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Democratic Transitions

Hungary: The Negotiated Transition and Its Lessons
By Jozsef Szajer

When did the changes in Hungary begin?

These types of questions are the most difficult to answer. The prevailing trend in Hungarian public opinion is that the long agony of the communist system began at the moment the 1956 revolution against the Soviet communists was crushed. The regime that came to power on the back of Soviet tanks was always grappling with the question of its own illegitimacy throughout its life. The system coped with its legitimacy though incomplete reforms, attempts to raise the living standards, and making it taboo to even mention the year 1956 in the education system. By the early 1960s, all that the regime had was the minimal acquiescence of the oppressed society. Socialist ideologues called this minimal legitimacy public consensus. In its bare essence all this meant that the regime did not disturb the privacy of its citizens and did not interfere with personal matters and choices. It did not expect mimicking enthusiasm, however, in return it demanded the unequivocal acceptance of the system's institutions and procedures. Among these were the role of the party leader, the self-censorship of the media, the state control over the economic system, faithful alliance with the Soviet Union, and above all, a total gag on the brutal oppression of the 1956 revolution. The oppressed masses were simply allowed to accept what was happening to them. The economic miracle of Hungarian socialism and social peace rested on this fake consensus. So when did all this break up?

Like so many other things, Hungarian socialism broke when they attempted to fix it. A unique dual social structure emerged in Hungary after the 1960s when the first economic reforms were launched and farmers were allowed to cultivate some land for home consumption. A secondary economy, a limited private economy, slowly evolved parallel to the state's redistributive system. An increasing portion of the population, according to 1988 estimates 75 percent, participated in one way or another in the private market. The self-sufficient micro-enterprises mushroomed and this paradox phenomenon was later referred to as socialist civic development. But the semi-market reforms did not improve the efficiency and competitiveness of the socialist

While in the 1960s and 1970s the poorer, mainly agrarian segment of the population took part in such market enterprises, during the 1980s and 1990s a more noteworthy change took place. An entrepreneurial spirit conquered those with higher education, and the idea of a second or parallel society followed almost automatically the rise of a secondary economy. The system atomized society, yet also individualized it. While the basic institutions of the regime remained intact, a new system was emerging with exceptions, privileges, or deviations from the general rules. The average Hungarian citizen set up his survival mechanism through a series of individual approaches and solutions. This led to self-exploitation and embodied the so-called
frigidaire or consumer socialism. Hungarians tended to interpret "consensus" with the regime as not only having rights to a car imported from fellow socialist countries or to a self-made weekend shack, but to much more. They let the regime live its own life as long as it did not meddle into their affairs. Som argue that changes in the Hungarian system started when the Communist Party abandoned the consensus and introduced the new income tax system in the summer of 1987. Its message to all segments of society was to contribute on a Western scale to the state's expenditures. The citizens viewed the services that the state provided them were far inferior to those in the West. The public started to compare its living standard with Western life styles since in the 1970s and 1980s, traveling to the West was relatively easy, provided one did not have political skirmishes with the regime. Hungarian society, quite surprisingly the party elite included, was influenced by western consumerism and culture during these two decades. The former 1956 revolutionary who earned his living as a driver for the British Embassy felt the system changing inevitably when he learned that the children of the party elite were leaving in scores to study in Western universities. One joke in Hungary is that communism failed because the communists disappeared.

However, the changes were accelerated by numerous other factors. By the 1980s, quality of life was deteriorating, and a wide spectrum of society from intellectuals to workers felt that they lacked prospects for a meaningful life and self-respect. The sense of hopelessness reached unbelievable heights. For example, half of society took to tranquilizers, and the suicide rate stood and alcohol consumption placed Hungary at the top of world statistics.

How was all this reflected in politics?

The HSWP (Hungarian Socialist Workers Party) attempted to fit a round peg into a square whole. It tried to breathe new life to the dying socialist plan economy. Reforms launched in the mid-1980s gave large state enterprises more autonomy in managing their businesses. The political bargaining position and leadership role of corporate managers strengthened. They
started to realize that the mere existence of the re-distributive role of the communist party elite were obstacles to their activities. A well known economist early in the 1980s predicted that the system would fail economically. And indeed, diminishing resources made the socialist system ever more obsolete, and after the economic reforms the transformation of the political institutional structure became inevitable. In the meantime, the state was still ruled by the same political elite which led the post-1956 repression, the reconciliation, and the and the so-called "stagnation era." The Party postponed changes in leadership for decades. Therefore, the loyalty of local party leaders starving for new assignments could not be counted on. The ambitions of this new generation were further amplified by the reorganization of the upper leadership of the Soviet Communist Party and the launching of perestroika. Mikhail Gorbachev adopted an idea from his master, Yury Andropov, who used to say that the existing political and economic system was workable, but with better efficiency. The young and middle-aged Hungarian party bureaucrats were ready, and this meant that their time had come.

How did things unravel?

There has been an ongoing dialogue in scholarly circles and in the public about the real nature of the Kadar regime, a special Hungarian version of socialism. To what extent was this system a change from the previous Stalinist period? Why is the Kadar era referred to as soft dictatorship? Post-Stalinism is distinguished from hard dictatorship by the fact that in the upper level of the communist party the principle of collective leadership is in practice. The members of the political committee divide the party functions among themselves. Once in a while, one could witness actual debates in the committee sessions, the quasi-parliament of the old system. Although the prestige of the top leader was held high, his cult-like adoration was abolished. The collective leadership tends to rely on an expert apparatus to make its decisions. The institutional system of the party and the state ran parallel to each other, even mimicking representative democracy. Nevertheless, the 99 percent plus outcome in the elections was never questioned. The Kadar regime managed to control the state security police and the justice apparatus. This self-defense mechanism blocked purges within the party. A justice system and a constitution were in effect, nevertheless, the authorities enjoyed unlimited power to interpret and execute the law. The basic law formally guaranteed freedom of speech or assembly, but with the subtle restrictions that they could only be practiced in the interest of the working people. Citizens, therefore, thought twice if they wanted to practice their constitutional rights. It is not surprising that only a few were imprisoned for political reasons during the second half of the Kadar regime.

The post-Stalinist Hungarian system strove for more balanced economic development. It focused less on heavy industry, and so far as the circumstances allowed, it liberalized its agricultural policy and attempted to raise the living standard by improving infrastructure and services. This goal proved to be illusionary after the oil crisis of the 1970s. The country sank deeper into foreign debt. At the 13th congress in 1985, the party made a last, desperate attempt to inject life into the dying economy. They announced an accelerated reform package which had undesired effects. It moved the country to the brink of total economic collapse and further deepened its indebtedness. The leadership looked for political solutions and allowed multiple candidates to run in electoral districts only to unveil the hypocrisy of the system that called itself a true democracy. In an other attempt, the leadership tried to extend democracy within the party by granting extended authority to the local organizations denying the basic communist principle of democratic centralism.

In 1987, Janos Kadar was forced to break the hard liners stronghold on the upper leadership in the party and appointed the ambitious but dogmatic Karoly Grosz as Prime Minister. This move resulted in a dual power structure. The government announced a new economic modernization package while the party leadership tried to preserve the status quo. Janos Kadar and his comrades were forced to call for a national emergency party assembly for May 1988 as a result of the intensifying nationwide unrests and the pressure coming from local party organs. This meeting was the starting point of the chain reactions that led to the system change.

Who implemented the changes?

An element of the consensus between the party and society was that no plurality was allowed in the political sphere, but a limited polarization of opinions was tolerated in cultural life. The seeds of today's Hungarian political parties emerged from these cultural interest groups. At that time they existed merely as circles of friends since the Kadar regime did not tolerate any contact with other social groups. This explains the weak social support base behind the parties of the system change. The miracle of the Polish Solidarity, a workers' union of millions, was not feasible to achieve in Hungary. People were bribed by small allowances from Kadar's regime; hidden subsidized unemployment and the system of self-exploitation described above.

Toward the end of the 1980s the previously divergent intellectual initiatives started to coalesce into six main groupings. First, the rural-national line whose activists had the most extensive social network. This movement always aspired to become a Hungarian Solidarity, and its main goal was to serve as advocates for Hungarians living in neighboring countries. The Romanian dictatorship's anti-Hungarian policy helped popularize their cause. The dissidents comprised the second group. They called themselves democratic opposition and after a short flirtation with the far left they came to the conclusion that the system was unsalvageable and was doomed to fail. In their program and in the underground press they focused on human rights (advocating conscienscious objection to military service and freedom to travel) and promoting the institutions of liberal democracy.

The third group, in the beginning, was hard to distinguish from the second. It mainly consisted of students and youth in their 20s whose goal was to acquire an education level on par with Western standards and came to the conclusion that they wanted to utilize this knowledge in a Western style society. Because of their young age, the members of this group did not fear the regime's repression. These three groups comprised the elite of the dominant parties of the system change. HDF (Hungarian Democratic Forum), AFD (Alliance of Free Democrats), and AYD (Alliance of Young Democrats). A strong environmental commitment characterized all three.

The religious intellectuals formed a separate group. Their intention was to guide Hungary to a rediscovery of its Christian traditions. The reform economists were yet another formation striving to put their views on a national market economy in practice. The sixth group consisted of the reform communists, a rather flexible yet structured group and it included a wide
palette from careerists to disenchanted socialists. The Communist Party had three-quarters of a million members of the 10 million population of the country. A saying went that in the HSWP one could find all kinds of people, even honest ones.

The first programs of the opposition were worked out by the dissidents, the second group in our list. Beyond mere declarations, their activities reflected the philosophical influence of the Polish Solidarity. They subscribed to Jacek Kuron'sreasoning which held that it was necessary to build structures and institutions parallel to the regime if resistance was not possible. Civic society had to create its own people's front, unions and youth organizations. Yet, they expected that a personal change would serve as the impetus to the system change. The Social Contract, a document that circulated in the country in 1987 opened with the sentence: "Kadar has to go."

How did the transition actually take place?

Prime Minister Karoly Grosz carried out a successful coup against Janos Kadar at the 1988 party congress. Kadar, who led the country since 1956, remained party president formally but was not elected to the political committee. However, the committee welcomed among its members Imre Pozsgay the main hope of the rural people's front and Rezso Nyers an influential patron of the reform economists. Kadar's generation was forced out in its entirety from the Central Committee. Since Rakosi no Hungarian communist leader had so extensive power than Karoly Grosz, party chief-prime minister. It seemed that with the backing of Gorbachev's perestroika he cemented his position for decades. However, the events took a different turn.

The new leadership soon fell apart. Personal and conceptual conflicts emerged, especially over the question of the multiparty system. While they all talked about a model for changing socialism, the neo-Stalinist Grosz, the social democrat Nyers and Pozsgay, who brought his base from the HDF, outside of the party, however, all interpreted change differently. The opposition in the meantime became stronger and kept on building. In Romania, Ceausescu's program of village eradication (directed against the Hungarian minority) and the ensuing uproar in Hungary strengthened the nationalists, allowing HDF to extend its influence in the countryside. The rival of the Communist Youth Organization, the Alliance of Young Democrats was formed on March 30th, 1988. During that Summer, the first independent union was organized among employees in higher education and researchers. An environmental controversy also benefited the opposition. A nation-wide protest movement evolved against the dam to be built as a Hungarian-Czechoslovak joint venture. Prime Minister Grosz visited western heads of states to collect the glory as a reform politician but his influence in the home front was diminishing day by day. He lost all his credibility before the public when in the end of August he was willing to meet Nicolai Caucescu the hated Romanian dictator. In September, the first protests formed the first crack in the dam.

The party-state had to pay attention to the mushrooming social and political organizations. A decision, made in October, allowed organizations undisturbed operations under the condition that they did not violate the law. In the meantime, conflicts intensified within the state machinery. The Parliament, which so far had operated as a formal body, strove to acquire a legislative role. The communist trade unions began negotiations with the government in order to convince their members that they indeed represented their interests. In mid-November, the former dissidents formed a legitimate organization called the Alliance of Free Democrats. By fall's end, Karoly Grosz stepped down as Prime Minister to be replaced by a young Thacherite socialist named Miklos Nemeth. The ambitious politician vowed to separate the government from the party. By the end of the year the HSWP accepted the existence of a multiparty system, and a new law on freedom of assembly was passed in the beginning of 1989. This law legalized the right to form parties, although it left the details to be worked out by a later party law. At the end of January, Imre Pozsgay, political committee member, minister, in a radio address called the 1956 events popular uprise. This abolished the number one taboo of the Kadar regime. The historical parties banned in 1949 and 1957, the Social Democrats and the Smallholders, became active again. By spring it was time for a temporary and tactical integration of the forces of the opposition. On March 23, as a result of the Independent Lawyers' Forum's initiative, an opposition roundtable was formed to encompass the entire opposition movement. In front of the whole nation's eyes, the body of Imre Nagy, the prime minister executed in 1958, was exhumed and identified along with the bodies of several other martyrs. The media took advantage of its budding freedom and devoted its whole attention to this event. The Communist Party attempted to initiate negotiations with the opposition, which after some hesitation, turned down the offer. The turmoil within the HSWP intensified. The reform circles were sharply criticizing the party and the government for their ineptitude in managing the situation. At the same time, members of the leading elite did not forget to look after their long-term interests. A new law was passed on the privatization of state companies. This law opened the door for influential elite to acquire private property, and thus setting off a wave of spontaneous privatization.

By this time it had become clear that the communist party had  abandoned the option of using violence against the opposition. This assumption was supported in June 1989, when the party issued a statement denouncing the blood bath in China at Tiennamen Square. In the presence of 250,000 people, Imre Nagy and his comrades were reburied. At the ceremony Viktor Orban, one of the leaders of AYD, demanded the withdrawal of Soviet troops,  causing uproar among the politicians of the HSWP. Hardly anybody noticed that in July, Janos Kadar passed away, although his followers came out  in large numbers to escort his body on its last journey. Using loopholes in the law, the opposition had the electorate recall the most inept parliamentary representatives and won the August special elections, thus gaining access to Parliament.

The series of negotiations held under the name of the National Roundtable gained political significance. The parliament was replaced by a power center to function as a constitutional national assembly. The principal rules of the transition were laid down during the negotiations between the Opposition Roundtable and the party-state. The main questions of the constitutional framework and electoral rights were clarified. It proved to be essential that the opposition did not accept the government as one of the negotiating partners with the parties including the HSWP. The communist government made a historic decision in September by allowing some 60,000 East German citizens staying in Hungary to leave for Austria, effectively dismantling the Iron Curtain. In the mid-September, an agreement was reached at the National Roundtable negotiations. The radical wing of the opposition, however, found the outcome unsatisfactory, and using its momentum, initiated a referendum about four sensitive political questions: the dissolution of the Workers' Guard, the abolishment of party organizations in the work place, making party assets transparent, and the method of electing the President of the Republic. The HSWP dissolved itself in October to be replaced by the HSP (Hungarian Socialist Party), which included the entire left spectrum ( with the exception of the Stalinists).

The proclamation of the Hungarian Republic declaring the end of 40 years of communist rule took place on October 23rd on the 33rd anniversary of the 1956 revolution. The referendum mentioned above took place in November. The radical AFD and AYD won on each point, forcing Imre Pozsgay, the man who reevaluated the 1956 revolution, to leave the political scene. These two organizations launched a campaign to abolish the State Security Service of the Interior Ministry to prevent the communists from turning power over to the new HSP. They succeeded in having the interior minister step down. An enduring wish of Hungary came true on March 10, 1990 -proposed in controversy nine months piror- when the bilateral agreement on the complete withdrawal of the Soviet troops was signed in Moscow.

The first free election campaign of the third Hungarian republic was vivaciously youthful. Mudslinging went hand in hand with insults coming from the dissidents, the nationalists, and the communists. The HSP's only concerns were to eradicate all parties on the left and to implant as many of their functionaries to the rank-and-file of the new parties as possible. The Hungarian election law, which came to light at the National Roundtable negotiations, introduced a mixed electoral system with both proportional and majority elements present in it. The socialist party fought for a proportional system to capitalize on its national and local infrastructures. The opposition favored individual electoral constituencies based on fielding popular candidates.

The first free elections took place in two rounds held on March 25, 1990, and then on April 8.  The Hungarian Democratic Forum won, followed tightly by the Alliance of Free Democrats. The Independent Smallholders Party gained parliamentary presence by the support of the rural voters. Picking up 10 percent of the votes the HSP was the fourth party in the new legislature. Surprisingly, reaching the 4 percent threshold, both the Christian Democrats and the Young Democrats made it to
the parliament.

Jozsef Antall formed a center right government whose program and governing belong to the pages of another study. From the viewpoint of this paper it is worthwhile to mention that Antall had prepared for this task his entire life. Antall once made a remark, which later became well know, to someone in the street after the end of the 1956 revolution: "Now I submerge and wait for my turn." He would never have thought that his turn would really come.

What are the lessons of the negotiated transition?

In summary, it can be said that the Hungarian opposition succeeded in filling the vacuum in the power structure. It managed to overcome its conflicts at the decisive moments and was able to present itself as a unified block against the regime. The events taking place had a chain reaction effect on the system; things were constantly pushed forward as each new factor appeared giving momentum to the process. The transition had strong regional effects and counter effects. Especially noteworthy is the parallel course of the Hungarian and Polish transitions.

Jozsef Antall, who died in 1993, had another memorable remark: "You should have made a revolution." By this he meant that the peaceful, bloodless Hungarian transition had not just advantages but shortcomings also. The new constitutional framework brought about by the political bargaining process did not enjoy the support of a wide social spectrum. The new democratic parties were not always able to fulfill their role as mediators, although the anti-political sentiment in the public generated by the socialists did not help them in this either. The system change left the positions of the previous regime intact on the political level and in the area of trade unions. Neither the trade unions nor the socialists became stronger. The political pendulum swung to the opposite direction at every election. None of the parties was able to win two consecutive elections. Nevertheless, it is by all means a big achievement that the institutions of a democratic state - the constitutional court, an independent justice system and the network of local governments - evolved.

In economic terms, the transition proved much more difficult. The performance level of the Hungarian economy only recently started to climb back to the 1989 level. The main goal of the three governments so far was to establish a functioning market economy. They regarded privatization as the most important means of reaching that goal. Privatization was carried out with a unique, market oriented approach which involved even the domestic investors in the mechanisms of the market. This approach led to the emergence of genuine private enterprises, but at the same time generated resentment in some segments of society.

The governments of the new system often made the mistake of using privatization of the state assets as a panacea to cure the ills of the Hungarian economy, and not considering its long-term strategic interests. The denationalization of large parts of the domestic energy and commercial banking sectors by the socialist government has proved to be especially ill-considered and imprudent.

As a result of the 10-year long privatization process the ratio of private to state assets in the Hungarian economy amounts to 80 percent. Foreign owners control large parts of numerous sectors of the economy. On one hand, this fact helped improve the performance and efficiency of domestic enterprises, increased exports and economic integration. On the other hand, it had problematic consequences on the labor market and ill effects on the social structure and on the prospects of smaller domestic

In Hungary, the political and economic transition ended after 10 years. Hungary today is considered to be in the vanguard of the candidates for EU membership. What created this favorable situation? The country was able to adjust quickly to the requirement of being socially and economically competitive. It has fought fiercely against the political, social and cultural legacy of the past regime which a social scientist wittily called "clotted structures." The country, throughout the turmoil of the changes, has been able to preserve the relatively high standard of its education system thus joining the intensifying international competition with a well-trained and creative work force. There are still many problems to be solved. The lesson of the Hungarian transition is the same as the mentality the country has to have in the future: a political community in a given situation should not look for problems but try to find solutions.

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