CURRENT INTELLIGENCE WEEKLY SPECIAL REPORT HUNGARY CELEBRATES 'A DECADE OF PROGRESS'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005500070003-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 20, 2016
• Document Release Date: May 30, 2006
• Sequence Number: 3
• Publication Date: November 25, 1966
• Content Type: REPORT

Copy No. 6 81
CURRENT INTELLIGENCE WEEKLY
HUNGARY CELEBRATES "A DECADE OF PROGRESS"
CENTRAL INTELLIGENCE AGENCY
SECRET
GROUP I Excluded from automatic
downgrading and declassification
Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
Release 2006/11/13 : CIA-RDP79-00927A00550Q0700Q3-4
2 oven November T966
 25X1 Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
SECRET
HUNGARY CELEBRATES "A DECADE OF PROGRESS"
The Hungarian Socialist Workers' (Communist)
Party, at its ninth congress beginning on 28 Novem-
ber, will celebrate a "decade of progress" since So-
viet troops restored Communist control in 1956. In
fact the Hungarian party--the only one to be over-
thrown in Eastern Europe since World War II--has
made a noteworthy recovery. First secretary Janos
Kadar has gained for it a measure of public accept-
ance, established his own image as a moderate leader,
and--in the process--consolidated his personal power.
Persistent problems in industry and agriculture, how-
ever, obliged Hungary recently to adopt a long-range
economic reform program. The debate over this pro-
gram led the party into a continuing introspective
review of its policies, its changing role in society,
and its ability to adapt to modern political trends.
These are the key issues which will be discussed at
the forthcoming congress.
Background
After the "counterrevolu-
tionaries" were crushed in 1956,
Kadar closely aligned himself
and his associates with the pol-
icies and leadership of Khrushchev.
He launched a "humanization" pro-
gram designed to make socialism
more tolerable, and initially per-
mitted departures from Communist
economic doctrine in an effort
to raise the standard of living.
The Hungarians today are scarcely
affluent, but they are much bet-
ter off than they were ten years
ago.
The only major exception to
Kadar's moderate approach has
been the recollectivization of
agriculture, which was decreed
at the seventh party congress in
late 1959. Two years later Hun-
garian agriculture was almost com-
pletely collectivized, but the
Page 1
farmers have to some degree been
conciliated by offers of material
incentives and permission to con-
tinue cultivating private house-
hold plots.
By September 1961, however,
Kadar was back on a moderate course.
He consolidated his power through
an extensive governmental reorgan-
ization accompanied by a well-pub-
licized purge of Stalinists. In
December 1961, he declared that
"he who is not against us, is
with us" and followed that state-
ment with the introduction of a
number of liberal. policies. The
regime abolished class criteria
for university enrollment, loosened
restrictions on travel, limited
the power of the secret police,
released a large number of politi-
cal prisoners, and introduced ad-
ditional incentives to encourage
higher industrial and agricultural
production. Urging a revitalization
SECRET
SPECIAL REPORT 25 Nov 66
Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
THE ELIZABETH BRIDGE IN BUDAPEST, REBUILT BY THE HUNGARIAN GOVERNMENT, SERVES AS A SYMBOL OF HUNGARY'S
"DECADE OF PROGRESS" SINCE COMMUNIST CONTROL WAS RESTORED AFTER THE REVOLUTION.
Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
SECRET
of the party as well, Kadar an-
nounced that a non-Communist
could, on the basis of ability,
occupy any position except a post
in the party itself.
The eighth congress, in No-
vember 1962, endorsed all major
points of the policy of national
reconciliation through liberali-
zation, and reaffirmed party sup-
port for Kadar's "middle-of-the-
road" socialism. The ninth con-
gress will review those policies
and recommend adjustments in the
light of new trends.
With a pragmatic rather than
doctrinaire approach to the solu-
tion of Hungary's particular prob-
lems, the regime gradually has
achieved a measure of acceptance
from an apathetic population.
This was illustrated by the
order which prevailed between
23 October and 4 November this
year--the tenth anniversary of the
revolt. The regime had approved
special bus and streetcar sched-
ules on routes near public ceme-
teries in Budapest, and many
people visited graves during the
period. There was no other no-
ticeable public reaction, how-
ever, even though the continued
presence of Soviet troops on Hun-
garian soil serves as a constant
reminder of the 1956 intervention.
Culture and Religion
Since 1961 a considerable de-
gree of cultural freedom has been
allowed; outspoken writers and
other intellectuals are seldom
penalized for the public expres-
sion of their views. The regime
relies primarily on economic con-
trols to limit liberal "excesses."
The intelligentsia, content with
the liberal trend of Kadar's pol-
icies, is patiently awaiting a
"more freely effective public
opinion" to develop.
Although Kadar reduced pres-
sure on the Catholic Church im-
mediately after the revolt, the
liberal trend has not extended to
church-state relations. In 1964
the regime signed an agreement with
the Vatican which authorized the
appointment of new bishops. How-
ever, the regime has obstructed
implementation of the agreement,
and probably will continue to do
so. A major irritant in church-
state relations is still Cardinal
Mindszenty who, despite repeated
attempts to negotiate a settle-
ment, remains "the guest upstairs"
in the US Legation in Budapest.
SECRET
Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
SECRET
A new electoral reform bill,
adopted at a special session of
the National Assembly earlier
this month, is the latest gesture
toward liberalization made by the
Kadar regime. Designed to inject
"socialist democratism" into par-
liamentary elections, the bill
would break down the county lists
into small constituencies in which
the voters would be likely to know
the candidates. Parliamentary
delegates will hereafter be nomi-
nated by specific administrative
districts and will be subject to
recall if they do not perform
adequately. The reform, which
stipulates that a number of candi-
dates may stand for a given seat,
will not basically weaken the
party's control, since all dele-
gates must "represent the program
of the Patriotic People's Front,
without exception, as well as the
policy of socialism...."
Preparation for Congress
Also indicative of Kadar's
efforts to liberalize and broaden
participation in party and govern-
mental affairs are the prepara-
tions for the congress, which
have been under way since May.
In a departure from traditional
procedure, nominating committees,
after consultation with party
members, drew up lists of candi-
dates for local offices and for
delegates to the party congress.
The nominees were then approved
at meetings of local party mem-
bers in September and October.
Formerly, these candidates and
delegates had been selected by
the executive committees of the
local party organizations.
Serious economic problems
have obliged the regime to ini-
tiate an economic reform program
(ERP), and the congress will con-
centrate on the various provi-
sions of the program as well as
the "leading role of the party"
in implementing them.
The ERP was approved by the
central committee last May, and
is marked by the cautiousness
characteristic of the Kadar re-
gime. The ERP was made neces-
sary by stagnation in the rate
of economic growth. This was in
part the result of excessive at-
tention to detail in planning and
of unimaginative concentration on
meeting quantitative goals.
For a number of years after
the revolt the regime, for polit-
ical reasons, managed a rise in
the standard of living at a rate
the economy could no longer main-
tain. Retrenchment began two
years ago with a new labor code
which increased work norms, tight-
ened work rules, and caused some
reallocation of workers. Last
year the regime mishandled a series
of increases in prices and payroll
deductions for pensions. First
it denied that price increases
would take place. Then, it intro-
duced them late in December with-
out publishing specific details.
SECRET
Page 4 SPECIAL REPORT
Approved For Release 2006/11/13 : CIA-RDP '9-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
SECRET
These moves, although justified
by the economic situation, caused
much grumbling and apprehension
among the people. There are ru-
mors that additional adjustments
are necessary, and as recently
as October 1966 the regime felt
it necessary to reassure the pub-
lic by stating that "decreases
in the standard of living will
not be permitted."
The ERP is in its formative
stages. The reform calls for
more autonomy in enterprises to
facilitate an improvement in both
economic management and produc-
tion. Nevertheless, it appears
that centralized direction of
the economy will continue to be
stressed in the next few years
with only a limited role for the
operation of market forces.
Eleven commissions have sug-
gested reforms in economic problem
areas and these recommendations
have been debated extensively.
Some proposals have been intro-
duced experimentally in selected
industries, and these trials are
slated to continue through next
year. The ERP will be introduced
officially on 1 January 1968, and
will be followed by a two-year
period of adjustment.
Although several of the
principles and laws necessary to
implement the reform have been
prepared, few of the details are
available. Some innovations have
already been introduced in agri-
cultural management, internal
trade, and labor management.
The planners are currently
formulating the ERP, as well as
a five-year plan (1966-70) which
emphasizes the same goals, but
the regime does not claim that
either will be a panacea for Hun-
gary's economic problems. More-
over, the regime has not yet de-
termined how to put the princi-
ples of the new plan into prac-
tice. It is certain, however,
that unless the party is willing
to guide rather than rigidly su-
pervise economic management, the
operation of the economy will not
improve enough to enable the goals
of the program to be achieved.
Meanwhile, until the ERP is well
under way, it appears that liber-
alization in the economy will
proceed rather slowly.
"Leading Role of the Party"
A less pervasive role for
the party in economic management
is implicit in the new economic
reform program. This has led to
considerable confusion and debate
as to what, precisely, the party's
role will be after the reform is
well along. To help answer this,
the congress will discuss what
the regime calls the "leading
role of the party." This phrase
means simply that the party, as
a guide, must persuade the entire
population to carry out both state
and party directives.
SECRET
Page 5 SPECIAL REPORT
Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
JANOS KADAR
Party First Secretary
ZOLTAN KOMOCSIN SANDOR GASPAR
Agitation-Propaganda Trade Union Leader Propaganda Chief
Official
GYULA KALLAI
Premier
ANTAL APRO
CEMA Expert
JENO FOCK
Economic Czar
BELA BISZKU
"Unofficial" Heir Apparent
LAJOS FEHER
Agricultural Specialist
DEZSO NEMES
Theoretician
MIKLOS AJTAI
JANOS BRUTYO
LAJOS CSETERKI
LAJOS CZINEGE
PAL ILKU
REZSO NYERS
MIKLOS SOMOGYI
Labor Official
FERENC MUNNICH
Former Premier
Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
SECRET
In answer to critics who
charge that the party's role is
impaired by reliance on nonparty
experts, Kadar has merely asserted
that the function of party cells
in plant organizations will become
increasingly important in economic
reform since "enterprise autonomy
demands greater party influence."
Kadar praises the alliance between
the party and the "nonparty mil-
lions" who support party policies
and goals. He has told those who
got their jobs by virtue of party
affiliation, rather than ability,
that the regime is confident they
will be able to adapt to new situ-
ations.
Party Statute Changes
The congress will modify the
party statutes in order to allow
the party to function effectively
under the conditions produced by
the economic reform.
In an effort to make party
membership more flexible and at-
tractive, the congress will stipu-
late that "before any decision re-
lating to his work or to his per-
sonality is adopted, a member may
express his opinion"--thus assuring
the card-carrying technocrat of
the right to use his head when an
ideological approach is impractical.
The congress may also seek a
revision in the constitutional reg-
ulation concerning major party
meetings, and a plan will be in-
troduced whereby the party execu-
tive may call for a national party
meeting between two congresses to
draw up an interim summary of the
experiences gained in implementa-
tion of the previous congress'
resolutions. Since the executive
organs now supervise the financial
and administrative affairs of the
party, some of the auditing com-
mittees will be eliminated.
Perhaps the most noteworthy
revision to be discussed at the
congress is the need for "a
more precise definition of the
functions of the top leadership."
This became necessary because of
the uncertainty that prevails in
regard to individual responsibil-
ity within the party hierarchy.
Some resistance to Kadar's
policies exists among middle and
lower level party and government
functionaries even though the re-
gime has been stabilized by the
gradual elimination of extremist
elements in the party hierarchy.
A number of personnel shifts are
expected during the congress,
mainly to bring forth younger,
more cooperative supporters of
Kadar's middle course. There is
some evidence of this already.
Since May new first secretaries
have been "elected" in seven of
Hungary's 19 county party com-
mittees, and some of these shifts
were allegedly made to "strengthen
the party before the ninth con-
gress."
25X6
Changes in the party hierarchy
may include the removal of Presi-
dent Istvan Dobi, 915xi
who has long been 25X6
ripe tor retirement, and Jeno
' economic czar
5_25X1
SECRET
Page 7 SPECIAL REPORT 25 Nov 66
Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927A005500070003-4
SECRET
Some of the
older members of the regime lead-
ership--such as politburo member
Ferenc Munnich--may also be re-
tired from public life.
Foreign Policy
l'oreign policy will probably
not figure importantly during the
congress. Kadar's liberalization,
especially the amnesty of politi-
cal prisoners in 1963, has led to
a normalization of Hungary's status
in the United Nations and an im-
provement in its relations with
the US. Hungary has been gradu-
ally expanding its diplomatic,
cultural, and economic relations
with both Communist and non-Com-
munist countries. Last year,
while issuing a clearcut declara-
tion of continued support for the
USSR, the regime again expressed
an interest in expanding its re-
lations with the West as well as
in extending its relations with
the newly emerging and nonaligned
nations.
Budapest in recent months has
apparently been giving some in-
creased attention to developing
national positions. There is
some indication, for example,
that it may be interested in es-
tablishing full diplomatic re-
lations with West Germany in
the near future.
Since the party plans to
have its ninth congress celebrate
the success of Kadar's "middle-
of-the-road" socialism during the
last ten years, there is no reason
to expect major policy changes.
Discussion of the economic re-
form program will probably raise
as many questions as it attempts
to answer, and, since the reform
does not qo into effect until
1 January 1968, any substantive
provisions will probably be sub-
ject to later revision. The Kadar
regime, optimistic and stable,
will probably continue to explore
--although with the same gradual-
ism--new avenues of "socialist
democratism" in an effort to re-
tain popular support of its pol-
SECRET
Page 8 SPECIAL REPORT 25 Nov 66
Approved For Release 2006/11/13 : CIA-RDP '9-00927A005500070003-4
 Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4
SECRET
SECRET
Approved For Release 2006/11/13 : CIA-RDP79-00927AO05500070003-4