172. Paper Prepared in the Department of State1
Hungary—Political Overview
Foreign Affairs
Hungary is allied with the USSR and consistently backs Soviet positions on major international issues. However, on matters of lesser significance to the Soviet Union and of direct importance to Hungary, Hungarian foreign policy displays independent and sovereign aspects. One such area arises out of Hungary’s heavy dependence on foreign trade and its desire for Western technology. Accordingly, since 1977 Party First Secretary Kadar has made official visits to Austria, West Germany, Italy and France, and Hungary has developed an extensive set of primarily economically-oriented relations with Western countries, including the U.S. Western countries, in turn, utilize Hungary’s forthcoming attitude toward the Helsinki Final Act to engage in constructive dialogues with Hungary on all three Baskets of CSCE, including its humanitarian and cultural provisions. (U)
Hungary has followed what it calls a “principled” policy in regard to Iran. This couples expressions of understanding for Iran’s grievances against the United States with low-key denunciation of the holding of diplomatic hostages as a violation of international law. After initial hesitation, Hungary has followed the Soviet line on Afghanistan, with emphasis on the arguments that the Soviet intervention was “lawful” under agreements between the USSR and Afghanistan and that the latter had the right to request “self-defense” aid from its neighbor. (U)
U.S.-Hungarian relations have improved dramatically in the past several years. The two most important elements in this improvement were the return of the Crown of Saint Stephen to the Hungarian people on January 6, 1978, by a Presidential delegation headed by Secretary Vance, and the entry into force on July 7, 1978, of a trade agreement establishing MFN tariff treatment for the exports of both countries. The trade agreement negotiations entailed discussions and understandings with Hungary on questions of emigration in compliance with the Jackson-Vanik provisions of the Trade Act of 1974. (U)
Although there have been no major outstanding political issues between the U.S. and Hungary since conclusion of the Trade Agreement in 1978, deteriorating U.S.–Soviet relations have made more difficult [Page 511] the task of maintaining and building on the recent progress in U.S.–Hungarian relations. Although both sides have signaled a desire to maintain positive aspects of the bilateral relationship, Hungary has quietly exhibited some nervousness about being placed in an embarrassing position relative to the Soviet Union by being ostensibly favored by the U.S. in the framework of our differentiated policy toward Eastern Europe. Hungary also is concerned about the degree to which U.S. export-control measures directed against the Soviet Union may impinge on it. We, in turn, have concerns about the potential diversion of U.S. grain or technology to the USSR. (C)
Domestic Affairs
The Communist Party leadership retains control over political life. However, through its “alliances” policy the Party encourages participation of Communists and non-Communists alike in building “socialist” Hungary under the maxim, “who is not against us is with us.” (U)
Party First Secretary Janos Kadar has gained a large degree of acceptance among the political elite and the public, and Hungarians credit the government with having achieved substantial improvements in living standards, a relaxed cultural atmosphere, and political and economic stability over the years since 1956. (U)
In 1968 Hungary introduced an economic reform called the New Economic Mechanism (NEM) which is in large part responsible for Hungary’s relative domestic prosperity. The NEM provides for a large degree of enterprise and managerial autonomy in making production and pricing decisions. In mid-1979 Hungary began to implement a series of measures to revitalize this mechanism to make the economy more efficient and internationally competitive. The new measures have already entailed major consumer price increases which, coupled with energy conservation stringencies, portend a pause in the increase in living standards. (U)
Although the Hungarian Government does not encourage religion, it tolerates it. It is at peace with Protestants and Jews, and has reached a modus vivendi with the Vatican and with the Catholic Church in Hungary. Laszlo Cardinal Lekai was recognized in 1976 as head of the Catholic Church in Hungary, the first primate since Cardinal Mindszenty. (U)
Hungary permits a significant degree of freedom of travel for its citizens to Western countries. Some 355,000 Hungarians (out of a population of 10.6 million) currently visit the West annually. Hungary’s record on permitting emigration is modestly positive. (U)
The Twelfth Congress of the Hungarian Socialist Workers Party in late March endorsed Hungary’s unique (in communist terms) economic reform measures while reiterating Hungary’s allegiance to its alliance with the USSR and support for Soviet foreign policy positions. Billed as [Page 512] a “working Congress,” this quinquennial meeting addressed primarily domestic concerns. In a thematic context which both emphasized and called for more trust between Party and people, the Congress in effect ratified the Kadarist domestic course, including new economic reform measures. (C)
- Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 27, Hungary: 1/78–1/81. Confidential.↩