Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

330. Intelligence Research Report¹

No. 69

Washington, February 25, 1987

(U) Hungary Since the 1956 Uprising: Part III—The Gathering Crisis

Note: This is the third of a series of four reports on events in Hungary since 1956. Part I (INR Report No. 40, October 21, 1986)² dealt with the genesis of the Kadar regime; part II (INR Report No. 52, December 2, 1986),³ its consolidation. Part IV will look at the implications of these for post-Kadar Hungary.⁴

Key Judgments

After almost two decades of political stability and growing prosperity, Hungary since the early 1980s has been in an uncertain transition period as the 30-year Kadar era enters its twilight. A series of adverse domestic trends—political, social, economic, and generational—are converging to complicate the issue of who and what comes after Kadar. The various but interrelated developments include:

— the coming of age of a post-1956 generation (now about half of the country’s 10.6 million population) oblivious of the lessons of the revolution, and the concomitant growing urgency of another “social contract” with that generation similar to the one Kadar effected with its parents by the early 1960s;

— stagnating (and for the younger and older segments of society, falling) living standards over the past seven years, a situation that is unlikely to improve appreciably this decade;

— a rising sense of national self-awareness, especially among youth, manifested in a growing interest in the country’s recent and distant history as well as in the fate of ethnic Hungarians living in neighboring countries and in the West;

— the emergence of a small but diverse and growing political opposition, whose members are found even within the establishment;

— the surfacing of some new and some traditional sources of tension with Romania; and

— the looming threat of loss of the currently excellent credit rating with Western bankers at a time of gathering economic and political problems, compounded by the growing hard-currency debt burden.

Complicating these problems is the emerging popular perception that during the coming trying years Kadar either may not be in office or may not be as effective a leader as in the past. Most important, however, is the fact that not since the late 1950s has a Hungarian leadership been confronted with as many serious problems as are converging in the late 1980s.

How the Hungarian regime will cope with the conflicting demands implicit in these trends—and under whose leadership—will determine the orientation of the post-Kadar era and, of course, his political legacy. The outcome could range between deepening uncertainty, stagnation, and erosion of political stability—even a crisis—at one extreme and a new takeoff marked by a modest economic recovery and expanded political liberalization at the other. The former would make Hungary look more like its allies while the latter has the potential to set Hungary even farther apart from them.

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[Omitted here is the table of contents.]

Image Versus Reality

Conventional wisdom still counts Hungary among the politically stable and economically prosperous countries in Eastern Europe. In fact, Hungary today is less stable politically than the German Democratic Republic or Czechoslovakia and in terms of living standards could be similarly ranked.

Nonetheless, a number of factors work in the regime’s favor:

— Kadar and most of his colleagues seem to be fully aware of the burgeoning difficulties they face (indeed, far more so than might be implied from the country’s highly favorable image in the West which Budapest itself deliberately cultivates).

— Although none of the market-oriented reforms introduced over the past 18 years is irreversible, it would take a much more serious economic or political setback than has been experienced thus far to force a major retrenchment from Kadar’s relatively liberal course. This is so primarily because substantial parts of both establishment and populace have a vested interest in continuing it even after Kadar is gone.

— So long as relative political stability prevails, the comparatively small orthodox faction within the establishment is unlikely to pose a serious problem. And Moscow (or other orthodox allies) is not likely to insist that Budapest take a course that might threaten the very stability it seeks.

Having recognized the profound, and in many ways unique challenges the various internal and external pressures pose for an already fragile social consensus, the regime gradually also has come to recognize the urgency of dealing with them. It is its imaginative (by Warsaw Pact standards) approach to containing these various pressures which has shaped Hungarian internal dynamics in the 1980s.

Commitment to Top-Down Change

This approach amounts to a calculated effort to defuse pressures from below before they pose a serious political problem, and to do so by coopting and adopting those elements of the popular demands which can be absorbed without causing unmanageable domestic or external repercussions. Once the regime adopts as its own what it judges to be acceptable (politically and ideologically) of the popularly backed agenda, it has felt relatively free to ignore other, more radical demands and to isolate and discredit their proponents as unreasonable and extreme.

The authorities have been rather successful in “containing” the challenges thus far. But what is more important for the future is that the regime is only superficially in control of the process. In reality, with each conflict resolution (which amounts to deciding on an acceptable level of concession), the regime whets the popular appetite for new demands.

A policy of “give-and-take” has been the hallmark of the Kadar leadership from at least the early 1960s. Its pace accelerated markedly with the onset of economic stagnation; now areas that previously were the exclusive reserve of the regime have been opened to the new dispensation. The regime still benefits in that this expanding process of accommodations allows it to cultivate the image of the most liberal country in the Warsaw Pact.

At the same time, the leadership runs a considerable risk as long as yielding to popular demands remains the only viable means for keeping an increasingly restive younger generation satisfied. This is now becoming a questionable prospect in the medium term because a new cycle of prosperity is not probable until the end of the decade. Indeed, the trickle-down “creeping liberalization” seems actually designed by the regime to divert public attention from austerity. In so doing, the regime hopes to avert a greater level of instability that could result from the austerity measures inherent in the economic reforms slated for implementation through 1990.

Hungary is riddled with contradictions, tensions, and runaway problems. That none of these has assumed critical dimensions is due to the benign, by East European standards, nature of Kadar’s leadership. With shrewdness and common sense, he has been able to steer a pragmatic, middle-of-the-road course between conflicting extremes. Virtually all the diehard, old-time orthodox figures had been weeded out by the mid-1980s; none of them fell so far as to feel humiliated but far enough to prevent a comeback. (The younger neo-orthodox figures who followed them are a new breed in that they do recognize the need for change, but they want to go slower and not as far as the “reformists.”) Although no one can replace Kadar, his collegial style of rule and penchant for seeking consensus stand to survive him, at least for a while.

Another critical factor has been Kadar’s ability to sell his reform experiment and “alliance” policy to the Kremlin, first to Khrushchev and then to his successors. By the time the ideologically questionable features of what has become known as the Hungarian model began to arouse Soviet suspicions, the experiment was paying enough dividends in terms of political stability to assuage Moscow’s more serious concerns. Also, Soviet toleration of the reform has been a significant factor in containing popular anti-Soviet sentiments in Hungary. Aware of this, Moscow generally has refrained from strong-arm tactics and kept periodic disputes out of public view, a modus operandi in which Kadar has willingly connived.

The Economic Scene

Overall economic performance under the Kadar regime has been impressive by East European standards, in sharp contrast with that of the pre-1956 period. Development strategies pursued for the last 30 years have been guided by the overriding political objective of pacifying an alienated populace by improving living standards. After almost two decades of experimentation, a largely agrarian country has been transformed into a semideveloped industrial one. Moreover, Hungary has evolved a modified hybrid economic model of its own, sometimes referred to as “market socialism,” which combines features of a Soviet-style planned economy with those of the capitalist West. Although the former features dominate, the latter have grown in significance.

The centerpiece of the regime’s policies has been its longstanding, if often faltering, commitment to a comprehensive economic reform known as the new economic mechanism (NEM), launched after prolonged debate on January 1, 1968. Also of importance has been the regime’s liberal approach to agricultural development, which to a great extent preceded introduction of the NEM.

Accomplishments notwithstanding, the Hungarian economy is far from sound and is more vulnerable to domestic and external pressures—political and ideological, as well as world economic trends—than is commonly recognized. The reason is the way the original reform agenda was implemented—spasmodically in the state industrial sector, more consistently in the agricultural sector. This largely explains the successes and the failures of the economy, as well as its ability to weather adverse changes in the world economy without the kind of crisis Poland has experienced.

Agriculture. Unlike in Poland, where the predominantly private agriculture has been treated as a stepchild by the authorities, in Hungary the already liberalized agricultural sector received a further boost from the 1968 reforms, which allowed and supported cultivation on household plots by cooperative farmers. This stemmed from the official strategy of encouraging agricultural production to give Hungary, historically the granary of Europe, not only self-sufficiency but also a substantial exportable surplus. Except for a brief period in the early 1970s, the Kadar regime has never deviated from this principle.

Thus while the economy as a whole experienced serious dislocations during much of the 1970s, Hungary had by 1974 an export surplus in all major agricultural products, and by 1975 per capita agricultural output was about 90 percent of the US level. In fact, by the mid-1970s, Hungary was the only East European country to have achieved an exportable agricultural surplus, equal to about 12 percent of domestic output. Domestic food shortages have been rare and when they occurred (e.g., in the early 1970s) they were caused essentially by government restrictions on the private farming of collective farms. Since the watershed mid-1970s, however, Hungary’s agricultural performance has become spotty as a result of bad weather and, more importantly, lack of investment funds.

By 1984, Hungary alone among its allies was exporting a sizable share (about 35 percent) of its total agricultural output to help meet hard-currency obligations and cushion the impact of deficits on the state industrial sector. These exports were not made at the expense of domestic consumption (per capita meat consumption has reached about 80 kilos in recent years) because supplies were more than adequate to cover domestic demand at subsidized prices. Thus, not only has Hungary not had to depend on large imports of agricultural and food products as have other East European countries (particularly Poland), but it also has avoided the attendant economic and political risks bedeviling some of its allies.

Aside from the considerable dividends in domestic political terms (as well as within the bloc), Hungary’s creditworthiness in Western financial circles has been helped by the success of the agricultural sector. Agricultural performance has played a crucial role in Hungary’s economic prosperity and political stability and will continue to do so in the looming trouble spots. If the regime eliminates some of the food subsidies as part of price reform, social tensions could mount. The uncharacteristically ill-prepared price hikes in mid-January 1985 sparked considerable grumbling among consumers on fixed salaries, families with children, and pensioners (the latter make up about 25 percent of the population and their number is growing). Potentially more serious would be the impact of a severe drought. A severe harvest shortfall would strain the regime’s financial resources, have a ripple effect in terms of hard-currency borrowing needs, turn the current public indifference for the new reforms into outright opposition, and lead to the erosion of what remains of political stability.

Industry. In contrast to agriculture, Hungary’s industrial base has not performed adequately, owing in large measure to the regime’s failure to push ahead consistently with the 1968 industrial reform agenda. Performance in the initial years of 1968–72 was impressive. Several features of a centrally planned economy were replaced with a guided market allocation system, which featured profits and incentive payments for managers and workers. Although the state retained decisionmaking power over all infrastructural, social, and most manufacturing investments and other economic regulators (e.g., wages, prices, trade), by 1973 industry was averaging a 7-percent expansion yearly.

Between 1972 and 1978, however, the momentum of reform slowed, then halted, and in some respects was reversed in the state industrial sector. The causes were many:

— an overheated investment program caused by policy error;

— growing concern over the reforms’ impact on income inequalities, which were exploited at Moscow’s instigation by hardliners still ensconced in the establishment;

— an overly diversified industry for a country of Hungary’s size and development;

— excessively large industrial units rendered inflexible in responding to changing conditions, compounded by preferential policies and inadequate or no competition; and

— the impact of a growing labor shortage which hit the industrial sector before newly acquired habits of productivity and efficiency could come into play.

Impact of the 1973 Oil Crisis. It was against this background that Hungary experienced the 1973 oil crisis and subsequent economic slowdown in the West. These factors reinforced the regime’s retrenchment policies that had been triggered in 1971 by hardline pressure (from Moscow and at home) to eliminate the “ideologically undesirable” side effects of the 1968 reforms. At that point—just as today—the leadership was not fully united behind the reform course (the decision to go ahead was in fact a hard-fought compromise pushed by Kadar), and the population would not accept the necessary sacrifices without political turmoil. Moreover, the regime committed the costly tactical mistake of assuming that the changes in world economic trends were only temporary and that, in any case, the country somehow could shield itself from the effects of worldwide stagflation.

Thus, rather than reduce increasingly costly imports by slowing domestic growth rates and simultaneously introducing austerity measures to boost exports, the regime chose to take advantage of the excess liquidity of Western money markets (the result of recycled petrodollars) to rely on increased hard-currency borrowing. By the mid-1970s, Hungary also faced the falling demands in the West (especially by the European Economic Communities) for one of its few hard-currency-earning exports, food products, especially meat. Western protectionist measures against Hungarian manufactured exports aggravated the situation, as did a variety of policy decisions (e.g., imposition of taxes on “excess” profits from exports) which often rewarded inefficient enterprises. State subsidies were used with imports as well as with consumer goods to protect the consumer, further distorting the relationship between production and consumption prices. Another of Hungary’s reactions to the internal and external shocks was to increase trade with its Council for Mutual Economic Assistance partners through annual increases in bloc trade transacted in convertible currencies.

Even so, what proved to be of paramount importance was that the economic reform suffered a severe setback while the country’s gross external debt rose from $1.4 billion in 1973 to $7.5 billion at the end of 1978, when credit conditions began to tighten. The situation was made worse by: the 1979–80 world oil price increase, which progressively drove up the price of Soviet oil on which Hungary largely depends; mounting interest rates; the sobering impact of the Polish crisis; and the need to reduce a massive hard-currency trade deficit ($1.2 billion by 1978).

Return to Reforms. It was against this background that the pro-reform faction, spearheaded by Politburo member Ferenc Havasi, began to push successfully for a return to the basic premises of the 1968 reform program. The regime proceeded on two fronts. Some of the recentralizing aspects affecting the state industrial sector were dismantled and the principle of profitability in enterprises reaffirmed, and a wide-ranging debate got under way on politically sensitive reforms shelved from the early 1970s until spring 1984. Meanwhile, the regime instituted a number of measures in 1982 aimed at such nonstate sectors as the cooperatives, the small but expanding legal private enterprise, and the informal or illegal private activity in industry and agriculture. This was tantamount to legalizing or expanding the already considerable “second economy” to meet hitherto unsatisfied demand for goods and services the state sector was unable to provide.

The initial results were impressive enough to help Budapest deflect some of the criticism of more orthodox allies that it was giving way to “creeping capitalism.” Kadar himself defended the Hungarian practice by noting that only about 4 percent of the means of production was in private hands and only about 5 percent of the labor force was engaged in small private industries. What he left unsaid was that a majority of the labor force (estimated at 75 percent of the total) had been working in the second economy just to make ends meet, putting in 60–80 hours weekly with two or more jobs instead of the officially set work week of 42 hours. Meanwhile, real income had declined steadily since the late 1970s with no change expected for the rest of the 1980s.

The austerity policies of the last 6–7 years, however necessary, have strained public tolerance. Kadar acknowledged this in an unpublished confidential speech during the April 17, 1984, Central Committee plenum, when he argued successfully against a “second reform” as politically and ideologically unfeasible. But he also made it clear that the populace would not accept the proposed 0.5-percent growth for 1985 and prevailed in setting a 2.5-percent growth rate for national income in the ensuing years, a modest increase in consumption, and a per capita increase in real income by 1.5–2 percent. These targets have not been reached, however, and the outlook for 1987 is even gloomier. Despite austerity measures aimed at drastic cutbacks in investments and imports as well as consumer belt-tightening, Hungary’s gross hard-currency indebtedness reached about $13.3 billion (almost $11 billion net) by the end of 1986.

The April 1984 plenum also decided on the scope of reform to be implemented in the 1986–90 Five-Year Plan period. Although it falls far short of being a “reform of the reform,” it is the first major reform undertaking since the early 1970s. In fact, it is similar to that part of the original 1968 agenda which was shelved by 1973. The reforms call for price increases, reduction of subsidies, greater wage differentiation, further cutbacks in central planning, enterprise decentralization, introduction of new forms of management (workers councils and elected management teams) in many state enterprises, tax reform, and modernization of the banking system. Even if the package is put into practice only in watered-down fashion—as it has been thus far—it could still erode popular support for the regime. Unlike the 1968–71 reforms, which were accompanied by a fast rise in living standards, new reforms are seen by average Hungarians without the optimism of 1968 and, rather, as a source of their daily travail.

Yet abandoning reforms would make matters worse than would persevering in implementing them. Thus the regime has little choice but to follow through with the reform package as much as is politically acceptable and ideologically defensible. At the same time, however, the authorities must be careful as they grapple with what a growing number of critics call the “social malaise” afflicting Hungarian society.

A manifestation of this malaise that has come under severe criticism has to do with the country’s highly distorted demographic situation, whereby 45 percent of society is under 30 and 23 percent are pensioners. The remaining 30+ percent of the population therefore must support an aging population. Other indicators of this social malaise are: a decline in population in absolute terms that is not expected to be reversed until about 2030, a higher death rate than birth rate (partly owing to abortion on demand), a divorce rate of almost 50 percent, exceptionally high levels of alcoholism (fourth highest in the world) and suicides (the world’s highest and affecting mostly youth and middle-aged males), and a growing crime rate.

The regime also has come under criticism for its lack of a comprehensive social policy commensurate with the needs created by increasing social stratification (largely a byproduct of the reforms). The number of unemployed is estimated at 40,000–100,000 and is certain to rise, especially if the regime carries out the otherwise badly needed and long-overdue structural reform of state industry. Meanwhile, the existence of poverty is no longer denied, with estimates as high as 30 percent of the population, affecting mostly families with several children, single mothers, and pensioners. Many social ills (divorce, alcoholism, suicide, declining birth rate) stem from the acute shortage of housing, for which the waiting period is 8–12 years. Because of the investment cutback, a substantial portion of new housing has been built by the private sector, but because this has benefited mostly the nouveau riche (doctors, private entrepreneurs, the technocratic intelligentsia, and the political elite), it has exacerbated rather than eased social tensions.

These problems likely will get worse in the coming years, especially if the regime sticks to its adjustment policies. The currently projected growth rates may mean no improvement at all for a substantial part of the population, a prospect with serious implications for the regime’s ability to renew a “social contract” with the general population in the aftermath of the 1956 upheaval. The task promises to be difficult even under Kadar; without him, it could be much more complicated.

Moscow’s attitude remains an important conditioning factor. So far, the Soviets have not expressed serious reservations about the reform program, and Kadar in turn has sought to allay their periodic concern about the pace and political consequences by stressing gradualness and moderation. Presumably, only in case of serious domestic social and political upheaval would the Soviet leadership be likely to interfere decisively. While Hungary may be drifting toward a crossroads, it does not now appear likely that the difficulties will reach unmanageable proportions under Kadar or that a post-Kadar leadership would seek to chart a radically different course in the near term. Nonetheless, Budapest remains at the mercy of Soviet generosity (e.g., by allowing Hungary to maintain its dollar surplus and a ruble deficit in bloc trade) and faces renewed demands from Moscow for more and better quality exports in exchange for raw materials and energy vital for Hungary.

In the final analysis, the Soviet attitude toward the reforms, however justifiable from an economic point of view, will hinge on the severity of the political problems they generate in the late 1980s. The current measures, diluted as they are compared with those contemplated during the Andropov interlude, do threaten many of the vested interest groups on which stability of the Kadar regime has depended. And yet, the regime appears convinced that its course is in the long run a less painful way of staving off crisis.

An Unexamined Past—The End of the “National Amnesia”

One of the politically most sensitive and nettlesome problems confronting the Kadar regime is reawakened nationalism. As has happened often in Hungarian history, the surge in national consciousness has been spearheaded by the intellectuals, especially younger ones both in and outside the establishment. This phenomenon has been gathering momentum since the mid-1970s, despite, or perhaps because of, the regime’s ongoing efforts to contain it. Its appearance is closely connected with the coming of age of a new generation of Hungarians, some 4.7 million of a declining population of 10.6 million.

This generation, unlike its elders, grew up under conditions of peace, growing material prosperity, and detente. Its members lack the conditioned historical reflexes, or lessons, learned from the traumas of the war and the 1948–56 Rakosi era and, even more important, the 1956 upheaval. Until the mid-1970s, the distorted presentation of Hungarian history dictated by the regime was tantamount to trying to instill a powerful sense of national guilt. In ostensible reaction to the irredentism during the 1920–44 Horthy regime, the leitmotif since 1948 of Hungarian communist historiography well into the Kadar era was what the neo-populist intellectuals called “self-flagellation”—a historiography which propagated the view that as “the last ally of Hitler, Hungary deserved its fate.”

The problem was compounded in the late 1960s when the Budapest regime went so far as to eliminate history as a required subject in high schools, a practice that lasted until the mid-1970s. It was against this background that the post-1956 generation came of age, in a period of rising prosperity and growing openness of the system, with the older generation depoliticized and newcomers in a state of “historical amnesia.” But the hedonistic outlook of the young began to change as economic problems appeared on the horizon and prospects for the good life faded. Prompted by developments in neighboring countries as well as trends in the West, younger Hungarian intellectuals increasingly began to ask such basic questions as “who are we, what is our past, what actually was our role in World War II, what happened in 1956, and what prospects does the future hold for Hungarians as a people?”

The regime sought to defuse the pressure by staging several symposia, where lame explanations by establishment figures were vehemently challenged and demands for unvarnished history voiced. Questioned was the validity of the prevailing view that the record of the last century and a half justified national self-abnegation. In often heated debates, the younger intellectuals argued that their generation should not be expected to feel guilty or responsible for the sins of their forebears, especially because their knowledge of the past was limited or tendentiously distorted.

Specifically, they objected to a national history rewritten only from the perspective of geopolitical realities following the two world wars. They maintained that Hungarian history could not be confined to Hungary as shaped by the Treaty of Trianon of 1920 (and again the Treaty of Paris of 1947), i. e., comprising one-third of its pre-World War I territory. Restricting historical studies to post-Trianon Hungary exclusively, they insisted, would be tantamount to denying a historical reality spanning some thousand years and would amount, in effect, to a sort of spiritual mutilation of the nation’s history possibly worse than the two physical dismemberments this century.

Step by step, a revisionist historiography began to emerge which sought with increasing objectivity and scholarship to come to terms with the national past. Historians have been joined by publicists and journalists in this effort. Some intellectuals have gone so far as to link what they view as Kadar’s insensitive policies and the growing social ills and have called on the nation to confront its past as a way of healing its wounds. Discarding instilled inhibitions, the media began to use old Hungarian names of cities now located in neighboring countries when discussing Hungarian literary and historical figures and events.

Inevitably, the growing interest in history among youth, and then gradually the public at large, took on added dimensions as Hungarians traveled to neighboring countries (except the Soviet Union) in increasing numbers. Renewed contacts with relatives were fostered. Youth, in particular, learned for the first time that almost 4 million ethnic Hungarians lived mostly in contiguous areas outside the country and became acquainted with their conditions as minorities.

Reinforced by the revival of interest in ethnic studies in the West, the popular pressure to address the issue of Hungarian communities abroad became a serious dilemma for the authorities, who realized their impotence in doing anything on behalf of these ethnic Hungarians. One way the regime sought to deflect attention from the minorities in neighboring countries was to cultivate ties with Hungarian communities in the West. While this effort succeeded in dividing the Hungarian diaspora—the pejorative term “emigres” henceforth was reserved to those in the West who continued to reject the outstretched hand of Budapest—it failed to dampen interest in the diaspora closer to home.

Ethnic Minorities

The question of national minorities—in Hungary as elsewhere in East-Central Europe and the Soviet Union—is a politically charged issue. It was ignited in the mid-1970s by the Ceausescu regime’s rehabilitation of the pre-World War II, romanticized historiography of Romanian history. The stated objective was to assert uninterrupted habitation of Romania by Romanians for some 2 millenia to justify Romania’s right to Transylvania, which it gained from Hungary in 1919.

The low-key polemic on this subject beginning in the mid-1970s took on growing intensity as Bucharest began to impose limitations on contacts between its ethnic Hungarians and their counterparts on the other side of the border. Kadar’s cautious efforts to defuse the issue during a two-day summit in 1977—split between the border cities of Debrecen and Oradea (Nagyvarad)—were not successful, and relations between the two ostensible allies have grown increasingly tense.

Against the background of a mounting polemic with Romania, public pressure on the Kadar regime intensified as Bucharest imposed further restrictions in the early 1980s on the nominally still visa-free travel of Hungarians to Romania—banning stays with ethnic Hungarians except for immediate blood relatives, confiscating Hungarian-language publications, curtailing Hungarian-language educational possibilities for ethnic Hungarians in Transylvania, and dispersing the latter to other parts of Romania by limiting job opportunities. Currently dissident as well as establishment Hungarian intellectuals are pushing for more open treatment of some contentious historical issues with sensitive political overtones first raised in Romanian publications. The ensuing polemics have by now reached a decibel level unprecedented among Communist European countries.

For its part, the Ceausescu regime continues to reject the notion—on which Kadar and Ceausescu had agreed in 1977—that the national minorities should serve as a bridge to promote better bilateral relations. In late 1984, Ceausescu went so far as indirectly to accuse Budapest of “irredentism.” Earlier in 1985, Bucharest closed its only consulate in Hungary (in Debrecen), ostensibly as an economy measures but in fact to try to nudge Budapest into closing its consulate in Cluj (Kolozsvar).

Responding to public pressure, the Hungarian Socialist Workers’ (Communist) Party for the first time placed on the agenda of the 13th congress in March 1985 the question of the rights of Hungarian minorities in neighboring countries and those of the non-Hungarian minorities in Hungary as a vehicle for strengthening relations between Hungary and its neighbors. This bow to domestic sentiment only succeeded in infuriating Bucharest, however, and did not placate Hungarian intellectuals or the public. The minority question is one issue on which the overwhelming majority of Hungarians in and outside the country, including the party’s rank and file, agree. It also constitutes the more volatile aspect of the larger issue of national reawakening under way in Hungary.

Despite the popularity of such a cause, Budapest until 1986 was reluctant to seize on it as Ceausescu has done because of the serious implications such a course has for Budapest’s relations with Bucharest and Prague—which also has a large ethnic Hungarian population—as well as the Warsaw Pact and Moscow. The USSR will not countenance serious conflict between two of its allies, not only because of the corrosive effect it would have on the Pact’s military cohesion but also because the USSR itself has about 200,000 ethnic Hungarians in the former Hungarian territory of Sub-Carpathian Ukraine.

Because there is little prospect for a significant change in Romania’s long-term objective of trying to build a homogeneous nation-state as a way of reinforcing its possession of Transylvania, Budapest—with or without Kadar—is reduced to balancing two equally unpalatable policy options. One is to risk being perceived as indifferent, or ineffective, in ameliorating the lot of its ethnic brethren in neighboring states. The other is to yield to the pressure by publicly raising the issue of ethnic Hungarians with its allies in Bucharest or Prague, as was demanded by the November 1986 congress of the Hungarian Writers’ Association. Officially, Hungary thus far generally has espoused the first option, though hewing to it has not been made easy by Budapest’s relatively liberal and open media policy relying, whenever possible, on self-censorship.

Kadar has been able to manage the problem by periodically reining in intellectuals who clamor for more outspoken rejoinders to what they consider Romania’s denigration of Hungarians and distortions of Transylvania’s thousand-year history as part of Hungary. Some writers have been gagged and chief editors dismissed. But this has alienated many writers, especially the neo-populists, and a majority of the dissidents who already hold Kadar responsible not only for his alleged failure to forge a national policy more responsive to Hungarian interests, but also for the many social ills and moral decay they say afflict Hungarian society.

Public acceptance of Kadar is still fairly solid in the countryside and among those urban residents who have prospered from primary and secondary jobs (skilled workers, professionals, technocrats), and with a majority of the power elite. But rumblings over his perceived indecisiveness among the party apparat and the ranks have been on the rise. A growing segment of the urban populace unable to keep pace with inflation (pensioners, much of the youth, and other disadvantaged people) has become indifferent toward him. Meanwhile, his reputation among the intellectuals has eroded seriously in recent years and the slide—judging from the bitter confrontation at the 1986 writers’ union congress—is likely to continue.

It is in this context that the fate of the regime’s economic and political reform policies assume paramount significance. Assuming that Kadar gradually withdraws from active political life over the next few years, his successor(s) may not be able or willing to resist the temptation to seek public backing, i.e., legitimation, by allowing freer rein to popular sentiments on minority and related issues if legitimation through economic prosperity is not attainable. Some of the more persistent intellectuals have found a sympathetic hearing among second-echelon officialdom, the so-called young Turks in the hierarchy, whose activities recently have been curtailed by Kadar but who could rebound to prominence after he is gone. These young Turks, most prominent among them neo-populist Imre Pozsgay, general secretary of the Patriotic People’s Front, have criticized the regime (and by implication Kadar) for slow action on economic and political reforms, inattention to the country’s social ills, and unwillingness to take a more courageous stance on the minorities and other national issues.

Open Dissent Grows

Parallel with the revival of interest in history was the emergence in the late 1970s of a group known as the Democratic Opposition, made up mostly of young sociologists, philosophers, and historians. They drew on the Helsinki Final Act to promote the cause of human and civil rights in Hungary via the publication of uncensored material in samizdat form. Their number never exceeded 200 but their publications proliferated in recent years.

The regime did not take particular notice of them until they turned their attention to issues of concern to broader circles of Hungarian society, such as the fate of the Hungarian minorities in neighboring countries, inflation and stagnating living conditions, the extent of poverty and indebtedness, the impact of the reforms, documents relating to the 1956 uprising, the new independent peace movement, and opposition within the churches (especially the Catholic Church) to the accommodationist policies of church hierarchies. Dissent also affected the universities, where demands included abolition of the teaching of Russian, Marxism, and Leninism as compulsory subjects and reinstatement of the ousted editorial board of the outspoken monthly Mozgo vilag (Changing World). The regime not only has not complied but also recently has suspended the Budapest University publication Medvetanc (Bear Dance) as well as the neo-populist periodical Tiszataj. The latter’s sin was to demand a reevaluation of the 1956 uprising and Kadar’s role in it.

Alarmed at the growing coalescence of various strands of opposition, as well as the appearance of so-called free university lectures and small discussion groups in private homes, the authorities in early 1983 responded with a crackdown. The repressive moves, moderate by the standards of other bloc countries, ranged from a limited ban on publication for some of the more critical establishment intellectuals to suspension of the Jozsef Attila Circle of Young Writers. Members of the Democratic Opposition were subjected to harassment, searches, confiscation of samizdat material, denial of passports (or offered one-way passports), dismissal from jobs, and blacklisting.

In summer 1984 the regime imposed stiff fines on dissidents for publication or dissemination of printed material without permit under the amended press regulation issued that June. Three months later, one of the more outspoken dissidents, Gabor Demszky, received a six-month jail sentence, suspended for three years, for resisting a police search of his car. To halt the printing of samizdat material, the regime in December 1984 restricted the use, storage, registration, and handling of duplicating machines and empowered the police to act as control authority. Meanwhile, the crackdown was extended to religious dissenters who as conscientious objectors refused induction into the military; dozens of them were jailed, and they remain jailed. The hitherto unhampered activity of popular punk-rock groups also came under close scrutiny. Four musicians were sentenced to jail terms in 1984 for writing blatantly anti-Kadar, anti-communist, and anti-Soviet songs, although some of them were never performed publicly.

Conscious of the need to maintain its positive image in the West, as well as of the dangers in too frontal an attack on either the dissidents or the critical intellectuals, the regime sought to defuse the challenge by trying more conciliatory gestures as well. The authorities established channels of communication with more moderate elements of the opposition, some of whom do not regard themselves as dissidents, and loosened restrictions on the official press by allowing it to address issues that had broad popular appeal (e.g., social problems, the minority issue, and the polemics with Romanian and Slovak historians).

Despite the relative proliferation of dissident and quasi-oppositional activity, the Democratic Opposition is not likely to pose a threat to the regime so long as it remains fragmented and shies away from concentrating on problems affecting society at large. As it is, the majority of its members not only applaud the regime’s opening to the West but also favor expansion of the private sector under the recent reforms. The potential for troublemaking would increase, however, should social tensions become aggravated as a result of the reforms.

Kadar’s role has been central in this equation. He is known to have advocated a nonconfrontational approach toward dissent and to have assented to a tempered form of crackdown when the samizdat literature began to run articles dealing with 1956, including his own role in those events, as well as with concerns of other dissident groups and such topics as the economy and the minorities. Kadar is especially vulnerable on the latter issue because it is not subject to easy remedy. He has had to allow the media to vent the matter of Hungarian minorities from time to time to maintain credibility and to keep the issue from becoming unmanageable. At the same time, he has to be mindful of Moscow, which reportedly has warned him against committing the same mistake former Polish leader Gierek did when he let dissent get out of hand.

Kadar’s response has worked thus far and the problem need not seriously worsen in the short run even after he leaves office, provided the current domestic difficulties themselves do not significantly worsen. If they do, the level of opposition can be contained only by greater concessions both in the official media and in the form of political reforms. But the dynamics of this interaction between regime and popular pressure would drive the regime ever further toward unorthodox limits.

Whether Kadar is still in charge would make a crucial difference, as would the extent to which the regime had succeeded in forging another social contract with the post-1956 generation. That, in turn, depends on whether the Kadar regime can finally go through with the painful restructuring of the country’s industrial sector along with the necessary political reforms—all without further weakening the public’s already shaky tolerance and without incurring opposition from Moscow. Equally important would be Budapest’s ability to use the Western option judiciously, as would the prevailing international political, economic, and financial situation.

1. Source: Reagan Library, Rudolf Perina Files, Hungary—Substance 1987 (1). Confidential. Drafted by Foldvary; approved by Richard Clarke (INR).
2. IRR No. 40, “Hungary Since the 1956 Revolution: Part I—The Genesis of the Kadar Regime,” is in the Department of State, Official Correspondence of Deputy Secretary of State John C. Whitehead, July 1982–January 1989, Lot File 89 D 139, EE Trip: Budapest, Hungary—Nov 10–12.
3. IRR No. 52, “Hungary Since the 1956 Uprising: Part II—Consolidation of the Kadar Regime,” is in the Reagan Library, Walter Raymond Files, P. 9 East Europe.
4. Part IV, “Hungary Since the 1956 Uprising—Outlook and Implications,” issued on June 22, 1987 as IRR No. 97 is in the Reagan Library, Rudolf Perina Files, Hungary—Substance 1987.