For many months after the creation of the republic, Hungary was on the verge of bankruptcy. Lack of foodstuffs, inflated prices, the damaged transport system, and other economic dislocations severely impeded national recovery.
Consolidation of Power
In January 1947 some of the leaders of the Small Landholders' party were charged with conspiring to overthrow the republic and were arrested by the Communists. Premier Nagy was forced to resign in May; he was succeeded by another member of the Small Landholders' party, Lajos Dinnyés. Officers suspected of disloyalty to the Communists were purged from the army. In July the national legislature was dissolved and in August elections for a new parliament were held. Although the Communists won only 22 percent of the votes, they dominated the coalition government formed by Dinnyés. Under coercion, the Social Democratic party in 1948 amalgamated with the Communist party, forming the Hungarian Workers' party. A purge of the new party early in 1949 further consolidated the Communists' power. In May 1949 parliamentary elections were held again, and this time the voters were presented with a single slate consisting only of Communists and their supporters. In August the assembly adopted a constitution, establishing the Hungarian People's Republic.
Economic Transformation
Meanwhile, the transformation of Hungary in accord with Communist policies had begun. Treaties of friendship and cooperation with the USSR and other Communist countries were concluded. Most church schools were nationalized, and hundreds of priests and nuns who opposed the action were arrested; József Cardinal Mindszenty was arrested, tried, and early in 1949 sentenced to life imprisonment. Many industries were also nationalized. Peasants who could not be persuaded to collectivize had their lands confiscated and turned over to the collective farms. Thousands of opponents of the Communist regime were sentenced to labor camps.
Following the death of Soviet Premier Joseph Stalin in 1953 the Hungarian government liberalized some of its policies. Mátyás Rákosi, who had become prime minister in 1952, retained his position as Communist party chief, but was succeeded as premier by Imre Nagy. A new, less rigid economic program was launched, and the government granted amnesties to some political prisoners and abolished internment camps. Relations with other Communist countries remained close, however. Hungary joined the USSR and other Eastern European Communist countries in forming the Warsaw Pact for mutual defense and in enlarging the functions of the Council for Mutual Economic Assistance (COMECON).
Indications that the period of liberalization was coming to an end appeared in April 1955, when Nagy was dismissed from the premiership and expelled from the party because of alleged anti-Soviet nationalism and failure to follow the pattern of the Soviet Union in his policies. He was succeeded by András Hegedüs, a protégé of Rákosi. Ernö Gerö, another pro-Soviet, became party secretary. But following the denunciation of Stalin by the Soviet leader Nikita Khrushchev in 1956, government policies were again softened.
The Revolt of 1956
Popular discontent was mounting, however, and opponents of the government drew encouragement from the Polish defiance of the Soviet Union manifest in 1956. Students demonstrated against compulsory courses in the Russian language and in Marxism-Leninism and, along with the Writers' Union, expressed their sympathy with the anti-Soviet movement in Poland. Workers joined these groups in demanding the reinstatement of Nagy as premier. On October 23 Premier Hegedüs, unable to control the demonstrations, called for help from troops of the Soviet occupying force. The Workers' party stepped in and replaced Hegedüs with Nagy, and Gerö with János Kádár, who had previously been jailed as a nationalist. Nagy sided with the demonstrators, announcing that the one-party system would be discontinued and free elections held. He promised economic reforms, freed Cardinal Mindszenty, demanded the withdrawal of Soviet forces, and, denouncing the Warsaw Pact, proclaimed Hungary a neutral state. The USSR promised concessions, but demonstrations continued. In early November Soviet troops and tanks suppressed the insurgents. Hundreds of Hungarians were executed, thousands more were imprisoned, and nearly 200,000 fled the country.
The Kádár Regime
A new Communist dictatorship was set up, with Kádár as premier and head of the renamed Hungarian Socialist Workers' party (HSWP). Moscow promptly promised $250 million in aid and full support. Punishment of insurgents continued through 1957 and 1958, and thousands were deported to the USSR. Nagy and many of his associates were executed. Cardinal Mindszenty took refuge in the U.S. legation in Budapest, where he remained until he was permitted to leave the country in 1971. Nagy's promise of free elections was repudiated.
Kádár remained firmly in control for more than three decades, his power base being the general secretaryship of the party, although he held the premier's office intermittently. The strict controls imposed after the 1956 uprising were relaxed somewhat beginning in 1967. In the general elections held in March that year opposing candidates were permitted to run in certain parliamentary and local contests, although they had to be approved by the regime. The government remained committed to Moscow, joining in the 1968 invasion of Czechoslovakia.
In 1968 the New Economic Mechanism (NEM) was introduced. An important new departure, the NEM called for much less central control of the economy and greater freedom for individual plant managers. Profitability, rather than the attainment of quotas, was made the chief criterion for judging the performance of a factory. After five years the NEM appeared to be a success, although a slight slowdown had occurred in the industrial growth rate.
In the early 1970s Hungary increased its trade and cultural contacts with non-Communist countries. In 1972 Hungary signed a consular convention with the United States, and in 1973 it began negotiations with West Germany that aimed at establishing normal diplomatic relations. Relations with the Roman Catholic church also improved; in 1974 the Vatican officially removed Cardinal Mindszenty as archbishop of Esztergom.
Relations with the West continued to improve and trade to increase throughout the 1970s. The economy was allowed to operate partly according to free market forces to the evident gain of the general populace. By the early 1980s, however, inflation was rising, prompting Kádár to express public concern and to effect some changes in the political leadership. The regime remained careful not to antagonize the USSR, however, and fully supported the Soviet hard line against liberalization in Poland in 1981 and 1982. An economic downturn in the mid-1980s led to the imposition of an austerity program, a mass demonstration for freedom of speech, and civil reforms, and, in May 1988, to the replacement of Kádár as general secretary. The new secretary, Károly Grósz, had been prime minister since June 1987; in that post he had initiated a tough economic program that included levying new taxes, cutting subsidies, and encouraging the small private sector. As further signs of liberalization, the government relaxed censorship laws, allowed the formation of independent political groups, and legalized the right to strike and to demonstrate. In 1989 the government provided a hero's burial for Imre Nagy, eased restrictions on emigration, revised the constitution to provide for a democratic multiparty system, and changed the country's name from the People's Republic of Hungary to the Republic of Hungary. In March and April 1990 a coalition of center-right parties won a parliamentary majority in the nation's first free legislative elections in 45 years. After a referendum providing for direct presidential elections failed because of a low turnout, the National Assembly chose a writer, Árpád Göncz, as head of state.
In 1990 Hungary became the first Eastern European nation to join the Council of Europe, and in 1991 and 1992 the government signed declarations of cooperation with Poland, Czechoslovakia, Russia, and Ukraine. Relations with Romania and Czechoslovakia were strained because of the treatment of Hungarian minorities in those countries, including some 1.7 million in Romania. By mid-1992, about 100,000 refugees from the former Yugoslavia had fled to Hungary due to war there, and the government appealed for assistance from western European nations. In parliamentary elections in May 1994, the Hungarian Socialist party (formerly the Hungarian Socialist Workers' party) regained a majority, and named its leader, Gyula Horn, as its choice for prime minister when the new parliament convened in July. In an effort to end disputes with neighboring Slovakia and Romania, Horn offered to drop Hungarian claims on Slovakian and Romanian territory in return for a guarantee of safety for ethnic Hungarians living in those countries. In July 1994, Horn issued an official apology for Hungary's role in the deaths of 600,000 Hungarian Jews in the Holocaust. In 1995 Hungary was engaged in negotiations over the status of ethnic Hungarian minorities in Slovakia and Romania, and with Slovakia concerning the Gabcíkovo hydroelectric project. Hungary has claimed that the Gabcíkovo-Nagymaros dam is harmful to the environment because it has changed the flow of the Danube. In January 1995, Slovakia agreed to release more water from the reservoir.