Hungary

Introduction

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Figure 1. Administrative Divisions of Hungary, 1989

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 (IMF--see Glossary) and the World Bank (see Glossary) 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 (for value of the forint--see Glossary), more than three times the planned budget deficit of 19.5 billion forints. The foreign debt stood at US$20 billion. Hungary had to cut its deficit or forego the last installment of a loan it had obtained from the IMF in May 1988. Inflation continued as well. Wages rose 12 to 13 percent rather than the planned 6 to 7 percent. Prices rose 15 to 16 percent rather than the planned 12 to 15 percent. From January through September 1989, industrial production was only 98.4 percent of what it had been during the same period in 1988. 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 (see Glossary). In June 1989, the first free elections in the history of postwar Eastern Europe took place in Poland. These elections eventually brought to power a Solidarity-led government that intended to institute many of the same political and economic reforms in Poland that Hungary's leaders, as well as Hungary's opposition groups, envisaged for their country. In late 1989, the reform bloc within the Warsaw Pact was strengthened as the German Democratic Republic (East Germany), Bulgaria, and Czechoslovakia began their own reform efforts.

Although the most important steps toward creating a democracy were taken in late 1989, the effort actually began with a number of measures in the first half of the year. On January 11, 1989, the National Assembly passed laws on associations and assembly, the first in a series of steps aimed at introducing a multiparty system in Hungary. On March 15, 1989, for the first time in postwar 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 (see Glossary) authority. According to one party spokesman, this right had become "obsolete." Indeed, on May 10, 1989, the National Assembly approved a government reshuffle involving five ministers and one state secretary with ministerial rank. Chairman of the Council of Ministers Miklos Nemeth himself, rather than the Central Committee of the HSWP, selected the new officials.

The Central Committee also outlined a reform program for the economy. At its February 10 plenum, the Central Committee determined to end the country's "economic, political, and moral 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 (see fig. 1).

The Reform Alliance was the best organized of the factions, and it had the most elaborate program. By the end of the second day of the congress, the Reform Alliance had 511 members, about 40 percent of the total. This faction played an important role in the outcome of the congress. It called for an open break with the past, as well as for a repudiation of the HSWP's crimes and mistakes, and it sought to staff leadership positions with new personnel who would promote new kinds of policies. The Reform Alliance also advocated the democratization of party decision making.

Indeed, in large measure the congress produced the new policies called for by the Reform Alliance. To begin with, the party changed its name to the Hungarian Socialist Party (HSP). The party's statutes still defined it as a "Marxist political organization," but it fully accepted "the values of human development, humanism, freedom, and democracy." The term Leninist did not appear in any of the documents emanating from the congress.

The HSP's manifesto dedicated the organization to building a "democratic, law-governed state marked by direct democracy" and the creation of a "market-based economy." The party also called for a social welfare policy to moderate extreme differences in 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 (see Glossary), which supervised political and ideological work in the military, was disbanded. New education officers were to work side by side with commanders and to train soldiers in civics and educate them about social policy problems. Second, some of the functions of the Ministry of Defense were transferred to the new "Command of the Hungarian People's Army," which was to assume responsibility for actual military assignments. A smaller Ministry of Defense continued to function, but it had responsibility for military policy and other administrative and theoretical matters only. The minister of defense was accountable to the prime minister, and the commander of the Hungarian People's Army was responsible to the president, who was commander in chief of the armed forces.

On February 2, 1990, following talks between the Soviet Union and Hungary, Moscow agreed to withdraw all of its troops from Hungary. The communique that resulted from the talks stated that the two sides "agreed that the withdrawal of Soviet troops will be carried out on the basis of an intergovernmental agreement to be concluded within the shortest possible time." On March 10, 1990, Budapest and Moscow signed an agreement for the withdrawal of all Soviet forces from Hungary by June 30, 1991. The withdrawal began on March 11, 1990, and two-thirds of Soviet troops and equipment were to be removed by the end of 1990.

In foreign policy, Hungary continued to adhere to its 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. March 13, 1990

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On March 25, 1990, round one of the first free parliamentary elections in forty-three years took place in Hungary. In the 152 district elections, only five candidates succeeded in winning a majority. Among the winners was former Prime Minister Miklos Nemeth, who ran as an independent. Runoff elections on April 8 were to decide the outcome of the other 147 district races.

In balloting for the county-level lists, the Hungarian Democratic Forum gained 24.7 percent of the vote, which translated into 40 seats in the National Assembly. The Alliance of Free Democrats won 21.39 percent of the vote for thirty-four seats, and the Independent Smallholders' Party 11.73 percent for sixteen seats. Other parties winning the necessary 4 percent threshold for representation in the National Assembly were the Hungarian Socialist Party with 10.89 percent of the vote, the Federation of Young Democrats with 8.95 percent of the vote, and the Christian Democratic People's Party with 6.46 percent of the vote. Among the many parties failing to reach the required threshold were the Social Democratic Party and the Hungarian Socialist Workers' Party.

The Hungarian Democratic Forum emerged as the clear winner after the second round of elections held on April 8 in those electoral districts where no candidate gained a majority in the first round of voting. The forum gained a total of 164 seats in the National Assembly in the two rounds of voting. Second was the Alliance of Free Democrats with ninety-two seats. The Hungarian Democratic Forum chose to form a government together with the Independent Smallholders' Party, which won forty-four seats, and the Christian Democratic People's Party, which won twenty-one seats. Hence, the governing coalition held 229 seats at about 60 percent of the 394 total. (On March 1, the National Assembly had added 8 seats to its previous total of 386, 1 each for the country's Gypsy, Croatian, Serbian, Romanian, Slovak, Slovenian, German, and Jewish minorities. Nominations for these seats were to be prepared by an interparty committee within the National Assembly or by the National Assembly as a whole.)

The new National Assembly convened for the first time on May 2, 1990. At that meeting, it elected Árpad Goncz, a writer jailed for six years following the Revolution of 1956, as president of the National Assembly, which made him interim president of the republic. Goncz was actually a founder of the Alliance of Free Democrats. In return for the Hungarian Democratic Forum's support for Goncz, the Alliance of Free Democrats agreed to support a series of amendments to the Constitution that were to secure the establishment of "an independent democratic constitutional state" in Hungary and provide the legal basis for a market economy. Another amendment agreed to by the two parties would require only a simple majority in the National Assembly to approve legislation for all matters except those of the highest political importance (such matters included a law on referendums, a nationalities law, a citizenship law, legal provisions concerning the freedom of conscience and religion, and other issues). The two parties also agreed to an amendment according to which the president would be elected to a four-year term by the National Assembly rather than be elected by the population as a whole. Yet another amendment would change the method for the representation of national minorities in the government and in the National Assembly.

On May 23, 1990, Jozsef Antall of the Hungarian Democratic Forum became the prime minister. Other government ministers included Balazs Horvath of the Hungarian Democratic Forum, who became minister of the interior; Ferenc Jozsef Nagy of the Independent Smallholders' Party, who became minister of agriculture; Lajos Fur of the Hungarian Democratic Forum, who became minister of defense; Geza Jeszensky of the Hungarian Democratic Forum, who became minister of foreign affairs; and Peter Akos Bod of the Hungarian Democratic Forum, who became minister of trade and industry.

The elections and the formation of a new noncommunist government took place against the backdrop of crisis situations in the economy and in foreign relations with Romania. In January 1990, prices of meat, poultry, flour, milk and other dairy products, and cooking fat and oil rose an average of 32 percent; car prices rose 25 percent; and prices of beer, cigarettes, and gasoline also rose. On February 1, rents for state-owned apartments increased an average of 35 percent, while bus and train fares rose 45 percent, and railroad fares rose 20 percent. The drastic price increases resulted from a reduction in government spending to reduce the budget deficit from 50 billion forints in 1989 to 10 billion forints in 1990. To meet this objective, the government cut many price subsidies and decontrolled most producer prices.

On March 18 and 19, severe anti-Hungarian violence erupted in the Romanian town of Tîrgu Mures. In the clashes between Romanians and Hungarians, 3 people died and 269 were injured. This violence led to a rapid deterioration of relations between Hungary and Romania. Prime Minister Miklos Nemeth addressed a note of protest to Romanian Prime Minister Petre Roman. Hungarian Foreign Minister Gyula Horn addressed a letter to United Nations Secretary General Xavier Peres de Cuellar and to Jan Martenson, head of the UN Human Rights Committee, asking that the committee mediate the dispute without delay. For its part, the Romanian government responded by holding the Hungarian government responsible for the bloodshed in Tîrgu Mures, and called upon Hungary to refrain from interfering in Romania's internal affairs. In response to these changes, the Hungarian government stated that accusations of Hungarian interference were unfounded, and that the source of the tragic events lay in the Romanian government's hesitancy to take resolute action to stem the rise of national chauvinism in Romania. The Hungarian government called for talks between the two governments on all issues as a means to reduce tension.

May 25, 1990
Stephen R. Burant

Data as of September 1989

Hungary - TABLE OF CONTENTS