, and police broke up some demonstrations. In the late 1980s,

individuals began testing the limits of the government's less restrictive approach. The system of informal self-censorship, which

had operated since the 1960s, appeared to be foundering (see Mass

Media, ch. 4). Historians called for archival sources on the nation's recent history to be opened and freely examined by impartial scholars. A variety of independent publishers and periodicals

appeared, dealing with sensitive issues or publishing the works of

authors previously considered taboo. The official press and occasionally even television journalism were becoming more outspoken on virtually all issues, possibly in response to growing competition for the public's attention.

As freedom of association became more extensive (a more per- missive law was officially adopted in 1989), a number of groups

emerged with interests spanning the entire range of social and political life. The focus of many new associations revealed a growing

popular interest in public affairs. The groups ranged in outlook

from the neo-Stalinist Ferenc Munnich Society, founded in 1988,

to the "Openness Club," also founded in 1988, which sought to promote complete freedom of the press, television, and radio.

Some groups with definite political leanings hoped eventually

to function as viable political parties. Others sought merely to represent and publicize the viewpoints of members. Several of the

latter received particular attention throughout the country. In September 1987, a group of about 150 intellectuals, including some

106
The Society and Its Environment

party members, formed the Hungarian Democratic Forum to sponsor public debates on social and political policy. At first the regime

seemed to welcome the Forum, apparently hoping to reap the support of previously disaffected intellectuals. However, the Forum's

status later became less clear, as some of the participating party

members were expelled from the party. In 1988 a group of stu- dents established a new national organization called the Federation of Young Democrats. A politically radical group, it aimed to establish a democratic Hungary, but its leaders denied any plans

to form a political party. In 1989, together with five other organizations, the Hungarian Democratic Forum and the Federation of

Young Democrats formed what became known as the Opposition

Roundtable to discuss a variety of social and political policy options.

In the late 1980s, more than at any time in the previous four

decades, the Hungarian people lacked a consensus on the proper

social goals of the country. Some observers, both within the country and abroad, feared that if economic conditions worsened as predicted, latent conflicts among social groups would destabilize

the country, especially in the absence of strong state and party in- fluence, which was no longer considered legitimate in the eyes of

the populace. However, other observers stressed the opportunities

for the emergence of new, fresh ideas and the vigorous, healthy

debates that were occurring throughout Hungarian society. The

latter assessment gave genuine grounds for optimism.

* * * For a retrospective view of aspects of society's development,

Zsuzsa Ferge's A Society in the Making is helpful. Both Hungarian

and Western ethnographers have shown special interest in Hungarian rural life and its modern evolution. Two valuable studies are Edit Fel's and Tamas Hofer's Proper Peasants and Peter D. Bell's Peasants in Socialist Transition. Hungarian Ethnography and Folklore by

Hungarian ethnographers Ivan Balassa and Gyula Ortutay contains a wealth of detail as well as illustrations of traditional Hungarian folkways. For the current urban perspective, Peter A.

Toma's Socialist Authority provides a readable, somewhat journalistic

overview. The Hungarian government's Central Statistical Office

publishes statistical yearbooks in English that incorporate much

information concerning past and present social structure. The Foreign Broadcast Information Service's Daily Report: East Europe offers current reporting of major social developments as depicted in the

Hungarian media. The reports published by Radio Free Europe

contain valuable information and analyses as well. (For further in- formation and complete citations, see Bibliography.)

107

Chapter 3. The Economy
Large kitchen for farm workers' meals, 1924
DESPITE WAR, DEPRESSION, revolution, foreign occupation,

and periods of near chaos, Hungary's economy has advanced in

the twentieth century from a near-feudal state to a middle-level

stage of industrial development. The economic system has undergone dramatic change since 1968, evolving from a Soviet-type

"command" economy, in which government planners in Budapest

dictated much of the country's economic behavior, into a hybrid

that combined social ownership of the means of production with

a stock exchange, central planning with aspects of a free market,

and government intervention with a measure of enterprise autonomy and some private enterprise. After Hungary's failed popular

revolution against communist rule in 1956, the government opted

to foster domestic tranquility and legitimize control by the Hungarian Socialist Workers' Party by steadily improving the Hungarians' standard of living through economic growth.

For several reasons, the Hungarian economy can grow only if

its factories and farms become more efficient and competitive. First,

except for excess workers in existing enterprises, Hungary no longer

has an untapped labor pool, such as the one that existed after World

War II in the female and peasant populations. Second, the country has a paucity of natural resources, and imports of raw materials have become more costly for Hungary on both Western and

Council for Mutual Economic Assistance markets. Third, Hungary can pay for imports of raw materials and efficiency-improving

Western technology only by exporting goods whose quality and

price are competitive in the world market.

Since 1968 the government has launched two rounds of economic

reform, seeking to boost efficiency and competitiveness. The first was the New Economic Mechanism, introduced in 1968, in which

the government abolished universal compulsory planning, granted enterprises greater autonomy, and unleashed some market forces. The program stalled within four years, but a burgeoning balance

of trade deficit, slumping performance, deteriorating terms of trade,

and other problems prompted the leadership to start the reform

process anew in the late 1970s. Since then the government has

streamlined its ministries, dismantled some huge enterprises and

trusts, stimulated the growth of small and private firms, implemented a competitive pricing system, decentralized foreign trade, created

small stock and bond markets, enacted a bankruptcy law, carried

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Hungary: A Country Study

out banking reform, and levied value-added (see Glossary) and

personal-income taxes. In the late 1980s, a burdensome foreign debt, inefficient enterprises, raw-material supply problems, and stiffer competition in the

world market were just a few of the problems facing the economy.

The country's leaders had to improve Hungary's convertiblecurrency trade balance significantly in order to import the technology and raw materials necessary for further growth. At the same

time, they had to maintain or improve domestic living standards

and hold down unemployment and domestic inflation. The con- junction of Soviet leader Mikhail S. Gorbachev's program of re- structuring in the Soviet Union and Janos Kadar's replacement

as party general secretary by Karoly Grosz in Hungary greatly en- hanced the chances that the government would try to achieve further

economic progress by implementing even more dramatic reforms.

Although Western observers agreed that Hungary had the most

accurate and open reporting of economic statistics in the communist

world, they warned against accepting those data at face value.

Economists in communist and noncommunist countries used differ- ent statistical concepts and procedures that produced differing

images of Hungary's economic system. Hungarian and foreign

analysts also complained that political expedience had sometimes

tainted Hungary's official statistics. Resource Base

Geologically, Hungary is composed primarily of young sedimentary rock that is generally poor in minerals and other raw materials except bauxite, soft coal, and small deposits of uranium, natural

gas, oil, iron ore, manganese, and copper. However, Hungary has

large tracts of fertile land, a favorable climate, and some forests. The country's general lack of raw materials has necessitated for- eign trade, a concern that has dominated the economic policies of

Hungarian governments since 1918, when the country lost much

of the territory it held prior to World War I (see Trianon Hungary, ch. 1). Raw materials, semifinished products, spare parts,

fuels, and electricity accounted for 64.2 percent of imports in 1986

and cost 25.9 percent of Hungary's gross domestic product (GDP

see Glossary). The Soviet Union was Hungary's principal supplier

of raw materials (see Foreign Trade, this ch.).

Energy Resources

In the late 1980s, Hungary's coal deposits totaled about 4.5 bil- lion tons and included hard coal (about 15 percent of the total),

brown coal (30 percent), and lignite (55 percent). Hungarian coal

112
The Economy

generally has a low energy content and lies at great depths in thin seams, making mining difficult and costly. Deep mines in the Mecsek

Mountains near Pecs and Komlo yield dusty hard coal and coal suita- ble for coking. Thick layers of higher-quality brown coal lie 200 to 300 meters beneath Tatabanya and Dorog, while lower-quality

brown coal lies under the Carpathian foothills near Miskolc and in the central Danube Plain. The Varpalota Basin in Veszprem County

and the southern slopes of the Matra Mountains yield lignite. Hungarian experts predict that the country's coal reserves will last about

400 years at the production levels attained in the late 1980s.

Hungary's natural-gas and oil deposits are far smaller than its coal reserves. The country's largest natural-gas deposits are located near Szeged, Hajduszoboszlo, and Miskolc. Geologists hoped to discover additional natural- gas deposits but predicted that naturalgas reserves would run dry in fifteen to twenty years. Small crudeoil deposits lie beneath Szeged, Zala County, and other areas. The

Zala crude is highly viscous and difficult to transport. Wells at Lispeszentadorjam, Lovaszi, and other sites yield high-quality oil, but in the late 1980s the deposits were almost exhausted. In the late 1970s, drillers struck oil in the mid-Danube-Tisza region (the central part of the country) and near Sarkeresztur, Endrod, and Ulles. However, geologists anticipated no new major oil discoveries and

expected the wells to run dry by the year 2000.

In the 1950s, Hungary began mining uranium near Pecs with

Soviet assistance. In the late 1980s, estimates of the actual size of

the country's uranium deposits were unavailable, but official sources indicated that Hungary had uranium reserves sufficient to supply

its domestic needs until about the year 2020. In the mid-1980s,

the Soviet Union guaranteed Hungary's future nuclear-fuel needs.

Mineral Resources

The Bakony and Vertes mountains contain 10 to 12 percent of

the world's known bauxite reserves and deposits of manganese ore, the only alloy necessary for steel production found in Hungary.

The only iron-ore mine, located at Rudabanya, produces ankerite

and siderite that contain only 24 to 27 percent iron and require

lime before smelting. In the late 1980s, the country's limestone

and dolomite reserves satisfied the needs of its pig-iron industry.

Copper mines at Recsk remained undeveloped in 1987 because of

lack of financing and because of copper's low price on world commodity markets.

Land, Climate, and Forests Arable land, pastures, meadows, vineyards, and gardens occupy

70 percent of the total land area. Hungary has large tracts of fertile

113
Hungary: A Country Study

black soil, especially in the Great Plain region; although the cli- mate can be harsh, it is favorable for agriculture (see Climate,

ch. 2). Concentrated in mountainous areas, the forests occupy about

1 . 5 million hectares and contain mostly deciduous trees of little value except for holding moisture. The government launched an

extensive reforestation effort after World War II, but in the late 1980s domestic timber still supplied only 10 percent of the country's needs.

Environmental Problems

Rapid industrialization and the priority of plan fulfillment over environmental concerns have produced serious air and water pollution problems in Hungary. In the late 1980s, about 38 percent

of Hungary's population lived in regions where air pollution ex- ceeded international standards. Electric plants burning high- sulfur

coal and automobiles emitted most of the pollutants that fouled

Hungary's air. The country's sulfur-dioxide emissions in 1984 to- taled 1.8 million tons, an average of 17.6 kilograms per hectare.

Prevailing winds from the west and southwest carried 70 percent

of Hungary's sulfur-dioxide emissions into neighboring countries,

but acid rain had damaged 25 to 30 percent of the country's forests. Government efforts had succeeded in reducing dust pollution.

Pollutants also fouled the rivers and ground water. The Tisza,

Danube, Szamos, Sajo, and Zagyva were Hungary's most polluted

rivers, and the water supplies of 773 towns and villages were not

fit for human consumption. In 1970 Hungary emitted 1.5 million

cubic meters of polluted water per day. Industrial waste from chemical, rubber, iron, paper, and food-processing industries accounted

for 70 percent of the effluent, of which only 27 percent was treated.

Only 46 percent of Hungary's population had an adequate sew- age system.

In the 1980s, Hungary annually produced 5 million tons of

hazardous waste, and it reportedly imported hazardous waste from

Austria, Switzerland, and the Federal Republic of Germany (West

Germany) in return for hard currency. After three years of public

protest, in the late 1980s Hungary began constructing an inciner- ator in Dorog capable of burning about 25,000 tons of hazardous

waste per year. Hungary operated a nuclear-waste dump between

the villages of Kisnemedi and Piispokszilagy, but precise information on the disposal of radioactive waste from the country's nuclear

power plant was unavailable.

Hungary signed the United Nations Convention on Long-Range

Transboundary Air Pollution in 1979 and the Helsinki protocol

114
The Economy

on sulfur-dioxide emissions in 1985. In 1987 and 1988, the government passed new pollution regulations and obtained loans from

the World Bank (see Glossary) to improve pollution control. Hungary had antipollution agreements with Czechoslovakia and Austria but had no such agreement with Romania and complained

about Romania's chronic discharge of phenol, oil, and other pollutants into the Tisza and smaller rivers. Labor Force

In the late 1980s, active earners made up a large percentage of

the working-age population, and many Hungarians supplemented

their income by working outside jobs, tilling household plots, or operating private businesses. Unfortunately, many enterprises used

labor inefficiently, and the country suffered from underemployment and relatively low labor productivity. The government had

enacted measures aimed at forcing enterprises to operate more ef- ficiently. Regrettably, these measures threatened the elimination

of many jobs and signaled a significant ideological departure from

communism's commitment to full employment. Fear of unemployment influenced government decisions to allow the private sector

to grow and to create jobs for laid-off workers. Despite the government's concern, observers expected overall unemployment to re- main low by Western standards.

Work Force

In 1987 about 6.1 million of Hungary's 10.6 million people were

of working age, and 4.9 million were active earners. The number

of active earners was expected to remain between 4.8 and 5.1 million in the 1990s. The state sector employed about 3.5 million per- sons (70.5 percent of the country's active earners) in 1986; the

cooperative sector, approximately 1.2 million (23.8 percent); and

the private sector, about 266,000 (5.4 percent). According to for- eign observers, official statistics underestimated the size of the pri- vate sector because they included only persons who reported their

private activity as their primary occupation. In the late 1980s, approximately 75 percent of Hungary's families earned extra incomes

working " sideline activities" to supplement the wages and benefits

that family members earned in the state and cooperative sectors. These activities, which were mostly agricultural, generated productive man-hours equal to about 20 percent of the man-hours worked

each year in the socialist sector (the state and cooperative sectors)

.

While sideline activities contributed to family incomes and the nation's productivity, they also deprived the socialist sector of the

115
Hungary: A Country Study

energy and attention that workers would otherwise direct to their

primary jobs.

In 1987 workers in industry numbered just over 1.5 million, or 31.2 percent of the active earners, including 57,600 in the private

sector (see table 5, Appendix). When rapid industrialization began

in 1949, only 19.4 percent of the labor force worked in industry.

Hungary had about 19.3 percent of its labor force or 890,000 active earners working in the agricultural sector in 1987, including

about 846,100 in the socialist sector and 43,900 in the private sector. The number of persons actually engaged in private agricul- ture was much higher, however, because government statistics counted collective- and state-farm members who worked household plots only as members of the socialist sector. The number of

workers in the agricultural sector has steadily declined since the war. In 1949 about 53.8 percent of the labor force worked in agricul- ture; this figure dropped to 24.4 percent in 1970 and to 19 percent

in 1980, but it rebounded slightiy to 19.3 in 1987 as agricultural

enterprises began employing more workers in nonagricultural activities. The service sector accounted for 21 .3 percent of the active

work force in 1986; commerce, 10.5 percent; transportation and

telecommunications employed 8.3 percent; and construction, 7 percent.

Underemployment and Unemployment

After World War II, Hungary suffered from chronic, widespread

underemployment. Until the late 1980s, the leadership stubbornly

clung to the principle of full employment, and employment rolls swelled because, as a consequence of low wages, it was more cost

effective to employ human labor than install labor-saving equipment or implement other efficiency measures. In addition, an enterprise tax based on average wages encouraged managers to pad

their payrolls with low-paid, redundant employees who worked at or near full capacity only during the closing weeks of a plan period

when pressure to meet targets was most intense. Underemployment combined with other factors to make the country's labor

productivity only 40 to 50 percent of that in Western countries.

In the late 1980s, the government shelved the principle of full employment and enacted measures, including new bankruptcy and

tax laws, to induce enterprises to use labor and other resources more

efficiendy (see Economic Regulators, this ch.). Vigorous implementation of these measures will entail layoffs, retraining, and early

retirement for many workers.

Hungary was the first member of the Council for Mutual Economic Assistance (Comecon—see Glossary) to acknowledge the

116
The Economy

existence of unemployment. Marxist-Leninist ideology has always

considered socialism and unemployment incompatible, and until

1987 even the word unemployment was taboo in Hungary. The ideological implications of this policy shift outweighed the scale of the

potential layoffs. The government reported that 30,000 to 40,000

people were unemployed in late 1987, and government officials have

estimated that another 100,000 to 150,000 workers might be laid

off while Hungary implemented its economic reform. Compared

with Western countries, however, Hungary's unemployment problem was relatively small: a 4 percent unemployment rate is generally considered full employment in a free-market economy; in

Hungary this percentage would amount to about 240,000 people.

In 1987 Hungary became the first communist state to establish

public works programs to provide jobs for the unemployed. In 1988

it created an unemployment relief fund with the capacity to benefit

25,000 people. Nevertheless, critics argued that the government

did not allot sufficient funds to these programs to deal with projected

layoffs.

Labor Turnover

Before 1968 the labor force was generally tied to the workplace.

The government restricted job changes and prohibited moving to a new city without permission. In the 1980s, however, the annual

labor turnover rate averaged about 23 percent, or about 1 million

job changes each year, mostly in low-paying, seasonal, and unskilled positions. Although the government had lifted legal restric- tions, relocation to another city was unusual because Hungary had

a housing shortage.

Women in the Work Force and Foreign Workers

Womenjoined the work force in great numbers after World War

II and contributed significantly to the government's industrialization drive in the 1950s and 1960s. Families supported the entry

of women into the work force because they could not survive on

a single income or they desired a higher living standard. In 1949

about 29.2 percent of active earners were women; by 1987 they

accounted for 46 percent. Likewise, whereas 34.5 percent of

working-age women were active earners in 1949, about 75 per- cent were active earners by 1987. About 59 percent of Hungary's

working women were manual workers; the remainder worked in

white-collar jobs. (About 70 percent of men were manual workers,

and 30 percent had white-collar jobs.) Women dominated lowpaying jobs in the textile industry, the service sector, canneries,

117
Hungary: A Country Study

and commerce; in the white-collar area, women dominated in

education, health, and low-profile office jobs.

Hungarian enterprises employed about 10,000 foreign workers

in 1986, including about 3,000 Polish miners, 1,300 Cubans in

various jobs, and some Vietnamese textile workers. After 1983 Hungarian workers with firm job offers were free to accept employment in Western countries for up to five years, but in 1986 only a small number of Hungarians were employed abroad.

Economic System and Control Mechanisms

In the late 1940s, Hungary's Marxist-Leninist leaders imposed

a Soviet- style command economy that included rigid central planning, agricultural collectivization, and rapid industrialization (see

Postwar Hungary, ch. 1). Faced with the need to improve efficiency

in the late 1960s, however, the government undertook economic

reforms and in 1968 introduced the New Economic Mechanism

(NEM), which eliminated compulsory plan directives, introduced

market mechanisms, allowed many enterprises a measure of au- tonomy, and legalized a narrow range of private economic activity. The reform stalled between 1972 and 1978, but trade imbalances

and other problems prompted the government in 1979 to begin

implementing a second wave of reforms that included ministerial

and industrial restructuring. These reforms to a great degree

differentiated the Hungarian economy from a traditional command

economy. The Hungarian Socialist Workers' Party (HSWP),

however, has retained its monopoly of political power, and a central plan containing broad goals still existed in 1989. After Kadar's

resignation as general secretary in May 1988, Hungary entered

a new era that may see more energetic implementation of reforms

already on the books and the enactment of even more radical re- form measures. Role of Party and Government Bodies

As of mid- 1989, the HSWP was the dominant political institu- tion in the government and the ultimate authority on all political,

economic, and social issues (see Hungarian Socialist Workers'

Party, ch. 4). The party's leading organs passed resolutions that

functioned as basic guidelines for government bodies making eco- nomic decisions, and party leaders also exercised formidable in- formal influence. Primary authority lay with the Politburo and the

Secretariat (particularly the latter' s committee for economic and

social welfare policy, the working group for economics, and the

department for economic and social welfare policy). In the 1980s,

the party assumed a lower profile in economic decision making than

118
The Economy

it had before the reform, and it consulted more with ministers, enterprises, and other government and economic organizations.

The Council of Ministers was the government's highest administrative decision-making body. Its State Planning Committee

concerned itself with long-term economic issues. The council's Economic Committee oversaw the economy's day-to-day operation (see State Apparatus, ch. 4). The government consolidated the ministerial structure in the late 1970s and 1980s in order to reduce the ministries' influence on

managers of enterprises. In 1989 four branch ministries—industry,

agriculture and food, construction, and communications—set policy, assisted in allocating resources (especially investments), promoted

development, and ensured achievement of export targets. Hungary's

functional ministries were the Ministry of Finance and the Ministry of Trade. The Ministry of Finance supervised the banking sys- tem and worked out many of the economic regulators that guided

the economy. The Ministry of Trade developed and implemented

foreign and domestic trade policy, granted export and import licenses and certain subsidies, and controlled the balance of payments.

The National Planning Authority and the National Price Office

acted much like functional ministries. As with traditional centrally

planned economies, the National Planning Authority was one of

the most powerful economic organs in the government. It participated in almost all of the central government's economic decision

making, and its chairman presided over the State Planning Committee. After the NEM was instituted, however, the planning

authority focused primarily on medium- and long-term planning.

Prices were supposed to reflect "justified" costs, and enterprises had

to report price increases to the National Price Office, which could

intervene formally or informally if it deemed a price increase unjustified. With the Council of Ministers' approval, the National Price

Office could issue administrative commands to enterprises in case of actual or possible economic disruptions. However, the National

Price Office usually used persuasion or adjusted one of the economic

regulators to implement its decisions.

In the late 1980s, to oversee economic policy the National Assembly had committees on planning and finance, industry, agriculture, and commerce (see National Assembly, ch. 4). The assembly's

role in economic policy making was growing, but it was still far

less important than its Western counterparts.

Ownership

The means of production consist of all the material factors used

to produce goods and include land, raw materials, and capital. In

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Hungary: A Country Study

a traditional centrally planned economy, the state owns all the significant means of production outside the agricultural sector. The

ruling party and the government planning bureaucracy exercise

the functions of ownership and ration the means of production.

In the agricultural sector, state, cooperative, and private forms of

ownership coexist, but the state closely supervises and controls all key aspects of production.

In Hungary state ownership of the means of production still predominated in the late 1980s, although the government had

broadened the scope of private and foreign ownership. The state has owned more than 90 percent of Hungary's agricultural land

since its second collectivization campaign ended in the early 1960s. In industry, economic reformers wanted the state to delegate ownership functions to enterprises in the socialist sector or to independent holding companies whose only function would be to exercise

ownership rights. (These companies would operate much the same way that incorporated companies in capitalist economies operate.)

Hungary had abolished the system of formal central allocation of resources for all but a few goods, and enterprises generally had

to purchase labor, raw materials, and other inputs to production

and sell output on their own. The government began allowing Hungarian enterprises to form joint ventures with foreign firms in 1972.

Subsequent laws made joint ventures even more attractive for for- eign investors, and in some instances foreign firms could take more

than a 50 percent stake. Planning

Under capitalism the market guides most economic activity. In

a traditional command economy, however, a central planning board

sits atop a hierarchy of ministries, branches, and enterprises and

attempts to direct almost all economic activity. The board develops

a national economic plan after bargaining with ministries, enterprises, and others over production targets and resource allocations.

The board then presents the plan to the country's highest political

authorities for approval. The plan spells out, among other things,

what goods will be produced, who will produce them, how much

will be produced, and what materials and capital will be available.

After the plan is approved, the planning board issues directives

to ministries, enterprises, and other economic institutions. The

directives, which have the force of law, contain production targets

expressed in physical units for some items and in value terms for

others. Although all plan targets are compulsory, enforcement is stricter on targets for higher-priority items such as military hard- ware and producer goods.

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The Economy

Under the NEM, which was instituted in 1968, the government

abolished compulsory plan directives for most enterprises, but left

its planning institutions intact. In the late 1980s, the plan was considered a framework rather than a law binding managers of enterprises,

and plans often stated targets as ranges. The National Planning

Authority developed long-, medium-, and short-term plans. Longterm plans reflected the leadership's overall economic objectives for national income, industrial and agricultural production, investment,

and other areas. The government used short- and medium-term

planning to guide the economy toward the long-term objectives.

In the planning process, the central government provided each

enterprise with information about forthcoming plan objectives, and

each enterprise in turn furnished the government with a copy of

its plan. In developing short- and medium-term plans, the National

Planning Authority first projected supply and demand using enter- prise production plans. If supply and demand estimates failed to balance or if enterprise production plans did not comply with

broader plan goals, the authorities could manipulate any of a number of economic regulators in order to induce the enterprises to revise their production plans. For example, the management of

each state and collective farm had to prepare a five-year plan ac- cording to instructions from the Ministry of Agriculture and Food.

The ministry then aggregated the plans of all the farms. If the sum

of the plan targets indicated that the agricultural sector could not

achieve national production goals, the central authorities manipulated prices, credits, subsidies, or other economic regulators to in- duce farm managers to alter their plans toward fulfilling those goals.

The party and government supplemented these economic regulators with direct intervention to ensure plan fulfillment in such key

areas as defense and energy production, extractive industries, construction of key infrastructure projects, and foreign trade.

Economic Regulators

Instead of issuing compulsory plan targets, the government administratively adjusted economic regulators to induce enterprises

and cooperatives to fulfill the regime's macroeconomic plan. The

key economic regulators were prices, taxes, enterprise-income regulations, exchange rates, and direct administrative intervention. The

government did not apply the regulators uniformly throughout the

economy but changed them according to need.

Prices

In a traditional command economy, prices function as political

instruments rather than as natural market regulators that respond

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Hungary: A Country Study

to supply and demand. Central authorities set producer and con- sumer prices, which bear little relationship to each other and often

remain fixed for many years. Producer prices are those prices that

enterprises pay for goods. Planners use producer prices to facili- tate target- setting and to determine plan fulfillment. Consumer

prices for all items except housing, foodstuffs, and other basic

necessities are set at artificially high levels to avoid open inflation.

Consumer prices for essential goods are supposed to be set at market-clearing levels, but actual retail prices are often lower, caus- ing persistent shortages and forced savings. Prices for imports and

exports are based on current world market prices in trade with the

West and on an average of past world market prices for trade with

the Comecon countries.

In 1968 the NEM gave enterprises more flexibility to set prices

and permitted market forces to influence prices. Subsequent price

reforms created a direct link between world market prices and Hungarian producer prices for most items. The government, however,

could not allow prices to float freely because key enterprises faced

little domestic or import competition and could dictate the prices

of essential items in an unrestricted market. Decades of arbitrary

price, wage, tax, and subsidy policies also have left many imbalances

in the economy that would cause significant dislocations if the

authorities arbitrarily introduced a free market in one stroke.

In 1980 the authorities introduced a so-called "competitive price

system" for industrial producer prices. The system was designed

to simulate what domestic prices would be if enterprises faced significant market competition. The government assigned each enterprise to one of three groups according to a series of factors, including

the amount of competition the enterprise faced in the domestic and

foreign market. The different groups were subject to progressively

less restrictive pricing rules; enterprises facing the stiffest competition were generally subject to the least restrictive rules. A 1984

reform gradually loosened administrative restrictions in order to permit market forces to guide the pricing decisions of a greater number of enterprises. In agriculture, the government set producer

prices annually according to average production costs and other

factors, and it used cost-plus pricing for most other sectors. The NEM left consumer prices virtually untouched, and by 1976

the average of consumer prices had fallen below the average of

producer prices. The authorities subsequently adjusted consumer

prices in order to manage demand, wean enterprises away from

reliance on government subsidies, and reestablish a buffer between

producer and consumer prices. Over the course of the 1980s, the

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The Economy

government attempted to let market forces influence a growing

number of consumer prices.

Wages, Salaries, and Incentives In a traditional command economy, the government regulates

each enterprise's wage fund and fixes wage scales for workers in

different job classifications. Managers receive bonuses based on

their ability to fulfill plan targets. The government regulates farmers' incomes by establishing prices for deliveries to the state; some

farmers legally supplement their earnings by selling produce grown

on private plots. In the late 1980s, labor income was composed of wages, salaries,

and profit-sharing payments. In addition to levying taxes, the government regulated wages and salaries by setting basic pay brackets depending on skill classifications and working conditions. For

unskilled job categories, the highest-paid workers made 50 percent more than the lowest-paid workers; for skilled categories, the

highest-paid workers made 100 percent more than the lowest-paid

workers in the same category. Other regulations governed profitsharing distributions. The government used these income regulators to counterbalance forces that tended to force incomes up and

thus create inflationary pressures and widen income differentials. These forces resulted from the enterprises' monopoly over the

domestic market and enterprise managers' insufficient economic

interest in profitability. Wage increases and profit-sharing payments

have been linked to enterprise profits since 1968, and in 1985 the

government introduced a radical reform of wage and income rules that abandoned the practice of controlling incomes with a check on average wages.

Taxes

In a command economy, the state collects taxes and other charges

from enterprises, collectives, cooperatives, and individuals and

redistributes the revenue to fund public consumption, new investment, and subsidies for enterprises unable to cover costs. In the

late 1980s, Hungary's tax system was very complex. Few tax rules applied uniformly to all enterprises; some tax scales were customfit for individual enterprises, sometimes even within the same

branch, and the government often granted one-time tax exemptions to financially strapped enterprises. In 1988 Hungary became

the first communist country to introduce value-added and personalincome taxes. The government originally intended to use these new

taxes to supplant capital, accumulation, wage, and local taxes on

enterprises, but it did not abolish all of the existing taxes.

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Hungary: A Country Study

The 1988 tax law for the first time required state enterprises,

private businesses, and individuals to account for all business trans- actions. The government introduced the value-added tax in order

to switch its revenue source from the enterprises to consumers; to increase labor expenses in order to improve labor efficiency; to in- crease prices and enable the government to reduce state subsidies;

to raise import, raw-material, and energy prices to encourage their

efficient utilization; and to enhance incentives for export production. The government levied the personal income tax in order to minimize net income differentials in the state, cooperative, and pri- vate sectors; to stifle the growth of the underground economy; to tap previously unreported private income; and to create a means

to adjust taxes for inflation. The levying of a personal-income tax was also intended to help eliminate other kinds of taxes that impeded productivity.

Enterprise Income Regulation

In addition to price and wage regulation and taxation, the Hungarian government controlled enterprise incomes by prescribing

the means by which enterprises calculated revenues and expenses

and apportioned earnings. Taxes on inputs and profits were levied

at several steps in the sequence of computations. In 1985 the

authorities abolished rules requiring enterprises to allocate after- tax profits to various wage and development funds, but in the late 1980s the government still used tax rules and other devices to in- fluence enterprise distribution of after-tax profits.

Exchange-Rate Controls

In 1981 Hungary established a unified exchange rate and be- came the first Comecon country to permit limited convertibility

of its currency. At the same time, the Hungarian National Bank

began adjusting the exchange rate of the forint (for value of the

forint—see Glossary) on a daily basis against a weighted basket

of nonconvertible currencies, using a variety of criteria including

export and domestic producer prices. The exchange rate functioned

as a domestic price-setting guide that to a certain degree reflected

world market prices.

Direct Administrative Intervention

In the late 1980s, the government reserved the right to inter- vene directly in sectors marked by a significant market imbalance

and when manipulation of economic regulators proved insufficient

to achieve or restore a state of equilibrium. The government also could intervene directly when a Comecon agreement had to be

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The Economy

fulfilled. Means of direct government intervention included allocat- ing resources; adjusting imports, exports, or purchases by producers

and distributors; forcing enterprises to accept contracts to supply,

for example, important investment projects, the health care sys- tem, state reserves, and other areas; designating distribution channels; and prescribing inventory levels. Each year the government

decided which enterprises were subject to central intervention, and

a list of these enterprises became a part of the annual plan. In the

late 1980s, government recourse to central allocation or administrative intervention had become an exception to the rule, and when

such intervention did take place, it was in a number of cases only

temporary.

Finance

In a centrally planned economy, an enterprise has three sources

of finance: the state budget, the banks, and the enterprise's own

resources. An enterprise cannot, however, use its after-tax profits to increase wages or to undertake new investment without government approval. Credit is necessary to provide enterprises with the

financial means needed to pay for planned inventories and to finance

operations during the hiatus between delivery and payment; credit

also gives the government an additional means of controlling enter- prise activity. A single bank performs both central and commercial banking functions.

The reforms of the mid- to late 1980s significantly altered Hungary's financial institutions and practices. A number of new banks were created, and the government permitted foreign investors to participate in the banking system. The credit system was liberal- ized, although decisions to extend credit remained unrelated to past

economic performance. The government also created a series of

new investment opportunities for individuals and enterprises. Fi- nally, in 1986 Hungary enacted a bankruptcy law.

Financial Institutions

The economic reforms of the mid- to late 1980s resulted in a

restructuring of the country's financial institutions. Up until that

time the institutions included the Ministry of Finance; the Hungarian National Bank; five major and several smaller commercial

banks, some with foreign partners; the National Savings Bank; small

venture-capital institutions; and a nascent insurance industry.

The Ministry of Finance oversaw the financial and banking sys- tem and the insurance industry. The ministry also supervised

foreign-exchange policy and concluded international financial agree- ments through the Hungarian National Bank.

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Hungary: A Country Study

In 1987 Hungary unveiled a new, two-tier banking system consisting of banks that were supposed to function as genuine, profitmaking credit institutions. Before the reform, the Hungarian

National Bank dominated the banking system, functioning as the

central bank, the bank of issue, and the main commercial bank.

All banks acted as agents of the state, and their lending decisions were based not on profitability but on government guidelines geared

toward implementing the economic five-year plan.

The 1987 reform stripped the Hungarian National Bank of its commercial-banking function, but it remained the country's bank

of issue and its central bank. In its role as the bank of issue, the

Hungarian National Bank established the national payment and

accounting system, promulgated rules on money circulation, coor- dinated Hungary's relations with international financial institutions, and determined foreign-exchange rates. As the central bank,

the Hungarian National Bank regulated the money supply using

credit policy, interest rates, obligatory reserve requirements, and

other means. The Hungarian National Bank was a member of the

International Bank for Economic Cooperation and the International

Investment Bank, both headquartered in Moscow. It was also a

shareholder in the Bank for International Settlements in Basel,

Switzerland, and owned the Hungarian International Bank in Brit- ain and the Central Wechsel- und Creditbank A.G. in Austria.

The reform created five major commercial banks: the Hungarian Foreign Trade Bank, the General Banking and Trust Company, the Hungarian Credit Bank, the National Commercial and

Credit Bank, and the Credit Bank of Budapest. They were all Hungarian-owned joint-stock companies and were licensed to per- form a full range of commercial-banking services and provide short- term credits for technical-development projects and the implementation of new technology. The government did not permit these

banks to establish direct foreign banking relations, however, or to

offer banking services to individuals. The Hungarian Foreign Trade

Bank handled foreign-currency exchange, countertrade, letters of

credit, and industrial cooperation deals. In addition, it provided

short-term import and export credits and loans for projects geared

toward expanding exports. Eleven smaller financial institutions also offered commercial-banking services.

Hungary has joined with foreign investors to form several other

commercial banks. The Central-European International Bank

(CIB), which had US$436 million in assets in 1986, performed lease financing and prefinancing of export contracts. Founded in 1979,

CIB was the first offshore bank (a bank set up in a foreign country

to take advantage of the particular regulatory environment of that

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The Economy

country) in a Comecon country and the first joint venture in Hungary in which Western partners took a majority stake. The Hungarian National Bank held a 34-percent share, and six Western banks

each held 11 -percent shares. Another commercial bank, Citibank

Budapest, was a joint venture of Citibank Overseas Investment Corporation and the Central Wechsel- und Creditbank A.G. Citibank

Budapest was the first Western bank permitted to take direct part

in commercial banking activities in Hungary. It was a full-service commercial bank that operated in forints and convertible currencies. Unicbank was a third commercial bank offering equity financing

for new and expanding ventures and short-, medium-, and longterm loans to state-owned enterprises, cooperatives, joint ventures,

and private businesses. Six Hungarian financial institutions and

cooperative banks from Austria and West Germany joined with the

International Finance Corporation, a subsidiary of the World Bank,

to form Unicbank in 1987.

Other than local savings cooperatives, Hungary's National Savings Bank was the only financial institution permitted to serve in- dividuals in the late 1980s. The National Savings Bank handled

savings accounts, made loans to individuals and private businesses,

and engaged in foreign currency exchanges through a countrywide

network of branches. The bank also handled convertible-currency

accounts for Westerners, offering competitive interest rates and protection from Western tax authorities. Other small venture-capital

institutions allowed by a 1982 government decree provided either

credit or equity to new businesses engaged in innovation, technical development, and the like, that the traditional financial insti- tutions were not equipped or inclined to finance.

In addition to these financial institutions, in the late 1980s Hungary had two separate insurance companies. Spurred by rising in- flation in Hungary, the insurance companies had become strong

advocates of further economic reform, especially the broadening

of laws on equity investment. One of the companies made direct

investments in a private hotel and a brewery and planned to in- vest in the construction of office buildings.

Credit Criteria

After several rounds of reform, credit decisions often remained

unrelated to the past profitability or creditworthiness of the potential borrower, and the government often used the credit system to bail out enterprises operating at a loss. In cooperation with other

banks and financial institutions, the Hungarian National Bank is- sued "Guiding Principles on Credit Policy" as part of the state five-year plan. Credits were extended under varying conditions,

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Hungary: A Country Study

with different interest rates, maturities, and priorities to influence

development in harmony with the national plan. The directives

of the Hungarian National Bank were binding on all other parts

of the banking system.

Financial Instruments

Before reforms were enacted in 1 983 , enterprises had no options

other than depositing their after-tax profits in bank accounts or

investing them in their own operations, and individuals had no

options other than maintaining savings accounts or investing in

housing or real estate. In 1989 enterprises could deposit funds at a number of banks; invest in their own plants; lend money to other

enterprises through inter-enterprise loans; and buy, issue, and trade

stocks and bonds. Individuals could invest their funds in a savings

bank, purchase bonds, lend money to other individuals, or invest

in silent partnerships. The government hoped the development of

these new investment opportunities would boost enterprise-profit

and personal-income incentives, encourage voluntary savings by

enterprises and the population, funnel more capital to efficient enter- prises and more productive endeavors, and conversely reduce the

capital flow to inefficient enterprises and wasteful projects. In 1989

it was still uncertain whether these reforms would produce the

desired effects. The government allowed agricultural cooperatives to issue up

to 200,000 forints (approximately US$3,225) in bonds to members as well as nonmembers beginning in 1984, and the authorities later expanded the right to issue bonds to industrial and other

enterprises. In 1987 enterprises issued bonds worth about US$354

million, up from US$87.3 million the year before. Bond issuance

accounted for about 7 percent of total private savings and about

10 percent of total investment. By early 1988, banks, enterprises,

local councils, agricultural and industrial cooperatives, hospitals,

and other entities had issued about US$500 million in bonds. About

100,000 individuals owned 60 percent of the bonds; institutions

held the remainder. Returns ranged from 9 to 12 percent and were

higher than the interest paid on savings accounts. The government

taxed interest on bonds issued after January 1, 1988, at a flat rate of 20 percent.

In early 1987, the government legalized the capitalization of

enterprises through the sale of stock without prior authorization.

By early 1988, investors had purchased about US$555 million worth

of stock in sixteen banks and about fifty enterprises and joint ventures. In the same year, about twenty financial and banking insti- tutions founded a small stock exchange. The exchange opened for

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The Economy

trading only once every two weeks, but its founders hoped to ex- pand its operation and introduce a fully computerized trading sys- tem. Trading was limited because the government, through the

Hungarian National Bank, owned most of the shares. By 1989 at

least one enterprise had launched an employee stock ownership plan,

and the government had proposed a law lifting existing restrictions on employee stockholding in order to tap uninvested individual sav- ings and give employees a sense of common purpose with their

enterprises. The opening of stock and bond markets prompted

former Ministry of Finance employees to create a private company

to perform independent assessments of individual enterprises.

Bankruptcy

In 1986 Hungary became the first communist country to enact a bankruptcy law. The law sought to induce enterprises to become

profitable and less reliant on state subsidies, which in 1987 con- sumed about 23 percent of the national budget. Under the law,

creditors, unpaid suppliers, and other enterprises could initiate bankruptcy proceedings against any insolvent or delinquent enterprise except agricultural collectives. The National Reorganization

and Liquidation Board, which oversaw the bankruptcy process, attempted arbitration and reorganization before final liquidation.

Workers who lost their jobs as a result of liquidation were entitled

to unemployment benefits.

Although by 1987 claimants had filed bankruptcy actions against

fifty-five enterprises, including one large construction firm, the

government had not enforced the bankruptcy law vigorously.

Government interference in the market remained so widespread

that in bankruptcy proceedings unprofitable enterprises could

justifiably argue that their losses were only marginally related to efficiency or managerial decisions. Despite proclamations that

profitability was the main standard for judging enterprise performance, the government continued to compensate firms operating

at a loss with subsidies, tax breaks, credits, preferential treatment

in price setting, and other means. The government extracted the

earnings of profit-making enterprises to fund these measures.

Industrial Organization

In a centrally planned economy, only branch ministries and other

government bodies can establish production and distribution enterprises, which are usually very large and have a regional or nationwide monopoly in their business activity. Enterprises carry on

official economic relations through the ministerial bureaucracy

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Hungary: A Country Study

rather than through a market. State organs appoint, evaluate,

promote, and dismiss enterprise managers, whose main responsibility is to meet or exceed plan targets.

Industrial organization in Hungary followed the pattern of a command economy until 1968, when the government granted enterprises a modicum of autonomy. Reform advocates were not,

however, powerful enough to force a restructuring of Hungary's

industrial institutions. In the late 1970s, Hungary had the world's

most concentrated industrial organization, with 699 state enterprises employing an average of 1 ,569 people each. The bureaucracy

functioned in many ways as it did before the reform, supervising

and directing large enterprises and trusts, thus stifling the development of true enterprise autonomy and a market mechanism.

On several occasions in the 1980s, the government adopted measures to decentralize Hungary's highly concentrated industrial or- ganization in order to promote enterprise independence, flexibility,

and efficiency. In 1981 the authorities eased restrictions on creat- ing small- and medium-sized enterprises in the state, collective,

and private sectors. The government merged three industrial ministries into the single Ministry of Industry in order to shrink the bureaucracy and cut the informal channels of influence that existed

between the ministries and supposedly independent enterprises.

Between 1979 and 1984, the authorities broke up 14 of the country's 28 trusts and divided a number of large enterprises into more

than 300 smaller entities. However, despite the government's efforts, Hungary's industrial organization remained one of the world's

most highly concentrated. This concentration led to the creation

of monopolies that suffocated competition in many production areas

In the late 1980s, the central government also continued to expect

the Ministry of Industry to ensure supplies, and both the government and the enterprises continued to expect the ministry to in- tervene to remedy imbalances.

Also in the 1980s, the government took steps to simplify the complicated and time-consuming process of starting a business. A

minister, the head of a nationwide government body, or a local council with prior approval from the minister of finance could found

a state-owned enterprise. The founder defined the enterprise's initial activity and supervised its operation, but other changes have

eroded much of the control that founders once exercised. In 1985

most of Hungary's industrial enterprises introduced "democratic

measures," under which the employees elected top managers di- rectly or indirectly. The government also permitted enterprises to change their economic activities without prior consultation,

provided that they informed their founder and the appropriate

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The Economy

branch ministry of the change. Enterprise councils or collective

management were managing 77 percent of the industrial enterprises

by 1986, while the Ministry of Industry continued to supervise the

remainder. Even under "industrial democracy," an enterprise's

founder could veto candidates for director and dismiss elected directors, and ministries still exercised critical influence. As Janos

Kornai, a leading Hungarian economist, has written, despite "industrial democracy" and the authorities' call for profitability and

attention to the market, enterprise managers know that their

"career, the firm's life and death, taxes, subsidies and credit, prices

and wages, all financial 'regulators' affecting the firm's prosperity, depend more on the higher authorities than on market per- formance."

In 1982 the government provided for the creation of semiprivate

and private industrial ventures, including economic work cooperatives (EWCs) and independent contract work associations

(ICWAs), to encourage entrepreneurship and competition. EWCs

were groups of no more than thirty workers employed by a state- owned enterprise who were allowed to use the enterprise's machinery outside normal working hours to produce goods under

special contracts. The workers needed the enterprise's permission

to establish an EWC, and the enterprise often entered into contracts with the EWC itself. The workers received far higher wages

for this additional work than they did for their regular jobs. In 1982

approximately 25,000 workers participated in 2,775 EWCs; by the

end of 1986, approximately 450,000 workers participated in 35,205

EWCs. ICWAs were self-organized and self-capitalized private

groups that performed work under contract but had no affiliation to any single state-owned enterprise. About half of an ICWA's

members worked for the group full time. In 1982 Hungary had

2,341 ICWAs; by October 1983, that number had climbed to 4,463.

Agricultural Organization

In a traditional centrally planned economy, state and collective

farms play the key role in agricultural production; small privateplot farming is tolerated but is expected to "wither away." The

state makes production and marketing decisions for the farms, and

individual state-farm managers and collective-farm members have

little input into decision making.

Hungary collectivized its agricultural sector in two campaigns

beginning in 1949 and ending in 1961. In the first campaign, the

government coerced peasants to move to state and collective farms,

enforced compulsory delivery quotas and high taxes, and set prices

artificially low to gain control of agriculture and use it to generate

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Hungary: A Country Study

capital needed for industrial development (see Rakosi's Rule, ch. 1). Peasants reacted by slowing production and departing from the

collective farms in great numbers, especially during the Revolution of 1956 (see Revolution of 1956, ch. 1). The government

changed its tactics in the second campaign, which began in the late 1950s. The authorities relied more on persuasion than coercion and

eliminated compulsory deliveries, increased material incentives,

furnished loans, offered tax breaks, and provided seed, fertilizers,

and farm equipment. By 1960 about 90 percent of Hungary's farmland was collectivized, and in 1961 nearly 94 percent of the agricultural earners worked in the socialist sector. After the mid-1960s, the agricultural sector often served as a testing

ground for reforms later introduced into the overall economic sys- tem. In the 1965-67 period, the government eliminated obligatory

plan targets, allowed farms to plan production, loosened restrictions on self- financing, and permitted production on private plots. After

the NEM was introduced in 1968, cooperative farms gained true autonomy. In the 1980s, agricultural producers could buy inputs

from a variety of sources and sell to purchasers of their choice.

Large-Scale Farming

Large-scale farming—made up of state and cooperative farms

focused on such activities as grain and fodder production, which

were capital-intensive and in which economies of scale were most

significant. A 1985 law transformed state farms from state- administered organizations into self-governing enterprises under

the supervision of the Ministry of Agriculture and Food. However,

state farms were subject to more state control than cooperatives

in such matters as appointment of managers and the use of profits,

and state-farm employees were government employees who worked

for fixed wages and bonuses.

A cooperative farm was owned and managed by its members,

who elected a chairman to manage the farm according to its charter. Although cooperative farms could employ workers, cooperative

members were technically not "employees." The cooperative paid

employees a set wage; members received a base salary and a yearend dividend based on net profits. Cooperatives were also freer

than state farms in deciding how to use their profits, and many

cooperatives delegated certain operations to autonomous work teams

or individuals who divided the operation's net profits. The cooperative farms owned only about half the land they worked; the state and individuals owned the rest. In the late 1980s, the government still fixed prices for a large

portion of agricultural production, including corn, wheat, and beef

132
Farm house in Tata

Courtesy Sam and Sarah Stulberg

cattle. In addition, all state and cooperative farms received some

form of state subsidy, and about 27 percent received fixed-rate subsidies for farming low-quality land. Hungary's large-scale farming sector has become increasingly concentrated as state and

cooperative farms have merged. Between 1960 and 1986, the number of agricultural cooperatives dropped by 72 percent to 1,260.

The amount of arable land per cooperative stood at 3,024 hectares

in 1986.

Small-Scale Farming

Small-scale producers—individuals or small groups who tilled household plots or operated small farms—concentrated more on

labor-intensive output or activities in which the risks of investment were to be assumed by those doing the work. In the late 1980s,

Hungary had three types of small-scale farming units: approximately 623,000 household plots of cooperative members, about

792,000 small auxiliary farms of nonagricultural or state-farm employees, and a few private farms. Approximately 63 percent of the

population participated in the small-scale agriculture sector. The

combined contribution of household plots and auxiliary and pri- vate farms to gross agricultural output was 31.5 percent in 1975

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Hungary: A Country Study

and 31.3 percent in 1986. Successful integration of small-scale farming into the agricultural sector kept overall production levels high.

The government imposed few restrictions on the sale of output

in the small-scale farming sector, and supply and demand determined prices in a free market. Thus, producers had a strong in- centive to work hard and produce more. Before the mid-1980s,

cooperatives were hostile to household producers. In the late 1980s,

however, officials proclaimed that private household farming was

a permanent component of agriculture under socialism. The central government encouraged cooperatives to assist members with

household plots to boost production by providing seed, transport,

machinery, advice, and marketing assistance. Household producers

also qualified for subsidies, tax breaks, loans, and discount prices

for machinery and agricultural chemicals. Regulations limited

the size of household plots to 0.6 hectares of cropland and 0.23

hectares of vineyard or orchard per worker. The government abandoned earlier limits on livestock. Pensioners, housewives, dependents, and others performed most of the work on household plots

and small-scale farms. Their labor amounted to about 2.3 billion

man-hours annually and outstripped the total number of man-hours

worked in large-scale farming.

Ancillary Activities The 1 968 reform allowed agricultural enterprises to diversify into

nonagricultural economic activities. Twenty years later, the government granted cooperatives the right to change their internal struc- ture, to engage in new activities, and to extend their involvement

in nonagricultural production without the permission of regulatory bodies. State farms and cooperatives were engaged in food

processing, machinery repair, parts production for manufacturing enterprises, construction, trade, and the restaurant business.

Several large-scale farms developed "technically operated production systems" for crop production, horticulture, and animal husbandry that used state-of-the-art technology. The farms sold these

systems, which included input and output programs and consulting services, to other large-scale farms. These systems have acceler- ated the modernization of the agricultural sector. The nonagricultural activities of state and cooperative farms have

increased profits and tapped manpower once lost during off-seasons. In 1983 nonagricultural activities accounted for 47 percent of state- farm profits and 44 percent of cooperative-farm profits. By 1988

the farms' ancillary activities accounted for more than 7 percent

of Hungary's total industrial production.

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The Economy

Private Activity

Perhaps the most significant aspect of the economic reform and

the leadership's most striking break with Marxist-Leninist ideology

has been the expansion of the private sector. The government decided to allow the emergence of private enterprise because it believed that private entrepreneurs would increase competition in some areas, fill demand for goods and services that state-owned

enterprises had been unable or unwilling to meet, and create work

for people who would lose their jobs as unprofitable enterprises re- organized to become more efficient. Changes in the Domestic Trade

Law in 1986 opened new areas to private entrepreneurs, especially

in services. A year later, the government allowed private businesses

in a number of categories to employ twenty to thirty workers. A

law passed in 1988 allowed the establishment of limited partnerships,

which could include an unlimited number of partners and employees

and operate in all fields except finance. However, private businesses continued to suffer from restricted access to capital from state- owned banks and thus had to depend on private and extralegal loans

that did not carry full legal protection.

Small lamily-operated businesses remained the rule in the pri- vate sector, and in 1987 only about 300 private businesses employed more than six people. Most entrepreneurs ran their businesses as a part-time activity in order to supplement their earnings from a job in the state sector that provided social benefits. In addition to the household plots, private farms, economic work cooperatives,

and independent contract work associations, private business people were operating 28,965 retail shops, restaurants, and other busi- nesses in 1986, more than twice the total in 1980. In addition to private restaurants and stores, which accounted for about 7 per- cent of domestic trade in 1985, entrepreneurs had established

computer-software companies, construction firms, service businesses, and a theater. Individuals could also contract to operate

state- or cooperative-owned retail stores or restaurants and retain

all profits over the contract cost. In 1986 contractors operated about

12 percent of Hungary's shops and 41 percent of its food-service

establishments.

Conflict-Resolution Mechanisms

In countries with a command economy, the ruling communist

party generally denies the existence of antagonistic conflicts that

arise between groups with differing economic interests. The leadership suppresses open expression of these conflicts and resolves them

behind closed doors. When authorities reform such an economic

135
Hungary: A Country Study

system by introducing market mechanisms, they acknowledge that

economic, and therefore political, conflict arises between various

groups and that the authorities must devise political mechanisms

to resolve them. The market mechanism resolves certain conflicts,

such as disputes between buyers and sellers or creditors and bor- rowers, but new conflict-resolution mechanisms are necessary to resolve broader conflicts. As of the late 1980s, the Hungarian leadership had chosen to

tackle this problem by implementing conflict-resolution devices that

did not threaten the HSWP's monopoly of power. The government introduced electoral reform, granted the judiciary greater in- dependence to administer justice according to legal criteria, and

encouraged trade unions to become more active in defending the

interests of the workers against enterprise managers (see State Apparatus, ch. 4). Trade unions obtained the right to call strikes when

management decisions disregarded the law or breached a collective contract or "socialist morality"; however, the authorities toler- ated no conflict between the unions' goals and those of the regime

(see Mass Organizations, ch. 2). The government also encouraged

the press to publicize abuses of power by management (see Mass

Media, ch. 4).

After the 1968 reform, organizations also emerged to represent

economic interest groups, and some of these organizations acquired

a growing influence in party and governmental decision making.

The government required private and semiprivate entrepreneurs

to become members of the Small Craftsmen's National Association, the Small Tradesmen's National Association, or the Industrial Cooperatives' National Council. In 1988, about 900 small

entrepreneurs founded the National Association of Entrepreneurs,

which worked through Hungary's Chamber of Commerce. In the

late 1980s, the National Association of Entrepreneurs actively participated in the debate over a law on business organization.

Economic Sectors

Industry overtook agriculture in the postwar era to become the

predominant economic sector. In 1986 industry accounted for 50.7

percent of gross output; agriculture and forestry, 18.2 percent; nonmaterial branches (generally services), 11.3 percent; construction,

6.3 percent; transportation, post, and telecommunications, 5.6 percent; trade, 6.1 percent; and water works supply, 1 percent (see

table 6, Appendix). Industry has taken up most of the investment

funds since the early 1960s, followed by consumer goods and ser- vices (the nonmaterial branches), agriculture, and transportation

and communications (see table 7, Appendix). Despite a growing

136
The Economy

private sector, state-owned enterprises dominated the economy.

According to official statistics, state-owned enterprises produced

63.4 percent of national income in 1986; the cooperative sector produced 23 percent; auxiliary farms of private individuals, 6.6

percent; and the private sector, 7 percent (see table 8, Appendix).

Economists estimated that the extralegal "third economy" also made up a significant portion of the country's economic life. Industry

Energy and raw-material extraction accounted for 13.1 percent

of gross industrial production in 1986; metallurgy contributed 8.3

percent; engineering, 25.6 percent; chemicals, 19.1 percent; light

industry, 12.9 percent; food processing, 16.8 percent; building

materials, 3.2 percent; and other miscellaneous industry, 1 percent. As this industrial profile shows, Hungary's industry continued

to reflect the Stalinist emphasis on heavy industry inherited from

the immediate postwar period.

Energy

Chronic coal-mining problems and shrinking domestic hydrocarbon reserves have plagued the economy since the mid-1970s.

The reliance on imported energy increased steadily from 37.2 per- cent in 1970 to 51.3 percent in 1986. The Soviet Union furnished

most of Hungary's energy imports, but Soviet production setbacks

and demands for better trade terms complicated Hungary's energy

supply problems after the mid-1980s. Analysts expected the Soviet

Union to demand more and better-quality goods from Hungary

in exchange for its energy exports in the 1990s (see Relations with

the Soviet Union, ch. 4). Hungary slashed investment in coal mining in the late 1960s and

1970s, when Soviet oil and natural gas were less expensive alter- nate fuels. Consequently, coal's share of domestic energy production dropped from 62.7 percent in 1970 to 36.6 percent in 1986.

Coal accounted for about 26 percent of Hungary's energy consumption. In the early 1980s, rising oil and natural gas prices prompted

Hungary to reopen the flow of investment into coal mining but

the country still suffered from a severe shortage of miners, and its mines were unable to keep pace with rising demand. The government approved substantial pay increases for miners in order to at- tract new workers. In 1986 Hungary's mines employed 79,566

workers who labored between sixty and seventy hours per week

and produced coal worth about US$779 million. Total annual coal

output has hovered around 24 million tons since 1975, but hardcoal production actually fell by about 23 percent between 1975 and

137
Hungary: A Country Study

1986, and the calorific value of coal output declined by about 18

percent in the same period. Coal, coke, and briquette imports

totaled US$268 million in 1986.

Hydrocarbons, including oil, propane, natural gas, and gasoline, accounted for 61 percent of total energy consumption in 1986.

Natural-gas production has increased considerably since the

mid-1960s, exceeding 7 billion cubic meters in 1986 and 1987.

Domestic consumption, however, has far outstripped production

since 1970, nearly doubling from 5.9 billion cubic meters in 1975

to 11.5 billion in 1986. Hungary's wells supplied about 94.8 per- cent of its natural-gas consumption in 1970 but only 66.1 percent

in 1986. Natural-gas imports totaled 4.8 billion cubic meters in

1986 and cost about US$366 million. The Soviet Union supplied

Hungary with about 90 percent of its natural- gas imports.

Hungarian wells have pumped about 2 million tons of crude oil yearly since 1975, mostly from the Szeged region, but observers

expected production to decline after 1990. Oil imports totaled

US$1.1 billion in 1986, while exports added up to about US$332

million. Hungary exported oil by reselling Iranian and other Middle

Eastern oil acquired in various compensation schemes.

Hungary launched an energy rationalization program in the early

1980s aimed at maintaining levels of domestic oil and gas production attained in the mid-1980s, increasing exploration, and substituting natural gas and other fuels for oil. The conservation

program, backed by stiff price hikes, netted positive results. Oil

consumption dipped from 12.5 million tons in 1979 to 9.1 million

tons in 1985, and Hungary's imports of petroleum and petroleum

products dropped from about US$1.3 billion in 1985 to US$1.1

billion in 1986.

Hungary's power plants had a 6.8-billion-kilowatt capacity in

1986 and generated 28 billion kilowatt-hours of electricity, almost

double the amount generated in 1970. The increase failed, however,

to keep pace with demand as consumption rose from 17.9 billion

kilowatt-hours in 1970 to 38.6 billion in 1986. Hungary overcame

the 1986 shortfall by importing 1 1.9 billion kilowatt-hours of electricity. Transmission lines from the Soviet Union carried about

one-third of Hungary's imported electricity.

In the late 1980s, thermal power stations generated 70 percent

of Hungary's electricity and burned about 65 percent of Hungary's

brown coal production and nearly all of its lignite output. Hungary has constructed large thermal power stations in the last 15

years, including a 1 .9-million-kilowatt heat and power plant at Szazhalombatta in Pest County that generated almost 40 percent

of the country's electricity.

138
The Economy

Southern Hungary's uranium reserves supplied the 880-millionkilowatt Paks nuclear power plant in Tolna County, the country's

only nuclear power facility. The plant's first reactor went on line

in 1983, and its second followed a year later. In 1986 the plant

generated 7.4 billion kilowatt-hours, or about 26.5 percent of the

nation's electricity output and 19.2 percent of its consumption.

Hungary and the Soviet Union agreed in 1986 to build four additional 440-megawatt reactors at Paks in the next decade. Officials

hoped that the plant would supply about 40 percent of Hungary's

electricity by the early 2000s. In the late 1980s, Hungary's hydroelectric power stations generated less than 1 percent of the country's electricity, but Hungary

has joined with Czechoslovakia to build two hydroelectric power

stations on the Danube at Gabcikovo in Czechoslovakia and at Nagymaros in Hungary. The project, which was scheduled for completion by 1993, received Austrian financial assistance (see Relations with Other Communist Neighbors, ch. 4). However, in May

1989 the Hungarian government suspended work on the power

station because of public concern over the damage it threatened

to cause to the environment. The power stations' total projected

capacity was 3.6 billion kilowatt-hours per year, and their estimated

cost was US$1.4 billion. Mineral Mining and Metallurgy

The aluminum industry developed rapidly after World War II and in the late 1980s employed more than 40,000 workers. The

production of bauxite (used in making aluminum) more than doubled since the war, reaching more than 3 million tons in 1986, while

alumina (aluminum oxide) output totaled 856,000 tons in the same

year. Increased bauxite production was depleting deposits near the

surface, however, and costly deep mining had become necessary.

Conversion of alumina into aluminum is highly energy intensive,

and a lack of inexpensive electricity prevented Hungary from converting more than 25 percent of its alumina output. Therefore,

Hungary had to import about 65 percent of the aluminum con- sumed by its factories each year. Under an exchange agreement

signed in 1985, Hungary exported 530,000 tons of alumina to the

Soviet Union each year for smelting in return for 205,000 tons of

aluminum. In the late 1980s, Hungary received significantly less aluminum per unit of alumina than under previous agreements,

largely because the price of aluminum had risen against the price

of alumina on world markets since the 1960s. In the late 1980s,

Hungary's aluminum-fabrication industry concentrated more on

manufacturing semifinished and specialized products and less on

139
Hungary: A Country Study

bulk production of the metal in the unfinished form. The major

aluminum processing plant was the Light Metal Works at Szekesfehervar, which had a capacity of approximately 100,000 tons per

year in the late 1970s. Hungary exported much of its bauxite, alu- mina, and aluminum to the Comecon countries.

Soviet technology and raw-material inputs were key factors in

the development of Hungary's iron and steel industry in the 1950s.

The large steel mills at Dunaujvaros in Feher County, Ozd,

Miskolc, and Budapest have used local low-grade iron ore, but more

than 80 percent of their raw-material input originated in the Soviet

Union. In the late 1980s, the industry suffered from several major

problems. First, Hungary's iron and steel mills were less cost ef- fective than West European mills because, among other factors,

Hungary had to pay to transport and process Soviet ore that had

only a relatively low (45-50 percent) iron content. Second, the prices

Hungary received for its iron and steel exports to convertiblecurrency markets had fallen. These exports generated losses for

the industry, but Hungary continued the trade for several reasons: the domestic market could not absorb enough output to maintain

satisfactory use of the country's mill capacity, the state subsidized

losses on metallurgical exports, and export income provided the

industry with the grounds to increase wages. The industry underwent a sweeping reorganization as part of a 1987 restructuring program that included the elimination of 2,400 jobs. Hungary produced no iron ore in 1986, and analysts expected the country to reduce

iron and steel output by up to 10 percent in 1988.

Engineering and Chemicals

Throughout the postwar period, the engineering and chemical

branches have been the most important in Hungary's industrial

sector. The engineering sector employed about 32 percent of Hungary's industrial workers in 1986 and produced 25.5 percent of the

country's total industrial output; the chemical sector employed 7.5

percent of the industrial work force and accounted for 19 percent

of industrial output.

Hungary's vehicle-manufacturing subbranch emphasized

production of buses and axle housing and accounted for about 28

percent of the engineering branch's output in 1986. Comecon as- signed production of large buses to Hungary in the 1950s. Hungary's Ikarus bus enterprise became the world's fourth-largest bus

producer, accounting for about 20 percent of the world's bus exports in 1980. The engineering branch also produced tractors, diesel locomotives, river vessels, floating cranes, machine tools, passenger

140
The Economy

elevators, batteries, telephone equipment, lighting equipment, and

other products.

The chemical branch grew faster than any of the other branches

after the 1960s, and in 1986 the chemical branch's 133 enterprises

accounted for 19 percent of industrial output. Its main subbranches

produced fertilizers, pharmaceuticals, and petrochemicals. The

pharmaceutical industry was more than a century old and accounted

for 1.5 percent of world production. Hungary ranked second to Switzerland in per capita pharmaceutical exports and fifth in the

world in overall pharmaceutical exports. It was also Comecon's

largest pharmaceutical supplier. Pharmaceutical production ex- panded at a nearly 18 percent annual rate since 1960, satisfying

80 percent of Hungary's market. Western markets purchased 40

percent of Hungary's pharmaceutical exports. In 1986 the pharmaceutical industry's output totaled about US$513 million.

Rapidly rising demand for synthetic materials and a desire to replace imports with domestic production prompted Hungary to begin developing a petrochemical industry on the eve of the 1973

oil crisis. The project, which required significant investment and

integration with the Soviet economy, proceeded despite the changes

that the oil crisis brought to the market. In 1989 five Hungarian

refineries produced petroleum products, but four were too small

to take advantage of economies of scale. Analysts expected a large

portion of Hungary's refinery capacity to remain underutilized until sometime in the 1990s. The synthetic-fiber, chemical-additive, and

phosphorus-fertilizer branches were especially problematic.

Light Industry and Food Processing

The government neglected the consumer-oriented light-industry

and food-processing branches of the economy during its push to develop heavy industry in the 1950s. This policy resulted in short- ages, poor quality, a narrow product mix, and slow development

of new products. Since that time, production of light industrial

goods, such as textiles, garments, furniture, pulp, and other

products, has improved significantly. In 1985 Hungary exported

about 65 percent of its silk fabric production, 50 percent of its cloth- ing and footwear output, and 25 percent of its textiles. Although Hungary has not had food shortages for years, its foodprocessing branch has modernized slowly and produces only a

limited range of foodstuffs. Given the importance of foodstuffs in

Hungary's export profile, the slow growth of the food-processing

industry has prevented the country from capturing potential

markets. In the late 1980s, the branch's main products included

wine, flour, canned goods, sugar, beer, dairy products, and meat

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Hungary: A Country Study

products. After 1970 many state and collective farms set up foodprocessing operations (see Agricultural Organization, this ch.).

High Technology

Hungary has developed a small but viable computer industry

since the late 1960s. The Videoton electronics firm, which was one

of Eastern Europe's most aggressive computer manufacturers, developed several computer models in the 1970s and has exported

its computer products to West Germany, Austria, Finland, and

the Comecon countries. Economic reforms in the early 1980s cleared

the way for state firms, research institutes, private partnerships,

and even individuals to manufacture personal computers. Hungary possessed an impressive software-producing capability, and

many Western countries have purchased Hungarian programs or subcontracted with Hungarian designers to develop software. Unfortunately, the microelectronics industry suffered a major blow

in 1986 when a fire gutted its most important plant, located in

Budapest. In 1986 the high-technology industry produced 5,128

small computers, 145,717 semiconductors, and 20,690 integrated

circuits. Agriculture

The success of the agricultural sector in large part has underpinned the country's high standard of living relative to the other

countries of Eastern Europe. Agriculture provided an abundance

of food, that, at least until the late 1980s, reinforced social and political stability. Hungary's farms also supplied about 25 percent

of the country's convertible-currency exports, which were key be- cause they funded imports of Western technology vital to industrial development. But the agricultural system also faced several

nagging problems, including high production costs, difficulties in

carving out new markets, and dependence on imported protein

feeds, agricultural machinery, nonnitrogenous fertilizers, and other

inputs.

In the late 1980s, agricultural output was divided about equally

between plant and animal production. The country's main crops were corn, wheat, and sugar beets; its main animal products were

poultry, hogs, eggs, and milk (see table 9, Appendix). Hungary

had been a net exporter of grain since 1973 and in the late 1980s was Eastern Europe's largest exporter of meat and meat products.

Hungarian agriculture's capital-intensive nature and its scale of

production were closer to West European than East European levels. The agricultural sector used fewer but more powerful tractors in

1986 (53,947) than it did in 1970 (67,472). Hungary also reduced

142
The Economy

the amount of irrigated land and cut fertilizer use. Irrigated lands

shrank from an average of 249,100 hectares in the 1971-75 period

to 162,600 hectares in 1986. Fertilizer use fell from 224 kilograms

per hectare in 1975 to 212 in 1986, while manure use grew slightly. In 1986 the 129 state farms worked 26.1 percent of the country's cultivated land (2,159 hectares), employed 17.6 percent of

the agricultural work force (163,000), and produced 17.6 percent

of the country's agricultural gross output (about US$1 .2 billion—see table 10, Appendix). Cooperative farming remained the largest social sector in the agricultural sector. In 1986 some 1,260 cooperative farms worked 76 percent of the cultivated land, employed 74.

1

percent of the agricultural work force (691,000), and produced 51

percent of the country's agricultural gross output (US$3.4 billion).

In 1986 cooperative-farm members' household plots combined

with auxiliary and private farms to produce 31.3 percent of agricultural gross output. These producers also supplied significant portions of specific crop and animal products. For example, in 1986

household plots and private farms produced 76 percent of Hungary's potatoes, 74.7 percent of its vegetables, 58.6 percent of its fruits, 48.8 percent of its wine grapes, 24.1 percent of its cattle,

55.5 percent of its pigs, and 43.1 percent of its poultry.

Construction

In 1986 the construction sector accounted for nearly US$5 bil- lion in production. The sector had 165 state-owned construction

enterprises employing an average of 1,223 workers, 531 cooperative construction firms with an average of 123 workers, 460 eco- nomic work cooperatives with an average of 11 members, 2,745

private economic partnerships with an average of 8.5 members,

and 24,229 private crafts people who mainly worked alone. Housing accounted for 33.8 percent of construction activity in 1986; in- dustrial building construction accounted for 9.5 percent; roadway

construction, 6.4 percent; and cultural and educational buildings,

5.1 percent.

Transportation and Telecommunications

The nation's transportation and communications systems were

highly centralized because of Budapest's importance as the capital

and principal urban center (see fig. 7). Like other East European

countries, Hungary redirected much of its transport system after World War II to accommodate a dramatic increase in trade with

the Soviet Union. Despite the fact that transportation employed

about 14 percent of the total work force in the late 1980s, trans- portation delays were frequent.

143
Hungary: A Country Study

CZECHOSLOVAKIA

)

'(,Y

Figure 7. Transportation System, 1989

144
145
Hungary: A Country Study

Hungary began constructing the main lines of its railroad sys- tem between 1850 and 1900 in order to link Budapest with other

major cities. In 1986 this system consisted of 7,769 kilometers of

rail lines, of which 1,128 kilometers were double tracked. Diesel

and electric locomotives have replaced steam engines, and the length

of electrified track almost tripled between 1970 and 1986, reaching about 25 percent of the system. The country's two rail-transport

enterprises employed about 134,000 workers in 1986. The railroads

carried about 119 million tons of freight in 1986, about 20 percent

of which were coal and other fuels; they also carried 232,920 passengers. The system improved its fuel consumption per ton- kilometer from 1,235 kilojoules in 1970 to 322 in 1986.

In the late 1980s, Hungary's 140,163 kilometers of roadway,

21 percent of which were paved with asphalt or concrete, carried a greater volume of freight than the railroad. The country's sixtysix truck and bus fleets carried 4.5 million passengers and 572 million tons of goods in 1986 and employed 122,000 workers. In 1986

the nation's truck and bus fleets totaled 163,151 and 25,920 trucks

and buses, respectively, more than double their size in 1970; pas- senger automobiles numbered 1,538,900, including 1,500,800 pri- vate automobiles. Hungary has modernized its road system since

1950, but the roads were still inadequate to handle the country's

increasing number of private automobiles and heavier domestic

and international truck traffic. The Danube formed the largest part of Hungary's 1,622 kilo- meters of navigable waterway. The principal port was Budapest's

Csepel free port. Dunauvaros was also an important port. In 1986

Hungary's fleet included 52 passenger boats, 41 tugboats, 236

barges, and 15 seagoing ships. The river transport system carried

3.4 million tons of cargo and 4. 1 million passengers, most of whom

were tourists. The national airline, MALEV, flew twenty-four aircraft on forty- one international routes in 1986, carrying 1.2 million passengers

and 16,372 tons of cargo. Hungary discontinued domestic air trans- port in 1969. Several major Western airlines flew into Budapest's

Ferihegy Airport, which in 1986 recorded 18,025 takeoffs and

departures and served 2.3 million passengers.

A 5,604-kilometer pipeline network linked Hungary's main oil- and natural gas-producing centers with Budapest and other major

cities. The system transported 20.2 million tons of oil and natural

gas in 1986. In the mid- to late 1980s, Hungary annually received

about 1 .2 billion cubic meters of Soviet natural gas through the two

Friendship pipelines and an additional 4 billion cubic meters through

the Alliance pipeline. In 1986 Hungary and the Soviet Union began

146
Train station in Csopak

Courtesy Gustav Forster

negotiations on Hungary's participation in the construction of what was to be the longest natural gas pipeline in the world. Planners

projected completion by 1990.

In the late 1980s, Hungary continued to suffer from a severe shortage of telephone lines. In 1986 the country had 770,200 tele- phones, including 524,600 private telephones, which gave it about

145 telephones per 1,000 persons, an increase of 46 percent since

1975. Despite this increase, the average wait for the installation

of a telephone was about fifteen years. Telephone possession was

one of the clearest indicators of class distinctions in Hungary. A

1983 study showed that only 6 percent of Hungary's unskilled and

semiskilled workers had a telephone, while 40 percent of professionals had them. The telephone system did not have the capacity

to accommodate computer telecommunications. In the late 1980s,

Hungary had two television channels, and it issued more than 2.9

million television licenses in 1986. Licenses to purchase radios were

not required after 1980.

Private Sector

Small private enterprises have multiplied rapidly since 1982,

when the government eased legal restrictions. But in 1989, the

147
Hungary: A Country Study

private sector as a whole still made up only a small portion of the

economy. The government's tally of persons who reported private

economic activity as their primary occupation showed that the pri- vate sector accounted for only 5.1 percent of active earners in 1986.

The private sector did, however, account for 13.7 percent of the

active earners involved in construction, 16.5 percent of those in

transport, and 12.6 percent of those in personal- or economic-service

businesses. In 1986 Hungary had 150,664 private crafts people,

up from 86,303 in 1970 and 111,960 in 1981. Just under 52 per- cent of the crafts people plied their trade as their principal occupation, about 12 percent were pensioners, and 36 percent were employed full time in other fields. As officially defined, the private sector's contribution to net material product rose from only 2.6 percent in 1970 to 3.5 percent

in 1980 and 7 percent in 1986. Although the private sector's portion of industrial production only increased from 1 percent in 1970

to 1.8 percent in 1986, its share of the construction industry more

than doubled from 6.3 percent in 1970 to 14.5 percent in 1986.

The Third Economy

A semilegal or illegal "third economy" operated in Hungary

as it did in other communist countries. Activities in the third econ- omy included holding unofficial second jobs, moonlighting on

vacations and sick leave, performing outside work during work

hours, dealing in illegally imported or pilfered goods, lending money

at high rates, renting property illegally, evading taxes, and bribing or "tipping" doctors, lawyers, store clerks, and others. In a 1983 survey, 60 percent of hospital patients admitted they had paid

their doctors even though Hungary had free national health care. Many of those active in the third economy had become relatively

rich, and tension sometimes arose between the third economy's

"haves" and the law-abiding "have-nots." The press attributed

the third economy's existence to three main factors: shortages of

certain goods and services, an inflation rate that made supplementary income necessary, and the fact that many enterprises possessed

monopolies on certain goods and services.

Hungary's Economic Research Institute has estimated that in

the early 1980s Hungarians generated the equivalent of about US$2

billion per year in unreported income, which equaled about 20 to 25 percent of their total income and 16 percent of domestic net material product. The newly enacted personal-income and valueadded taxes were in part an attempt to tax unreported incomes,

and the government created a special office to investigate persons

who displayed expensive tastes but reported relatively low incomes

148
Bus station in Mezokdvesd

Courtesy Sam and Sarah Stulberg

(see Economic Regulators, this ch.). Many pro-reform economists

opposed measures to snuff out illegal economic activities, arguing

instead for liberalizing private-enterprise laws to include many

activities considered illegal.

Foreign Trade

Hungary can compensate for its paucity of natural resources only

by engaging in foreign trade, which, in the late 1980s, accounted

for about half the country's national income. After the Great Depression, commerce with Germany dominated Hungary's external trade,

and agricultural products accounted for most Hungarian exports.

After World War II, the communist government limited its eco- nomic contacts with the West, and the Soviet Union became the

country's principal trading partner. Hungary significantiy increased

trade with the West after the 1968 economic reforms when its econ- omy could no longer grow without imports of technology and raw

materials from the Western nations. It signed the General Agreement on Tariffs and Trade in 1973 and, in the midst of a balance

of payments crisis, joined the World Bank and the International

Monetary Fund (IMF—see Glossary) in 1982. Although in the late 1980s the Soviet Union remained Hungary's principal trading part- ner, almost half of Hungary's trade was with Western countries.

Production shortfalls had forced the Soviet Union to slow exports

149
Hungary: A Country Study

of oil and other key raw materials, forcing Hungary to strive to utilize raw materials more efficiently and increase exports to the West

to pay for additional raw-material imports. The need to boost effi- ciency and make Hungarian goods competitive on Western markets also prodded the government to undertake economic reforms. Ever-worsening terms of trade, increasing Western protectionism,

reduced access to foreign credit, interest-rate increases, and the

generally slow response of Hungarian enterprises to changing market conditions brought the country serious foreign-trade imbalances

after 1987. The net foreign hard currency debt more than doubled from US$7 billion in 1981 to US$15.5 billion in 1987, making its per capita foreign debt the highest among the communist

states. Hungary had to spend between 65 and 70 percent of its convertible- currency earnings to service its debt. Despite the fact that the economy did not meet the government's debt-reduction

target in 1987, analysts predicted that the convertible-currency debt

crisis would recede as a government austerity program began to take hold. The debt and current accounts deficit, which analysts

estimated to be US$1 .2 billion in 1987, prompted Hungary to con- clude a standby credit agreement with the IMF in 1988.

Organization of Foreign Trade

The government maintained a state monopoly on foreign trade

until 1988, when it began allowing all but a few production enterprises to participate in foreign trade. In 1989 the country's

once-powerful foreign-trade enterprises still existed, but they held

exclusive trading rights on only a narrow range of goods. The

Ministry of Trade's chief control instrument on foreign trade was

the licensing of imports and exports, which the ministry could use

to avoid balance of trade and balance of payments disequilibria.

For example, the ministry could deny an enterprise a license to export a product to the Comecon market in order to encourage

its export to the convertible- currency market. The ministry issued

import licenses according to a list of priority items. Highest-priority

goods were those necessary to maintain current production, including raw materials, semifinished goods, and spare parts. Second priority went to capital goods and machinery that could quickly boost

hard-currency exports. Basic consumer goods and nonessential and

luxury items constituted the two lowest categories. The government enacted austerity measures in 1 988 that limited imports almost

exclusively to the most essential items.

Cooperation Agreements and Joint Ventures

In addition to engaging in direct foreign trade in the late 1980s, enterprises and foreign firms could enter into cooperation

150
The Economy

agreements or joint ventures that gave Hungary access to Western

technology and opened new markets. Cooperation agreements took

many forms, including the sale of a plant or production line with

partial payment to the seller made from products from the plant or line; the subcontracting of a domestic firm to manufacture

products; license agreements under which the foreign partner

provided technology to the Hungarian partner to produce a particular product; and production agreements under which the for- eign partner provided equipment, expertise, manufacturing

processes, and sometimes financing to the domestic enterprise and

then purchased all or part of the output. In the late 1980s, the

government levied a 40-percent tax on profits from cooperation

agreements. The 1988 foreign-trade law gave Hungarian enterprises greater freedom to conclude cooperation agreements. Western

companies tended to prefer cooperation agreements to joint ventures because cooperation agreements were more flexible and car- ried less risk. The closest cooperation between Hungarian and foreign firms

took place through joint ventures, which the government first legalized in 1972. In a joint venture, a foreign firm and a domestic enterprise each put up capital to establish a new company to produce goods or services. Hungarian law required that the Hungarian enterprise hold at least a 51 percent stake, except in such

areas as banking and services, in which the Ministry of Finance

could authorize the foreign owner to be the majority shareholder.

In 1985 a West German cosmetics firm became the first nonbanking Western firm to hold a 51 percent stake in a joint venture with

a Hungarian enterprise. The government levied a 20-percent profit tax on joint ventures and permitted the foreign partner to repatriate its share of the earnings in convertible currency. The Hungarian National Bank guaranteed the foreign partner's share of the

capital against state takeover subsequent to the agreement. When

a joint venture terminated, the foreign firm could repatriate its share

of the capital investment. Only three joint ventures were operating in 1977, and in an effort to entice more foreign partners the

government broadened the joint-venture law several times and

created customs-free zones in 1983. The number ofjoint ventures

rose to 35 in 1984 and to more than 100 in 1988. Most of Hungary's joint ventures involved companies from West Germany, Austria, Switzerland, the United States, and Sweden.

Hungarian enterprises frequently requested foreign partners in

joint ventures or cooperation agreements to take payment in kind

and then market the goods in the West. Analysts estimated that

these and other countertrade arrangements have made up a sizable

share of Hungary's trade with the West since the early 1970s, but

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Hungary: A Country Study

exact figures were unavailable in mid- 1989. The frequency and size of requests for countertrade increased after Hungary began austerity measures to reduce its foreign debt and trade deficit in 1988.

Trade Volume and Structure

Total trade turnover, at 1986 prices, rose from US$13.4 billion

in 1981 to US$18.8 billion in 1986. Hungary's exports increased

from US$6.5 billion to US$9.2 billion in the same period, while

its imports increased from US$6.9 billion to US$9.6 billion. The principal imports were crude oil, coal, iron ore, copper, raw

materials for the plastics industry, chemical fibers, artificial fertilizers, paper, cotton, animal feed, and capital and consumer goods.

Raw materials, semifinished goods, and spare parts accounted for

44.8 percent of imports in 1986. Energy imports increased from

6 percent of total imports in 1970 to 19.4 percent in 1986 (see

table 11, Appendix).

Hungary's main exports included agricultural products, pharmaceuticals, bauxite, machine tools, buses, telecommunications and

electronic equipment, lighting equipment, industrial rubber goods,

ball bearings, rolled steel and aluminum, clothing, and footwear.

In 1986 raw materials, semifinished goods, and spare parts ac- counted for 30.2 percent of exports. Exports of machinery, trans- port equipment, and capital goods increased from 16.7 percent of

total exports in 1970 to 30 percent in 1986. Likewise, agricultural

exports rose from 7.4 percent of total exports in 1970 to 20.1 per- cent in 1986. Grain exports increased from an average of about

1 million tons a year from 1976-80 to nearly 2.2 million tons in

1986. Meat exports also rose, from an average of 285,000 tons a year from 1976-80 to 421,000 tons in 1986 (see table 12, Appendix).

Tourism enhanced Hungary's hard-currency balance sheet. The

number of foreign tourists visiting Hungary rose from 4 million

in 1984 to 10.6 million in 1986, including 2 million from noncommunist countries. Tourist spending netted Hungary about US$371

million in 1986. Most visitors came from Czechoslovakia, Poland,

Austria, and Yugoslavia; approximately 117,000 Americans visit- ed the country in 1985. About 6.3 million Hungarians traveled

abroad in 1986, mostly in Eastern Europe. In 1988 the government further eased restrictions on its citizens' foreign travel. Trade Partners

Hungary's foreign trade was about evenly split between the

Comecon countries and the West. Trade with the Comecon market

accounted for 53.1 percent of its trade turnover in 1986, an in- crease from 49.3 percent in 1980. Total trade turnover with the

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The Economy

Comecon countries, measured at 1986 prices, increased from about

US$6.8 billion in 1981 to US$10 billion in 1986. Exports to the

Comecon countries increased from US$3.6 billion to US$5.1 bil- lion in the same period, while its imports from those countries rose from US$3.3 billion to US$4.9 billion. In 1986 more than 90 percent of the country's energy imports,

42.5 percent of its raw- and basic-materials imports, and more than

60 percent of its capital- goods imports came from the Comecon

countries. In addition, 48 percent of exports of raw-materials and

semifinished goods, 84.3 percent of its machinery and capital-goods

exports, and more than half of the exports of industrial consumer

goods and agricultural products went to the Comecon market.

In the late 1980s, the Soviet Union, plus three other Comecon

countries—the German Democratic Republic (East Germany),

Czechoslovakia, and Poland—made up four of Hungary's six most

important trading partners. The Soviet Union was Hungary's main

trading partner, accounting for more than 30 percent of Hungary's overall trade and 60 percent of its trade with the Comecon

countries (see table 13, Appendix). Raw materials and energy dominated the structure of Soviet-Hungarian trade. Under the SovietHungarian trade agreement for the Seventh Five-Year Plan (1986-

90), Hungary agreed to export foodstuffs, computers, telecommunications equipment, buses, and other finished goods to the Soviet

Union. In turn, Hungary imported mining equipment, heavy

machinery, some consumer goods, and even larger amounts of

Soviet raw materials and energy than it did in the preceding plan.

East Germany, Hungary's third largest trading partner, Czechoslovakia, and Poland accounted for about 16.5 percent of Hungary's overall trade and 31.1 percent of its trade with the Comecon

countries.

About half of Hungary's trade was with Western countries. Trade

turnover with the Western world was US$7.9 billion in 1986; imports totaled US$4.2 billion, and exports amounted to US$3.7

billion. In June 1988, Hungary and the European Economic Community (EEC) signed a ten-year trade agreement, the first of its kind

between the EEC and a Comecon country. The agreement provided

for a reduction of quotas on about 2,000 items by 1995. Hungarian officials estimated that the trade would boost Hungary's hardcurrency exports from US$25 million to US$50 million by 1995. In 1987 the EEC countries accounted for 24.4 percent of Hungary's

imports and 19.9 percent of its exports. Hungary accumulated a US$5 billion trade deficit with the EEC countries between 1979

and 1986.

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Hungary: A Country Study

West Germany was Hungary's largest Western trading partner

and second largest trading partner overall. Raw materials and semifinished goods made up about 65 percent of the US$1.2 billion

of goods that Hungary imported from West Germany in 1986;

machinery and equipment made up about another 20 percent.

Hungary's exports to West Germany totaled US$771 million and

included foodstuffs, live animals, machinery, chemical products,

textiles, clothing, pharmaceuticals, and aluminum products. As of

1987, West German banks had furnished Hungary with more than

US$16 billion in loans; in the same year, the West German government guaranteed a twelve-year credit for Hungary, marking the

first time that the Hungarian government has accepted credits

backed by a foreign government. In addition, Hungary and West

Germany concluded an investment protection agreement in 1986

under which the Bonn government, based on Hungarian assur- ances, guaranteed that West German firms with investments in

Hungary would be able to repatriate their profits and not be subject to nationalization of their assets. In 1987 West German firms

had about 330 cooperation agreements with Hungarian firms; more

than half were in engineering and machine industries. Siemens,

Krupp, Telefunken, Volkswagen, and smaller West German firms were involved in about thirty joint ventures with Hungarian enterprises (see Relations with the West, ch. 4). Austria was Hungary's second largest Western trading partner.

In 1987 Hungary imported Austrian goods worth US$574 million

and exported US$594 million in goods to Austria. In 1987 Austrian and Hungarian firms were engaged in 120 cooperation agree- ments and fourteen joint ventures. Hungary and the United States signed their first trade agreement in 1978, and Hungarian goods bound for American ports

enjoyed most-favored-nation status. In 1988 ten United States- Hungarian joint ventures operated in Hungary, but, excluding Citi- bank Budapest's holdings, the total of United States capital invested

in Hungary stood at a mere US$58 million. In 1987 bilateral United

States-Hungarian trade reached its highest mark ever at more than

US$500 million. Exports to the United States, however, accounted

for only 2.3 percent of Hungary's exports in 1986, and imports

barely exceeded 2 percent of Hungary's total imports.

Trade relations with Japan were growing as Hungary sought

Japanese capital and technology and hoped to gain a share of the

Japanese market as that country opened its doors to foreign trade.

Hungary imported US$142 million worth ofJapanese goods in 1986

while exporting only US$42.4 million in goods. Basic materials and

semifinished goods accounted for more than half of Hungary's

154
The Economy

Japanese imports; machinery and consumer goods accounted for 27 percent and 19 percent, respectively. More than 65 percent of

Hungary's exports to Japan were basic materials and semifinished

products, including pharmaceuticals, aluminum, and chemical

products; foodstuffs accounted for another 16 percent. In addition,

Hungary and Japan formed their first joint venture in 1984 to produce polyethylene sheets for insulation.

Hungary's trade with developing countries totaled about US$1 .4 billion in 1986 and represented a 7.3 percent share of its total trade,

down from 9.5 percent in 1980. Exports to the developing world

consisted of machinery, vehicles, industrial consumer goods, and

agricultural goods. Hungary imported from the developing countries tropical foods and other agricultural products, petroleum oil, clothing, carpets, electrical appliances, and steel products. In 1985

Hungary joined the International Finance Corporation and the In- ternational Development Association, both of which are World Bank

affiliates. Finally, trade with China rose dramatically from about US$1 12.7

million in 1984 to US$343.9 million in 1986. However, China ac- counted for less than 2 percent of Hungary's trade in 1986.

Domestic Consumption

Hungary's domestic trade sector differed significantly from the

cumbersome rationing system that existed in most centrally planned

economies. And since Hungary began implementing economic re- forms, the production sectors of the economy funneled through the

trade sector a far better supply and variety of goods and services

than Hungarians had enjoyed earlier. By the late 1980s, Hungary's

economy had largely overcome the supply shortages that tormented

both producers and consumers in countries with command economies. Still, many Hungarians lived at or below the officially recognized poverty level (see Social Relations in the 1980s, ch. 2). Domestic Trade Sector

The domestic trade sector consisted of state- and cooperativeowned wholesale and retail enterprises and privately owned stores and restaurants. The Ministry of Trade oversaw the state-owned

trade enterprises, and all state and cooperative commercial enterprises could engage in both wholesale and retail trade. Private merchants were not required to purchase goods from the wholesale

dealers, but they were barred from functioning as wholesalers themselves. In 1986 Hungary had 17,222 state retail stores, 20,163

cooperative ones, and 22,230 private ones. Private contractors

155
Hungary: A Country Study

managed about 12 percent of the total number of state and

cooperative-owned shops. About 75 percent of the 445,000 people

working in the trade sector were women. Wages in the sector were

10 percent lower than the national average, which may account

for the fact that the sector had high employee turnover. In 1985

Hungary had 102 shops that sold imported goods for foreign cur- rency with annual sales topping US$20 million.

The largest retail trade enterprise in Hungary was the SkalaCoop chain, which several cooperative associations founded in 1974.

Skala-Coop began purchasing goods directly from manufacturers

and used modern marketing techniques, flashy advertising, an

aggressive expansion policy, and consumer credit to capture about

13 percent of the country's entire trade by 1986. The chain also

became the first large trade enterprise to gain direct foreign-trade

rights.

Standard of Living

In 1989 the supply and selection of food and other consumer

goods in Hungary exceeded those in most other East European

countries, and Hungarians as a whole suffered nothing similar to the hardship that the Romanians and Bulgarians endured in the

1980s as a result of government-ordered energy cutbacks. In 1986

Hungary's per capita meat consumption was the highest in Eastern

Europe, while its egg consumption ranked among the highest.

Per capita consumption of meat, fish, milk and dairy products,

eggs, vegetables, potatoes, coffee, wine, beer, and hard liquor all increased significantly between 1950 and 1984. In 1960 the majority

of households had both a bicycle and a radio, 20 percent owned

a washing machine, and a few even possessed a television, a refrigerator, or an automobile. By 1984, 96 out of 100 households owned

a washing machine, every household owned a refrigerator, and the

ratio of television sets to households was 108 to 100. The quality

and variety of durable consumer goods on sale had also improved.

As in other societies, purchase of luxury items was the prerogative

of higher-income groups. For example, in the late 1980s automobiles were owned mostly by upper- and middle-income households.

As of 1984, only 34 out of 100 households owned an automobile.

In 1986 the total disposable income of all Hungarians was the

equivalent of US$17.2 billion. Hungarians spent 88 percent of that

income, saved 6.2 percent, and invested 5.8 percent in building

their own housing. Foodstuffs accounted for 27.1 percent of personal spending; services, 26.6 percent; beverages and tobacco, 14.6

percent; other consumer goods, 11.6 percent; clothing, 8.2 percent;

156
Vdci utca, main shopping district, Budapest

Courtesy Scott Edelman

durable goods, 7.9 percent; and heating and energy, 4 percent.

The state paid the cost of medical and other social services (see

Health, ch. 2). Official Hungarian sources reported that the average per capita

monthly wage was 6,000 forints in 1988, about 14 percent above

the officially recognized poverty level of 5,200 forints (US$84).

Economists estimated that between 25 and 40 percent of the people lived below the poverty level. Economic Policy and Performance, 1945-85

After 1949 Hungary's communist government under Matyas

Rakosi applied the Soviet model for economic development (see

Postwar Hungary, ch. 1). The government used coercion and brutality to collectivize agriculture, and it squeezed profits from the

country's farms to finance rapid expansion of heavy industry, which

attracted more than 90 percent of total industrial investment. At

first Hungary concentrated on producing primarily the same as- sortment of goods it had produced before the war, including locomotives and railroad cars. Despite its poor resource base and its favorable opportunities to specialize in other forms of production,

Hungary developed new heavy industry in order to bolster further

157
Hungary: A Country Study

domestic growth and produce exports to pay for raw-material

imports (see table 14, Appendix). The Soviet Union became Hungary's principal trade partner, supplying crude oil, iron ore, and

much of the capital for Hungary's iron and steel industry. Heavy

Soviet demand also led Hungary to develop shipbuilding and textile industries. Trade with the West declined considerably. Soviet

pressure, a Western trade embargo, and Hungarian policies favoring domestic and regional autarky combined to reduce the flow

of goods between Hungary and the West to a trickle during the

Cold War period.

Rakosi's regime also established wage controls and a two-tier

price system made up of producer and consumer prices, which the

government controlled separately. In the early 1950s, the authorities used these new controls to limit domestic demand and cut rela- tive labor costs by tripling consumer prices and holding back wages.

Popular dissatisfaction mounted as the economy suffered from

material shortages, export difficulties, and mounting foreign debt.

Agricultural growth also stagnated, and the area of cultivated land

actually decreased.

During the thaw after Soviet dictator Joseph Stalin died in 1953,

Imre Nagy became Hungary's prime minister and, following the

Soviet example, implemented an economic policy known as the

New Course. Nagy's administration halted the collectivization

drive, allowed farmers to leave collective farms, abolished compulsory production quotas, raised procurement prices for farm

products, and increased investment in agriculture. Nagy also shifted

investment from heavy industry to consumer-goods production.

The economic system itself, however, remained unchanged, and

plan fulfillment actually worsened after 1953.

Hard-line party members soon undermined Nagy, and Rakosi

regained control in 1955. The collectivization drive began anew,

and the government redirected investment back to heavy industry

before the cataclysmic Revolution of 1956 brought the country's

economy to a standstill. According to official statistics, the econ- omy registered an 11-percent negative growth in 1956. After the

revolution, Janos Kadar and others in the new leadership understood that they had to gear their economic policies toward improving

the population's living standard, and they recognized that practical considerations had to temper their commitment to the tenets of Marxism-Leninism as defined by the Soviet Union. From 1957

to 1960, consumption grew more rapidly than national income as the government tried to assuage popular discontent. Per capita real income was 54 percent higher in 1960 than it had been in 1950.

In 1959 the Kadar government began a second major collectivi- zation drive. Instead of using coercion, however, the government

158
Shops in Zalaegerszeg

Courtesy John Tarafas

offered peasants incentives to join cooperative or collective farms.

The campaign ended in 1962 after more than 95 percent of agricultural land had come under the socialist sector's control. During

the 1960s and 1970s, the Hungarian government made significant

investments in agriculture and raised farm prices in an effort to make the sector viable. Agricultural mechanization also expanded

by 50 percent.

During the 1960s, the government gave high priority to expanding the industrial sector's engineering and chemical branches.

Production of buses, machine tools, precision instruments, and

telecommunications equipment received the most attention in the

engineering sector. The chemical sector focused on artificial- fertilizer, plastic, and synthetic-fiber production. The Hungarian

and Comecon markets were the government's primary targets, and

the policies resulted in increased imports of energy, raw materials,

and semifinished goods.

By the mid-1960s, the government realized that the policy for

industrial expansion it had followed since 1949 was no longer viable. Although the economy was growing steadily and the population's living standard was improving, key factors limited further

growth. Returns from mining were diminishing, and Hungary had

159
Hungary: A Country Study

exhausted previously untapped manpower reserves. The government recognized that the efficiency of Hungary's industries lagged

well behind that of Western industries and that its communication and transportation infrastructures were so inadequate that they

retarded further economic growth. The Comecon countries were

unable to supply Hungary with sufficient energy, raw materials,

and technology to achieve further growth, and Hungary's leaders

realized that the country would have to seek these critical inputs

from the West. The government introduced the NEM in 1968 in

order to improve enterprise efficiency and make its goods more

competitive on world markets.

From 1968 to 1972, the NEM and a favorable economic environment contributed to good economic performance. The economy

grew steadily, neither unemployment nor inflation was apparent;

and the country's convertible-currency balance of payments was

in equilibrium as exports to Western markets grew more rapidly

than its imports. Cooperative farms and factories rapidly increased

production of goods and services that were lacking before the re- form. By about 1970, Hungary had reached the status of a mediumdeveloped country. Its industry was producing 40 to 50 percent

of the gross domestic product, while agriculture was contributing

less than 20 percent.

In 1973 and 1974, in the midst of the Fourth Five-Year Plan

(1971-75) world oil prices skyrocketed. Hungary's terms of trade,

that is, the ratio of the prices Hungary received for its exports to the prices it had to pay for its imports, deteriorated considerably.

The leadership responded to the new conditions with several major

policy errors, which reversed the changes that had taken place under

NEM. First, policy makers assumed world oil prices would soon

return to earlier levels and concluded that the economy could be

shielded from the capitalist world's crisis. The government did this shielding by subsidizing enterprises hard hit by rising energy costs and taxing the profits of enterprises that benefited from the high

world prices. Second, the authorities chose to accelerate economic

growth to deal with Hungary's deteriorating terms of trade. The

Fifth Five-Year Plan (1976-80) emphasized industrial expansion

and modernization and provided for a significant increase in investment. The share of gross investment in the gross domestic product

climbed from 34 percent in 1970 to 41 percent in 1978. Third, the

government used pre- 1974 price and demand figures to justify

launching major projects that the economy at that time could not

carry out efficiently. Finally, planners earmarked significant investment resources to increase the country's capacity to produce energy,

basic materials, and simple semifinished goods in order to meet

160
The Economy

domestic demand and increase exports to the Comecon markets.

However, Hungary's investments did not spawn a modern manufacturing capacity, which is the kind of industrial capacity needed

to produce output for sale on the convertible-currency market.

Decision makers discovered to their chagrin that they could not

protect the economy from the world price increases. Because the

economy depended on energy and raw-material imports, accelerated economic growth required increased imports of raw materials and energy that Hungary could not obtain from the Comecon

countries. Thus, Hungary had to turn to the convertible-currency

market to obtain a greater proportion of its inputs. In the 1970s,

Hungary's spending on consumption and investment outstripped

what its economy produced by an annual average of 2.2 percent;

in 1978 alone it spent 5 percent more. The export earnings did

not cover the cost of imports, convertible-currency trade deficits quickly piled up, and the government used foreign credits to finance

the deficits. In addition, the government's efforts to shield the country's enterprises from Western price increases backfired as Hungary's structure of production and investment never adjusted to world demand. Antireform politicians and managers of large enterprises won partial reinstatement of the command economy by

the mid-1970s. This recentralization exacerbated Hungary's eco- nomic woes by further isolating Hungary's enterprises from market forces and prompting managers to show inadequate concern

for efficiency, waste, and the competitiveness of their products on

world markets.

Hungary's economic policy makers realized by 1978 that if the

economy continued to run trade deficits, the country would soon be unable to honor its debt obligations. In 1978 the HSWP decided to revive the NEM. A year later, the government implemented a stabilization program aimed at, among other things,

redirecting the economy away from heavy industry, improving the

convertible-currency trade balance, and shrinking the country's

foreign debt. The program's architects planned to maintain cur- rent levels of material consumption for several years in order to maximize convertible-currency exports; at the same time, they

planned to cut spending by reducing investment.

New external shock waves rocked the economy in the late 1970s,

further eroding Hungary's terms of trade and undercutting the

country's creditworthiness despite the reduction in investment. Oil

prices rose dramatically and precipitated a world recession. Soon

interest rates rose, and Western banks reduced the flow of credits

to the East European countries in 1982 as a result of Poland's debt

161
Hungary: A Country Study

moratorium, Romania's insolvency, and the economic sanctions

levied by the United States against Poland after the declaration

of martial law in December 1981. The interest-rate increases helped

to increase Hungary's hard-currency debt (see table 15, Appendix). Before the rates rose, Hungary relied heavily on floating-rate,

short-term loans whose maturities were poorly staggered. In 1981

more than 80 percent of Hungary's US$8.7 billion convertiblecurrency debt was due within five years, and debt-servicing costs consumed about 33 percent of Hungary's convertible-currency

earnings. In 1982 a liquidity crisis in Hungary shook the confidence of Western bankers, and for several months the country was

unable to negotiate new credits from the West.

Eager to avoid debt rescheduling, Hungary joined the IMF and

the World Bank in 1982 and received from them about US$2 bil- lion in loans. In addition, Hungary introduced a stricter stabilization program and obtained bridge financing from the Bank for International Settlements. The leadership also renewed its support

for economic reforms, which creditors viewed as a positive step

toward more efficient use of resources and improvement of the country' s balance of payments.

Under the new stabilization program, spending on investment

and consumption, which had outstripped the amount the economy

had produced by 6.9 percent from 1974 to 1978, fell to 1 percent

less than production from 1979 to 1983. By 1985 Hungary had

slashed its investment spending to about US$5.2 billion, 21.8 percent less than in 1981. The government also increased prices steeply.

Hungary's Sixth Five-Year Plan (1981-85) called for greater austerity, efficiency, and profitability, and it forecast growth of 14 per- cent to 17 percent over the previous plan period. The economy,

however, grew by only 7 percent. Industrial production rose only

12 percent, far below the planned growth of 19 to 22 percent.

Agricultural output rose 12 percent over the previous plan period,

while the Hungarians' real per capita income increased 7 to 8 percent. Planners targeted exports to increase by 37 to 39 percent and

imports by 18 to 19 percent; exports, however, rose only 27 percent, while imports increased merely 6 percent.

The Seventh Five-Year Plan, 1986-90

In the Seventh Five-Year Plan period (1986-90), the leadership

expected the economy to supply consumers with a greater assort- ment of foodstuffs, to improve the country's balance of payments

by raising exports, and to increase productivity and profitability.

Planners called for the net material product to grow by 15 to 17

percent over the 1985 level. The plan also called for industrial

162
The Economy

production to rise by 14 to 16 percent over the 1981-85 plan period;

agricultural output to rise 7 to 10 percent; domestic consumption,

13 to 16 percent; real per capita income, 9 to 1 1 percent; and both

imports and exports, 16 to 18 percent.

In 1986 Hungary's national income grew by only 0.5 percent,

far short of the planned 2.3 to 2.7 percent. Both industrial production, which rose 1.8 percent, and agricultural production, which

increased 1 percent, were far short of planned levels. At the same

time, domestic consumption jumped 3 percent, consumer prices

increased 5.3 percent, and per capita real income rose 0.7 percent.

Investment grew by 5.1 percent, the maximum envisaged in the

plan. Compared with the previous year, Hungary's imports in 1986

rose by 2.5 percent, while exports fell by 2 percent. In 1987 national income grew as planned by about 2 percent.

Industrial production rose by 3.7 percent, higher than the planned

2 to 2.5 percent, but bad weather caused agricultural output to

fall far short of the 1986-90 plan target. In 1987 investment grew

by 6 percent, approximately six times the planned amount, while

per capita income remained at the 1986 level. The government in- creased prices on energy and foodstuffs sharply in 1987 and in- creased prices on 53 percent of the items sold in the country in

January 1988. The consumer price index for the first eight months

of 1988 was 16 percent higher than for the same period in 1987,

while the official inflation rate was 17.7 percent. The government

also devalued the forint an average of 13 percent against Western

currencies in 1987.

Hungary has enjoyed favorable treatment from international capital markets despite disappointing growth and continued deterioration in external accounts. At least one author has pointed out

that Western banks have shown the greatest confidence in countries such as Hungary that have good debt- servicing records, regardless of the countries' economic problems. In the latter half of the

1980s, Japanese banks increased their loan portfolio and sought

to make low-risk loans to East European countries, particularly

Hungary. Hungary took on loans to restructure its industry, renovate power stations, implement its energy rationalization program,

upgrade its telecommunications system, and finance foreign trade.

The current value of Hungarian exports declined between 1984

and 1986, and the country ran a US$548 million trade deficit in

1986 followed by a US$390 million deficit in 1987. As a result of a deteriorating convertible-currency current account, Hungary's

debt more than doubled in two years from US$8.6 billion in 1985

to US$18 billion in December 1987, and the country's ratio of debt

to convertible-currency exports reached 338 percent by 1986. In

163
Hungary: A Country Study

May 1988, the government signed a US$350 million standby credit

agreement with the IMF and announced strict austerity measures.

In the first nine months of 1988, Hungary's convertible-currency

trade netted a US$200 million surplus, rebounding from the

US$470 million deficit it showed in the same period in 1987. The

surplus marked the first time since 1981 that Hungary's foreign

trade with developed countries was balanced.

In 1989 the government sought to achieve large trade surpluses

with convertible-currency markets that would enable the country

to repay its foreign debt and import raw materials and technology.

Hungary could create those surpluses only by importing more raw

materials or using existing resources more efficiently. Hungary's

major supplier, the Soviet Union, was experiencing shortfalls in

oil and other raw-materials production that were forcing it to slow

and even reduce exports. Thus, Hungary again was forced to turn

to convertible-currency markets to secure additional raw materials.

Because neither Hungary nor the Comecon countries generally had

the technology and know-how that were necessary to improve effi- ciency and increase the output of products marketable in the West,

Hungary also had to turn to the West for technology. The leadership understood that realizing the benefits of economic relations

with the West required significant further improvement of the eco- nomic system. At the Thirteenth Party Congress in March 1985,

the leadership reaffirmed its commitment to continue economic re- forms that promised to improve efficiency and enhance the competitiveness of Hungary's exports. In the last years of the Kadar

era, the government had enacted many such reform measures, but

the implementation and enforcement of these measures were uneven. With the emergence of a new leadership under Karoly Grosz

in 1988, Hungary appeared poised to enact and implement more

dramatic reforms, including political changes, that could radically

alter the country's economic life in the 1990s.

Hungary's economic reforms proceeded so rapidly in the 1980s

that works on the country's economic system have become out- dated shortly after appearing in print. The most comprehensive description of Hungary's economic reforms available is Paul

Marer's "Economic Reform in Hungary" in East European Economies: Slow Growth in the 1980s, a publication of the United States Congress. Marer's East-West Technology Transfer: Study of Hungary

also examines Hungary's economic reforms and provides detailed

analyses of Hungary's major economic sectors and its trade with

164
The Economy

the Comecon countries and the West. Janos Kornai's article "The

Hungarian Reform Process: Visions, Hopes, and Reality" provides a sober assessment of the reforms by a leading Hungarian

economist. Also interesting are Paul Hare's "Industrial Development of Hungary since World War II" and "The Beginnings of

Institutional Reform in Hungary." (For further information and

complete citations, see Bibliography.)

165

Chapter 4. Government and Politics

V
A small-town judge, 1916
THE POLITICAL SYSTEM of the Hungarian People's Republic, like others in Eastern Europe, drew heavily upon a model first established in the Soviet Union. The leading political institution

in the state was the ruling communist party, in this case the Hungarian Socialist Workers' Party. This monolithic, centralized party

determined the basic economic, political, and social policies for the

country as a whole, and the government implemented the party's

decisions.

The Constitution, ratified in 1949 and amended considerably

in 1972, grants political and economic rights to the people,

prescribes civic duties, and establishes the institutions of government. According to the Constitution, the National Assembly (the

parliament) holds supreme authority in the state. In fact, the

Presidential Council, a standing body of the National Assembly

that combined legislative and executive functions, assumed most

of the duties of the National Assembly and those of a chief of state. The National Assembly, however, did provide a vehicle for ex- panded political participation. A 1983 amendment to the Constitution mandated multicandidate elections for most seats in the

National Assembly. The Council of Ministers—the executive arm

of the government—had primary responsibility for the economy.

Within the party, the rank-and-file members had virtually no in- fluence over decision making. The permanent party bureaucracy,

headed by the Politburo and administered by the Secretariat, ex- ercised supreme power within the party. These organs made policy for the party, enforced discipline, and regulated admissions.

Middle-level organs managed policy on the county and district

levels. Basic Organizations—on the lowest rung of the party

hierarchy—carried out party activities in economic enterprises. The

Patriotic People's Front served under the auspices of the party;

this mass organization involved the citizenry in carrying out decisions made by the party. The mass media also served as instruments to generate popular support for the party's policies.

In May 1988, Karoly Grosz succeeded Janos Kadar as general

secretary of the party. Kadar had been leader of the party since

the Soviet invasion of 1956. Mounting economic problems and

general dissatisfaction with the pace of political reform led to the ouster of Kadar at the party's Third Party Conference.

Hungary's foreign policy positions generally coincided with those

of the Soviet Union. Since 1986 these countries have supported

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Hungary: A Country Study

each other's reform efforts. Nevertheless, Hungary displeased the

Soviet Union with its efforts to establish an independent role for small- and medium-sized states in international affairs and to obtain Western economic assistance to help modernize its economy.

Discord also emerged between Hungary and Romania—ostensibly

another fraternal ally—over the latter 's oppression of its Hungarian minority.

Constitutional Development

The theoretical foundations of Marxist-Leninist constitutions

differ from those underlying Western, democratic constitutions.

The latter are fundamentally prescriptive: they define a set of political relations between government and people that ought to exist. By contrast, Marxist-Leninist constitutions attempt to reflect reality

by describing an existing set of political relationships. As these political relationships evolve over time, the regime alters the constitution to reflect these changes. The Hungarian Constitution serves several political purposes. It attempts to mobilize the populace in

support of the regime's goals. The Preamble of the Constitution

formally calls upon the people to promote the construction of so- cialism and communism. In addition, the Constitution demands

that the most loyal sections of the population advance the regime's

goals through greater efforts and initiative. The Preamble also offers justifications for the regime's existence by describing the historical past that led to Marxist- Leninist rule. The Constitution does, however, bear some similarity to democratic constitutions. Like Western constitutions, the Hungarian Constitution establishes the rights and duties of the citizenry, although

it devotes more attention to the latter than democratic constitutions. In addition, the Constitution specifies the institutions of government

and the relations among them. It is, however, much more detailed

in this regard than most democratic constitutions.

The Constitutional Law Council, formed in 1983, had some

power to enforce observance of constitutional principles. The council, a fifteen-member body subordinate to the National Assembly,

monitored decrees, laws, and resolutions issued by government bodies to ensure their conformity with the Constitution.

Constitution of 1949

In June 1948, the Hungarian Workers' Party (on November 1, 1956, renamed the Hungarian Socialist Workers' Party—HSWP)

sought to legitimate the fundamental changes that had taken place

in the state, the economy, and the society and directed the government's Council of Ministers to begin work on a constitution. The

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Government and Politics

Council of Ministers formed a Drafting Committee, which submitted a proposed Constitution on August 5, 1949. The National

Assembly ratified the Constitution on August 20, 1949, thus making a new national holiday that coincided with the traditional holi- day of the feast of Saint Stephen.

The regime modeled its Constitution on the 1936 "Stalin" constitution of the Soviet Union. As of the late 1980s, its basic fea- tures remained in effect, although the regime added important

amendments in 1950, 1953, 1954, 1972 and 1983. The 1949 Constitution contained a sociopolitical program dictated by the Soviet

Union and listed the achievements of Hungary's "people's

democracy" (see Rakosi's Rule, ch. 1). The government, with its ministerial system, collective presidency, and powerless legislature,

resembled the Soviet system of the Stalinist period. The Constitution also created the local council system and new kinds ofjudicial

institutions, and it laid the groundwork for the country's system

of public prosecutors (see State Apparatus, this ch.). Only Chapter IX, which described the national flag and coat of arms, had

a specifically Hungarian character.

Amendments of 1972

To keep pace with the changes that had taken place in Hungary

since Kadar became first secretary of the HSWP in 1956, the re- gime changed every chapter of the Constitution in 1972. According to Hungarian political scientist Istvan Kovacs, the 1972

amendments "brought into harmony the wording of the Constitution and the socialist transformation of the country between 1 949

and 1972." Thus, the Constitution describes the achievements of

the Kadar regime. It also provides a constitutional basis for the

regime's efforts to gain the allegiance of all Hungarians by replacing the term workers, the only group that the 1949 Constitution entitled to full civil rights, with the term citizens. The changes in 1972

signaled a break with Hungary's Stalinist past and the beginning

of a new, more benevolent phase in regime-society relations.

The Constitution, as amended in 1972, plays several important

roles in Hungarian political life. Most important, the Constitution provides justifications for the emergence and development of

the regime itself, a,s well as for the political forces that shaped its character. The Preamble refers to the Marxist- Leninist regime as the product of more than 1 ,000 years of Hungarian history, thereby

linking it with Hungarian tradition. It also draws on the heritage

of the Hungarian Soviet Republic of 1919, thus attempting to cre- ate a socialist state tradition in Hungary and link itself to that tra- dition (see Political and Economic Life, 1905-19, ch. 1).

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Hungary: A Country Study

In justifying the regime, the Constitution attempts to establish

the legitimacy of the political system. The Constitution defines the

Hungarian People's Republic as a socialist state in which all power

belongs to the working people. It labels the Patriotic People's Front

(PPF) as a movement uniting all social groups for the resolution

of political, economic, and cultural problems. Chapter I, Article

15, establishes the orientation of Hungary's foreign policy by stat- ing that the country forms part of the world socialist system and

seeks to develop its friendship with other socialist states. Finally,

Chapter IX of the Constitution defines visual symbols for the Hungarian People's Republic by describing the coat of arms and the

flag of the state and by locating the country's capital in Budapest.

In establishing the country's political system, the Constitution

fixes the HSWP as the leading force in society. Although the Constitution does not formally proscribe other political parties, neither

does it provide for their existence. On November 10, 1988, however,

the Council of Ministers took the first in a series of steps required

to legalize the existence of other parties when it approved draft laws on the rights of assembly and association. The National Assembly

approved these new laws on January 11, 1989. According to the

new laws, county courts were to register these associations and could

not refuse to register them if they met the law's requirements. Thus,

private individuals, legal entities, and unofficial groups could set up political parties if their programs observed the law. A separate

statute was to deal with matters such as registration, supervision,

and dissolution of the parties. A new constitution, which was to be ready for ratification in 1990, would determine the role and status of political parties other than the HSWP in society. Taking advantage of this change in the political atmosphere, other political

parties, which had been disbanded in the late 1940s, began to re- emerge in the late 1980s. For example, the Independent Smallholders' Party announced it would resume its activities. The Social

Democratic Party and the National Peasant Party also began to reorganize (see Coalition Government and Communist Takeover,

ch. 1). Having provided several kinds ofjustifications for the regime's

existence, the Constitution proceeds to establish the institutions of

government. The Constitution delineates the powers of the National Assembly, the Presidential Council, the Council of Ministers,

and the local councils. The Constitution establishes a judicial

system made up of the Supreme Court and a series of lower courts. The Constitution requires the National Assembly to elect a prosecutor general, who in turn appoints prosecutors at local levels.

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Government and Politics

Like constitutions in the West, the Hungarian Constitution

describes civic and political rights. These rights include the guarantees of equality before the law and the personal freedom and in- violability of the citizenry; liberty of conscience and freedom of

worship; freedom of speech, press, and assembly; right of association; and privacy of correspondence and the home. In line with

the Marxist-Leninist ideology of the regime, the Constitution also guarantees certain social and economic rights, including the right

to leisure time; the right to financial support for old age, disease,

and disability; and the right to education.

The Constitution, however, limits citizens' exercise of their political rights. According to Chapter VII, Article 64, the Constitution guarantees the rights of speech, press, and assembly "in a manner conforming to the interests of socialism and the people."

This clause allows the government to ban any activities it considers

detrimental to its interests. Equally important, Chapter VII, Article 69, states that the "fundamental duty" of the citizenry is to "protect the property of the people, to consolidate social ownership, to increase the economic strength of the Hungarian People's

Republic ... to consolidate the order of society." Although in 1988

the United States Department of State found that Hungarians en- joyed relatively more liberties than their counterparts in other countries of Eastern Europe, duties to the state continued to take

precedence over rights contained in the Constitution. The regime

did not treat as inalienable the rights held by the people.

Furthermore, socioeconomic rights contained in the Constitution have acted not only as an economic safety net but also as a

source of oppression for the people. For example, the right to work

not only guaranteed employment but also allowed the regime to enforce compulsory employment for all adult males and all single

females because the regime could best exercise power over the

populace while they were at work. The right to leisure time allowed

the regime to control the forms of entertainment that citizens could

enjoy. And the right to primary and secondary education has meant

little more than the obligation to listen to regime- sponsored efforts at political indoctrination.

Constitutional Law Council

In 1989 the Constitutional Law Council had the power to monitor constitutional life in Hungary, note possible violations of the

Constitution, and initiate procedures to eliminate laws, decrees,

and regulations that failed to conform to the Constitution. The

National Assembly elected the fifteen members of the Constitutional Law Council, which included National Assembly delegates,

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Hungary: A Country Study

the minister of justice, the president of the Supreme Court, the

prosecutor general, and the chairman of the People's Control Committee (see State Apparatus, this ch.). The council was subordinate

to the National Assembly and, unlike the United States Supreme

Court, was not an independent body for judicial review.

In amending the Constitution to establish the Constitutional Law

Council in 1983, the regime responded to demands of the public

to promote the rule of law and to requests of constitutional lawyers to systematize laws, decrees, and regulations promulgated by

the ministries. The council used reports of violations from "reliable entities," which included government agencies, the National

Assembly, and the county and district councils. If the Constitutional Law Council found that a law, decree, or regulation violated the Constitution, the council mediated between the body that

lodged the complaint and the government organ that issued the

law, decree, or regulation. The council could suspend acts it deemed

unconstitutional, but it could not repeal them.

Individual citizens lacked direct access to the Constitutional Law

Council. In fact, only government organs in a position to violate

the Constitution—the National Assembly, the Presidential Council, the ministries, and the county and district councils—had the right to initiate inquiries by this body. If a person submitted a case to the Constitutional Law Council, the council referred that person

to the government organ best able to represent the case. However,

authorized organs represented only their own viewpoints, not those

of individuals. Furthermore, no religious body had access to the council; therefore, issues concerning church-state relations never appeared

for review. In effect, the Constitutional Law Council was answerable only to governing organs, not to the Hungarian people.

State Apparatus

The political system of Hungary bore some similarity to a parliamentary form of government. In principle, power in the

government emanated from the National Assembly, which elected

its own leadership—the Presidential Council and its chairman, who

served as chief of state—and the Council of Ministers, which formed

the government (see fig. 8). The state apparatus, however, was

not the center of political power in Hungary. The government merely executed policies designed by the HSWP. Within the government itself, power resided in the Council of Ministers and the

Presidential Council. The National Assembly merely ratified decisions made elsewhere.

Government life centered on the Council of Ministers. The re- gime established the Council of Ministers in the immediate postwar

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Government and Politics

period using the Soviet Council of Ministers as a model. The

primary function of the Council of Ministers was to administer the

economy. It also had the power to pass some legislation; the ministries could make laws in their own jurisdictions.

The Presidential Council—the collective chief of state—was modeled after the Soviet Union's Presidium of the Supreme Soviet.

The council, headed by its chairman, combined legislative and ex- ecutive functions. In fact, the Presidential Council passed most of

the country's legislation.

The HSWP effectively exercised control over the government.

In 1989 all members of the Council of Ministers and most members of the Presidential Council were party members and served on such party bodies as the Central Committee and the Politburo

(see Party Structure, this ch.). As party leaders, government offi- cials formulated economic, political, and social policies. These offi- cials were subject to the norms of democratic centralism, which

required them to carry out the directives of the HSWP or face party

discipline (see Democratic Centralism, this ch.). Equally important, the party exercised control over these governmental institu- tions through its power of nomenklatura (see Glossary), a list of party

and government positions for which the party had power to make

appointments. The HSWP's Basic Organizations ensured that the

staff of each ministry adhered to party policies on a day-to-day basis. In the 1980s, the regime opened up the political system to a greater

degree of popular participation. Although multicandidate elections

had been permitted since the late 1960s, a 1983 amendment to the

Constitution made mandatory the multicandidate elections for the

National Assembly and the local councils. However, these elections

took place under the auspices of the PPF, which guaranteed that

candidates accepted its program. A national list of candidates to the

National Assembly, who ran unopposed, did ensure the election of

party and government luminaries, as well as of other figures of national importance. Nevertheless, in the 1985 elections many independent candidates, who were not among the PPF's original slate of

nominees, succeeded in gaining seats in the National Assembly and

the local councils. Significantly, although the regime structured the

elections to favor its candidates, until mid- 1989 the Hungarian elec- toral system was the most democratic in Eastern Europe.

The local councils had very little power. Ironically, their chief

importance lay in administering those services, such as education,

housing, and food supply, that had the greatest impact on people's lives. Like other Marxist-Leninist regimes in the late 1980s, Hungary

lacked an independent judiciary. The Supreme Court, together with

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Hungary: A Country Study

176
Government and Politics

a system of lower courts at the county and district levels, had few

duties and little power. The prosecutor general and his subordinates

at the local levels represented the state in prosecuting persons ac- cused of a crime. However, the law also obligated these officials to protect the rights of the citizenry and ensure a fair trial for the

accused.

Council of Ministers

According to the Constitution, the Council of Ministers guided,

influenced, and controlled the entire construction of the economic,

political, and social system of socialism. The council had primary

authority over economic decision making; it developed and implemented the regime's economic plans. Beginning in 1968 with the

introduction of the New Economic Mechanism (NEM), an effort to relax central controls over the economy, the Council of Ministers

played a particularly critical role within the political system (see Economic Policy and Performance 1945-85, ch. 3). In 1989 the Council of Ministers consisted of a chairman (the

prime minister), two deputy prime ministers, twelve ministers, the

chairman of the National Planning Authority, the chairman of the

People's Control Committee, and the chairman of the State Planning Committee. The number of ministries has varied over time. In 1989 they included agriculture and food, culture and education,

defense, environmental protection and water management, finance,

foreign affairs, health and social affairs, industry, internal affairs,

justice, communications, construction, and trade. Other agencies

also operated under the auspices of the Council of Ministers and

in 1989 included the Central Statistical Office, the Hungarian National Bank, the National Price Office, the State Office for Church

Affairs, the State Office for Youth and Sports, the Postal Service,

and the State Wage and Labor Office.

Although the Council of Ministers devoted primary attention to the economy, according to the Constitution its first responsibility was to "safeguard and guarantee the political and social order of

the state and the rights of the citizens." In 1989 other duties in- cluded enforcing laws and decree-laws, supporting scientific and cul- tural development, establishing a system for social and health

services, and concluding and approving international agreements.

According to Chapter III, Article 34, of the Constitution, a special

act of the National Assembly may assign other duties to the Council of Ministers in addition to those described in the Constitution.

In 1989 ministers had no fixed term of office. Ministers served

at the behest of the National Assembly and could, upon recom- mendation of the party, be recalled at any time.

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Hungary: A Country Study

Hungarian political scientist Mihaly Bihari has argued that the

Council of Ministers and the ministerial system institutionalized

society's economic interests and their representation within the

government. The ministerial departments made the most important decisions on the economy because they had the requisite

knowledge at their disposal as a result of their day-to-day administration of issues under their jurisdiction. Although the National

Assembly and, most often, the Presidential Council issued laws,

regulations, and decrees, the ministries developed and selected the

suggested proposals. Bargaining among ministries and within the

Council of Ministers resolved policy differences on these proposals.

All interested ministries had the opportunity to modify these

proposals so that it was possible to discern the interests and politi- cal demands of the social groupings represented by each ministry.

The People's Control Committee functioned under the direction of the Council of Ministers. The committee supervised a hierarchy of similar committees at the local levels. The Presidential

Council appointed members of the People's Control Committee,

but volunteers staffed most of the positions at the local levels. The

committees oversaw the operations of government organs, social

organizations, and economic enterprises to ensure proper management and legality.

Presidential Council

In 1989 the Constitution described the Presidential Council as subordinate to the National Assembly and superordinate to the

Council of Ministers. However, the Presidential Council was in

fact the highest state organ and, because the National Assembly

met so infrequentiy, it acted as an ersatz parliament. In early 1989,

the chairman of the Presidential Council was Bruno F. Straub, at the time the only noncommunist chief of state in Eastern Europe.

The Presidential Council had combined legislative and executive powers. It set the date for elections to the National Assembly,

convened the National Assembly, initiated legislation, and decreed

national plebiscites. The Presidential Council also contributed to the normal functioning of state life by concluding and ratifying

treaties, receiving the credentials of foreign ambassadors, electing

professional judges, and conferring awards and titles. The Presidential Council supervised the local councils by setting the date for

council elections, ensuring the rights of the councils, and dissolving those councils that infringed on the Constitution. When the

National Assembly was not in session, the Presidential Council as- sumed the powers of a parliament. In fact, the Presidential Council performed most of the government's legislative work. (The

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Government and Politics

National Assembly usually approved the decree-laws of the Presidential Council at its next session.) In the event of war or threat

to the security of the state, the Presidential Council could establish a National Defense Council with extraordinary powers.

In addition to these legislative and executive duties, the members of the Presidential Council undertook a number of other tasks. They participated in the committee work of the National Assembly (see National Assembly, this ch.), held meetings with constituents, and handled complaints about the bureaucracy from the

citizenry. Members could represent Hungary abroad and hold

meetings with foreign delegations. They also visited county and

district governments and participated in awards ceremonies.

In 1989 the secretariat of the Presidential Council consisted of

a division for justice, which handled pardons for criminals; a divi- sion for civil proceedings; a division for law; and a division for honors and decorations. These divisions had their own organizational statutes. The secretariat lacked a permanent organizational structure because new divisions could be created according

to need.

In the late 1980s, the Presidential Council remained a rather

secretive body. The media did not publish its discussions and debates. The Presidential Council also did not announce its voting

procedures.

In 1989 the Presidential Council consisted of a chairman, two

deputy chairmen, a secretary, and seventeen members at large.

The National Assembly elected these members from among its own

delegates, although the Central Committee of the HSWP actually

made the choices. Both party members and nonparty members

could be selected for the Presidential Council—including its leadership positions—although party members generally predominated.

Three rules seemed to have governed the Central Committee's

selections: the council had to be a representative body mirroring

the occupational and social structure of the population, it had to contain a number of well-known people in public life, and it had

to include several party leaders. The Presidential Council thus was made up of party leaders, as well as representatives of social and

political groups, including national minorities, peasants, and

women. Church leaders who supported the regime also were

selected. A few members were nominated because of their policy

expertise in a given field. For example, because the secretary not

only supervised the secretariat of the council but also helped to determine its political line and handle its day-to-day affairs, that official usually had had previous experience in the personnel administration of the HSWP.

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Hungary: A Country Study

National Assembly

The Constitution designates the National Assembly as the

supreme organ of state power. In reality the parliament played a

limited role in the government. Until 1989, the 352-member

unicameral National Assembly met only three or four times a year

in sessions that lasted no longer than four days each. In addition

to electing the membership of state and government bodies nominally subordinate to it, the National Assembly also enacted laws

and approved the five-year economic plans. However, from 1980

through 1985 the National Assembly passed only eighteen bills, an insignificant number compared with those passed by the

Presidential Council and the Council of Ministers. In the late 1980s,

party leaders openly acknowledged that these two bodies made all the important decisions and that the National Assembly was merely

a rubber stamp.

Delegates to the National Assembly did play several important

roles. They contributed to the plenary discussions of the parliament, acted as members of the county groups, served their constituencies, and participated in the parliament's standing committees.

Plenary sessions chiefly concerned local problems and were an at- tempt to use the parliament's publicity to pressure authorities on

the distribution of funds. Delegates elected from each county formed

county groups to promote the interests of their region. Because most

counties had an urban-rural mix, formation of a common policy

outlook was difficult. However, inasmuch as Hungary had more

agricultural regions than industrial regions, agriculture enjoyed

predominance. As servants of their constituencies, delegates

reported on their activities in the National Assembly and attempted

to resolve citizens' complaints against the bureaucracy.

The most important duties of the delegates concerned their work

on the standing committees of the National Assembly. The National Assembly elected in 1985, in addition to legal, administrative, and judicial committees, had standing committees for

construction and transport, culture, industry, trade, foreign affairs,

agriculture, social and health affairs, infrastructural development

and environmental protection, and planning and budgeting. During

the 1980-85 convocation of the National Assembly, 221 out of the

352 delegates served on the standing committees, which met about

50 times a year. The committees discussed draft laws submitted

by the Council of Ministers, usually proposing only small changes

in the text. The committees did, however, have the power to reject the drafts at this stage. In the 1980s, the committees also actively

supervised the implementation of laws. A parliamentary presidency,

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Government and Politics

which consisted of the chairman and two deputy chairmen aided

by a small bureau, coordinated the work of the committees.

Elections to the National Assembly

In 1983 the government instituted a new electoral system for the

National Assembly and local councils to encourage more popular

participation in governmental affairs. Before 1966 Hungary had

used an electoral system in which a voter could vote only for or

against the official slate of candidates. In 1966 the government in- itiated election procedures that made the nomination of more than one candidate possible; in the 1971 elections, 49 districts out of

352 nominated two or more candidates. By 1981, however, the

number of multicandidate districts declined to fifteen, thus caus- ing concern within the party leadership and eventually triggering

reform.

In 1983 the regime instituted a new electoral system for several reasons. British authority Bill Lomax has written that Hungarian

leaders "felt sufficient confidence that by granting measured degrees

of independence and autonomy to society, they could win not just

the passivity but the complicity if not quite the loyalty of major

sections of the population." Through its multicandidate elections,

the regime attempted to convince the populace that the political

system was essentially democratic. The electoral system afforded

the government the opportunity to mobilize people in support of a political campaign and thereby increase their political awareness.

Finally, the elections provided an occasion for testing the HSWP's

organizational and supervisory abilities. The new rules compelled the nomination of several candidates

in single-member districts. Both residents of the district and workers employed in the district but living elsewhere could participate

in the nomination meetings. At the meetings, voters could ask questions of the candidates and comment on their programs with support or objections. The PPF organized the meetings and proposed

the candidates. Nominations could also be submitted by other social and political organizations or persons in the district. All candidates, however, had to accept the PPF program to be eligible for nomination. Thus the procedure favored regime candidates and

minimized the chances for independent candidates. For a candidate

to gain nomination, 33.3 percent of the persons present at the meeting had to cast a "yes" vote. If no candidate received the required

percentage, another nomination meeting was held. In addition, the

rules stipulated that the number of nomination meetings equal the

number of candidates, but each parliamentary district had to have

at least two candidates and therefore two meetings. All proposals

181

*****

! 1 1 ?rr| Hj

National Parliament building

Courtesy Gustav Forster

183
Hungary: A Country Study

for the nomination of independent candidates had to be resubmitted at the next meeting. The rules also allowed each citizen to vote

for several nominees. Because the regime could use the PPF to mobilize large numbers of people against undesirable candidates,

this rule discriminated against independent nominees.

The efforts of the dissident Laszlo Rajk to gain nomination il- lustrate the barriers faced by independent nominees. On April 18,

1985, at the first of the two required nomination meetings in the

southern constituency of Budapest's fifth district, Rajk gained the

support of about 40 percent of the 223 people present. At the sec- ond electoral meeting on April 22, the regime attempted to thwart

Rajk's nomination. HSWP activists, plainclothes police, and fac- tory workers filled the hall. Rajk's speech raised such controversial issues as conscientious objection to military service, the fate of the environment, and the problem of Hungarian minorities

abroad (see Relations with Other Communist Neighbors, this ch.).

At the second meeting, only about 27 percent of the 1,388 voters present supported Rajk.

In addition to the obligatory multiple candidacies, the new

electoral system called for the establishment of a national list of

thirty-five candidates to be elected without opposition. Politburo

member Mihaly Korom justified the national list by arguing that

"important interests demand the representation of leading personalities" from society, culture, science, and the churches. Korom

maintained that the "character of their work, the province of their

activities go far beyond the boundaries of their electoral districts."

The law was successful in promoting multiple candidacies throughout the country. In addition, some independent candidates gained

nomination and election. Of the 352 National Assembly constituencies in the 1985 election, 298 had two candidates each, 50 had

three candidates each, and 4 had four candidates each. Most of

the triple and quadruple candidacies occurred in Borsod-AbaujZemplen, Fejer, and Pest counties and in Budapest. Of the 152

people who were not originally on the PPF list and were nominated

from the floor, 78 received the necessary one-third votes at two

or more nominating meetings, and 51 of them had been proposed

in addition to the 2 nominees successfully nominated by the PPF.

About 1.5 million people, or 20 percent of the country's eligible

voters, participated in the nominating meetings for the 1985 elec- tions to the National Assembly and the local councils. Approximately 150,000 people asked to speak out at the meetings in support

of the proposed candidates.

In the general election, abstention rates were high by East European standards. Turnout in the whole country was 93.9 percent,

184
Government and Politics down from 97 percent in 1980. The turnout in Budapest was 88.4

percent. The number of valid votes cast (votes submitted according to the rules) was 94.6 percent; in Budapest this figure was 92.3

percent. Negative votes—votes cast against all candidates on the

ballot—amounted to 1.2 percent of valid votes. Of the 352 electoral districts, 42 required runoff elections be- cause no candidate could muster the required 50 percent plus one

of the valid votes. Another eighty constituencies had close contests. Of the seventy-eight independents who gained nomination, fortythree won seats after runoff elections. Nevertheless, thirty-three

of these forty-three candidates were party members. The proportion of independent candidates was quite low, but, according to American political scientist Barnabas Racz, their nomination

marked an unprecedented development in the history of East

European elections.

Although the 1985 election was democratic by East European

standards, Hungarian dissidents and Western commentators pinpointed several troubling features. In most of the electoral districts,

the two PPF candidates were the only nominees. In addition, only

the priorities of the candidates differed, not their programs. The

regime subjected campaign literature to strict copying regulations,

and it took steps to limit publicity for candidates. Dissidents maintained that the procedures favored the big industrial enterprises,

which packed nomination meetings with supporters for their

preferred candidates. In turn, these candidates, once elected, formed

parliamentary lobbies that supported increases in subsidies for the

industries to which they owed their nomination.

County and District Government

In 1989 district government resembled that on the national level: a popularly elected local council chose an executive to administer

the affairs of its jurisdiction. Communes {kdzseg), large communes

(nagykozseg), cities, and districts of Budapest elected councils on this

level. District councils elected the county-level councils, which also chose an executive.

The councils served as legislatures for their jurisdictions, while

a chairman and an executive committee, elected from the ranks,

carried out the actual administration of government activities. The

executive committee on the county level supervised the work of

the executive committee on the district level. In turn, the Council

of Ministers directed the work of the county executive committees.

The chairmen of the county and district councils sat on the cor- responding executive committees of the HSWP (see Party Structure, this ch.).

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Hungary: A Country Study

Executive committees on each level had their own administrative apparatus made up of specialized departments to manage

government activities in their jurisdiction. Within their sphere of

influence, the executive committees could appoint and remove the

directors of branch organizations administering these services.

However, these personnel decisions required approval by the ex- ecutive committee at the county level or by the Council of Ministers.

In addition, when the executive committee appointed local offi- cials, it had to take into account the standards established for those

positions by the Council of Ministers. The Council of Ministers

also had the right to submit its own nominees for positions in the

district and county administrations (see Council of Ministers, this ch.).

District and county government dealt with services that had the

most immediate impact on the lives of the citizenry: education,

housing, day care facilities, and medical care. In the late 1980s,

the local government had jurisdiction over 90 percent of the

preschool and day care facilities, all general (elementary) schools,

most middle schools, 90 percent of government-owned housing,

80 percent of the hospital beds, and 70 percent of the libraries, theaters, and educational centers. The national government had direct

control over areas such as railroads, waterways, postal and fire ser- vices, and communications. Local councils also had some power

in passing a budget for their jurisdiction and to manage its execution.

In the late 1980s, county and district government had relatively

large authority in managing the local economy. About 14,000 enterprises and firms meeting the needs of the local population were

under their jurisdiction. The law allowed local governments to create these enterprises. The national government also permitted local government to approve the plans of these enterprises, which functioned mainly in the service sector. Since 1983 multicandidate elections to the district councils have

been mandatory. In the 1985 elections, an estimated 88,000 candidates competed for the 42,734 district seats. About 5.4 percent

of district constituencies had triple candidacies, and 0.2 percent

had quadruple candidacies. Reports of the nomination meetings

indicated an average participation of from 200 to 400 people, a very small fraction of the approximately 30,000 people per district. In addition, problems emerged in many districts. In Bacs-Kiskun

County, the organizers combined the meetings of the twentyseventh and twenty-eighth council districts and allowed them to vote jointiy for each other's nominees. The PPF nullified the results. In Budapest two different constituencies nominated the same

186
City hall in Gyor

Courtesy Gustav Forster

person. In 102 districts, the nominating meetings had to be

repeated.

Judicial Organs

The district courts, labor courts, and military courts lay at the

bottom of the judicial hierarchy. District courts were the courts of first instance in all disputes. Labor courts operated in Budapest

and the counties, hearing cases on appeal from labor affairs arbitration committees and other extrajudicial entities dealing with labor matters. Military courts operated in garrisons and some military

units, concerning themselves with military cases and other cases

that affected national defense (see Military Justice, ch. 5). The

Supreme Court heard appeals directly from the military courts. County courts served as courts of first appeal for decisions of

the district courts and the labor courts. The county courts also acted

as courts of first instance in certain cases involving murder, willful homicide, and grave crimes against social property. These courts functioned as courts of first instance in civil suits of a certain magnitude directed against the state, government officials, or socialist enterprises.

The Supreme Court acted as the court of appeal for the county

courts and the military courts. One of the judges of the Supreme

Court or one of the court's judges working together with lay as- sessors (non-professional judges) could act as court of first instance

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Hungary: A Country Study

for certain important cases. These decisions could then be appealed

to a council of the Supreme Court. Councils of the Supreme Court

specialized in military, civil, criminal, labor affairs, or economic

cases. The Presidential Council of the Supreme Court heard appeals from these councils on points of law.

Professional judges and lay assessors presided over the courts. When courts on any level acted as courts of first instance, they consisted of a professional judge and two lay assessors, although the

law provided for some exceptions. Courts hearing appeals consisted

of three professional judges, with the exception of the Presidential

Council of the Supreme Court, which was led by the council's

president.

The Supreme Court could issue "guiding principles or decisions

in principle" when guidance was necessary "in the interests of

guaranteeing uniformity or on questions of legal interpretation."

These decisions were binding on the lower courts. Other decisions

of the Supreme Court were not binding, but they influenced the

decisions of the lower courts. The prosecutor general supervised observance of the law. This

official, who was appointed by the National Assembly upon recom- mendation of the party's Central Committee, headed a hierarchy

of prosecutorial offices organized on the county and district levels. The prosecutor general undertook criminal investigations and prose- cutions and reviewed the legality of actions taken by governmental, social, and economic organs. Only the National Assembly,

Presidential Council, and Council of Ministers were excluded from

the authority of the prosecutor general.

Hungarian Socialist Workers' Party

The Hungarian Socialist Workers' Party (HSWP) formed the

"revolutionary vanguard of the working class" that "organizes and

guides the people in their struggle to construct a Socialist society."

The ideology, method of decision making, and structure of the

HSWP all derived from the Communist Party of the Soviet Union

(CPSU). The method of decision making—democratic centralism—stifled intraparty dissent and secured the control of central party organs over the personnel appointments and the activities of lower party organs.

In the late 1980s, the HSWP was a top-down, centralized or- ganization. In theory, representative party bodies such as the party

congress held supreme decision-making authority. In practice, bodies such as the party congress and the Central Committee on the

national level and the conference on the county and district levels were too large and met too infrequentiy to exercise decision-making

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Government and Politics

power (see fig. 9). The Politburo and Secretariat centralized power

on the national level, and the party bureaus did so on the county

and district rungs of the hierarchy. The Basic Organization, the

lowest level on the hierarchy, supervised the activities of rank-andfile members in factories, collective farms, and the armed forces. The party, aiming to be a monolithic organization, enforced strict discipline on the membership for violating the Party Rules (see Glossary) and for infringing on the norms of democratic centralism.

The party also attempted to preserve its elite status within society.

Therefore, it was very selective in its recruitment policies. Although

originally the self-proclaimed party of the working class, in the late 1980s the intelligentsia predominated in its ranks.

The PPF, a mass organization working under the direction of

the party, acted as a "transmission belt" for party policies. As of

the late 1980s, it had not yet carved out an independent role for

itself in Hungarian politics.

Ideology

The HSWP, as a party created under the influence of the CPSU,

generally adhered to the Soviet concept of Marxism-Leninism,

which regarded the essence of socialism to be state ownership of

the means of production, controlled by a dictatorship acting in the

name of the working class. Hungarian ideologists echoed their

Soviet mentors. For example, Gyorgy Aczel, until mid- 1988 a member of the Politburo, stated that "a society can be called socialist when a new political system and mechanism come into being on

the basis of new conditions of ownership."

According to Hungarian Marxist-Leninists, the welfare of the

working class constituted the historical goal of the party. However,

since 1956 the HSWP has sought to represent the interests of all Hungarians and has devoted greater resources to promoting the

spiritual and material progress of the whole society. The party also has come to acknowledge that "a perfect, complete Marxism does

not, cannot, and will never exist" and therefore has rejected the

notion of a set of eternally valid ideological premises emanating

from Moscow. Rather, since the late 1950's the HSWP has sought

to adapt general Marxist-Leninist ideas to Hungarian conditions.

In the late 1980s, the party considered the country's socialist development to be in transition between the stage of intermediate economic development and the stage of "developed social- ism." Developed socialism promised the intensive development

of the economy, emphasizing qualitative improvement in working

conditions and the standard of living, as well as liberalization of

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Hungary: A Country Study
Government and Politics

the political system to encourage incipient pluralism and popular

political participation.

Democratic Centralism

According to the Party Rules, the "HSWP is built on the principle of democratic centralism." In theory, democratic centralism

calls for the democratic election of all members of leading organs

by secret ballot, subordination of lower party organs to higher party

organs, and the obligation of the leading organs to report regularly on their activities to their party organization.

In practice, intraparty democracy functioned within narrowly

circumscribed limits set by party leaders, who were the only offi- cials able to change party policies. In addition, when the party made

a decision, members possessed only the information provided to them by the party hierarchy. Based on that information, the leadership expected the rank and file to endorse its decisions. Delegates

sent to meetings at the next highest level were, in fact, chosen by

the leaders they ostensibly elected. Moreover, the central party ap- paratus controlled personnel appointments and ensured that only

"trustworthy" members were appointed to positions of authority. In the late 1980s, party leaders acknowledged problems with this form of decision making. For example, a party document argued

that "if democracy is narrowed down, then issues are solved only

by the leadership and a group of experts." This document maintained that greater participation of the rank and file would ensure wider responsibility and decisions of higher quality.

Indeed, in 1988 the party loosened some of democratic centralism's traditional precepts. For example, in June 1988 the Budapest

party committee chose among two candidates—Mihaly Jasso and

Pal Ivanyi—for the position of first secretary of the Budapest party

committee. An eight-person nominating committee selected the can- didates based on consultations with party committee members,

department heads, district first secretaries, and other activists. In

the first two votes, neither candidate received the required 50 per- cent plus one of the valid votes. On the third vote, Jasso received a majority. Later in 1988, the party loosened other strictures, thus

allowing party members to join organizations, movements, and

associations considered by the party to be its "potential or actual

allies." In July 1988, more evidence appeared that the party was loosening the norms of democratic centralism. The Central Committee

approved a resolution reducing the party's nomenklatura authority over a number of party, government, and economic positions. In

1973 approximately 1,700 such positions existed, of which more

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Hungary: A Country Study

than 800 could be filled by Central Committee secretaries (see Party

Structure, this ch.). In 1985 the Central Committee reduced the

number of such positions to 1,241. A Central Committee resolution of July 13-14, 1988, further lowered the number of these positions to 435. However, in 1988 Istvan Petrovszki, the head of

the Central Committee's Party and Mass Organizations Department, reported that the party would not completely halt the practice of recommending personnel for key positions. When these

appointments concerned staff in such bodies as the National Assembly, the PPF, and the National Council of Trade Unions, each

of which had the right to nominate and elect its own officials, the

party would make recommendations. However, if these organizations selected their own nominees, the party would oppose the selec- tion, according to Petrovszki, only if it questioned the person's

' 'political reliability."

Despite some changes in the procedures of democratic centralism, in the late 1980s participation in decision making remained

low in the HSWP. Party studies continued to show that the level of activity and the quality of party work among the rank and file were poor. Individuals or, at most, small committees selected

nominees for party offices. Indeed, Sandor Lakos, editor in chief

of Pdrtelet (Party Life), wrote in the late 1980s that the most important question facing the party was how to create greater party

democracy.

Party Structure

In theory, the party congress formed the highest authority in

the HSWP, although, because it met only once every five years,

it lacked real power. Its members were appointed by officials of

the Central Committee and the Politburo, two organs nominally

responsible to the party congress. The Central Committee, which

included more than 100 members and usually met once every three

months, also was too large to exert much influence. The Central

Committee yielded in real power and authority to the Politburo

and the Secretariat. Also nominally subordinate to the party congress was the Central Control Committee, which enforced party

discipline.

The Politburo and the Secretariat paralleled a set of governmental

institutions that included the Council of Ministers and the Presidential Council (see Presidential Council, this ch.). The difference between party and government institutions lay in the distinction

between policy formation and policy execution. In general, the party

formulated policy and the government carried it out. Since the early

postwar period, however, the party has been heavily involved in

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Government and Politics

executing economic, domestic political, and foreign policies.

Nevertheless, in the late 1980s party leaders, especially General

Secretary Grosz, called upon party organs to withdraw from dayto-day supervision of policy execution and content themselves with

establishing broad policy guidelines.

Within the party, the Politburo was responsible for selecting policy alternatives. The Secretariat produced policy alternatives for the Politburo, and, once that body made a decision, the Secretariat

carried them out. Of course, in fulfilling its role the Secretariat

often made policy decisions itself. The structure of intermediate party organizations on the county

and district levels resembled that of the central institutions. According to the Party Rules, the authoritative body at each level was the conference, which elected a committee that in turn chose

a bureau with several members (including a first secretary) and

a secretariat. Conferences at the district level elected delegates to the county party conference. However, in the late 1980s the norms

of democratic centralism dictated that party leaders at each level approve the composition of the conference that elected them, as well as the composition of party committees, bureaus, and secretariats on the next lowest level. Basic Organizations made up the lowest rung of the party hierarchy. In contrast to higher rungs on the hierarchy, which were

organized on a territorial basis, the Basic Organizations were lo- cated at places of work, residences, and armed forces units having more than three party members. The party meeting formed the

highest authority at this level. The only full-time, salaried party

official in the Basic Organization was the secretary.

Central Institutions

Central party institutions made decisions binding on the party

as a whole. In addition, they made policy for every aspect of the

country's domestic and foreign policies. Hungary's central party

institutions, like those of other Marxist-Leninist parties of Eastern

Europe, were modeled on those of the CPSU.

Party Congress

According to the Party Rules, the congress was the * 'highest

organ of the HSWP." The congress had the following powers: it debated reports of the Central Committee and the Central Control Committee, approved the Party Rules, elected the Central Control Committee and the Central Committee, determined the general

guidelines of party policy, and determined the most immediate and

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Hungary: A Country Study

important tasks of socialist construction. The Central Committee

convened a party congress once every five years. In fact, the party congress usually legitimated policies decided

upon elsewhere. The Politburo gave its prior approval to officials elected by the party congress. The congress merely ratified solu- tions to political, social, and economic problems that had been developed by the Secretariat and approved by the Politburo. Thus,

party congresses had mainly a propagandistic character.

The agendas of all party congresses in the postwar period have

been similar. The general secretary reads the report of the Central Committee. Debates and approval of the report follow. Speeches

are read by leaders of foreign communist party delegations, with

the representative of the CPSU going first. The congress also adopts

reports of other party organs as well as a party program. Finally,

the congress "elects" the Central Committee, the Secretariat, and

the Central Control Committee.

The Thirteenth Party Congress, held March 25-29, 1985, made

no important changes in HSWP policies, continuing the general

policy line of the 1960s and 1970s. In contrast to earlier party congresses, however, greater degrees of candor and open criticism

characterized the Thirteenth Party Congress. Social problems dis- cussed included the declining birth rate, the poor quality of health

services, and the inequalities created by economic reform.

The Thirteenth Party Congress had 935 delegates, or about 1 for every 1,000 party members. The social composition of the

delegates mirrored the social composition of the party as a whole

(see Social Composition of the Party, this ch.). Workers and

peasants made up approximately 30 percent of the delegates. Functionaries in party and social organizations made up 23.1 percent

of the delegates, leading executives and administrators 24.9 percent, and employees 8.4 percent. Women comprised about 27 per- cent of the delegates.

The Central Committee also had the power to convene a party

conference at any time during the interval between congresses. The

party held its first conference in May 1945 and its second in June

1957. In May 1988, the HSWP leadership convened the Third

Party Conference.

The Third Party Conference had 1 delegate for every 1 ,000 party

members, or a total of 859 delegates. In addition, the 106 Central

Committee members and 25 members of the Central Control Committee also had the right to vote. The conference had powers similar to a party congress. It approved new directions in economic

and social policy, and it ratified important personnel changes in

the leadership. Grosz succeeded Kadar as general secretary, and

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Government and Politics

the conference created for Kadar the new, largely honorific position of chairman of the party. In addition, liberal reformers Rezso

Nyers and Imre Pozsgay became Politburo members.

Central Committee

Between party congresses, in principle the supreme power in the

HSWP rested with the Central Committee. The Central Committee

acted on "behalf of the party with respect to state, government,

and social organs and in international relations." The Central Committee, according to the Party Rules, held plenums at least once

every three months. It had the power to elect department heads

of the Central Committee apparatus; direct the operations of the

party's central institutions, newspapers, and periodicals; nominate

the editorial boards of the central publications; supervise the per- formance of professional party activists; allocate party funds; control the work of government organs; and approve the economic

plan, other economic and social policies, and the national budget

for debate and ratification by the National Assembly (see National

Assembly, this ch.). The Central Committee also administered lead- ing party education institutions, such as the Political College and

the Social Science Institute, and dealt with ideological questions

and international affairs. Virtually the whole life of the country

fell within the purview of the Central Committee.

The Thirteenth Party Congress elected a 105-member Central

Committee. That congress retained seventy-six members elected

at the Twelfth Party Congress in 1980 and elected twenty-nine new

members. In June 1987, the Central Committee grew to 107 members after the deaths of 5 members and the appointments of 7 others. In April 1988, the Central Committee had 106 members after the

death of another member.

Personal merit and institutional affiliation determined who was

selected to the Central Committee, with most members selected

because of their positions. Members included officials of the central

party apparatus, party leaders on the county level, and leading offi- cials of the trade unions, the military, and mass organizations. Some

economic officials also gained membership. Other members of the

Central Committee worked in the media or were active in the fields of science, culture, or the arts. Central Control Committee

According to the Party Rules, the Central Control Committee

"works to assist the strengthening of the party's ideological, political, [and] organizational unity, and the instruction of party membership; keeps watch over the political behavior, party loyalty, and

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Hungary: A Country Study

moral purity of the party membership; [and] fights consistently

against all forms of antiparty factional activity." This committee

conducts disciplinary investigations, hears appeals against decisions

of lower party organs, and audits the economic and financial records

of party bodies. In 1985 the Thirteenth Party Congress elected

twenty-five members to this committee. A chairman and a secre- tary managed the work of this party organ.

Politburo

The Central Committee nominally elected the membership of

the Politburo, which directed party activity between plenums of

the Central Committee. The Politburo consisted of the country's

most powerful political leaders; its members occupied the most important positions in the party, government, and mass organizations. In early 1989, Politburo membership included Grosz, the

general secretary; Janos Berecz, the party's leading ideologist; Istvan Szabo, an agricultural specialist; Csaba Hamori, the chairman of the Central Committee's Youth Committee; Janos Lukacs,

Central Committee secretary for party organization; Pal Ivanyi,

Central Committee secretary for economic policy; Miklos Nemeth,

the chairman of the Council of Ministers; and other government

and economic administrators. Each Politburo member had responsibility that often overlapped with an area managed by a government ministry.

The Politburo usually met once a week to address the country's

foreign, military, economic, and domestic policies. The Politburo

conducted its meetings in secret, although it often invited other

members of the party, government, and mass organizations to at- tend. The general secretary chaired the meeting, and decisions appeared to be reached by consensus. The Politburo informed Central

Committee plenums about the issues discussed at these weekly

meetings.

Traditionally, succession to the position of general secretary has

presented problems for the political elite. No institutionalized procedures governed the transfer of power from one general secretary

to the next. And in the late 1980s, the general secretary did not

have a set term of office. The general secretary had to secure power

by promoting trusted clients to positions of power and influence

within other leading party, government, and state institutions. Like

other Soviet satellite parties in Eastern Europe, the HSWP Politburo usually gained prior Soviet approval for the appointment of

its general secretary. The general secretary also required con- tinued Soviet support to remain in office. Thereafter, the general

secretary had to establish his authority by generating successful

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Government and Politics

economic, social, and foreign policies. Kadar accomplished all these

objectives, and he remained in the post of general secretary from

1956 to 1988. However, when the leadership deemed Kadar too

conservative to push forward further economic and political reforms,

it ousted him in favor of Grosz, having gained Soviet approval to do so.Secretariat

The Secretariat served as the staff of the Politburo, administering a bureaucracy that oversaw all aspects of the party's and the

country's activities. The Secretariat, which consisted of five secretaries, prepared decisions for Politburo approval and either implemented these decisions itself or ensured that the responsible

government bodies carried them out. In early 1989, four secretaries—Grosz, Berecz, Lukacs, and Ivanyi—also sat on the Politburo and were the most powerful of the five members of the

Secretariat.

The general secretary supervised the work of the Secretariat as a whole. In 1989 the five secretaries maintained responsibility for ideology, defense and internal security, party organization, for- eign policy, and economic policy. Each secretary worked with a

small staff of three to five assistants. The four powerful secretaries

Grosz, Berecz, Lukacs, and Ivanyi—also chaired committees of

the Central Committee for international, legal, and state management policy; social policy; party policy; and economic and social

welfare policy, respectively. In 1989 working groups of the Central Committee formulated long-term policy recommendations in

the areas of party building, economics, educational and cultural

policy, science policy, and cooperatives policy.

In the late 1980s, the heads of the five Central Committee departments for social policy, party policy, economic and social welfare

policy, international party relations, and management and the head

of the Central Committee Office (also considered a Central Committee department) answered to the secretaries. Departments controlled the work of their counterparts on the county and district levels of the party. In addition, they maintained working relations

with their counterparts in the CPSU and the relevant departments

in the allied communist parties of Eastern Europe. The departments worked closely with their corresponding ministries to ensure that the government properly implemented party policies. In

the late 1980s, this task changed, however, as the party leadership

sought to lessen the involvement of the party apparatus in the dayto-day administration of the economy. As a result, in late 1988 the

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Hungary: A Country Study

Politburo targeted the 249-member staff of the Central Committee for reductions of 8 to 10 percent.

Intermediate Institutions

Intermediate party institutions embraced organs on the county

and district levels. The structure of the party on these levels resembled that on the national level. In principle, at each level the most

authoritative body was the conference, which was attended by

delegates from lower levels. These conferences took place every two

years to review reports, discuss the activities of the government

and party bodies under their jurisdiction, and elect a party committee. The conference also elected delegates to the conference at the next highest level. District conferences thus selected delegates

to the county party conference, and the county party conference

elected delegates to the party congress. If a Basic Organization had more than 1 ,500 members, it elected delegates direcdy to the county

party conference. In fact, the party leadership at each level nominated the delegates, and the party conferences merely confirmed

these nominations.

Between meetings of the conferences, the party committee constituted the highest authority on the district and county levels. The

committees on the county level met every three months, and those on the district level met every two months. These committees chose

a bureau and a secretariat to manage the affairs of their jurisdictions between committee meetings. Party bureaus consisted of the

first secretary, the head of the county or district government, and

specialists in industry, economics, agriculture, and youth and ideol- ogy. The first secretary at each level was the most powerful offi- cial in the jurisdiction.

The secretariat of the county and district party bureaus coordinated and supervised the implementation of party policies in the

party bureaucracy and the government (see fig. 10). The secretaries and the bureaus answered to their respective conferences and

committees, but they also received directions from the organs above

them, particularly the Secretariat of the Central Committee.

However, the primary duty of the district-level apparatus was to supervise the Basic Organizations. This apparatus also approved

the admission and expulsion of members by the Basic Organizations.

Basic Organizations

A Basic Organization existed in every government institution,

production unit, residential unit, and armed forces unit having three or more party members. In 1985 the party had 25,402 Basic

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Government and Politics

Organizations, of which 37.2 percent were in government institu- tions or the armed forces, 30.2 percent in industrial enterprises,

15 percent in agricultural enterprises, and the remainder in resi- dences scattered throughout the country.

The membership meeting had the highest authority in the Basic

Organization. According to the Party Rules, membership meetings had to be held at least once every two months. The membership meeting elected a secretary, a deputy secretary, and a small

bureau to administer the affairs of the Basic Organization. In Basic

Organizations of fewer than ten members, the membership meeting elected only a secretary and a deputy secretary. Often the district organization nominated the secretaries as part of its nomenklatura authority. In the 1980s, however, competitive elections became more frequent. In 1985 one-third of the newly elected secretaries were newcomers to the position, and, compared with 1980, the

number of multiple candidacies rose. Large Basic Organizations were divided into party groups, which elected a steward to direct

their affairs. The party groups assessed the work and behavior of

their members and the fulfillment of party tasks. The Basic Organization performed several tasks. Most important, the Basic Organization implemented party decisions in the

economic enterprise or other unit under its jurisdiction. The Basic

Organization conducted agitation and propaganda to explain party

policies to nonparty members, to inspire nonparty members to meet

regime goals, and to encourage enthusiasm in the workplace. The

Basic Organization admitted new members subject to the approval

of the district party organization. The Basic Organization gave in- formal courses for party and nonparty members on ideology, party

history, and current events. The Basic Organization controlled the

activity of enterprise management to ensure the fulfillment of its economic plan. Finally, the party expected the Basic Organizations

to be vigilant and to report activities within their jurisdiction that

could be considered harmful or disloyal.

Discipline

The Party Rules stated that members who violated party norms

were subject to punishments ranging from a reprimand to expulsion. In addition, a less formal form of punishment involved the

so-called "exchange of party cards," in which the old party cards were replaced for the faithful and the membership of those per- sons who had broken party discipline was revoked.

The HSWP could take several forms of disciplinary action against

its members. Punishments included a reprimand, censure, severe censure, severe censure with final warning, and expulsion. From

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Hungary: A Country Study

FIRST SECRETARY

SECRETARIES

1 f PARTY ADMINISTRATION PROPAGANDA ECONOMIC ACCOUNTING AND MASS AND POLICY AND

ORGANIZATIONS EDUCATION SERVICES

Source: Based on information from Hans-Georg Heinrich, Hungary: Politics, Economics, and

Society, Boulder, Colorado, 1986, 55.

Figure 10. Structure of the County Committee Apparatus, 1986

1980 through 1985, the HSWP expelled 7,639 members. In addition, the party could suspend members from their office for a specified period of time or could recall party members from public

office. Disciplinary proceedings took place at the membership meetings of the Basic Organization. Higher party organs confirmed or

rejected the decision of the Basic Organization. Ultimately, the

party's Central Control Committee could also review the decision.

The exchange of party cards took place on a party-wide scale. Between 1945 and 1977, six such exchanges occurred. The HSWP

began another exchange of party cards in 1986 to strengthen party

discipline and maintain Kadar's control over the party. As of April

1988, approximately 46,000 members left the party as a result of

that exchange: 250 were expelled, about 40,000 left voluntarily,

1,500 were advised to leave, and 4,000 were taken off the membership list, probably for failure to pay their membership dues.

Membership

The HSWP placed strict requirements on membership in the

party. Members had to work actively on the party's behalf and

set a moral and political example for nonparty members.

200
Government and Politics The HSWP opened membership to persons at least eighteen years of age who accepted Marxist-Leninist ideals, participated in one

or more of the party's Basic Organizations, and paid their dues. In addition, the Party Rules obliged members to accept the policies, guidelines, and organizational rules of the HSWP. The Party

Rules called upon members to be politically active and morally

above reproach, command the respect of others for their work, and

4 'live in a socialist fashion." The party enjoined its members to master the fundamentals of Marxism-Leninism, expand their practical and theoretical knowledge of this ideology, and fight against

the remnants of bourgeois ideology and morality. Members had

to observe the rules of party discipline and execute the decisions

of the party and the government. Members also undertook self- criticism to expose their own shortcomings. Finally, they worked

to strengthen and expand the party's links with the masses and to propagate the party's ideals and policies.

Party members enjoyed certain rights. They participated in the

discussion of theoretical, political, and organizational issues at party

meetings and voted on the adoption of resolutions. Members had

the right to vote in party elections and to stand as candidates. Members were able to criticize "in a party-like manner" the work of

another party member or party organ at meetings, to present a request or recommendation to the Basic Organization, as well as

to higher party bodies including the party congress, and to receive a valid response. However, democratic centralism discouraged such

criticism. Any party member who questioned the policies of the

leadership would be subject to party discipline.

Social Composition of the Party

In mid-1988 the HSWP had about 817,000 members, or 10.3

percent of Hungary's adult population. Nominally the party of the

working class, the HSWP actually was dominated by members of

the intelligentsia. Men outnumbered women.

Since 1956 the proportion of workers and peasants in the party

has declined. In 1962 industrial and agricultural workers made up

59 percent of the party. This figure dropped to 38 percent in 1970,

and by 1985 it had declined to 31.9 percent. By contrast, in 1975

members of the intelligentsia made up 40 percent of the membership, and by 1985 that figure had risen to 42.4 percent.

Other statistics showed that members used their membership to raise their social status. In 1985 about 62 percent of party members originally were workers when they joined the party and 8.9

percent originally were peasants. As a result of the influence that

party members held in society and the favors that the regime granted

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Hungary: A Country Study

to party members, about 40 percent of the party membership was

able to climb into the ranks of the intelligentsia from the working

class and the peasantry. Thus, children of workers and peasants

used the party as a vehicle of upward mobility. Having joined the

"political class," party members, particularly full-time party offi- cials, could pass their new status on to their children.

Statistics on the educational background of party members con- firmed the dominance of the intelligentsia. In 1985 approximately

21 percent of party members had received degrees from a higher

educational institution. The corresponding figure for the population as a whole was only 6.1 percent. In 1985 about 43.9 percent

of the membership had a high school or special secondary school

education. The figure for society as a whole was 27.1 percent. Between 1975 and 1985, the proportion of members who had no more

than a primary-school education declined from 55.4 to 28.4 percent.

Historically women have formed a minority of the party's membership, although since the 1960s their percentage of the membership has risen. In 1966 women made up 22.9 percent of the HSWP,

and by 1970 this figure had risen to 24.4 percent. By mid-1988

women made up approximately 32.1 percent of the party. In the

late 1980s, however, women generally had not advanced into positions of power. For example, in the Central Committee elected in

1985, a mere 11 percent of the members were women. In early

1989, only two women sat on the Politburo.

Patriotic People's Front

According to the Constitution, the Patriotic People's Front (PPF)

' 'unites the forces of society for the complete building up of social- ism, for the solution of political, economic, and cultural tasks."

The Constitution adds that the PPF "cooperates in the election

and operation of the organs of popular representation." The PPF

facilitated broad mass participation in regime policies and generated mass support for party programs. In 1988, according to Imre

Pozsgay, at that time head of the PPF, the tasks of that organization included helping to achieve a new social accord in Hungary,

consolidating new public thinking in the public consciousness, and

helping citizens to participate in building a socialist society from

below.

Approximately 130,000 grass-roots committees elected by local citizens carried out PPF policies on the local level. A congress of

the PPF met every four years to elect its National Council and to review the activities of the organization. The National Council

elected the National Presidency and the National Secretariat, which

managed the PPF and set policy for it.

202
Government and Politics The PPF undertook a variety of tasks. Perhaps most important,

it organized national and local elections (see Elections to the National Assembly; County and District Government, this ch.). The

PPF served as an umbrella organization that united such bodies

as the National Council of Hungarian Women, the National Gypsy

Council, and other bodies representing national minorities in Hungary. The PPF also provided a framework for cooperation among

different classes and strata of society, between religious believers

and nonbelievers, and between party members and nonparty members. Finally, the PPF attempted to protect citizens' interests by

leading the struggle against the corruption and abuse of power.

Mass Media

In Hungary the media served as instruments of regime policy, so their primary task was to promote the party's policies. Although

other organizations, such as the PPF, the Communist Youth

League, and the trade unions, produced their own publications,

the regime controlled their content (see Mass Organizations, ch. 2). In the 1980s, the regime continued to suppress other sources of

information, although it made available in hotels some Western

periodicals and newspapers. The regime banned private ownership of the media.

In the late 1980s, Hungary had no censorship laws. However,

informal censorship occurred in a number of different ways. Both

the party and the government had organs for censorship. The party

set guidelines, which were transmitted from its Department for Agitation and Propaganda to the lower party organs and to the edi- tors in chief of the media. The Council of Ministers' Information

Bureau acted as the government's agency for censorship (see Council of Ministers, this ch.). The Hungarian Telegraph Agency

(Magyar Tavirati Iroda—MTI) was the primary source of information for the media. Because the news media often lacked other

sources of information, they depended on MTI for materials. MTI

could thus exercise centralized control over the kinds of information that appeared in print or over the airwaves. The regime carefully selected editors and informed them about party and

government censorship standards. Editors could be fired for failure

to comply with these standards. For example, in 1983 Ferenc Kulin,

editor of Mozgo Vildg (World In Motion), lost his position for "systematic defiance" of party directives. Editors often exercised in- formal censorship, rejecting an article, for instance, because they

claimed it did not suit the profile of their publication. Editors also exercised censorship when they recommended changes to a work

that removed or softened its politically sensitive parts. Paradoxically,

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Hungary: A Country Study

the lack of censorship standards encouraged editors to take a conservative approach to censorship to ensure that their publications

did not include materials that might offend anyone in authority.

On March 20, 1986, the National Assembly passed a new press

law defining the "rights and duties of journalists and the right of

the public to fast and timely information." The law compelled

government officials to respond to requests for information from

reporters. Journalists, however, had to submit a copy of their arti- cle to people they had interviewed for it. The law prevented the

publication of materials that "would hurt the constitutional order

of the People's Republic and its international interests . . . and

public morals." Critical pieces of writing could be rejected on that

basis. In addition, according to Politburo member and Central

Committee secretary Berecz, the law proscribed questioning Hungary's "socialist achievements" and its "national historical and

moral values."

Hungary had three major daily newspapers: Nepszabadsdg (People's Freedom), the official organ of the HSWP; Nepszava (People's Voice), the organ of the trade unions; and Magyar Nemzet

(Hungarian Nation), the organ of the PPF and the most liberal

of the three newspapers. Nepszabadsdg was the party daily and had

a circulation of approximately 467,000 in early 1989. In November 1988, a new daily

A Nap (The Sun)—began publication with

a circulation of between 80,000 and 100,000 a day. An afternoon

paperEsti Hirlap (Evening News)—had a circulation of between

200,000 and 250,000 a day.

The regime also published a number of specialized journals.

Tdrsadalmi Szemle (Social Review) was the HSWP's ideological

monthly; it had a circulation of approximately 41,000. Pdrtelet (Party

Life) had a circulation of about 130,000. Other, more obscure journals contained more interesting subject matter by virtue of their

lower circulation and more specialized audiences. Valosdg (Reality) was intellectually the most stimulating journal because it dealt with

politically sensitive and highly unorthodox topics.

Most provincial journals treated only topics of regional interest. Nevertheless, Jelenkor (Present Age), published in Pecs, and Forrds

(Source), published in Kecskemet, had wider audiences because

they included interviews with national literary figures and scholarly research from Budapest. Tiszatdj (Tisza Country), published

in Szeged, claimed a wide readership because it published materials on Hungarian national minorities living outside the country.

However, in 1986 the government banned Tiszatdj because of "publication policy mistakes." The editors were dismissed and subjected

204
Government and Politics

to party discipline. The publication reappeared in 1987, and the

party rehabilitated the editors in early 1989. In the late 1980s, television was the most popular form of enter- tainment. Approximately 95 percent of Hungarian households had

a television set. In the early and mid-1980s, Hungarians watched

an average of 140 minutes of television programs per day. Programming on the country's two channels ran from mid-afternoon to late at night. In addition, some hotels and local cable and aerial sys- tems had the equipment to receive and transmit Western-relayed

satellite programs. Near the country's western border, households

with a good roof antenna could receive one Austrian, two Yugoslav, and two Czechoslovak channels.

Hungary's three radio stations broadcast a variety of programming. In addition, Hungary concluded a radio agreement with Austria to establish a joint German-language radio station called Radio

Danubius. In May 1986, the station began broadcasting a twelvehour program. The station eventually was to attain economic self- sufficiency through advertising.

In the late 1980s, videocassette recorders (VCRs) became very

popular in Hungary. At the end of 1987, VCRs numbered between

200,000 and 300,000, and an estimated 1 million people had ac- cess to a VCR. In 1984 Hungary became the first East European

country to have stores renting videotapes, and more than fifty videotape outlets existed in late 1987. The government-operated outlets, however, had only 800 titles and a total of only 15,000 copies.

Illegally produced, copied, and distributed cassettes accounted for

80 percent of the videotape market. These tapes treated taboo

themes such as religion, anti- Soviet sentiments, sex, and violence.

The regime acknowledged that these tapes had spread throughout

the country like a "contagious disease" and held them responsible for the rise in the crime rate, increased drug use, and the higher

suicide rate (see Health, ch. 2). Foreign Policy

In the 1980s, Hungary attempted to carve out a semi-independent

role for itself within the Soviet alliance system in Eastern Europe.

The origins of the Hungarian position lay in the regime's efforts to promote economic reform, which required Western involvement

and support. The regime also sought to create popular support for

itself by providing an abundance of consumer goods supplied by

the West. For reasons of history and tradition, Hungary cultivated

ties with Austria and the Federal Republic of Germany (West Germany). In the mid- and late 1980s, Hungary also attempted to fur- ther relations with Britain and the United States. In addition, as

205
Hungary: A Country Study

further evidence of its initiative in foreign policy, Hungary developed relations with Israel, China, and the Republic of Korea (South

Korea), which had previously been considered "pariah" states by

most East European regimes.

Hungary's most important ally was the Soviet Union, with which

it has enjoyed particularly good relations since 1986, when Soviet

leader Mikhail S. Gorbachev initiated his reform program. In the

late 1980s, Hungary strongly supported Soviet foreign policy positions. In return, Hungary received Soviet support for its efforts

at domestic reform. Hungary also accepted integration into the al- liance system through the Council for Mutual Economic Assistance

(Comecon—see Glossary) and the Warsaw Pact (see Glossary).

Relations with its other communist neighbors played a crucial

role in Hungarian foreign policy. The state of relations between

Hungary and Romania, Czechoslovakia, and Yugoslavia generally depended on how these countries treated their Hungarian

minorities. Because Yugoslavia treated its Hungarian minority well,

relations between the two countries were excellent. In Czechoslovakia, the relation between Slovaks and ethnic Hungarians were

not smooth. Through bilateral contacts, Hungary sought to en- courage the Czechoslovak government to improve its treatment of

Czechoslovakia's Hungarian minority. However, Romania's treat- ment of the Hungarian minority in Transylvania received worldwide condemnation. Hungary sought, through a variety of bilateral and multilateral efforts, to encourage more equitable treatment of

Hungarians in Romania.

Principles of Foreign Policy

When superpower relations deteriorated in the early to mid1980s, Hungary defined a role for small- and medium-sized states in maintaining ties between countries of the Warsaw Pact and the

North Atlantic Treaty Organization (NATO). The reasons for Hungary's interest in East-West dialogue lay in its relatively liberal domestic policies as well as its foreign economic policies. Following the Revolution of 1956, the leadership determined that a policy of isolation threatened the stability of the Soviet alliance system

in general and Hungary in particular. In addition, the leadership

believed that without access to the world economy, Hungary's econ- omy would continue to lag behind the economies of the West.

In the late 1970s and early 1980s, the Soviet invasion of Afghanistan, the crackdown on the Solidarity labor union movement in

Poland, and the deployment of United States intermediate-range

ballistic missiles (IRBMs) in Western Europe led to a deterioration of relations between the superpowers. Hungary resisted this

206
Government and Politics

worsening of relations with the West. Thus, the theory that Hungary had won some freedom of action in the domestic sphere by

remaining loyal to the Soviet Union in foreign policy lost much

of its validity in the mid-1980s.

Several factors led Hungary to push for an independent stance.

First, the Kadar regime believed that any return to economic iso- lation from the West would endanger policies designed to modernize the economy and to promote political liberalization. In turn,

these two policies were intended to encourage popular political sup- port for the regime and bolster its legitimacy. Their failure could

have led to political catastrophe for the leadership. Second, Romania

and the German Democratic Republic (East Germany) were pursuing their own independent initiatives with selected NATO countries. The Hungarians believed that their policy would also find

supporters in Bulgaria and Poland, both of which needed help from

the West to overcome their economic problems. Third, the Soviet

leadership experienced internal differences over the issue of East- West relations. In 1984 some Soviet economists and political commentators positively evaluated the Hungarian reforms. The Kadar

regime believed that it had allies in the top Soviet leadership, possibly including then-General Secretary Konstantin U. Chernenko

himself.

The Soviet Union used its allies in the Communist Party of

Czechoslovakia (CPCz) to reply to Hungary's initiatives. On

March 30, 1984, the CPCz daily Rude prdvo published a scathing

critique of Hungary's policy, which it labeled "one-sided par- ticularism." The article maintained that the Hungarian stance would lead to a weakening of the common international strategy

and foreign policy of the Warsaw Pact, encourage efforts by

capitalist states to gain one-sided advantages by promoting differ- ences among socialist states, and favor a narrow, nationally oriented

approach to transitory economic difficulties. The Czechoslovak

newspaper also argued that the Hungarians attached importance

to distinctions between large and small states rather than to the

class structure of these states. Finally, Rude prdvo complained that

national interests were beginning to take precedence over the in- terests of the Soviet alliance system as a whole. Articles in several

Soviet party and government publications echoed the Czechoslovak comments, suggesting that the CPCz and the CPSU coordinated their attacks on Hungary.

Secretary of the Central Committee for Foreign Policy Matyas

Szurds laid out Hungary's response to the charges of its allies. In

1984 Szuros began publishing his justifications for Hungary's

stance. He later added other arguments to underscore Hungary's

207
Hungary: A Country Study

stance. Szuros averred that, although relations between the superpowers might be poor, historical traditions and contemporary geopolitical relations could encourage the development of relations

between certain socialist states and certain capitalist states. Particularly the small- and medium-sized states in each alliance sys- tem, through dialogue and constructive relations, could improve

the international atmosphere and thereby create possibilities for

the improvement of relations between the United States and the

Soviet Union. In turn, such an improvement could lead to an overall reduction of international tension.

Szuros believed that national interests had to be given more

weight when formulating common Warsaw Pact positions on for- eign policy and military issues. A conception of the common goals

of socialist states could command the support of the individual socialist countries only if it took national interests into account. Szuros

rejected the notion that, by pursuing its national interests, Hungary sought to gain one-sided advantages from the West. He wrote

that as a result of historical and geopolitical factors, capitalist states showed different degrees of interest in developing relations with

the various socialist states. Thus Bulgaria carried on intense rela- tions with Greece and Turkey, and Austria and West Germany

developed close relations with Hungary.

In 1985 and 1986, Szuros broadened these considerations when

he wrote that the communist movement lacked an organizational

and a political center that could enforce prescriptions for behavior.

He argued that although a common ideology united the international communist movement, ideology was neither a code of dogma

nor a closed system but a body of ideas undergoing constant change.

Szuros therefore advocated the "proper adaptation" of the basic

principles of Marxism-Leninism to specific national circumstances.

These formulations justified renovations in domestic policy, in turn

leading to innovations in foreign policy, including Hungary's opening to the West.

In July 1986, Szuros went beyond these arguments when he wrote

that small- and medium-sized countries had more to lose in the

event of a conflict between the superpowers than did the superpowers themselves. Therefore, smaller countries had objective in- terests in seeking and maintaining detente. Smaller countries also had a special responsibility to contribute to an atmosphere encouraging the reduction of tension, deepening of dialogue, and strengthening of trust. Therefore, claimed Szuros, small- and medium-sized

states had interests of their own, regardless of their class structure. Relations with the Soviet Union

In the postwar period, several factors contributed to Soviet

208
Government and Politics

influence in Hungary. The Soviet Union maintained a large troop

presence in Eastern Europe (see Soviet Influence, ch. 5). The struc- tural characteristics of the Warsaw Pact minimized the independence of East European military establishments and the CPSU

exercised significant political influence within the HSWP and the

government.

Relations between Hungary and the Soviet Union also depended on a series of more personal factors. Thus, before Gorbachev as- sumed power in the Soviet Union, the conservative Soviet leadership disapproved of Hungarian reform efforts, and relations between

the two countries were therefore cool. After Gorbachev became

general secretary of the CPSU and initiated his reform program,

the leadership of each country found in the other an ally for its program of economic and political change. Consequently, beginning in mid- 1986 relations between Hungary and the Soviet Union

warmed considerably.

At the Thirteenth Party Congress, the HSWP stressed the decisive importance of relations with the Soviet Union. At this congress, however, Grigorii V. Romanov, then a hard-line member

of the CPSU Politburo and Secretariat, criticized Hungary for its relations with the West. Romanov supported "businesslike contacts" with capitalist countries, but he warned that the socialist countries could not "allow the imperialist forces to use economic

levers as a means of political pressure and interference in the af- fairs of socialist states." Romanov advised Hungary not to go too

far in increasing trade and cooperation with the West.

The Twenty-Seventh Party Congress of the CPSU in March 1986

marked the beginning of a steady improvement in relations between Hungary and the Soviet Union. Kadar endorsed the Soviet

reform program and drew parallels between the CPSU's party congress and the HSWP's Thirteenth Party Congress. Hungary also supported the Soviet Union's foreign policy and disarmament

proposals. In June 1986, Gorbachev visited Hungary for talks with

Hungarian party and government leaders. According to the joint

communique, both sides shared "fully identical views" on foreign

and security policies. Each side pledged to assist the other in ac- celerating socioeconomic and scientific development.

In the mid- to late 1980s, the Soviet Union sought to expand

bilateral economic relations and scientific-technical relations with

Hungary. The Soviet Union needed Hungarian scientific and tech- nical expertise as well as economic assistance to strengthen Soviet

economic reform. Hungary, by contrast, sought to devote more

resources to its trade with the West and with the newly industrialized countries of the Third World.

209
Hungary: A Country Study

Soviet efforts to tie Hungary more closely to the Soviet econ- omy and to Comecon have achieved some success. In 1985 Hungary and the Soviet Union signed a long-range economic and

scientific-technical program of cooperation to last until the year

2000. The Kadar-Gorbachev talks in 1985 called for the strengthening of scientific-technical cooperation and the development of

new forms of cooperation between each country's research insti- tutes, economic enterprises, and work cooperatives. At a meeting

between Grosz and Gorbachev in July 1987, the two countries

agreed to expand bilateral trade in the 1986-90 period. The two

leaders also commissioned a fifteen- to twenty-year plan for developing economic and scientific-technical cooperation between their

two countries.

In 1988 two high-level meetings took place between Soviet and

Hungarian leaders. In April, Soviet then-President Andrei A.

Gromyko visited Hungary to promote the expansion of bilateral

ties in light of the changes taking place in both countries. Gromyko

met with Kadar, and they expressed a common interest in implementing reform in their own countries and in establishing new

kinds of cooperation. Grosz was the first East European leader to

visit the Soviet Union after the CPSU's Nineteenth Party Conference in July, a sign of Hungary's close relations with Moscow.

Gorbachev praised the HSWP party conference and drew parallels

between the reform efforts of both countries. Grosz called his meeting with Gorbachev ' 'useful and valuable" and said that the two

countries had never been more in harmony.

Relations with Other Communist Neighbors

In the mid- to late 1980s, Hungary attached particular importance to relations with Romania, Czechoslovakia, and Yugoslavia,

because each of these countries contained rather large Hungarian

minorities. A common culture and language, as well as family ties, linked Hungarians in these countries to Hungary. The Romanian

government and, to a lesser extent, the Czechoslovak government

have subjected their Hungarian minorities to various forms of political and cultural oppression. On the one hand, Hungarian public opinion has pressured the HSWP leadership and the government

to work for the amelioration of the harsh circumstances of Hungarians in neighboring countries. The regime, seeking to strengthen

its legitimacy within Hungarian society, has taken up the cause

of Hungarians living abroad. On the other hand, the prospect of

open discord within the Soviet alliance system has restrained Hungarian criticism of Romanian and Czechoslovak nationality policies.

210
Government and Politics Romania

According to Romanian statistics, 1.7 million Hungarians were

living in Romanian Transylvania in the late 1980s. Western experts maintained that at least 2 million Hungarians inhabited this part of Romania, and some estimates put the figure as high as 2.2

million. Although problems existed earlier, in the mid-1980s

Romanian treatment of the Hungarian minority became increasingly harsh. For example, the Romanian city of Bra§ov had no

Hungarian-language schools, although the city was home to Transylvania's second-largest Hungarian minority. In 1983 the Romanian government reduced Hungarian-language television broadcasts

from two and one-half hours per day to one hour per day. In 1984

it discontinued Hungarian-language programming altogether. The

Romanian government allowed the importation of only one

periodicalSakkalet (Chess Life)—from Hungary. The Romanian

government also attempted to prevent Hungarians from traveling

to Romania. During the height of the summer tourist season, Hungarians had to wait up to a whole day while Romanian authorities

searched their cars and baggage. Many Hungarians were not al- lowed to enter Romania after the seizure of books, periodicals, and

even HSWP and Hungarian government newspapers.

The Hungarian regime failed to respond quickly to the Romanian actions. As Austrian political commentator Paul Lendvai has

noted, because all communist countries are, according to their offi- cial definition, brothers, they must bury the differences that fre- quently appear between noncommunist states. Therefore, until the

mid-1980s the regime remained silent about the treatment of Hungarians in neighboring countries. For example, after a high-level

Romanian delegation visited Hungary in April 1985, the joint com- munique contained no reference to Romania's nationality problem.

Beginning in 1984, however, Hungarian criticisms of Romania

began to surface in the media, and Hungarian leaders began to develop their own position on minority nationalities. In August

1984, the deputy prime minister, Lajos Faluvegi, criticized Romania's treatment of its minorities. In a November 1984 speech to the Thirteenth Party Congress of the Romanian Communist Party

(RCP), National Council of Trade Unions secretary Lajos Mehes

echoed Faluvegi' s comments. The Thirteenth Party Congress

of the HSWP in 1985 also addressed this problem. Kadar twice

spoke about the need to respect the rights, language, and cul- ture of national minorities and to allow them freedom of move- ment and contacts with their mother country. Kadar emphasized

211
Hungary: A Country Study

that national minorities ought to act as a bridge between neighboring countries. In June 1987, at a meeting with a Romanian delegation headed

by Emil Bobu, an RCP Politburo member and Central Committee

secretary for party organization, Hungarian officials brought up the

problem of Romania's treatment of its Hungarian population. Hungary maintained that Romania's treatment of Hungarians failed to comply with a 1977 agreement between Kadar and Romanian leader

Nicolae Ceausescu to strengthen friendship and cooperation between

the two peoples and to develop good relations between the two countries. However, the two sides failed to reach an agreement on the

minority problem. Hungary wanted Hungarians in Romania to be

loyal citizens of that country but to preserve their language and cul- ture and be considered equals in "building socialism." Hungary

agreed that the problem could be setded only by Romania. However,

the Romanian report of the meeting failed to mention that the two

sides had discussed the problem.

Hungary took the unprecedented step of raising the minority

issue at multilateral forums. In October 1985, Hungary addressed

this problem at the Cultural Forum of the Conference on Security

and Cooperation in Europe (CSCE). A representative of the Hungarian delegation revealed that Hungary, Poland, the Soviet Union,

and East Germany prepared a proposal "about the assertion by

national minorities of their cultural rights" in which Romania and

Czechoslovakia did not participate. More important, on November 15 Marton Klein, a department head in the Ministry of Foreign Affairs, condemned the oppression of 3 million Hungarians

in neighboring countries. He called for guarantees of the minorities' civil rights and for granting them specific collective rights to use their language to enable them to preserve and enhance their

cultural traditions.

In March 1987, at a closed session of the CSCE review confer- ence in Vienna, the Hungarian delegation supported proposals for protecting minority rights submitted by Yugoslavia and Canada.

This action marked the first time a Soviet ally supported a Western

proposal at a CSCE review conference. Hungary faced heavy pres- sure from its allies for this decision. In April, Hungary responded

to Romanian criticisms of its "diversionary moves" and "nationalist" and "chauvinist" practices. Rezso Banyasz, head of the

Council of Ministers' Information Bureau, argued that the Romanian charges lacked foundation and damaged the basic interests

of the Romanian and Hungarian peoples.

Relations between Hungary and Romania further deteriorated in 1988. Thousands of ethnic Hungarians (and some ethnic

212
Government and Politics

Romanians) were fleeing from Romania to Hungary to escape

Ceau§escu's political oppression. The National Assembly passed

a resolution calling Romania's planned destruction of thousands

of villages a violation of human rights. The razing of between 7,000

and 8,000 villages and the relocation of their inhabitants were not

directed at minorities as such, but the minorities would suffer the

most because they would be scattered throughout the country and

lose their national identities. In July tens of thousands of Hungarians demonstrated in front of the Romanian embassy in Budapest

against the destruction of the villages. In response, Ceau§escu

threatened to close the Romanian embassy, closed the Hungarian

consulate in Cluj-Napoca, and blamed Hungary for the worsening of relations.

Grosz and Ceau§escu held an impromptu meeting in Arad,

Romania, on August 28, 1988, to discuss relations between their

countries. The talks lasted eight hours but failed to produce tangible results. The joint communique did not mention the nationality issue. Hungary later conceded that the two sides had made no

progress on this problem.

On November 14, 1988, relations fell to a new low when Romanian police arrested Karoly Gyorffy, the Hungarian commercial

counselor, in Bucharest. The Romanians accused Gyorffy of using

a stolen automobile, causing a serious accident, and distributing

leaflets inciting public opinion against the authorities. On November

19, Romania declared Gyorffy persona non grata and instructed

him to leave the country within three days. Hungary rejected all accusations against Gyorffy and noted that this incident did not

mark the first time that Romanian organs had hindered the work

of its diplomats. On November 24, Hungary expelled Romania's

political counselor.

Czechoslovakia

Since the formation in Slovakia (Czechoslovakia's eastern republic) of a dissident organization for the defense of the rights of Hungarians in 1979 and after frequent arrests of the Hungarian activist Miklos Duray, discrimination against the approximately 600,000

ethnic Hungarians in Czechoslovakia became a problem in the re- lations between the two communist neighbors. As of 1986, about

100 Hungarian activists had been arrested and imprisoned by

Czechoslovak authorities. Other problems included the lack of

Hungarian-language books and newspapers in Slovakia, discouragement of Hungarian-language training, and vandalism of Hungarian monuments and cultural offices.

213
Hungary: A Country Study

In the late 1980s, as a result of pressure from Hungary, Czechoslovakia attempted to redress some of the Hungarian minority's

complaints. In 1986 the two countries concluded an agreement that

called for Hungarian construction of a Hungarian cultural center

in Bratislava, the capital of Slovakia. In 1987 the Cultural Association of Hungarian Workers in Czechoslovakia was allowed to re- join the Czechoslovak National Front, from which it had been

expelled in 1972. Yet Czechoslovakia attempted to downplay the

minority problem. In the communique issued following the meeting between Grosz and Czechoslovak prime minister Lubomfr

Strougal in August 1987, Strougal mentioned the minority issue

only in passing. By contrast, Grosz noted the role of minorities

as a bridge between Hungary and Czechoslovakia and called for greater cultural contacts between the two countries.

Another outstanding issue between Hungary and Czechoslovakia

concerned the Gabcikovo-Nagymaros Dam project. In 1977 the

two countries agreed to build this hydroelectric power and navigation system on the Danube River between Bratislava and

Budapest. Hungarian public opinion strongly protested the project.

Environmental activists in Hungary claimed that the project would

severely damage the potable water supply, agriculture, and forests of both countries. Czechoslovakia has pressured the Hungarian

government to proceed more quickly with the project.

Yugoslavia

In the late 1980s, approximately 430,000 Hungarians lived in

Yugoslavia, primarily in the autonomous province of Vojvodina.

In the late 1980s, relations between Hungary and Yugoslavia were

good. After a December 1986 visit to Yugoslavia, Hungarian prime

minister Gyorgy Lazar termed "exemplary" Yugoslavia's treat- ment of its Hungarian minority. Yugoslavia provided an adequate

number of Hungarian-language schools on all educational levels

to this minority. In addition, the Yugoslav government freely per- mitted the publication and dissemination of periodicals and

newspapers in the Hungarian language.

In other areas, bilateral ties developed remarkably well. Since

the 1970s, Hungary has maintained governmental relations with

the various republics of Yugoslavia. The two countries also undertook a variety of successful economic and scientific-technical ventures. In 1985 Hungary and Yugoslavia signed a trade agreement

worth US$4.8 billion. In the late 1980s, each side expressed its readiness to increase cooperation in culture, education, information ex- change, and sports.

214
Government and Politics

Relations with the West

In the 1970s and 1980s, the consensus between regime and so- ciety in Hungary called for political support for the regime in return

for improvements in the standard of living and a loosening of re- gime controls over society. Hungary needed Western economic sup- port to raise its standard of living. Western economic support also entailed a modicum of political support. Hungary put out feelers to Austria as early as 1964 and sought to use that country—a per- manent neutral—as a bridge to the West. Subsequendy, the Hungarians turned to West Germany, historically the country's most

important trade partner in Central Europe. In the mid- to late 1980s, Hungary has also sought to improve relations with Britain

and the United States. In each case, Hungary wanted increased

trade and cultural contacts. By contrast, in 1988 Hungary had only

begun to cultivate relations with France, and economic and cul- tural contacts with that country therefore remained at a low level. Austria

Since the mid-1960s, good relations between Hungary and Austria have resulted from a number of factors. A common water sys- tem, including the Danube, the Drava, and the Mur rivers, together

with countless smaller rivers and Lake Ferto (Neusiedlersee), meant

each country's use of it affected the other country. Means of trans- portation, including road and railroad connections such as the

Raba-Odenburger railroad line, also drew the countries together.

Equally important, in the mid-1960s each country came to accept

the permanence of the other's social system and attempted to find

common areas of agreement despite political differences. Finally,

in 1981 the two countries agreed that the border, which had earlier

caused discord, no longer presented a problem.

In the 1980s, economic relations between Hungary and Austria were quite strong. More than 100 cooperation agreements in areas such as machine-building, metallurgy, pharmaceuticals, agriculture, and light industry were in force between the two countries.

In 1986 total trade between the two countries amounted to US$1 .

1

billion. Hungary was Austria's fourth largest trade partner overall, and Austria was Hungary's second largest Western trade

partner.

The two countries also cooperated considerably in culture, science

and technology, sports, and other fields. The Hungarian Cultural

Institute in Vienna organized an average of fifty events per year, and the Austrians operated their own cultural institute in Budapest.

In 1987 the Hungarian-Austrian Friends Circle was established to

215
Hungary: A Country Study

promote common cultural traditions and Hungarian interest in Austrian history and culture. In the late 1980s, the theme that the two

countries shared "a special relationship" has recurred in both

governments' commentaries on their political relations. The Hungarian media also stressed the Central European identity and in- terests common to the two countries.

West Germany

Since the early 1970s, when the Four Power Agreement on Berlin and the Basic Treaty between East Germany and West Germany normalized West Germany's relations with the Soviet Union

and East Germany, respectively, Hungary has greatly expanded

its ties with West Germany. After West German chancellor Helmut

Kohl's visit to Hungary in 1984, the Hungarian press stressed the

special place of West Germany in Hungary's foreign policy and

West Germany's efforts to reduce tension between East and West.

Nepszabadsdg called Kohl "the patron of East-West relations." Over

the course of the 1980s, political contacts and dialogue have been

constant and frequent, despite problems in superpower relations.

For Hungary, West Germany has served as an economic gateway to the West. In the late 1980s, West Germany was Hungary's

largest Western trading partner. As of 1984, 332 cooperation agree- ments linked the economies of the two countries. That same year, the two countries extended a ten-year agreement on economic, in- dustrial, and technical cooperation signed in 1974. In 1987 Hungary and West Germany signed a five-year agreement on scientific and technical cooperation.

Cultural relations between the two countries also expanded. In

1987 the two governments agreed to set up cultural and information centers in each other's country and concluded a visa agreement easing restrictions on Hungarians trying to enter West

Germany. The West Germans also praised Hungary's treatment

of its German minority and its policy of allowing ethnic Germans

to resettle in West Germany.

Britain

To diversify support for its economic reforms, in the mid-1980s

Hungary began to pursue relations with Britain. In 1984 Britain

accounted for 4.3 percent of Hungary's exports to the West and

5.2 percent of its imports from the West. In the mid-1980s, Hungary was able to increase its trade with Britain owing to Britain's

recovery from its economic recession, the flexible price policy of

Hungarian economic enterprises, and a more favorable international climate.

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Crown ofSaint Stephen, which the United States returned to Hungary in 1978

Courtesy Gustav Forster

Kadar paid an official visit to Britain in the fall of 1 985 . According to British prime minister Margaret Thatcher, the two sides

shared common ideas "with regard to peace, prosperity, and security." The two governments admitted that differences persisted,

although they agreed to play a "useful role" in creating good re- lations between the Warsaw Pact and NATO.

The good political climate facilitated the expansion of cultural

relations. Hungary and Britain carried out bilateral cultural and

scientific exchanges within the context of an agreement that was

renewed every two years. In 1985 Glasgow held a five-week fes- tival of Hungarian culture. In addition, the British firm Pergamon Press published an English translation of Kadar' s speeches

and articles. United States Relations between Hungary and the United States began to warm

in 1978 when the United States returned the Crown of Saint

Stephen to Hungary (the crown had fallen into American hands

after World War II). High-level political contacts took place rather

frequently in the 1980s. Hungary benefited from these contacts be- cause the United States kept it abreast of the course of Soviet-United

217
Hungary: A Country Study

States arms control negotiations. In 1986 Secretary of State George

Shultz visited Hungary, and in 1987 Central Committee secretary

Szuros visited the United States. In the summer of 1988, General

Secretary Grosz paid a ten-day visit to the United States. Hungary has taken certain steps to improve its relations with

the United States. The Department of State has reacted favorably

to Hungary's efforts in the area of human rights. United States

officials have also praised the introduction of market mechanisms

in the Hungarian economy.

In 1986 trade between Hungary and the United States amounted

to US$345 million. The Hungarian government sought the renewal

of most-favored-nation status on a three-year cycle rather than an- nually to facilitate planning in the foreign trade sector. During his

visit in 1988, Grosz devoted most of his attention to economic matters, seeking to encourage greater and more varied cooperation between the two countries. The United States responded by allowing

Hungary to open a trade bureau on the Pacific coast. Relations with Selected Non-Western Countries

In the mid- to late 1980s, Hungary began to forge new economic

and political relations with three countries that had long been ignored by most other countries in Eastern Europe. Hungary had

broken off political relations with Israel in 1967, all but cut off re- lations with China as a result of the Sino-Soviet split, and neglected

South Korea for fear of angering the communist Democratic People's Republic of Korea (North Korea). Given the varying circumstances of these countries, Hungary had different reasons for seeking

to reopen relations with them, although in the case of all three countries, economic relations figured prominently. The Hungarians

sought to develop trade and commercial ties with Israel. Hungary

and China shared an interest in economic and political reform.

South Korea provided a key to opening Hungarian relations with

the newly industrialized countries of the Pacific Basin.

Israel

On September 14, 1987, Israel and Hungary agreed to open in- terest sections with a maximum of five diplomats in each other's

countries. The Hungarian interest section in Tel Aviv was to have

been established at the Swedish embassy and the Israeli interest

section in Budapest at the Swiss embassy. This low level of diplomatic representation was to facilitate economic, trade, cultural, and

humanitarian cooperation between the two countries and to help remove obstacles to consular relations.

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Government and Politics

In 1988 both Israeli foreign minister Shimon Peres and Israeli prime minister Yitzhak Shamir visited Hungary. Hungary designated Shamir's visit as private to avoid offending Arab states. Hungary sought to use both visits to strengthen trade and cultural

relations with Israel. Western observers regarded these high-level contacts as another step toward the reestablishment of full diplomatic relations.

China

In the late 1970s, Hungary began working toward better rela- tions with China. Trade and economic relations began to expand

in 1983, followed by the improvement of interstate relations

and cultural ties. However, because of ideological differences,

Hungarian-Chinese relations focused on economic ties. In 1985

the two countries signed a long-term foreign trade agreement to expand bilateral economic and trade cooperation. The two countries also agreed to exchange information on their economic re- form efforts. Imports from China rose from 0.6 percent of

Hungary's total in 1984 to 1.8 percent of the total in 1986. Exports to China rose from 0.8 percent of the total to 1.9 percent

of the total in that same period. Hungarians participated in several Chinese industrial development and reconstruction programs.

By 1982 both communist parties began to show an interest in

resuming political relations. In 1985 the HSWP sent the Chinese

Communist Party (CCP) the guidelines for its Thirteenth Party

Congress. In return, the CCP sent a message to the "dear comrades" of the HSWP, wishing the Hungarian people success in

the building of socialism.

Political relations intensified in 1987. In June Chinese premier

and acting general secretary of the CCP Zhao Ziyang visited Hungary. Kadar's visit to China in October 1987 marked the resumption of party-to-party relations. The Chinese praised Hungary's

reform program and called Kadar's visit "historic" because it symbolized a new era of friendship and cooperation between the two

peoples.

South Korea

In February 1989, Hungary and South Korea agreed to establish full diplomatic relations. Hungary thus became the first communist country to recognize South Korea. South Korea was one

of the most developed countries in Asia, and the Hungarians sought

South Korea's assistance in developing their economy. In addition, Central Committee secretary Sziiros argued that economic

ties to South Korea would facilitate the development of ties with

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Hungary: A Country Study

other countries of East Asia and the Pacific Basin and the increase

of foreign economic assistance to develop Hungary's economy.

Hungary and the Soviet Model

Hungary's interest in economic reform prompted not only political reform but also changes in its foreign policy stance. The re- gime found that successful economic reform required political

reform to encourage greater popular participation in governmental affairs and an increase in regime legitimacy. Thus, the regime

took certain steps to expand political participation and to promote more individual freedom. Successful economic reform also necessitated changes in Hungary's relationship to the world economy.

Hungary developed and diversified its relations with many Western

countries and with several non-Western countries. Political reforms

also encouraged Western countries, particularly the United States,

to furnish economic assistance to Hungary. Domestic economic

reform therefore provided the impetus for Hungary's willingness

to emancipate itself, if only to a small degree, from both the Soviet

political model and Soviet foreign policy tutelage.

In 1989 monographs on Hungary's political system and foreign

policy remained scarce. Hans-Georg Heinrich's Hungary: Politics, Economics, and Society presents an overview of the government, state, and party structures. Baruch Hazan's The East European Political System, although a general work, contains some useful information

about Hungary. Peter Toma's Socialist Authority also provides material on the political system. For most aspects of government and

politics, the interested reader is encouraged to turn to more specialized works. Istvan Kovacs's "The Development of the Constitution of the Hungarian People's Republic" discusses the

Constitution. Heinrich's Verfassungswirklichkeit in Osteuropa contains

much material on the Presidential Council. Barnabas Racz's "Political Participation and Developed Socialism: The Hungarian Elections of 1985" is the best secondary source on the electoral system.

George Schopflin's Censorship and Political Communication in Eastern Europe provides a perspective on the media. The best writings on

foreign policy are the reports prepared by analysts at Radio Free

Europe, particularly those by Alfred Reisch. In addition, an ac- count of Hungary's attempts to develop a new foreign policy role

for itself is found in works by Gyula Jozsa. (For further information and complete citations, see Bibliography.)

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Chapter 5. National Security
Two soldiers, Esztergom, 1918
THE HUNGARIAN PEOPLE'S ARMY (HPA) of the late 1980s

comprised ground and air forces under the supervision of the Ministry of Defense. The ground forces accounted for more than 77 per- cent of the total strength of the HPA, which in 1989 numbered

slightly less than 100,000 troops. The armed forces that constituted

the HPA were committed by treaty to the Soviet-East European

alliance known as the Warsaw Pact. Another military force, the

Border Guard, which patrolled the country's frontiers, was supervised by the Ministry of Interior, as were the National Police and

the Security Police. Hungary had no uniformed state security police.

The Workers' Guard, a part-time force similar to a national guard was an arm of the Hungarian Socialist Workers' Party. The HPA

and the Border Guard obtained manpower through a system of

universal male conscription; service in the other organizations was

voluntary. A small number of women also served in the armed

forces in auxiliary roles but were not subject to conscription.

Political changes in Hungary and the Soviet Union in the late 1980s promised drastic changes in the HPA's relationship to the

party and to the Warsaw Pact. Reformers proposed removing the

national security forces from tight party control to reduce the likeli- hood that they would be used for domestic political coercion. The

lessening of tensions in Europe had allowed the financially strapped

Hungarian government to severely cut its military budget without

fearing domestic or international reprisal. Both Soviet and Hungarian officials spoke cautiously of the possibility of a politically and

militarily neutral Hungary. In 1989 the Soviet Union had begun

withdrawing a small portion of its 65,000 troops stationed in Hungary. Ironically, by the late 1980s many Hungarians viewed this withdrawal with dismay because they had begun to see the Soviet

forces in their country as protection against an increasingly mili- tant Romania.

Political liberalization also encouraged changes in the criminal

justice system. Regime leaders promised to depoliticize the administration ofjustice and the police, although as of 1989 the apparatus

of repression remained intact. However, harsh measures against

dissent and public demonstrations, which had been taken as late as 1986, had stopped by 1989.

Historical and Political Setting

Hungary had a glorious military tradition in the Middle Ages.

However, long resistance to the Ottoman Turks left Hungary weak,

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Hungary: A Country Study

and the country was eventually partitioned by the Turks and the

Habsburgs in 1541. Thereafter—except for the period between

World War I and World War II —Hungary's armed forces have

been subject to those of an outside power, first the Habsburg imperial army and then, after World War II, the Soviet-dominated

Warsaw Pact. Hungary has played less of a role in the Soviet alliance system

than the other Warsaw Pact countries except for Romania. It had

the smallest army in the Warsaw Pact (see Glossary). Unlike the

German Democratic Republic (East Germany) and Czechoslovakia,

which border on the Federal Republic of Germany (West Germany), Hungary does not border on a member of the North Atlantic

Treaty Organization (NATO).

Historical Background and Traditions

Since the Magyars' conquest of the Carpathian Basin in 896,

Hungarians have had to be concerned about their national security. Twice in Hungary's history, a foreign invader killed nearly

half of the country's population, and at other times Hungarians

had to endure occupation by a foreign power seeking to destroy

their national identity. For this reason, a military leader who delivered the people, however temporarily, from foreign oppression be- came a hero.

The Medieval Period

Before the Magyar tribes conquered the Carpathian Basin in 896,

they lived a seminomadic life on the Russian steppe (see Early History, ch. 1). Their military organization and weaponry resembled

those of various Bulgar-Turkish tribes who also inhabited the steppe

at that time. Riding on swift steppe ponies, the Magyar horsemen

used recurved bows for battie at long distance, and they used sabers,

short lances, axes, and clubs for hand-to-hand combat. In the ninth

century, Arab historians wrote that the Magyars could muster

20,000 horsemen for battle. In the mid- to late ninth century, the Magyar tribes inhabited

the territory lying to the north of the Black Sea between the lower

Don and lower Dnepr rivers. From there they made armed forays

against kingdoms to the west, first against the Bulgars on the lower

Danube in 839 and then in 862 against Pannonia (see Glossary),

which at that time was part of the eastern Frankish Kingdom.

In the last decade of the ninth century, the Magyar tribes en- gaged in a series of military actions that culminated in their conquest of the Carpathian Basin. From 892 to 894, they raided

Moravia (in what is today the central part of Czechoslovakia) and

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National Security

Pannonia, gaining valuable knowledge about the fortified passes

in the Carpathian Mountains, the natural defenses of their future

homeland. In 894-95 three Magyar forces were operating in the

Danube Basin—one allied with Byzantium against the Bulgars in the south, one allied with the Franks against Moravia in Pannonia,

and a third that was invading what is now the Trans-Carpathian

oblast in the Soviet Ukraine. With most of their armed men away

in battle, the Magyars remaining in the Dnieper-Dnestr region

could offer little resistance to the Pechenegs, a steppe people who

attacked them from the east. Suffering great material losses, the

Magyars on the steppe fled westward, through the Carpathian

mountain passes, into their future homeland.

Even though their conquest of the Carpathian Basin was not yet

complete, in 899 the Magyars launched their first plundering ex- pedition against the rest of Europe. Terrorizing Europe for more

than half a century, the Magyar raiders reached southern Italy,

France, Spain, northern Germany, Greece, and even the gates of

Constantinople. However, the raids against Western Europe ended

when in 955 the Magyars suffered a disastrous defeat near Augsburg (in Bavaria) against a coalition headed by the Holy Roman

Emperor, Otto II. Hungary was one of the strongest military powers in Europe for nearly 250 years following its establishment as a kingdom in A.D.

1000 (see Medieval Period, ch. 1). Engaging in small wars for either

territorial or dynastic reasons, the country successfully resisted German and Byzantine attempts to meddle in its internal affairs. However, Hungarian armies could not stop the Mongols, who in- vaded the country in 1241. Although the attack was expected and

the border fortifications reinforced, the Mongols easily swept

through the Carpathian passes into the Danube Plain in March

1241 . In April the Hungarian army met one of the Mongol armies

in the area between present-day Leninvaros and Miskolc. The Hungarian force was surrounded and totally annihilated at Mohi, but

Hungary's King Bela IV managed to elude the Mongols and escape. The Mongol occupation was brief but devastating, wiping out

at least half the population. The country soon recovered economically but remained militarily weakened until the beginning of the

fourteenth century. Charles Robert (1308-42), the first Anjou king

of Hungary, required the nobles to maintain small armed units, or banderia, which served as a reserve force in addition to the nobility and mercenaries serving in the royal army. This renewed

military strength, combined with the fact that Hungary's neighbors were either militarily weak or preoccupied elsewhere, helped

create a relatively peaceful Eastern Europe in the fourteenth

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Hungary: A Country Study

century. Even the increasing threat from the Ottoman Turks, start- ing in the 1360s, was successfully resisted during this time.

The Modem Period

In the fifteenth century lived Janos Hunyadi, perhaps the greatest

Hungarian general of all time (see Renaissance and Reformation,

ch. 1). Although Hunyadi fought, not always successfully, against

the Turks several times in the 1440s, he is best known for his victory against them near Belgrade in 1456. There the Hungarian

forces decisively defeated the Turkish army and sent the sultan into

flight. However, the Turkish wars, together with the petty struggles on the western borderlands, drained the national treasury, and

increasingly heavy taxation and feudal obligations pushed the

peasantry into a rebellion that was eventually crushed. The country was economically weakened and racked by political instability,

and its military might declined precipitously after the death of King

Matyas Corvinus in 1490.

The Ottoman Turks threatened to invade in the 1520s, but the

Hungarian nobility seemed oblivious. The Turks successfully at- tacked Belgrade in 1521, and on August 29, 1526, met the small,

poorly equipped Hungarian army at Mohacs. The Hungarian

forces were nearly wiped out, and their king, Louis II, died in the

rout. The Turks captured Buda in early September but then re- treated southward, loaded with captives, and having no intention

of permanently occupying Hungary. However, the struggle between

the Habsburgs and the Hungarian contenders for the Hungarian

throne pulled the Turks deeper into Hungarian politics, leading

to their military occupation of Buda in 1541 and the entire Hungarian plain soon afterward. The Habsburg emperor was left with

a strip of land in northeastern Hungary (called "Royal Hungary"),

while Transylvania remained nominally independent under Turkish suzerainty (see fig. 3). The section of Hungary directly under

Ottoman rule became a wasteland, as various Turkish military for- mations periodically looted and destroyed settlements, killing the

inhabitants or selling them into slavery.

In Royal Hungary, the Habsburgs constructed a system of for- tifications along the border with Ottoman Hungary during the

seventeenth century. Many Hungarian nobles, having fled the Turkish zone of occupation, assumed military leadership of important

sectors of this border zone. Their serfs were obliged to work twelve

days annually on border fortifications, to perform military service,

and to pay a military tax. Several Hungarian military leaders during

this time achieved fame for their exploits. Miklos Znnyi's heroic

stand against the Turks in 1564 and Istvan Bocskay's victory over

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National Security

the Habsburgs in Transylvania in 1604-05 were bright spots in

the otherwise dismal military history of the Hungarians during the

period of Ottoman occupation (see Partition of Hungary, ch. 1). The failed Turkish attack on Vienna in 1683 began a process

of retreat that led to the Ottomans' being driven out of Buda in 1686 and most of Hungary by the end of the century. The subsequent Habsburg rule, however, proved to be just as cruel as that

of the Turks, and resulted in an eight-year rebellion led by Ferenc

Rakoczi (see Hungary under the Habsburgs, ch. 1). The Treaty

of Szatmar (1711) ended this war, during which half a million Hungarians died.

During the eighteenth century, the Habsburg Hofkriegsrat (see

Glossary) in Vienna directly controlled the Hungarian army, which was created in 1715. The Palatine (see Glossary) was commander

in chief of the armed forces in Hungary, but the Habsburgs deliberately left the office vacant. Responsibility for recruitment and supply was assumed by the Hungarian Viceregal Council, located in

Pozsony, the capital of Royal Hungary (present-day Bratislava in

Czechoslovakia), until 1785 and then transferred to Buda.

During the first half of the eighteenth century, the Habsburgs

established a Hungarian standing army made up of six high commands: one for Hungary proper and the others for Croatia, Slavonia, Transylvania, the Banat (in southern Hungary), and the

Military Frontier Zones (located in Croatia). The Hungarian standing army was supported by war taxes paid by the counties and

towns. Soldiers were supposed to serve for life but were usually

discharged after twenty years of service. This term was reduced

to ten years in 1830. Until 1840 soldiers were forced into service

by press gangs; later they were selected by lot. In 1790 the Hungarian nobility revolted against the Habsburgs

in an attempt to restore former feudal privileges and Hungarian

autonomy. A separate Hungarian army was formed from the

banderia, but it was dissolved when the Habsburgs managed to avoid war with Prussia and thus were able to redirect their imperial forces

toward Hungary.

Hungarian soldiers fought in the Habsburg army during the wars

against France from 1792 to 1815. Except for a small battle at Gyor

in 1808—which the French won—no military action took place on

Hungarian soil. Nevertheless, the Hungarian troops suffered more

than 150,000 casualties during these wars. The revolution that broke out in Vienna in 1848—part of a wave

of revolts that swept across Europe that year—caused enough dis- ruption in the imperial government to allow the Hungarian nobility to seize more political autonomy for Hungary. After quelling

227
Hungary: A Country Study

the revolt in other parts of the empire, the Habsburg government

in September 1848 sent forces into Hungary under Josip Jelacic,

the Habsburg governor of Croatia. Jelacic 's army was met by a

hastily formed Hungarian army and was driven out of the country. The government in Vienna attacked again in the late fall and

even occupied Pest in early December. In the spring, however,

these Habsburg forces were driven out by a Hungarian army under

a young major, Artur Gorgei, while another Hungarian army,

under General Jozef Bern, drove the Habsburg forces out of Transylvania. Nevertheless, in June 1849 the Russian army came to the rescue of the Habsburgs and invaded Hungary through the

Carpathian Mountains. Outnumbered and outgunned, Bern's small

army was defeated in August, and Gorgei surrendered his forces

to the Russians shortly afterward. The revolt was crushed and its leaders hanged, although Lajos Kossuth, the leader of the revolutionary government, escaped to the Ottoman Empire.

Although the Compromise of 1867 establishing the Dual Monarchy of Austria-Hungary gave each country separate parliaments

and separate governments, the Hungarian military forces remained

under centralized Habsburg control (see Dual Monarchy, ch. 1). Thus, Hungarian soldiers, together with the other troops of nations under the Habsburg monarchy, found themselves mobilizing for war in the summer of 1914, first against Serbia and then

against Serbia's ally, Russia. The largest Hungarian army in his- tory fought under the imperial flag on the side of the Central

Powers.

The Military in Trianon Hungary

Hungarian independence came in 1918, when the Habsburg Empire's disintegration gave not only the Hungarians but also the empire's other nationalities the opportunity to establish sovereign

states. Hungarian soldiers, scattered among the Habsburg troops

at various places within and outside the empire, were ordered home

by the government of Mihaly Karolyi in the fall of 1918. They found

their country racked by political and economic strife. Hungary could

not resist the Romanian army's advance to Budapest but did drive

the Czechs out of northern Hungary (present-day Slovakia).

However, the Treaty of Trianon signed in June 1920 pushed the

Hungarian army back close to the present-day boundaries (see

Trianon Hungary, ch. 1). Moreover, the Treaty of Trianon limited

Hungary's military forces to 35,000 soldiers.

Motivated by a desire to regain lands lost as a result of the Treaty

of Trianon, Hungary allied itself with Italy in the late 1920s and

with Germany during the 1930s. Diplomacy and alliances, rather

228
Liberation Monument on

Gellert Hill in Budapest

Courtesy

Sam and Sarah Stulberg

than military action, brought about the return of some former Hungarian lands in 1938-39. Hungary participated in the German in- vasion of the Soviet Union in June 1941 by committing a small

force to aid in the German occupation of the Ukraine. After January 1942, however, the Hungarian army was thrown into the front

lines with the Germans. Underequipped (one machine gun was

allotted for every kilometer of front line) and lacking warm cloth- ing and fuel, this army suffered about 200,000 casualties at the

battle of Stalingrad during the winter of 1942-43. This defeat, combined with the Soviet rollback of the German invasion, quickly

turned Hungarian public opinion against the war. Many Hungarian

prisoners of war fought on the side of their Soviet captors or were

sent as partisans behind the Axis lines in southeastern Europe. Tired

of the half-hearted Hungarian war effort, the Germans occupied

Hungary in March 1943. Admiral Miklos Horthy, the Hungarian regent, attempted to negotiate an armistice with the Allies in

the fall of 1944. Horthy was soon arrested by the Germans, but

by then the Red Army had already entered eastern Hungary. The

Red Army captured Budapest in December and pushed the Germans completely out of Hungary by early April 1945.

Sovietization

By the end of World War II, the public had little respect for the

army because the war had been lost and the territory that had been

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Hungary: A Country Study

reincorporated after 1938 was given back to Czechoslovakia, Romania, and Yugoslavia. Soviet officers believed Hungarian army

officers to be as guilty as their German counterparts and, because

of the undistinguished performance of the Hungarian army during the war, the Soviets had no respect for Hungary as a military

force. The communists distrusted the former army officers, and

these officers hated the communists. After the Hungarian People's

Republic was established in 1949, many of these officers were

punished and often sent to the harshest labor camps (see Postwar

Hungary, ch. 1). The postwar Hungarian army developed out of divisions put

together to fight Germany after Hungary had made peace with the

Allies in December 1944. Under Soviet pressure, however, the army

was quickly demobilized in 1946, and most officers were removed

because of pro-Western or anticommunist sympathies. A new force was then created under an independent command controlled by

the Hungarian Communist Party, and a new army—the Hungarian People's Army—officially emerged in 1948. The military clause

of the peace treaty that Hungary signed with the Allies permitted

it to have an army of 65,000 troops and an air force of 5,000 per- sonnel and ninety aircraft. According to American expert Ivan Volgyes, Mihaly Farkas,

the minister of defense from 1948 to 1953, served as the chief ar- chitect of the new Hungarian People's Army. Following Soviet

orders, Farkas, himself an avowed Stalinist, set out to imitate the

Soviet army and to Sovietize the Hungarian army. The HPA's

organization mirrored that of the Soviet army. Its uniforms, ranks

and insignia, decorations, and "general privileges" were all based on the Soviet model, as was the "dual command system," whereby

the party attached political commissars to each military commander

to ensure the political reliability and ideological commitment of

the troops. These political officers were assigned by the Ministry

of Defense's Main Political Administration (see Glossary) and were

given instructions by the Administrative Department of the

Secretariat of the Hungarian Workers' Party (HWP—on November 1, 1956, renamed the Hungarian Socialist Workers' Party

HSWP). Although this dual command system was still in effect in the late 1980s, it placed the most restrictions on military com- manders in the period between 1949 and 1955.

Soviet influence further increased when, starting in November

1948, hundreds of Soviet military "advisers" were assigned to the

Hungarian army at all command levels down to the regimental

one. Although theoretically acting only as advisers, they influenced

all important decisions. Beginning in December 1948, thousands

230
Budapest, site of start of 1956 uprising

Courtesy Gustav Forster

of Hungarians began attending Soviet military and political academies to gain technical expertise and political indoctrination. Hungarian generals were sent to Soviet general staff schools (see Soviet

Influence, this ch.).

The regime managed to create a communist officer corps by actively recruiting workers and peasants into the higher ranks of the

military. By 1954 a little more than half of the officers were chil- dren of manual laborers, while about one-third came from peasant

families. The officer corps provided upward mobility for the former

"underclass," while providing material benefits in a country where

standards of living were low compared with those of Western

Europe.

State Security Forces and the Revolution

Ironically, by the time the HPA had become thoroughly Sovietized, the first waves of de-Stalinization rippled through the Hungarian Workers' Party. In 1953 the Stalinist party leader, Matyas

Rakosi, lost his position as prime minister, and the Stalinist minister

of defense, Mihaly Farkas, fell from power. Professional training

for officers was instituted at the military academies. A better educated and increasingly professional officer corps began to question

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Hungary: A Country Study

the dogmatic teachings of the party. Tension arose when the "internationalism" (a euphemism for following the Soviet line in for- eign and military policy) stressed by the communist state clashed

with the latent nationalism of the officers. These officers also re- sented special privileges bestowed on both the State Security Department (Allamvedelmi Osztaly—AVO—the name for the pre- 1956

secret police) and the Soviet officers in the country.

Although the HPA did not participate in the Revolution of 1956

as an organized force, its role in that conflict demonstrated its political unreliability to both the regime and the Soviet Union (see

Revolution of 1956, ch. 1). Organized military support for the revolution did not occur for two reasons. First, before being sent home

on October 28-29, the Soviet military advisers in Hungary ordered

various sections of the Hungarian army to disperse. Second, Prime

Minister Imre Nagy refused to order the HPA to oppose the final Soviet invasion that took place on November 3. However, not only

did conscripts refuse to fire on mass demonstrations that took place on October 23 (although the AVO forces did), but some even went

over to the insurgents and supplied them with weapons. Supposedly "politically reliable" cadets from military academies likewise

joined the insurgents, as did some military officers. One of the most

important military figures to join the revolutionaries was Colonel

Pal Maleter, the commander of an armored unit sent to recapture

the Kilian barracks in Budapest from the Freedom Fighters. In

a parley with the insurgents, Maleter became convinced that they

"were loyal sons of the Hungarian people," and he joined them.

Maleter eventually became minister of defense in the Nagy government; he was later tried and executed with Nagy in 1958.

The regular police, at least those in Budapest, were likewise sympathetic to the insurgents. On October 24, Sandor Kopacsi, chief

of the Budapest police, gave orders to supply the revolutionaries

with weapons. Budapest police joined the rebels but did not fight

the Soviet army. Police headquarters then became headquarters

for revolutionary forces. Many members of the dreaded AVO, by contrast, fell victim

to the public's wrath. During the revolution, AVO recruits deserted,

and its professional officers found themselves hunted down by mobs.

Some lynchings occurred. The regular police helped disarm the

security police, and those security police known to have committed acts of state terror against the citizenry were taken into cus- tody to await trial (some were summarily executed). Most AVO

officers were detained by the revolutionary government, which

abolished the security police on October 29. At first, Moscow sought

to suppress the insurgency with the forces at hand. Soviet armored

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National Security

units began arriving in Budapest in the early morning of October

24. For the next four days, they fought intermittently with the in- surgents. They were unable to dislodge Hungarian army units in

the Kilian barracks that were under the leadership of Colonel

Maleter or the units near the Corvin Cinema. Soviet forces and

advisers publicly withdrew from Budapest on October 28. On the

surface, it seemed as through the revolt was victorious.

On October 30, the government formed the Revolutionary Committee of the Armed Forces, with representatives from the army,

police, and the Freedom Fighters. The following day, the appointment as its head of General Bela K. Kiraly, who had been imprisoned from 1951 to 1956, was announced. On November 1, 1956,

Hungary withdrew from the Warsaw Pact and declared political

neutrality. This act was in response to reports of the Soviet army's

entering the country in force on October 31. The Soviet army began pouring into Hungary on November 1 and proceeded to occupy airfields and other strategic points in the

country. The invasion used 120,000 soldiers taken from eleven fully

staffed, "category-one" (forces of three-quarters' to full strength)

divisions in Romania and the Ukraine. Volgyes believes that the

coordinated nature of the attack and the positions taken by Soviet

units suggest that the Soviet Union had planned the invasion far in advance.

The Soviet army returned to Budapest in force on November 4. The HPA, still splintered and riddled with pro-Soviet officers, could

not offer organized resistance. The Freedom Fighters had neither

the manpower nor the ammunition to oppose the Soviet army for long. After the fighting stopped, the Soviet authorities began to round up suspects, disarm the Hungarian People's Army, and carry out summary executions. In the next few years, the Hungarian

courts handed down an estimated 2,000 death sentences, primarily to street fighters.

The Postrevolutionary Period

The HPA underwent a purge after the revolution. Officers were

required to sign a declaration condemning the revolution, praising Hungarian-Soviet "friendship," and pledging allegiance to the

new government ofJanos Kadar. Nearly 20 percent of the officer

corps refused to sign the declaration, even under threats, and were

expelled from the army. In the year following the revolution, the

army was reorganized under Soviet supervision, with increased

power given to the political commanders. However, in order to assuage public opinion, the official mission of the army changed

from "defending socialism" to defending Hungary.

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Hungary: A Country Study

The HPA became an integral part of the Warsaw Pact forces

in 1957 but did not participate in pact military exercises until 1962.

The HPA participated, although reluctantly, in the Soviet-led

Warsaw Pact invasion of Czechoslovakia in August 1968. In 1989

the Hungarian government revealed that the HPA participated in

the invasion because the Kadar regime feared that failure to do

so would have halted Soviet exports of raw materials to Hungary.

Through the late 1980s, the HPA and Soviet troops held joint

exercises on Hungarian soil twice a year, and Hungarian forces

participated in exercises held on the territory of other Warsaw Pact

countries. Rarely, however, did forces from the other Warsaw Pact

nations conduct military exercises in Hungary.

Government and Party Control

Ultimate responsibility for defense policy lay with the HSWP

Politburo (see Party Structure, ch. 4). The party exercised several

channels of control over the armed forces. The party officially controlled the army through the Government Administration and

Administration Department of the Secretariat. The head of the

Ministry of Defense's Main Political Administration reported to

this party body and to the minister of defense. The Main Political

Administration, in turn, controlled the political departments at the

division level and the political deputies of the commanding officers

at the subdivision level. Party cells were subordinated to the deputy

commanders for political affairs. The Army Committee of the Central Committee of the HSWP supervised overall political work in

the army.

During peacetime the Presidential Council, whose members were

subject to the HSWP's nomenklatura (see Glossary) authority, over- saw national defense; the defense committee of the National

Assembly also worked closely with the Presidential Council (see State Apparatus, ch. 4). At the government level, the Council of

Ministers' Committee of Defense supervised the defense committees of Budapest and those of the counties. The minister of defense was a member of the defense committees of both the Council of

Ministers and the National Assembly in peacetime. During wartime, the president would transform the Presidential Council into

the National Defense Council, with the minister of defense leading the war effort. In theory the Presidential Council appointed and dismissed

officers, but in fact this responsibility was assumed by the minister

of defense. The minister of defense had always been a member of

the Central Committee of the HSWP, the highest ranking officer,

and the commander in chief of the armed forces. He reported to

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the chairman of the Council of Ministers and to the HSWP Polit- buro in peacetime. In late 1989, Hungary's minister of defense was Colonel General Ferenc Karpati, who was appointed in December 1985 upon the death of his predecessor, Colonel General

Istvan Olah. Karpati had joined the Hungarian Communist Party

in 1945 at age nineteen. His chief of staff was Lieutenant General

Jozsef Pacsek. At the same time, Brigadier General Istvan Bracsok

served as secretary of the HSWP's People's Army Committee, while

Lajos Krasznai served as chief of the HPA's Main Political Administration.

Party membership was essential for career advancement in the

military; hence, party membership among officers was high; ac- cording to Karpati it was 80 percent in 1989. This high level of

party membership among officers was another means of party control over the military. The party began recruiting prospective

officers in the military academies, where students underwent a

screening process to assess their political reliability.

By contrast, party membership among enlisted men and non- commissioned officers (NCOs) was relatively low. Estimates placed

party membership at 0.5 to 0.8 percent of those persons drafted,

compared with about 4 percent for the general population of the same age. In the late 1980s, however, party membership was seri- ously declining, and it can safely be assumed that the percentage

of HSWP members among the military rank and file was dropping as well. Expenditures

The military budget underwent a series of reductions in the late 1980s because of the country's worsening economic problems. The

1987 estimated military budget, based on Ministry of Finance in- formation, was US$867 million (40.745 billion forints). The 1989

budget was cut to US$576 million (40.3 billion forints) even before January 1, 1989. The proportion of the military budget devoted

to the acquisition of new technology dropped from 32 percent in

1988 to 16 percent in 1989. From 1980 to 1985, this proportion

had averaged about 50 percent of the military budget.

In the late 1980s, the Soviet Union and other Warsaw Pact countries expressed displeasure with the relatively low Hungarian defense

budget, but this pressure did not induce the Hungarians to increase

the percentage of the gross domestic product (GDP—see Glossary)

devoted to defense. Only Romania spent a smaller percentage of

GDP on national defense than Hungary, but in absolute numbers

Hungary's outlay was the smallest in the Warsaw Pact.

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Hungary: A Country Study

By contrast, the funds spent by the government for armed forces

subject to the Ministry of Interior and the Workers' Guard increased

by nearly 22 percent from 1987 to 1988 and by nearly 24 percent

from 1988 to 1989. Much of this increase, however, was expected

to be canceled out by inflation and price reform.

The budget for the defense and interior ministries had to be approved by the defense committee of the National Assembly, a body

that managed to increase its power during the late 1980s. Nevertheless, in 1989 the committee once again approved the state budgets

for the ministries of defense and interior and, for the first time,

the Workers' Guard, without inquiring about how the money was

to be spent.

Military Industry

In the late 1980s, the government's defense industry produced

only a small amount of the HPA's needs. Major weapons were

obtained from the Soviet Union. Communications and instrumentation equipment made up about three-quarters of the country's

military production, while artillery and infantry weapons and ammunition made up another 12 percent. The production of vehicles

and aviation components contributed about 8 percent, while chemicals and light industrial products formed the remaining 5 percent.

In early 1989, military industries anticipated a 31 -percent decline

in production compared with the previous year because of the

slashed military budget and a drop in exports. Factories that

produced mostly military equipment were expected to be hard hit. Military orders, mostly long-range microwave equipment and

accessories, made up about 80 percent of the production of the Precision Mechanics Enterprise. Military orders for handguns made

up 35 percent of the Weapon and Gas Appliance Factory's production and 25 percent of the orders for the Diosgyor Engineering Factory. The Machine Factory at Godollo, which produced components

for military vehicles and tanks and repaired army equipment, was owned by the Ministry of Defense and operated by soldiers. In January 1989, it was operating at 50 percent of capacity because orders

from the other Warsaw Pact countries dropped by 50 percent and

a cut in sales to the HPA was anticipated. The military production of the Videoton telecommunications factory, valued at US$132

million in 1988, was expected to fall to US$84.9 million in 1991,

and more than 2,000 of its 7,000 workers were expected to be

released, resulting in a 40-percent idle manufacturing capacity. The

effects of cutbacks in military procurement on the euphemistically

named "Lamp Factory" (Lampagyar), which produced pistols and

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automatic rifles, and the Danuvia Factory, which manufactured

machine guns, was not known.

Soviet Influence

In the late 1980s, Soviet influence on Hungary's HPA was exercised in two ways. Numerous organizational ties linked the Soviet

military with Hungary's armed forces. An equally important in- fluence was the fact that a major component of the Warsaw Pact's

military forces—the Southern Group of Forces—was stationed in Hungary.

Loyalties and Control

Soviet leader Nikita S. Khrushchev (1953-64) once said that the

Soviet government had never trusted the Hungarian army. Despite

the training that Hungarian officers had received from the Soviet

military since 1948 and the Soviet infiltration of the HPA's top

command structure, the Revolution of 1956 confirmed Moscow's

apprehensions. The events of 1956 threw the loyalty of even the

top Hungarian military elite into question.

In the 1980s, Soviet influence on Hungarian military officers was much greater among the upper-level officers than among lowerlevel officers, regimental sergeants major, or NCOs (see Uniforms

and Rank Insignia, this ch.). The higher-ranking officers saw their careers tied to Hungary's association with the Soviet Union and

the Warsaw Pact, while those of lesser ranks saw Soviet troops in

Hungary as an army of occupation.

The Soviet Union exerted its military influence within Hungary

in a variety of ways. The obvious means were official ministry-toministry contacts and the presence of Soviet troops in the country. In addition, the chief Soviet representative of the Warsaw

Treaty Organization in Hungary exercised day-to-day control of

both the Soviet army and the Hungarian People's Army. Also, the

Soviet military attache and staff in the Soviet embassy maintained

a liaison office with the HSWP Central Committee's Government

Administration and Administration Department, the Ministry of

National Defense's Main Political Administration, and the Central Committee of the HPA's party organization. And, finally, the

representative and staff of Soviet military intelligence met frequently

with various military and political authorities.

Nevertheless, the HPA was hardly a pawn of the Soviet military establishment. During the 1980-81 crisis in Poland, the Hungarian military leadership received instructions from the HSWP

not to intervene in Poland without orders from the party. This order

emanated not only from a purportedly sovereign government's

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Hungary: A Country Study

desire to retain control over its own military but also from a determination to maintain civilian control over the military.

In the late 1980s, the HPA also pressed for ''more democracy"

in Warsaw Pact decision making. This term justified requests for giving Hungary and other non- Soviet members a greater voice in

decision making within the pact and for rotating the command of

the Warsaw Pact forces among all the military leaders of the nonSoviet Warsaw Pact (NSWP) countries.

Soviet Southern Group of Forces in Hungary

Soviet troops have been stationed in Hungary since April 1945,

when they pushed the German army completely out of the country. After Hungary signed a peace treaty with the Allies in 1947,

Soviet forces remained in order to secure lines of communication

with Soviet troops occupying Austria. Soviet forces withdrew from

Austria in May 1955 but remained in Hungary at the request of

the High Command of the Warsaw Treaty Organization, which was formed one day before the Austrian treaty was signed.

In May 1957, the Soviet-installed government under Kadar

signed an agreement with the Soviet Union to legally recognize

the Soviet forces that had occupied the country in 1956 (see Revolution of 1956, ch. 1). Called the Decree Having the Force of Law

No. 54 of 1957, it justified the Soviet presence as a defense against

NATO "aggression" and West German rearmament. The agreement mentioned no specifics, such as the number of Soviet troops,

their deployment within Hungary, and the facilities made available to them, although such items may have been written down

in a secret protocol. The version of the agreement made public mentioned only that the Soviet troops were to be stationed "indefinitely"

and that the compact could be changed only by mutual consent.

Officially called the Southern Group of Forces (SGF), Soviet

troops in Hungary numbered 65,000, according to NATO esti- mates made in November 1988. At that time, the troops were under

the command of Lieutenant General Aleksei A. Demidov. The

Soviet forces in Hungary corresponded strategically to the Group

of Soviet Forces stationed in East Germany, the Northern Group

of Forces in Poland, and the Central Group of Forces in Czechoslovakia.

The SGF, headquartered in Budapest, commanded the 13th

Guards Tank Division in Veszprem, the 2d Tank Division in

Esztergom, the 253d Motor Rifle Division in Szekesfehervar, and

the 93d Guards Motor Rifle Division in Kecskemet. These forces were supported by an air assault brigade, five fighter regiments,

two fighter- ground attack regiments, several combat helicopter

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units, and reconnaissance aircraft. In a war against NATO, the

SGF and the Hungarian troops would be used as part of the Southwestern Theater of Military Operations (teatr voennykh deistvii—

TVD).

In December 1988, Soviet leader Mikhail S. Gorbachev an- nounced that the Soviet Union would unilaterally remove some

of its forces from Eastern Europe. This force reduction, which began

in April 1989, was to be carried out over a two-year period. It would

include the tank division deployed at Veszprem and the surrounding

area, an armored training regiment, a paratroop battalion and in- terceptor squadron based at Tokol airport in Pest County, a chemical defense battalion, and the SGF training school for NCOs in

Szolnok. This partial withdrawal would remove 450 tanks; 200

guns, trench mortars, and mine throwers; 3,000 vehicles; and

10,400 of the 65,000 Soviet troops in Hungary. In April 1989, Hungarian foreign minister Gyula Horn said that all Soviet soldiers

might be removed from the country in the first half of the 1990s.

The Soviet troops were generally isolated from Hungarian life. They did not interfere in Hungarian affairs and appeared in public usually in small groups and only in certain restricted areas. The

Hungarians generally did not like the Soviet soldiers and did not

fraternize with them.

External Threats to National Security

In the late 1980s, Hungary's defense policy was in a state of flux. The government no longer stressed the possibility of a NATO at- tack, nor did it consider likely a Soviet intervention to halt Hungary's march toward reform. In fact, spokesmen for both Hungary

and the Soviet Union publicly alluded to a possible withdrawal of

Hungary from the Warsaw Pact and the proclamation of neutrality for Hungary such as that enjoyed by Finland and Austria. But

both sides spoke cautiously about this possibility, and the Hungarian government stressed that it did not wish to pursue neutrality at the risk of upsetting the balance of power in Europe.

Threat from the North Atlantic Treaty Organization

Traditionally, Hungary's role in the Warsaw Pact had been to follow the Soviet lead on matters of national and bloc defense. But

even during the early and middle 1980s, when member countries

of the North Atlantic Treaty Organization (NATO) began install- ing intermediate-range ballistic missiles in Western Europe in

response to the installation of Soviet SS-20 missiles in the western

portion of the Soviet Union, the attitude of the Hungarian government toward the West was never as rabidly vehement as that

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Hungary: A Country Study

displayed by the governments of Czechoslovakia or East Germany

(see Principles of Foreign Policy, ch. 4). In fact, the Soviet Union

had criticized Hungary for not spending enough on its military

and for stressing defense of the country (honvedelem) instead of

defense of the countries of the Warsaw Pact. Western analysts speculated about Hungary's military role in a Warsaw Pact conflict with the West. Hungary does not border

any NATO country and therefore was not in the front line of

Warsaw Pact troop deployment. It was seen to play a supporting

role, primarily by supplying military engineering support and some

antiaircraft defense. In a war with NATO, Hungarian forces would

either be used in the Warsaw Pact's Western Theater of Military

Operations against West Germany or in the Southwestern Theater of Military Operations against NATO's southern flank. In both

scenarios, Hungarian forces would have to enter the territory of

neutral countries. For instance, Yugoslavia's neutrality might be

breached to project Soviet and Warsaw Pact power in the Mediterranean. Hungarian military engineering support would prove crucial in such a campaign.

Threat from Romania

During the 1980s, the Hungarian government broke its silence

about Romania's oppression of its Hungarian minority, numbering about 2 million to 2.2 million people (see Relations with Other

Communist Neighbors, ch. 4). Under Soviet pressure and for the

sake of socialist solidarity, the Hungarian government had refrained

from criticizing Romania, but increasing domestic pressure forced

it to act. As the war of words between the two countries heated up, so did the potential for armed conflict. In July 1989, Der Standard, published in Vienna, reported that a secret meeting of the Hungarian

state and party leadership had taken place in November 1988 in

which the military was asked to assess the strategic balance between

Hungary and Romania. The resulting report, published in February 1989, revealed Hungary's "striking military inferiority." Hungary had no fortifications on its border with Romania, and in a

private meeting Romanian leader Nicolae Ceau§escu allegedly

warned Karoly Grosz, Hungary's party leader, not to install such

defenses. During the summer of 1989, Hungarian diplomats hinted

at fear of attack by Romania. Der Spiegel, published in Hamburg,

reported in July 1989 that Hungary felt threatened by the Condor

intermediate-range missiles that Romania had acquired with "German and Argentine help." At a July 1989 Warsaw Pact meeting

in Bucharest, Ceau§escu was said to have threatened Hungary with

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war, although representatives of both countries agreed that steps

had to be taken to stem the rising tension. Ironically, by this time

the Hungarian opposition had stopped insisting that Soviet troops

leave the country because they were seen to be the country's main

protection against Romania.

Threat from the Soviet Union

From the mid- 1940s through the mid-1980s, the threat of a Soviet

invasion prevented the other Warsaw Pact countries from deviating from Moscow's prescribed domestic and foreign policies. The

Soviet invasion of Hungary in 1956 demonstrated that Moscow

would act if it believed that changes in that country threatened the

security of the Warsaw Pact or the leading role of the communist

party in Hungary. After economic reforms began in the 1960s,

Hungary's government and party leaders were careful to take Soviet

sensitivities into account. However, in the late 1980s, Moscow

showed that it was sympathetic rather than hostile to reforms within

Hungary, thus lessening the chances of a Soviet invasion.

The Hungarian Armed Forces

Compared with the other countries in the Warsaw Pact, in the

late 1980s Hungary had the smallest army and air force, as well

as the fewest artillery pieces, light armored vehicles, and antiaircraft weapons. It ranked last, along with Bulgaria and Romania,

in the number of military helicopters, and only Romania had fewer

tanks. In addition to lagging behind its Warsaw Pact allies quantitatively, the quality of its military equipment was decidedly "middle level," according to Volgyes. As of mid- 1988, the military did

not possess modern Soviet T-84 tanks, MiG-29 fighter aircraft, or the new Soviet 5.48mm infantry weapons. Western analysts have

claimed that the Hungarian military forces had the lowest combat

readiness in the Warsaw Pact and were one of the non- Soviet

Warsaw Pact military forces least trusted by Moscow. The HPA's

military construction branch was the only section of the armed forces held in high regard by all observers.

Of approximately 100,000 personnel on active duty in the HPA

in 1988, about 64,000 were conscripts. During a national emergency, Hungary could mobilize about 900,000 trained men. Ground Forces

In 1989 about 77,000 troops served in the ground forces (commonly referred to as the army), and about 45,000 of them were

conscripts. As in other Warsaw Pact armed forces, the army was by far the largest service.

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Hungary: A Country Study

The reorganization of the HPA, still under way in 1989, at- tempted to transform its overall structure from one army and one

corps possessing one tank and five motorized rifle divisions into

three corps with a combined total of five tank brigades and ten motorized rifle brigades. This reorganization set the HPA apart

from the other armies of the Warsaw Pact, which were still primarily

divided into divisions and regiments. The leadership of the HPA

believed the reorganization would make the armed forces more effi- cient by reducing the number of commands by about one-third.

In the late 1980s, the central headquarters of the HPA was

in Szekesfehervar, with the three corps headquartered in Tata,

Kaposvar, and Cegled, respectively. Each corps consisted of five brigades subdivided into battalions, including an independent

artillery battalion and an engineering battalion. The largest corps, centered in Tata, possessed three tank brigades and two motorized

rifle brigades. The two other corps each had one tank brigade and

four motorized rifle brigades. The corps stationed in Cegled was

a skeleton unit. The three corps together possessed three SA-6

surface-to-air missile (SAM) regiments.

In addition to the three corps and fifteen tank and motorized

rifle brigades, the HPA possessed independent artillery and Scud

surface-to-surface missile brigades, as well as an airborne battalion

(the thirty- seventh, stationed in Szolnok). An antitank regiment, an antiaircraft artillery regiment, and an SA-4 SAM regiment were

still likewise army, and not corps, troops. Independent engineering battalions were used for rail and roadway repairs, construction projects, and maintenance and repair of telephone and power

lines. In 1988 the Danube Flotilla, incorporated into the army in 1968,

consisted of 700 men and eighty-two vessels, including ten Nestin

MSI (riverine) boats. During wartime its chief functions would be

to clear the Danube and Tisza rivers of mines and to assist the army

and its materiel in river crossings.

In 1988 the army possessed 1,200 T-54 and T-55 battle tanks.

The Soviet Union has been producing these tanks since 1945, but some have been built as recently as 1979, and many have been

upgraded with infrared night-vision systems and laser range-finders.

The HPA also had about 100 T-72s, a model that appeared in

Soviet units in the early 1970s and began to be seen in Warsaw

Pact armies about 1980. Hungary also possessed about 100 PT-76

light tanks.

The HPA's artillery inventory in 1988 included 225 M-1938

(122mm) and 50 M-1943 or D-l (152mm) howitzers and 100 D-20

(152mm) gun howitzers. It also included 90 2S1 (122mm) and

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20 2S3 (152mm) self-propelled guns and 100 M-43 (120mm) mortars. The HPA had fifty BM-21 (122mm) multiple-rocket launchers

and twenty-four Frog-7 and Frog-9 Scud surface-to-surface missile launchers. Antitank defense consisted of 100 AT-3 Sagger (including BRDM-2 self-propelled) and 100 AT-4 Spigot antitank

guided weapons, 125 SPG-9 (73mm) recoilless launchers, and 100

D-44 (85mm) and 50 D-12 (100mm) antitank guns. Air defense

weaponry consisted of 80 S-60 (57mm) towed antiaircraft guns,

50 ZSU-4 SP (23mm) self-propelled antiaircraft guns; and 30 SA-4,

60 SA-6, 350 SA-7, and 50 SA-9 SAMs.

Reconnaissance units in the HPA possessed an estimated 300

BRDM-2 and 400 Hungarian-produced FUG-65 (OT-65) scout

vehicles. Motorized infantry units were equipped with 350 BMP-1

infantry combat vehicles and 1,000 Hungarian-produced PSz-H-IV

(FUG-70) armored personnel carriers. The PSz-H-IV had been

in service since 1983, but production was discontinued; it was to be replaced by Soviet BMP- 1 tracked mechanized infantry combat vehicles.

In the late 1980s, the HPA used as its standard infantry weapon

the Kalashnikov 7.62mm AKM assault rifle and its 7.62mm

AMD-65 version with a folding stock. The 7.62mm RPK and RPD

light machine guns were also in service. As of mid- 1988, the armed

forces planned to convert to the new standard Soviet 5.45mm

weapons, but the actual conversion had not yet begun.

The HPA imported most of its ground forces weaponry from

the Soviet Union. Domestic industry supplied only a small portion of the army's needs, such as small-caliber weapons (pistols,

rifles, and machine guns), some types of artillery pieces, and ammunition.

In 1988 the HPA's stock of road transport vehicles consisted

mostly of Hungarian-produced heavy-duty D-566 trucks, Soviet

GAZ-69 and UAZ-69 trucks, and East German Robur LO-1800

trucks. Soviet Ural-355 and ZIL-131 trucks had just been in- troduced into service.

Engineering equipment included PMP heavy pontoon bridges,

GSP ferries, K-61 and PTS amphibious vehicles, T-54 MTUs,

MT55s, and TMM truck-mounted bridging units to build shorter spans. Hungary built bridging equipment under license from the

Soviet Union, Czechoslovakia, and East Germany. Signal troops

used Hungarian-made and Soviet-made equipment.

The HPA's engineering and construction corps were considered

top notch among the Warsaw Pact countries for their excellent support of amphibious operations. Even Western analysts have called

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Hungary: A Country Study

this contribution Hungary's most important one to Warsaw Pact

defense.

If engineering was the strongest component of the HPA, logistics was its weakest. Only the regular army was trained in logistics

and provided with means of transportation. In a war, the underequipped units would have few logisticians and an insufficient number of vehicles.

In August 1989, the Ministry of Defense disbanded an armored

brigade of about 2,000 officers and enlisted men stationed in

Szabadszallas in Bacs-Kiskun County as part of a planned 9 per- cent reduction of troops and arms in the army scheduled for 1989

and 1990. Most of the heavy weaponry at the site was scheduled

to be melted down.

Air Force

In 1989 the Hungarian air force was organized into one air

division and one air defense division, both headquartered at Veszprem. The air division consisted of three fighter or fighterbomber regiments of three squadrons each. The air division also

possessed one helicopter regiment consisting of three squadrons, one transport regiment consisting of two squadrons, and one re- connaissance squadron. The air defense division, responsible for ground-based air defense, consisted of three SAM regiments. Air

force personnel in 1988 numbered approximately 22,000, of whom

8,000 were conscripts. The ratio of career personnel to conscripts was slightly less than two to one. In 1988 the air force possessed 135 combat aircraft and 40 at- tack helicopters. The three fighter-bomber squadrons possessed

ninety MiG-21F/PF/bis/U and forty-five MiG-23M fighter- ground

attack aircraft. The reconnaissance squadron flew ten Su-22 aircraft. The two transport squadrons possessed fifteen An 24/26s and

An-2s. The three helicopter squadrons together had forty Mi-24

attack helicopters, twenty-five Mi-8 medium-transport helicopters,

twenty-five Ka-26 helicopters for training and civilian duties, and

five Mi-2 light transport helicopters. Yak-1 Is and Yak- 18s, L-29s,

and MiG-15UTIs were used for training purposes. The air defense

system consisted of one division with three SAM regiments possessing some twenty sites and 120 SA-2/3 missiles. In June 1989,

Brigadier General Istvan Schmidt, commander of the Hungarian

air force, announced that no modernization of the air force would

take place in the near future, meaning that Hungary would continue to rely heavily on the units of the Soviet air force stationed

in the country.

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Manpower

Article 70 of the Constitution states that the "defense of the country shall be the duty of every citizen of the Hungarian People's

Republic. Citizens shall perform military service on the basis of

the universal system of the draft." Therefore, according to the National Defense Act of 1976, male citizens become eligible for military service after January 1 of the year in which they turn eighteen. In 1988 about 75,300 males turned eighteen, of whom 25 percent

the highest percentage among the Warsaw Pact armies—could be

expected to be found unfit for military service because of health

problems. More than 32 percent of conscripts were twenty-two years

old, showing that many men were able to defer their military service

for educational or other reasons. Young men were liable for national service conscription until

age twenty-three and subject to call-up in times of an emergency

until age fifty-five. Those whose military service had been interrupted or postponed were liable for conscription until age twentyeight, although draft evaders were liable for conscription until age

forty. Women from ages eighteen to forty-five in medical professions and women professionals within the Ministry of Interior were

automatically registered for military service but could serve only

in time of war and then only in noncombatant functions.

Before 1980 all recruits served for two years except those who

had a completed their higher education; these recruits served for eighteen months. In 1980 the term of conscription was reduced

to eighteen months but remained at twenty-four months for those

conscripted into the air force. Recruits having children served even

less time. In the late 1980s, call-up occurred twice a year, in February and in August.

Reserves consisted of physically fit men who were not currently

serving in the armed forces. Men who had never been drafted could

be called up for six months of reserve training until age forty.

Officers who had served could be called up every five years for a four-month period of refresher training, while NCOs and privates

could be so trained for up to three months every five years. All

physically fit males could be called up at least once a year for maneuvers lasting no more than twenty days, although legally, if necessary, they could serve for a full year. Conscripts could be kept an

additional two months after completing national service.

Conscientious Objection

According to the National Defense Act, those persons who re- fused military service during peacetime could receive up to five years' imprisonment. Permission was sometimes given, however,

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Hungary: A Country Study

to Jehovah's Witnesses, Seventh-Day Adventists, or Nazarenes to serve as noncombatants in military construction units. Government

opposition to Catholic conscientious objectors increased after October 1986, when the country's Catholic bishops declared that

Catholics could neither refuse nor condemn obligatory military ser- vice, although they did urge the state to allow some sort of alter- native service. This proclamation was followed by reports of dozens

of conscientious objectors' being arrested and sentenced to thirty

to thirty-six months' imprisonment by the Budapest Military

Tribunal. These so-called "expedited" proceedings were characterized by trials lasting only ten to fifteen minutes. One man so imprisoned, Karoly Kiszely, wrote a letter to the Conference on

Security and Cooperation in Europe enumerating the ways in which

conscientious objectors were harassed: they were physically abused,

and their punishments were imposed without court hearings,

without regard for judicial processes, and without legal counsel.

Those convicted were allowed contact with only two family members, and they were permitted to send or receive only one "heavily censored" letter per month and to receive only one authorized

visit by a relative each month. Furthermore, they were crowded

together in prison with common criminals.

The government showed signs of softening its position in late 1987, when it reduced the term of military service for future clerics from eighteen to twelve months. And in early 1989, an amendment to the National Defense Act permitting conscientious objection was introduced into the National Assembly. Conscientious objection was to be allowed beginning in the second half of 1989. On

March 1, 1989, the government announced that seventy conscientious objectors serving time in prison had been released and that

their criminal record would be dropped, pending approval of a new

National Defense Act. Noncombatant service was twenty-four

months in the army and another twelve months of nonarmed reserve

service. Civilian service was initially proposed for thirty-six months

at locations to be determined by the government, with labor paid

for in wages. In June 1989, the National Assembly voted to lower

the duration of civilian service to twenty-eight months and resolved

that the noncombatant service and nonarmed reserve service

together not exceed twenty-eight months.

Education and Training

Much of the military education system developed since 1949 has

been patterned on Soviet models, with the help of Soviet advisers.

This pattern was also applied to troop training programs in garrisons and in the field. Yet despite Soviet attempts to make the

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HPA more concerned with defense of the Warsaw Pact countries

than with national defense, the army remained highly patriotic and

nationalistic. Moreover, toward the end of the 1980s attempts were made, despite the HSWP's objections, to partially depoliticize the

military.

Conscript Programs

Call-up consisted of three steps: obligatory premilitary training

from January 1 of the year in which the future draftee turned seventeen; military registration at the District Military Replacement

Center, where the registree received a medical examination and,

if disabilities were found, was obliged to correct those disabilities capable of correction and continue premilitary training; and recruit- ment, at which time questions of medical fitness and service branch

and unit assignment were resolved. Recruits underwent basic train- ing for four weeks, then took the oath of allegiance. This process was followed by six months of specialized training for whatever

task the recruits were to perform. They were then assigned to units. During all this time, the recruits also underwent ideological training.

Through political indoctrination, the military aimed at inculcating soldiers with a Marxist-Leninist worldview that would enable

them to accept party positions and the way these positions related

to internal and external events. Soldiers were taught the need for

discipline, self-sacrifice, and loyalty to party, country, and the socialist alliance (including the Soviet Union), and were inculcated

with a consciousness of their own invincibility. In fact, the HPA

required that only 10 percent of a conscript's training time during

the first phase of basic training be devoted to strictly political topics,

while 70 percent was spent on military subjects. These relative

proportions demonstrated that the HPA leadership viewed politi- cal indoctrination as secondary to teaching basic soldiering to recruits and persuading the brighter among them to seek a professional military career. Those who showed both desire and ability were given twenty-eight hours of free time each week to prepare

to enter university. The HPA also awarded scholarships to some

recruits to attend university full time during their service time, plus

another twenty-four days of additional annual leave and considerably increased pay and benefits.

The combat training for recruits resembled that of other Warsaw

Pact countries. Soldiers were taught proficiency with weapons,

weapon systems, battlefield tactics, endurance, and stress prevention. Tactical exercises and maneuvers were often undertaken with

Soviet forces in the country. Battle areas in such exercises could

be twenty-six to thirty-two kilometers deep, and nuclear strikes were

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Hungary: A Country Study

simulated. Soldiers sometimes were electronically monitored for

stress. Housing provided to conscripts was of poor quality. In December 1988, Minister of Defense Ferenc Karpati admitted that 10

percent of the barracks were not fit for habitation because they did

not have regular hot water service. In general, most barracks were

sixty to eighty years old and badly needed new wiring and

plumbing.

Material deprivation aside, most conscripts considered their mili- tary training inadequate. As well as spending time in political in- doctrination courses, conscripts were obliged to perform a great

deal of work in the labor-starved economy (see Labor Force, ch. 3). For example, in 1987 soldiers worked 32,000 man-days in agriculture. Many conscripts, even those assigned to border guard duty,

regarded military service as a waste of time.

Specialized- Officer Programs

Despite the benefits, youth in the late 1980s showed little interest

in professional military careers. According to the Ministry of

Defense, this lack of interest resulted in a pool of applicants smaller

than the number needed for a good selection of candidates.

Candidates for officer training were chosen by the ministries of

defense, interior, and education, together with the Communist

Youth League's central committee (see Mass Organizations, ch. 2). These candidates had to be of "good character," politically relia- ble, physically fit, single, and not over twenty-one years of age, and they had to demonstrate military aptitude. They were required

to take mathematics and physics tests and psychological examinations. Knowledge of Russian was necessary to become an officer

in the air force. After such screening, candidates attended a military college for four years as officer cadets. After passing final examinations, they became junior officers (in the army, air force, or border guard) and were obligated to serve fifteen years.

Political officers were trained in military colleges but took different courses. A background in the Communist Youth League and the

Hungarian National Defense Association (Magyar honvedelmi

szovetseg—MHSz) helped in selection for this career. Older candidates were chosen from the party apparatus or from those with

degrees in the "science of Marxism-Leninism." The Ministry of

Defense's Main Political Administration oversaw the selection and

screening of political officers. In the late 1980s, the HPA operated schools ranging from secon- dary schools through colleges for the academic, technical, and political training and advancement of regular personnel. Many senior

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officers, in addition to successfully completing military schooling

at all levels, also were sent to the Soviet Union for courses in that

country's military institutions. Such Soviet schools included the

Voroshilov General Staff Military Academy in Moscow, the Frunze

Military Academy and the Malinovskii Military Academy, the

Zhukov Air Defense Academy, and the Moscow Military Academy

of the General Staff. Courses of study in the Soviet Union lasted

from two to eight years. The Soviet Union also sent lecturers and

textbooks to Hungary. Hungarian officers also were trained in

Czechoslovakia and Poland.

The military academies were the highest level of military schooling, the most important of which was the Miklos Zrinyi Military

Academy in Budapest. Before 1968 its entrance requirements were

lenient, but after that time entry was obtained only upon the successful completion of a military college or an officers' training school

of equivalent ranking. The course of study took three years, and

a variety of subjects were offered. Graduation from the Miklos

Zrinyi Military Academy was necessary to attain high-level com- mand positions.

The Lajos Kossuth Military Academy in Szentendre in Pest County also ranked high in the military education system. It was

considered to be academically equal to other institutions of higher

learning. Graduates were commissioned as army officers. The Lajos

Kossuth Military Academy offered specialized training in mechanized infantry, armored troops, surface-to-surface artillery, engineering, military economy and supply, and border guard work.

The Kossuth Academy required knowledge of two foreign languages, one of which had to be Russian. The school also offered

many courses on various aspects of Marxism-Leninism.

Other high-level military schools included the Mate Zalka Technical Military Academy in Budapest, which specialized in antiaircraft, artillery, radar technology, signaling and telecommunications,

and nuclear, biological, and chemical (NBC) defense and warfare;

the Gyorgy Kilian Technical Air Force Academy, which trained

ground and air crews and taught aviation and aircraft maintenance;

the Honved Military College, which offered a three-year course

of study for university graduates training to become officers; and

the Frigyes Karikas Military College. The HPA also operated

specialized military high schools in Eger, Nyiregyhaza, and Tata.

Volunteers for military colleges were generally between the ages

of eighteen and twenty-one and were drawn from all parts of the

country. As a group, their precollege academic performance was

not impressive. Nearly three-quarters chose a military career be- cause they liked the military life-style and its contribution to society.

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Hungary: A Country Study

The remainder had motives that the HPA found less than admirable, such as the desire for high pay and fringe benefits, and had

goals that have been described as "incoherent" or "selfish," such

as a desire for adventure. Some students also came from families

with a strong military tradition. In the mid-1970s, about 14 per- cent of the students at the Gyorgy Kilian Technical Air Force

Academy and 19 percent of those sent to study at Soviet military

colleges had at least one parent with a military background.

Warrant officers were selected from career servicemen and conscripts. They could not be older than twenty-three, and they had

to have had at least an eight-year general (elementary) school education certificate. Their training took two years, and they could

be promoted to the rank of sergeant or staff sergeant. They were

obligated to serve at least twelve years. Officers and regimental sergeants major (sergeant, master ser- geant, and sergeant major) in the military were compensated rela- tively well. Although starting salaries were low, they more than

doubled after fifteen to twenty years of service. Officers also received an additional clothing allowance. They could retire at age fifty- five instead of age sixty (the age required for the rest of the population), and their pensions totaled 60 to 90 percent of the average

of their last five years' salaries. They also received from twentyfive to thirty-seven days of vacation a year. However, the professional military life also had its disadvantages.

Officers could not engage in the second, unofficial economy and

were thus required to live solely off their salaries, a difficult situation in Hungary (see Domestic Consumption, ch. 3). The housing provided by the military was both cramped and substandard.

A professional soldier could be assigned to four or five different

garrisons during his career, requiring moves by the entire family.

In some locations, wives could not easily find suitable employment,

essential foods, and social services. Military authorities were very

concerned about the increasing alienation and materialism and the

resulting high rates of alcoholism, suicide, and divorce among

officers of the HPA.

Premilitary Programs

Hungarian schools required some military education for all stu- dents from the seventh grade through secondary school and higher

education. The regime saw military education as an integral part

of general education, a way by which young people could acquire

the skills they would need when serving in the army and a means

to increase the defense capability of the country. Such training in- cluded weapons maintenance and use, radio communications,

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electronic and mechanical engineering, aircraft piloting, parachute

training, and scuba diving.

Actual premilitary training was optional but was advised before

age seventeen and obligatory from age seventeen to call-up, up to age twenty-three. No more than two years of such training could

be required. This training could assume different forms, including a camp setting. In 1984 the MHSz and the Pioneer youth or- ganization established such a camp for premilitary training on

Szentendre Island in the Danube, north of Budapest. In 1987 nearly

150 secondary students attended, half the number that applied.

The boys were placed in radio communications and shooting

groups, while both girls and boys participated in sports. Various

programs included military theory and practice, computer games,

movies, "patrol competitions," sports, and excursions. Soldiers

supervised some activities, and the HPA provided the meals.

Paramilitary Programs

In the late 1980s, the MHSz gave lessons and courses related

to defense and civil defense, and it aided in the premilitary training of young people and in military training for reservists. The

MHSz resembled the Soviet Voluntary Society for the Promotion

of the Army, Air Force, and Navy (Vsesoiuznoe Dobrovol'noe

Obshchestvo Sodeistviia Armii, Aviatsii, i Flotu—DOSAAF).

In small villages, men were required to take part in weapons

training, using air guns, at least once a year. All adults were also obliged to participate in civil defense drills, using as masks.

In the cities, workers in large organizations formed "civil defense

chains," a system of notifying co-workers to meet at a prearranged

place during a civil emergency. Every year each workplace held

at least one civil defense drill. Uniforms and Rank Insignia

In 1989 the army had approximately the same number of ranks

found in other typical military organizations, but these ranks were grouped into six classifications, the names of which did not always

translate readily to those used by other military organizations. Commissioned officer ranks, however, were standard and ranged from

second lieutenant to general. They included four general officer

ranks: brigadier general, lieutenant general, colonel general, and

army general. Field grades were major, lieutenant colonel, and

colonel. Junior officer ranks began with sublieutenant and advanced

through second lieutenant and first lieutenant to captain.

Enlisted grade nomenclature differed from that used by most

of the world's armies. The three lowest grades—private first class,

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Hungary: A Country Study

corporal, and lance sergeant—were called noncommissioned

officers. The next four grades—staff sergeant, sergeant first class,

master sergeant, and command sergeant major—were called

regimental sergeants major; in the armies of most countries these

ranks would also be included among the NCO grades. Above the

regimental sergeants major but below the lowest commissioned

officer ranks were two grades that were translated as ensigns, which were the equivalent of warrant officers in other armies.

Rank insignia consisted of shoulder boards for officers, ensigns,

and higher-grade enlisted men (see fig. 11). Lower grades wore

patches on shirt or blouse collars. Rank was indicated by the amount

of ornamentation and the number of stars on the shoulder board.

Officers had gold piping around the edges of the boards; ensigns

and enlisted men had silver. Generals' stars were placed upon a

solid gold braid background. Junior officers' boards did not have

braiding; officers of field grades had boards that were partly braided.

Except for the outer braiding, boards of the higher-grade enlisted

men resembled those of junior officers. Background colors and

bronze devices identified service branches. Uniforms were

brownish-olive drab. Enlisted men wore heavy wool in winter and

a lighter colored cotton in the warmer seasons. Officers wore the same colors, but the materials were worsted wool for winter and

either cotton or tropical-weight worsted wool for summer. The most

frequentiy seen uniforms were the service, dress, and field uniforms.

The service uniform was worn for most light-duty work, recreation, and informal social occasions. It consisted of a comfortably

fitting "blouse," long trousers, and low shoes. In summer a lighterweight, light-colored shirt was worn instead of the blouse. The dress

uniform consisted of the same blouse and trousers but had extra ornamentation, and the trousers were tucked into high boots.

Officers wore a Sam Browne belt (a belt with a strap over the right

shoulder) and, for the most formal occasions, a sword. Field uniforms included high boots into which the trousers were tucked. In

summer the officers' field uniforms included a short jacket, Sam

Browne belt, and sidearm; enlisted men's uniforms had a cotton

shirt, which could be worn with the sleeves rolled up. A heavy over- coat was added in the winter.

Twelve decorations were still being awarded in the late 1980s

for extraordinary achievement, special merit, or outstanding per- formance. Another twenty-four were authorized to be worn but were no longer awarded. A few of those had been discontinued,

but most of them were applicable to earlier service, such as during

World War II or the communist takeover after the war.

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The highest-ranking decoration was the Hero of Socialist Labor.

It was followed in order by the Medal of the Hungarian People's

Republic, the Red Banner Order of Merit, and the Red Star Order

of Merit. Some of these decorations were awarded in two or more

degrees, in which the first degree was the highest class. The Order

of Merit for Outstanding Service was frequently awarded to higherranking military personnel. Although it ranked twenty-fourth in

the list of thirty-six decorations, it was one of the few that was

accompanied by a monetary award. A substantial pension supplement accompanied three or four of the more important decorations.

Internal Security and Public Order

In 1989 the Ministry of Interior was responsible for public order,

public safety, internal security, and, since the beginning of 1988,

public administration. The ministry controlled the armed security

organizations in the country—the National Police, the Security

Police, and the Border Guard—but not the Workers' Guard, which was subject directly to the HSWP. The ministry was also responsible for such diverse tasks as fire prevention and passport control.

In the late 1980s, the government attempted to limit the ministry's arbitrary use of power or at least tried to clean up its public

image. In an interview in June 1989, Minister of Interior Istvan Horvath suggested that the ministry ought to transfer its control

of the Security Police to the local governments.

National Police

The public police forces performed routine police duties throughout the country. Although they operated within local jurisdictions,

they were centrally organized and controlled by the Ministry of

Interior.

To become a public police officer, a candidate had to have

finished general elementary school and, in theory, to have completed two ten-month training periods. However, most officers serving in 1989, according to the Ministry of Interior, did not have

this kind of education. In the late 1980s, morale problems affected

the police. Inflation had eaten away their salaries, and the crime

increases had overburdened their work loads (see Incidence of

Crime, this ch.). In addition, policemen could not travel to the

West. OnJuly 5, 1989, policemen founded the Independent Policemen's Trade Union to protect their interests. As Hungary inched toward democracy during the late 1980s the

populace felt freer to criticize the police. The Ministry of Interior,

in turn, felt obliged to publicize reforms. For example, in April

1989, the Federation of Young Democrats staged a sit-in in front

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Hungary: A Country Study

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National Security

of the headquarters of the Ministry of Interior. This organization was protesting the lenient sentences given by military courts to policemen who committed brutality. Federation members demanded that the minister of interior resign and that the ministry

be removed from party control.

More surprising was the ministry's reaction to this criticism. In

a press conference, a ministry spokesperson claimed that the "direct

supervision" of the ministry had indeed been transferred to the

government. During the same month, a ministry spokesperson con- demned the acts of some police officers who had abused their

authority and engaged in "impermissible activities." In the late 1980s, the ministry appeared to be concerned with its public image

and claimed to be investigating "all allegations" of unlawful or improper activities by its agents. In a rather euphemistic but tell- ing statement, Minister of Interior Horvath proclaimed in August

1989 that "protection of the public order [must] be provided

according to European standards in the late 20th century."

Security Police

In the late 1980s, Hungary's 15,000 member Security Police was

controlled by the Ministry of Interior. However, unique among

Warsaw Pact countries, Hungary lacked a uniformed security police

force. Such a force—the AVO—had existed but was disbanded in

October 1956 (see Background and Traditions, this ch.). Given

the vehemence with which the public hated the AVO and associated

it with the Stalinist terror, the Kadar regime saw fit not to revive

it, even under a different name. Nevertheless, until the late 1980s

the Security Police continued to harass and arrest those persons

deemed to be political enemies.

The reform of the political system during the second half of the

1980s appeared to have also affected the Security Police. In an in- terview on Hungarian television in July 1989, Minister of Interior

Horvath claimed that the Security Police no longer viewed the

domestic opposition as political enemies, an image that had be- come "obsolete" in a multiparty system. He condemned previ- ous Security Police actions, such as harassing and detaining known

dissidents before national holidays as "a bad reflex action of a differ- ent type of power structure." Horvath stressed that the Security

Police did have a legitimate intelligence and counterintelligence

function but was not an organization "placed above the citizens."

Border Guard

In 1989 Hungary's Border Guard numbered 16,000, operating

in eleven districts. Conscripts totaled 1 1 ,000, or nearly 70 percent

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Hungary: A Country Study

of the total. Although nominally controlled by the HPA, the Border

Guard Headquarters of the Ministry of Interior took orders from

both the party Basic Organization in the ministry and the Government Administration and Administrative Department of the

HSWP's Secretariat (see Party Structure, ch. 4). The Border Guard

Command was established in 1946 and reorganized in 1950. Its tasks were governed by Decree Number 40/1974, which brought

border regulations into conformity with those of other Warsaw Pact

countries. The exact level of party and Communist Young League

membership among the Border Guard was unknown, but it was

certainly higher than that of the army. For this reason, Volgyes

argued that the regime may have considered this organization to be more reliable than the army as a whole, although the high per- centage of conscripts left this contention open to question.

Border Guard work in Hungary required a high level of education, political training, good health, "good appearance," and even

a knowledge of the foreign languages necessary for work at border

crossing stations. Statistics from 1987 showed that 40 percent of

guards at border crossing points had finished secondary school or

university. In 1986 border guards checked the documents of 50

million people visiting or transiting Hungary through sixty-six highway, rail, river, and air border crossing points.

In the late 1980s, a permit was nominally required to enter a narrow zone along the western and southern borders, but according to Major General Janos Szekely, chief of the Border Guard

Headquarters, "anyone who applies to the proper agency for a per- mit usually gets it." An estimated 900 voluntary Border Guard

auxiliary groups aided in the arrest of about 20 percent of border

violators.

During the late 1980s, Hungary's borders with two countries

received international attention. On May 3, 1989, Hungarian sol- diers began removing the barbed wire fence on the border with

Austria. Calling the fence "outdated" and superfluous, given the

existence of Hungary's new (1988) liberal passport law, the Hungarian government publicly stated that all sections of the fence would

be removed by the end of 1990. Although the Austrian government publicly welcomed this development, it privately feared that

other East Europeans, especially Romanians, would travel to Hungary in order to escape into Austria.

It was not Romanians but East Germans touring Hungary in

the summer of 1989 who took advantage of the newly opened border

to flee to Austria. The Hungarian Border Guard interfered only

sporadically with this flight, and eventually the Hungarian government allowed the East Germans to leave through Hungarian border

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National Security

checkpoints. In September 1989, the government announced that

it would allow all the East Germans in the country wishing to emigrate to the West to leave Hungary. By the beginning of October, more than 35,000 had left the country to go to West Germany.

The East German government protested that Hungary had reneged on its border agreements with the other members of the Warsaw

Pact, but the Hungarian government claimed that it was merely

following the spirit of the Helsinki Accords that were signed as part

of the Conference on Security and Cooperation in Europe in 1975

and the border remained open.

Workers' Guard

The Workers' Guard, a paramilitary organization directly controlled by the HSWP, claimed to have 60,000 members in 1988.

Possessing only small arms, its mission was officially limited to protecting the population and state property in times of war or unrest. In fact, the Workers' Guard assisted the National Police and

army during events that required crowd control. The guard wore

its own distinctive gray uniform.

Directly controlled by a permanent department of the HSWP's

Central Committee, the Workers' Guard was, in effect, the party's

private army, and the overwhelming majority of the guard were

party members. Founded in 1957 shortly after the revolution, this organization became the chief protector of the newly formed Kadar

regime.

In June 1989, the government announced that in the future it, not the party, would have control over the Workers' Guard and

that many of the functions of this paramilitary organization would

be eliminated. An interministerial committee of the government was formed to examine the mission and activities of the guard and

perhaps even to rename it. Criminal Justice System

Like other criminal justice systems in Marxist-Leninist countries, Hungary's criminal justice system was, until the late 1980s,

heavily politicized. The system, like other aspects of the political

system, was subject not to the rule of law but rather to the whims

of the party. As part of its efforts at democratization in the late 1980s, the government began an effort to create an independent

judicial system.

Incidence of Crime

Crimes against both people and property soared during the 1980s.

Violent crime, which also increased dramatically, was disproportionately committed by Gypsies (see Minority Groups, ch. 2).

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Hungary: A Country Study

Gypsies made up about 4.7 percent of the population, but they

numbered 54 percent of those persons convicted of murder and

rape and 49 percent of those convicted of robbery.

Criminal offenses against the state and private individuals cost the economy nearly US$50 million in 1988, or 0.5 percent of the

country's annual budget. Losses from criminal offenses against pri- vate property doubled from 1987 to 1988. White-collar crime, es- pecially bribery of office executives, also rose, and the country's

efforts to increase the role of private enterprise led to a new type

of criminal activity—money laundering.

By contrast, certain other types of activities formerly considered

illegal by the state had become legal under new, more tolerant laws.

Thus, in the late 1980s liberalized passport and customs regulations reduced currency crimes by 25 percent and smuggling cases by 20 percent.

In the 1980s, the level of alcoholism in Hungary grew at the

fastest rate in the world. In the 1950s, the communist regime considered alcoholism to be a "remnant of the past," but the increase

in alcoholism over the years had forced the government to pay at- tention to this problem. The rapidly rising rate of alcohol consumption was fueled by an increasing number of women and youth with

drinking problems. About 120,000 children lived in families in

which one or both parents were heavy drinkers, and reports sur- faced of youth gangs drinking in Budapest subway stations.

However, the government's data showed that at least in the workplace the problem of alcoholism was diminishing, rather than in- creasing. Surveys taken between 1985 and 1987 showed that

drunkenness in the workplace dropped each year: from 9.1 per- cent in 1985, to 3.7 percent in 1986, and to 2.2 percent in 1987.

Nevertheless, alcohol, rather than controlled substances, was related

to virtually all of the crimes committed under the influence of any

type of drug. In the first eight months of 1988, more than 18,500

crimes were committed under the influence of alcohol, while 37

crimes were committed under the influence of hard drugs (heroin

and cocaine) and 84 under the influence of drug substitutes.

According to the Ministry of Interior, although hard drugs were

shipped through Hungary, they did not appear to be a serious

problem for Hungarian society. In the late 1980s, Ministry of Interior statistics cited only forty-five to fifty prosecutions per year

for narcotics violations. Nevertheless, the use of hard drugs did

appear to be rising.

The use of drug substitutes or the abuse of prescription drugs,

however, caused the government serious concern. Abusers obtained

opium-based and other drugs from hospitals, pharmacies, and drug

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factories by stealing, by forging prescriptions, or by buying drugs

from staff looking for extra money. Glue sniffing was also a problem,

especially for children aged seven to fifteen. In the late 1980s, the press admitted that the country possibly had 50,000 drug addicts

but did not mention the drugs responsible for addiction.

Before 1984 the government had denied the existence of a drug

problem, but since then the subject has received wide public dis- cussion. In the late 1980s, laws against the use of controlled substances were flexible and gave judges the ability to adjust sentences according to the quantity of the drug involved and the age of the

seller. Those persons in possession of "excessive amounts" could

receive up to an eight-year prison term.

Penal Code and Criminal Procedure

Hungary's legal system has been influenced by Roman law. The

country's first written law code, compiled by Stephen Werboczy

in 1514, codified the unwritten laws and customs that had existed

up to that time. The Tripartitum, as this codification was called, was modified over the following centuries, but a written, formal

law code was not officially published until 1878. This publication

formed the basis of the Penal Code appearing in the early 1950s,

but many articles remained unchanged until the entire code was

republished in 1961.

The Penal Code and a decree on criminal procedures that ap- peared in 1972 incorporated constitutional revisions made at that

time (see Amendments of 1972, ch. 4). Both the code and the decree

reflected the subordination of the legal system to the state, and

harsher penalties were meted out for crimes against the state and

state property than for crimes against the person and private

property. The Penal Code was revised in late 1978 and again in

September 1989. The latest revision, which still required the approval of the National Assembly as of September 1989, abolished

the use of the death penalty for crimes against the state. Hungary's system of justice did not subscribe to the adversary

system; neither did it recognize common law or precedent (see

Judicial Organs, ch. 4). The prosecutor in a Hungarian court was

responsible for presenting all the evidence, both for and against

the defendant. Defendants had the right to legal counsel, who at- tempted to ensure that the prosecutor's presentation of the case was unbiased. Judges were bound by the law as written, not by

the decisions of other judges. The judge's interpretation applied

only to the specific case; it set no precedent for other cases. Military Justice

Military tribunals were part of Hungary's judicial system and

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Hungary: A Country Study

were responsible to the minister of justice and to the minister of

defense. A military council of the Supreme Court reviewed cases from lower military tribunals or tried the most serious cases. Military court jurisdiction was usually limited to cases involving military personnel, cases involving civilians on military instal- lations, or cases involving an aspect of the country's defense.

Military courts had a judge and two lay assessors (non-professional

judges), whose functions were similar to their equivalents in civilian courts. Military judges were commissioned professional officers with

law degrees. Lay assessors were chosen from all ranks, at respective meetings of officers, regimental sergeants major, and enlisted

personnel. Members of the court had to have a rank at least equal

to that of the accused.

Penal System

From 1949 to 1961 , the penal system consisted of labor or internment camps and prisons with three types of disciplinary regimes.

By 1961 the regime claimed it had abolished the labor camps. A

law eliminated these different regimes, but a new system containing four regimes has been instituted since. Confinement to penitentiaries was the most severe regime under the new system, while

local jails provided the lightest. Prisoners sentenced to the two in- termediate regimes were assigned to one of two different types of

prisons. In 1975 the government introduced an additional regime

for convicts who committed for the fourth time a violent crime carry- ing a sentence of more than one year. In July 1989, a prisoner in the Vac Prison north of Budapest

committed self-immolation, and several hundred of his fellow

prisoners went on a hunger strike to protest the harshest possible

regime. The government immediately promised to abolish this re- gime, thus affecting 282 male and 14 female prisoners.

In the late 1980s, the HPA possessed just one penal battalion,

located in Nagyatad in Somogy County. Soldiers who had received

seven-month to two-year sentences were sent there to perform

manual labor, primarily for the HPA but often for the national

economy. Alcohol played a part in two-thirds of crimes committed by soldiers. At least one-third of these crimes involved violence

against superiors, insubordination, or draft dodging.

Reaction to Political Dissent

As with the constitutions of the other Warsaw Pact countries,

Hungary's Constitution grants rights to citizens but qualifies these

rights so that they are meaningless (see Constitutional Development, ch. 4). For example, Chapter VII, Article 64 of the

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Constitution gives citizens freedom of speech, press, and assembly, yet Section 54 states that citizens' rights "shall be exercised

in accordance with the interests of socialism and the people" and

that these rights "shall be inseparable from the fulfillment of the

duties of citizens."

Nevertheless, from the 1970s well into the 1980s Hungarians had

a wider latitude to criticize their government than did other East

Europeans. But most Hungarians developed a "self-censorship"

in which they avoided publicly discussing such sensitive topics

as one-party rule and Hungary's relations with the Soviet Union

and the other Warsaw Pact countries. Hungarians thus generally

avoided problems with the state, while the state gave the appear- ance of tolerating dissent.

The development of samizdat in the early 1980s provoked a severe government reaction. In June 1982, several samizdat editors were

subjected to police surveillance, and later in the year one was fined

4,000 forints (for value of the forint—see Glossary), about the aver- age wage for one month at that time, for publishing without offi- cial permission. In the following months, the police began to subject

others associated with samizdat to both "light" measures (denial

of permission to travel abroad, periodic house searches, detention,

fines, or employment difficulties) to those of outright oppression

(beatings or imprisonment). The regime even used psychiatric

methods such as closed wards and electric shock therapy against

dissidents. In 1987 dissidents were still subject to house searches,

and in 1988 they were still denied passports.

To stop the tide of unofficial publishing, the government passed

Decree 49/1984 (XI. 21), which required that all duplicating

machines and photocopiers be registered with the state, and Decree

4/1985 (VII20), which allowed police surveillance and even expulsion from the country for those persons whose political beliefs the

government considered a danger to the Hungarian People's Republic, its social order, or public security. The authorities also punished

official publishers when magazines touched upon taboo subjects.

For example, in 1983 the editor of Mozgo Vildg (World in Motion)

lost his job for defying party directives. In 1986 the editors of Tiszatdj

(Tisza Country) were ordered to resign because of articles in their

journal describing the horrible situation of Hungarians living in Romania (see Mass Media, ch. 4). Rock musicians also felt the state's wrath when their music did

not meet official approval. During the mid-1980s, the Committee

of Hungarian Radio censored records and songs because they were

not "optimistic enough" or because they referred to drugs or to

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Hungary: A Country Study

"red, white, and green" (the colors of the precommunist Hungarian

flag).

Unauthorized street demonstrations were also harshly punished

in the mid-1980s. In 1986 the police brutally broke up a demonstration held on March 15 to commemorate Hungary's declaration of independence from the Habsburg Empire in 1848. Unofficial

peace and environmental groups were also harassed when attempting to meet publicly.

However, political reforms of the late 1980s softened the government's view of dissent, although its behavior remained ambiguous. In October 1988, street demonstrations commemorating the

revolution were tolerated, and a relatively free press arose. The

government spoke openly about liberalizing its passport law. Yet

a Miskolc court in 1988 handed an elderly, disabled pensioner a one-and-a-half-year suspended sentence for writing an open letter to the HSWP in which he criticized " domestic conditions and cer- tain leaders." Legal sanctions resulting from involvement in the

Revolution of 1956 were lifted for twelve people but remained for

another fifty-four.

Hence, as of 1989 the government's record on dissent, as with

other aspects of the reform of the national security system, was

mixed. To be sure, regime leaders repeatedly announced their in- tent to reform, and, indeed, many important steps were taken in

that direction. But as Hungarian dissident Miklos Haraszti re- minded his audience in 1989, Hungary was still "a country with

powerful bureaucrats, with the same armed forces, and with a political police."

* * *

Unfortunately, few English-language sources deal with the past

and present Hungarian military. English-language sources for Hungarian military history are almost nonexistent outside of the few

standard surveys of Hungarian history, such as Denis Sinor's History

of Hungary. A notable exception is Bela K. Kiraly's Hungary in the Late Eighteenth Century, which sets forth detailed information about

the Hungarian-Habsburg military structure of that time. Peter

Weiss's "The Hungarian Armed Forces Today" provided the most

current information at the time of this writing. An excellent over- view of the HPA since World War II is given by Ivan Volgyes in

his article "Hungary." F. Rubin's "The Hungarian People's

Army" is also useful but dated. For information about the HPA's

force strengths and weaponry, no source is better than the Inter- national Institute for Strategic Studies' annual The Military Balance.

262
National Security

Radio Free Europe occasionally produces articles that treat Hungarian military matters. Some translations produced by the Joint

Publications Research Service and the Foreign Broadcast Information Service concern questions of Hungary's national security.

(For further information and complete citations, see Bibliography.)

263

Appendix

Table

1 Metric Conversion Coefficients and Factors

2 Population, Selected Years, 1920-87

3 Marriages and Divorces, Selected Years, 1921-86

4 Infant Mortality, Selected Years, 1921-86

5 Active Earners by Sector, Selected Years, 1949-87

6 Gross Output and Net National Product by Sector, 1970, 1980,

and 1986

7 Average Investment by Sector, 1961-70, 1971-80, and 1981-

86

8 Share of Social Sectors in Employment and National Income,

1970, 1980, and 1986

9 Output of Selected Agricultural Products, 1976-87

10 Contribution to Agricultural Gross Output by Type of Farm,

Selected Years, 1966-86

11 Structure of Imports and Exports, 1986

12 Agricultural Imports and Exports, 1976-86

1 3 Rank Order of Hungary ' s Principal Trading Partners , 1984,

1985, and 1986

14 National Economic Indicators, Selected Years, 1950-86

15 Foreign Trade and Current Account Balance, 1981-87

265

Appendix

Table 1. Metric Conversion Coefficients and Factors When you know Multiply by To find 04 inches 0.39 inches Meters 3.3 feet 62 miles Hectares (10,000 m2 ) 2 47 Square kilometers 0.39 square miles 35 3 cubic feet 26 gallons Kilograms 2.2 pounds

0.98 long tons

1.1 short tons 2,204 pounds

Degrees Celsius .... 9 degrees Fahrenheit

(Centigrade) divide by 5 and add 32

Table 2. Population, Selected Years, 1920-87

(in thousands)

Year Females Males Total 1920 4,112.8 3,874.1 7,986.9 1930 4,436.7 4,248.4 8,685.1 1941 4,755.2 4,560.9 9,316.1 1949 4,781.4 4,423.4 9,204.8 1960 5,157.0 4,804.0 9,961.0 1970 5,318.4 5,003.7 10,322.1 1980 5,520.8 5,188.7 10,709.5 1985 5,508.1 5,149.3 10,657.4 1986 5,501.9 5,138.1 10,640.0 1987 5,494.5 5,126.6 10,621.1 Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 39.

267
Hungary: A Country Study

Table 3. Marriages and Divorces, Selected Years, 1921-86

(per thousand population)

Year Marriages Divorces

1921 11.6 0.8 1930 9.0 0.6 1938 8.1 0.6 1948 10.7 1.2 1960 8.9 1.7 1970 9.3 2.2 1975 9.9 2.5 1980 7.5 2.6 1985 6.9 2.8 1986 6.8 2.8 Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 48.

Table 4. Infant Mortality, Selected Years, 1921-86

(per thousand live births)

Year Total Year Total

1921 1930

1938

1948 1960

1970

1975

192.7 152.5 131.4

94.1 47.6

35.9

32.8

1980

1981 1982

1983 1984

1985

1986

23.2 20.8

20.0

19.0 20.4

20.4

19.0 Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 61.

Table 5. Active Earners by Sector, Selected Years, 1949-87

(in percentages)

Sector 1949 1960 1970 1980 1987

Industry 19.4 27.9 36.3 33.9 31.2 Construction 2.2 6.1 7.4 8.2 7.0 Agriculture and forestry 53.8 38.5 24.4 19.0 19.3 Waterworks and supply 0.1 0.2 1.2 1.5 1.6 Transportation and telecommunications .. 4.4 6.5 7.3 8.1 8.3 Trade 5.3 6.3 7.9 9.8 10.5 Other material activity n.a. n.a. n.a. 0.9 1.0 Personal and economic services 3.5 2.5 2.8 3.1 3.7 Sanitary, social, and cultural services .... 3.8 5.6 7.7 10.4 12.5 Public administration and other services . 7.5 6.4 5.0 5.1 4.9 TOTAL 100.0 100.0 100.0 100.0 100.0 Percentage of women 29.2 35.5 41.2 43.4 46.0

n.a. —not available. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 27, 28, 39.

268
Appendix

Table 6. Gross Output and Net National Product by

Sector, 1970, 1980, and 1986

(in percentages, at constant prices)

Gross Output Net National Product

Sector 1970 1980 1986 1970 1980 1986

50.2 51.8 50.7 36.2 36.9 36.0

8.2 7.5 6.3 9.1 8.8 7.4 Agriculture and forestry 17.8 17.4 18.2 22.3 19.6 21.5 Transportation, post, and

5.6 5.4 5.6 7.7 7.9 7.8 7.2 5.9 6.1 11.8 11.0 10.6

1.0 1.0 1.1 0.9 1.2 0.9 Other material activities n.a. 0.5 0.7 n.a. 0.7 1.2 Nonmaterial branches and price differences 10.0 10.5 11.3 12.0 13.9 14.6 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

n.a. —not available. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 30.

Table 7. Average Investment by Sector, 1961-70, 1971-80, and 1981-86

(in percentages, a+ current prices)

Sector 1961-70 1971-80 1981-86

38.2 34.6 31.4

2.5 2.6 1.4 16.6 13.8 12.8 Transportation and communications 12.9 12.0 11.3

3.1 4.2 4.3 2.9 5.1 6.1

n.a. 0.5 23.8 27.7 32.2 TOTAL 100.0 100.0 100.0

n.a. —not available. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 30.

269
Hungary: A Country Study

Table 8. Share of Social Sectors in Employment

and National Income, 1970, 1980, and 1986

(in percentages)

Distribution of Contribution to Active Earners National Income

Sector 1970 1980 1986 1970 1980 1986

. 67.7 71.1 70.5 70.7 69.8 63.4 Cooperative sector . 28.1 25.5 24.4 23.6 23.0 23.0 Auxiliary farms of persons employed outside agriculture n.a. n.a. n.a. 3.1 3.7 6.6

. 4.2 3.4 5.1 2.6 3.5 7.0 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

n.a. —not available. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 30; and Janos Kornai, "The Hungarian Reform Process: Visions, Hopes, and Reality ," Journal of Economic Literature, 24, December 1986,

1692.

Table 9. Output of Selected Agricultural Products, 1976-87

Product 1976-80 1 1981-85 1 1986 1987 Wheat 2 5,186 6,066 5,740 5,674 Corn 2 6,374 6,977 7,029 6,987

Potatoes 2 1,567 1,446 1,264 1,270 3,979 4,461 3,760 4,224 300 615 857 787 Catde 3 1,926 1,919 1,766 1,725 Hogs 3 7,805 8,953 8,280 8,687

Poultry 3 63,002 65,082 61,570 67,010

Sheep 3 2,560 3,044 2,465 2,337 Beef and Veal 3 203 204 196 200 Pork 3 922 1,097 1,048 1,038

Poultry Meat 3 328 320 440 470 Milk 3 2,283 2,752 2,778 2,786 Eggs 4 4,475 4,351 4,290 4,120

1 Average.

2 By 1,000 tons.

3 By 1,000 head.

4 By million pieces. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 181, 187, 188; and Nancy J. Cochrane and Miles J. Lampert,

Agricultural Performance in Eastern Europe, 1987, Washington, 1988, 19-20.

270
Appendix

Table 10. Contribution to Agricultural Gross Output

by Type of Farm, Selected Years, 1966-86

(in percentages)

Type of Farm 1966 1975 1980 1986

State farms 16.4 18.0 16.8 17.6 Cooperative farms 48.4 50.5 50.4 51.0 Household plots 23.7 19.0 18.5 16.4 Auxiliary and private farms 11.5 12.5 14.3 14.9 TOTAL 100.0 100.0 100.0 99.9 *

* Figures do not add up to 100 percent because of rounding. Source: Based on information from Janos Kornai, "The Hungarian Reform Process: Visions, Hopes, and Reality ," Journal of Economic Literature, 24, 1986, 1701; and

Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 174.

Table 11. Structure of Imports and Exports, 1986

(in percentages)

Commodity Group Imports Exports

Fuel and electricity 19.4 3.5 Raw materials, semifinished goods, and spare parts 44.8 30.2 Machinery and capital goods 16.7 30.0

Industrial consumer goods 11.7 16.2 Agricultural goods 7.4 20.1 TOTAL 100.0 100.0

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 272.

Table 12. Agricultural Imports and Exports, 1976-86

(in thousands of tons) *

Average 1976-80 Average 1981-85 1986 Product Imports Exports Imports Exports Imports Exports

Grain Wheat 8 682 26 1,363 n.a. 1,669 Corn 116 330 23 250 23 478 Other _167 _J23 _49 32 _118 27 Total grain 291 1,035 98 1,645 141 2,174

Oilseed Meal 614 5 679 32 566 31 Meat Products 13 285 14 423 19 421 Sugar 84 31 28 43 n.a. 5

n.a. —not available.

* No information reported on amounts less than 1,000 tons. Source: Based on information from Nancy J. Cochrane and Miles J. Lampert, Agricultural Performance in Eastern Europe, 1987, Washington, 1988, 13-14, 17-18.

271
Hungary: A Country Study

Table 13. Rank Order of Hungary's Principal Trading

Partners, 1984, 1985, and 1986 * (in percentages)

1984 1985 1986 Country Imports Exports Imports Exports Imports Exports

.... 29.1 30.1 30.0 33.6 30.9 33.9 West Germany 10.7 7.4 11.4 7.8 12.4 8.4 East Germany 6.4 5.9 6.5 6.1 6.7 6.4

5.1 5.3 6.4 5.3 6.2 5.3 Czechoslovakia . . . . 5.0 5.2 5.0 5.7 5.2 5.9 Poland 4.4 4.2 4.7 3.8 4.7 4.2

Italy 2.4 3.3 2.8 2.9 2.7 3.2 Yugoslavia 3.9 3.4 3.5 3.6 2.7 3.1 2.5 2.7 3.0 2.3 2.0 2.3 2.0 2.2 2.0 2.0 2.1 1.9

1.5 1.8 1.7 1 .9 2.0 0.6 0.8 0.9 1.3 1.8 1.9 France 1.7 1.7 1.8 1.4 1.9 1.5 1.8 1.5 1.9 1.5 1.8 1.3 1.4 1.5 1.5 1.4 1.4 1.6 Netherlands 1.3 1.1 1.3 0.9 1.4 1.1 Japan 1,1 0.4 1.7 3.4 1.5 0.5

1.0 0.5 1.1 3.8 1.3 0.7 Sweden 1.0 0.7 1.1 0.7 1.1 0.8

Brazil 3.1 n.a. 1.7 0.3 1.2 0.5 Others 13.7 20.6 9.9 10.5 9.1 13.5 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

n.a. —not available.

* Percentages of imports and exports for each year, ranked according to the total for 1986. Source: Based on information from "Hungary," The Europa Yearbook 1988, London, 1988, 1309; and Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest,

1988, 276-77.

272
Appendix

Table 14. National Economic Indicators, Selected Years, 1950-86

(1950= 100)

Indicator 1950 1960 1970 1980 1986 100 177 300 467 501 National income in industry 27 37 46 48 46

National income in agriculture 48 31 22 16 19 100 228 456 804 919

100 106 103 115 124

100 197 448 708 618

Investment in industry

n.a. 41 34 31 29 Production per person in state industry . 100 148 226 381 462

Agricultural hauling power

302 1,325 3,824 7,461 8,509

Fertilizer per hectare

5 23 122 211 212

* n.a. —not available. Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 1986, 1988, 7-9, 15, 79; and Diane Flaherty, "Regional Policy and the Reform

of Central Planning: An Assessment of the GDR, Hungarian, and Yugoslav

Approaches," Contributions to Political Economy, 3, March 1984, 42.

Table 15. Foreign Trade and Current Account Balance, 1981-87

1981 1982 1983 1984 1985 1986 1987 Current account balance 1

. . . -730 -64 298 338 -459 -1440 -945 Trade account balance 1 .... -83 459 533 608 112 -440 -20

Gross hard-currency debt 2. . 8.7 7.7 8.3 8.8 11.8 15.1 7.7 Net hard-currency debt 2 ... 7.0 6.6 6.8 6.7 8.6 12.0 5.5

1 In millions of United States dollars.

2 In billions of United States dollars. Source: Based on information from Przemyslaw T. Gajdeczka, "International Market Perceptions and Economic Performance: Lending to Eastern Europe," Eastern European Politics and Societies, 2, No. 3, Fall 1988, 10; and NancyJ. Cochrane and Miles J. Lampert, Agricultural Performance in Eastern Europe, 1987, Washington, 1988, 566-67.

273

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Glossary

Comecon—Council for Mutual Economic Assistance. Sometimes

cited as CMEA or CEMA. Members in 1989 included Bulgaria, Cuba, Czechoslovakia, the German Democratic Republic

(East Germany), Hungary, the Mongolian People's Republic

(Mongolia), Poland, Romania, the Soviet Union, and Viet- nam. Its purpose was to further economic cooperation among

members.

corvee—Number of days each week that the serf was required to work for his lord. entail system—Form of inheritance by which land passed to the

owner's male descendents or, if he had no male heir, to the crown. Entail checked Hungary's economic development be- cause it prevented the nobles from selling their land or using

it as collateral to obtain credit. forint—National currency of Hungary. As of July 1989, the offi- cial exchange rate was 62.28 forints to US$1.

gross domestic product (GDP)—Includes "transferred value" (cost

of materials) and "newly created value" (profits and wages).

"Nonproductive" activities (services) are not included in GDP;

thus, it is not comparable with the Western concept of gross national product (GNP).

Hofkriegsrat—Central organ for all military matters in the Habsburg lands.

International Monetary Fund (IMF)—Established along with the

World Bank (q.v.) in 1945, the IMF is a specialized agency

affiliated with the United Nations that takes responsibility for stabilizing international exchange rates and payments. The

main business of the IMF is the provision of loans to its members when they experience balance of payments difficulties. These loans often carry conditions that require substantial in- ternal economic adjustments by the recipients.

nomenklatura—From the Latin nomenclature. This Russian word

denotes an enumeration of important positions and the candidates who are examined, recommended, and assigned to fill them by communist party committees at various levels. palatine—Originally created in the fifteenth century. Highest office- holder in Hungary in the eighteenth century; in theory, the

commander in chief of the Hungarian armed forces. Pannonia—Former Roman province west of the Danube in presentday Hungary and northern Yugoslavia.

303
Hungary: A Country Study

Party Rules—HSWP document, which can be altered by the party

congress. The Party Rules contain sections on regulations for

admission into the HSWP, the organizational structure of the

party, the principles of democratic centralism, the role of the

Basic Organization, the tasks of the party in state and mass

organizations, and membership dues.

Petofi Circle—A group formed in 1956 named after the nineteenthcentury poet and revolutionary Sandor Petofi, who symbolized

Hungary's desire for freedom. Made up of liberal writers, intellectuals, and some communists, the circle generated the ideas

that led to the Revolution of 1956.

value-added tax—A tax applied to the additional value created at a given stage of production and calculated as the difference between the product value at that stage and the cost of all materials

and services purchased as inputs.

Warsaw Pact—Political-military alliance founded in 1955 as a counterweight to the North Atlantic Treaty Organization. Members in 1989 included Bulgaria, Czechoslovakia, East Germany,

Hungary, Poland, Romania, and the Soviet Union. Has served

as the Soviet Union's primary mechanism for keeping politi- cal and military control over Eastern Europe.

World Bank—Informal name used to designate a group of three

affiliated international institutions: the International Bank for

Reconstruction and Development (IBRD), the International

Development Association (IDA), and the International Finance

Corporation (IFC). The IBRD, established in 1945, has the

primary purpose of providing loans to developing countries for productive projects. The IDA, a legally separate loan fund

administered by the staff of the IBRD, was set up in 1960 to furnish credits to the poorest developing countries on much easier terms than those of conventional IBRD loans. The IFC,

founded in 1956, supplements the activities of the IBRD

through loans and assistance designed specifically to encourage

the growth of productive private enterprises in less-developed

countries. The president and certain senior members of the

IBRD hold the same positions in the IFC. The three institu- tions are owned by the governments of the countries that subscribe their capital. To participate in the World Bank group,

member states must first belong to the IMF {q.v.).

304
Index

Academy of Sciences, 89-90

Action Program of HSWP, xxxi

Aczel, Gyorgy, 189

administrative structure: reform of, 60

agreements, 153, 154, 216, 238; anti- pollution, 115; for cooperation, 150-52,

215; radio, 205; for Soviet troop with- drawal, xlv; to study county financial operations, xlvi Agricultural and Food Processing Plat- form. See Hungarian Socialist Workers'

Party (HSWP)

agricultural cooperatives, 128

agricultural sector (see also farms, collective and state): collectivization of, 131-

32, 157; labor force in, 115-16; perfor- mance of, 21-22, 23-24, 29, 57, 142-

43, 159, 163; price setting for, 122, 132-33; proposal for land ownership,

xlii; recollectivized, 55, 120, 158-59;

small-scale farms in, 133-34

air force, 244, 248

airline (MALEV), xlvi, 146

airport, 146

Albrecht V (king of Hungary), 13 alcoholism, 101, 258

Alliance of Free Democrats, xxxiv, xxxvxxxvii, Hi, xliv, xlix-1 Allied Control Commission, 47 aluminum industry, 139-40 Amnesty International, 105

Anatolia, 12 Andrassy, Gyula, 29 Andrew II (king), 9 Andrew III (king of Hungary), 1

1

Antall, Jozsef, 1 anticommunist forces, 49

anti-Semitism, 29, 31-32, 38, 42-46

April Laws, 26-27 armed forces: conscription and voluntary

service in, 223; reduction in number of, xiv; spending for, xiv, 236

armistice with Soviet Union, 47 army: control by Habsburg Hofkriegsrat, 227; political indoctrination in, 247;

post-World War II, 230 Arnulph (king of East Francia), 5 Aron Marton Association, xxiii

Arpad, 4 Arpad Dynasty, 5, 11 Arrow Cross Party, 44, 46

Association of Young Pioneers, 91

Attila Jozsef University, xxxix

Attila the Hun, 5 Austria, 27-28, 38; boundary with, xlivxlv, 67, 215, 256; economic assistance from, 139; relations with, 205, 215-16;

Soviet troop withdrawal from (1955), 238; trade with, 154

Austrian Alps, 68

Austrian Empire, 16-28

Austro- Hungarian Empire, 28

Avars, 5 AVO. See State Security Department

(Allamvedelmi Osztaly: AVO)

Axis powers. See Italy; Nazi Germany

Azamos River, 67

Bakony Mountains, 113 balance of payments. See current account

deficit Balkans, 12 Bank for International Settlements, 126 banking system (see also credit system),

125; reform in, 126-27 bankruptcy law, 125, 129

Baptists, 94

Bardossy, Laszlo, 45

Basta, George, 17 Batthyany, Louis, 26-27

bauxite industry, 139

Bela III (king of Hungary), 8 Bela IV (king of Hungary), 9, 11, 225

Belgrade, 44, 226

Belgrade Declaration (1955), 52

Bern, Jozef, 228

Berecz, Janos, xlii, 194, 195, 204

Beria, Lavrenti, 51 Bethlen, Gabor, 17 Bethlen, Istvan, 38-40

Bihari, Mihaly, 178

birth rate, 71-72

black market or underground economy,

137, 148-49 Bobu, Emil, 212 305
Hungary: A Country Study

Bocskay, Istvan, 17, 226-27

Bod, Peter Akos, 1 bonds, 60 Border Guard, xlv, 223, 253, 255-57 Borsod-Abauj-Zemplen County, xlvi Bosporus Straits, 12 Bracsok, Istvan, 235

Britain: relations with, 205-6, 216-17;

trade with, 216

Bruszt, Laszlo, xxxvi Buda, 15, 16, 25, 28 Budapest, 65 budget deficit, xxix, xiv, 1 Bulgaria, xxx, 12 Bulgars, 4, 5, 224-25

Bulgur-Turks, 4, 75 Bush, George, xlvi bus manufacturing industry, 140

Calvinism, 16, 17, 66

capitalism, 120 Carpathian Basin, 4-5, 75, 224-25

Carpathian Mountains, 4, 225 Carpatho-Ukraine, 43, 67 Ceau§escu, Nicolae, xlvii-xlviii, 212, 213, 240-41

Celts, 5 censorship, 106, 203-4, 261-62

central bank, 124-26

Central-European International Bank

(CIB), 126-27

central planning, 50-51

Central Statistical Office, 177 Chamber of Commerce, 136

Charles Robert (king of Hungary), 11, 225

Charles V (Holy Roman Emperor), 15 Charles VI (Habsburg king), 20-21

chemical industries, 140-41, 159 China: relations with, 206, 219; trade

with, 155 Chinese Communist Party (CCP), 219

Christian Democratic People's Party,

xxxiii, xxxvi, xlix Christian National Union, 37, 38-39

Churchill, Winston, 47 church schools, 51 Citibank Budapest, 127, 154

Civic Democratic Party, 48

climate, 70

coal deposits, 68, 112-13

coal industry, 137-38

Cold War, 49

collective farms, xxvii, 51-52, 55, 80

colonization, 21 Comecon. See Council for Mutual Eco- nomic Assistance (Comecon)

Cominform, 50 Committee for Historical Justice, xxvi commune elections, 185 communist government: impact on soci- ety of, 65, 104-7; opposition to, 104-7 Communist Party of Czechoslovakia (CPCz), 207 Communist Party of the Soviet Union

(CPSU), 188, 189, 209 Communist Youth League (Kommunista

Ifjusagi Szovetseg: KISZ), 66, 88-91, 248 Compromise of 1867, 28, 29, 32, 34, 37, 228 computer industry, 142 Conference on Security and Cooperation in Europe (CSCE), 257; Cultural Forum of, 212

conscientious objection, 105

conscription, xli, 223, 247-48

Constitution (1949): amendments to, xxvii, xliii, 99, 171-74; freedoms enunciated in, 94-95; mixed ideology in, 170; provisions of, xxvii, 76, 169, 171-

73, 260-61 ; role of communist party in, xxvii

constitution, new (1990), 172

constitution, temporary (1919), 36

Constitutional Court, xxxvii, liii Constitutional Law Council, 170, 173-74

construction industry, 143, 148

corvee labor, 22, 26 Corvina library, 14 Council for Mutual Economic Assistance (Comecon), 51, 206; trade with, 140-

41, 152-53 Council of Ministers, 169, 170-72,

174-75, 234-35; county-level participa- tion by, 185-86; Information Bureau

of, 203; reorganization and role of, xxi, xxxvii; role, power, and composition of, 177; role in economic planning of, 119 Council of National Salvation Front, Romania, xlviii councils, district and county, 185 Counter-Reformation, Roman Catholic, 16

counterrevolution, xxx, 37 306
Index

county courts, 187

court system, 58, 175, 177, 187 CPSU. See Communist Party of the Soviet Union (CPSU)

Credit Bank of Budapest, 126

credit system, 127-28

crime, 257-59

criminal justice system, 223, 257-62

Croatia, 8, 16, 23, 38

Croatians, 21, 22, 26, 28-29, 38, 65, 76

Croatia-Slavonia, as territory, 27 Csepel free port, 146

Cultural Association of Gypsies in Hungary, 78

Cultural Association of Hungarian Workers, 214

currency, 48; convertibility of, 124; devaluation of, 163; nonconvertibility of rubles, xlvi current account deficit, xxviii-xxix, 150, 163-64

Czechoslovakia, 35, 38; boundary with,

67, 68; economic and political reform

in, xxx; officer training in, 249; rela- tions with, xlvii, 206, 210, 213-14;

reparations to, 49; trade with, 153; Warsaw Pact countries invasion of

(1968), 58

Danube Flotilla (HPA), 242 Danube River, 4, 67, 68, 105-6, 146, 214, 215

Daranyi, Kalman, 43-44

Deak, Ferencz, 27, 29

debt, external, xxviii, 41, 59-60, 112, 150, 163 Decree No. 4 (1985), 261 Decree No. 40 (1974), 256 Decree No. 49 (1984), 261 Decree No. 54 (1957), 238

defense industries, 236-37

defense policy, xli, 234, 239 Demidov, Aleksei A., 238

Democratic League of Free Trade Unions, xxx

Democratic People's Party {see also Christian Democratic People's Party), xxxiii Democratic Union of Scientific Workers, 89-90

developing country trade, 155

Diet of Pressburg (1687), 20

district courts, 187

divorce, xxix, 65, 87-88 Dnepr River, 4 Domestic Trade Law (1986), 135 Don River, 4 Dozsa, Gyorgy, 14 Drava River, 67, 68, 215

drought, 70 drug abuse, 101, 258-59 Dual Monarchy of Austria- Hungary, 28, 30-31, 34, 35, 228 Duray, Miklos, 213

Eastern Orthodox Church, 17, 21 economic assistance, xlv, 139 economic performance, xxvii-xxix, 85; un- der Gombos administration, 42; under New Course policy, 52; under New Eco- nomic Mechanism (NEM) policy, 57-59, 160; Soviet criticism of, 51 economic policy (see also market economy;

National Planning Authority): with

central planning, 120-21, 157-60; New

Course, 51-52; New Economic Mechanism (NEM), 57-58, 111-12, 118, 121-22, 134, 160-61; opposition to NEM implementation, 58-59; postwar

reconstruction, 48; proposed reform by

HSWP for, xxxi-xxxii; recentralization, 161 ; reforms under Kadar regime,

xxviii, 54-57, 158-64, 207; role of Council of Ministers in making, 119, 169, 170-72, 174-75, 177-78; under

Soviet regime, 50-53; stabilization pro- gram in late 1970s, xxviii, 161-62 Economic Research Institute, 148 economic system: with central planning, 120-34; private sector activity in, 135; reform of, 26 economic work cooperatives (EWCs), 131 Eden, Anthony, 47

education, military, 246-51; academies

for, 231, 249; paramilitary, 251; premilitary, 250-51

educational system: under communist

government, 96-99; reform in, 32, 33, 44

electoral system, xliii-xliv; in communes,

105; democratic nature of, 174; free elections of, xxxv-xxxvii, xlix-1, 37; laws (1966, 1970, 1983), 58, 60; for National Assembly, 181, 184-85; reform

in, 136, 190-91 307
Hungary: A Country Study

electricity generation, 138-39, 214

emigration, 32, 74 employment, 115-16 Endre Bajcsy-Zsilinszky Society, xxxiv, xxxvii energy industries, 138-39

energy resources, 112-13, 137-42

engineering sector, 140-41, 159

entail system, 11-12, 24, 31 Entente powers, 3, 35

environmental concerns, 70, 105-6, 1 14—

15 equipment manufacturing, 140-41

ethnic composition, 38, 74-78 European Economic Community (EEC),

153 exchange rate system, 60; controls for, 121; unified, 124

exports: of bauxite, alumina, and alumi- num, 139-40; to Comecon countries, 153; of computer products, 142; per- formance of, xxviii-xxix, 152, 163; of pharmaceutical products, 141; principal, 23-24, 152; to Soviet Union, 153;

to Western countries, 149-50; to West Germany, 154

Faluvegi, Lajos, 211

family constellation, 65, 86

Farkas, Mihaly, 230-31

farms: collective or cooperative, 158-59;

cooperative and state, 55, 132-34, 143;

small-scale, 133-34, 143

fascist parties, 44

Federation of Young Democrats, xxxix,

xxxv-xxxviii, xlii, xliv, xlix, 107, 253-

54 Ferdinand (king of Hungary), 15 Ferdinand V (ruler of Hungary), 26 Ferenc Munnich Society, xxxix, 106

Ferihegy Airport, 146

feudal economy, 8

financial instruments, 60, 128-29

financial sector, 60, 125 Finno-Ugric people, 3, 74-75

fiscal policy (see also tax system), 121 Five-Year Plan: Fourth, 103-4, 160;

Fifth, 160; Sixth, xxviii, 162; Seventh, 162-64

flood control, 68

food processing industries, 141-42

foreign policy, 169-70; changes in 1980s

for, 60; of Gombos administration, 42-43

forests, 114 For the Equality of Chances of the Provinces Platform. See Hungarian Socialist Workers' Party (HSWP)

For the HSWP Platform. See Hungarian

Socialist Workers' Party (HSWP)

Four Power Agreement, 216

Francis I (ruler of Hungary), 23-24, 25 Franz Ferdinand (archduke), 34 Franz Joseph (emperor), 19, 26-29, 34 Freedom Fighters, 232, 233 freedom of the press, xxxi, 104-7, 261-62

free port (Csepel), 146

Frigyes Karikas Military College, 249 Frunze Military Academy, Soviet Union, 249

Fur, Lajos, 1

Gabcikovo-Nagymaros Dam, xlvii, 105-6, 139, 214

gas and petroleum products industry, 138

gas pipelines, 146-47

Geczi, Jozsef, xxxix General Agreement on Tariffs and Trade

(GATT), 149 General Banking and Trust Company,

126 geography, 65, 67 Germans, 5, 9, 21, 26, 65, 76 Germany (see also Nazi Germany); trade

with, 149 Germany, East: economic and political reform in, xxx; relations with, xlvii; trade with, 153 Germany, West, 205, 216; trade with,

154, 216

Gero, Erno, 53 Geza (chieftain), 6

gold, 8, 9, 11-12 Golden Bull, 9, 11 Gombos, Gyula, 41-42 Goncz, Arpad, xlix-1 Gorbachev, Mikhail S., xlii, 112, 206,

209, 210, 239

Gorgei, Artur, 228

government, district and county, 185-87 government intervention, 111, 120-21,

124-25, 150 Great Plain, 65, 68 Greek Orthodox, 66, 94 308
Index

Greeks, 65, 76 Green movement, 105 Gromyko, Andrei A., 210

Grosz, Karoly, xxlii, 112, 164, 169, 210, 213, 214, 218, 240

Groza, Petru, 49

Gyorffy, Karoly, 213 Gyorgy Kilian Technical Air Force Academy, 249-50

Gypsies, 65, 74, 76-78, 257-58

Habsburg Empire {see also Austrian Empire; Royal Hungary): deposition of, 27; disintegration of, 228; invade Transylvania, 1 7 ; rulers of, 3 , 11; rules part of Hungary, 3, 16, 224 Hamori, Csaba, 196

Haraszti, Miklos, 262 hazardous waste problem, 114 HCP. See Hungarian Communist Party

(HCP)

health care, 66, 99-102

Helsinki Accords, 257

hill country, 65

Hitler, Adolf, 42, 43, 45

Hofkriegsrat, 227 Home Defense Sport Federation, 91 homogeneity of population, 74 Honved Military College, 249 Horn, Gyula, xlvii, 1, 239 Horthy, Miklos (regent), 37-39, 41, 44-46, 49, 229

Hortobagy, 67, 68 Horvath, Balazs, 1 Horvath, Istvan, 253, 255 household farming, 133-34

housing, xxv, 88, 103-4, 143 HPA. See Hungarian People's Army

(HPA)

HSP. See Hungarian Socialist Party (HSP)

HSWP. See Hungarian Socialist Workers'

Party (HSWP)

human rights: in Czechoslovakia, 213-14;

in Hungary, 218; in Romania, 211-13,

240; in Yugoslavia, 214

Hungarian-Austrian Friends Circle, 215-

16 Hungarian Autoclub, 91 Hungarian Communist Party (HCP):

control of government by, 50; lack of support for, 46; organization of, 36; power of, xxv, 47-49

Hungarian Credit Bank, 126 Hungarian Cultural Institute, Vienna,

215 Hungarian Democratic Forum, xxxiii, xxxiv, xxxvi-xxxvii, lii, xlix-1, 107 Hungarian Foreign Trade Bank, 126 Hungarian Independence Party, xxxii Hungarian language, 3-4, 6, 24; composition of, 75-76; as official language,

29, 75 Hungarian National Bank, 124-27, 129, 151, 177 Hungarian National Defense Association (Magyar honvedelmi szovetseg: MHSz),

248, 251 Hungarian People's Army (HPA): Central Committee of party organization

of, 237; change in responsibility of, xlv; creation of (1948), 230; dual command

system of, 230; ground and air forces

of, 223, 241-44; Main Political Administration of, 235; military equip- ment of, 242-44; penal battalion of, 260; purge of, 233; reorganization

of, 242; role in Revolution of 1956

of, 232-33; Soviet influence on, 237-

39 Hungarian People's Party, xxxiv, xxxvixxxvii Hungarian People's Republic, 3, 50, 172, 230; end of (1989), xxvii Hungarian Red Army, 36-37 Hungarian Republic (1946), 48 Hungarians, 38 Hungarians in Romania, 1-li, 210-11, 240 Hungarian Socialist Party (HSP), xxvii,

xl-lii, xlix; National Presidium of, li; National Steering Committee of, li; withdrawal from armed forces of, xlv Hungarian Socialist Workers' Party

(HSWP) (see also Hungarian Socialist Party (HSP)), 55-56, 66; Action Pro- gram of, xxxi; Agricultural and Food

Processing Platform, xl; Basic Organizations in, 175, 189, 193, 198-99, 200, 256; Central Committee of, xxxi, 59, 195, 200, 234, 237, 257; Central Control Committee of, 195-96; constitutional basis for power of, 172, 175;

contact with Chinese Communist Party

of, 219; county and district level participation in, 185-86; defense policy

309
Hungary: A Country Study

responsibility of, 234; democratic

centralism principle of, 191-92; Department for Agitation and Propaganda

of, 203; discipline in, 199-200; dissent within, xxxix; For the Equality of Chances of the Provinces Platform, xl; For the HSWP Platform, xl; intermediate institutions of, 198; loses support

(1989), xxxv-xxxvi; membership in, 200-202, 235; Party Congress of, 193-

95; party structure of, 192-93; People's

Democratic Platform of, xl; Politburo

of, 118-19, 196-7, 234-35; power monopoly of, 60, 118, 136, 169, 174, 188-

89; Reform Alliance of, xl; role of Patriotic People's Front in, xxxiv-xxxvii;

Secretariat of, 197-98; sharing of power

for reform by, xxi, 118-19; Workers' Guard of, xlii-xliii, xlii-xliii, 223, 253, 257; Young People's Platform, xl; youth organization of: Communist

Youth League, 66, 88-91 Hungarian Soviet Republic (1919), 35-

36, 46 Hungarian Telegraph Agency (Magyar

Tavirati Iroda: MTI), 203 Hungarian Workers' Party (HWP) (see also Hungarian Socialist Workers'

Party (HSWP)); xxvii, xxviii, 54, 170; Administrative Department of, 230;

control of state by, 3, 50; incipient deStalinization in, 231 Hungary as territory, 27 Hunyadi, Janos, 13, 226 HWP. See Hungarian Workers' Party

(HWP)

hydroelectric power system, 139, 214

immigration (see also refugees), 9 import licensing, 150

imports: of aluminum, 139; from China,

219; of coal, 138; from Comecon countries, 153, 161; of electricity, 138; of

iron ore, 140; of oil, 138; performance

of, 163; principal, 152; of raw materials, 111-12; from Soviet Union, 153; from West Germany, 154 import substitution, 122, 157 Imredy, Bela, 44 independence (1918), 228

independent contract work associations (ICWAs), 131

Independent Smallholders' Party (see also Smallholders' Party); xxxii, xxxiv,

xxxvi-xxxvii, xlix, 172

Industrial Cooperatives National Council, 136

industrial sector: after dismemberment,

38; in centrally planned economy,

xxvii, 129-31; competitive prices for, 122; development under Bethlen re- gime of, 39-40; employment in, 116; engineering and chemical industries in, 140-41; expansion in 1970s of, 160-61; impact of World War II on, 48; per- formance of, xxviii-xxix, 136, 163

inflation, xxix, 48, 80

insurance industry, 127

International Bank for Economic Cooperation, 126

International Investment Bank, 126

International Monetary Fund (IMF):

loans from, xxix, 162; membership in, xxviii, 149; standby credit agreement

with, 150, 164

investment: domestic, 55, 128, 160, 163; foreign direct, 120

investment protection agreement, 154

Ipoly River, 67

iron deposits, 68

iron industry, 140

Israel, xliv-xlii, 206, 218-19

Italians, 9

Italy, 42, 44, 228

Ivanyi, Pal, 191, 196, 197

Japan, 44; loans from, 163; trade with, 154-55

Jasso, Mihaly, 191

Jelacic, Josip, 26, 228

Jeszenszky, Geza, 1 Jewish Emancipation Act (1868), 29, 38 Jewish Law, 44

Jews, 9, 21, 29, 38, 65, 66, 76; deportation of, 45-46; emancipation of, 29, 32;

in Hungarian politics, 51; position in society of, 31-32, 77, 80; repression in Kallay administration, 46; as victims

of anti-Semitism, 42-46; as victims of white terror, 37

joint ventures, 120, 150-52, 154 Joseph II (ruler of Hungary), 22-23

journals, 204-5

judicial system (see also criminal justice 310
Index

system); components of, 187-88; greater independence for, 136; lacks independence, 174-75, 177; military courts in, 259-60

Kabar tribe, 5 Kadar, Janos, xxxv, 46, 210, 217, 219; administration of, 3, 46, 50, 53-58,

112, 158, 164, 233-34; concern for repressed Hungarians of, 21 1-12; consolidation of power by, 56; constitutional changes in regime of, 171; economic policies of, 54-57, 158-64,

207; ouster of, 169; policy toward

Soviet Union of, 209-10

Kallay, Miklos, 45 Kalman I, 8 Karl IV (emperor), 34-35, 38-39

Karolyi, Gyula, 41 Karolyi, Mihaly (The Red Count), 35,

37, 228

Karpati, Ferenc, 101, 235, 248

Kazan', 4 Khazar tribe, 4 Khrushchev, Nikita S., 52, 55-57, 237

Kiraly, Bela, 233

Klein, Marton, 212

Kohl, Helmut, 216

Kopacsi, Sandor, 232 Korea, South, xlv-xlvi, 206, 219-20

Kornai, Janos, 131 Korom, Mihaly, 184

Kossuth, Lajos, 25, 26-27, 228

Kovacs, Bela, 49 Kovacs, Istvan, 171 Krasznai, Lajos, 235

Kulin, Ferenc, 203 Kun, Bela, 35, 36-37, 46

labor camps, 260

labor courts, 187

labor force, 32; composition of, 82; employment of, 115; foreign workers in, 118; mobility of, 117; size of, 42; women in, 87, 102, 117-18

Lajos Kossuth Military Academy, 249

Lakatos, Geza, 46 Lake Balaton, 67, 68, 83 Lake Ferto (Neusiedlersee), 68, 215 Lake Velence, 67 Lakos, Sandor, 192 land for agriculture, 68, 112, 113-14

land ownership, xxviii, 32, 79, 120, 132

land reform, 26, 38, 40, 44, 48, 51, 80, 91 languages: Croatian, 29; German, 27; German as official, 22; Hungarian,

3-4, 6, 24, 26, 33; Hungarian as offi- cial, 29, 75; Latin as official, 22, 23; Magyar, 22; Russian, 98

Lazar, Gyorgy, 214

Laszlo I (king of Hungary), 8

Laszlo V (king of Hungary), 13 League of Nations, 39

legal system, 15, 259

Lendvai, Paul, 211 Leopold I (emperor), 19-20 Leopold II (ruler of Hungary), 23 Leo VI (emperor), 4

Liberal Party, 29, 31, 33-34

lignite, 112-13

literacy rate, 32, 44

Little Plain, 68

local government. See councils, district and county; government

Lomax, Bill, 181 Louis I (king of Hungary), 11-12

Louis II (king of Hungary), 15, 226

Lukacs, Janos, 196, 197 Lutheran Church, 94, 95 Lutheranism, 16, 17, 66

magnate class, 9, 11-15, 21, 23-25, 31 Magyarization, 33 Magyars: in Hungary, 21; influences on,

4; origins of, 3-5, 75, 224; in present- day Hungary, 65; as raiders, 5-6, 224-25; society of, 6, 8 Maleter, Pal, 232-33

Malinovskii Military Academy, Soviet Union, 249 Maria Theresa (ruler of Hungary), 21-22 market economy, xxx, xxxi-xxxii, xxxiii, 111 marriage rates, 72 Marshall Plan, 49-50

Martenson, Jan, li Martinuzzi, George, 15, 17

Marxist-Leninist ideology: in Constitution, 170-73; counterrevolution against, xxx;

in educational system, 96-99; in Hungarian Constitution (1949), 170; in Hungarian Socialist Workers' Party (HSWP), 189; related to unemployment, 116-17 311
Hungary: A Country Study

mass media, 169, 203-5 mass organizations, 86, 88-91 Mate Zalka Technical Military Academy,

249 Matra Mountains, 67, 113 Matyas Corvinus (king of Hungary),

13-14, 226 Mecs, Imre, xxx Mecsek Mountains, 113 medical care, public and private, 66 Mehes, Lajos, 211

Methodists, 94

Metternich, Klemens von, 26 MHSz. See Hungarian National Defense

Association (Magyar honvedelmi

szovetseg: MHSz)

migration, 32, 74 Miklos Zrfnyi Military Academy, 249

military courts, 187, 259-60

military sector, xxvii Mindszenty, Jozsef (cardinal), 51, 54, 92 mineral deposits, 68, 113 mining, 8, 9, 11-12

Ministry of Agriculture and Food, 121, 132 Ministry of Defense, 223; Main Political Administration, xlv, 230, 234, 248;

military industries owned by, 236-37;

plan for reduction of troops by, 244; re- organization of, xlv Ministry of Education, 96

Ministry of Finance, 119, 125 Ministry of Home Affairs, xlv Ministry of Industry, 60, 130-31, 253

Ministry of Interior, 223, 258

Ministry of Trade, 119, 150, 155

minorities, 21; constitutional provisions

for, 76-77; policy toward, 74 Mohacs (battle), 15, 226 Mohi (battle), 9, 225 monetary policy, 121 Mongols, 9, 225 Moravia, 224 Mormons, 94

mortality rate, 71-72, 100-101 Moscow Military Academy of the General

Staff, 249

most-favored-nation status, xlii, 154, 218

mountains, 67, 68 Mount Kekes, 67 multiparty system. See political system

Miinnich, Ferenc, xxxix, 56 Murad (sultan), 12

Mur River, 215

Mussolini, Benito, 42

Nagy, Ferenc, 48, 49 Nagy, Ferenc Jozsef, 1 Nagy, Imre, xxx, 51-54, 158, 232 Napoleon, 24 Napoleonic wars, 23, 227

National Assembly: new election rules

for, xlii-xliv; new power for, xlii; role, power and composition of, 169, 180-81 ; role in defense spending of, 236

National Association of Entrepreneurs, 136

National Association of Stamp Collectors, 91 National Commercial and Credit Bank,

126

National Council of Hungarian Women,

66, 88, 203

National Council of Trade Unions, Romania, 211 National Council of Trade Unions

(Szakazervezetek Orszagos Tanacsa: SZOT), xxxiv, 89

National Defense Council, 234

National Gypsy Council, 78, 203

National Price Office, 177

nationalism, 3, 22-23, 60-61, 246-47

Nationalities Law, 29, 33

nationalization: in 1919, 36; post-World

War II, 48, 50

National Peace Council, 105 National Peasant Party, 48, 53, 172 National Planning Authority, 119-21

National Police, 223, 253, 255

National Presidium. See Hungarian Socialist Party (HSP)

National Price Office, 119

National Reorganization and Liquidation

Board, 129 National Savings Bank, 127

natural gas, 113

natural resources: distribution of, 111-14,

149, 157; loss with dismemberment of, 38

navigation system, 214 Nazi Germany: assistance from, 67; in- vasion of Yugoslavia by, 44; occupation of Hungary by, 45-46; relations with, 3, 37, 42-44, 228 Nemeth, Miklos, xxxi, xlvii, xlix, li, 196 312
Index

New Economic Mechanism (NEM). See economic policy news media, 203

newspapers, 204 North Atlantic Treaty Organization

(NATO), xli, 206 Northern Hills, 65, 68

nuclear power, 139

Nyers, Rezsd, xxxi, xxix, xli, xlvii, 56,

59, 195

officer corps, 231-32, 233; Soviet in- fluence on, 237; training for, 248-50

Ogotai (khan), 9

oil deposits, 68, 113

oil pipeline, 146

oil price shock, xxviii, 160, 161 Olah, Istvan, 235 Openness Club, 106 Opposition Roundtable, xxxiv-xxxviii, 107 Otto I (king of Holy Roman Empire), 6 Otto II (king of Holy Roman Empire),

6, 225 Ottoman Empire: central Hungary as province of, 16-17; Transylvania as part of, 16, 19 Ottoman Turks, 3, 12, 13, 223-24, 226

Pacsek, Jozsef, 235

palatine as ruler, 12, 16 Pannonia, 224-25

paramilitary education, 251

partition of Hungary, 15-17, 19 Party of Forty-Eight, 34

Party of Independence, 34, 35

Party of Unity, 39

Party of Work, 34

passport law (1988), 256

Patent of Toleration, 22, 23

Patriotic People's Front (PPF), xxxiv, 58, 169, 172, 174, 181, 184, 189; relation

to Hungarian Socialist Workers' Party

(HSWP) of, 202-3

Peace Group for Dialog (Dialogus), 105 peace movement, 105 Peace of Karlowitz, 19 Peace of Vienna, 1

7

Peace of Westphalia, 17 Peace of Zsitvatorok, 17

peasants, 31, 32, 40, 55, 79-81 Pecheneg tribe, 4, 225

Penal Code, 259

penal system, 260

penitentiaries, 260

pension system, 66, 102-3

People's Control Committee, 174, 178 People's Democratic Platform. See Hungarian Socialist Workers' Party

(HSWP)

Peres, Shimon, 219

Peres de Cuellar, Xavier, li Pest, 25, 28

Petofi Circle, 53 petrochemical industries, 141

Petrovszki, Istvan, 192 pharmaceutical industry, 141

pipeline system, 146-47

plains, 65

Poland: crisis: 1980-81, 237; free elec- tions in, xxx; influence on Hungary of, xxviii; Louis I as king of, 12; officer training in, 249; trade with, 153

Political College, 195

political system: army dual command sys- tem, 230; emergence of multiparty sys- tem in, xxvii, xxx, xxxvii, 106; emergence of parties in, xxxii-xlii, 106; HSWP structure in, 192-93; liberali- zation of, xxvii-xxviii, xxx, xliv, 60, 223; parties in 19th century of, 33-34; post-World War II, 47-49; reform of, 26, 262; reform requirement for, 58

population, 21, 31-32, 65, 70, 110-12;

composition of, 76; homogeneity of, 74;

loss in post-war dismemberment of, 38, 71; in urban areas, 73-74

ports, 146

Postal Service, 177

poverty, xxv, 41, 79, 85, 155, 157 Pozsgay, Imre, xxxi, xxxvii-1, 195, 202 PPF. See Patriotic People's Front (PPF)

Pragmatic Sanction (1723), 20, 37

Precision Mechanics Enterprise, 236

president, xxxvii, xliii Presidential Council, 169, 174-75; abolition of, xliii; defense policy responsibility of, 234; role, power and

composition of, 178-79

Presidential Council of the Supreme

Court, 188

price system: controls and price-setting in, 121, 132-33, 163; under New Course 313
Hungary: A Country Study

policy, 52; reforms under New Eco- nomic Mechanism, 122-23; restructur- ing of, 60; rising prices in, xxlx, 1; for small-scale farm output, 134

private and semi-private enterprises, 131, 147-48

private sector, 60, 111, 120, 135-37, 147-48

property {see also joint ventures): expropriation of, xxvii; plan for private and for- eign, xxxii, 120

prosecutor general, 188

protectionism, 150

Protestant religions, 16, 66, 93-94

Public Health Act (1972), 99

public works program, 117

purges, 52 Puspokszilagy, 114

Raba-Odenburger railroad, 215 Raba River, 67, 68 Racz, Barnabas, 185 Radio Danubius, 205

radio stations, 205

railroad system, 146, 215

rainfall, 70 Rajk, Laszlo (communist leader during

the 1930s and 1940s), 46-47, 50, 52 Rajk, Laszlo (prominent dissident during

the Kadar era), 184 Rakoczi, Ferenc, 20, 227 Rakoczi, Gyorgy, I (prince), 17 Rakoczi, Gyorgy, II (prince), 19 Rakosi, Matyas, 3, 47, 49-54, 231 Rakosi administration, 157-58 RCP. See Romanian Communist Party

(RCP)

rebellion, national (1703-11), 20

recession (1929), 41 referendum (1989), xxxviii, xlii Reform Alliance. See Hungarian Socialist Workers' Party (HSWP)

Reformation, Protestant {see also Counter- Reformation, Roman Catholic), 11, 16 reform leaders, 24-25 Reformed (Calvinist) Church, 94, 95

refugees: from East Germany, xlvii, 256-

57; post-World War I, 37; from Romania, 76, 212-13

religion {see also Patent of Toleration), 16, 17, 66; discrimination against, 29,

31-32, 42-46, 86; freedom of, 22; persecution of Protestants, 17, 19, 20 Republic of Hungary (1989), xxvii, xliii revolt: noblemen, 227; peasant, 12, 14, 20

revolution (1848), xxx, 19, 26-27, 227-28

Revolutionary Committee of the Armed

Forces, 233 Revolution of 1956, xxx, 46, 53-54, 232, 237

Ribanszki, Robert, xxxix

rights {see also human rights): constitutional, 173, 260-61; to strike, xxx

rivers, 67, 114

river transport, 146

roads, 146, 215 Roman, Petre, li Roman Catholic Church: as ally of magnates, 31; conversion of Magyars by,

6; Counter-Reformation of, 16; domination by, 32, 96; persecution of, 86, 91-93; reduction in power of, 32-33,

91-92; revival of (1980s), 93, 95 Roman Catholics, 17, 66 Romania, 35, 38, 44, 49; anti-Hungarian

violence in, 1-li; boundary with, 67;

relations with, xlvii-xlviii, li, 206, 210-

13, 223, 240-41 Romanian Communist Party (RCP), 211 Romanians, 5, 17, 21, 22, 26, 37, 38, 65,

76, 256 Romanov, Grigorii V., 209 Romans, 5 Royal Hungary, 16-17, 19, 226-27

Rozsik, Gabor, xxxv

rule of law, xxvii, xlviii Russia, 27

samizdat, 105, 261

Saxons, 8 Schmidt, Istvan, 244

schools, 66

Security Police, 223, 253, 255

Serbs, 12, 21, 22, 26, 65, 76

serfs, 8, 9, 11, 13-15, 21-22, 24; bondage law for, 14-15; Eastern Orthodox

religion of, 17; growth of population of, 22

service sector, 116 Seventh-Day Adventists, 94, 246

Shamir, Yitzhak, 219

Shultz, George P., 218

Sigismund, 12 314
Index

Simon, Janos, xxxvi

Sio River, 67

Slavonia, 38

Slavs, 4, 5 Slovakia, 36, 38, 43, 67, 213-14

Slovaks, 21, 22, 26, 38, 65, 76

Slovenes, 65, 76 Small Craftsmen's National Association, 136

Small Tradesmen's National Association, 136

Smallholders' Party, 37, 39, 48, 49, 53

Social Democratic Party, xxxiii, xxxiv,

xxxvi, xlii, 32, 35, 39, 48, 49, 50, 53, 172

Social Science Institute, 195

social structure, 6, 8-9; changes in, 31, 80-85; impact of World War II and

communism on, 65-66, 78-80; mobility in, 80-81; reform of, 26

social welfare system (see also public works

program), 99-102

software industry, 142

Solferno (battle), 27 Southern Group of Forces (SGF) (War- saw Pact), 237, 238-39

Soviet-Hungarian trade agreement, 153

Soviet Union: assistance from, 35; control of Eastern Europe by, 3; control of Hungary by, 46, 49; cooperation pro- gram with, 210; German invasion of, 45, 229; influence on HPA of, 237-39;

liberalization of foreign policy of, xlvi; military advisers in Hungary, 230-32;

military training schools of, 249-50; Red Army invades Hungary (1944),

47; Red Army of, 37, 45-46, 229; re- lations with, xlvi, 206, 208-10; reparations to, 49; role in 1956 Revolution

of, 53-54, 232-33, 241; support for eco- nomic and political reform by, xxxviii; trade with, 112, 149-50, 153, 158, 164; troops in Hungary, 238; troop with- drawal from Hungary, xlv, 223, 239; weapon sales of, 236, 243

Soviet Voluntary Society for Cooperation with the Army, Air Force and

Navy (Vsesoiuznoe Dobrovol'noe

Obshchestvo Sodeistviia Armii, Aviatsii, i Flotu: DOSAAF), 251

spending, military, 223, 235-36

Springer, Axel, xxxi

Stalin, Joseph, xxxii, 3, 47, 49-51, 96, 158

Stalingrad (battle), 229

standard of living, 142, 156-57

State Office for Church Affairs, 95, 177

State Office for Youth and Sports, 177 state-owned enterprises, 120; before and

after reform, 130; competitive pricing

for products of, 122; domestic trade patterns of, 155-56; performance of, 137; proposal to sell, xxviii; revenues and spending of, 124

State Security Department (Allamvedelmi

Osztaly: AVO), 232, 255

State Wage and Labor Office, 177

steel industry, 140 Stephen (king of Hungary), 6-8

stock exchange, 111, 128-29

Straub, Bruno F., 178

strikes, xxvi, 136

Strougal, Lubomfr, 214 Sublime Porte, 17

subsidies, xxviii, 31, 133, 160

suicide rate, 101 Suleyman the Magnificent (sultan), 3,15,

19

sulfur-dioxide emissions, 114-15 Supreme Court, xlii, 175, 177, 187-88, 260 swamps, 68

Sylvester II (pope), 6 Szabo, Istvan, 196

Szalasi, Ferenc, 46

Szechenyi, Istvan, 24-25, 26

Szekel tribe, 8, 12 Szekely, Janos, 256

Sztojay, Dome, 45-46

Szuros, Matyas, xxvii, 207-8

Tamerlane, 12 tax system, 121, 123-24, 151

Teleki, Pal, 38, 44

telephone system, 147

television, 147, 205

territories: division into, 27; regained, 42-43

textile industry, 141 Thatcher, Margaret, 217

thermal power stations, 138

third economy. See black market or under- ground economy

Thirty Years' War, 17 Thokoly, Imre, 19

Tildy, Zoltan, 48 315
Hungary: A Country Study

Tirgu Mure§, 1-li Tisza, Istvan, 34-35

Tisza, Kalman, 29, 31-34

Tisza River, 4, 67, 68

Tito, Josip Broz, 50 Tokes, Laszlo, xlviii tourism, 152

trade, domestic, 155-56

trade, international: government inter- vention in, 150-51; with Western countries, 149-52, 153-54

trade barriers, 150

trade policy: agreement with Germany, 42;

dollar- account agreement with Soviet Union for, xlvi; under Kadar regime, 57, 60; liberalization of, xxxii; reform of, 60

trade unions, 32, 39, 50-51, 60, 66, 88-90, 136 Transdanube, 65, 68

transportation system, 143, 146-47

Transylvania, 5, 8, 38, 43; incorporation

into Hungary of, 26; ruled by Ottoman

Empire, 16-19; as separate from Hungary, 20, 225; as territory, 27 Treaty of Eternal Friendship (1940), 44

Treaty of Friendship and Cooperation

(1984), xlviii Treaty of Paris (1947), 49 Treaty of Szatmar, 20, 227 Treaty of Trianon (1920) (see also Tria- non Hungary), 38, 39, 42, 67, 228

Treaty of Vasvar, 19 Trianon Hungary, 228-29

Tripartite Pact (1940), 44

Tripartitum of 1514, 15, 259 Turks (see also Ottoman Turks), 11, 12, 15-17

Ulaszlo I (king of Hungary), 13 Ulaszlo II (king of Hungary), 14-15 underemployment, 115-17 unemployment, 116-17

Uniates (Catholics of the Eastern Rite), 66, 94, 95 Unicbank, 127

uniforms, ranks, insignias, 230, 251-53 Union of Three Nations, 12, 17 Unitarians, 17, 94, 95 United Nations (UN): Convention on Long-Range Transboundary Air Pollution, 114; Human Rights Commission of, li

United States: relations with, xlvi, 205-6, 217-18; trade agreement with, 154; trade with, 154 United States Peace Corps, xlvi universities: under communist regime, 98-99; establishment of, 12, 14 University of Pittsburgh, xlvi Ural Mountains, 4, 75 uranium deposits, 139 Urbarium (see also serfs), 22

Varpalota Basin, 113 Vertes Mountains, 113

videocassette recorders (VCRs), 205 Vienna, 227-28

viticulture, 68

Vojvodina, 27, 38, 43 Volga River, 4, 75 Volgyes, Ivan, 230, 233, 241

Voroshilov, Kliment, 47-48

Voroshilov General Staff Military Acad- emy, Moscow, 249

wage policy, 123 wages, xxix Warsaw Pact, 54; armed forces commit- ment to, 223-24, 234; reform element

in, xxv; role in, xlv, 239-40; Southern Group of Forces, 237; withdraws from, 233 Warsaw Pact countries, 206

wastelands, 68 weapons acquisition, 236 Werboczy, Stephen, 15, 259

white terror, 37, 39, 46 Wladyslaw III (king of Poland), 13 women: in armed forces, 223; in Hungarian Socialist Workers' Party (HSWP),

201; in labor force, 87, 102, 117-18;

status in social structure, 87, 90 Workers' Guard. See Hungarian Socialist Workers' Party (HSWP)

World Bank (see also Unicbank): International Finance Corporation and Inter- national Development Association of, 127, 155; loans for pollution control, 115; loans from, 162; membership in, xxviii, 149 World Health Organization, 100 World War I (see also Entente powers), 3, 28; impact of, 34-35, 71, 228 316
Index

World War II, 48, 65, 78

Writers' Association, 52-53

214; reparations to, 49; treaty with. 44

Young People's Platform. See Hungarian

Socialist Workers' Party (HSWP)

Yugoslavia, 35, 38; boundary with, xlivxlv, 67, 68, 256; expelled from Cominform, 50; relations with, 206, 210,

Zala County, 68

Zapolyai, Janos (king of Hungary), 15 Zhao Ziyang, 219 Zhukov Air Defense Academy, 249

Zrinyi, Miklos, 226

317

Published Country Studies

(Area Handbook Series)

550-65 Afghanistan 550-87 Greece 550-98 Albania 550-78 Guatemala

C C A A A 550-44 Algeria C c A 1 1

A

550-1 /4 Guinea

C C A CQ Angola c^A QO Guyana and Belize 550-73 Argentina c c A K1 550-151 T T 1 _ Honduras

550-169 Australia 550-165 Hungary

550-176 Austria 550-21 India Bangladesh ^A 1 DD\J— 1 04- Indian Ocean

550-1 /0 Belgium c c a 550-oy Indonesia

c ca c<: 550-66 Bolivia C C A £Q 550-bo Iran

c ca on 550-zO Brazil C CA Q 1 DOU-J

1

T__ _ Iraq 550-168 Bulgaria 550-25 Israel 550-61 Burma 550-182 Italy 550-50 Cambodia CCA OA 550-30 Japan

CCA 1CC 550-166 Cameroon c c A Q A 550-34 Jordan

oou-i oy OOU— ^a JO^fi Kenya

550-77 Chile 550-81 Korea, North

550-60 China 550-41 Korea, South

C C A 1C 550-/6 Uolombia CCA CO 550-58 .Laos

C C A O Q DDU-oo Commonwealth Caribbean, C C A C)A Lebanon

Islands of the R^A Q1 Congo 00U-OO ^A °.P. Liberia 550-90 Costa Rica 550-85 Libya 550-69 Cote d'lvoire (Ivory Coast) 550-172 Malawi

^a 1 ^9 ^^A Malaysia

CCA OO 550-2/ Cyprus CCA 1C1 550-161 Mauritania

C CA 1 CO 550-15o Czechoslovakia CCA 1 A 550-/y Mexico

550-36 Dominican Republic and 550-76 Mongolia

Haiti 550-52 Ecuador 550-49 Morocco

550-43 Egypt 550-64 Mozambique

550-150 El Salvador 550-35 Nepal and Bhutan

550-28 Ethiopia 550-88 Nicaragua 550-167 Finland 550-157 Nigeria 550-155 Germany, East 550-94 Oceania

550-173 Germany, Fed. Rep. of 550-48 Pakistan 550-153 Ghana 550-46 Panama

319
550-156 Paraguay 550-53 Thailand 550-185 Persian Gulf States 550-89 Tunisia 550-42 Peru 550-80

550-79 JT 11111 UIJIIlCo 550-74 TVJT gdllUd era nns

550-1 69 PnlanH X Ulo.llLI 550-97 T In i fn l i ugucty 550-181 Portugal 550-71 Venezuela

550-1 60 XVUllld.Illa 550-39 V IClllalll 550-37 XWV R wanna CUlUa ell anrlIxJ. JJRunUl U.11U1 inHi 550-183 1 ClllCllo, X 11C 550-51 Nanrii OdUUl ill Ararna aula 550-99 X UeUMdvla i otoqI a\/i a 550-70 QOCllCeal i-i rral 550-67 550-180 Sierra Leone 550-75 Zambia

550-184 Sin pjcipore 550-171 Zimbabwe

550-86 alia 550-Q3 OUU.U1 ^rwitrx Afrira IL-d 550-95 Srwipt T In i on 550-179 Spain 550-96 Sri Lanka

550-27 Sudan

550-47 Syria 550-62 Tanzania

320



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