Foreign Relations of the United States, 1947, Eastern Europe; The Soviet Union, Volume IV

864.00/10–247

The Minister in Hungary (Chapin) to the Secretary of State ¹

secret
No. 3470

Budapest, October 2, 1947.

Sir: I have the honor to refer to my Despatch No. 3284 of July 22, 1947 in which I attempted to analyze the complex of factors determining the United States’ policy in Hungary. The elections of August 31 and the formation of a new Parliament and Cabinet suggest the desirability of a reexamination of the situation with particular reference to possible effect on our policy in this country. I do not intend to suggest that our policy here can vary greatly from that pursued in other so-called satellite states. Nevertheless, Hungary as the last peripheral nation to be forced within the Soviet orbit does present certain problems differing in degree, if not in nature, from those found in other central and eastern European countries.

The national elections, it is true, demonstrated once again that most Hungarians are “non-Communist” in outlook and feeling.

The methods employed in the recent elections and the tangible results thereof have been reported by the Legation in full as well as by the American press. However ‘a brief review may be of some assistance in evaluating the situation.

In pre-election speeches, propaganda and manipulations the Communist Party successfully demoralized, confused and fragmentized its opposition. The vast mass of non-Communist (actually anti-Communist) voters faced a field filled with parties but found it difficult to choose a party which expressed their will.

Among the nine non-Communist parties three were of the Coalition, and six were in opposition. The confusion of the electorate is illustrated by the results of the voting.²

The Smallholder Party bore the brunt of the election losses, not so much because of active campaigning by the Communists as by reason of the fact that the supine leadership of the party during the past two years, particularly since the ouster of Nagy, resulted in disillusionment and alienation of the great mass of peasants and bourgeoisie who had voted Smallholder in 1945. The Smallholder loss from 57 percent of the electorate in 1945 to 15.4 percent in the past election was thus a tribute to the success of the Communists war of attrition against its major opponent.

Losses of the Social Democratic Party may be attributed in part to a clever tactical move made by the Communists when it became apparent during the election campaign that the Social Democrats might possibly emerge as the strongest party. To confuse the growing number of Social Democratic adherents, the Communists began to proclaim the early fusion of the two parties, with the result that despite vigorous denials by Social Democratic leaders, the anti-Communists in that party were definitely alienated. (It may be noted that the Communist Party following the elections tried to ascribe Social Democratic losses to the secession of right wing members of the party under Peyer; the fact that according to the final tally only 85,458 votes were credited to the already existing Radical Party which Peyer had joined, vitiates this argument). Most significantly, however, the Communists applied the disfranchisement technique to the Social Democrats as well as the bourgeois parties, and Social Democratic sources claimed, following the elections, that at least 110,000 registered active party members had been illegally disfranchised. The Social Democratic Party also suffered, of course, from widespread disillusionment with its appeasement-minded leadership.

The National Peasant Party failed to play an important role. It increased its representation in Parliament from 21 to 36 seats, partly, it is reliably reported, through liberal use of multiple voting but since it is considered merely as the agrarian wing of the Communist Party, the gain is all for the Moscow-directed bloc.

The so-called opposition was so fragmentized as to eliminate any possibility of real opposition, and the electorate had little opportunity to weigh the relative merits of the various parties, some of which were formed only a few weeks prior to the elections and most of which had almost no access to the press or radio. Furthermore it was rumored that at least one of the opposition parties was deliberately organized by the Communists to draw anti-Communist votes which later could be used to promote Communist policies. Despite such rumors, vilification and slander of opposition leaders and active violence to disturb opposition party meetings, two parties, the Democratic Peoples Party and the Hungarian Independence Party emerged with a substantial share of the votes. The total vote of the opposition parties amounted to slightly more than 39 percent, too little however to prevent the Coalition from securing those peculiar advantages of the electoral law which increased the Coalition’s representation in the National Assembly. It will be recalled in this connection that the electoral law provided a special reserve allotment of sixty sealts over and above those competed for directly in the election. By gaining 60% of the total electoral vote, the Coalition parties were entitled to 75% of these sixty seats and thus increased their representation in the Parliament from 60 to 66% or 271 seats.

Large scale disfranchisement accomplished in a methodical manner followed by carefully planned multiple voting on a large scale further tipped the scales in favor of the Communists and produced in the end a substantial plurality for the Communist Party as a result of which it obtained 100 out of 411 seats in the National Assembly and 5 out of a total of 15 portfolios in the Cabinet. Significantly, the Communists now hold the Ministries of Foreign Affairs, Interior, Communications and Public Welfare, while their leader Mátyás Rákosi holds the position of senior Deputy Prime Minister. The extent to which these advantages can be exploited to obtain additional control over the administrative, executive and judicial segments of the Government remains to be seen. It may be observed, however, that it is apparent already that the Communists expect through occupation of key positions to control many areas of the national Government which they do not nominally control.

Hungarian popular reaction to the elections was a mixed feeling of elation at the surprising strength of opposition parties and a profound pessimism that these parties would have little effect on the national scene. Smallholders and Social Democrats, in open revolt against continuance of appeasement policies, appear to have given up their fight against Leftist leaders, and are dominated by fear of personal and party reprisals by the Communists (Legtel 1555 September 16³). During the last two years Smallholder leaders excused their concessions to Communist demands on the grounds of playing for time and stalling off the Communists until the Peace Treaty should go into effect. Today, with the Peace Treaty in force, despite their bitter defeat in the elections much comment is still heard along the same line of the necessity to play for time until Soviet troops are out of Hungary. There seems to be little realization of the fact that in any future elections the Smallholders Party, having lost all popular support because of its unrepresentative character would probably disappear.

However, the elections were only an incident in the continuing political struggle for power. The results had not even been announced before the jockeying for positions in the Government began. Intra-Party and inter-Party conferences alternated for three weeks before a compromise could be found, with the Communist Party holding the whip hand and refusing to give ground on any important issue. The ridiculous situation has now developed where the Smallholders, having on several occasions solemnly repudiated their Communist-appeasing “leadership”, find themselves with two of these “leaders” Mr. Dinnyés and Mr. Ortutay, back in office the former as Prime Minister and the latter as Minister of Education. The Communists declined the onus of furnishing a candidate for the Prime Ministry and flatly imposed on the Smallholders (through President Tildy) not only this position but also specified who was to fill it. Similarly they insisted upon inclusion of Ortutay in the Cabinet over Smallholder objection. The Socialists have retained four portfolios, but were foiled in their efforts to neutralize the Communist Ministry of Interior by securing a Social Democrat Secretary of State for police. Nominally the Communists and their agrarian wing party the National Peasants have five plus two, or seven portfolios as compared to eight for the Smallholders and Social Democrats. Actually with their stooges, Dinnyés, Szakasits⁴ and Ortutay and the Communist Secretaries of State alternating directly under all non-Communist portfolios, Communist control is virtually complete.

The entry into force of the Hungarian Peace Treaty created scarcely a ripple of comment in Hungarian political circles and among the disillusioned populace. Hungarians feel that they will not have regained their sovereignty until the last Soviet soldier has left their territory. The fear of Soviet power remains the dominating force in Hungarian political life. This psychology of fear appears to have penetrated so deeply into the Hungarian political mentality that despite all professions by moderates of a change of attitude and tactics following withdrawal of Soviet troops, it is open to doubt whether resistance to the Hungarian Communist Party will materially increase after ratification of the Austrian Treaty if this ratification is long delayed. Therefore the timing of the withdrawal of Soviet troops from Austria and their Lines of Communication in Hungary plays a decisive role in Hungarian thinking. With state control of the banks almost a certainty and with agreement on payment of German assets in Hungary to the Soviet Union already concluded, it appears that the race between the ratification and Soviet-Communist control of Hungarian economy is already largely lost.

Furthermore it appears likely that in this country, as in its eastern neighbors, the Government will not allow the terms of the Peace Treaty to stand in the way of Soviet domination, and we may expect to see the articles of the Peace Treaty relative to prohibition of fascist organizations used to nullify the guarantees of basic human and political liberties. Prior to the withdrawal of Soviet troops it is likely that as in Bulgaria and Roumania a large influx of Soviet civilians will occur. The Hungarian press, already severely limited by Government censorship, will undoubtedly become even more pro-Soviet and anti-American. It is reliably reported that in his initial address to the section chiefs of the Foreign Office, the new Hungarian Minister for Foreign Affairs, Mr. Erik Molnár stated inter alia that in its foreign policy, Hungary could no longer afford to be “strictly neutral” as regards the great Powers. He reportedly expanded on this theme by emphasizing that countries such as Hungary “lying on the paths of history and policy” have no recourse but to adapt their own policy to “geographical considerations”.

There has always since the “liberation” been a group of “realists” in Hungary who while clinging inwardly to their own opinions, as respects political or economic theory, have held that Hungary cannot survive without making a compact with the Soviet Union, and that it is better to surrender certain freedoms than to run the risk of having all freedoms taken away and be completely submerged. To this group may be added a growing number of persons who, weary of the chaos and the lack of direction of the traditional Hungarian parties and their leaders and despairing of any concrete support from the West, accept with resignation the Communist leadership in relief at finding stability imposed by an organization which exercises a firm hand, and appears destined to dominate the Hungarian political scene for some years to come.

No evaluation of the Hungarian political scene would be complete without mention of the extraordinarily poor grain harvest this year. Due to crop failures caused by the drought Hungary will have to draw on its limited foreign exchange for the import of wheat if there is not to be real suffering this winter. The bread ration has already been reduced following the elections from 250 grams per person to 200 grams per person on October 1. The corn crop which is used largely for feeding farm animals was something in the nature of a disaster and already large scale slaughtering of pigs has been initiated in anticipation of feed scarcity.

It seems clear that dissatisfaction over reduced food and fuel supplies may almost be taken for granted this winter land will entail considerable political danger should the weather be as severe as last year. It is not unlikely that this strong probability played a part in the reluctance of the Communists to assume the onus of filling the office of the Prime Minister with one of their own party.

Turning to Communist plans for the future, the party’s announced program for the next three years (Legation Despatch 3407 of September 11⁵) follows closely the measures already taken or planned in Bulgaria and Roumania. Control of finances and production is involved in the demand for the nationalization of the National Bank and of the large private banks in conformity with the law setting up state controllers. A law providing for confiscation of property illegally acquired is proposed, similar to the Bulgarian law promulgated in the middle of 1946, and it appears safe to assume that, as in Bulgaria, the legal burden of proving by documentary evidence that assets were acquired legally will remain on the individual persons or corporations. A capital levy has already been instituted and the Communist plan envisages a prohibition of all incomes over 3000 forints per month. Thus in numerous ways assets will be taxed or controlled out of existence.

The liquidation of propertied classes is rendered even more likely by the Communist proposal for a double price system involving stores for “rich people” with one price and stores for the poor with a much lower price. A Workers’ Court with authority to pass judgment on individuals involved in speculation and the inflation of prices is also planned, under which any private trader or company could easily lose his property. Lastly, public works for the unemployed are envisaged which, as in Bulgaria, may well involve compulsory labor service for which anti-Communists will be recruited. Thus there may well develop two classes of society in which the opponents of Communism, many of whom have already lost their political rights by disfranchisement in the elections, become second class citizens.

Signs are apparent that the stage may be being set for another conspiracy—this time involving Pfeiffer⁶ and his group. The Communists have made no secret of the fact that he is next on the list and are already manipulating through blackmail and direct intimidation, sufficient evidence to raise conspiracy charges. It is of course axiomatic by now that “conspiracy” need only consist of efforts to resist the extreme left no matter how mild or legitimate, where as any tactics however immoral or repugnant are laudable if directed at reinforcing Communist control. What the attitude of the other parties may be when the attack comes is a problem. Certainly they can no longer plead unawareness or confidence that the attacks will not eventually in turn be directed against them, for leaders of all parties, Social Democrats as well as Barankovics himself have admitted that they are now in peril.

It is exceedingly difficult if one is residing in Hungary or in any other country which is in the process of Soviet absorption, to view the world situation entirely objectively from the point of view of United States interests. There is everywhere here surrounding one, an atmosphere of fear which has been greatly intensified by the execution of Petkov.⁷ That political arrests to date actually have not been numerous does not in any sense detract from the fact that everyone from the ex-banker to the son of an ex-noble’s coachman working for the Legation is constantly oppressed by the thought that they may be called up by the political police at any time for an “interview” the intensity of which will vary according to circumstances. Few average citizens have had actual experience with the police, but all know of some one who has had or who has simply disappeared and has never been heard of since. Yet the mass of the people and this includes all ranks, all classes somehow manage to live on. On the other hand any person who manages to distinguish himself in any walk of life whether it be in politics, the professions, business or any other activity where he is in any position to sway others or affect Soviet interest for good or evil, will immediately find that he is under constant surveillance and subject to control, direct or indirect from the Communist party.

Throughout all it remains clear, as stated above, that the overwhelming mass of the Hungarian people including the Social Democrats and even a good percentage of the Communist party who joined out of opportunism or pressure, have no love for Communism of the Soviet pattern or for Slavic domination. One cannot discount the intensity of Magyar nationalism, however passive, which has survived Turkish, Slavic and German overlordship. It is this sense of racial and cultural survival traditionally bound up with a feeling of pride at having served as the Easternmost projection of Western civilization which differentiates Hungary so much from the surrounding satellite states all of whom with the exception of Roumania are completely Slav.

Even though the process of Sovietization of Hungary has not progressed as far as in other near-by countries it is recognized that our policy with regard to Soviet ambitions here cannot logically be considered apart from that in the other satellites. It is equally clear that we cannot assume positions or formulate a policy based entirely upon broad moral principles or humanitarian ideals no matter how lofty.

We are forced back accordingly to a consideration of the value of Hungary as a pivotal point in what I assume to be for the time being at least, a policy of containment of Soviet imperialism. Any frank abandonment of Hungary would of course constitute a retreat and require setting up a new line of defense to the Westward. It is entirely possible that such a retreat might be justified on broader considerations, but from here it would appear that Soviet expansionism should be opposed in Hungary by all legitimate means at our command short of actual collision.

The question of taking up the Hungarian case before the organs of the United Nations has at least lost its urgency since the holding of the Hungarian elections and the placing into effect of the Peace Treaty, and it is presumed that any consideration of this case by the Assembly will be in conjunction with other problems of Russian imperialism in South Eastern Europe.

Termination of the Allied Control Commission for Hungary may at first glance seem to present possibilities for the diminution of influence of the Soviet Union, but in my opinion the Committee of Ministers provided in Article 39 of the Treaty will be difficult to constitute in the face of declared Soviet opposition and if constituted would be completely ineffectual. Soviet influence will continue to be exerted directly by the Soviet Minister or Commander of the Line of Communication troops or indirectly through the Communist officials of the Hungarian Cabinet.

We should be prepared, however, to recognize that the influence of the Soviet Legation will be greater than that of either this or the British Legation, due to the proximity of the USSR, the continued presence of occupation troops which following the 90-day period of the Peace Treaty will become Line of Communication troops, the increasingly close economic relations between Hungary and the Soviet Union and lastly the growing power of the Hungarian Communist Party.

In conclusion it is now apparent that the Communist Party has emerged from the national elections of August 31 as the only coherent Party in an otherwise completely disorganized and demoralized political picture. Barring miracles, the process of incorporation of Hungary within the general Soviet system described in my despatch under reference will now continue at a steady and inexorable pace. The wonder is that this process does not proceed more rapidly for certainly there is no organized political force within this country which can stand in the way. In fact, it appears to me that aside from the future course of Soviet-American relations the only effective brakes upon a more rapid rate of Sovietization of Hungary are: first, adverse world opinion; and second, the material inconvenience which would result from the ensuing inevitable economic disruption.

Despite these obstacles I am hopeful if not sanguine that this Legation can play a role of importance in Hungary, and I consequently suggest that the moment has not yet come where its staff may be reduced to that of a listening post in the Soviet Zone. On the other hand I do not feel that American interests in this area can be sufficiently active to require any large staff in the normally active economic and commercial fields. Only the intelligence and the informational and cultural aspects of the Legation’s work to my mind merit consideration for expansion. I suggest that the immediate future is the last opportunity which we may have for any further expansion of intelligence in this vitally important area of South Eastern Europe. It should still be possible to set up an effective intelligence net-work here given a few trained men of high quality and sufficient funds which in later years might prove of inestimable value to the country, and I strongly recommend that immediate consideration be given to this possibility. So far as the informational and cultural aspects of the work are concerned, I have already discussed this problem with members of the Smith–Mundt Committee⁸ and have furnished copies of the Legation’s memoranda⁹ on the subject to the Department. I recommend an immediate but modest strengthening of the informational and cultural organization of this Legation.

Respectfully yours,

Selden Chapin

1. A copy of this despatch was sent by Minister Chapin directly to Assistant Secretary of State Norman Armour who replied in a letter dated October 29, not printed. Armour’s letter observed that Chapin’s recommendations appeared to have been covered in the instructions contained in telegram 1047, October 6, to Budapest, infra. Armour concluded in part as follows:

   “We here in the Department agree with the tenor of your conclusions and recommendations …

   “Please don’t get the impression that we are throwing in the sponge as far as Hungary is concerned, and we quite agree with your estimation of the important role your Legation can play in Hungary. I know you are working under tremendous difficulties and against great odds but we in the Department are more than conscious of these difficulties and, as I have previously told you, [are] very pleased with the way you are handling the task.” (864.00/10–247)

2. For a summary of the election returns, see footnote 1, p. 363.
3. Not printed.
4. In the new Dinnyés Cabinet, Social Democratic leader Árpád Szakasits continued as a Deputy Prime Minister.
5. Not printed.
6. Zoltán Pfeiffer, member of the Hungarian National Assembly and leader of the Hungarian Independence Party, fled from Hungary in early November and went into exile.
7. Nikola Petkov, the leader of the Bulgarian Agrarian Union, was executed in Sofia on September 23, despite the protests of the United States Government. For documentation on the concern of the United States over the arrest, trial, and execution of Petkov, see pp. 159–183, passim.
8. Senator H. Alexander Smith of New Jersey and Representative Karl Mundt of South Dakota headed a Congressional group which visited various European and Near Eastern countries during September and October for the purpose of investigating the Department of State’s overseas information program. The Smith–Mundt Committee visited Budapest from September 26 to September 28.
9. Not printed.