1. The last 75 years

At the General Election held in May 1998 the largest number of seats in Parliament, but short of an absolute majority, was won by the centre-right Fidesz - Civic Party -- which, having grown out of student protest movements of the last years of Communist rule, was for long called Alliance of Young Democrats -- in co-operation with the Hungarian Democratic Forum. A coallition with the Smallholders Party has assured them of a comfortable, if not overwhelming, majority in Parliament, and has enabled Fidesz to form a stable majority government. However, since the coallition partners between them control less than two-thirds of parliamentary seats, the new government will not be in a position to push through any constitutional changes, or other measures that require a two-thirds majority, that are not supported by the opposition,

This reversed the election results of 1994, when the Hungarian Socialist Party (broadly: more-or-less 'reform-minded' ex-members of the ex-Communist Party) had gained an absolute majority in Parliament. Despite its origins, the government formed by this party proved to be in favour of an untramelled 'free market' economy, concentrating on attracting foreign investment, encouraging ruthless home-grown capitalists, and putting macro-economic management before the wellbeing of the population at large. In consequence the international business community liked it, the electorate less so.

By 1998 an ambitious, if occasionally mismanaged, privatisation programme, started by the first post-Communist government, transferred the bulk of the country's industrial and trading enterprises, as well as financial institutions, from state to private ownership (much of it representing foreign capital, about half from Germany, the USA and France). During the period 1990-97 approximately one quarter of all western investment in erstwhile Communist contries went to Hungary. The re-opened Budapest stock exchange consistently outperforms its counterparts in other ex-Communist countries (and shares in the recently privatised telecoms operator, MATÁV, have obtained listing on Wall Street too).

The price paid for these economic changes is a high level of inflation (still in the high-to-mid teens), unemployment running at well above 10 per cent (and considerably more in eastern parts of the country), a dramatic decrease in the real earnings of wage and salary earners -- especially those in public employment: education, health-care, civil servants -- and others on fixed incomes, old age pensioners in particular.

Since 1990 all governments have shared the ambition of taking Hungary into the European Union (EU) and joining NATO. In March 1998 Hungary was invited to start formal accession negotiations with the EU, but attainment of full membership before 2002 or 2003 seems unlikely (however Hungary does already co-operate regularly with a number of EU technical bodies). An invitation to join NATO was issued in July 1997, and has since been approved by the existing members of the Alliance, whose legislatures are currently going through the processes of ratification (the US Congress has already passed the ratification); full membership of NATO is likely to be achieved in 1999 (Hungary has already co-operated with NATO, notably in connection with support for the force sent to Bosnia). Hungary is also a member of the OECD, as of the Council of Europe.

The developments leading to the current situation began in 1989-90 when, in an amazingly peaceful transition, the Hungarian Socialist Workers Party (HSWP, as the Communist Party, the Soviet-backed master of Hungary since shortly after the Second World War, was then called) abdicated from its monopoly of political power, starting the collapse of Communist regimes in Central and Eastern Europe once Gorbachev had let it be understood that the USSR would not interfere. Following a series of round-table meetings with representatives of the hitherto illegal opposition, the HSWP agreed to free multi-party elections. Held in March 1990, these were won by a right-of-centre coalition, headed by the Hungarian Democratic Forum, which initiated the restoration of the country's West-European orientation and of a market economy in Hungary.

The period, three decades and more, preceding this change is associated with the name of János Kádár, the Party boss (his official titles changed from time to time) who had come to power with the aid of Soviet tanks in 1956. In the latter part of his long rule he managed to turn Hungary into the most cheerful prison block behind the Iron Curtain, slightly relaxing travel restrictions -- but passports valid for more than one specific journey abroad, to the West, were in general not issued until 1988 -- and stepping up the supply of consumer goods at the cost of incurring excessive foreign debts. In the last years of this period limited small-scale private enterprise was also tolerated.

Kádár had come to power after Hungary's attempt to shake off Communism, in October 1956, had failed: additional units of the Red Army were moved in (at the behest of Soviet Ambassador Andropov, and in accordance with operational plans already prepared in July that year), to crush the popular uprising that demanded democracy, free elections and neutrality in international affairs. The West sympathised, but did nothing: Britain and France were busy waving the flag at Suez, the USA was electing a new President. In the aftermath tens of thousands were imprisoned, thousands 'vanished' into the Soviet Union, and many hundreds, including Imre Nagy Prime Minister for a few heady days, were executed. And some 200 thousand people, about 2 per cent of the population, mainly young (their average age was just over twenty), qualified and enterprising, fled to the West.

Communist rule was established in Hungary in 1948-49, somewhat above three years after the Soviet Red Army had liberated the country -- with much raping of women, looting of the population's belongings, and rounding up of civilian men to boost the number of POWs taken to the levels expected by Stalin -- in 1945. It then remained in occupation, augmented with units of the NKVD (the later KGB), initially to supervise the dismantling and removal to the USSR of most of what industrial infrastructure had not been destroyed during the war. At the General Election held in September 1945 the Communist Party had received only 17% of the popular vote, but using salami tactics (move towards power a small slice at a time), and backed by Soviet pressure and assistance, it gradually eliminated (often physically) all non-Communists -- and especially those who had been active in the resistance to Nazi Germany -- from political life and positions of any consequence.

A one-party Marxist-Leninist state, its government totally subservient to Moscow (behind the scenes the Soviet Ambassador acted like a viceroy: no decision of any import was taken without reference to him), and a Soviet-style planned economy were then set up, under the leadership of Mátyás Rákosi. All private businesses, down to the smallest one-man workshops, were nationalised without compensation; the peasants were forced into kolkhoz-style state farms; the borders were sealed; and the political police, the dreaded ÁVO, operating from their bland HQ at 60 Andrássy Boulevard (later renamed Stalin Boulevard), arrested, tortured, executed or imprisoned without trial -- public trials were reserved for spectacular show cases modelled on Stalin's purges of the 1930s -- anyone the Party disapproved of.

In 1945 Hungary had fallen from the frying pan into the fire: in March 1944 Nazi Germany had occupied the country, installed a pro-Nazi puppet government, deported anti-Nazis to concentration camps in the Reich, and extended the holocaust to Hungary too. Up to then Hungary had been an island of de facto tolerance in Axis-occupied Europe -- the application of such 'racial laws' as had been introduced under German pressure was lax in the extreme and easily evaded -- and provided a safe haven for numerous refugees from other Continental countries, as well as for escaped Allied POWs: German demands for their extradition were politely but consistently refused.

That occupation was Germany's response to Hungary's, clumsy and botched, attempt to get out of the war, into which Germany -- which had by then occupied all surrounding countries (except Romania, ruled by the pro-Nazi Fascist Iron Guard) -- had dragged a reluctant Hungary in the autumn of 1941. Up to then Prime Minister Count Paul Teleki, pushed into suicide by German aggression that spring, had managed to keep Hungary neutral.

During the thirties Hungary came to be increasingly overshadowed by ever more powerful Nazi Germany, a direct neighbour after it had annexed Austria (the Anschluss) in 1938. Governments in favour of closer links with Germany, such as that of Julius Gömbös (who coined the phrase Berlin-Rome Axis), alternated with others inclined to cautiously distance Hungary from Germany -- a difficult task at a time when Britain and France were consistently appeasing Germany; especially difficult after Chamberlain and Daladier had agreed, at Munich in 1938, to let Hitler and Mussolini arbitrate in the matter of Hungarian-populated regions of Czechoslovakia (see below): by their Vienna Decision most of those regions were returned to Hungary, boosting the arbitrators' popularity.

In the twenties the Government lead by Count Stephen Bethlen, which lasted nearly a decade, consolidated the country after the ravages of the First World War.

From the end of the First to that of the Second World War Hungary remained a kingdom without a king. The last reigning monarch, Charles IV (1916-18), had been exiled by the victorious Allies after the First World War, and there was no consensus on how to fill the throne (or, indeed, whether it was vacant). Pending resolution of this issue Admiral Nicholas Horthy -- the last C-in-C of the Austro-Hungarian Navy (which had remained bottled up in the Adriatic throughout the war) -- was the country's acting Head of State, with the title Regent. As such he could advise, but not dictate to, governments that had sufficient support in Parliament; he also had the power to dissolve Parliament at will and call new elections, but he only used it once: to refuse the dissolution requested by pro-German Prime Minister Béla Imrédy, who considered Parliamentary support for his policy insufficient and hoped to improve it after new elections.

Horthy had been appointed Regent by Parliament in 1920, following a brief but bloody Bolshevik reign of terror in 1919, headed by Béla Kún (later, in the 1930s, 'purged' by Stalin). The Bolsheviks had come to power on the collapse of the feeble Government of Count Michael Károlyi who -- having been appointed Prime Minister by the King in October 1918 -- declared a republic in January 1919, and became its President. His most fateful action on coming into office was to order all, admittedly war weary, Hungarian troops to lay down their arms and return to their homes -- thereby effectively disbanding the Army.

The country undefended, the new Czech state, which already had an army, started occupying the Highlands of Hungary, which then became the Slovak portion of Czechoslovakia; at the same time Romania -- which had an intact army, since it had been under the Central Powers' occupation almost from the day it had declared war on them -- occupied first Transylvania, then most of the central Lowlands, and eventually even Budapest and parts of Transdanubia. Meanwhile Serbia annexed Croatia-Slavonia in the South-West.

This gave these states a strong hand when the victorious Allies finally got round to imposing their peace terms to Hungary at Trianon in 1920. There was no question of peace negotiations: the terms -- which, dictated by Clemenceau, were approved by Lloyd George and President Wilson -- were simply presented to the Hungarian delegation (held under house arrest while in Paris) for acceptance as they stood. They were harsh in the extreme: the area of Hungary was reduced to 28 per cent (yes: twenty-eight per cent) of what it had been, setting the arbitrary borders the country still has. And along with 72 per cent of its territory Hungary lost 60 per cent of its population to Romania, Serbia (which renamed itself Yugoslavia in 1929) and the newly created Czechoslovakia; for obscure reasons even Austria received a chunk (today's Burgenland).

Last updated: July 1998