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Background: Hungary was part of the polyglot Austro-Hungarian Empire, which collapsed during World War I. The country fell under communist rule following World War II. In 1956, a revolt and announced withdrawal from the Warsaw Pact were met with a massive military intervention by Moscow. In the more open GORBACHEV years, Hungary led the movement to dissolve the Warsaw Pact and steadily shifted toward multiparty democracy and a market-oriented economy. Following the collapse of the USSR in 1991, Hungary developed close political and economic ties to Western Europe. It joined NATO in 1999 and is a frontrunner in a future expansion of the EU.
Government type: parliamentary democracy
Capital: Budapest
Currency: 1 forint (Ft) = 100 filler

Geography of Hungary 

Location: Central Europe, northwest of Romania
Geographic coordinates: 47 00 N, 20 00 E
total: 93,030 sq. km
land: 92,340 sq. km
water: 690 sq. km
Land boundaries:
total: 2,009 km
border countries: Austria 366 km, Croatia 329 km, Romania 443 km, Serbia and Montenegro 151 km (all with Serbia), Slovakia 515 km, Slovenia 102 km, Ukraine 103 km
Coastline: 0 km (landlocked)
Climate: temperate; cold, cloudy, humid winters; warm summers
Terrain: mostly flat to rolling plains; hills and low mountains on the Slovakian border
Elevation extremes:
lowest point: Tisza River 78 m
highest point: Kekes 1,014 m
Natural resources: bauxite, coal, natural gas, fertile soils, arable land
Land use:
arable land: 51%
permanent crops: 3.6%
permanent pastures: 12.4%
forests and woodland: 19%
other: 14% (1999)
Irrigated land: 2,060 sq. km (1993 est.)
Environment – current issues: the approximation of Hungary’s standards in waste management, energy efficiency, and air, soil, and water pollution with environmental requirements for EU accession will require large investments.
Environment – international agreements:
party to:  Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulphur 85, Air Pollution-Volatile Organic Compounds, Antarctic Treaty, Biodiversity, Climate Change, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Wetlands
signed, but not ratified:  Air Pollution-Persistent Organic Pollutants, Air Pollution-Sulphur 94, Antarctic-Environmental Protocol, Law of the Sea.
Geography – note: landlocked; strategic location astride main land routes between Western Europe and Balkan Peninsula as well as between Ukraine and Mediterranean basin.

People of Hungary 

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. 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.


Most of the country has an elevation of fewer than 200 meters. 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, 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 summer swimming, and in winter its frozen surface provides excellent opportunities for winter sports. Smaller bodies of water are Lake Velence (26 square kilometers) in Feher County and Lake Fertö (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 Alps; and the Northern Hills, which is Austrian 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, a long, and 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 remainder of the country’s border with Yugoslavia. It lies south and west of the course of the Danube. It contains Lake Fertö 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 territory is suitable for agriculture; of this portion, 72 percent is arable land. Hungary lacks extensive domestic sources of the energy and raw materials needed for industrial development.


Temperatures in Hungary vary from -28° C to 22° C. Average yearly rainfall is about sixty-four centimeters. Distribution and frequency 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 herbicides used in agriculture and from industrial 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.

History of Hungary 

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 regime collectivized agriculture. The property of the prewar ruling classes was expropriated, and the regime undertook a reign of terror 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 announce 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 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 itself attempting to carry through far-reaching reforms allowed Hungary to implement radical reforms. The example of wide-ranging 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 investment 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. Again, world energy prices rose, and Western banks limited the flow of credits as a result of the crackdown on the Solidarity labor movement in Poland and the insolvency in Romania. Increases in interest rates caused problems for Hungary’s balance of payments.

Hungary joined the International Monetary Fund and the World Bank in 1982. These institutions compelled Hungary to introduce a new stabilization program, which called for reductions in spending on investment and consumption. By 1985 spending on investment was 21.8 percent less than it had been in 1981. Prices also rose. The Sixth Five- Year 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 the economy fared somewhat better, but in 1988 inflation far exceeded 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, 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. Outputs 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 retired 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.

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 introduction 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. 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 history, 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 “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 16 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 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 Rezsö 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 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 crisis” by creating a market economy based on mixed ownership. On 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 atmosphere 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 indeed 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 estimated 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 expense of the executive; a free market system; strong support for private sector entrepreneurship; tax relief to encourage entrepreneurs; the reprivatization of agriculture; and “perpetual neutrality” for Hungary.

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’s 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 included antinationalist 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 economy: 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 entrepreneurial stratum. However, the entrepreneurs were to be groups, not individuals.

The Alliance of Free Democrats was founded on December 13, 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 thirty-five. 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 Bajcsy- Zsilinszky 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 overcome 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, 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 securing 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 little 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 Godollö, 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 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 percent 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 Kiskunfelegyhaza, 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 surveyed 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 Alliance 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.

The agreement between the HSWP and the Hungarian Democratic Forum, the 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 socialism; 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 argument also called for the creation of a strong 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 elections 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 because its candidate–Imre Pozsgay–was the most popular political figure in the country at the time. For its part, the Hungarian Democratic Forum minimized the importance of Pozsgay’s candidacy because of the difficulty of even a well-known politician’s 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 outcome 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: disbanding 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 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.

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 Munnich 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 Munnich Society] is to stop the further deterioration of socialist achievements . . . and to lend support to the development and strengthening of socialism.” The Ferenc Munnich Society sought the retention of the HSWP’s leading role in social, economic, and governmental institutions. 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 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.

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 living 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 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. Rezsö 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 election to local representative bodies within their jurisdictions, and they could nominate candidates from their jurisdictions for election 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 elections 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 action 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 disbanded the Workers’ Guard, without naming a successor organization.

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 Supreme 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 explicitly 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 represented 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.

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 disbanding 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 removed 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-kilometer-wide “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 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, 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 semi- independent 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 Republic of Korea (South Korea) and Israel, both of which it recognized 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 permission 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-Abaúj-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 services 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 status to Hungary on a permanent rather than on a yearly basis. On October 27, the president announced that Hungary would be perpetually 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 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 Gabcikovo-Nagymaros Dam project on May 13. 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 announced 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 Ceausescu 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, Rezsö Nyers, together with Foreign Minister Gyula Horn and Prime Minister Miklos Nemeth, met Ceausescu 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 Ceausescu’s plan to raze 7,000 to 8,000 villages and relocate their inhabitants in large apartment complexes. The 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 Tökes, an ethnic Hungarian Reformed minister in Timisoara, Romania, and his family initiated the revolution in Romania that brought Ceausescu’s ouster and execution in December 1989. In response to the violence perpetrated by the Ceausescu 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 Ceausescu’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 transmitters 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 Ceausescu 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 experienced 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 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.

Historical Setting

THE HUNGARIAN PEOPLE’S REPUBLIC emerged in 1949 after the Hungarian Workers’ Party eliminated its rivals and assumed 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. Suleyman the Magnificent’s Ottoman armies conquered and partitioned the country with the Habsburgs in the sixteenth 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 postwar 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 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 engaged 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 Bulgar-Turks from about the fifth to the seventh century. During this period, the Magyars became a semisedentary people who lived by raising cattle 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 Árpad to lead the migration and that they swore by sipping from a cup of their commingled blood to accept Árpad’s male descendants as the Magyars’ hereditary chieftains. The Magyars probably knew of the lands in the Carpathian Basin because from 892 to 894 Magyar mercenaries had fought there for King Arnulph of East Francia in a struggle with the duke 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 southsouthwest 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 thirteenth 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 occupied 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.


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 Árpad Dynsaty and was firmly allied to the Christian West. Eventually the Árpad line died out, however, and Hungary again descended into anarchy, with the most powerful nobels 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 took captives for labor, ransom, or sale on the slave market. The Byzantine emperor and European princes paid the Magyars annual 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), Árpad’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 ispan, or magistrate, appointed by the king. In Stephen’s time, Magyar society had two classes: the freemen nobles and the unfree. The nobles were descended in the male line from the Magyars who had either migrated into the Carpathian Basin or had received their title 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. 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 century 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, cattle remained the principal medium of exchange. Towns began developing when an improvement in agricultural methods and the clearing of additional land produced enough surplus 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 income from the crown lands nearly equaled the revenues generated 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 raising 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 institution of the parliament, or Diet.

Andrew II’s 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 remained of his kingdom.


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, reorganized 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, and Jews. Mining began anew, farming methods improved, and crafts and commerce developed in the towns. After 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 Árpad 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.


After the Árpad 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 III’s death. An Árpad 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, standardized 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. Hungary’s economy continued to flourish during Louis’s 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 activates, 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 (1387-37), 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 selling 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 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 outstripped 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, 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, 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 network 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 exemptions 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’ 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 Ulaszlo II and Louis II

Matyas’s reforms did not survive the turbulent decades that followed 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 discontent boiled over in 1514 when well-armed peasants (if they are in rebellion they are not really acting as serfs) 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 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 then-childless 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.

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. 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 converted 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 mostly 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 persecuted 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 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 selfgovernment , and a prosperous middle class developed through artisanry and trade.


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 concluded 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 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. Soon, the Ottoman occupation of Hungary continued not so much because of the Turk strength but because of the West’s disunity and lack of resolve. Hungarian nobles grew impatient with the Habsburgs’ persecution of Protestants and reluctance to take steps to drive out the Turks. Their discontent exploded 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 discontent 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.


The Habsburgs ruled autocratically on almost all questions except 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 1948 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 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 Pressburg 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 disloyal 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 Tranyslvania 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 eight-year 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 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 further 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. Many Jews 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 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. 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 inherited 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 official 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 insisting 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 French- and 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 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 later 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 alleged 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 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, became 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 livelihood, 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 surpassed wartime levels. As more lesser nobles earned diplomas, the bureaucracy and professions became saturated, leaving a host of disgruntled 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 request 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 reforms. 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 project as the construction of the suspension bridge 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, economic 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 reforms with increasing success after Francis’s death in 1835 and the 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; freedom 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, effectively 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 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 request, 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 repression followed. Batthyany and about 100 others were shot, several society women were publicly whipped, and the government outlawed 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, Croatia-Slavonia, 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 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 intensified and finally resulted in the Compromise of 1867, which created the Dual Monarchy of Austria-Hungary, also known as the Austro-Hungarian Empire.


The Compromise of 1867, which created the Dual Monarchy, gave the Hungarian government more control of its domestic affairs than it had possessed at any time since the Battle of Mohacs. 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 aftermath of the war, a series of governments–including a communist regime–assumed power in Buda and Pest (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 internal 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 remained the language of command in the military as a whole. The compromise designated 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. 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 enjoyed 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 inadequate. 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 further action concerning nationalities, and discontent fermented.

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 succumbed to charges of financial mismanagement and scandal.

As a result of these economic problems, Kalman Tisza’s Liberal Party, created in 1875, gained power in 1875. 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 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, railroad, and waterway projects. Commerce and industry expanded quickly. After 1880 the government abandoned its laissez-faire economic 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 diet. 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 become predominantly Jewish. In fact, Jews created the modern economy that supported Tisza’s bureaucratic machine. In return, Tisza 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 percent 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 secretly 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 reform 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.

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 appointments, 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, they 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 pressures and heightened fears of territorial claims against Hungary after the creation of new nation-states in the Balkans forced Tisza to outlaw “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.

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 Forty-Eight, 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 economic 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 inevitable. 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 victory took to Budapest’s streets after the declaration of war. However, Hungary, was ill prepared to fight. The country’s armaments 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 has expanded voting rights. Tisza resigned in 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. Pressured 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 bourgeoisie 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 reform 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 discontent, 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 exploiting 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.

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 cultural 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 restore Hungary’s borders than on their revolutionary agenda. Kun hoped that the Soviet Russian government would intervene on Hungary’s behalf and 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 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 purge of foreign communists in the late 1930s.


A militantly anticommunist authoritarian government composed of military officers entered Budapest on the heels of the Romanians. A “white terror” ensued that led to the imprisonment, torture, 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.


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 occupied 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 little 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 Independent 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 (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. Romania acquired Transylvania; Yugoslavia gained Croatia, Slavonia, and Vojvodina; Slovakia became a part of Czechoslovakia; and Austria also acquired a small price of prewar Hungarian territory. Hungary also 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 estates into smallholdings. Teleki’s government resigned, however, after the former emperor, Karl IV, unsuccessfully attempted to retake Hungary’s throne in March 1921. King Karl’s return narhed a split parties between conservatives who favored a Habsburg restoration and nationalist right-wing radicals who supported election of a Hungarian king. 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 reenthronement to merge with the Smallholders’ Party and form a new Party of Unity with Bethlen as its leader. Horthy then appointed 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 legalize their activities and free political prisoners in return for their pledge to refrain from spreading anti-Hungarian propaganda, calling political strikes, and organizing the peasantry. In May 1922, the Party of Unity captured a large parliamentary majority. Karl IV’s 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 foreign-currency 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 currency 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 secured 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 fueling industrial development.

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 remained poor, and consequently the working class never gave Bethlen its political support. The peasants fared worse than the working class. 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 percent 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 reactionary 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 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 Hitler. 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 extended its territory four times and doubled in size from 1938 to 1941. It regained parts of southern Slovakia in 1938, Carpatho-Ukraine in 1939, northern Transylvania in 1940, and parts of Vojvodina in 1941.

Hitler’s assistance did not come without a price. After 1938 the fuhrer 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 of Jews 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 percent 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 and dismantled Gombos’s political machine. After Horthy publicly dashed hopes of land reform, discontented rightwingers 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 socalled Jewish Law, which set quotas limiting Jews to 20 percent of the positions in certain 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 of Jews. 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 Eternal 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 invade. 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 suicide 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 former Hungarian lands in Yugoslavia, and Hungary eventually annexed sections of Vojvodina.

Horthy named the right-wing radical Laszlo Bardossy to succeed 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 territory in Transylvania. Bardossy agreed and committed onethird 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 estimated 40,000 Hungarians and wounded 70,000. As anti-Axis pressure 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, dissolved the labor unions, and resumed the deportation of Hungary’s Jews.

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 outlawed 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 Hitler 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 systems, 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.


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 of the Spanish Civil War (1936-39) and a former student communist 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 percent 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 Independent Smallholders’ Party, one member of the National Peasant Party, and one unaffiliated member. The provisional government concluded an armistice 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 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 Debreceu to Budapest, and a second, expanded Provisional National Assembly was chosen. With the support 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 Independent 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 Independent 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 economic reconstruction and land reform. 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.

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 Independent Smallholders’ Party, on the false charge of plotting to overthrow the government. The Independent 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’ treatment of the Hungarian minority in Transylvania became an irritant in relations between the two countries.

Rakosi’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 to 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 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 linking the Soviet communist party with the communist parties of Eastern Europe, France, and Italy.

The HCP proceeded swiftly 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. 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 became 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 four-year 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 chief Janos Kadar, who was jailed and tortured for three years.

Between 1948 and 1953, the Hungarian economy was reorganized according to the Soviet model. 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 introduced Soviet-style central planning. Planners neglected the production of consumer goods to focus on investment in heavy industry, especially steel production, and economic self-sufficiency. In January 1949, Hungary joined the Council for Mutual Economic Assistance, an organization designed to further economic cooperation between 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 collared, 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.

Stalin died in March 1953. The new Soviet leadership soon permitted 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 performance. 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 terror, 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. Hungary ceased collectivization of agriculture, allowed peasants to leave the collective farms, canceled the collective farms’ compulsory production 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 consumer 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 fulfillment after 1953 than before. Rakosi used his influence to disrupt 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 economy. 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 industry 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. The party press printed open attacks. The Writers’ Association, the newly created Petofi Circle, and student organizations clamored for Rakosi’s ouster and arrest. On June 30, the Central Committee dissolved the Petofi Circle and expelled intellectuals 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. 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 member of the secret police. The Central Committee named Nagy prime minister on October 25 and selected a new Politburo and Secretariat; one day later, 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 Independent Smallholders’ Party, Social Democratic Party, National Peasant Party, and other parties, 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 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 responded 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 the 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 radiobroadcast. 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 political 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 livings. 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 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 communism” .

In late 1956, the party named a committee of mostly reform-minded 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 collective 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 economic change. During the chaos of the revolution, Hungary’s collective 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. 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 regime 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 collectivized 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 shakeup . Khrushchev had consolidated his position in the Kremlin and had 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 thus assumed the top government post, as well as the leadership of the HSWP. He then dismissed other hard-line officials. Kadar’s 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 became 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 enterprises 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 secretary 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. Since the Treaty of Trianon, Hungary had depended on foreign trade, and in the early 1960s the government placed top priority on improving the 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 announced price hikes. Popular discontent rose as a result.

In May 1966, the Central Committee approved a sweeping reform 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 setting 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 and modernization of the infrastructure. Finally, agricultural collectives 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 standard 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. Even after a second electoral law in 1970 made it legal for other groups to nominate individuals, few multiple candidacies actually arose. 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 further political changes. However, Kadar was able to work out a modus vivendi with the Soviet leadership. The Soviet Union allowed 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 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 introduction 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 restrictions applied to small enterprises and agricultural producers. Wages rose, prices came under central control, and the regime introduced 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” arose. A clampdown on intellectuals began, and Nyers lost his Politburo 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 rewarded inefficiency and stifled innovation and initiative. Enterprises ignored market signals, and shortages plagued producers. Large amounts 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 billion by 1980.

In 1978 the government admitted that its attempt to shield Hungary from world economic conditions could not be continued. 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, including supervisory councils that would include worker-elected representatives. New financial institutions also emerged, and a 1983 government decree allowed enterprises, cooperatives, financial institutions, 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. 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 elections. 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 foreign policy. These new departures were inspired in large measure by Hungarian nationalism, a force that had long encouraged Hungarians to control their own destiny and to resist the hegemony of their larger, more powerful neighbors.

Hungary  Economy

Economy – overview: Hungary continues to demonstrate strong economic growth and to work toward accession to the European Union. The private sector accounts for over 80% of GDP. Foreign ownership of and investment in Hungarian firms is widespread, with cumulative foreign direct investment totaling $23 billion by 2000. Hungarian sovereign debt was upgraded in 2000 to the second-highest rating among all the Central European transition economies. Inflation – a top economic concern in 2000 – is still high at almost 10%, pushed upward by higher world oil and gas and domestic food prices. Economic reform measures such as health care reform, tax reform, and local government financing have not yet been addressed by the ORBAN government.
GDP: purchasing power parity – $113.9 billion (2000 est.)
GDP – real growth rate: 4% (1999 est.), 5.5% (2000 est.)
GDP – per capita: purchasing power parity – $11,200 (2000 est.)
GDP – composition by sector:
agriculture:  5%
industry:  35%
services:  60% (2000 est.)
Population below poverty line: 25.3% (1993 est.)
Household income or consumption by percentage share:
lowest 10%: 3.9%
highest 10%: 24.8% (1996)
Inflation rate (consumer prices): 10% (1999 est.)
Labor force: 4.2 million (1997)
Labor force – by occupation: services 65%, industry 27%, agriculture 8% (1996)
Unemployment rate: 10% (1999 est.), 9.4% (2000 est.)
revenues:  $13 billion
expenditures:  $14.4 billion (2000 est.)
Industries: mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles
Industrial production growth rate: 6% (1999 est.), 18% (2000 est.)
Electricity – production: 36.75 billion kWh (1999)
Electricity – production by source:
fossil fuel: 61%
hydro: 1%
nuclear: 38%
other: 0% (1999 est.)
Electricity – consumption: 35.234 billion kWh (1999)
Electricity – exports: 2.35 billion kWh (1999)
Electricity – imports: 3.406 billion kWh (1999)
Agriculture – products: wheat, corn, sunflower seed, potatoes, sugar beets; pigs, cattle, poultry, dairy products
Exports: $22.6 billion (f.o.b., 1999), $25.2 billion (f.o.b., 2000)
Exports – commodities: machinery and equipment 59.5%, other manufactures 29.4%, food products 6.9%, raw materials 2.4%, fuels and electricity 1.8% (2000)
Exports – partners: Germany 37%, Austria 9%, Italy 6%, Netherlands 5% (2000)
Imports: $25.1 billion (f.o.b., 1999), $27.6 billion (f.o.b., 2000)
Imports – commodities: machinery and equipment 51.1%, other manufactures 35.9%, fuels and electricity 8.1%, food products 2.8%, raw materials 2.1% (2000)
Imports – partners: Germany 25%, Russia 8%, Austria 7%, Italy 7% (2000)
Debt – external: $27 billion (1999), $29.6 billion (2000)
Economic aid – recipient: $122.7 million (1995)
Currency: forint (HUF)

Map of Hungary