359. Telegram From the Department of State to the Embassy in Bulgaria and the Embassy in Poland1



  • The Secretary’s Meeting With Hungarian General Secretary Karoly Grosz.
(C—Entire text).
Summary: On July 26, Secretary Shultz had a wide-ranging discussion with Hungarian General Secretary Grosz which focussed heavily on Hungary’s internal developments. Grosz defended the openness of Hungarian society, but acknowledged that the rules of conduct are not yet established. This resulted in misunderstandings such as those which occurred during the demonstrations on the 30th anniversary of Nagy’s death.2 He saw the need for greater intellectual support for the reform program and new legislation on minorities and the right of assembly. He hoped for a new constitution by 1990.
On the foreign policy front, Grosz asserted that the Hungarians are looking outward and even moving toward relationships with Israel [Page 1145] and Korea. He admitted that some of this Warsaw Pact partners remain wary of Hungary’s opening to the West. He stressed the importance of working with Gorbachev and said that if Gorbachev failed, we would all live in a tougher world. End summary.
The Secretary met Grosz for one hour at latter’s hotel suite. With Grosz were Laszlo Kapolyi, Commissioner of the Council of Ministers; Lazlo Kovacs, Deputy Minister of Foreign Affairs; Ambassador Hazi; MFA Second Secretary Kiss, Embassy DCM Pataki (notetaker); and an interpreter. The U.S. side included the Deputy Secretary, Assistant Secretary Ridgway, Ambassador Palmer, DAS Simons, EUR/EEY Director Deal (notetaker), and an interpreter.
The Secretary said he looked forward to hearing from Grosz about developments in Hungary and Hungary’s foreign relations. He said we are living through a time of tidal changes. He had seen such change in his extensive travels, e.g., in the USSR, China and Thailand; the trend is not limited to one country. Economic and political systems are being rearranged; scientific and technological questions are coming to the fore. There is a ripple effect and more diplomatic fluidity today than before, e.g., in Cambodia, South Africa and the Korean Peninsula. Unfortunately, there is not that fluidity in Central America. He then invited Grosz’s comments on these trends.
Grosz said that he had been preoccupied with domestic problems and the accelerating pace of change in Hungary. It should come as no surprise that there is an intense debate about how to resolve Hungary’s internal problems and how to set its course internationally.
The process of change is strong in the socialist world. The USSR, Poland and Hungary are working on common ground with a common spirit. On the other hand, Bulgaria’s course is uncertain, the GDR has reservations about reform, and Czechoslovakia is preoccupied with domestic affairs. He did not know whether these trends are necessarily favorable for Hungary. He did not like Hungary being in the position where everyone agrees with it, but he didn’t want Hungary to be isolated either. In response to the Secretary’s question about where Romania stood in this scheme, Grosz said only that as he got older increasingly he lacked self-discipline and declined to comment further. (FYI. Grosz left no doubt, however, about his negative attitude toward Romania. End FYI). Within the Warsaw Pact there are fewer differences of view on international issues than on domestic reform programs, he said.
In Hungary’s case he had decided to open the country further to outside influence while settling domestic issues that arise one by one. He saw the need to obtain intellectual support for internal renewal. Money is important but intellectual support more so. He had not fallen in love with the West, but he could take some things from it for [Page 1146] use in Hungary. Hungarians had concentrated traditionally on Western Europe; it is time to see what is happening elsewhere.
Grosz stressed that he did not seek financial support for Hungary, the Hungarians can get all they need from their close neighbors. What is needed is better intellectual exchanges and better East-West communications to resolve contentious issues.
He noted that Hungary’s relations with Israel are not as good as he would like. The suspension of diplomatic relations in years past had achieved nothing. The Israelis do what they want regardless of formal relations. He wanted to communicate better with Israel and get his message (unspecified) across. He had invited Peres to Hungary and talked with him about the present and future. He noted Shamir would come also when he has the time. Hungary is dealing more actively now with Asians generally and the ASEAN countries in particular. Relations with China had improved since Kadar’s visit to the PRC. The trends and processes in China are remarkable. The Chinese show more conviction and resolve in their economic reform efforts than the Hungarians. Hungary is improving relations with Thailand and Malaysia, and he recognized that it is time to come to terms with the South Korean issue.
The Secretary termed this a smart policy. Korean society is moving ahead at a breathtaking pace. He had just been to Korea3 and could testify to that. It would be wise to be associated with that kind of dynamism. Grosz agreed; he said Hungary had sent a representative to Korea to prepare for its Olympics, but his activities will extend beyond the games to see what further steps in the relationship are possible.
Grosz claimed difficulty in dealing with the Arab world. The Hungarians don’t understand it well. Hungary had to rethink its policy toward Arab countries and reorient some elements of that policy.
He noted that better U.S.-Soviet relations give Hungary greater opportunities and permit the development of more contacts internationally. He had spoken with Gorbachev twice in preparation for his visit to the U.S. Gorbachev would like further cooperation with the U.S., but is uncertain about the impact of the coming elections on U.S. policy. The Soviet leadership attributes greater importance now than previously to the development of relations with the FRG. He had contributed personally to that process. He also had urged Jaruzelski to seek a more dynamic relationship with the FRG. Regrettably, the Poles do not seem as receptive to the idea as the Soviets. It is important that there be a further rapprochement between the U.S. and USSR and between [Page 1147] the USSR and Western Europe. He added that some of Hungary’s “friends” are suspicious about Hungary’s good contacts with Germany and Austria.
On travel and tourism, Grosz said that 20 million tourists visited Hungary last year, but only 117,000 came from the U.S. He would like more American tourists. Hungary had opened its borders as of January 2; travel from Hungary is up 450 percent in the first six months of 1988 over 1987. Yet at the National Press Club luncheon he had been asked about the six persons who were not allowed to travel.4 He was prepared to have millions of Hungarians see the world even if this heavily in terms of Hungary’s current account. Personal contacts do more to further relations than meetings between Prime Ministers. He wanted Hungarians to learn more foreign languages; only seven percent of the adult population now spoke a foreign language well. He downplayed the risk of open borders to the survival of the regime. He concluded this lengthy monologue with a call for better bilateral relations, while noting that there did not appear to be any special problems.
The Secretary responded by stressing the importance of human rights in which freedom of travel and freedom of emigration are key elements. The U.S. always looks at the internal policies of other countries; repressive actions get a lot of attention here.
Grosz asserted that it is hard to imagine a more open system than in Hungary now. Unfortunately, the rules of conduct are not yet established there. They must sort these things out through enactment of legislation; this is a task for the parliament. He cited as an example of the lack of rules of conduct the problems arising from the 30th anniversary of Nagy’s death. He had allowed demonstrators to pay tribute to Nagy, make speeches, meet freely. He did not want policemen around, and there weren’t any. He told the demonstrators to keep away from two areas, but they failed to do so, apparently desiring to challenge the new party leader. He wanted to be fair, however, and warned them in advance of the consequences if the demonstrators failed to abide by the rules. But they did not respect the law. The Secretary asked what they had done. Grosz said it might sound strange, but he did not like to see policemen beaten up. But that is what happened. And if policemen don’t respond to provocations they should be sent to a monastery to which the Secretary retorted “if they can get in.” Not fazed, Grosz said he was opening up monasteries too. He then noted Amb. Palmer’s broad contacts with Hungarian society, saying that if Palmer didn’t believe Grosz’s version of events he would show the Ambassador a [Page 1148] film of the demonstrators’ provocation of the police. He would save that film to show the world if the press made further comments about the repressive activities of the Hungarian police.
Returning to questions about the rule of law, he saw the need for legislation on minorities and the right of assembly. He had set up a working commission to write a new constitution by 1990; the present group is evaluating the historical experience of the last four decades. 11 committees are studying aspects of the economic reform. In short, Hungary has done more in the last year than in the previous ten. He saw full consistency and harmony between Hungarian internal programs and its external policies. Certain things should be understood, however, Hungary would not leave the Warsaw Pact. There could not be a qualitative change in the rules on ownership of property. There would be an increase in private enterprises from 6 percent of the total now to 25–30 percent in the future. The Hungarian reform program goes as far as possible and is appropriate for Hungary’s part of the world. In carrying out the program, the assistance of others would make things easier, but if no assistance is forthcoming Hungary will still proceed nonetheless. He claimed to understand Hungary’s current situation and did not fear the future.
The Secretary replied that there is no reason for Grosz to fear the future, which belongs to people willing to confront the facts and to allow the achievements of the information age to work for them. Hungary seemed to position itself correctly. He was impressed that the Soviets showed that sense also, as was evident in his conversation with them. But their task was more difficult than Hungary’s due in part to the USSR’s large, entrenched bureaucracy.
Grosz denied that bureaucracy is the Soviet Union’s greatest enemy. The Russian people themselves are obsessed with old ideas and practices, citing as an example a story told by Gorbachev about two Russian villages only one of which was willing to experiment with more flexible rules on milk production quotas. Grosz said you can replace bureaucrats, but you can’t replace workers or peasants who lack vision. That is Hungary’s problem as well.
On the question of U.S.-Soviet relations, Grosz counseled patience. The Soviet leadership is moving in the right direction despite the obstacles; the change is historic in nature. If Gorbachev fails, all of mankind will live in a tougher world. In his personal view, the U.S. needs the Soviet Union as a dynamic cooperative partner. The U.S. has a 50-year edge over the USSR in the economic sphere and can only gain as competition moves from the military to the economic realm. He disputed the merits of COCOM controls which he claimed do little to halt progress. The U.S. gains more through competitiveness and openness than trade restrictions. The Soviet Union has the potential for being America’s greatest market.
The Secretary said that it had been our experience that the more successful our economic partner the more successful we are. It is not a zero sum game. John Whitehead always says in a negotiation you should leave something on the table for the other guy. To be successful in a negotiation, both sides must benefit. In talking to Gorbachev, the President had said that one-sided arms deals will not hold up. The President’s place on the political spectrum in the U.S. ensures that any deal he makes will stick.
Grosz said that what President Reagan has done is of historic importance; he took that position publicly. He saw two points on which the U.S. might not agree. (1) New things are possible with the new leadership in the USSR. This is indeed a historic opportunity; and (2) The U.S. and USSR are not the only powers responsible for world developments. Others must have a say too. The second point is as important as the first.
The Secretary concluded by urging Grosz to share with the President some of the fine jokes he had heard on his own visit to Budapest.
FYI. Hungarian National Bank President Bartha told EUR DAS Simons July 27 that Grosz had been pleased with Secretary’s positive response concerning continued development of Hungarian relations with South Korea, and had told Bartha he had in fact raised Korea and Israel with the Secretary precisely in order to elicit such a response. End FYI.
  1. Source: Reagan Library, Rudolf Perina Files, Hungary—Bilateral 1988 (1). Confidential. Grosz visited Washington for an official working visit July 26–28.
  2. June 16.
  3. July 16–18.
  4. The luncheon was earlier that day.