175. Telegram From the Embassy in Hungary to the Department of State1
6196. Subject: Official-Informal. EUR/EE only; three copies only. For Bridges from Kuchel.
1. (U) Transition: Peter, we are most grateful for the background information2 you have been giving us on the composition and interests of the foreign affairs transition teams. The Ambassador and I find it extremely helpful to have your comments which both amplify and lend a little chiaroscuro to the wireless reports.
2. (C) We hope that the following appraisal of the current situation in Hungary and US-Hungarian relations will be useful in preparing your briefing paper on Hungary for the transition staff.
3. (C) Kadarism—Under Janos Kadar Hungary has forged a unique position in Eastern Europe. During the past twenty-five years, Kadar has brought Hungary out of the depression of a failed revolution and into a period of sustained stability and general prosperity at home. The essence of Kadar’s policies has been substantial, if sometimes nuanced, support for Soviet foreign policy goals in exchange for a measure of latitude to pursue internal reforms and a relatively relaxed social policy. The success by Eastern European standards of the new economic mechanism in achieving prosperity at home and the politically adept implementation of Kadar’s National Alliance policy has allowed the Hungarian Communist Party to achieve a level of legitimacy that few would have imagined in 1956. By achieving compromises with religious institutions, permitting individual travel to the West every three years and generally allowing Hungarians of all persuasions to work within the system, Kadar has earned the acquiescence, if not the support of most of Hungary’s population. Kadar’s famous dictum “Those who are not against us are with us” remains the basis of the Hungarian Party’s approach.
[Page 521]4. (C) Hungary in the 1980’s—Although Hungary’s economic performance and management has been better than in most Eastern European countries, the nation will confront serious problems in the next decade, over many of which the Hungarians have no control.
—As elsewhere in Eastern Europe, Hungary faces the prospect of significantly decreased economic growth in the 1980’s. Hungary is particularly vulnerable to international economic pressures, worldwide inflation and the rising cost and uncertain availability of energy) since it depends on imports for 80 percent of its raw materials and now exports 50 percent of its GNP (25 percent of its trade is with the West).
—As a result, the next five-year plan projects only a 7–9 percent increase in personal income. Over the last decade, however, the Hungarian populace has been accustomed to steady, perceptible increases in the standard of living. The political cost of a modest, albeit realistic, economic strategy designed to preserve rather than improve existing lifestyles will be a major factor in the Hungarian leadership’s calculations over the next five years. An austere economic policy could also hinder the Party’s ability to implement fully the economic reform program.
—The Helsinki Final Act and relaxed East-West atmosphere of the 1970’s served as an umbrella by which Hungary promoted its economic, political and cultural ties with Western Europe and the US. Any additional chill in East-West relations forcing a cutback of these relations will have serious implications for Hungary.
—The uncertainties surrounding the Soviet succession and the possibility of the passing of the now 68 year old Kadar also raise questions about the long-term outlook of Hungary. “Can Kadarism survive Kadar?” remains an important question. Kadar has changed the perspectives of a generation of Hungarians and his overall approach has been widely accepted. But many of his policies are more stylistic adaptations of Communist policy rather than substantive institutional changes. For the moment Kadar appears healthy enough. Most Hungarians, however, prefer not to think about what might happen when he goes.
5. (C) Implications of Polish events—The Hungarian Party has reviewed the internal situation in the wake of Polish events. It has congratulated itself on the efficacy of Kadar’s economic reform policies but has also taken steps to promote a more aggressive, public role for Hungary’s controlled trade unions. Underlying the Party’s professions of confidence (bordering on smugness) that it has the situation under control is a genuine fear that the Polish example could present a political alternative and challenge to the Party. The Hungarian populace seems to be impressed that the Polish workers have so far “got away with it” by creating their own unions and base of power. The 1956 experience, however, continues to condition the Hungarian perspective toward the [Page 522] Soviet Union. Many continue to believe that in the end the Soviets will not countenance the Polish challenge to Communist ideology and control. The longer Lech Walesa and his colleagues maintain their power, the greater the Polish example will influence Hungary.
6. US-Hungarian relations—The return of the Crown of St. Stephen in January 1978 paved the way for a steady expansion of US-Hungarian relations. The 1978 Trade Agreement, extension of MFN, the Cultural Agreement and a steady exchange of high level visitors have resulted in a significant increase in bilateral contacts across the board. The Hungarians have responded to our own policy of differentiation in Eastern Europe following the Soviet invasion of Afghanistan. With the exception of the postponement of a parliamentary delegation’s visit to the US in February, the bilateral agenda has been almost completely carried out to mutual advantage. The Embassy has been able to expand contacts significantly in the Hungarian community and we have begun exploring new areas of cooperation such as increased military contacts, energy development and narcotics control. The Hungarians worry about the possibility of continued stalemate or further deteriorations in US-Soviet relations. This is compounded by the tenseness created by the fluidity of the Polish situation. Nevertheless, Hungarians continue to emphasize their desire to see the bilateral agenda expand and contacts with the U.S. increase. The future, barring a catastrophic East-West confrontation such as Soviet intervention in Poland, two areas deserve the attention of the new administration:
—High-level visits: Over a year ago the Hungarians noted the possibility of a Kadar visit to the U.S. We have had recent indications that the Hungarians will soon raise the question again.3 Depending on the circumstances, a Kadar visit could serve not only to promote bilateral relations with Hungary but also to demonstrate our interest in Eastern Europe as a whole. They would also be pleased to have President Reagan visit Hungary if he were to make at least one other stop in the Bloc.
—Improve economic relations: Trade between the U.S. and Hungary now totals about $250 million per year (with a U.S. trade surplus). The Hungarians hope that bilateral trade will surpass $500 million by 1985, bringing the U.S. from its current eighth position among Hunga[Page 523]ry’s Western trading partners to fourth behind the FRG, Austria and Italy. Economic factors hindering increased commercial exchanges include a lack of dependable availability of parts and servicing for U.S. equipment and Hungary’s need to conserve foreign exchange. Policy issues influencing trade expansion include the annual U.S. review of MFN status which Hungarians see as an impediment to long term trade development and the U.S. failure in some cases to act expeditiously on export license applications not involving strategic items.
Conclusion. Without losing sight of the overall geopolitical realities which condition Hungary’s relationship with the U.S., we can say our policy of differentiation has paid dividends. Hungary continues its internal economic decentralization and increased use of market economy techniques. Its record of CSCE compliance, while still requiring improvement, is second to none within the Soviet Bloc. The opportunity for average Hungarians to travel to the West and be exposed to Western culture at home continues to increase. All of these factors are in the long-term interest of the United States. Encouraging their development should continue to be at the core of our policy toward Hungary.
[Omitted here is information unrelated to Hungary.]
- Source: National Archives, RG 59, Central Foreign Policy File, D800566–0890. Confidential; Immediate.↩
- In telegram 307509 to Budapest, November 19, the Department informed the Embassy of the transition papers proposed by the Bureau of European Affairs following Reagan’s election. While Hungary did not figure as a separate topic, EUR/EE requested that Budapest send suggestions of what might be included in a separate paper if one was requested. (National Archives, RG 59, Central Foreign Policy File, D800553–0952) In telegram 6142 from Budapest, November 21, the Embassy cabled a brief overview of U.S.-Hungarian relations, concluding that it did not see any “pressing or immediate issues in Hungarian-American relations that warrant isolated attention.” (National Archives, RG 59, Central Foreign Policy File, D800557–0751)↩
- In telegram 5775 from Budapest, October 31, Ambassador Bergold reported on his conversations with the British Ambassador to Hungary and with Hungarian officials on the results of the visit by British Foreign Secretary Lord Carrington to Budapest. Hungarian State Secretary Janos Nagy, praising the positive effects of the Carrington visit, told the Ambassador that, following the U.S. elections, he would like to discuss “the evolution of Hungarian-American relations, looking toward the possibility of high level visits in each direction within the next several years.” (National Archives, RG 59, Central Foreign Policy File, D800529–0185)↩