HUNGARY

Republic of Hungary

Magyar Népköztársaság

CAPITAL: Budapest

FLAG: The national flag, adopted in 1957, is a tricolor of red, white, and green horizontal stripes.

ANTHEM: Isten áldd meg a magyart (God Bless the Hungarians).

MONETARY UNIT: The forint (Ft) of 100 fillérs is a paper currency with flexible rates of exchange. There are coins of 10, 20, and 50 fillérs and 1, 2, 5, 10, 20, 100, and 200 forints, and notes of 50, 100, 500, 1,000, and 5,000 forints. Ft1 = $0.00508 (or $1 = Ft196.83) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Anniversary of 1848 uprising against Austrian rule, 15 March; Labor Day, 1 May; Constitution Day, 20 August; Day of the Proclamation of the Republic, 23 October; Christmas, 25–26 December. Easter Monday is a movable holiday.

TIME: 1 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Hungary is a landlocked country in the Carpathian Basin of Central Europe, with an area of 93,030 sq km (35,919 sq mi), extending 268 km (167 mi) n–s and 528 km (328 mi) e–w. Comparatively, the area occupied by Hungary is slightly smaller than the state of Indiana. It is bounded on the n by Slovakia, on the ne by the Ukraine, on the e by Romania, on the s by Serbia and Croatia, on the sw by Slovenia, and on the w by Austria, with a total boundary length of 2,171 km (1,349 mi). Hungary's capital city, Budapest, is located in the north central part of the country.

TOPOGRAPHY

About 84% of Hungary is below 200 m (656 ft) in altitude, its lowest point, at the Tisza River, being 78 m (256 ft) above sea level and the highest being Mt. Kékes (1,014 m/3,327 ft) in the Mátra Mountains, northeast of Budapest. The country has four chief geographic regions: Transdanubia (Dunántúl), the Great Plain (Alföld), the Little Plain (Kisalföld), and the Northern Mountains. Hungary's river valleys and its highest mountains are in the north-east. Generally, the soil is fertile. The chief rivers are the Danube (Duna) and Tisza. The largest lake is Balaton, which has an area of 601 sq km (232 sq mi).

CLIMATE

Hungary lies at the meeting point of three climatic zones: the continental, Mediterranean, and oceanic. Yearly temperatures vary from a minimum of -14°c (7°f) to a maximum of 36°c (97°f). The mean temperature in January is -4°c to 0°c (25° to 32°f) and in July, 18° to 23°c (64° to 73°f). Rainfall varies, but the annual average is approximately 63 cm (25 in)—more in the west and less in the east—with maximum rainfall during the summer months. Severe droughts often occur in the summers.

FLORA AND FAUNA

Plants and animals are those common to Central Europe. Oak is the predominant deciduous tree; various conifers are located in the mountains. Among the abundant wildlife are deer, boar, hare, and mouflon. The Great Plain is a breeding ground and a migration center for a variety of birds. Fish are plentiful in rivers and lakes. As of 2002, there were at least 83 species of mammals, 208 species of birds, and over 2,200 species of plants throughout the country.

ENVIRONMENT

Chemical pollution of the air and water is extensive, but resources to combat pollution are scarce: a 1996 government study estimated that us$350 million were needed to combat pollution, but only us$7 million were allocated for this purpose. According to the study, air pollution affects 179 areas of the country, soil pollution affects 54 areas, and water pollution affects 32. Hungary is also one of 50 nations that lead the world in industrial carbon dioxide emissions, with a 1992 total of 59.9 million metric tons, a per capita level of 5.72 metric tons. However, the total carbon dioxide emissions dropped to 54.2 million metric tons in 2000. Hungary has 6 cu km of renewable water resources, with 55% used for industrial purposes and 36% used for farming activity. Hungary's principal environmental agency is the National Council for Environment and Nature Conservation, under the auspices of the Council of Ministers.

Geothermal aquifers lie below most of Hungary. The water brought from these to the earth's surface ranges in temperature from 40°c (104°f) to 70°c (158°f). In the southwest, geothermal aquifers have produced water at 140°c (284°f). Some of these waters are cooled and used for drinking water, but many aquifers are used to heat greenhouses.

In 2003, about 7% of the total land area was protected. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 7 types of mammals, 9 species of birds, 1 type of reptile, 8 species of fish, 1 type of mollusk, 24 species of other invertebrates, and 1 species of plant. Endangered species included the longicorn, the alcon large blue butterfly, the dusky large blue butterfly, and the Mediterranean mouflon.

POPULATION

The population of Hungary in 2005 was estimated by the United Nations (UN) at 10,086,000, which placed it at number 79 in population among the 193 nations of the world. In 2005, approximately 16% of the population was over 65 years of age, with another 16% of the population under 15 years of age. There were 91 males for every 100 females in the country. According to the UN, the population for 2005–10 was expected to decline annually by -0.4%, a rate the government viewed as too low. The fertility rate, which had been declining since the 1990s, reached just 1.5 births per woman in 2005. The projected population for the year 2025 was 9,588,000. The population density was 108 per sq km (281 per sq mi).

Since the early 1950s, there has been a fundamental shift of the population from rural to urban areas. The UN estimated that 65% of the population lived in urban areas in 2005. The urban growth rate has substantially slowed in recent years, with the UN estimating annual growth in urban areas at just 0.14% as of 2005. The capital city, Budapest, had a population of 1,708,000 in that year. Other urban areas include: Debrecen, 217,706; Miskolc, 211,000; Szeged, 178,878; Pécs, 172,177; Nyíregyháza, 115,643; Székesfehérvár, 111,478; and Kecskemét, 107,267.

MIGRATION

Sizable migration during the two world wars resulted from military operations, territorial changes, and population transfers. Peacetime emigration in the decades before World War I was heavy (about 1,400,000 between 1899 and 1913). Emigration of non-Magyars was prompted by the repressive policy of Magyarization; groups also left because of economic pressures, the majority going to the United States and Canada. In the interwar period, migration was negligible, but after 1947 many thousands left, despite restrictions on emigration. As a result of the October 1956 uprising, approximately 250,000 persons fled Hungary. The largest numbers ultimately emigrated to the United States, Canada, the United Kingdom, Germany, France, Switzerland, and Australia. Emigration totaled 42,700 between 1981 and 1989. By the 1990s, emigration was virtually nonexistent; only 778 persons left in 1991, according to official statistics.

Between 1990 and 2003, some 115,000 immigrants acquired Hungarian citizenship, granted almost exclusively to ethnic Hungarians from neighboring countries. At the end of 2000, 3% of Hungary's population (294,000) were foreign-born, resulting from international migration, and as a consequence of historic events such as border changes or citizenship agreements. According to Migration Information Source, from 1990 to 2003, the border guards recorded 152,000 cases of foreigners attempting to enter illegally, and 80,000 efforts to leave Hungary illegally. These activities indicate Hungary's transit role in illegal migration.

Since 1960, net migration from the villages to the cities has decreased, from about 52,000 that year to 20,814 in 1986. Since 1989, Hungary has received nearly 155,000 refugees, with major influxes from Romania in 1988–89 and the former Yugoslavia in 1991–92. About 5,400 asylum seekers have been recognized as refugees since 1989. In the 1990s Hungary provided temporary protection for over 32,000 Bosnians. Most of these refugees resettled to another country or repatriated. The Temporary Protection status of some 480 Bosnian refugees, who remained in Hungary in the latter part of the 1990s, was withdrawn by the government in mid-1999. As a result of the Kosovo crisis, 2,800 Yugoslav asylum seekers arrived in Hungary, including 1,000 Kosovo Albanians. The organized voluntary repatriation of refugees began in August 1999, when the first 185 Kosovars returned to their homeland. At the end of 2004 there were 7,708 refugees and 354 asylum seekers in Hungary. Asylum seekers were from Georgia and Turkey. In 2004, 832 Hungarians applied for asylum in Canada.

As a member of the European Union (EU) since 1 May 2004, Hungary's migration and illegal migration border controls have tightened. According to Migration Information Source, as of 2002 some 115,000 foreign citizens with a valid long-term permit (i.e., good for at least one year) or permanent residence permit resided in Hungary; 43% were Romanian citizens, 11% Yugoslavians, 8% Ukrainians, and most of these were ethnic Hungarians, and 6% were Chinese. This population amounted to 1.13% of Hungary's total population. These changing waves of labor migration are also characterized by a new form of labor migration within the EU, termed "walk-over-the-border for employment," where workers seeking higher wages travel from one country to a neighboring one, such as from Slovakia to Hungary.

In 2005, the net migration rate was estimated as 0.86 migrants per 1,000 population.

ETHNIC GROUPS

Ethnically, Hungary is essentially a homogeneous state of Magyar extraction. The 2001 census indicates that Hungarians constitute about 92.3% of the total population. Roma account for about 1.9%. Ethnic Germans make up about 0.7% of the population. There are also small groups of Croats, Poles, Ukrainians, Greeks, Serbs, Slovenes, Armenians, Ruthenians, Bulgarians, Slovaks, and Romanians.

LANGUAGES

Hungarian, also known as Magyar, is the universal language. In addition to the letters of the English alphabet, it has the following letters and combinations: á, é, í, ó, ö, ő, ú, ú, cs, dz, dzs, gy, ly, ny, sz, ty, zs. Written in Latin characters, Hungarian (Magyar) belongs to the Finno-Ugric family, a branch of the Ural-Altaic language group. Hungarian (Magyar) is also characterized by an admixture of Turkish, Slavic, German, Latin, and French words. In addition to their native language, many Hungarians speak English, German, French, or (since World War II) Russian. In 2002, 98.2% of the population spoke Hungarian; 1.8% spoke various other languages.

RELIGIONS

According to a 2001 census, approximately 55% of the people are nominally Roman Catholic, 15% are members of the Reformed Church, 3% of the population are Lutheran, and less than 1% are Jewish. About 3% of the population describe themselves as Greek Catholics. About 15% of the population claim no religious affiliation.

About one million Jews lived in Hungary before World War II and an estimated 600,000 were deported in 1944 to concentration camps. According to estimates from the World Jewish Restitution Organization, there are between 70,000 and 110,000 Jews currently residing in Hungary. There are also seven Buddhist and five Orthodox denominations. There are three Islamic communities.

A 1990 Law on the Freedom of Conscience provides for separation of church and state and safeguards the liberty of conscience of all citizens and the freedom of religious worship. However, the state does grant financial support to religious denominations for religious practice, educational work, and maintenance of public collections. To promote further support of religious institutions, between 1997–99 the government signed separate agreements with the country's four largest churches (the Roman Catholic, Jewish, Lutheran, and Calvinist churches) and two smaller groups (Hungarian Baptist and Budai Serb Orthodox). The government also provides funds each year for the revitalization of churches based on annual negotiations between the Ministry of Cultural Heritage and the Ministry of Finance.

TRANSPORTATION

Transportation facilities have improved steadily since the 1960s. Budapest is the transportation center. In 2002, roads totaled 159,568 km (99,251 mi), of which some 70,050 km (43,571 mi) were paved, including 527 km (328 mi) of expressways. In 2003, Hungary had 2,777,219 passenger cars and 394,988 commercial vehicles registered for use.

As of 2004, Hungary had 7,937 km (4,937 mi) of broad, standard and narrow gauge railroad lines. Of that total, standard gauge lines accounted for the largest portion at 7,682 km (4,778 mi), followed by narrow gauge lines at 219 km (136 mi) and broad gauge lines at 36 km (22 mi). Most freight is carried by trucks; railway transport is of lesser importance. The railroad and bus networks are state owned.

Permanently navigable waterways totaled 1,622 km (1,009 mi) in 2004, of which most were on the Danube and Tisza rivers. In addition to the government shipping enterprises—which operate the best and largest ships and handle the bulk of water traffic—the Shipping Cooperative, an association of small operators, continues to function. In 1999, the latest year for which data was available), the merchant marine fleet consisted of 2 cargo ships with a total capacity of 12,949 GRT.

Hungary had an estimated 44 airports in 2004. As of 2005 a total of 19 had paved runways, and there were also five heliports. Ferihegy Airport in Budapest is the most important center for domestic and international flights. All domestic traffic is handled by the Hungarian Air Transportation Enterprise (Magyar Légiközlekedési Vallalat—MALÉV). In 2003, about 2.369 million passengers were carried on scheduled domestic and international airline flights.

HISTORY

Ancient human footprints, tools, and a skull found at Vértesszóllós date the earliest occupants of present Hungary at a period from 250,000 to 500,000 years ago. Close to that site, at Tata, objects used for aesthetic or ceremonial purposes have been discovered, among the earliest such finds made anywhere in the world.

Celtic tribes settled in Hungary before the Romans came to occupy the western part of the country, which they called Pannonia and which the Roman Emperor Augustus conquered in 9 bc. Invasions by the Huns, the Goths, and later the Langobards had little lasting effect, but the two subsequent migrations of the Avars (who ruled for 250 years and, like the Huns, established a khanate in the Hungarian plain) left a more lasting impression.

The Magyars (Hungarians) migrated from the plains south and west of the Ural Mountains and invaded the Carpathian Basin under the leadership of Árpád in ad 896. For half a century they ranged far and wide, until their defeat by Otto the Great, king of Germany and Holy Roman emperor, near Augsburg in 955. They were converted to Christianity under King Stephen I (r.1001–1038), who was canonized in 1083. The Holy Crown of St. Stephen became the national symbol, and a constitution was gradually developed. The Magna Carta of Hungary, known as the Golden Bull of 1222, gave the nation a basic framework of national liberties to which every subsequent Hungarian monarch had to swear fidelity. Hungary was invaded at various times during the medieval period; the Mongols succeeded in devastating the country in 1241–42.

Medieval Hungary achieved its greatest heights under the Angevin rulers Charles Robert and Louis the Great (r.1342–82), when Hungarian mines yielded five times as much gold as those of any other European state. Sigismund of Luxembourg, king of Hungary, became Holy Roman emperor in 1410, largely on the strength of this national treasure. During the 15th century, however, Turkish armies began to threaten Hungary. The Balkan principalities to the south and southeast of Hungary developed as buffer states, but they did not long delay the advance of the Turks; nor could the victories of János Hunyadi, brilliant as they were, ultimately stem the Turkish tide. With the Turks temporarily at bay, the Hungarian renaissance flourished during the reign of Hunyadi's son, Matthias Corvinus (1458–90), but his successors in the 16th century overexploited the gold mines, brutally suppressed a peasant revolt, and allowed the Magyar army to deteriorate. Hungary's golden age ended with the rout by the Turks at Mohács in 1526.

Thereafter, warring factions split Hungary, but power was gradually consolidated by the Habsburg kings of Austria. With the defeat of the Turks at Vienna in 1683, Turkish power waned and that of the Habsburgs became stronger. The Hungarians mounted many unsuccessful uprisings against the Habsburgs, the most important insurrectionist leaders being the Báthorys, Bocskai, Bethlen, and the Rákóczys. In 1713, however, the Hungarian Diet accepted the Pragmatic Sanction, which in guaranteeing the continuing integrity of Habsburg territories, bound Hungary to Austria.

During the first half of the 19th century, in the aftermath of the French Revolution and the Napoleonic wars, Hungary experienced an upsurge of Magyar nationalism, accompanied by a burst of literary creativity. The inability of a liberal reform movement to establish a constitutional monarchy led to the revolt of 1848, directed by Lajos Kossuth and Ferenc Deák, which established a short-lived Hungarian republic. Although Hungarian autonomy was abolished as a result of intervention by Austrian and Russian armies, Austria, weakened by its war with Prussia, was obliged to give in to Magyar national aspirations. The Compromise (Ausgleich) of 1867 established a dual monarchy of Austria and Hungary and permitted a degree of self-government for the Magyars.

After World War I, in which Austria-Hungary was defeated, the dual monarchy collapsed, and a democratic republic was established under Count Mihály Károlyi. This was supplanted in March 1919 by a Communist regime led by Béla Kun, but Romanian troops invaded Hungary and helped suppress it. In 1920, Hungary became a kingdom without a king; for the next 25 years, Adm. Miklós von Nagybánya Horthy served as regent. The Treaty of Trianon in 1920 formally freed the non-Magyar nationalities from Hungarian rule but also left significant numbers of Magyars in Romania and elsewhere beyond Hungary's borders. The fundamental policy of interwar Hungary was to recover the "lost" territories, and in the hope of achieving that end, Hungary formed alliances with the Axis powers and sided with them during World War II. Hungary temporarily regained territories from Czechoslovakia, Romania, and Yugoslavia. In March 1944, the German army occupied Hungary, but Soviet troops invaded the country later that year and liberated it by April 1945.

In 1946, a republican constitution was promulgated, and a coalition government (with Communist participation) was established. Under the terms of the peace treaty of 1947, Hungary was forced to give up all territories acquired after 1937. The Hungarian Workers (Communist) Party seized power in 1948 and adopted a constitution (on the Soviet model) in 1949. Hungarian foreign trade was oriented toward the Soviet bloc, industry was nationalized and greatly expanded, and collectivization of land was pressed. Resentment of continued Soviet influence over Hungarian affairs was one element in the popular uprising of October 1956, which after a few days' success—during which Hungary briefly withdrew from the Warsaw Treaty Organization—was summarily put down by Soviet military force. Many people fled the country, and many others were executed. From that time on, Hungary was a firm ally of the USSR. In 1968, the New Economic Mechanism was introduced in order to make the economy more competitive and open to market forces; reform measures beginning in 1979 further encouraged private enterprise. The movement toward relaxation of tensions in Europe in the 1970s was reflected in the improvement of Hungary's relations with Western countries, including the reestablishment of diplomatic relations with the FRG in 1973. A US-Hungarian war-claims agreement was signed that year, and on 6 January 1978 the United States returned the Hungarian coronation regalia.

The New Economic Mechanism that had been instituted in 1968 was largely abandoned, at Soviet and Comecon insistence, a decade later. This compounded the blows suffered by Hungary's economy during the energy crisis of the late 1970s, leading to a ballooning of the country's foreign indebtedness. By the late 1980s the country owed $18 billion, the highest per capita indebtedness in Europe.

This indebtedness was the primary engine of political change. The necessity of introducing fiscal austerity was "sweetened" by the appointment of reform-minded Karóly Grosz as prime minister in 1987. Faced with continued high inflation, the government took the step the following year of forcing János Kádár out entirely, giving control of the party to Grosz. In 1989 Grosz and his supporters went even further, changing the party's name to Hungarian Socialist Party, and dismantling their nation's section of the Iron Curtain. The action that had the most far-reaching consequences, however, came in October 1989 when the state constitution was amended so as to create a multiparty political system.

Although Hungarians had been able to choose among multiple candidates for some legislative seats since as early as 1983, the foundations of a true multiparty system had been laid in 1987–88, when large numbers of discussion groups and special interest associations began to flourish. Many of these, such as the Network of Free Initiatives, the Bajscy-Zsilinszky Society, the Hungarian Democratic Forum, and the Alliance of Free Democrats, soon became true political parties. In addition, parties that had existed before the 1949 imposition of Communist rule, such as the People's Party, the Hungarian Independence Party, and the Social Democrats, began to reactivate themselves.

All of these groups, or the parties they had spawned, competed in the 1990 general election, the first major free election to be held in more than four decades. No party gained an absolute majority of seats, so a coalition government was formed, composed of the Democratic Forum, Smallholders' Party, and Christian Democrats, with Forum leader Jozsef Antall as prime minister. Arpad Goncz, of the Free Democrats, was selected as president. An important indicator of Hungary's intentions came in June 1989, when the remains of Imre Nagy, hanged for his part in the events of 1956, were reentered with public honors; politicians and other public figures used the occasion to press further distance from Communism and the removal of Soviet troops. Another sign of public sentiment was the first commemoration in 40 years of the anniversary of the Revolution of 1848.

Under Antall Hungary pursued a vigorous program of economic transformation, with the goal of transferring 30–35% of state assets to private control by the end of 1993. Hungary's liberal investment laws and comparatively well-developed industrial infrastructure permitted the nation to become an early leader in attracting Western investors. However, there were large blocs in society, and within the Democratic Forum itself, that found the pace of transition too slow, particularly since the government did not keep to its own time schedule.

In addition to its economic demands, this radical-right contingent also has a strongly nationalist, or even xenophobic, agenda, which has tended to polarize Hungarian national politics. Approximately 10% of the Hungarian population is non-Hungarian, including large populations of Jews and Roma (Gypsies). There are also large Hungarian populations in neighboring states, particularly in Romania, all of whom had been declared dual citizens of Hungary in 1988. The appeal to "Hungarianness" has been touted fairly frequently, widening preexisting tensions within the dominant Democratic Forum party, and weakening their coalition in parliament. The Smallholders Party withdrew from the coalition in 1992, and in 1993 other elements were threatening to do the same.

The Democratic Forum's loss of popularity was vividly exposed in the parliamentary elections of May 1994, when the party, led by acting head Sandor Leszak, lost almost one-third of the seats it had controlled. In that election voters turned overwhelmingly to the Hungarian Socialist Party, giving the former Communist party an absolute majority of 54%. Voter turnout in the two-tier election was as high as 70%, leaving little doubt that Hungarian voters had repudiated the Democratic Forum and its programs of forced transition to a market economy.

Hungary's international indebtedness remained very high—the country ran a $936 million trade deficit for the first two months of 1994 alone—obligating new prime minister Gyula Horn to continue most of the same economic reform programs which the Socialists' predecessors had begun. There was concern, however, that the Socialists' absolute majority could lead to a reversal of some of the important democratic gains of the recent past. Those concerns sharpened in July 1994, when Prime Minister Horn unilaterally appointed new heads for the state-owned radio and television, who immediately dismissed or suspended a number of conservative journalists.

On 8 January 1994 Hungary formally accepted the offer of a compromise on NATO membership. The offer involved a new defense partnership between Eastern Europe and NATO. By July 1997, NATO agreed to grant Hungary full membership (along with Poland and the Czech Republic) in the organization in 1999. In order to help them qualify to join NATO and the EU, Hungary and Romania signed a treaty on 16 September 1996 ending a centuries-old dispute between the two neighbors. The agreement ended five years of negotiations over the status of Romania's 1.6 million ethnic Hungarians. On 12 March 1999, Hungary, Poland, and the Czech Republic were formally admitted to NATO, becoming the first former Warsaw Pact nations to join the alliance.

Despite improvements in the economy, the position of the Socialists was undermined by dissatisfaction among those negatively affected by privatization and austerity measures, as well as by financial scandals in 1997. The Socialist government was toppled in national elections held in May 1998, and a new center-right coalition government was formed in July by Viktor Orbán, leader of the victorious Federation of Young Democrats-Hungarian Civic Party (Fidesz).

In 1997 Hungary was invited to begin negotiations leading to membership in the European Union. It was formally invited to join the body in 2002 at the EU summit in Copenhagen. It was accepted as a full member on 1 January 2004. In 2000, parliament elected Ferenc Madl as president.

Under Victor Orbán, Hungary experienced increasing prosperity, but also increasing social division. Fidesz is a strong supporter of ethnic Hungarians in neighboring countries. Indeed, parliament in June 2001 passed a controversial law entitling Hungarians living in Romania, Slovakia, Ukraine, Serbia, Croatia, and Slovenia to a special identity document allowing them to temporarily work, study, and claim health care in Hungary. In June 2003 the law was amended by the parliament, with a majority of the Hungarian population agreeing with it. However, the referendum held in December 2004, in conjunction with this law, was invalidated due to low turnout.

Orbán's party was challenged in the April 2002 general elections by the Socialist Party, which chose Péter Medgyessy as its candidate for prime minister. Although Medgyessy characterized his party as patriotic, he stressed it was less extreme than Fidesz, and supported diversity as well as traditional values of fairness and social justice.

The 2002 campaign was divisive, and saw nationalists come out in force in favor of Fidesz. Although it won the largest bloc of seats in the National Assembly in the second round of voting (aligned with the Hungarian Democratic Forum), it was the Socialists in concert with the Alliance of Free Democrats that formed a coalition government with Medgyessy as prime minister.

In June 2002, allegations surfaced that Medgyessy had worked as a counterintelligence officer in the secret service under the Communist regime in the late 1970s and early 1980s. Medgyessy claimed he never collaborated with Moscow's KGB, but instead sought out Soviet spies attempting to disrupt Hungary's efforts to join the IMF. Upon his admission, his popularity soared.

In the summer of 2004, internal problems within his own party, as well as growing opposition from the coalition partners—the Alliance of Free Democrats, led Medgyessy to resign. He was replaced with Ferenc Gyurcsany, the former sports minister and one of the government's most popular figures. Gyurcsany received 453 votes, while his main contender—Peter Kiss—got 166.

The new prime minister promised to strengthen the coalition, boost economic growth, and improve living conditions for Hungarians. However, strict budget controls (many imposed by the EU), and unfulfilled election promises dramatically decreased the popular support for his government, and party. In the 2004 European Parliament elections, the Young Democrats (the main opposition party) led the pack, and predictions for the 2006 national parliamentary elections showed Socialists as garnering only 20% of the votes.

In June 2005, opposition-backed Laszlo Solyom was elected as the new president of Hungary. He garnered 185 votes, in the third round of elections, followed closely by the Socialist's nominee—Katalin Szili—with 182 votes.

GOVERNMENT

Hungary's present constitution remains based upon the 1949 Soviet-style constitution, with major revisions made in 1972 and 1988. The 1988 revisions mandated the end of the Communist Party's monopoly on power, removed the word People's from the name of the state, and created the post of president to replace the earlier Presidential Council.

The present system is a unitary multiparty republic, with a parliamentary government. There is one legislative house (the National Assembly), with 386 members who are elected to four-year terms. The head of state is the president, who is elected by the parliament, for a five-year term. In 2005, Laszlo Solyom—a university professor and former president of the Constitutional Court—was elected president by a simple majority of the legislative vote. The next presidential elections were scheduled for June 2010.

The head of the government is the prime minister, leader of the largest party seated in the parliament. The prime minister is elected by the National Assembly on the recommendation of the president. In the Antall government important ministerial and other posts were split among representatives of various parties. As of 2005, the prime minister was Ferenc Gyurcsany, a wealthy businessman and popular political figure. Gyurcsany replaced Péter Medgyessy in 2004, following dissentions within the ruling coalition.

POLITICAL PARTIES

Following the general elections of April 2002, four political parties were represented in the 386-member National Assembly, split into two coalitions. This situation raised fears that Hungary was drifting into a two-party state, divided by ideology and personalities, instead of reflecting other interests not represented in government.

The predominant party is the Hungarian Socialist Party (MSZP), whose government was toppled in 1998, but returned to power in 2002, receiving 42.05% of the popular vote and garnering 178 seats in the National Assembly. The MSZP is the Hungarian Communist Party renamed and, to a certain extent, reoriented. The party's platform indicates strong support for the market economy system, albeit with a wide net of social services. It supports diversity in Hungarian society, as opposed to the center-right's more populist, nationalistic party Fidesz.

The leading opposition party was the Federation of Young Democrats-Hungarian Civic Party (also known as Fidesz), which held 164 seats. The party's leader, Viktor Orbán, was named prime minister in 1998; he was out of office in 2002 when the Socialists came to power. Originally known as the Federation of Young Democrats, the party was formed on an anti-Communist platform by student activists and young professionals in 1988. During the 1990s, it evolved into a mainstream center-right party and was renamed in 1995.

The Alliance of Free Democrats (SzDSz), which holds 20 seats, is the coalition partner of the MSZP. This party was a liberal opposition party during the Antall government, with positions strongly in favor of closer integration with Europe, cooperation with Hungary's neighbors, and support for alien Hungarians. In economic terms their platform is very similar to that of the MSZP, which was the basis of their agreement to enter into a coalition. However, their alliance had frequent disputes that in result undermined their political strength.

The Hungarian Democratic Forum (MDF), which has been reduced to 24 seats, is a party of strong support for the ethnic minorities within Hungary. It is currently aligned with Fidesz. The Hungarian Justice and Life Party (MIEP) first gained parliamentary representation in 1998, winning 14 seats, and was founded by Istvan Csurka, who was expelled from the MDF for his nationalist and anti-Semitic sentiments. The party is populist in orientation, seeking to elevate "Hungarian values." It won 4.4% of the vote in 2002 but held no seats. The next legislative elections were scheduled for April 2006.

The Independent Smallholders' Party (FKgP), which held 48 seats in the 1998 government but no seats in the government formed in 2002, is a center-right party that seeks to ensure Hungarian interests in the context of European integration. It draws particular support from rural districts and among farmers.

Other parties include the centrist Center Party and the communist Worker's Party. Hungary also has a noticeable "skinhead" movement, which has provoked fights and other disturbances, especially with Gypsies.

LOCAL GOVERNMENT

Hungary is divided administratively into 19 counties, 20 urban counties, and the capital city of Budapest also has county status. At the local and regional level, legislative authority is vested in county, town, borough, and town precinct councils whose members are directly elected for four-year terms. Members of the county councils are elected by members of the lower-level councils. Hungary also has provisions for minority self-government, which is not based territorially, because minorities live dispersed throughout the country. Municipality councils must seek the approval of minority self-governments for matters affecting minority education and culture, among others.

JUDICIAL SYSTEM

Cases in the first instance usually come before provincial city courts or Budapest district courts. Appeals can be submitted to county courts or the Budapest Metropolitan Court. The Supreme Court is basically a court of appeal, although it may also hear important cases in the first instance. As of 2003, a new intermediate court of appeal was to be established between county courts and the Supreme Court, designed to alleviate the backlog of court cases.

The president of the Supreme Court is elected by the National Assembly. A National Judicial Council nominates judicial appointees other than those of the Constitutional Court. The state's punitive power is represented by the public prosecutor. Peter Polt was appointed as prosecutor general in 2000.

The Constitutional Court reviews the constitutionality of laws and statutes as well as compliance of these laws with international treaties the government has ratified. The 11 members of the Constitutional Court are elected by parliament for nine-year terms with a two-thirds majority; their mandates may be renewed in theory, but as of 2002, this had not happened in practice.

ARMED FORCES

In 2005, Hungary had a total of 32,300 active personnel in its armed forces, including an army of 23,950 and an air force of 7,500 personnel. The Hungarian Army operates 238 main battle tanks, 178 armored infantry fighting vehicles, 458 armored personnel carriers, and over 573 artillery pieces. The Air Force operates 14 combat capable aircraft, as well as 12 attack helicopters and 17 support aircraft. All major equipment is of Soviet design. There is a small Army maritime wing with 60 personnel operating three river craft to patrol the Danube River. Paramilitary forces, consisting of frontier and border guards, under the direction of the Ministry of the Interior, number about 12,000. There are about 44,000 military reservists. The defense budget was estimated at $1.43 billion in 2005. Hungary provides UN observers and peacekeepers to eight regions or countries.

INTERNATIONAL COOPERATION

Hungary has been a member of the United Nations since 14 December 1955 and participates in ECE and most of the nonregional specialized agencies except the IFAD. Hungary became a member of the OECD in 1996, a NATO member in 1999, and a member of the European Union in 2004. Hungary is also a member of the WTO, the Council of Europe, G-9, and the OSCE. The nation has observer status in the OAS and is a member affiliate of the Western European Union.

Hungary is part of the Australia Group, the Zangger Committee, the Nuclear Suppliers Group, the Organization for the Prohibition of Chemical Weapons, the European Organization for Nuclear Research (CERN), and the Nuclear Energy Agency. In environmental cooperation, Hungary is part of the Antarctic Treaty, the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Before World War II, industrial growth was slow because adequate capital was lacking. Since 1949, however, industry has expanded rapidly, and it now contributes a larger share than agriculture to the national income. The government has no capital investments abroad, but it participates in limited economic activities in developing countries. Substantial industrial growth continued through the 1960s and mid-1970s, but output in the socialized sector declined during 1979–80, and growth was sluggish in the 1980s.

After the fall of Communism in 1989, Hungary began a painful transition to a market economy. Between 1990 and 1992, GDP dropped by about 20%. Freed to reach their own level, consumer prices rose 162% between 1989 and 1993. The rate of unemployment was 12.2% at the end of 1992. By late 1998, private-sector output was over 85% of the GDP.

By 1994, Hungary was in an economic slump unknown since the reforms toward capitalism began. Export earnings were down, inflation was on the rise, and Hungary's gross debt rose to about $31.6 billion in mid-1995 (the highest per capita foreign debt in Europe). The IMF directed the government to curb social spending, but restricting social welfare during a period of high unemployment was unpopular with voters. The government began a stabilization plan in March 1995 designed to decrease the budget deficit by ft170 billion (3–4% of the GDP) and to decrease the current account deficit to $2.5 billion from the record high of $4 billion in 1994. The government cut expenditures, increased its revenues, devalued the forint by 9%, introduced a crawling peg exchange rate policy, added an 8% surcharge on imports, and called for wage controls at state-owned companies. As a result of the program, inflation and GDP growth rose. In addition, the black market economy was estimated to be as much as 30% of GDP.

In the years since its implementation, the stabilization program has borne fruit. By 1999, the IMF assistance had been repaid. The Hungarian economy exhibited strong growth rates with GDP increases of 4.6% and 5.1% in 1997 and 1998, respectively. Although a hard winter and the Kosovo conflict appeared to hamper Hungarian efforts to match the prior years' growth rate levels, the economy performed well in 2000, led by an increase in foreign direct investment. Since then, manufacturing output and productivity increased, and export industries did well, although increases in wages and a rapid appreciation of the forint in 2002 moderated export growth. The global economic downturn that began in 2001 had an impact on the Hungarian economy, as GDP rose by 3.3% in the first half of 2002, down from 6.6% in the first half of 2000. Although this growth rate was higher than most European nations in 2002, it was below the rate needed for Hungary to reach the wealth levels of EU countries.

Due to government efforts at privatization, over 80% of the economy was privately owned by 2001, and Hungary stands as a model for countries undergoing market reforms. In December 2002, Hungary was formally invited to join the EU; it was accepted as a full member in May 2004 as one of the most advanced of the 10 candidate countries slated for accession.

As an EU member, Hungary maintained its position as one of the most dynamic and strong economies in Central and Eastern Europe. Its position within the European Union, and the fact that it is still comparatively cheaper to do business there than in other Western European countries, makes Hungary a prime target for investments. However, Hungary is being challenged by some of its neighbors that have managed to maintain lower labor costs, and a more attractive tax system. Already some of the investments in the country have moved further east, to countries like Romania and Ukraine, and some of the bids for new investments have been lost for the same reasons.

Although the GDP growth was slower in 2002 and 2003 (3.3% and 2.9% respectively), it recuperated lost ground in 2004, with a 4% increase, and is expected to exceed 4% in 2005. Inflation decreased to 7% in 2004, and unemployment was only 5.9% in the same time period. However, in order to catch up with the developed economies in the EU, Hungary should register (according to the IMF specialists) annual growth rates of 5–5.25%. This means that further investments have to be attracted to generate funds for the state. Consequently, the governments planned to sell Budapest Airport and Antenna Hungaria in 2005. Attracting additional foreign investments is increasingly difficult though, as the country has to fight with rather high budget deficits (5.9% in 2004), and with increased competition from its neighbors.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Hungary's gross domestic product (GDP) was estimated at $159.0 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $15,900. The annual growth rate of GDP was estimated at 3.7%. The average inflation rate in 2005 was 3.7%. It was estimated that agriculture accounted for 3.9% of GDP, industry 30.9%, and services 65.3%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $295 million or about $29 per capita and accounted for approximately 0.4% of GDP. Foreign aid receipts amounted to $248 million or about $25 per capita and accounted for approximately 0.3% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Hungary totaled $56.30 billion or about $5,574 per capita based on a GDP of $82.8 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 1.6%. In 2001 it was estimated that approximately 25% of household consumption was spent on food, 17% on fuel, 6% on health care, and 20% on education. It was estimated that in 1997 about 17.3% of the population had incomes below the poverty line.

LABOR

Hungary's workforce in 2005 was estimated at 4.18 million. In 2003, agriculture accounted for 5.5% of the labor force, with 33.7% in manufacturing, and 60.7% in the services sector. In 2005, the estimated unemployment rate stood at 7.1%.

Before World War II, trade unions had not developed substantially; their combined membership was only about 100,000, principally craftsmen. After the war, the government reduced the number of the traditional craft unions, organized them along industrial lines, and placed them under Communist Party control. The Central Council of Hungarian Trade Unions (SZOT) held a monopoly over labor interests for over 40 years. Since wages, benefits, and other aspects of employment were state-controlled, the SZOT acted as a social service agency, but was dissolved in 1990 with the shift away from centralization to democracy. The National Federation of Trade Unions is its successor, with 735,000 members in 1999. There are now several other large labor organizations in Hungary, including the Democratic League of Independent Trade Unions, with some 100,000 members, and the Federation of Workers' Councils, with 56,000 members. Labor disputes are usually resolved by conciliation boards; appeal may be made to courts. Since 1991, most unions have been hesitant to strike, preferring instead to act as a buffer between workers and the negative side effects of economic reform. Collective bargaining is permitted but is not widespread.

The eight-hour day, adopted in several industries before World War II, is now widespread. The five-day week is typical, but many Hungarians have second or third jobs. The law prohibits employment for children under the age of 15 and closely regulates child labor. The minimum wage in 2002 was $140 per month which was not sufficient to provide a decent lifestyle for a family. Most workers earn more than this amount. Health and safety conditions in the workplace do not meet international standards, and regulations are not enforced due to limited resources.

AGRICULTURE

In 2003, 52% of the land (4,820,000 hectares/11,910,000 acres) was arable. More than half of Hungary's area lies in the Great Plain; although the soil is fertile, most of the region lacks adequate rainfall and is prone to droughts, requiring extensive irrigation. In 2003, some 230,000 hectares (568,000 acres) of land were irrigated. In 2003, agriculture contributed 4% to GDP.

Before World War II (1939–45), Hungary was a country of large landed estates and landless and land-poor peasants. In the land reform of 1945, about 35% of the land area was distributed, 1.9 million hectares (4.7 million acres) among 640,000 families and 1.3 million hectares (3.2 million acres) in state farms. In 1949, the government adopted a policy of collectivization based on the Soviet kolkhoz, and by the end of 1952, 5,110 collectives, many forcibly organized, controlled 22.6% of total arable land. Peasant resentment led to a policy change in 1953, and many collectives were dissolved, but the regime returned to its previous policy in 1955. As a result of the 1956 uprising, collectives were again dissolved; but a new collectivization drive begun in 1959 was essentially completed by 1961. Meanwhile, the proportion of the economically active population employed in agriculture decreased steadily. In 1949, agricultural employees accounted for 55.1% of the total labor force; in 2003, agriculture accounted for 10.7% of the engaged labor force and gross agricultural output was valued at over €1.95 billion. In 2004, Hungary had an agricultural trade surplus of $1.3 billion.

Hungary has achieved self-sufficiency in temperate zone crops, and exports about one-third of all produce, especially fruit and preserved vegetables. The traditional agricultural crops have been cereals, with wheat, corn (maize), and rye grown on more than half the total sown area. In recent years, considerable progress has been made in industrial crops, especially oilseeds and sugar beets. Fruit production (especially for preserves) and viticulture are also significant; the wine output in 2004 was estimated at 48 million liters. That year, over 650,000 tons of grapes were produced on 93,000 hectares (230,000 acres).

The principal field crops harvested in 2004 included (in tons): corn, 8,317,000; wheat, 6,020,000; sugar beets, 3,130,000; potatoes, 767,000; rye, 125,000.

ANIMAL HUSBANDRY

Although animal husbandry is second only to cereal cultivation in agricultural production, the number and quality of animals are much lower than in neighboring countries. An inadequate supply of fodder is one of the chief deficiencies. In 2005 there were 4,059,000 hogs, 1,397,000 sheep, 723,000 head of cattle, and 68,000 horses; poultry numbered 32,800,000. The 2005 out-put of livestock products was 1,034,000 tons (live weight) of meat, 2,043,000 tons of milk, and 5,000 tons of wool; egg production was 180,200 tons.

FISHING

Fishing was unimportant before World War II (1939–45), but production has increased in recent years. The best fishing areas are the Danube and Tisza rivers, Lake Balaton, and various artificial ponds. The catch is composed mainly of carp, catfish, eel, and perch. The 2003 catch was 18,406 tons, 64% from aquaculture. Hungary imports around $15–20 million in seafood annually to meet demand.

FORESTRY

Forests totaled 1,840,000 hectares (4,547,000 acres), or 19.9% of Hungary's total land area, in 2000. The forest consists of the following main species: oak, 23%; black locust, 20%; pine and fir, 15%; Austrian and turkey oak, 11%; poplars, 9%; beech, 6%; horn-beam (blue beech), 6%; and others, 10%. Because of the relatively small forest area and the high rate of exploitation, Hungary traditionally has had to import timber. During the 1960s, a systematic reforestation program began. Reforestation affected about 440,000 hectares (1,087,000 acres) during 1960–68 but only about 65,000 hectares (161,000 acres) in 1970–74 and 64,322 hectares (158,942 acres) during 1975–81. From 1990–2000, some 136,000 hectares (336,000 acres) were annually reforested.

Roundwood production has remained stagnant in recent years, at 5,660,000 cu m (200 million cu ft) in 2004. Less than 12% of the production is softwood; Hungary's wood imports consist mostly of softwood, while exports are based on hardwood products. Production of wood products in 2004 (in thousands of cu m) included: sawn wood, 204; wood-based panels, 638; paper and paper-board, 579; and pulpwood, 653.

Privatization of agricultural land, including forests, finished in 1996. According to estimates from the Ministry of Agriculture's Forestry Office, 55% of forests were under state control, 44.5% were owned by private individuals, and 0.5% belonged to municipalities.

MINING

In 2002, Hungary produced modest amounts of fossil fuels and industrial minerals, cement and coal being the dominant components of industrial minerals and metals. Although the country had significant output of alumina and bauxite, the output of primary aluminum was modest, due to limited domestic energy sources. Construction aggregates and cement continued to play an important role in Hungary's economy, especially in view of the modernization process necessary for the country's infrastructure, for which planned highway construction through 2008 would be an important element. Mineral reserves were small and generally inadequate.

Bauxite mining and refining to alumina, as well as manganese mining, remained the only metal mining and processing operations in Hungary in 2002. Production of bauxite, found in various parts of western Hungary, was 720,000 tons in 2002, compared with 1 million tons in 2001. Total resources of bauxite were estimated to be 23 million metric tons, with commercial reserves at 16 million metric tons. Bakony Bauxitbany Kft. constituted Hungary's bauxite mining industry in 2002. Hungary also produced 40,000 metric tons of manganese ore concentrate (gross weight) in 2002, up from 338,000 metric tons in 2001, and 250,000 tons of gypsum and anhydrite in 2002. A total of 500,000 tons of calcined lime were also produced that same year. In addition, Hungary produced alumina (calcined basis), bentonite, common clays, diatomite, kaolin, nitrogen, perlite, sand (common, foundry, and glass) and gravel, dimension stone, dolomite, limestone, sulfuric acid, and talc. Although Hungary no longer mined copper, past surveys of the deeplying Recsk copper ore body, in the Matra mountains, discovered 172–175 million tons of copper ore at a grade of 1.12% copper and about 20 million tons of polymetallic ore at a grade of 4.22% lead and 0.92% zinc as well as smaller quantities of gold, molybdenum, and silver. After failing to attract foreign investment, the exploration shaft and adit at Recsk was closed, the equipment removed, and the facilities flooded in 1999. Exploration for gold in the Recsk region continued in 2000, as 35 million tons of gold-bearing enargite copper ore was delineated with a grade of 1.47 grams per ton of gold.

ENERGY AND POWER

Hungary has modest reserves of oil, natural gas, and coal. In addition, the country's electric power sector relies upon nuclear power to provide a sizable portion of its electric power needs.

In 2002, Hungary's electric power generating capacity stood at 8.393 million kW, of which conventional thermal plants accounted for: 6.478 million kW; nuclear 1.866 million kW; hydropower 0.048 million kW; and geothermal/other 0.001 million kW. Electric output in 2002 came to 34.061 billion kWh, of which: conventional thermal sources accounted for 20.548 billion kWh; nuclear 13.255 billion kWh; hydropower 0.192 billion kWh; and geothermal/other 0.066 billion kWh. Electric power consumption in 2002 totaled 35.977 billion kWh. Imports and exports of electric power that year came to 12.6 billion kWh and 8.3 billion kWh, respectively. By the end of 1963, all villages were connected with electric power. Hungary's sole nuclear power plant, at Pécs, consists of four second-generation, Soviet-designed, VVER-440/213 reactors, which began production in 1982. As of 2002, modernization was planned to extend the operating life of the reactors by 20 years. The normal lifespan of the four units would end between 2012 and 2017. However, if the continuous operation of the power plant is to be maintained, the needed modernization would have to start in 2007.

Hungary's reserves of crude oil and natural gas are estimated, as of 1 January 2004, at 102.5 million barrels and 1.2 trillion cu ft, respectively. Refining capacity for that same date is estimated at 161,000 barrels per day. Coal reserves in 2001, were estimated at 1,209 million short tons. In 2003, Hungary's total oil production was estimated at 45,700 barrels per day, with natural gas and coal output estimated in 2002 at 110 billion cu ft and 14.2 million short tons, respectively. Consumption of oil, natural gas and coal outstrips domestic production. Demand for oil in 2003 was estimated at 137,000 barrels per day, while natural gas and coal consumption in 2002 were estimated at 473 billion cu ft and 15 million short tons, respectively. However, the consumption of coal has declined. Between 1993 and 2003, Hungary's demand for coal fell 21%. Brown coal, or lignite, accounted for all domestic coal out-put in 2002. Uranium, discovered in 1953 near Pécs, is expected to supply its nuclear station until 2020.

INDUSTRY

Hungary is poor in the natural resources essential for heavy industry and relies strongly on imported raw materials. Industry, only partially developed before World War II, has expanded rapidly since 1948 and provides the bulk of exports. Industrial plants were nationalized by 1949, and the socialized sector accounted for about 98.5% of gross production in 1985.

Hungary has concentrated on developing steel, machine tools, buses, diesel engines and locomotives, television sets, radios, electric light bulbs and fluorescent lamps, telecommunications equipment, refrigerators, washing machines, medical apparatus and other precision engineering equipment, pharmaceuticals, and petrochemical products. Textile and leather production has decreased in relative importance since World War II, while chemicals grew to become the leading industry in the early 1990s. Food processing, formerly the leading industry, provides a significant portion of exports; meat, poultry, grain, and wine are common export items.

In 1993, industrial production was only two-thirds of the 1985 level. In 1997, industrial output increased in the manufacture of road vehicles, consumer electronics, insulated cables, office equipment and computers, steel products, aluminum metallurgy, household chemical products and cosmetics, rubber and plastic products, and paper and pulp production. In 1992, Suzuki and Opel began producing automobiles in Hungary, the first produced there since before World War II. Suzuki increased annual output at the Magyar Suzuki Corporation from 29,000 to 50,000 units starting in the 1995 fiscal year. Since 1990, Hungary has developed industrial strength in the automotive field as well as an expanding automotive sourcing industry in plastics and electronics. In 2001, Hungary produced 144,313 automobiles, a 5% increase over 2000. In 2000, it produced 1,621 heavy trucks, a 24% increase over 1999. In 2000, close to 14% of total Hungarian industrial output was accounted for by the vehicle manufacturing industry.

The growth in manufacturing output and productivity in the early 2000s has been supported by a considerable amount of foreign investment. Successive Hungarian governments have pursued privatization policies and policies to restructure industry, so that by 2002, 80% of the economy was privately owned. Hightech equipment (computers, telecommunication equipment, and household appliances) showed the strongest industrial growth in 2001. Industries targeted for growth in 2003 were the automotive industry, the general industrial and machine tool industry, and the information technology industry. Housing construction was another growth sector in 2002.

In 2004, the share of the industrial output in the GDP was 31.4%, while its representation in the labor force was 27.1%. Agriculture contributed 3.3% to the GDP, while occupying 6.2% of the labor force; services came in first with a 65.3% share in the economy, and a 66.7% representation in the labor force. The industrial production growth rate was 9.6% in 2004, and most of this growth occurred in industries like motor vehicles, chemicals (especially pharmaceuticals), textiles, processed foods, construction materials, metallurgy and mining.

SCIENCE AND TECHNOLOGY

In 2002, there were 486 technicians and 1,473 researchers per million people that were actively engaged in research and development (R&D). Total expenditures on R&D during that year amounted to $1.374 million, or 1.01% of GDP. Of that total, the government sector accounted for the majority of spending at 58.6%, followed by business at 29.7%, foreign investors at 10.4%, and higher education at 0.3%. Undistributed funds accounted for the remainder. Hightech exports in 2002 were valued at $7.364 billion and accounted for 25% of manufactured exports.

Among major scientific organizations are the Hungarian Academy of Sciences (founded in 1825), the Association for Dissemination of Sciences (founded in 1841), and the Federation of Technical and Scientific Societies (founded in 1948), with 32 agricultural, medical, scientific, and technical member societies. In 1996, Hungary had 45 research institutes concerned with agriculture and veterinary science, medicine, natural sciences, and technology. There are 25 universities and colleges offering courses in basic and applied science. In 1987–97, science and engineering students accounted for 32% of university enrollment. In 2002, science degrees (natural sciences, mathematics and computers, and engineering) accounted for 11.9% of all bachelor's degrees awarded.

In addition to the National Museum of Science and Technology, Budapest has museums devoted to transport, electrical engineering, agriculture, natural history, and foundries.

DOMESTIC TRADE

Budapest is the business and trade center of the country, though most production facilities lie elsewhere. Over the past few years, the retail and wholesale sector has grown along Western standards. Throughout most of the country, small, family-owned and operated retail establishments predominate. However, in Budapest supermarkets, department stores, and indoor shopping malls have grown rapidly.

The Polus Center, the first American-style shopping mall in Central Europe, opened on the outskirts of Budapest in November 1996. West End City Center, the largest mall complex in Central Europe, was opened in Budapest in 1999. As of 2002, there were about 400 franchise operations nationwide. Several foreign chains are present. Retail purchases are still primarily cash based, though some banks are beginning to issue credit cards. A 12% value-added tax (VAT) applies to food, books, hotel accommodations and utilities. A 25% VAT applies to most other good and services. Additional excise taxes (ranging from 10–35%) apply to some products, such as gold, coffee, wine, and automobiles.

New regulations passed in January 1997 concerning trade in food products and the operation of retail outlets focus on the reduction of black market activity, consumer protection, and harmonization with EU law. Nevertheless, the underground economy remained at around 30% in 1999.

Business hours extend from 9 or 10 am to 4 or 5 pm for offices and general stores and to 3 or 4 pm for banks. Early closing (between noon and 1 pm) on Saturdays is widespread; Sunday closing is general. Food stores open between 6 and 8 am and close between 7 and 9 pm weekdays; a few remain open on Sundays.

Newspapers and general, trade, and technical magazines are used for advertising; there is also broadcast and outdoor advertising. A major industrial fair, held since 1906, takes place every spring and autumn in Budapest.

FOREIGN TRADE

Hungary imports raw materials and semifinished products and exports finished products. Within that general framework, however, the structure, volume, and direction of Hungarian foreign trade have changed perceptibly in recent years. The total trade volume expanded from huf18.344 million (foreign exchange) in 1959 to huf2.657 billion in 1994. In 2000, exports were estimated at $28.1 billion (up from $12.9 billion in 1995), while imports were estimated to be $32.1 billion (up from $15.4 billion in 1995).

The majority of Hungary's export market is concentrated in the manufacturing industry, including electrical machinery, motor vehicle parts, polymers, petroleum refining, telecommunications equipment, and aluminum. Manufactured goods make up 82% of all exports. Other important exports include apparel (4.4%), polymers (2.2%), and meat (2.1%).

In 2004, Hungary's exports reached $54.6 billion (FOB—Free on Board), while its imports (FOB) grew to $58.7 billion; the trade deficit was $4.1 billion. The most important export partners were Germany (where 31.4% of Hungary's exports went), Austria (6.8%), France (5.7%), Italy (5.6%), and the United Kingdom (5.1%). The bulk of exports were made up of machinery and equipment (61.1%), and other manufactures (28.7%); other export commodities included food products (6.5%), raw materials (2%), fuels and electricity (1.6%). Imports came mainly from Germany (29.2%), Austria (8.3%), Russia (5.7%), Italy (5.5%), the Netherlands (4.9%), China (4.8%), and France (4.7%). The main import commodities included machinery and equipment (51.6%), other manufactures (35.7%), fuels and electricity (7.7%), food products (3.1%), and raw materials (2.0%).

BALANCE OF PAYMENTS

Having scrapped central planning, the Hungarian government is engaged in stabilizing the economy and taming inflation. In 1992, exports had grown by 7.4%, but recession in export markets, western European protectionism, an appreciating forint, bankruptcies of firms producing one-third of exports, and drought caused Hungarian trade to slow down. In 1994, Hungary had a current account deficit of $4 billion, but it shrank to $2.5 billion in 1995, and to a further $1 billion in 2001. Export markets were weak in 2003, and were not expected to rebound until mid-2004. Strong private consumption growth was sustaining the growth of the economy in 2003, but the current account deficit was forecast at 5.4% of GDP in 2003/04.

The US Central Intelligence Agency (CIA) reported that in 2002 the purchasing power parity of Hungary's exports was $31.4 billion while imports totaled $33.9 billion resulting in a trade deficit of $2.5 billion.

The International Monetary Fund (IMF) reported that in 2001 Hungary had exports of goods totaling $28.1 billion and imports totaling $30.1 billion. The services credit totaled $7.71 billion and debit $5.55 billion.

By 2004, the exports of goods and services expanded to $65.3 billion, while imports reached $68.3 billion; this resulted in a

negative resource balance of $3 billion. Also, the current account deficit worsened, growing from -$7.2 billion in 2003, to -$8.8 billion in 2004. The reserves of foreign exchange and gold grew from $11.5 in 2003 to $14.8 in 2004, covering less than four months of imports. Hungary is a major recipient of aid from the EU—for 2004–06 it had $4.2 billion available in structural adjustment and cohesion funds. The external aid is dwarfed however by the external debt, which grew from $47.4 billion in 2003 to $61.3 billion in 2004.

BANKING AND SECURITIES

Banking was nationalized in 1948, when the National Bank of Hungary was installed as the bank of issue, with a monopoly on credit and foreign exchange operations.

Following the 1987 reform of the banking system, the National Bank retained its central position as a bank of issue and its foreign exchange monopoly, but its credit functions were transferred to commercial banks. Three new commercial banks were established: the Hungarian Credit Bank, the Commercial and Credit Bank, and the Budapest Bank. Two other commercial banks, both founded in the 1950s, are the Hungarian Foreign Trade Bank and the General Banking and Trust Co. These six banks serve the financial needs of enterprises and government operations. The main bank for the general public is the National Savings Bank; in 1987 there were also 262 savings cooperatives. The Central Corporation of Banking Companies handles state property, performs international property transactions for individuals, and deals with the liquidation of bankrupt companies. The State Development Institution manages and controls development projects. In 1987 there were also three banks with foreign participation: the Central European International Bank (66% of shares held by six foreign companies), Citibank Budapest (80% owned by Citibank New York), and Unibank (45% owned by three foreign companies). In 1991 there were 10 government owned commercial banks, 16 joint-stock owned commercial banks, 5 government owned specialized financial institutions, one offshore bank, and 260 savings cooperatives. By 1997, Hungary had over 30 commercial banks, about 10 specialized financial institutions, and 260 savings cooperatives. By 1998, around 75% of all banks had been privatized and 70% of these shares had foreign owners. Upon joining the OECD in 1996, Hungary ceased its ban on the establishment of foreign branches, effective January 1998.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $9.7 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $24.3 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 9.8%.

In Budapest, an authentic commodity and stock exchange functioned from 1867 until 1948, when it was closed down as the country transformed into a centralized socialist economy. The reorganization of the Hungarian securities market, after a pause of some 40 years, started at the beginning of the 1980s. The Exchange was founded eventually on 21 June 1990. The bull market on the Budapest Stock Exchange (BUX) continued during the final quarter of 1996. The BUX index closed 1996 at 4,125, up 170% compared with end-1995. The increase was the second strongest in the world, following the Venezuela market. By 7 February 1997, the BUX index had reached 5,657. By mid-2000, the index stood at over 8,800, but as of mid-2003, it had dropped to just over 8,000 amid the global recession. However, by the end of 2004, the BUX had recovered, rising 57.2% that year to close at 14,742.6. In 2004, a total of 47 companies were listed on the BUX, which had a market capitalization of $28.711 billion.

INSURANCE

Before World War II, 49 private insurance companies—25 domestic and 24 foreign—conducted business activities in Hungary. All insurance was nationalized in 1949 and placed under the State Insurance Institute, a government monopoly. A new institution, Hungária Insurance Co., was founded in 1986. As of 1997, the regulatory authority was the Insurance Supervisor (allami Biztositasfeluegyelet). Compulsory insurance in Hungary includes third-party auto liability, workers' compensation, and liability for aircraft, watercraft, and several professions. In 2003, the value of direct premiums written totaled $2.454 billion, of which nonlife premiums made up the largest portion at $1.473 billion. Allianz Hungaria was the country's leading nonlife insurer, with gross written nonlife premiums of $621.8 million for 2003. ING was Hungary's top life insurer in 2003, with gross written life premiums totaling $280.1 million.

PUBLIC FINANCE

In recent years, the government has presented its budget bill to the National Assembly sometime during the first several months of the year, but the budget itself becomes effective on 1 January, when the fiscal year begins. It is prepared by the Ministry of Finance. Although Hungary had one of the most liberal economic regimes of the former Eastern bloc countries, its economy still suffered the growing pains of any country trying to come out of communism

and privatize its industries. The last few years, however, Hungary has enjoyed a remarkable expansion, averaging annual GDP growth of 4.5% between 1996 and 2002. Inflation in that period dropped from 28% to 7%, and unemployment fell to 6%, less than most EU countries. Eighty percent of GDP is now produced by privately owned companies. Still, Hungary's foreign debts remain large, putting a damper on the economy's otherwise spectacular performance.

The US Central Intelligence Agency (CIA) estimated that in 2005 Hungary's central government took in revenues of approximately $51.4 billion and had expenditures of $58.3 billion. Revenues minus expenditures totaled approximately -$6.9 billion. Public debt in 2005 amounted to 60.9% of GDP. Total external debt was $76.23 billion.

The International Monetary Fund (IMF) reported that in 2002, the most recent year for which it had data, central government revenues were Ft6,338.1 billion and expenditures were Ft7,781.6 billion. The value of revenues was us$25 million and expenditures us$30 million, based on an exchange rate for 2002 of us$1 = Ft257.887 as reported by the IMF. Government outlays by function were as follows: general public services, 28.1%; defense, 3.0%; public order and safety, 4.3%; economic affairs, 20.6%; environmental protection, 0.5%; housing and community amenities, 0.4%; health, 5.8%; recreation, culture, and religion, 1.8%; education, 5.2%; and social protection, 30.2%.

TAXATION

As of 2006, Hungary's corporate tax rate is 16%. Capital gains are also taxed at the 16% rate. However, only 50% of capital gains generated from stock transactions are subject to the tax. Capital gains from the sale of business assets are treated as business income. The withholding tax on dividends paid to foreign companies is 20% unless recipients reinvest them in Hungarian companies. Dividends paid to individuals are subject to a 25% withholding tax, and dividends that are in excess of 30% of the return on equity are subject to a 35% rate. However, most tax treaties with Hungary reduce the withholding tax to between 5% and 15%.

The progressive personal income tax schedule in Hungary has a top rate of 38%. Individuals receiving capital gains on immovable property or the sale of securities are subject to a 25% tax. Individuals also can take allowances against the taxes they owe in the form of tax deductions or tax credits. The main deduction from taxable income is 20% of annual income up to a certain maximum. The disabled are given an extra deduction. There are also partial deductions allowed for school fees, interest paid for the purchase of a house, and for donations to charity. Inheritance and gift taxes range from 11–15%. There is a 2–6% tax on the transfer of housing, and a 10% tax on the transfer of large estates. Local authorities may levy individual income and corporate taxes.

The major indirect tax in Hungary is the value-added tax (VAT). The normal VAT rate is 25%, with a reduced rate of 15% for items of social value, food and other staple items. A 5% VAT applies to certain medical materials and supplies, and to textbooks. Housing leases, health and education services, and financial services are exempt from the VAT. Other taxes include a stamp tax and a consumption tax imposed on cars, jewelry, gasoline, alcohol, cigarettes, and cosmetics at rates between 10% and 200%.

CUSTOMS AND DUTIES

Under Hungary's liberalized import policies, 93% of all imports do not require licenses. Under World Trade Organization (WTO) rules, import licenses on certain products from WTO states are no longer required. Under the same regulations, duties for countries with most-favored-nation status stood at around 8% in 2002, but could be over 100% for selected commodities.

FOREIGN INVESTMENT

Even before the repudiation of communism, Hungary sought to enter joint ventures with Western countries. By the end of 1996, Hungary had attracted $15 billion in foreign direct investment. Since 1989, Hungary has attracted nearly one-third of all foreign direct investment in Central Europe and Eastern Europe. In 1995–96, the government adopted a stringent economic reform program of liberalization and privatization, and by 2002, the private sector, which had been 20% of the economy in 1989, was about 80%. Hungary has five free trade zones in which corporations are treated as foreign and are exempt from custom duties and taxes.

In the period 1988 to 1990, Hungary's share of world FDI inward flows was five and a half times its share in world GDP, the sixth-largest ratio in the world. Annual foreign direct investment (FDI) inflows into Hungary reached a peak in 1995 at about $4.5 billion, from which point they declined steadily until 2001, when there was an upswing to $2.4 billion from $1.6 billion in 2000. In 2002, FDI inflow fell to less than $1.5 billion. The average FDI in-flow from 1998 to 2001 was about $2 billion a year. For the period 1998 to 2000, Hungary's share of FDI inflows was about equal to its share of world GDP. Total FDI stock, from 1989 to 2002, is estimated at about $34 billion.

The largest single source of foreign investment has been the United States, followed by Germany, the Netherlands, Austria, the United Kingdom, and France.

Of foreign capital invested in Hungary through 2000, 50% has been in manufacturing, 15% in telecommunications, 13% in energy, 6% in banking and finance, and 10% in other areas. FDI out-flows from Hungary have averaged about $400,000 per year and as of 2001, foreign stock held by Hungarians totaled $2.2 billion.

The flow of foreign investment reached peak levels in 2003 and 2004, with €2.3 billion and €2.5 billion respectively. The Hungarian Ministry of Economics and Transportation estimated that by 2004 the total stock of FDI exceeded €42 billion, with the United States and Germany taking the lion's share of this total. The same agency expects the flow of FDI to grow to €3–3.5 billion in 2005. Most of the investments went to manufacturing (46%); real estate (12%); trade and repair (11%); finance (10%); transport, telecommunications, storage and post (10%); and the energy sector (5%). By 2003, the biggest investors in Hungary were: Deutsche Telekom A.G., Germany (with cumulative investments exceeding $1.7 billion); Audi A.G., Germany ($1.4 billion); General Electric, US ($1.1 billion); Telenor ASA, Norway ($1 billion); and, Vodafone, Netherlands ($850 million).

ECONOMIC DEVELOPMENT

During the first 20 years after World War II, Hungary had the following economic plans: the three-year plan (1947–49) for economic reconstruction; the first five-year plan (1950–54) which aimed at rapid and forced industrialization and which was slightly modified in 1951 and by the "new course" policy of 1953; the one-year plan of 1955; the second five-year plan (1956–60), designed to further industrialization but discarded as a result of the October 1956 uprising; the three-year plan (1958–60), which also emphasized industrialization, although it allocated greater investment for housing and certain consumer goods; and the new second five-year plan (1961–65), which provided for a 50% increase in industrial production. These were followed by the third five-year plan (1966–70); the fourth five-year plan (1971–75), with greater emphasis on modernization of industrial plants producing for export and housing construction; the fifth five-year plan (1976–80), which called for amelioration of the gap in living standards between the peasantry and the working class; the sixth five-year plan (1981–85), emphasizing investment in export industries and energy conservation and seeking to curb domestic demand; and the seventh five-year plan (1986–90), which projected growth of 15–17% in NMP, 13–16% in industrial production, and 12–14% in agriculture.

Far-reaching economic reforms, called the New Economic Mechanism (NEM), were introduced on 1 January 1968. In order to create a competitive consumers' market, some prices were no longer fixed administratively, but were to be determined by market forces. Central planning was restricted to essential materials, and managers of state enterprises were expected to plan and carry out all the tasks necessary to ensure profitable production. In the early years of the NEM, the growth rate of industrial output surpassed target figures; national income rose substantially, surpassing any previous planning periods; and productivity increased significantly in all sectors of the national economy. However, following the huge oil price increases of 1973–74, the government returned to more interventionist policies in an attempt to protect Hungary's economy from external forces. Beginning in 1979, the government introduced a program of price reform, aimed at aligning domestic with world prices; changes in wage setting, intended to encourage productivity; and decentralization of industry, including the breakup of certain large enterprises and the creation of small-scale private ones, especially in services. New measures introduced in 1985 and 1986 included the lifting of government subsidies for retail prices (which led to sharp price increases) and the imposition of management reform, including the election of managers in 80% of all enterprises. The 1991–95 economic program aimed to fully integrate Hungary into the world economy on a competitive basis. The program's main features were to accelerate privatization, control inflation, and institute measures to prepare the way for the convertibility of the forint.

Reforms slowed in 1993 and 1994, and the privatization of state firms stopped. However, privatization accelerated in 1995 as the result of new laws passed in May of that year, which made the process simpler and allowed for the rapid privatization of small firms. Some large utilities were privatized in 1995; the first wave of the electricity and gas company privatization totaled $3.2 billion, primarily from German, Italian, and French interests. Budapest Bank, one of the country's largest banks, was sold to GE Capital Services. Hungary is now one of the few countries in Eastern Europe to have privatized major portions of its telecommunications and energy sectors. In 1995, the government received $4.5 billion in privatization proceeds. From the mid-1990s, a massive amount of foreign investment flowed into the country. (It stood at just under $23.5 billion by the end of 2001, which was equivalent to about 46% of GDP.)

In 1994, the Development Assistance Committee of the OECD distributed $68.3 million in aid to Hungary. Net concession flows from multilateral institutions that year amounted to $132 million. With the adoption of an International Monetary Fund (IMF)-backed stabilization program in 1995, Hungary exhibited consistent GDP annual growth of 4% in the late 1990s. Moreover, Hungary has repaid its entire debt to the IMF, and was formally invited to join the EU in 2002, and finally accepted in 2004, together with nine other countries.

The private sector now produces 80% of GDP. The economy was suffering from the effects of currency appreciation in 2003, and from rises in wages in 2001–02. Hungary's markets in 2003 were weak, given the dismal state of the global economy. (Exports in 2001 reached the equivalent of some 60% of GDP, up from 30.6% in 1991.) The current account deficit reached 5.9% of GDP for in 2004.

The Hungarian economy improved as it joined the EU, but the rate of improvement was deemed unsatisfactory. The GDP growth rate was 4% in 2004, but IMF specialists consider that the economy needs to grow by 5–5.25% annually if Hungary is to catch up with Western Europe in the timeline that it set for itself. The Hungarian policy makers are trying to attract additional investments in the country as a way of fostering additional growth. This task is made difficult however by increasing competition from neighboring countries, and the need to implement a leaner and more flexible tax system.

SOCIAL DEVELOPMENT

A national social insurance system was relatively well advanced before World War II for the nonagricultural population. A 1972 decree of the Council of Ministers extended this system to cover virtually the entire population, including craftsmen; by 1974, 99% of the population enjoyed the benefits of social insurance. Coverage includes relief for sickness, accidents, unemployment, and old age and incapacity, and provides maternity allowances for working women, allowances for children, and payment of funeral expenses. Men can collect old age pensions at the age of 62 after 20 years of employment. As of 2005, women collect at age 60, and will meet the same standards as men by 2009. The social insurance system also provides for disability and survivorship benefits. Medical care is provided directly to the insured through the public health service.

Women have the same legal rights as men, including inheritance and property rights. They hold a large number of the positions in teaching, medicine, and the judiciary, but generally earn less than men. Women are underrepresented in senior positions in both the private and public sectors. Sexual harassment in the workplace is commonplace, and it is not prohibited by law. Spousal abuse is a huge problem; approximately 20% of women were victimized in 2004. Sexual abuse, rape, and domestic violence are underreported due to cultural prejudice.

Minority rights are protected by law, allowing for the creation of minority local government bodies for limited self-rule. The law also preserves ethnic language rights and encourages minorities to preserve their cultural traditions. Despite these efforts, the Roma minority continues to face discrimination and prejudice. There were also reports of excessive police force in certain cases, as well as pretrial detention.

HEALTH

The Ministry of Health administers the state health service, with the counties and districts forming hospital regions. By the end of 1974, 99% of the population was covered by social insurance and enjoyed free medical services; those few not insured pay for medical and hospital care. Limited private medical practice is permitted. In 1992, the Ministry of Welfare proposed a compulsory health care scheme based on the German system, to be administered by the National Health Security Directorate. After the termination of socialism in 1989, the Hungarian health system was largely unchanged. About 5% of clinics were privatized and health care was available to nearly all of Hungary's people. Health expenditures comprised an estimated 6.8% of the gross domestic product.

As of 2004, there were an estimated 316 physicians, 852 nurses, and 46 dentists per 100,000 people. Hungary's birthrate was estimated at 9 per 1,000 people. Contraceptives were used by an estimated 73% of married women. Average life expectancy was 72.40 years in 2005. Free professional assistance given to insured pregnant women and to the mothers of newborn children, maternity leave and grants, and improved hygienic conditions helped lower the infant mortality rate to 8.57 per 1,000 live births in 2005. As of 2000, the total fertility rate was 1.3 per woman during her child-bearing years.

The country faces severe problems in maintaining an acceptable level of health care for its population. The UN considers its death rate unacceptable (13 per 1,000 in 1999). The heart disease occurrence is below the average for wealthier countries. The likelihood of death after age 65 from heart disease was 283 (male) and 283 (female) per 1,000 people during 1990–1993. The number of cardiovascular deaths in 1994 was 74,182 people. Arteriosclerosis is a major cause of death (100 per 100,000 people). Contributing factors include the incidence of cardiovascular disease, which is directly related to stress through pressures of work, together with smoking and dietary factors. Hungary has one of the highest smoking rates in Europe. In 1990, there were 40 reported cases of tuberculosis per 100,000 people. Virtually all children up to one year old were vaccinated against tuberculosis, diphtheria, pertussis, and tetanus, polio and measles.

Compulsory testing for HIV has been widespread since 1988 in Hungary's attempt to stop the spread of AIDS. Hungary has resisted pressure from international agencies to switch from compulsory to voluntary testing. The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 2,800 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

The construction rate for new dwellings has been greater in smaller cities and towns than in Budapest, where as of 1980, 17.3% of all housing units were built before 1900 and 56.3% before 1945. About 20,320 new dwellings were completed in 2000; about 31,511 dwellings were completed or under construction in 2001. According to national statistics, in 2005 there were about 4,127,743 dwelling units nationwide. About 84% were owner occupied. Only about 130,208 units were owned by municipal governments. Most homes have an average of four rooms. It has been estimated that about 1.2 million people are affected by overcrowding.

Low-income residents and other private builders generally rely on the labor of family and friends, buying the essential materials little by little; they may apply for loans if necessary to complete the dwelling.

EDUCATION

Before education was nationalized in 1948, most schools were operated by religious bodies, especially the Roman Catholic Church. The educational system is under the control of the Ministry of Education and is supervised by the local councils, which receive financial assistance from the central government. As of 2003, public expenditure on education was estimated at 5.5% of GDP, or 14.1% of total government expenditures.

Education is free for 12 years of study and compulsory for 10 years. The state also pays the bulk of costs for higher education. Primary school covers eight years of study. Secondary schools are divided into academic schools (gimnázium ) and vocational schools (szakközépiskola ). Programs at academic schools run from four to six years. Vocational school programs generally cover four years of study. In addition to its regular primary education, Hungary has over 100 primary schools with special music programs based on the pedagogy of the 20th-century composer Zoltan Kodály; at these "music primary schools," music receives as much emphasis as all other subjects. The academic year runs from September to June.

In 2001, about 80% of children between the ages of three and six were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 91% of age-eligible students. The same year, secondary school enrollment was about 94% of age-eligible students. Most students complete their primary education. The student-to-teacher ratio for primary school was at about 9.6:1 in 2003; the ratio for secondary school was about 11:1.

Hungary has about 77 institutions of higher education, including 25 universities and 47 colleges. Adult education expanded after World War II, especially through workers' schools and correspondence courses. Although there are university fees, many students are exempt from payment or pay reduced fees. In 2003, about 51% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 99%.

LIBRARIES AND MUSEUMS

Hungary's National Archives were established in 1756; among its treasures are some 100,000 items from the period prior to the Turkish occupation (1526). Hungary's National Széchényi Library is the largest and most significant in the country. Founded in Budapest in 1802, it has more than 2.5 million books and periodicals and more than 4.5 million manuscripts, maps, prints, and micro-films. Other important libraries are the Lóránd Eötvös University Library (1.5 million volumes) and the Library of the Hungarian Academy of Sciences (2.1 million volumes), both in Budapest; and the Central Library of the Lajos Kossuth University in Debrecen (1.27 million volumes). There are numerous local and regional public libraries.

There were over 500 museums (about 70 in Budapest) and many zoological and botanical gardens. One of the largest institutions is the Hungarian National Museum, which displays relics of prehistoric times as well as artifacts reflecting the history of Hungary from the Magyar conquest through 1849, including the Hungarian coronation regalia. A branch of the National Museum is the Hungarian Natural History Museum. Other museums, all in Budapest, include the Ethnographical Museum, the Museum of History, the Hungarian National Gallery, and the Museum of Fine Arts. Many castles and monasteries throughout the country have been converted to museums. There is also a Bela Bartok Museum, a Chinese Museum, a House of Terror museum (2002), and a Franz Lizst Memorial Museum and Research Center, all in Budapest.

MEDIA

Budapest is the principal communications center. Although tele-communication services in Hungary were long underdeveloped, services improved significantly during the 1990s, and investment in value-added services, such as the Internet and VSAT, grew. In 2003, there were an estimated 349 mainline telephones for every 1,000 people; about 28,000 people were on a waiting list for telephone service installation. The same year, there were approximately 769 mobile phones in use for every 1,000 people.

In 2004, there were two state-owned public service television stations and two national commercial television stations. The same year, there were one public service radio and two national commercial radio stations. There are some smaller regional stations. In 2003, there were an estimated 690 radios and 475 television sets for every 1,000 people. About 190.7 of every 1,000 people were cable subscribers. Also in 2003, there were 108.4 personal computers for every 1,000 people and 232 of every 1,000 people had access to the Internet. There were 210 secure Internet servers in the country in 2004.

Budapest has always been Hungary's publishing center. The largest dailies (with affiliations and 2002 circulation rates as available) are Népszabadság (Hungarian Socialist Workers' Party, 316,000), Népszava (Hungarian Trade Unions, 120,000), Mai Nap (100,000), Kurir (80,000), Magyar Hírlap (Budapest Party Committee and Metropolitan Council, 75,000), Expressz (75,000), and Magyar Nemzet (Patriotic People's Front, 70,000).

The constitution of Hungary provides for free speech and a free press, and the government is said generally to respect these rights. Although previously all means of communication had been government property, 1995 saw the beginning of the privatization process, with aims to put most print and broadcast media in private hands.

ORGANIZATIONS

There is a Chamber of Commerce in Budapest. The International Labour Organization has a subregional office in Budapest. Hungary is a member of the International Chamber of Commerce. Trade and professional associations exist representing a variety of occupations, including the steel and automotive workers, journalists, teachers, librarians, engineers, architects, and various medical professionals. There is a Confederation of Professional Unions based in Budapest.

Organizations promoting research and study of various medical and scientific fields also exist. Some of these are member organizations of the Federation of Hungarian Medical Societies and/or the Hungarian Academy of Sciences. A cultural organization particular to Hungary is the International Kodaly Society; named for the music composer, scholar, and teacher, this organization promotes appreciate and study of music, particularly for youth. The multi-national scientific organization of the International Measurement Confederation is based in Budapest.

Notable national youth organizations include the Federation of Young Democrats of Hungary, the Goncol Environmental Youth Alliance, the National Union of Hungarian Students, and Young Musicians of Hungary. The Hungarian Scout Association is also active, as are various chapters of the YMCA/YWCA. There are several sports associations promoting amateur competition in such pastimes as tennis, badminton, skating, and baseball. There is a national chapter of the Paralympic Committee. National women's organizations include the Association of Hungarian Women and the National Council of Hungarian Women.

Volunteer service organizations, such as the Lions Clubs and International, are also present. The Red Cross, Caritas, and Amnesty International have active chapters in the country.

TOURISM, TRAVEL, AND RECREATION

Among Hungary's diverse tourist attractions are Turkish and Roman ruins, medieval towns and castles, more than 500 thermal springs (some with resort facilities), and Lake Balaton, the largest freshwater lake in Europe. Budapest is a major tourist attraction and cultural capital, with 2 opera houses, over 200 monuments and museums, and several annual arts festivals.

Popular sports include handball, football (soccer), tennis, and volleyball. The Budapest Grand Prix, the only Formula-1 motor race in Eastern Europe, was inaugurated in August 1986. A valid passport is required of all foreign visitors. Citizens of the United States and Canada are not required to have a visa for stays of up to 90 days.

Hungary had 31,412,483 visitors in 2003, about 48% of whom came from Central and Eastern Europe. There were 64,091 hotel rooms with 158,634 beds and an occupancy rate of 38%. The average length of stay was three nights. Tourist expenditure receipts totaled $3.4 billion.

In 2004, the US Department of State estimated the daily expenses for staying in Budapest at $218. Other areas were much lower at $93 per day.

FAMOUS HUNGARIANS

The foundations for modern Hungarian literature begin with the movement known as the Period of Linguistic Reform, whose leaders were the versatile writer Ferenc Kazinczy (1759–1831) and Ferencz Kölcsey (1790–1838), lyric poet and literary critic. Among the outstanding literary figures was Dániel Berzsenyi (1772–1836) of the Latin School. Károly Kisfaludy (1788–1830) founded the Hungarian national drama. Mihaly Vörösmarty (1800–55), a fine poet, related the Magyar victories under Árpád in his Flight of Zalán. He was followed by Hungary's greatest lyric poet, Sándor Petöfi (1823–49), a national hero who stirred the Magyars in their struggle against the Habsburgs in 1848 with his Arise Hungarians. Another revolutionary hero was Lajos Kossuth (1802–94), orator and political author. János Arany (1817–82), epic poet and translator, influenced future generations, as did Mór Jókai (1825–1904), Hungary's greatest novelist. The outstanding dramatist Imre Madách (1823–64) is known for his Tragedy of Man. Endre Ady (1877–1919) was a harbinger of modern poetry and Western ideas; Attila József (1905–1937) is another well-known poet. Lyric poets of the contemporary era include László Nagy (1925–78), János Pilinszky (1921–81), and Ferenc Juhász (b.1928). Gyula Illyés (1902–83), a poet, novelist, and dramatist, was one of the outstanding figures of 20th-century Hungarian literature. Ferenc Molnár (1878–1952) is known for his plays Liliom, The Swan, and The Guardsman. György Lukács (1885–1971) was an outstanding Marxist writer and literary critic. Hungarian-born Arthur Koestler (1905–83), a former radical, was a well-known anti-Communist novelist and writer. Imre Kertész (b.1929) is a Jewish-Hungarian author, Holocaust concentration camp survivor, and winner of the Nobel Prize in literature in 2002.

János Fadrusz (1858–1903) and József Somogyi (1916–93) are among Hungary's best-known sculptors. The outstanding Hungarian painter Mihály Munkácsy (1844–1900) is best known for his Christ before Pilate. Victor Vasarely (1908–97), a world-famous painter of "op art," was born in Budapest and settled in France in 1930. Miklós Ybl (1814–91) was a leading architect; and Gyula Halasz (1899–1984), better known as Brassai, was a well-known photographer. The Hungarian-born Joseph Pulitzer (1847–1911) was a noted journalist and publisher in the United States. Hungarian musicians include the composers Franz (Ferenc) Liszt (1811–86), Ernst (Ernö) von Dohnányi (1877–1960), Béla Bartók (1881–1945), Zoltán Kodály (1882–1967), and György Ligeti (b.1923); violinists Jeno Hubay (1858–1937) and Joseph Szigeti (1892–1973); cellist János Starker (b.1924); and pianists Lili Kraus (1903–86) and Erwin Nyiregyhazi (1903–87). Renowned Hungarian-born conductors who became famous abroad include Fritz Reiner (1888–1963), George Széll (1897–1970), Eugene Ormándy (1899–1985), Antal Doráti (1906–88), and Ferenc Fricsay (1914–63). Miklós Jancsó (b.1921) is a distinguished film director, and Vilmos Zsigmond (b.1930) a noted cinematographer; Béla Lugosi (Blasko, 1882–1956) and Peter Lorre (Laszlo Loewenstein, 1904–64) were famous actors.

Notable scientists include Lóránd Eötvös (1848–1919), inventor of torsion balance; Ányos Jedlik (1800–95), known for his research on dynamos; and the psychoanalyst Sándor Ferenczi (1873–1933). Ignaz Philipp Semmelweis (1818–65) pioneered in the use of antiseptic methods in obstetrics. Béla Schick (1877–1967) invented the skin test to determine susceptibility to diphtheria.

Hungarian-born Nobel Prize winners are Róbert Bárány (1876–1936) in 1914, Albert Szent-Györgyi (1893–1986) in 1937, and Georg von Békésy (1899–1972) in 1961 in physiology or medicine, Georg de Hevesy (1885–1966) in 1944 in chemistry, and Dénés Gábor (1900–79) in 1971 for physics. Budapest-born scientists who contributed to atomic research in the United States were Leó Szilárd (1898–1964), Eugene Paul Wigner (1902–95), John von Neumann (1903–57), and Edward Teller (1908–2003). Theodore van Karman (Todor Kármán, 1881–1963) is the father of aerodynamics. Paul Erdős (1913–1996) was an important mathematician, as was John von Neumann (Neumann János, 1903–1957). Eugene Paul Wigner (1902–1995), physicist and mathematician, received the 1963 Nobel Prize in physics. George Andrew Olah (b.1927 as György Oláh), a Hungarian-American chemist, won the Nobel Prize in chemistry in 1994.

Imre Nagy (1895?–1958) served as prime minister from 1953 to 1955, but was removed from office because of his criticism of Soviet policy; the uprising of October 1956 briefly brought Nagy back to the premiership. Arrested after the Soviet military intervention, Nagy was tried and executed in 1958. János Kádár (1912–89), first secretary of the HSWP since 1956, initially aligned himself with Nagy but subsequently headed the government established after Soviet troops rolled in. Kádár, who held the premiership from late 1956 to 1958 and again from 1961 to 1965, was the preeminent political leader in Hungary until his removal in May 1988. Gyula Horn (b.1932), a former communist, was named prime minister in 1994. He served in that post until 1998, when he was succeeded by Viktor Orbán (b.1963), who was prime minister between 1998 and 2002. Péter Medgyessy (b.1942) served as prime minister from 2002 until 2004, not completing his term. Ferenc Gyurcsány (b.1961) succeeded him.

George Soros (b.1930), philanthropist, was born in Budapest.

DEPENDENCIES

Hungary has no territories or colonies.

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Hungary

History & Background

The Republic of Hungary is one of the oldest nations in Europe, tracing its roots to the invasion of the vast Hungarian plain from the east by King Árpád the First around A.D. 1000. This cultural group, the Magyars, was the forerunner of today's ethnic Hungarian population that constitutes more than 90 percent of the current population. In addition to a long settlement history, Hungary also boasts a long history of formal education. The University of Pécs was established in 1367 to study law and medicine, and a number of other universities were established as early as the fifteenth and sixteenth centuries. In 1777 the first university was established in the capital Budapest. The blossoming of the Austro-Hungarian Empire between 1848 and 1920 saw significant achievements in the educational, scientific, and cultural life of the nation. This period also saw significant exchanges with other European universities that contributed to the vitality of the Hungarian educational system. The end of the Austro-Hungarian Empire and the significant reduction in the territorial area of Hungary in 1920, as a result of the conditions of the Treaty of Trianon, created a large diaspora of ethnic Hungarians outside the present boundaries of Hungary. The welfare of these people, particularly in the preservation of their Hungarian identity, has been an issue since 1920. Education has played a significant role in preserving this identity; for example, the demand by the Hungarian government for the creation of Hungarian language universities in present day Romania has been a feature of inter-ethnic and international relations.

Language is the single most unifying feature of Hungarian identity. Hungarian is a language of the Finno-Ugrian group of Uralic languages. It is therefore a non Indo-European tongue with its nearest linguistic relatives being Finnish and Estonian. As a result speech, writing, and comprehension are more difficult for Indo-European speakers. Thus the Hungarian education system is marked not only by an emphasis on studying the mother tongue but also on preparing students to communicate in the Indo-European tongues, particularly English and German, of the nations that surround them. Religion is also important in Hungary, and the Catholic Church in particular plays a large role in the educational system. More than two-thirds of the population are Roman Catholic, 20 percent are Calvinists, and 5 percent are Lutheran. A major exception to the Hungarian linguistic and religious majority is the presence of 500,000-700,000 Roma, often called "Gypsies," representing approximately 5 percent of the population. The educational system and achievements of this cultural group represent a major exception to the overall excellent standard of education in Hungary.

The other significant development in the Hungarian educational system has been the effects of demographic trends. Demographically, Hungary is one of the few nations in the world experiencing a negative natural increase. In other words, the death rate is higher than the birth rate. This pattern has been present for more than 20 years and as such has important repercussions for school enrollment and ultimately the future labor force.

All of these cultural and historical trends must be seen in the light of political change in Hungary in the twentieth century from a European system between 1920 and 1948 to a socialist system between 1948 and 1990. From 1990 to the present, the restructuring of the system to reflect a more democratic system of government and privatization of property and the demands of a market economy occurred.

For many years the Hungarian system of education was seen as one of the finest in the world. Indeed at one point Hungary had produced more Nobel Prize winners per capita than any other nation. It particularly excelled in science, where such important figures as Dr. Leó Szilárd and Dr. Edward Teller, atomic scientists on the Manhattan project, and Van Kaman, the helicopter pioneer, were all Hungarian born and trained. Perhaps more recognizable are Ernö Rubik, the Hungarian mathematician who invented the Rubik's cube, and József Bíró, who invented the Biro disposable pen. Finally, Andy Grove, the CEO of Intel Corporation and the 1998 Time magazine Man of the Year was born in Budapest. Today the challenge presented by the need to restructure the Hungarian educational system puts this legacy of educational excellence at serious risk.

Constitutional & Legal Foundations

Constitutional Provisions & Laws Affecting Education: An understanding of the laws and regulations that currently guide Hungarian education requires an understanding of the changes wrought by the imposition of the socialist system in 1948. The socialist government in the years following 1948 placed a great emphasis on education and significantly increased the number of schools, colleges, scientific institutes, and universities. They also made all the institutes of higher education separate and distinct from other institutions within the higher education community. Thus, for example, medical schools were separate institutions from law schools, which in turn were separate from technical schools, schools of veterinary medicine, teacher training colleges, art colleges, and physical education colleges. Yet all of these could be located in the same city and often on the same campus. At the highest level of the system were the Academies of Sciences that functioned as supreme educational, yet predominantly research institutes.

Reform of this system commenced in 1993 with the Law on Higher Education (Act LXXX). All education was placed under the jurisdiction of the Ministry of Education (previously education had been the responsibility of five ministries). Two advisory bodies were formed to guide, and in some cases control, institutions and their curricula. These bodies were the Hungarian Accreditation Committee (HAC) and the Higher Education and Scientific Council (HESC). The law also established budgeting procedures for student support, facility support, program development, and research.

In 1996 the Law on Higher Education was amended to integrate postsecondary vocational institutions into an overall system of higher education. In addition the law proscribed what constituted a higher education degree namely:

• A 3- or 4-year degree (equivalent to an undergraduate degree)
• A 3-year doctoral program (The Ph.D.)
• A further 2-year program for a specialized postgraduate degree

This amendment also initiated the integration of the universities. The goal was to reduce the number of state institutions of higher education from 55 to 30 (17 universities and 13 state colleges). However many of the existing colleges refused to forgo their autonomy, and the process of integration was slow and resented.

Further amendments were made in 1999 (Act LII) to expedite this consolidation, and further proposals to amend the Act in 2000 were produced that would affect quality assurance, admissions to higher education, distance learning, the credit system, and regional cohesion.

Educational Philosophies: Since 1990, the Hungarian educational philosophy has been concerned with access, equality of opportunity, quality (or, given the standard of excellence prior to 1990, maintenance of quality), and applicability to the needs of the twenty-first century workforce and in particular to its integration into the European Union philosophy of educational development. The Ministry of Education in 2000 enunciated the following goals:

• To provide the opportunity of having access to educational institutions of guaranteed quality to every child and youth
• To make the standard and efficiency of the educational work visible to all partners and interested parties
• To improve the quality of the professional work of maintainers of schools and kindergartens
• To enhance the flexibility of the structure of training and its orientation towards the labor market in secondary vocational education

The educational policy of the Ministry of Education is based on three pillars, namely: strengthening the role of the state in the field of financing (increasing the ratio of state funding to local funding), supplementing the regulation of content by framework curricula, and developing the national system of assessment and quality control. As part of the latter, the COMENIUS 2000 Program for Quality Improvement in Public Education was launched in 2000.

Educational System—Overview

Compulsory Education & Age Limits: Education in Hungary is compulsory between the ages of 6 and 16. The child may have had the benefit of a kindergarten (óvoda ) experience prior to school entry but formally begins school (általános iskola ) at 6 and remains in that school until 14. At 14 the child will attend a secondary school, either a grammar school devoted primarily to academic studies (gimnázium ) or a vocational school (szakközépiskola ). While the pupil is permitted to leave school at 16, most continue to 18 years of age. Further study in institutes of higher education is by competitive entry and less than one fifth of all students go on to colleges and universities.

Academic Year: The school academic year runs from September to mid-June while institutes of higher education are finished by the end of May. Schools generally use two semesters, but religious holidays (Christmas and Easter) are times of extended school breaks.

Enrollment: In 1996 enrollment in primary schools was 97 percent of the relevant age group and enrollment in compulsory secondary school was 87 percent. Enrollment for males (98 percent) was similar to females (97 percent) in primary schools but female enrollment was higher in secondary schools (87 percent) than males (85 percent). Overall school enrollment has risen since 1990, probably as a result of a dedicated effort on the part of the government and population to adjust to economic change.

Females & Minority Enrollments: Unlike many nations, Hungary has full equality in education as a legacy of the Socialist system. As a result school enrollment is around 98 percent for the nation. The most significant obstacle to full enrollment is enrollment of Roma children into the school system.

Language of Instruction: In the primary and secondary schools of Hungary, Hungarian is the predominant language of instruction. However, in areas of significant ethnic minorities (Croats, Serbs, and Roma), bilingual education is present. This is particularly so in southern Hungary (areas of Croat and Serbian ethnicity) and in the northeast region (an area of Roma concentration). Language training in English and/or German (sometimes Italian) commences around the age of ten, but, in schools specializing in languages, it can be as early as the third grade or age eight. Language training continues through the four years of secondary school. In institutes of higher education, classes are often taught in German or English to improve student familiarity with these languages and also to attract foreign students to study in Hungarian institutions.

Examinations: Students at the primary and secondary levels are examined at the end of the year with the summer examination acting as the judge of whether the student advances to the next grade. Examinations at the end of secondary school are set by the state and partly used as university entrance examinations, in conjunction with examinations set by the individual university for the faculty in which the aspiring student wishes to enter. Examinations in universities and colleges are at year's end and can be both written and oral.

Grading System: When graded at primary and secondary school, the grading is on a one (failure) to five (excellent) system.

Private Schools: Private schooling is not a major part of the Hungarian educational system. This is because the state has consistently reaffirmed its commitment to full funding (albeit an increasingly diminishing amount). In 1996 only 2 percent of all preprimary students were in private schools, 3 percent of primary school children were in school, and 5 percent of secondary students were in school.

Religious Schools: During the period of Socialist government, the church as a vehicle in the education system was totally repressed. With the coming of democracy, the church sought to recover its role in the system, culminating in Law LXX of July 1999 that established the role of the Catholic Church in the financing of the public and religious activities of the schools. In 1999 the church ran 74 kindergartens, 177 primary schools, 7 schools for special education, 15 vocational schools, and 79 general secondary schools. At the tertiary level in 2000, there were 26 institutions of higher education sponsored by the church, mostly theological colleges but some universities. One example is Pázmány Péter Catholic University, which was established in 1993 following the change of government. Other religions were less impactful. The Károlyi Gáspár University of the Hungarian Reform church was formed in 1993 though.

It should also be noted that there are six "foundation" colleges in Hungary specializing in such subjects as education for the handicapped, business, and entrepreneurial activity. They receive their funding from tuition fees and educational foundation grants and attempt to provide educational services to defined market niches.

Instructional Technology (Computers): There is a growing availability of computers in the schools of Hungary, usually for administrators and within the library. Most students commence computer training at the age of 11 or 12, but voluntary instruction at an even earlier age is not unknown. Most of the institutions of higher education have computer labs but state institutions, particularly in the outlying cities, have a serious lack of computers for instructional technology. Access to the Internet is thus restricted.

Textbooks—Publication & Adoption: The state of school libraries is generally considered poor notwithstanding their heavy use in the curriculum. Budget difficulties in education have meant that new textbooks have not been produced or purchased, and hence the concern is not necessarily content but quantity and the physical condition of the existing inventory. Most socialist texts have disappeared though this was never a major feature of Hungarian libraries. In the area of tertiary education the situation seems a little better. As the institutions merge their holdings and expand, new libraries are being built to cater to the larger institutions. The World Bank has been a major supporter in the revitalization of libraries at the tertiary level.

Audiovisuals: There is a serious deficiency in the provision of audio-visual services in the classrooms at all levels. In large part this is a legacy of the socialist pedagogical method of instruction by means of lecture. Budget restrictions since the collapse of the Socialist system has made the provision of audio-visual as a modern teaching aid even more problematic. Audio-visual aids are limited to overhead projectors and slide projectors.

Curriculum—Development: The state is responsible for the development of the schools' curriculum and, in the case of Hungary, has been very active in the attempted transformation to a more western or global perspective. Teachers have some freedom to decide on their course content based usually on local and regional topics, opportunities, and issues.

Foreign Influences on Educational System: With the granting of associate membership in the European Union (EU) in 1994, the full application to join in 1997, and the joining of Hungary to NATO in 1999, European influences on Hungarian education have become more apparent. In particular Hungary was required to fulfill a number of requirements in order to conform to EU standards, which involved significant foreign involvement. Specific EU influences include Hungarian participation in the Socrates (K1-12 student exchanges), Erasmus (youths and student exchanges in higher education), and Leonardo da Vinci (development of vocational education) projects. Hungary is a partner in the EU European Voluntary service initiative established in 2000 and is also part of the "Fifth framework program" in which research and technological development are coordinated with the EU through the Ministry of Education. Finally, by becoming part of NATO, Hungary could take part in the NATO Science Fellowships Program that links Hungarian research in higher education to scientific institutes within all NATO countries.

Role of Education in Development: Education is very important to the Hungarian economy with more than 297,000 persons employed in this sector in 1997 or 8.14 percent of the labor force, making it a very significant employer in the country. Moreover, education has been touted as a major contributor to the bringing of Hungary into the world economy. To this end there has been a great emphasis placed on the role of the education system in fostering innovative thinking and entrepreneurship—two major areas that are seen as very important for the future of Hungary but were completely lacking in the socialist system of education. This emphasis must be reconciled with the concern that since the high literacy rates and technological achievements in the socialist era, the educational system has regressed. The reasons for this regression are readily apparent: lack of funding for teachers, equipment, and buildings; a movement out of the teaching profession of teachers; and a move away from a teaching career of the best and brightest graduates.

Preprimary & Primary Education

General Survey: Prior to 1990 Hungary had an extensive system of crèches and kindergartens that provided preschool care from the age of one up to the time children started primary school. This system was state-run and was an excellent preparation for school system entry. Mass privatization and the divesting of kindergarten facilities by the state and "new" private enterprises has led to a reduction in the number of preschool facilities. By the year 2000, crèches were still in use, but children could only enter kindergarten at age three and then move into the primary school at six. In 1999 to 2000 there were 4,643 kindergartens with 365,704 students and 31,409 teachers. The children are taught songs, games, and nursery rhymes in the first year and then language, basic mathematics skills, communication skills, and music in subsequent years.

In 1999 to 2000 there were 3,696 primary schools with 960,601 students being taught by 82,829 teachers, a ratio of 11:1 that ranks it amongst the best in the developed world. Enrollments in primary schools are in a state of decline as a result of the overall decline in birth rates. Primary enrollments are falling by about 4 percent per annum, and the decline in enrollments is exacerbated in rural areas as a result of migration into the cities as young people pursue employment opportunities.

One area that has received significant attention in the provision of education has been the attempt by the government to more fully integrate the Roma population into the educational system. Most often these efforts have been directed at the primary level of schooling for, as noted below, the dropout rate for Roma children is particularly high at this level. The official government policy that attempts to give the Roma population a more sedentary lifestyle has created a large number of predominantly Roma villages, and the educational result has been a series of special schools. There are 134 special schools in Hungary, but they are unevenly distributed in the country. In some parts of the country, particularly the northeast, this proportion is as high as 94 percent. The Hungarian Ombudsman for Ethnic and Minority Rights notes that such a disproportionate number of Roma pupils is a sign of institutional prejudice and discrimination and in particular the education of these pupils suffers because of this spatial concentration. Moreover the schools have great difficulty in finding teachers who will and can teach in such schools in part because of discrimination but also because of the need to speak Romany, the Roma language. The government responds that such a concentration helps disadvantaged Roma children but has appointed an Ombudsman for Educational Affairs to study the issue. The issue of Roma education remains a difficult issue. For example in 2000 the Hungarian courts found in favor of Roma students whose primary school had organized a separate graduation ceremony for Roma students, and the local government was required to pay compensation. The issue of Roma education will remain at the forefront of Hungarian educational policy as the EU views respect for minority rights as a major criterion for admittance.

Curriculum—Examinations: The curriculum for all students is set by the state, and teachers generally teach this curriculum though departures are possible. The most important subjects, not prioritized, are mathematics, history, Hungarian language and grammar, physical education, a foreign language of choice, physics, biology and chemistry (the latter 3 only ages 12-14), music, arts, geography, and environmental skills. Music and art lessons only take place in one or two classes per week. At the conclusion of each lesson period of some 45 minutes, the teacher is required to record in a centralized book what was taught to each student. The student will typically have 5 to 6 classes per day. Students are not usually examined in primary schools but are required to do essays and homework and interact during creative problem solving exercises. They are graded on their work on a scale of one (failure) to five (the best) and these cumulative assessments at the end of the school year determine whether they will be advanced to the next grade level.

Urban & Rural Schools: Data on the ratio of urban to rural schools is difficult to obtain. It is known that 25 percent of all primary schools are in the central region of Budapest and Pest County. If rural settlements are defined as those below 10,000 people, then 58.7 percent of schools are in rural areas and 41.3 percent in urban areas. Rural primary schools exhibit lower results in all performance measures than urban schools as enrollments are decreasing as a direct result of state support that is less than urban schools. This is because the amount of state subsidy is directly based on number of enrollments.

Teachers: Most teachers are women. They are usually trained at the regional teachers training institute and in rural areas usually teach in a former collective school building. In preprimary Hungarian schools, 100 percent of the teachers are women while in primary schools 92 percent are women. The average monthly salary in 2001 was approximately 50,000 Hungarian Forints or less than $200. In urban and suburban areas, teaching conditions are better than rural areas with greater access to equipment and supplies. Moreover local city governments are relatively more wealthy than rural governments and hence the buildings are in a better state of repair and thus more conducive to teaching. Overall, including secondary education, teacher numbers in the labor force per capita at 50 per 1,000 is amongst the highest in the world.

Repeaters & Dropouts: The number of repeaters in any one school year in Hungary was reported in 1990 at 3 percent (4 percent males and 2 percent females). Officials suggest that this has not changed significantly over the years. Total numbers of dropouts are not available but it is known that in 1999 the proportion of those reaching the age of 15 but not finishing primary school was 6.3 percent. This is up from 5 percent in 1997 and 5.1 percent in 1998. It is also known that a disproportionate number of these school dropouts are Roma children. In 2000 the EU indicated less than 46 percent of Roma youth completed their primary school education.

Secondary Education

General Survey: In 1999 to 2000 there were 14,155 secondary school teachers in the 1,533 general grammar schools and 26,512 teachers in the 990 secondary vocational schools. In total there were 503,617 students at the secondary level with females in the majority in general secondary schools (87,569 females and 57,641 males). In vocational schools males outnumber females (195,268 males and 162,035 females). The number of enrollments in secondary schools increased on average 3 percent per year between 1997 and 2000, but the decrease in primary and preprimary enrollments should reverse this trend in coming years.

Curriculum—Examinations & Diplomas: The most important diploma a student obtains is his or her Secondary School Certificate, which forms the basis for entering higher education or a profession. It is supplemented by an official book in which the school has recorded all courses taken and the grades received in the various examinations that are a part of the courses.

Teachers: Of the teachers in the secondary school system, most have received a university education, which is a necessary prerequisite to teaching in the school system. In secondary schools teachers tend to teach specialized subjects such as music, physical education, science, and art. With the falling number of teachers and the rising enrollment rate, class sizes are invariably increasing.

Vocational Education: As was noted earlier, a student, upon completing the lower level of primary education at age 14, can either continue in the secondary school or begin specialized technical or vocational study at a vocational school. In 1999 to 2001 there were 357,303 students and 26,512 teachers in 990 secondary vocational schools teaching 350 subjects. In 1999 the number of students in different types of secondary vocational schools were as follows: teacher training (1,684), arts (4,916), journalism and media (114), business administration (41,891), computers/MIS (7,229), engineering (27,929), manufacturing (7,909), architecture (4,939), agriculture (6,055), health (5,851), social services (2,535), human resources (8,445), transportation (4,137), environmental programs (1,996), security (3,100), and pre-vocational training (112,639). Since 1999 the government has dedicated a significant portion of its efforts to reforming the system of vocational education to create conformity with EU practices and objectives. The first measure was to provide a network of Public Evaluation and Examination Centers to standardize vocational education and training. The National Institute for Vocational Education, in conjunction with these centers, undertook an assessment of the needs of economy and recommended changes to the qualifications a student should obtain to reflect the changing labor marketplace. Finally, in January 2000 these qualifications were transferred from the Ministry of Economic Affairs to the Ministry of Education such that such qualifications were part of the educational attainment of the individual. By 2001, some 460 qualifications or 50 percent were under the Ministry of Education. Further progress in this area is being driven by Hungary's participation in the Leonardo da Vinci program that assists in aligning vocational education with future EU labor needs.

Education Outside the School System: In order to fight illiteracy and upgrade the workforce, Hungary has an extensive system of training outside the school system delivered primarily through regional job centers. In 1998 there were 103,675 participants in 5,363 vocations of which government or some other external financial source supported 36 percent. A total of 43 percent of these students were completing secondary school qualifications and 46 percent primary school qualifications. Of the fields of study of the vocational training establishments, 23 percent were in business administration; 20 percent in hospitality, trade, and tourism; 19 percent in the acquisition of computer skills; 16 percent in the industrial sector; 5 percent in health industries; and 17 percent in 7 miscellaneous fields. The institutions providing this type of private training are predominantly private companies (45 percent), autonomous bodies of existing educational institutions (47 percent), and non-profits (8 percent).

Higher Education

Types of—Public & Private: There are no private institutions of higher education with the exception of the 6 foundation universities noted above and the 26 church universities that are run with some support from the state.

Admission Procedures: Admission to Hungarian institutions of higher education commences with the publication of an admissions guide on or around December 15 each year. A central body, the National Office of Higher Education Admissions (NOHEA), publishes this guide. This body also provides information on the criteria required for admission, and sets national university entrance examinations. Their booklet also contains the application forms, which must be submitted by March 1 in the proposed year of entry. (There are two other less significant application periods but these are only for a limited number of subjects and institutions.) This body receives and processes the application forms after March 1 and sets entrance exams. It then acts as a liaison with the institutions of higher education.

Individual institutions have a significant role in the selection and admission of students. Applicants are generally scored on a combination of their scores in the final examination at secondary school, their overall GPA in secondary school, and their score on the NOHEA national examinations. However in practice the individual institutions have significant autonomy in the criteria they use in ranking an applicant. In some cases NOHEA scores alone may be used or the examinations waived (particularly for outstanding students). Language ability is often an important criterion, as is previous professional training. Health and artistic abilities may also be used. Finally a parent who graduated in the proposed profession, particularly law and medicine, may also be a factor. These subjective criteria for admission are awarded as "extra points" when creating an applicant's total score for admission. Essentially the institutions control their entry numbers and choose their entry-level class.

Applicants, on their application form, may apply for several majors and institutions but must rank their choices as they can only be admitted to one institution. The national scores for the NOHEA tests are published in July, and the applicant can then see if he or she has passed the standard for university or college admission. If this is so, at that time the prospective student's secondary or lower choices for colleges are dropped. It is also at this time that the "extra points" are awarded to place students.

It should be noted that in 2000 the Ministry of Education began a process to reform this admissions process, particularly to standardize admissions and make the system more equitable, transparent, and fair. To do this it is expected that greater emphasis will be placed on overall performance in the secondary school system and the final secondary school score and the NEOHA test will be made more responsive to specific applications to specific disciplines. The Ministry hopes to have reformed the secondary school examinations by 2002 and the university entrance exams by 2005. Finally, as part of this overall change, the admittance of more students into higher education is planned. At present only 17 percent of all eligible students are in higher education (up from 12 percent in 1995). The system is therefore seen as elitist and discriminatory.

Administration & Governance: Administration of higher education establishments is conducted by the individual institution with the state acting in an oversight capacity and enforced by granting an accreditation license to award degrees. The senior administrator is the rector (or the director general in a small number of colleges) who is elected by the university faculty for a period of five years, which is a renewable term. The rector reports to an institutional council and a senate that ratifies his decisions but who can also veto his decisions. The state can only intervene in university affairs in theevent of legal irregularities. Thus a university is essentially autonomous in regard to its inner workings. The composition of the governance boards is specified in the Higher Education Act of 1993-1996.

Enrollment: In 1999 there were 62 institutes of higher education in Hungary serving 280,000 students. Most are located in and around Budapest. With the amalgamation of the former Socialist institutions, there has been a move to provide regional centers of educational excellence that in turn will create economic development. Thus the cities of Debrecen, Miskolc, Szeged, and Pécs have taken on importance in not only regional education but also regional economic development. Eötvös Loránd University, with 18,500 students and more than 1,000 faculty; the Technical University of Budapest, with 12,300 students and more than 1,000 faculty members; and the Budapest University of Economic Science and Public Administration, with 3,700 students and 375 full time faculty, are the largest institutions of higher education in Budapest. Budapest is also the center for universities and colleges concentrating on music, fine arts, and applied arts. The University of Pécs, with 407 full-time faculty members and 19,500 students; the University of Debrecen, which will have 1,600 full-time faculty members and 14,000 students when 4 institutions are fully amalgamated into 1; and the University of Szeged, catering to 6,000 students with approximately 500 full-time faculty members, have the most students outside Budapest. Highly specialized studies (veterinary medicine, dentistry, pharmaceutics, forestry, and horticulture) tend to be located in only one institution, usually in the city and institution that provided that specialization in socialist times. Of all the institutions of higher education, the ecclesiastical institutions catered to 10,303 full-time students and 5,511 evening and correspondence students in 1999 while the foundations catered to 7,582 full-time students and 15,743 evening and correspondence students.

Teaching Styles & Techniques: The principal language of instruction in the institutions is Hungarian. Teaching pedagogy is in the process of slow change from primarily a standard lecture format to a more varied style with wider use of source material. Thus the use of overheads is becoming increasingly common but PowerPoint presentations and the use of Internet sources is still rare.

Finance (Tuition Costs): Typical tuition fees for Hungarian nationals for university courses range from US$75.00 (20,000 HUF) per course rising to $2,200 per semester, but fees for all Hungarian colleges and universities are generally paid for in full by the state in the form of fee waivers. In addition the state may give scholarships for living expenses or support in the form of meals and accommodations. In addition the Hungarian government has substantially increased the number and amount of scholarships for Roma students in higher education in order to increase the number of Roma in higher education. Data indicates only 0.24 percent of the Roma population obtained a degree in higher education in 1999.

Courses, Semesters, & Diplomas: Higher education in Hungary depends on the institution and the level of study. At the college level the length of study is either three or four years. The student receives the equivalent of a baccalaureate degree. For a university degree, the length of study is between four and five years and is equivalent to obtaining a master's degree. The exception to these degrees are degrees in law and medicine in which the law degree can be obtained in four and a half years and medicine is typically of six years duration with significant practical work in the latter part of the prospective lawyer or doctors study.

During the socialist regime, upon completion of the university education, a student could undertake further post-graduate work, usually of a scientific nature. Thus a person could get a doctor universitatis (university doctor or dr. univ) from a university or a candidatus scientiarium (candidate of sciences or C.Sc.) or doctor scientarium (doctor of sciences or D.Sc.) as part of the Academy of Sciences system. However within the Act of 1993 there was the provision for universities to grant a Ph.D. There has been a dramatic change in the number of doctoral degrees awarded from the former system to the new Ph.D. qualification (or a Doctor of Liberal Arts—DLA —in the case of liberal arts) allowed under the law. In all doctoral programs the student is required to pursue a proscribed course of study, undertake original research, and write and defend a dissertation.

Upon completion of their degree program students receive a college graduate degree (fo~iskolai oklevél ) or a university graduate degree (egyetemi oklevél ) that may be referred to as a Bachelor of or Master of, depending on their study program and its length in order to facilitate comparison with international degrees. In the case of medical doctors, dentists, veterinary doctors or lawyers, their degrees are dr. med, dr. med. dent., dr. vet., and dr. jur., respectively.

All higher education institutes work in a two semester system that commences in September and ends in May with a one-month winter recess.

Professional Education: Universities and colleges can also provide certification programs of shorter duration than typical university courses. This is called Accredited Higher Vocational Training (AHVT) and is typically in a specialized area of applied study. These programs are usually two years in length, taught at colleges (though not exclusively), and in cooperation with secondary vocational schools. The graduate receives a certificate upon graduation, not a diploma. In addition university and college courses may be taught at other campuses to extend the reach of an institute's course offerings. This represents an important source of supplementary income for both institutions and their faculty.

Postgraduate Training: There is a long history in Hungary of post-graduate teaching in the various Academies of Science that was usually linked with the award of the doctorate degree. Out of necessity, this training was highly specialized and found in those specialized institutes established under the socialist system to produce an intellectual elite. This system is gradually being replaced by a system where university professors undertake both research and teaching while former academicians in academies must make their living by teaching as well as undertaking research.

Foreign Students: There are a number of foreign students in Hungarian universities primarily studying at the baccalaureate level. Typical of the extent of foreign students was the University of Pécs with 95 foreign students or 0.5 percent of their total student body in 2001. Seventy-five came from Europe, primarily under the EU Socrates program, and the remainder were American. Many of the students classified as foreign are ethnic Hungarians granted scholarships to study at Hungarian institutions. Thus, for example, ethnic Hungarians living as Croatian citizens in Croatia or Romanian citizens living in Transylvania often study in Hungary. The number of students from Western Europe and the United States is considerably less owing to the difficulty in understanding Hungarian, which is the language of instruction. Many universities provide lectures in English in part to offset this problem, and these courses are often linked to the Socrates/Erasmus program of the EU. Elementary language instruction in Hungarian is also a significant part of Hungarian higher education course offerings. In 1999 there were 448 Americans studying in Hungary.

Students Abroad: Given the difficulty of transition and the uncertain future of the nation, any ability to speak a foreign language, particularly English, and the resultant opportunity to study abroad has become a major incentive to students in higher education completing their studies overseas. This incentive is unfortunately accompanied by a reluctance to return to Hungary to become part of the labor force. Essentially a brain drain is occurring—albeit on a small scale, but enough to warrant concern. In 1999 there were 1,166 Hungarian students in the United States with a little more in Europe, the majority being in Germany. The major deterrent for Hungarian students to study abroad is the high cost of tuition and living expenses outside Hungary. Hence most students studying outside Hungary are on some kind of scholarship. It should also be noted that in 2000, a total of 479 Hungarian scholars were also studying in the United States, the largest of any eastern European country except Poland.

Role of Libraries: As was noted above, libraries have received serious attention since the change from a socialist government. In addition the historic importance placed on education throughout the last 500 years has left an impressive legacy of historic documents and literature that is available for consultation.

Administration, Finance, & Educational Research

Government Educational Agencies: There are essentially two levels of educational responsibility in Hungary. At the local level, elected administrative bodies (village and city councils) are responsible for school provision, maintenance, and teaching materials, including teachers. At the state level the Ministry of Education sets the curriculum for all primary and secondary public schools while institutions of higher education set their own curriculum with approval from the Higher Education and Scientific Council. Control over education policy is exercised by the state through the HESC by means of allocating finances, certification, and licensing of educational bodies.

At the local level schools are funded through a portion of tax revenue that is provided to schools by the local municipality and supplemented by state funds.

In Hungary, local teachers elect school principals. However, the election is a formality since the local government appoints school leaders in the end. School boards exist but without power or decision-making authority—policy and appointments are thus made by the local mayors and councils. Thus a school principal may not be a professional educator but rather a political appointee.

Ministry of the Department of Education: Daily responsibility for state education resides in the Ministry of Education based in Budapest. There were 700 public servants working in the Ministry of Education in 2001—613 ministry employees, 5 for the secretariat of UNESCO, and 82 working for the National Public Education and Examination Board.

Educational Budgets: State budgeting is still the primary source of funds for education in Hungary. Hungary's Gross National Product was $46.6 billion in 1998, and while only 1992 data on contribution to education is available (in 1992 education contributed 7.5 percent to the GDP), it is estimated that the percentage has remained approximately the same.

In 1996, some 308 billion forints (US$1,029 million) of government expenditures were spent on education. By 2001 spending on education represented 4.6 percent of the gross national product and had fallen since 1996 when it was just over 6 percent. Of the monies spent on education, 0.74 percent of the GNP went to kindergarten education, 2.38 percent to primary, 1.47 percent to secondary, 0.81 percent to higher education, and 0.28 percent to other forms of education. Education spending represented 9.56 percent of all government expenditures in 1990, and it fell at an average annual rate of 5.2 percent between 1990 and 1996. In 1996 education represented 8.66 percent of all state expenditures. Inflation over the years has also eroded significantly the purchasing power of these expenditures and notwithstanding the commitment to funding education, it is apparent that education spending is falling.

Types of Expenditures: Preprimary and primary education consumed 36.8 percent, secondary education consumed 46.3 percent and tertiary education consumed 15.5 percent of the national education budget in 1996. However expenditures per pupil as a percentage of GNP indicate only 18 percent was spent on primary and preprimary education (down from 23 percent in 1990), 49 percent was spent on the secondary sector, and 33 percent on tertiary education. Teacher and professional salaries take up approximately 70 percent of the total education budget.

National Education Organizations: There are a large number of committees and advisory bodies that advise the Minister of Education. The presence of advisory bodies such as HÖOK, the Association of Hungarian Students, the House of Professors, the Hungarian Academy of Sciences, and the Hungarian Rectors Conference are important independent bodies guiding Hungarian educational policy. Moreover the two major committees that guide policy and programming, the Hungarian Accreditation Committee and the Higher Education and Scientific Council, have representatives from all interest groups. For example, the HAC has a board of 30 members chosen from higher education, research institutes, and professional organizations. There are also non-voting members on the HAC from unrepresented groups and also a nonvoting student representative. The HESC has 21 members on its board of which 10 are academics, 10 are from user organizations (employers, municipalities, academic bodies, and unions), and 1 is from the Ministry of Education.

Educational Research: There are two bodies conducting educational research in Hungary; the Hungarian Institute for Educational Research (Oktataskutato Intezet ), which deals with sociological and other social science issues associated with education. They also publish a periodical called "Education." This institute provides for a doctorate in education through the University of Debrecen. The second body, the National Institute of Public Education (Orszagos Kozoktatasi Intezet ), carries out research at all levels of education and across the spectrum of educational issues usually by means of surveys on education topics. Both institutes are part of the Ministry of Education but they also receive external funding from private sources both Hungarian and international.

Project specific research is also undertaken by the HAC and the HESC. As part of their mandates to provide educational policy and program development, they may see the need to research a particular issue. To that end they frequently utilize experts and professional committees to undertake research as preparatory work for the decisions of the bodies.

Nonformal Education

Adult Education: Adult education has been recognized as a priority in Hungary in order for adults to adjust to the new socio-economic system. However the requirement that students (or businesses) pay for this learning seems to be a major obstacle to its success in difficult economic times. Invariably, if the individual wishing to upgrade his or her skills is unemployed, the government, through the job-center network, will pay for or subsidize the training. Costs vary on the type of training but the average in 2001 was between 70,000 and 120,000 HUF (US$230 to US$400). Foreign languages, bookkeeping and accounting, marketing and market economics, management and particularly human resource management, and computer literacy have been identified as priorities, but few establishments outside the larger cities of Budapest, Debrecen, Miskolc, Szeged, and Pécs offer these programs at present. In 1999 there were 132,789 persons registered as undertaking 6,743 types of adult education courses.

Open Universities & Distance Education: There are no open university-type opportunities. Distance learning in the form of correspondence courses through existing universities is possible but these are supplementary to the universities' normal in-residence structure. Correspondence courses with major universities are a significant contributor to the part time student body. There are distance education courses delivered through TV, radio, or Internet. These are becoming more and more popular but a dramatic growth in online courses is limited owing to the limited availability or scarcity of Internet links.

Teaching Profession

Training & Qualifications: Seven universities and colleges offer teacher training either as distinct faculties of teacher training or integrated into schools of natural, humanities, or social science. Those teachers who are trained in colleges graduate after four years and are qualified to teach in kindergartens and primary schools. Those trained in universities train for five years and are then qualified to teach in secondary schools. In 1999 some 21 percent of the total tertiary student population in teacher training colleges were education majors. This was down from 35 percent in 1994 probably reflecting the poor salaries to be expected upon graduation. In 1999 to 2000, there were 44,500 students studying in teacher training institutes, and if one assumes one-sixth of these graduated, there would be 6,500 new teachers in 2000. Eighty percent of all new graduates were women. In view of the low birth rates it might be expected that the demand for teachers in the twenty-first century will be reduced but this must be balanced with a teaching force that has a high median age. Moreover the loss of teachers, particularly in rural areas as a result of urbanization, will be cause for concern. This process will be exacerbated by the fact that urban schools have a higher prestige attached to teaching in them so they are preferred by teachers. It is also known that while 37 percent of the Hungarian population is considered rural, only 8 percent of students leaving secondary schools are from rural areas. As a result the challenge is to persuade urban teachers to move to rural areas—a policy that is in conflict with the urban migration trend of the rural population. Finally, upon the transformation away from a socialist economy to a more western system in 1990, there was a shortage of English language teachers in particular. By 2000 there was no teacher shortage and in some subject areas a surplus.

Salaries: Education is generally considered by Hungarians to be one of the worst paying employment sectors in the nation. The average teacher salary has increased every year since 1990 but has been grossly inadequate both in purchasing power and in its ability to keep up with inflation. It remains one of the most problematic areas of Hungary's educational system. In 2001 a typical salary of a person working in the education sector would be 72,710 HUF gross and 48,533 HUF net. There is no official discrimination in salary between men and women. More detailed data from the Ministry of Education reveal that salaries for women can range from 67,644 HUF to 46,162 HUF and for men 90,122 HUF to 56,714 HUF. This probably reflects the lower salaries for women who tend to occupy the more menial tasks (cleaners and canteen workers) in the education system. The typical salary scale quoted above is for all persons in education. Specifically for teachers, in 1998 a kindergarten teacher received 1.14 times the average salary, primary teachers earned 1.38 times, a secondary school teacher 1.67 times, and a university teacher 1.9 times. At the rate of exchange in 2001, a primary school teacher would take home approximately US$160.00 per month, while a university assistant professor could be expected to receive US$300.00 (In 2001, $1.00 was approximately 300 forints). The amount of salary usually depends on the years spent in the job, educational background, degree, and number of languages spoken, but not on gender. These salaries should be seen in light of daily living expenses in Hungary in 2001 that invariably exceeded salary by a significant amount. Indeed the average salary of a teacher or university professor in Hungary is such that supplemental sources of income must actively be sought. In rural areas it is estimated that 80 percent of teachers make extra money in addition to their teaching salary while in Budapest the figure is 79 percent of primary school teachers. In secondary schools the figure is 88 percent. This supplemental work usually involves private tutoring, supplemental teaching or consulting or even separate and different employment outside school hours, especially during the long summer recess.

Unions & Associations: Teachers are represented in Hungary by a union called The Democratic Union of Higher Education Employees (Pedagógusok Szakszervezete ). However, the role and influence of this trade union, as those of all other trade unions, is weakening. In the socialist era they were not, nor could be, real organs of interest or representation, and after the systemic change in 1990, they were unable to adjust to the new political and economic system. The Union of Higher Education that represents employees in other areas of education (Felso~oktatási Dolgozók Szakszervezete ) is not an exception, either. It is too weak to have a strong negotiating position.

There are also a number of student and administration bodies that are actively making representation in the process of changing the Hungarian educational system. For example there is a students' union that represents students' interests; it is represented at the national level by an association of students' unions with the acronym HÖOK.

Summary

General Assessment: The Hungarian educational system is currently in a state of rapid and dramatic change. Up until the collapse of the eastern Bloc, it was a model of literacy, availability, and accomplishment. Since 1990 it has been required to transform to a more global orientation, conform to a more European system, and make provision in its graduates for a student that must function in a market economy and democratic system. The adjustment has been often slow, painful, and problematic. The principal challenges appear to be:

• The desire to retain the standard of excellence that has characterized Hungarian education for many years
• The ongoing ability of the Central government to find the financial means to provide complete funding for education
• The need to pay teachers in the public schools and universities a living wage
• The need for curriculum change to reflect the move away from a centralized economy to a market-driven privatized economy
• A decreasing birth rate, particularly in the urban areas, that will put pressure on the educational system to adjust to a diminution in students entering the school system in the coming years
• The removal of administrative appointments from the political sphere and its replacement by a system based on competition and merit.

It is also common practice that people who have not undergone educational leadership training, nor studied organizational development, make all education decisions at the local and regional level. It appears that there is the need for the installation of a professional educational leadership system of school principals and superintendents to provide professional leadership at the local and regional level. This in turn would suggest the need for more power for school boards made up of parent representatives.

International Programs: Upon the fall of the Soviet Union, the countries of the eastern Bloc embarked on a rapid program of opening up their educational system to the influences of western educational institutions. Many of these links were established by expatriate Hungarians who were located in the west as refugees or descendants of refugees from the 1956 Hungarian uprising. Hungarian institutions therefore invariably have a network of partners that are former socialist states as well as European and American partners. More specifically, the desire of the Hungarian government to join the European Union also created an extensive liaison with western institutions. Thus, for example, the HAC has an international advisory board of nine European Union and U.S. academics that meet yearly to advise and recommend changes to Hungary's educational system. The overall result today is vibrant and active exchanges between Hungarian educators and international educational institutions.

Needs for Changes—Future: It would therefore appear that the most significant changes required for Hungary's educational system to stabilize would be for the country to enjoy economic stability and prosperity from which education could take its place as a significant contributor to the country's viability. This kind of stabilization and growth is anticipated upon the accession of Hungary to the EU and at that time a revitalization of Hungarian education might be said to be complete.

Bibliography

Europa Publications 2001. The Europa World Yearbook 2000. 41st ed. Vol. 2. London: Europa Pub.

International Association of Universities 1998. International Handbook of Universities. 15th ed. New York: Groves Dictionaries, 1998.

United Nations Educational, Scientific and Cultural Organization. (UNESCO). The Right to Education. World Education Report 2000. Paris: UNESCO, 2000.

Government of Hungary, Ministry of Education, 2001. Available from http://www.om.hu/jg.html.

—Richard W. Benfield and
Zoltán Raffay

HUNGARY

HUNGARY , state in S.E. Central Europe.

Middle Ages to the Ottoman Conquest

Archaeological evidence indicates the existence of Jews in Pannonia and Dacia, who came there in the wake of the Roman legions. Jewish historical tradition, however, only mentions the Jews in Hungary from the second half of the 11^th century, when Jews from Germany, Bohemia, and Moravia settled there. In 1092, at the council of Szabolcs, the Church prohibited marriages between Jews and Christians, work on Christian festivals, and the purchase of slaves. King Koloman protected the Jews in his territory at the end of the 11^th century, when the remnants of the crusader armies attempted to attack them (see *Crusades). Jews resided only in towns ruled by the bishops where important communities developed: in Buda (see *Budapest; 12^th century), Pressburg (*Bratislava, Hung. Pozsony; first mentioned in 1251), Tyrnau (*Trnava, Hung. Nagyszombat), and *Esztergom (by the middle of the 11^th century). During the 12^th century the Jews of Hungary occupied important positions in economic life. The nobles felt it necessary to curb this development, and in the "Golden Bull" (1222) an article was included which prohibited the Jews from holding certain offices and from receiving titles of nobility. The legal status of the Jews was settled by King Béla iv in a privilege of 1251, which follows the pattern of similar documents in neighboring countries. As a result of the Church Council of Buda in 1279, Jews were forbidden to lease land and compelled to wear the *Jewish badge. In practice, these decrees were not applied strictly because of the king's objection.

During the reign of Louis the Great (1342–82), the hostile influence of the Church in Jewish affairs again predominated. The *Black Death led to the first expulsion of the Jews from Hungary in 1349. A general expulsion was decreed in 1360, but in about 1364 their return was authorized though they were subjected to restrictions. In 1365 the king instituted the office of "judge of the Jews," chosen from among the magnates, who was in charge of affairs concerning Jewish property, the imposition and collection of taxes, representation of the Jews before the government, and the protection of their rights. The reign of Matthias Corvinus (1458–90) marked a change in favor of the status of the Jews, despite his support of the towns, whose inhabitants, the overwhelming majority of whom were Germans, were inimical to the Jews as dangerous rivals.

In 1494 there was a *blood libel in Tyrnau and 16 Jews were burned at the stake. In its wake, anti-Jewish riots broke out in the town; these were repeated at the beginning of the 16^th century in Pressburg, Buda, and other towns. The economic situation of the Jews was also aggravated: King Ladislas vi (1490–1516) canceled all debts owing to the Jews. In 1515, however, the Jews were placed under the direct protection of Emperor Maximilian i (the pretender to the crown of Hungary). During this period, a degrading form of Jewish *oath before the tribunals was introduced; it remained in force until the middle of the 19^th century. During the reign of Louis ii (1516–26) hatred of the Jews intensified as a result of the activities of Isaac of Kaschau, the director of the royal mint, and the apostate Imre (Emerich) Szerencsés (Latin: Fortunatus), the royal treasurer who devalued the currency and raised the taxes in order to provide funds for the war against the Turks.

During the middle of the 14^th century the most important Hungarian community was that of *Szekesfehervar (Ger. Stuhlweissenburg), whose parnasim also directed the general affairs of the Jews of the country. During the 15^th century the community of Buda gained in importance as Jews expelled from other countries also settled there. Little information is available on the spiritual life of Hungarian Jewry during the Middle Ages. Apparently it was poor in comparison to that in neighboring countries because of the dispersion of the communities and the small number of their members. The first rabbi whose reputation spread beyond Hungary was Isaac *Tyrnau (late 14^th–early 15^th century); in the introduction to his Sefer ha-Minhagim ("Book of Customs") he describes the poor condition of Torah study in Hungary.

Period of the Ottoman Conquest

The first, temporary Ottoman conquest of Buda in 1526 caused many of the Jewish inhabitants to join the retreating Turks. As a result of this movement, congregations of Hungarian Jews formed within the important communities of the Balkans. After central Hungary was incorporated within the Ottoman Empire in 1541, the Jewish status was relatively satisfactory. Jewish settlement in Buda was renewed, and Sephardim of Asia Minor and Balkan origin also settled there. During the 17^th century Buda was one of the most important communities of the *Ottoman Empire. This was largely due to the authority of its rabbi, *Ephraim b. Jacob ha-Kohen, author of Sha'ar Efrayim (1688).

In the Hapsburg dominions of Hungary in this period hatred toward the Jews increased. In 1529, following a blood libel in Bazin, 30 Jews were burned at the stake and the others were expelled from the town. The Jews were also expelled from Pressburg, Oedenburg (*Sopron), and Tyrnau. However, the magnates of western Hungary accorded their protection to the Jews expelled from the towns. The Jews expelled from Vienna found refuge on the estate of Count Esterhazy in *Eisenstadt and six small neighboring towns in 1670. It was the oldest of the "Seven Communities" of *Burgenland, granted autonomy in a privilege issued in 1690. In *Transylvania, under the rule of Gabriel Bethlen (1613–29), the status of the Jews was stabilized by a privilege granted in 1623. The favorable attitude toward the Jews there stemmed from *Reformation influences in Transylvania (see also Simon *Péchi).

18^th to 19^th Centuries (Until 1867)

By the beginning of the 18^th century, when most of Hungary came under Hapsburg rule, only a few remnants of the ancient Jewish settlement were to be found there. At this time, however, a movement of Jewish migration began, marking the formation of Hungarian Jewry of the modern era. The census of 1735 enumerated 11,600 Jews (in reality, their numbers were far greater) of whom only a few were born in Hungary, while the majority had come from Moravia and the minority from Poland. Most of the Jews were peddlers and small tradesmen. Because of the hostility of the townsmen, most of them lived in the villages. During the reign of *Maria Theresa (1740–80) the situation of the Jews deteriorated. In 1744 an annual "tolerance tax" of 20,000 guilders was levied on them. It was gradually increased, until it amounted to an annual sum of 160,000 guilders at the beginning of the 19^th century. The reign of *Josephii brought some improvements. In 1783 Jews were authorized to settle in the royal cities. There were 81,000 Jews in Hungary in 1787.

During the "period of reform" in Hungary in the 1830s and 1840s, the Jewish question was discussed in the legislative institutions, in literature, and in the periodicals and press. In general there was a marked tendency in favor of granting civic rights to the Jews, but on the whole society took a critical view of the Jews and assumed an attitude of reservation toward them, demanding religious and social reforms (see *Emancipation). The suppression of the revolution of 1848–49 also affected the status of the Jews. Because many of them were active in the revolution, the Austrian military government imposed a collective fine of 2,300,000 guilders on the communities; it was later reduced to 1,000,000 (in 1856, the sum was reimbursed in the form of a fund for educational and relief institutions). During the 1850s, the Jews were still subjected to judicial and economic restrictions (the Jewish oath; the need for a marriage permit; the prohibition on acquiring real estate; and others). Most of the restrictions were abolished in 1859–60; the Jews were authorized to engage in all professions and to settle in all localities. The first political leaders of the new Hungary, including Count Gyula Andrássy, Ferencz *Deák, and Kálmán Tisza, expressed their approval in the granting of civic and political equality to the Jews, and after the Compromise with Austria, the bill on Jewish emancipation was passed in Parliament without considerable opposition (Dec. 20, 1867). During the same period there was a rapid growth of the Jewish population of Hungary, due both to natural increase and immigration from neighboring regions, especially Galicia. The number of Jews had risen to 340,000 by 1850, and in the first population census held in modern Hungary (1869), 542,000 Jews were enumerated.

The Emancipation Period, 1867–1914

During this period Hungarian Jewry consolidated from the political, economic, and cultural aspects and succeeded in establishing a strong position in the life of the country. Jews played a considerable role in the development of the capitalistic economy of Hungary, and from the 1880s large numbers entered the liberal professions, and also contributed to literary life, in particular in journalism. In economic activity Jews in Hungary were especially prominent from the mid-19^th century in the marketing and the export of agricultural produce. Emancipation offered a wide scope for Jewish economic initiative in the establishment of banks and other financial enterprises. Jewish capital contributed significantly to the financing of heavy industry at the close of the 19^th century. The role of the Jews in agriculture was also considerable, as owners of estates and in particular as contractors in agricultural management and marketing. Before World War i, 55–60% of the total number of merchants were Jews, approximately 13% of the independent craftsmen, 13% of owners of large and medium-sized estates, and 45% of the contractors. Of those professionally engaged in literature and the arts, 26% were Jews (of the journalists, 42%), in law, 45%, and in medicine, 49%. On the other hand, only a small number of Jews were employed in public administration. The Jewish population numbered 910,000 in 1910. The identification of the Jews with the Magyar element in the Hungarian kingdom was an important factor in determining the general political attitude toward them. In 1895 the Jewish religion was officially recognized as one of the religions accepted in the state, and accorded rights enjoyed by the Catholic and Protestant religions. The law was enacted despite vigorous objection from the Catholic Church and its allies the magnates, who succeeded in delaying its ratification on three occasions.

From the mid-1870s political antisemitism emerged as an ideological trend, subsequently to become a political force, led by a member of Parliament, Gyözö Istóczy. The driving forces behind it were the resentment felt by those classes which were dispossessed by the capitalistic economy and the effects of recent social changes. Thus the main bearers of antisemitism were the gentry. German examples also played some part in Hungarian antisemitism. At the beginning of the 1880s anti-Jewish propaganda intensified and reached a climax with the blood libel of *Tiszaeszlar in 1882, which aroused much emotion and was the cause of severe anti-Jewish disturbances in several towns. The acquittal of the accused and the condemnation of the libel by many gentile leaders did not calm feelings. In 1884 an antisemitic faction of 17 members of parliament was organized but it did not wield much influence there, owing to internal dissension. Jewish defense against antisemitism took the form of apologetic and polemic literature. In face of the emphatic attitude of the government and the main political parties against antisemitism, it was deemed unnecessary to initiate any organized action. At the turn of the century the Catholic People's Party became the main bearer of antisemitism. It regarded it as its main task to combat alleged anti-Christian and destructive ideas, especially Liberalism and Socialism, which according to clerical presentation was closely associated with the Jews. Jewish intellectuals and their allegedly harmful influence were a particular target for unrestricted attack. Jewish reaction to clerical antisemitism was stronger, more pronounced and more courageous than to the antisemitism in the 1880s, which seemed to be less menacing. Many of the tenets of antisemitism in this era became cornerstones of the anti-Jewish ideology in the inter-war period. Antisemitism was also widespread among the national minorities, especially the Slovaks, principally kindled because the Jews tended to identify themselves with the nationalist policy of the Magyars.

During World War i the Jews suffered losses in life (about 10,000 Jews fell on the battlefield) and property. At the same time, anti-Jewish feeling was strong having increased because of the presence of numerous Jewish refugees from Galicia, which had been occupied by the Russians, and through the activities of Jews in the war economy.

Internal Life during the 19^th Century

In origin, spoken language, and cultural tradition and customs, Hungarian Jewry was divided into three sections: the Jews of the northwestern districts (Oberland) of Austrian and Moravian origin, who spoke German or a western dialect of Yiddish; the Jews of the northeastern districts (Unterland) mostly of Galician origin, who spoke an eastern dialect of Yiddish; and the Jews of central Hungary, the overwhelming majority of whom spoke Hungarian. In the classification of the inhabitants according to nationality, the overwhelming majority of the Jews in Hungary declared themselves members of the Hungarian nation; Jewish nationality was not officially recognized and the Jews thus became a party in the struggle between the ruling Magyar nation and the national minorities of Hungary. The internal life of the Jews of Hungary during the 19^th century was marked by polemics between the Orthodox on the one hand and those advocating modern culture, integration, and *assimilation on the other. At the beginning of the century, a strict Orthodox trend was established in Hungary under the leadership of Moses *Sofer of Pressburg. This town became a spiritual center for the Orthodox Jews of Hungary, and its yeshivah the most important in central Europe; it exerted much influence over the Hungarian communities and even beyond them.

From the 1830s, Haskalah made its appearance in Hungary, and the movement of religious *Reform, whose leading spokesmen there were Aaron *Chorin and Leopold *Loew, spread to several communities. Extreme Reform did not strike roots in Hungary, but the wish to introduce reforms in education and religious life made progress and aroused violent opposition from the Orthodox. The polemics between the Orthodox and the reformers (who in Hungary were referred to as *Neologists gained in intensity to become a central issue at the General Jewish Congress convened by the government in 1868.

The Congress was called in order to define the basis for autonomous organization of the Jewish community. It was attended by 220 delegates (126 Neologists, and 94 Orthodox). The conflict between the factions was aggravated when the majority refused to accept the demands of the Orthodox on the validity of the laws of the Shulḥan Arukh in the regulations of the communities. A section of the Orthodox opposition left the Congress, which continued with its task and established regulations for the organization of the communities and Jewish education. The organizational structure was to be based on the existence of local communities, on regional unions of communities, and on a central office which was to be responsible for relations between the authorities and the communities. The Orthodox did not accept these regulations, and particularly opposed those concerning the existence of a single community in every place. They appealed to Parliament to exempt them from the authority of these regulations. Parliament consented to their demands (1870) and the Orthodox began to organize themselves within separate communities. There were also communities which did not join any side and retained their pre-Congress status (the *status quo communities). The threefold split left its imprint on the internal organization and life of Hungarian Jewry until the Holocaust.

Moses Sofer and his school decisively influenced the development of Orthodox Jewry in western and central Hungary. Torah study became widespread among large sections of Orthodox Jewry, and yeshivot were established in every large community. The most renowned of these, besides that of Pressburg, were those of *Galanta, Eisenstadt, *Papa, Huszt (*Khust), and Szatmar (*Satu-Mare). During the 19^th century the Hungarian rabbinate was of a high standard and produced halakhists, authors of religious works, and community leaders, such as Sofer's son Abraham Samuel Benjamin *Sofer and grandson Simḥah Bunem *Sofer, Moses Schick, and Judah Aszód (1794–1866) in Szerdahely (Mercurea), Aaron David Deutsch (1812–78) in Balassagyarmat, Solomon *Ganzfried, and others. Torah literature underwent a considerable development, and a place of importance was held by learned periodicals in this sphere.

*Ḥasidism spread in the northeastern regions of Hungary, where it did not encounter violent opposition from the rabbis. Isaac Taub is regarded as having introduced Ḥasidism into Hungary; after his death the Ḥasidim there gathered around Moses *Teitelbaum in Satoraljaujhely. He founded a ḥasidic-rabbinical dynasty which was active in Maramarossziget (Sighet) and its surroundings. Another center of Ḥasidim was Munkacs (*Mukachevo), in Carpathian Russia, where Isaac Elimelech Shapira settled. In addition, the dynasties of the ẓaddikim of *Belz, Zanz, and *Vizhnitz had considerable influence in Hungary. Ḥasidism left its imprint on the Jews of the northeastern regions, and differences in customs and way of life arose between the Ḥasidim in Hungary and the section influenced by Pressburg and its school.

From the close of the 19^th century, assimilation became widespread within Hungarian Jewry and there was an increase in apostasy especially among the upper classes. Mixed marriage became a common occurrence, particularly in the capital.

Attachment to Ereẓ Israel was already ingrained within Hungarian Jewry from the period of Sofer, upon whose recommendation some of his distinguished disciples had emigrated to Ereẓ Israel where they ranked among the leaders of the Ashkenazi yishuv during the middle of the 19^th century. During the *Ḥibbat Zion period, Josef *Natonek was active in Hungary, and some believe that this activity influenced Theodor *Herzl, who was born in Budapest and spent his childhood and youth in Hungary. The nationalist ideal and political Zionism, however, only seriously attracted a limited circle of the academic youth, the intellectuals, and a minority of Orthodox Jewry, while assimilationist circles and the overwhelming majority of the Orthodox were sharply and firmly opposed to them. The Kolel Ungarn (Hungarian Community) in Jerusalem (see *Ḥalukkah) was a center of extremist opposition to Zionism in Ereẓ Israel, and the *Neturei Karta faction later developed from it.

1919 to 1939

The Communist regime which came to power in Hungary after its defeat in World War i included a considerable number of Jews in the upper ranks of the government led by Béla *Kun. After the Communist revolution had been suppressed, the establishment of the new regime was accompanied by riots and acts of violence against the Jews – "The White Terror" – the number of whose victims has been estimated at 3,000 dead.

With the stabilization of the political situation, the acts of violence abated, but the declared policy of the government remained antisemitic. In 1920, a *numerus clausus bill was passed, restricting the number of Jews in the higher institutions of learning to 5%. The situation improved while Stephen Bethlen was prime minister (1921–31), and the negative reactions aroused by the anti-Jewish policy weakened this tendency, even though widespread antisemitic activity was uninterruptedly carried on. In 1928 an amendment was introduced to the numerus clausus act, but the restrictions were not entirely abolished.

Another act of the same year granted the Jews the same right of representation in the Upper House of Parliament as the other religious communities. Rabbis Immanuel *Loew for the Neologists and Koppel *Reich for the Orthodox were elected to sit there. During the first few years after World War i, Zionist activity was brought to a halt by the government, but in 1927 the regulations of the Zionist Organization were again ratified and it was authorized to renew its organizational and propaganda activities.

The relative tranquilization in the situation of the Jews in Hungary also continued after the resignation of Bethlen and the rise to power of the Right. A sharp anti-Jewish turn took place during the late 1930s as a result of the strengthening of the Rightist circles and growing German-Nazi influence. In 1938 the "First Jewish Law" was presented to Parliament; it restricted the number of Jews in the liberal professions, in the administration, and in commercial and industrial enterprises to 20%. The term "Jew" included not only members of the Jewish religion, but also those who became apostates after 1919 or who had been born of Jewish parents after that date. The bill aroused objections from the opposition parties, but it was ratified by both Houses of Parliament. In 1939 the "Second Jewish Law" was passed; it extended the application of the term "Jew" on a racial basis and came to include some 100,000 Christians (apostates or their children) and also reduced the number of Jews in economic activity, fixing it at 5%; the political rights of the Jews were also restricted. As a result of these laws, the sources of livelihood of 250,000 Hungarian Jews were closed for them.

One reaction of the Jews to the anti-Jewish legislation was expressed by their emphasis on their patriotic attachment to Hungary, voiced by their official representatives; the Jews generally believed that the anti-Jewish current was only a fleeting phenomenon. Jewish communal organizations, led by the community of Budapest, began to develop ramified social aid activities to assist those ousted from economic life. Within certain sections of the community conversions increased; there were up to 5,000 apostates after the enactment of the First Jewish Law. However, wide circles of the Jewish public reacted by a return to Judaism, through fostering Jewish values, literature, and religious education. Zionism was strengthened and aliyah from Hungary to Ereẓ Israel increased.

Hungarian Jewry in the interwar period underwent great changes. Following the dismemberment of the country after World War i, the number of Jews was reduced by about a half (473,000 in 1920). Their number further declined during the 1920s and 1930s. The demographic decline of Hungarian Jewry in this period is evident by the sharp decline in the younger age groups (0–20) and increase in the older age groups. There was a marked tendency in the interwar years to concentrate in towns, especially in the capital. Over half of Hungary's Jewish population lived in Greater Budapest. The Neolog communities had 65% of the Jews, as against 29% Orthodox, and 5% status quo. This distribution was due to the fact that the great Orthodox centers of prewar times were ceded to the successor states.

[Nathaniel Katzburg]

Holocaust Period

The history of the destruction of Hungarian Jewry encompasses the Jewish population of the enlarged state of Hungary. In 1930, 444,567 Jews had lived in Hungary within the boundaries fixed in 1920. An additional 78,000 Jews came under Hungarian rule when southern Slovakia (Felvidék) was annexed by Hungary (Nov. 2, 1938). The 72,000 Jews who lived in the Czechoslovak province of Sub-Carpathian Ruthenia came under Hungarian jurisdiction when Hungary moved in on March 15–16, 1939. The Jewish population of the formerly Romanian northern Transylvania (awarded to Hungary on Aug. 30, 1940) numbered 149,000. According to the Jan. 31, 1941 census, out of a total population of 14,683,323 the Jews numbered 725,007 (184,453 of them in Budapest). In April 1941 there were about 20,000 Jews in the former Yugoslav territory (Bácska), occupied in the course of joint German-Hungarian military operations.

In conformity with the "Third Jewish Law" (1941), which defined the term "Jew" on more radical racial principles, 58,320 persons not belonging to the Jewish faith were considered Jewish. Thus the total number of persons officially registered as Jews in mid-1941 was over 803,000. According to a generally accepted estimate, the actual number of Christians of Jewish origin exceeded by far the officially recorded 58,320. Consequently, the total number of persons liable to racial discrimination in mid-1941 may be put at a minimum of 850,000.

The Third Jewish Law, based on the *Nuremberg laws, prohibited intermarriage. By mid-1941 the anti-Jewish measures had placed Hungarian Jewry in a most disadvantageous position in every sphere of political, economic, cultural, and social life. The government party, Magyar Élet Pártja (mep, "Party of Hungarian Life"), pursued a pro-Nazi, antisemitic policy, while various national-socialist groupings and the *Arrow-Cross Party exerted increasing pressure upon the government to stiffen radically its anti-Jewish policy.

The decimation of the Jewish population began in the fall of 1940, shortly after the incorporation of northern Transylvania, from where thousands of Jews whose citizenship was in question were forcibly expelled, mainly to *Romania. The first large-scale loss of life among Hungarian Jewry occurred in July 1941, when the Office for Aliens' Control expelled to German-held Galicia about 20,000 Jews, whose Hungarian citizenship was in doubt (mostly inhabitants of the areas annexed from *Czechoslovakia), as well as refugees from neighboring countries. They were mostly concentrated in Kamenets-Podolski and murdered in the autumn of 1941 by *ss men, assisted by Hungarian troops. The second great loss occurred in January 1942, when 1,000 Jews were massacred by gendarmes and soldiers in Bácska, mainly in Novi-Sad. In May 1940, special forced labor units had already been set up for enlisting Jews, who were excluded from army service. When Hungary joined the war against the Soviet Union, the labor units were sent with the troops. At that time there were 10 to 12 labor battalions comprising about 14,000 men, but later the number of Jews on the eastern front reached 50,000. After the great breakthrough of the advancing Soviet army near the River Don (January 1943) the Second Hungarian Army disintegrated and fled in panic. It is estimated that of the 50,000 Jews, 40,000–43,000 died during the retreat.

The position of the labor units which remained in Hungary was much better, especially when on March 10, 1942, the extreme antisemitic prime minister László Bárdossy was succeeded by the moderate, conservative Miklós Kállay. Nevertheless, that month Kállay announced the draft law for expropriation of Jewish property and envisaged clearing the countryside of Jews. He successively announced measures to be taken to eliminate Jews from economic and cultural life. In April 1942 Kállay pledged the "resettlement" of 800,000 Jews – as a "final solution of the Jewish question," pointing out, however, that this could be implemented only after the war. Presumably, these extreme anti-Jewish plans were meant to curry favor with the Germans, but in fact Kállay, in an agreement with the regent Nicolas Horthy, refrained from drastic steps and resisted pressure from the German government. Dissatisfied with Kállay's halfhearted measures, Germany exerted greater pressure upon Hungary from October 1942 for legislation for the complete elimination of the Jews from economic and cultural life, for compulsory wearing of the yellow *badge, and finally, their evacuation to the east. Similar interventions went on early in 1943. The Kállay government rejected the German requests for deportation mainly on economic grounds, arguing that deportation would ruin Hungary's economy and would harm Germany as well.

In April 1943 Hitler conferred with Horthy and condemned Hungary's handling of the "Jewish question" as irresolute and ineffective. Again the Hungarians rejected the German demands for the deportations, pointing out the necessity of waiting for favorable circumstances. By 1943 the Kállay government completed the program of eliminating the Jews from public and cultural life, while a numerus clausus was applied in economic life to restrict the position of the Jews according to their percentage in the total population (about 6%). The Jewish agricultural holdings were almost entirely liquidated, while the "race-protective" legislation segregated Jews from Hungarian society. However, in the course of 1943 and beginning of 1944 the Kállay government secretly conferred with the Western Allies in preparation for Hungary's extrication from the war. Under these circumstances the Nazi-style handling of the "Jewish question" hardly suited the country's interests. In December 1943, military court procedure was initiated against the criminals involved in the anti-Serbian and anti-Jewish massacres in Bácska (January 1942). The Germans regarded the prosecution of the murderers of Jews as an attempt to gain footing with the Jews and the Allies, and the incident contributed to aggravate the tension between Berlin and Budapest.

german occupation

By the beginning of March 1944 the occupation of Hungary was decided upon in Berlin. One of the German arguments for this step was the alleged sabotage committed by the Hungarian government against the "final solution of the Jewish question." Kállay's rejection of the German demands for deportation was considered as evidence of Hungary's determination to join forces with the Western Allies. Operation Margaret, that is, the occupation of Hungary, took place on March 19, 1944. By the time of the German occupation, close to 63,000 Jews (8% of the Jewish population) had already fallen victim to the persecution. Prior to the occupation, on March 12, 1944, Adolf *Eichmann, at the head of SS officers of the *rsha (Reich Security Main Office) began preparations in Mauthausen, Austria, for setting up the Sondereinsatzkommando (Special Task Force) destined to direct the liquidation of Hungarian Jewry. Most of the Sonderkommando members, among them Hermann Krumey and Dieter *Wisliceny, arrived in Budapest on the day of the occupation, while Eichmann arrived on March 21. On the German side special responsibility for Jewish affairs was assigned to Edmund Veesenmayer, the newly appointed minister and Reich plenipotentiary, and to Otto Winkelmann, higher ss and police leader and Himmler's representative in Hungary.

On March 22 a new government was set up under the premiership of the former Hungarian minister in Berlin, Döme Sztójay. The government consisted of extreme pro-Nazi elements, willing collaborators with Germany in the accomplishment of the "Final Solution." The new regime's minister of the interior Andor Jaross was in charge of Jewish affairs; however, actual execution of the anti-Jewish measures was directed by László *Endre and László *Baky, state secretaries of the Ministry of the Interior. Immediately after the entry of German troops into Hungary, hundreds of prominent Jews were arrested in Budapest and several other cities. Over 3,000 were detained by the end of March, increasing to 8,000 by mid-April. A great number of provincial Jews were rounded up, mainly at the Budapest railway stations, on the very evening of the occupation. They were interned at Kistarcsa and other concentration camps.

The Jewish organizations were dissolved throughout the country, and on March 20 a Jewish council (Zsidó Tanács) with eight members was set up in Budapest upon orders from the Germans, to act as the head of the Jewish communities. The Germans aimed at manipulating this authorized Jewish body to execute their measures without resistance and avoid an atmosphere of panic. By the end of March, similar Jewish councils were constituted in several larger provincial towns. However, unlike the Budapest Jewish Council, their activity was minimal and their existence short-lived. From the first days of the occupation, Eichmann and his collaborators endeavored to persuade the members of the central Jewish council that deportations were not intended and that Hungarian Jewry would not undergo brutal treatment. They assured them that no harm would befall the Jews, on condition that they obediently carry out the directives regarding their segregation and their new economic status.

The "Provisional Executive Committee of the Jewish Federation of Hungary," appointed by the Hungarian government on May 6, likewise aimed at ensuring complete observance of the anti-Jewish directives. By the time this body was set up, the Jews of the provinces had already been concentrated in ghettos, and Jewish community life had ceased to exist, so that the "Executive Committee" was a mere fiction, devised with the additional aim of lending a semblance of legality to the government's measures. Another task imposed on the Jewish bodies established after the occupation was to assure the complete and unhindered transfer of Jewish assets and valuables. Simultaneously with the German actions, the Sztójay government enacted intensive anti-Jewish legislation. Numerous anti-Jewish decrees aimed at the total exclusion of Jews from economic, cultural, and public life. Jews were dismissed from all public services and excluded from the professions; their businesses were closed down and any assets over 3,000 pengö (about $300) confiscated, as well as their cars, bicycles, radios, and telephones.

On March 31, 1944, Jews were ordered to wear the yellow badge. Actually, in a few places (e.g., Munkacs), the local authorities issued this order earlier. On April 7, the decision was taken to concentrate the Jews in ghettos and afterwards to deport them. The ghettoization process was entrusted to the Hungarian gendarmerie in collaboration with the local administration. By mid-April an agreement was reached between the Hungarian government and the Germans stipulating the delivery of 100,000 able-bodied Jews to German factories in the course of April and May. By the end of April the Germans modified this plan by dismissing any criteria on ability to work and demanded the deportation of the entire Jewish population to concentration camps in the eastern territories. However, at the end of April, several groups of able-bodied Jews were transported from the outskirts of Budapest to Germany (1,800 persons on April 28, and a smaller group from the Topolya concentration camp on April 30).

ghettoization and deportation

The ghettoization was started in the provinces. The Jews of Sub-Carpathian Ruthenia were evacuated to ghettos on April 16–19; up to April 23, about 150,000 Jews were concentrated on the northeastern areas of Hungary, pending their deportation to *Auschwitz, which started on May 15, with daily transports of 2,000–3,000. At the same time as the Carpatho-Ruthenian action, some ghettos were set up sporadically in different parts of the country, arbitrarily initiated by local authorities (e.g., the Nagykanizsa Jews were forced into a ghetto on April 19; a number of the Jews of the Veszprem county were crammed into improvised concentration camps as early as the last days of March). North Transylvanian Jewry was evacuated to ghettos in the first days of May, when the process of ghettoization had already been concluded in northeastern Hungary. The ghettoization in the rest of the country, except for the capital, was completed simultaneously. The Jews were driven out of their homes in the night, allowed to pack only a minimal supply of food and some strictly necessary personal belongings, and then assembled at temporary collection points. The provisional ghettos were set up in school buildings, synagogues, or factories outside the towns. In the large Jewish population centers, ghettos were established in the vicinity of the towns, mainly in brickyards, barracks, or out in the open.

Ghettoization was immediately followed by an inventory of the movable property and the sealing of the houses that had belonged to Jews. The Jews were permitted to add a few items of food and clothing to their scanty baggage during the inventory, which in most cases was accompanied by gendarme brutality and looting by the civilian auxiliary personnel. In this first phase of the ghettoization, the Jews in the villages were evacuated to temporary ghettos (collection points) set up exclusively in, or outside towns (from two to four collection ghettos per county). The second phase consisted of the evacuation from the collection ghettos to the larger, central ghettos. The concentration of Jews in the central ghettos is given in the Table: Jews in Central Ghettos.

About 8,000 detainees were interned in a number of concentration camps (e.g., Kistarcsa, Sarvar). The inmates were partly political prisoners and partly Jews from the provinces rounded up in Budapest. They also faced deportation along with the Jews of the ghettos. The living conditions of over 400,000 Jews forced into makeshift ghettos were characterized by overcrowding and lack of elementary hygienic facilities. Some of the inmates had no roof over their heads, and some ghettos were erected entirely outdoors. During the short period that ghettos existed in the provinces, inhuman conditions and torture claimed a number of victims and there were also numerous cases of suicide. When the next phase of the deportation began, the majority of the Jewish population was already in a state of physical and mental exhaustion.

The deportations, which started on May 14, were jointly organized by the Hungarian and the German authorities; but the Hungarian government was solely in charge of the Jews' transportation up to the northern border. Between May 14–15 and June 7, about 290,000 persons were evacuated from Zone i (Sub-Carpathian Ruthenia) and Zone ii (northern Transylvania). More than 50,000 Jews of northwestern Hungary and those north of Budapest constituting Zone iii were deported by June 30. Zone iv (southern Hungary, east of the Danube), with about 41,000 persons, was also evacuated by the end of June. The last phase was concluded by July 9 with the deportation of more that 55,000 Jews from Zone v, comprising Transdanubia and the outskirts of Budapest. According to Veesenmayer's reports, a total of 437,402 Jews were deported from the five zones. (There appears a slight difference, within a few thousand, between Veesenmayer's figures and other sources.) The bulk of the transports reached Auschwitz via central Slovakia by freight train. Each freight car was to carry about 45 persons, but actually in most cases 80–100 persons were crammed in under hardly bearable conditions. Thousands of sick, elderly people, and babies died in the trains during the three to five days of the journey, due to lack of water and ventilation.

The ghettoization and deportation were not condemned by Hungarian public opinion; instances of overt sympathy and willingness to help and rescue were an exception to the rule. Noteworthy among the few protests was the outspoken plea of Áron Márton, the Catholic bishop of Alba-Iulia. Hungarian authorities expelled him from Kolozsvar (now Cluj) in May 1944 for preaching in defense of the Jews. Attempts were made throughout the country to evade deportation, but only in northern Transylvania were most of them successful, due to its common border with Romania. The number of Jews who managed to cross the south Transylvanian border and escape to Romania in April–June may be put at about 2,000–2,500. In addition, a few hundred Jews went into hiding in the countryside, especially in northern Transylvania. Likewise some hundreds of Jews were spared deportation, when exempted by the authorities on grounds of military or other merit. A few thousand provincial Jews managed to evade deportation by either hiding in Budapest, or living in the Budapest ghettos alongside the bulk of the capital's Jewish population. About 95% of the deportees were directed to Auschwitz, where, under camp commander Rudolf *Hoess, large-scale preparations had been made for their mass murder. The able-bodied were dispersed to 386 camps throughout the German-held Eastern territories and in the Reich. A small percentage of provincial Jewry managed to evade deportation to Auschwitz. In the framework of a deal made by Rezsö *Kasztner with Eichmann (see below), some transports totaling several thousand (mostly from Debrecen, Szeged, and Szolnok) were directed to Austria. This group was spared selections, families remained united, and the majority survived.

In January 1943 a Zionist relief and rescue committee was formed in Budapest to help Jews in the neighboring countries. Otto *Komoly was president of the committee, Kasztner its vice president, and Joel *Brand was responsible for the underground rescue from Poland. Shortly after the German occupation, Kasztner and Brand established contact with Eichmann. Their names, especially that of Kasztner, became linked with the transaction known as Blut fuer Ware ("Blood for Goods"). Brand was sent to Istanbul to mediate between the Allies and the Germans for war materials, particularly trucks, in exchange for Hungarian Jewish lives, a mission doomed to failure. Kasztner went to Switzerland several times to meet with representatives of the *American Jewish Joint Distribution Committee, *Jewish Agency, and *War Refugee Board to work out a rescue plan and arrange its financing by Jewish organizations. Kasztner succeeded in concluding a deal with Eichmann, which resulted in the transport on June 30, 1944, of 1,658 Jews from Hungary to Switzerland at the fixed price of $1,000 per head and two further transports on August 18 and December 6, consisting of 318 and 1,368 Jews respectively, most of whom were of Hungarian and Transylvanian origin. The first group was first detained at *Bergen-Belsen, but, as a result of *Himmler's intervention, finally reached Switzerland by the end of December.

After deportations from the provinces were completed, preparations went under way for the deportation of Budapest Jews. The timing of the Budapest deportation to follow the completion of the "Entjudung" ("ridding of Jews") of the provinces, was set for technical, economic, and tactical reasons. On June 15, 1944, the Ministry of the Interior ordered the concentration of the Budapest Jews in some 2,000 houses marked with a yellow star and designated to enclose about 220,000 Jews. On June 25 a curfew was ordered for the capital's Jews, who from this date led the life of prisoners in utter destitution. The series of foreign interventions in May increased in June, taking on a more organized form and exerting a favorable influence upon the fate of Budapest Jewry.

In June the Swiss press, and subsequently the press in other neutral states and in the Allied countries, published details about the fate of Hungarian Jewry. The press campaign and the activity of Jewish leaders in Switzerland brought about a series of interventions with Horthy. Among others, the king of Sweden, the *Vatican, and the International Red Cross intervened. Among the Hungarian personalities who interceded with Horthy for the cessation of the deportations were Protestant bishops and Prince-Primate Justinianus Serédi. These interventions, along with the concealed intention of the Hungarian government to create favorable conditions in case of a separate armistice treaty with the Allies, brought a halt to further deportations on July 8. At the same time Baky and Endre, the chief Hungarian organizers of the "Entjudung," were dismissed. At the end of July, Himmler also gave his approval to the suspension of the deportations. Meanwhile, as many Jews as possible were successfully placed under the protection of some neutral states (e.g., Sweden, Switzerland, Portugal).

In August a turning point was reached when Horthy and his supporters dismissed the Sztójay government. A new government less servile to the Germans was formed under General Géza Lakatos, with the aim of preparing the armistice with the Allies. Throughout July and August the situation of the Budapest Jews and of the labor conscripts appeared more hopeful. However, on September 4, the Lakatos government declared war against Romania, which had joined the Allies (August 23). Hungarian units crossed the south Transylvanian border and perpetrated acts of savagery against the Jewish residents in the strip occupied up to the beginning of October. They massacred the whole Jewish population of Sărmş and Sărmăşel (126 persons), committed murders at Ludus and Arad, and made preparations for the introduction of anti-Jewish measures in the temporarily occupied territories.

On October 15, the fate of the Budapest Jews took a dramatic turn for the worse. After Horthy's unsuccessful attempt to extricate Hungary from the war, the Germans activated the Arrow-Cross Party of Ferenc *Szálasi, which immediately initiated an unprecedented reign of anti-Jewish terror. Eichmann, who had been obliged to leave Hungary on August 24 (after succeeding in deporting the inmates of the Kistarcsa and Sarvar camps, against Horthy's orders), returned to Budapest on October 17 and resumed his activity for deporting the capital's Jews. After October 15, the Budapest Jews were divided into two groups: The majority were enclosed in a central ghetto, while the smaller segment lived in the blocks and quarters "protected" by various neutral states (e.g., by Switzerland and Sweden). As a preliminary step in the deportations, the Jewish male population aged 16 to 60 was ordered out to work in fortifications. In accordance with the deportation plans, two transports of about 50,000 each were to leave in November for Austria and the Reich. However, these plans were thwarted by the military situation on the Eastern front. On November 2, Soviet troops reached the outskirts of Budapest. Under these circumstances the labor battalions were driven toward western Hungary, and on November 8, a group of about 25,000 Budapest Jews were directed on foot toward Hegyeshalom at the Austrian border. They were later followed by other contingents of up to 60,000. A high percentage of persons on this "death march" perished on the way. From the Arrow-Cross seizure of power until the Soviet occupation of Budapest (Jan. 18, 1945), about 98,000 of the capital's Jews lost their lives in further marches and in train transports, as well as through Arrow-Cross extermination squads, starvation, disease, and cases of suicide. Some of the victims were shot and thrown into the Danube.

resistance and rescue

Organized resistance among Budapest Jews made itself felt only in the autumn months, but it failed to develop on a large scale. A few small, armed groups were active in Budapest, attacking Arrow-Cross men and performing rescue operations. In several cases, armed Jewish youths, disguised as Arrow-Cross men or as soldiers, prevented executions and killed Szálasi's men. One form of resistance was the Zionist ḥalutz movement rescue activities, which consisted of forging identity cards, supplying money, food, and clothing, and facilitating escape or hiding. An attempt by the *Haganah to activate the rescue work by sending Hungarian-born Jews from Palestine failed in the summer of 1944. A few members of the Haganah were parachuted by the British into Yugoslav territory, from where they crossed into Hungary, but were captured. Two of them were executed (Perez Goldstein and Hannah *Szenes). The rescue operation by some neutral states proved to be efficient. Up to the end of October 1944, more than 1,600 Jews in Budapest were provided with San Salvador documents. By the end of the year, the number of Jews enjoying the protection of neutral states and of the International Red Cross in the "protected houses" rose to 33,000. The Arrow-Cross authorities recognized, among others, 7,800 Swiss and 4,500 Swedish safe-conduct passes. Prominent figures in this rescue work were Charles Lutz, a Swiss diplomat, and Raoul *Wallenberg, secretary of the Swedish Legation in Budapest.

By September–October 1944, northern Transylvania was occupied by the Soviet armies, followed by Hungary's eastern, southern, and northeastern strip. The Soviet forces occupied Budapest on Jan. 18, 1945, and by early April all "Trianon" Hungary. The Soviet occupation of Hungary brought freedom to the Budapest ghettos and to those labor conscripts who were within the borders.

demographic total

Statistical data on the destruction of Hungarian Jewry show that about 69,000 Jews were saved in Budapest's Central Ghetto and 25,000 in the "Protected Ghetto." In addition to these two categories, which also include persons safeguarded in the buildings of some neutral diplomatic missions, about 25,000 Jews came out of hiding in Budapest. A few thousand survived in Red Cross children's homes. An exact assessment of the number of Jews who returned to Hungary is rendered difficult by the fact that northern Transylvania, Sub-Carpathian Ruthenia, Felvidék, and Bácska were once again detached from it.

Throughout the first postwar months there was a large-scale fluctuation of population between "Trianon" Hungary and the so-called "succession states." The number of Jewish forced laborers who returned to Hungary or were liberated there, including those who later returned from Soviet captivity, may be estimated at 20,000. By the end of 1945 some 70,000 deportees had returned. The number of Jews saved in all these categories in postwar Hungary totaled 200,000. The losses of Hungarian Jewry from the Trianon territories was 300,000. A relatively high proportion of the survivors were non-Jews, who were, however, considered Jews according to the racial laws.

A total number of about 25,000–40,000 Jews who were saved returned to northern Transylvania; some 15,000 to Sub-Carpathian Ruthenia and about 10,000 to Felvidék, reattached to Czechoslovakia. The number of Jews who returned to Bácska is estimated at a few thousand. The relatively small number of survivors outside Hungary, who failed to return in 1945 to their former homes, cannot be assessed.

Of the 825,000 persons considered Jews in the 1941–45 period in greater Hungary, about 565,000 perished, and about 260,000 survived the Holocaust.

[Bela Adalbert Vago]

Postwar Period

As a result of the Holocaust, the demographic composition and geographical distribution of Hungarian Jewry had radically changed after the war. When the survivors of the death camps and forced labor returned to Hungary, a few took up residence in their previous homes, and 266 communities were reestablished (out of 473). In the following years, however, most left the provincial towns, and the Jewish communities there ceased to exist.

The postwar Hungarian regime abolished the anti-Jewish legislation enacted by its predecessor. The men who had governed during the war and many who had been directly responsible for the deportation and destruction of Jews were brought to trial and sentenced to death, and thousands of other war criminals were imprisoned. On the other hand, no comprehensive law was passed for the restitution of Jewish property that had been confiscated or forcibly sold, and the existing regulations and ordinances did not provide a solution for this vital problem. Although antisemitism was officially banned, there were strong anti-Jewish sentiments among the population, which blamed the Jews for the country's postwar economic plight. This was felt particularly in the provincial towns, whose inhabitants resented the return of the surviving Jewish deportees. In May 1946 there was a pogrom in Kunmadaras, and in July another took place in Miskolc, in which five Jews were killed and many injured. Antisemitic feelings were also voiced in the political literature of this period, in which the Jews were warned "not to try to capitalize on their sufferings during the war." The pogroms ceased at the end of 1946, when the economy was stabilized, but popular antisemitism continued to exist and found expression in such acts as the desecration of cemeteries. Recurrent antisemitism strengthened the desire of the Jews to emigrate.

The central Jewish institutions reconstituted after the war were the central office of the Neolog communities (which also included the "status quo" communities) and the central office of the Orthodox communities. Whereas before the war the Jewish leadership was composed of the Jewish financial aristocracy, the postwar leadership had a broad popular base, with Zionists playing a prominent role.

In December 1948, an agreement was reached between the government and the Jewish community, similar to agreements with other religious denominations, whereby the Jewish community was accorded official recognition, guaranteed freedom of religious practice, and assured of financial support. This agreement was renewed in 1968. In 1950, at the urging of the government the three religious trends – Neolog, Orthodox, and status quo – united into a single community organization. The Orthodox, who had voiced strong opposition to the forced unification, were granted a large measure of autonomy within the unified organization. Leadership of the community was under the direction of the Magyar Izraeliták Országos Képviselete ("National Representation of Hungarian Israelites"), while religious affairs were handled by two rabbinical committees – one Neolog and one Orthodox; the chairman of each committee was recognized as chief rabbi of the respective religious trend. A Jewish periodical, Uj Élet ("New Life"), was founded as a biweekly, in November 1945.

After the liberation of the country, Hungarian Jewry entered upon a new era of public activities. The Zionist Movement, including its various subdivisions and youth movements, was greatly strengthened and became very active in the field of education. It established a network of schools, in which Hebrew was the medium of instruction, as well as other youth institutions. The American Jewish Joint Distribution Committee (jdc) played an important role in the rehabilitation of the impoverished community, spending as much as $52 million on food, welfare, and education, during the period 1946–52.

The transformation of Hungary into a people's republic under Communist rule in 1949 was a fateful turning point for the country's Jews. The effects of this move were felt in the economic situation of the Jews, in their public life, and in their educational activities. The nationalization of the means of production, agencies, and services deprived large sections of the Jewish population of their means of livelihood. The new regime adopted a hostile attitude to the Jewish national movement, and Zionist activities were severely curtailed and eventually outlawed. The Zionist organization was disbanded in March 1949, and its leaders were sentenced to prison terms. Contacts between Hungarian Jews and world Jewry were restricted. Due to the strained relations with the United States, the work of the jdc was at first curtailed, and in the beginning of 1953 brought to a complete stop. Jewish educational institutions were absorbed by the general school system (a step which had far-reaching negative effects upon the education of Hungarian Jewish youth).

The growing severity of the Communist regime and the struggle it carried on against opposition resulted in large-scale expulsions from the cities to the provinces in 1951. An estimated 20,000 Jews were affected by this campaign, most of whom were driven out of Budapest. In 1953, when a more liberal policy was adopted, the situation of the Jews underwent some improvement, and many of those who had been expelled were permitted to return to their homes.

The 1956 uprising also had its effects upon the Jews. As a result of the emigration of rabbis and other Jewish leaders, organized Jewish life was disrupted. Some 20,000 Jews are believed to have left Hungary during this period. The report that antisemitic right-wing elements became active during the rebellion seems to be well founded in fact.

The period of liberalization that began at the end of the 1950s was beneficial to the Jews, and their communal religious and cultural life made some progress. The regime, however, frowned upon identification with any factor other than the socialist state, and an individual who sought to preserve his Jewish identity and engage in religious activities encountered difficulties in his economic and social advancement. This situation resulted in the further estrangement of young Jews from their Jewish heritage. The ties between Hungarian and world Jewry fluctuated over the course of the years. In the early postwar period, the ties were very close: Hungarian Jewry was affiliated to the *World Jewish Congress and sent representatives to international Jewish conferences. After the Communist take-over, the contacts with world Jewry declined, but they were revived in the 1960s, and representatives of Hungarian Jews again took part in meetings of the World Jewish Congress and other international Jewish conferences. Hungarian Jews also maintain links with Jewish communities in other East European countries and with the Memorial Foundation for Jewish Culture, which supports Jewish cultural and scientific institutions in Hungary.

In 1967 the Jewish population of Hungary was estimated at 80–90,000, including some 10,000 who did not take part in religious or communal life. The largest and most important community was in Budapest, where all the central Jewish institutions were located, and then numbered 60–70,000 persons. About 20 synagogues existed, and the community provided religious, welfare, and educational services, maintaining a Jewish high school and a rabbinical seminary. The latter was headed by the well-known scholar, Alexander *Scheiber, and was the only institution of its kind in Eastern Europe. It also served as the center of scientific work, especially the publication of source material on the history of the Jews in Hungary (Monumenta Hungariae Judaica (mhj), vols. 6–11, 1959–68). Other Jewish communities existed in the large provincial centers – Miskolc, Pécs, Debrecen, and Szeged.

[Nathaniel Katzburg]

During the 1970s the Jewish community in Hungary numbered some 60,000, of whom 50,000 resided in Budapest, which was thus the second or third largest in Eastern Europe; second only to that of the Soviet Union, and about the same, or slightly smaller, than that of Romania. About 60% were above the age of 50. Conservatism, as a tendency rather than ideology, characterized all aspects of the life of this closed community, and a goodly number of the Jews of Hungary belonged to the Reform (Neolog) stream of Judaism.

The communities were organized in the Association of Communities, a religious body recognized by the authorities, which operated the community's institutions: the Hungarian language publication Uj Elet ("New Life"), a Rabbinical Seminary, a Jewish gymnasium, museum, orphanage, oldage home, hospital, kosher meat shops and religious schools. There were 15 rabbis and 30 synagogues, of which six were in outlying cities.

The community received financial aid from the American Joint. On Dec. 6, 1977, the centenary of the Rabbinical Seminary in Budapest was celebrated, at which delegations from other Eastern European communities, including the Soviet Union, participated, as did Dr. Nahum *Goldmann, then president of the World Jewish Congress, Philip Klutznick, and graduates of the Seminary now active in the West. Graduates serving as rabbis in Israel were not invited.

Apart from this, the authorities continued to maintain the strict wall of isolation, severing the community from contact with communities in the West and in Israel.

In February 1980 an agreement was reached between the Joint Distribution Committee and the Hungarian government whereby the jdc would provide welfare services for Hungarian Jews.

In April 1980 the "Order of the Republic," one of its highest awards, was bestowed by the government on Rabbi Laszlo Salgo for his efforts in strengthening relations between the State and the Jewish community, and in May the government completed a memorial and permanent exhibition at the site of Auschwitz, in memory of the 435,000 Hungarian Jews deported to the death camp during World War ii, 400,000 of whom were murdered by the Nazis. Among the exhibits are documents detailing the history of Hungarian antisemitism since 1919. A memorial pillar bears the names of 30,000 of the victims.

[Eliezer Palmor]

Post-Communist Period

In the course of the 1980s a revolution of sorts occurred within the Jewish community in Hungary, with repercussions on its existence and development. This change can be defined as mainly one of quality but also one of quantity: There were now many more Hungarian Jews than there were a decade or two previously, that is, many more people of Jewish origin were now willing to identify themselves as Jews and no longer felt or saw a need to hide their Jewishness.

The freedom which returned to Hungary with the fall of communism in Eastern Europe also gave back to its Jews, who had suffered greatly, a sense of being free to be Jews, to maintain a natural link to the State of Israel, and to try to give Jewish education to their children. At the same time, antisemitism reappeared, and the Jews now faced the same choices as their brethren in the West: identification with Zionism and possible aliyah, or accelerated assimilation, or carefully walking the tightrope between the two.

assimilation, zionism, aliyah

Assimilation continued apace among the Jews of Hungary. The problem of intermarriage made itself felt in almost every Jewish family in Hungary.

As soon as it was legally possible, a Zionist Federation was founded in Hungary, led by psychologist Dr. Tibor (Samuel) Englander, but it had little influence and only a tiny fraction of Hungarian Jews were active in it. In 1992 no more than 100 Jews emigrated to Israel.

An impartial observer received the impression that he was seeing vibrant Jewish life. Dozens of organizations – B'nai B'rith, wizo, Na'amat, the Jewish Culture Organization, Zionist youth movements from Bnei Akiva to Ha-Shomer ha-Ẓa'ir, Chabad, and so on – carried on feverish activity which, however, touched only a small part of the Jewish population. Though the Jewish population of Hungary was estimated to be as high as 100,000 in 2005, with 80–90% living in Budapest, only around 6,000 were formally registered with the community and only 20,000 had contact with Jewish organizations.

antisemitism

Paradoxically, Jews seem to have been goaded into "Jewish life" by the antisemitism which reasserted itself under the new rule. Although it was still illegal, the police in a liberal regime were unable – and the government apparently did not care – to enforce this law. The result was a great spurt in antisemitic journalism and hateful antisemitic remarks by a few of the elected representatives of the Democratic Forum (mdf), the ruling party. The most prominent of the antisemitic papers were the Magyar Forum, under the editorship of the author Istvan Csurka, and Szent Korona ("The Holy Crown"), edited by Laszlo Romhany. Romhany was convicted of incitement to murder. In 1992 and early 1993 there were many incidents of attacks on foreign students as well as against gypsies and Jews by young persons called "nationalists," who identified themselves with the skinheads, and in the Hungarian Parliament they had a patron in the person of Isabella B. Kiraly (mdf). At a large demonstration in front of the Parliament in October 1992, groups of young people showed up in Nazi uniforms and the writer Csurka accused the president of Hungary, the liberal Arpad Gonz of having "the agents who pull the strings in New York, Paris, and Tel Aviv, guide his path in Hungarian politics," which according to Csurka was still ruled by the Jews as were the communications media.

In spring 1993 antisemitic feelings were aroused by an interview given by the head of the Jewish community, Gusztav Zoltai, and the chief rabbi of Budapest, Georg Landesman, to a Catholic weekly. The rabbi made a few lame statements which were seen as contemptuous of Hungarian culture. The rabbi apologized, but his opponents in the community used the ensuing storm of public opinion to call for his resignation. The Hungarian prime minister, Jozef Antal, addressed himself – in an unprecedented step – not to the board of the Jewish community, but to the Israel ambassador in Budapest, David Kraus, and demanded the dismissal of the rabbi, whose remarks were, as stated in Antal's letter, "false, shocking, detrimental to the Hungarian people, and likely to cause an outbreak of antisemitism." The ambassador rejected the letter's contents, but the Hungarian minister of the interior ordered that an investigation be opened to see whether there was any basis for accusing the rabbi of "causing hatred of Jews." After Rabbi Landesman apologized, but refused to resign, the community board canceled the position of chief rabbi and its duties were divided among the other rabbis. Landesman did stay on as the rabbi of the Great Synagogue on Dohany Street.

organizational structure

At the head of organized Hungarian Jewry stands Mazsihisz, the Alliance of Jewish Communities, which unites the organized Jewish Neolog communities. After a 50-year break, during which the Jewish leaders were appointed by the Communist regime, elections were held in 1990 and since then an elected directorate has been in operation. Among all Jewish organizations listed above, the largest and strongest is the culture organization, Mazsike, and even its membership does not exceed a few hundred. The Alliance publishes a biweekly called Uj Elet ("New Life"). The Orthodox congregation, operating four synagogues, a mikveh, and kosher food stores, is organized as the Autonomous Orthodox Community, and a small Reform congregation, Sim Shalom, is also in operation.

jewish education

In addition to kindergartens, three Jewish day schools serving 1,800 children were in operation through the 1990s and the early 2000s. These were the American Foundation School founded by the Canadian Reichmann family; it had 12 grades and maintained a moderate religious atmosphere; the Yavneh School (founded by the Lauder Foundation), defining itself as a "secular Jewish school"; and the Anne Frank Gymnasium, the oldest of the three, which was the only Jewish school not closed by the Communist regime, although it was severely limited by it, so much so that by the end of the 1970s only 15 pupils were enrolled in its four classes. In addition, the famous Rabbinical Seminary, founded nearly 120 years ago and headed by Chief Rabbi Dr. Schweitzer Jozsef in the early 2000s, was now part of the Yahalom Jewish College, which also included a teachers' training college preparing young people for teaching in the Jewish schools.

[Naftali Kraus]

Relations with Israel

From the liberation to 1949, there was substantial migration of Jews from Hungary to Israel, and during Israel's *War of Independence, the Hungarian government supported Israel. The Communist regime, however, opposing Zionism, prohibited large-scale emigration, and apart from an agreement made in 1949, under which 3,000 Jews were allowed to settle in Israel, there has been only a small trickle of Hungarian Jews moving to Israel. Contrary to the policies adopted by most other Communist regimes in Eastern Europe, the Hungarian government persisted in its restrictive attitude to aliyah. In conformity with the attitude of the government, the official relationship of Hungarian Jewry to Israel remained restrained. The Jewish institutions were warned against identifying with Israel. In fact, there does exist great interest in Israel, which is strengthened by the many family ties. Diplomatic relations between Hungary and Israel were established as early as 1948, and there has been a continuous rise in trade relations. The scope of trade reached $26,000,000. In June 1967, in the wake of the *Six-Day War, Hungary followed the Soviet Union's lead in breaking off diplomatic relations with Israel, but the rupture of diplomatic relations did not reflect upon trade relations.

[Nathaniel Katzburg]

The government of Hungary instituted an internal policy which was among the most liberal in Eastern Europe, and in this respect, it deviated from the line dictated by Moscow. That, however, did not apply to foreign policy, in which – and especially with regard to the Middle East conflict, with the exception of commercial ties – Hungary was in every respect a Soviet satellite.

Commercial ties between Israel and Hungary continued after diplomatic ties were severed in 1967, and in 1980 Israel exports to Hungary amounted to $2.7 million and imports to $11.0 million.

After the resumption of diplomatic relations in 1989, bilateral trade jumped, reaching $154 million in 2001. Of this, $78 million were exports from Israel (including telecommunication equipment) and $76 million were imports from Hungary (nearly half chemical products). Israelis have also invested $1.5 billion in Hungary, two-thirds of it in real estate. In addition, over 100,000 Israeli tourists visit Hungary annually, though Hungarian tourism to Israel dropped because of the Intifada, from 16,000 in 2000 to 5,400 in 2002.

With the resumption of diplomatic relations, visitors to Israel included President Arpad Gonz, Prime Minister Jozef Antall, and Foreign Minister Geza Jeszensky between 1990 and 1992. President Chaim Herzog of Israel visited Budapest (amid rumors that Arabs tried to assassinate him while there). Hungary was of great assistance to Israel in the transit of immigrants from the Soviet Union to Israel when they passed through the Budapest transit center. In 1992 terrorists attacked a busload of Soviet Jewish immigrants; although they were not hurt, two Hungarian policemen were wounded. In addition to the increased tourism, relations between cities and increased cooperation at international forums are developing.

[Naftali Kraus]

bibliography:

N. Katzburg, in: Sinai, 31 (1952), 339–52, incl. bibl.; J. Bergel, Geschichte der ungarischen Juden (1879); Magyar Zsidó Szemle, (1884) 1–65 (1948); imit; mhj; Zs. Groszman, A magyar zsidók a xix. század közepén, 1849–1870 (1917); L. Venetianer, A magyar zsidóság története a honfoglalástól a világháború kitöréséig (1922), incl. bibl.; J. Eisner (comp.), Az Izraelita hitfelekezet és hitközségeket érintö tȯrvények és rendeletek gyujteménye (1925); S. Stern, Die politischen und kulturellen Kaempfe der Juden in Ungarn vom Jahre 1848–1871 (thesis, Vienna, 1932), incl. bibl.; N. László, Die geistige und soziale Entwicklung der Juden in Ungarn in der ersten Haelfte des 19. Jahrhunderts (thesis, Berlin, 1934); J. Zsoldos (ed.), 1848–1849 a magyar zsidóság életében (1948); S. Roth, Juden im ungarischen Kulturleben in der zweiten Haelfte des 19. Jahrhunderts (1934), incl. bibl.; N. Katzburg, Antishemiyyut be-Hungaryah (1969), incl. bibl.; R.A. Kann, in: jsos, 7 (1945), 357–86. bibliography and collections of documents: M. Kolosváry-Borcsa, A zsidókérdés magyarországi irodalma (c. 1943); N. Katzburg, in: Sinai, 40 (1957), 113–26; 164–76; 248–55; 303–20; mhj, 1–12 (1903–69); B. Wachstein, Die Grabschriften des alten Judenfriedhofes in Eisenstadt (1922); idem, Urkunden und Akten zur Geschichte der Juden in Eisenstadt und den Siebengemeinden (1926). legal status: R. Hajnóczi (comp.), A magyar zsidók közjoga… törvények és rendeletek gyüjteménye (1925); Stein, A zsidók (1909); J. Eisner (comp.), Az israelita hitfelekezet és hitközégeket erintö törvények és rendeletek gyüjteménye (1925); Stein, A zsidók köz és magánjoga Magyarországon (n.d.). general works: J. Bergl, Geschichte der ungarischen Juden (1879); L. Venetianer, A magyar zsidóság története (1922; incl. bibl.); J.J. (L.) Greenwald (Grunwald), Toysnt Yor Yidish Lebn in Ungarn (1945). roman period and middle ages: A. Scheiber, Corpus Inscriptionum Hungariae Judaicarum (1960); idem, Hebraeische Kodexueberreste in ungarlaendischen Einbandstafeln (1969); idem, in: hj, 14 (1952), 145–58; F. Fülep, in: Acta Archaelogica, 18 (1966), 93–98; S. Kóhn, A zsidók története Magyarországon (1884); L. Zolnay, in: New Hungarian Quarterly, 7 (1966); A. Büchler, in: Bernard Heller Jubilee Volume (1941). turkish period: F. Grünwald, in: Bernard Heller Jubilee Volume (1941); N. Katzburg, in: Sinai, 31 (1952), 339–52; A. Scheiber, in: Acta Orientalia, 12 (1961), 107–38 (Ger.). modern times: B. Bernstein, in: David Kaufmann Memorial Volume (1900); A. Sas, in: Juedisches Archiv, 1 (1928), 1–6, 33–39; 2 (1929), 34–44; Zs. Groszman, A magyar zsidók V. Ferdinánd alatt (1916); idem, Amagyar zsidok a xix. század közepén (1917); J. Zsoldos (ed.), 1848–49 a magyar zsidóság éléteben (1948); J. Eötvös, "A zsidók emancipatiója," in: Budapesti Szemle (1840), and other editions; S. Stern, Die politischen und kulturellen Kaempfe der Juden in Ungarn vom Jahre 1848–1871 (thesis, Vienna, 1932), incl. bibl.; R. Kann, in: jsos, 7 (1945), 357–86; N. Katzburg, Antishemiyuth b'Hungaria 1867–1914 (1969), incl. bibl.; idem, in: Zion, 22 (1957), 119–48; idem, in: Bar-Ilan… Sefer ha-Shanah, 3 (1965), 225–51; 4–5 (1967), 270–88; 7–8 (1970), 303–43; B. Klein, in: jsos, 28 (1966), 79–98; J. Halmi, Das schwarze Buch ueber Kecskemét (1921); Joint Foreign Committee, The Jewish Minority in Hungary (1926). transylvania: Transylvania, Sub-Carpathian Ruthenia:z.y. Abraham, Le-Korot ha-Yehudim be-Transylvania (1951); M. Weinberger, in: Jewish Studies in Memory of Michael Guttmann (1946); eg, 7 (1959), vol. on Karpatorus. internal life: Y. Ben-David, in: Zion, 17 (1952), 101–28; N. Katzburg, in: Bar-Ilan… Sefer ha-Shanah, 2 (1964), 163–77; M. Eliav, in: Sinai, 51 (1962), 127–42; idem, in: Zion, 27 (1962), 59–86; M.Z. Kaddari, in: Sinai, 59 (1966), 185–90; J.J. (L.) Greenwald (Grunwald), Toledot Mishpaḥat Rosenthal (1921); idem, Le-Toledot ha-Reformazyon ha-Datit be-Germanyah u-ve-Ungaryah (1948); N. László, Die geistige und soziale Entwicklung der Juden in Ungarn in der ersten Haelfte des 19. Jahrhunderts (thesis, Berlin, 1934); S. Roth, Juden im ungarischen Kulturleben in der zweiten Haelfte des 19. Jahrhunderts (1934), incl. bibl.; M. Grünwald, Zsidó Biedermeyer (1937); M. Pelli, in: huca, 39 (1968), 63–79 (Heb.); A. Hochmuth, Leopold Löew als Theologe, Historiker und Publizist (1871); W.N. Löw, Leopold Löew. A Biography (1912); M.J. Burak, The Ḥatam Sofer (1967), incl. bibl; J. Katz, in: Studies… in Honour of Gershom Sholem (1968); L. Löew, Der juedische Kongress in Ungarn (1871); N. Katzburg, in: Aresheth, 4 (1966), 322–67, incl. bibl.; idem, in: Divrei ha-Congress ha-Olami ha-Revi'i le-Madda'ei ha-Yahadut, 2 (1968), 173–5 (Heb. sect.; Eng. summary, 191–2). education: J. Barna and F. Csukási (eds.), A magyar zsidó felekezet… iskoláinak monográfiája, 1–2 (1896); B. Mandl, Das juedische Schulwesen in Ungarn unter Josef ii (1780–1790) (1903); A. Moskovits, Jewish Education in Hungary (1848–1948) (1964). spiritual trends: L. Löw, in: Gesammelte Schriften, 4 (1898); J.J.(L.) Greenwald (Grunwald), in: Ha-Ẓofeh me-Ereẓ Hagar, 2 (1912); idem, in: Ha-Ẓofeh le-Ḥokhmat Yisrael 5 (1921); S. Kohn, Die Sabbatharier in Siebenbüergen (1894); Simon Péchi Szombatos imádságos könyve (1914); N. Ben-Menachem, in: Israel Elfenbein Jubilee Volume (1963); idem, Mi-Safrut Yisrael be-Hungaryah (1958). zionism: S. Hakohen Weingarten, Ha-Ḥatam Sofer ve-Talmidav (1945); Y.Z. Zehav i, Me-ha-Ḥatam Sofer ve-ad Herzl (1967). periodicals: Magyar Zsidó Szemle, 1 (1884)–65 (1948); Izraelita Magyar Irodalmi Társulat Evkönyve 1895–1918; 1929–1943; 1948; Ha-Ẓofeh me-Ereẓ Hagar, 1 (1911)–4 (1915); continued as Ha-Ẓofeh le-Ḥokhmat Yisrael, 5 (1921)–15 (1931); continued as Ha-Soker, 1 (1933)–5 (1938); Magyar Rabbik, 1905–08 holocaust period: R.L. Braham (ed.), The Hungarian Jewish Catastrophe: a Selected and Annotated Bibliography (1962); idem (ed.), Hungarian-Jewish Studies, 2 vols. (1966–69); idem, The Destruction of Hungarian Jewry: a Documentary Account, 2 vols. (1963); idem, Eichmann and the Destruction of Hungarian Jewry (1961); Institute of Jewish Affairs, New York, European Jewry Ten Years after the War (1956), 60–81; J. Lévai (comp.), Black Book of the Martyrdom of Hungarian Jewry (1948); idem (ed.), Eichmann in Hungary: Documents (1961); idem, in: Yad Vashem Studies, 5 (1963), 69–103; L. Rothkirchen, ibid., 7 (1968), 127–46; I. Benoschofsky and E. Karsai, Vádirat a nácizmus ellen, 3 vols. (1958–67), index; E. Landau (ed.), Der Kastner Bericht… (1961); M. Sandberg, My Longest Year (1968); Ha-Yo'eẓ ha-Mishpati la-Memshalah Neged Adolf Eichmann. Eduyyot, 2 (1963), 830–975. S. Rozman, Zikhron Kedoshim li-Yhudei Carpatoruss-Marmarosh (Yid., 1968), 214–327. contemporary period: P. Meyer et al., Satellites (1953), 373–489; American Jewish Congress, Jewish Communities of Eastern Europe (1967), 30–37; Kovács, in: jsos, 8 (1946), 147–60; Kutas, in: Journal of Central European Affairs, 8 (1949), 377–89; ajyb (1945– ); R.L. Braham and M.H. Hauer, Jews in the Communist World: a Bibliography (1963), 25–29; P. Lendvai, Anti-Semitism in Eastern Europe (1972), 301–25.

HUNGARY

Republic of Hungary

Magyar Népköztársaság

COUNTRY OVERVIEW

LOCATION AND SIZE.

Hungary is a landlocked country in eastern Central Europe bordered by Austria, Slovakia, the Ukraine, Romania, Serbia, Croatia, and Slovenia. Located in the Carpathian Basin, it is surrounded by the Carpathian Mountains, the Alps, and the Dinaric Alps. It has a total area of 93,030 square kilometers (35,919 square miles), 690 square kilometers (266 square miles) of which is water. Comparatively, Hungary is slightly smaller than the state of Indiana. The capital, Budapest, is located in the central northern region on the Danube river, which runs from Austria to the Croatian-Serbian border.

POPULATION.

The population of Hungary was estimated at 10.04 million at the end of January 2000, a slight decrease compared to the 1990 population of 10.38 million. In 2000 the birth rate was estimated at 9.26 births per 1,000, and the death rate was 13.34 deaths per 1,000. The population growth rate estimate in 2000 was-.33 percent, making Hungary a country where population is declining. The majority religion in Hungary is Roman Catholic (67.5 percent), followed by Calvinist (20 percent), Lutheran (5 percent), and atheist and other (7.5 percent).

Some 60 percent of Hungarians live in urban areas. Compared to other European countries in population density, Hungary ranks in the middle with about 109.4 persons per square kilometer (283 per square mile). The most densely populated areas lie in the industrial axis areas, running southwest to northwest, that are rich in natural resources.

The Hungarian population is predominantly ethnic Hungarian (89.9 percent), descendants of the Finno-Ugric and Turkish tribes who merged with the Avars and Slavic tribes in the 9th century. The modern population also includes Roma (Gypsies, 4 percent), Germans (2.6 percent), Serbs (2 percent), Slovaks (0.8 percent), and Romanians (0.7 percent). An interesting feature of Hungary is that many ethnic Hungarians who identify themselves as Hungarians also live in bordering states and other countries, approximately 5 million in all. The largest Hungarian population outside Hungarian borders—approximately 2 million—lives in the Romanian region of Transylvania. Another 700,000 live in the Slovak and Czech Republics, and some 650,000 live in the former Yugoslavia.

OVERVIEW OF ECONOMY

Hungary has an advanced and diversified free-market economy. Economic growth is strong relative to other countries in Europe, and Hungary has its sights set clearly on accession to the European Union (EU) before 2010. It has been more than 10 years since the official end of state socialism and a semi-command economy, and over 85 percent of the economy has been privatized . Hungary has undergone significant economic reform since 1989 including privatization, reform of important state-supported sectors like health care, pensions, and social security, and housing supports. It has also experienced significant regional development and the encouragement of both foreign and domestic investment.

Hungary's economic output has been steadily growing, yet it continues to lag behind typical western countries, including those of the European Union. Still, its growth rates have been impressive by the standards of developed countries, in recent years exceeding the EU average. Hungary's growth in the gross domestic product (GDP) was 5.5 percent in 2000, up from 4 percent in the previous year.

Hungary is regarded as a converging economy approaching the ranks of developed countries in general. Hungary is a member of the World Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank, and the Organization for Economic Cooperation and Development (OECD). It is currently an associate member of the European Union and has been preparing for full membership since 1997.

The most significant event affecting Hungary's economy after 1950 was the experiment of state socialism. When the communists took over in 1948, the economy of Hungary was based primarily on agriculture. That emphasis shifted under communist rule toward industrialization, especially heavy industry and manufacturing. In the late 1950s and 1960s the government retreated on this stance somewhat, emphasizing more consumer-oriented goods. As a consequence the Hungarian standard of living rose relative to that of other Eastern European countries under communist rule, but by the 1980s the Hungarian economy began to stagnate. As a consequence, Hungary became increasingly indebted to international lenders. At the same time, its ties with foreign governments, businesses, and organizations were gradually increasing. The combination of these financial and commercial trends contributed to the shift to a multiparty system in 1989.

The introduction of multiparty competition in 1990 was quickly followed by significant free market reforms, especially in the area of privatization. The new government was also particularly aggressive at attracting foreign investment, accounting for more than half of all direct foreign investment in Eastern Europe by 1993. Since 1989 more than US$20 billion in working capital has been invested by foreign companies. About 40 of the world's top 50 multinational companies are represented in Hungary. Hungary also has the most highly capitalized stock exchange in eastern Central Europe.

The growth potential of the Hungarian economy remains strong relative to both its neighbors and to the advanced economies of the European Union. Hungarian sovereign debt now rates as investment grade (debt low enough for investors to seriously consider putting money into the country). Hungary's economic growth in 2000 exceeded 5 percent, placing it above the EU average. Inflation , while high at just above 10 percent, is expected to drop to single digit levels in 2001 or 2002.

Organized crime has been a problem in Hungary since its political and economic transition in 1989, especially as a consequence of its geographic location and relative economic openness. Organized crime groups have used Hungary as a transit country for smuggling drugs, people, and weapons. Hungary has passed tough laws against such activities, however, and is rated much more highly as an attractive locale for foreign investment than many other post-communist countries. As it seeks to gain accession to the European Union, Hungary is actively seeking to eradicate the further influence of organized crime.

POLITICS, GOVERNMENT, AND TAXATION

Since its transition to a multiparty system in 1989, Hungary has enjoyed a fully competitive and democratic political system. Hungary is a parliamentary democracy with the leader of the largest party as prime minister. There is also a president who acts as head of state and is elected by the legislature. The legislative branch consists of the single-chambered National Assembly, consisting of 386 representatives elected through a combination of proportional and direct representation. Elections are held every 4 years, taking place in 1990, 1994, and 1998.

The ruling coalition in 2001 consisted of the right-of-center Fidesz-Hungarian Civic Party, in concert with the Hungarian Democratic Party and the Independent Smallholders' Party. The main opposition parties were the leftist Hungarian Socialist Party and the centrist Alliance of Free Democrats. A far-right nationalist party, the Hungarian Justice and Life Party, also received 14 seats for the first time in the 1998 election. The parties differ over the emphasis and content of some key economic policy issues. The Fidesz-based coalition, for example, supports a faster pace of economic reform than does the Socialist Party, which during its period in government from 1994-98 slowed the pace of reforms. Because all major parties are committed to Hungary's joining the European Union, however, economic policy differences are muted.

Hungary's judicial branch is headed by an independent Constitutional Court, established during the regime change of 1989 by the First Act of the Constitution. By law it is the responsibility of the Constitutional Court to guarantee that the constitution is adhered to in legal and political affairs. One important duty of the Constitutional Court is to reconcile the differences between national and international law, especially important in the economic and policy sphere as Hungary prepares its laws to conform to EU standards.

The Hungarian justice system is divided into 3 areas of jurisdiction, including criminal, civil, and administrative law. Administrative law includes reviewing the legality of administrative decisions, including economic policy decision, with regard to existing regulations. Hungary has a 3-tier justice system. At the lowest level are local courts (municipal district courts), superseded by county courts (in the 19 counties and the capital Budapest), and the Supreme Court. The office of the public prosecutor also plays an important role, used to investigate criminal activity and to represent the public interest. The public prosecutor supervises investigations, enforces punishments, and oversees court proceedings.

Hungary has a large centralized tax office, known in Hungarian as APEH. APEH monitors the financial activity of citizens and businesses, processing annual returns and value-added taxes , currently between 12 and 25 percent in Hungary depending on the category of good. APEH has fairly sweeping powers to investigate tax non-compliance, including its own police branch. Income tax on individuals is progressive (meaning the proportion of tax paid increases as income increases), ranging from 25 percent to 42 percent for the highest incomes. The general tax rate on businesses is 18 percent.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Like many former communist countries, Hungary possesses an excellent public transport system. The rail system, consisting of 7,606 kilometers (4,726 miles) of track, is state-owned and operated and connects all major cities in Hungary as well as a large number of international destinations. Hungary has 188,203 kilometers (116,944 miles) of highways, 81,680 kilometers (50,756 miles) of which are paved and 438 kilometers (272 miles) of which are expressways. Hungary also has 1,373 kilometers (853 miles) of permanently navigable waterways, including the Danube River flowing north to south through the center of the country. With its tributaries, the Danube provides a low-cost means to transport passengers and a large portion of domestic freight.

The completion of a canal between the Main River and the Danube River in 1992 allowed for goods to be shipped from the Black Sea to the North Sea. Finally, Hungary had 43 airports in 1999, including an international airport just outside Budapest. Hungary has a national airline, Malév, serving nearly all major European cities and several destinations in North America, Asia, the Middle East, and Africa. The airline was formerly state-owned but has now been partially privatized. The Ministry of Economic Affairs approved a large-scale program, the Széchényi Plan, designed to make massive national investments in highway and property development after 2000.

Power production in Hungary relies on a combination of domestically generated energy sources and imports. In 1999 Hungarian consumption of energy was 33.317 billion kilowatt hours (kWh), while production was 35.104 billion kWh. Hungary still has artificially low subsidized energy prices, but there are plans to allow prices to rise to western European market levels. At present Hungary's energy prices are between one-third and one-half of the prices in EU countries.

Like many other former Eastern bloc countries, Hungary relies heavily on fossil fuels to meet its energy needs. Hungary's estimated sources of primary energy supplies (1996, OECD/IEA) were 16.9 percent coal, 27.1 percent oil, and 40.4 percent natural gas. Of non-fossil fuel sources, 14.6 percent came from nuclear energy, 0.1 percent from hydroelectric sources, and 0.9 percent from other sources. Nuclear energy is produced in Hungary's 1 nuclear power plant, located near the city of Paks. Nuclear energy provides 38.9 percent of Hungary's electricity production, producing 13.969 billion kWh in 1998.

Hungary's telecommunication network has until recently been underdeveloped both from a technological and a service standpoint. But partial privatization of the state telephone company Matáv in 1993 and the planned introduction of competition for land-based telephone lines in 2002 has led to many important changes. Among these has been a spectacular growth in cellular phone services and ownership, with the number of mobile phone subscribers estimated at more than 3 million in 2000. (Official data put this number at 1.62 million in 1999, and 1.034 million in 1998.) There were 3 companies providing cellular service in 2001.

Under communism the telecommunication system was underdeveloped and poorly operated. Even in the first half of the 1990s, Hungarians often had to wait more than a year to have a fixed telephone line installed. This situation has changed quickly in recent years, however. The domestic phone network is now digitized and highly automated and is able to provide almost any telecommunication service need. Trunk services are carried by fiber-optic cable and digital microwave radio relay. Subscribers have had the option of fiber-optic connections (using ISDN lines) since 1996. Hungary has fiber-optic cable connections with all neighboring countries. Total fixed-line telephones in use were 3.609 million in 1999 and estimated at over 4 million in 2000. The Hungarian state telecommunications company, Matáv, had a state-guaranteed monopoly on fixed-line communications, a monopoly that was scheduled to end in 2002.

Hungary has an extensive number of radio stations: 57 FM radio stations, 17 AM radio stations, and 3 shortwave radio stations in 1998. Total radio ownership in 1997 was 7.01 million. Hungary also had 39 television broadcast stations and some 4.42 million televisions in 1997. Internet activity has also grown significantly in Hungary, with 45 Internet service providers operating in 1999. Only 58.9 persons per 1,000 owned personal computers in 1998, a figure well behind the United States, although many more people use computers in school or at their workplaces. The number of Internet users in 1999 was 137,000, and estimates for 2000 put this figure at 733,000.

Since private ownership of publications was legalized in 1989, the print media in Hungary has blossomed. In 1999 there were 10 national daily newspapers, the most popular being Népszabadság and Metró, each with 207,000 copies printed per day. Népszabadság, meaning People's Freedom, was formerly controlled by the communist party but is now independent. Most of Hungary's daily newspapers are partially foreign owned. Hungary also has dozens of weekly and monthly magazines and papers, the largest exceeding 500,000 copies per week.

ECONOMIC SECTORS

Hungary's shift to a service-based economy, away from the agricultural and industry sectors, has been the most marked change in recent decades. Before World War II, Hungary's economy was based primarily on agriculture, and its industry was almost entirely destroyed by the war. During the communist period beginning in 1948, emphasis shifted toward the development of industry, although production goals were set unrealistically high and Hungary was not able to meet them. In the 1960s and 1970s economic reforms shifted some of the emphasis from industry and placed more focus on agriculture and consumer goods . More recently, services have come to dominate the economy. According to 1999 figures, services account for 65 percent of the GDP, compared to 30 percent in industry and only 5 percent in agriculture. The labor force of 4.2 million shows a similar distribution, with 65 percent employed in services, 27 percent in industry, and 8 percent in agriculture.

AGRICULTURE

Agricultural production is important to Hungary's economy although its role in the economy has steadily declined. In 1999 agriculture provided 5 percent of the GDP and 8 percent of employment, roughly similar to proportions observable in West European countries. As a share of exports, agricultural and food products constituted 10.5 percent of Hungary's exports in 1998. Hungary has 93,000 square kilometers (35,900 square miles) of cultivated land, covering 52 percent of Hungary's total area.

During the communist period about 90 percent of all farmland was organized into collective and state-owned farms. In collective farms, different families worked together on jointly owned land and shared the earnings from the farm's output. State farms were directly owned and managed by the government. Following the introduction of the multiparty system and the transition to a free market economy in 1990, the new government began returning farms to private hands, also introducing forms of compensation for lands that had been seized. The result is that currently about 90 percent of cultivated land in Hungary is privately owned. Severe droughts following privatization, combined with sharp drops in government subsidies for farming, caused a 30 percent drop in agricultural production during the past 10 years. Animal breeding has fallen by 50 percent in comparison with 1990. State subsidies for agriculture in Hungary tend to be comparatively low, an average of 5 to 7 times less per capita in Hungary than in the average European Union country.

Hungary's leading agricultural products are a combination of staple crops, famous specialty items such as wine and livestock products, and basic livestock. Hungary's most important crops include corn, wheat, sugar beets, barley, potatoes, and sunflower seeds. It also produces grapes and wine, including several famous wines such as those from the Tokaj region. Other well-known specialty items include salami, goose liver, and paprika. Livestock production is also important in Hungary, including cattle, pigs, sheep, horses, and poultry. Important livestock products include milk, meat, butter, eggs, and wool. Finally, Hungary has some important freshwater fisheries, mostly located on the Danube and Tisza rivers, and on Lake Balaton. The commercial fish catch consists mainly of carp, pike, perch, sheatfish, and shad.

Hungary also has important forestry resources, although poor forestry management reduced Hungary's forestry resources under communism. The expansion of agriculture, a high rate of exploitation, and inadequate re-planting of trees contributed to a significant decline in the period following World War II. In response, the government reduced timber cutting and launched an extensive reforestation program in the 1960s. The timber cut in 1998 was 3.88 million cubic meters (137 million cubic feet).

INDUSTRY

Once a major component of the Hungarian economy under communist rule, industrial enterprises struggled in the early 1990s to come to terms with operating in a free market. By the late 1990s, however, investments in many industries and the expertise and education of Hungarian workers contributed to a resurgence in the industrial sector. From 1999 to 2000 alone, industry expanded 18.3 percent, the third straight year of double-digit growth in this sector.

MANUFACTURING.

Manufacturing forms an important component of the Hungarian economy and was responsible for 84.6 percent of Hungary's exported commodities in 1998, even though most of Hungary's industries must import the raw materials used in the manufacturing process. The engineering industry—which is dominated by automobile and automobile parts production—accounts for roughly one-third of industrial output. Other leading manufactured products include steel (both crude and rolled), cement, aluminum, textiles, paper products, and shoes. The manufacture and processing of agricultural products is also an important contributor to Hungary's manufacturing output.

CHEMICALS.

The chemical industry is an important component of the Hungarian economy. The plastic base materials and plastic processing industries were major components within this sector, contributing 2.1 and 2.6 percent of total industrial output, respectively. This sector is mainly concerned with producing goods for other companies within the industrial sector, and produces some goods for export. The pharmaceutical industry contributes 2.4 percent of industrial output and is primarily oriented toward producing human and veterinary medicines, fine chemicals, pesticides and insecticides, and other pharmaceuticals.

MINING.

Mining was an important component of Hungary's industry during the communist period but has declined considerably since the collapse of the communist regime in 1989. Under communism, the government owned all subsurface resources and held exclusive rights to extract and use them. The only exception was uranium ore, which was mined by an agency of the Soviet Union. In the mid-1990s Hungary's chief mineral products were hard coal, lignite, bauxite, petroleum, and natural gas.

SERVICES

TOURISM.

Tourism is an important and growing contributor to Hungary's economy. Not only does it directly fuel economic activity, but it has also in the past provided an important source of foreign currency. After agriculture, Hungary's second largest net foreign exchange earning source is tourism. The capital, Budapest, is a strong attraction for many tourists, with its many museums, churches, castles, and cultural events, including an annual spring festival of music and drama. In all, Hungary maintains more than 100 public museums throughout the country. Lake Balaton is also a popular vacation spot for summer recreation activities such as boating, fishing, and swimming. In 2000, according to the Hungarian Statistical Office, 31,141 foreigners visited Hungary, generating a total balance of revenues and expenditures of 2.5 billion euros.

RETAIL.

Retail commerce forms an important and growing part of Hungary's economy. At the end of 1999 some 103,000 economic associations and more than 150,000 retail businesses were in operation. This represents 149 retail stores for every 10,000 inhabitants. Nationwide, the most important players in the retail sector are involved in the sale of food and groceries, accounting for 35 percent of the retail trade. Leisure and other items come next at 24 percent, followed by textile and clothing retail at 17 percent. Total retail revenues have been steadily rising, at 4.3 trillion forints in 1999, compared to 3.8 trillion in 1998.

FINANCIAL SERVICES.

Financial services are provided by a competitive and largely privatized banking sector. The largest bank, the National Savings Bank or OTP, has branches nationwide and provides a full range of personal and business banking services. Many other banks exist, most private and wholly or partially foreign-owned. Bank services include personal accounts, credit and debit card accounts, mortgage and personal loans, business accounts and business loans, foreign currency accounts and currency exchange, insurance services, and safety deposits. Customer service in Hungarian banks lags behind United States standards but has been steadily improving as the sector becomes more competitive. Most banks now offer Internet and mobile phone account access, and all provide

an extensive national network of automated teller machines.

INTERNATIONAL TRADE

Hungary's international trade made an important shift following the change of regime in 1990. Under the communist system, nearly half of Hungary's annual foreign trade was with the Soviet Union and other communist nations of the Council for Mutual Economic Assistance (CMEA). Since the late 1980s and the collapse of the CMEA shortly thereafter, however, most of Hungary's international trade has taken place with western countries. Hungary's leading trade partners today are Germany, Italy, Austria, Russia, and the United States. In 1998 Hungary's exports went to Germany (37 percent), Austria (11 percent), Italy (6 percent), and the Netherlands (5 percent). The country's imports came mostly from Germany (28 percent), Austria (10 percent), Italy (8 percent), and Russia (7 percent). Exports in 1999 amounted to US$22.6 billion, and imports were valued at US$25.1 billion. Hungary's main exports are machinery and transport equipment, consumer goods, agricultural products, chemicals, apparel, textiles, iron and steel, and wine. Its main imports are machinery and transport equipment, crude petroleum, chemicals, metal ores, consumer goods, and agricultural products.

MONEY

Hungary's currency is currently linked to an exchange rate control mechanism known as the crawling peg , a mechanism used by the Hungarian National Bank to slowly devalue the currency. The objective has been to gradually make the transition between the forint, historically a non-convertible currency, to a currency that is fully convertible on world markets. Under communism, the currency was not convertible outside the communist bloc countries and an artificial exchange rate applied within Hungary, set by the government. Western currencies sold on the black market during this period typically

fetched a much higher conversion rate than the official government rate, and such activities were difficult for the government to control. The National Bank, therefore, sets and publishes a daily rate of exchange between the forint and the world's major currencies. This rate is determined by a combination of the market value of other currencies, the inflation rate of the forint, and decisions by the National Bank to change the value of the forint.

As in most economies emerging from communism, inflation in Hungary has been high relative to western economies. Despite concerted efforts by the government to bring inflation into single digits, inflation in 2000 was 10.1 percent. Hungary's inflation during the post-communist transition period, however, has remained much lower than in many other Eastern European countries where rates often rose into the triple digits.

The country's central bank is the National Bank of Hungary, which issues currency and maintains checking and savings accounts. Other financial institutions include the Foreign Trade Bank, which serves businesses trading outside of Hungary, and the State Development Institution, which finances large-scale investment projects. The Budapest Stock Exchange opened in 1990 and is today the most heavily capitalized exchange in the East European region.

POVERTY AND WEALTH

Despite the official ideology of equality during the communist period, incomes in Hungary during this period were far from equal. Incomes varied according to social class and place of residence, with incomes in Budapest typically higher than in villages. The situation was much worse during the period between World War I and World War II, however, when average per capita income was very low and income inequality very high. One measure often used to measure income inequality is the ratio of the richest 10 percent of the population to the poorest 10 percent. A survey taken in 1992 suggests that the ratio of incomes of the highest to lowest 10 percent was

more than 6, making it similar to the income distribution in France and Germany. This level rose to 7.5 in 1996, according to one source, although the official figures from the World Bank place it at 6.3. The differences between social and employment categories has also widened. The social groups who were more affluent before the change in regime were able to increase their incomes in the 1990s faster than inflation, while the poorer groups had incomes that generally lagged behind inflation. In addition, the poorer segments of society were those where unemployment struck the hardest.

A large portion of Hungarian society, about 30-40 percent, suffered a loss in income after 1989. About 30-40 percent, on the other hand, were able to maintain their income, while a smaller percentage, around 10 percent, were able to increase their incomes. This small category included the managers of state and private enterprises, former government officials, and some of the intellectual elite.

Poverty is a problem in Hungary, and one which has worsened since the transition in 1989. According to estimates based on the subsistence level calculated by the Hungarian Statistical Office, in 1996 the proportion of those living under the subsistence level was at least 35 percent. Using the European definition of poverty as being 50 percent lower than the per capita average wage, then 14 percent of the population was poor in 1996.

Poverty in Hungary is disproportionately high among children, peasants and agricultural workers, housewives, and the handicapped. Geographically, poverty is higher in villages than in urban areas, with approximately 28 percent of the village population living in poverty, but only 18-19 percent of the city-based population and 5 percent of Budapest living in poverty. One social group where poverty is particularly high is the Gypsy ethnic grouping. The Gypsy population has been among the worst off in the transition to a market economy. Some 80 percent of Gypsies lived in poverty, compared to just 15 percent of non-Gypsies in 1996.

WORKING CONDITIONS

The single most significant factor affecting employment in Hungary has been the change in the early 1990s from a communist economy to a free market economy. The collapse of the communist system and the wide-scale privatization of the means of production led to a huge displacement of Hungarian workers, causing unemployment to reach 13 percent in 1993. But as the economy has continued to improve since the mid-1990s, employment has improved. Unemployment in 2000 was 6.4 percent, a respectable figure even lower than in many West

European countries such as France or Germany. This rate is down from approximately 10 percent in 1999. Unemployment varies regionally, being the highest in the eastern and rural areas. Most Hungarian employment is in the service industry, which accounted for 65 percent in 1996. Another 27 percent was employed in industry, and some 8 percent in agriculture.

Throughout the 20th century, Hungary has seen a net migration from rural to urban areas. Urbanization in Hungary's 5 major cities accelerated this process, even though, after Budapest, the 5 major cities have populations only between 127,000 and 210,000. Currently many workers commute to urban workplaces from rural areas. In 1996, some 25 percent of the nation's workforce commuted to and from their jobs in this manner.

A labor code was passed in 1992 which recognized the collective rights of workers, including the right to organize into unions and bargain collectively. This code includes the right to strike, extended to all workers except the police and the military. Following the passage of this code the number of strikes in Hungary increased dramatically, although most lasted for only a short time. The largest union is the National Confederation of Hungarian Trade Unions, with approximately 1 million members in 1993 (from a total labor force of 4.3 million). A number of other union federations also exist.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1000. King Stephen of the Árpad dynasty rules the country. He is converted to Christianity and establishes Hungary as a Christian state.

1241. The Mongolian Tatars invade Hungary and occupy the territory for the year.

1526. Hungary is invaded by the Turks and the last Hungarian battle is lost in the southern town of Mohács. The Turkish occupation lasts for 150 years.

1686. Buda, the traditional seat of power on the western side of the Danube river dividing the cities of Buda and Pest, is recaptured from the Turks.

1703-11. Ferenc Rákóczi II, prince of Transylvania, leads a rebellion against the Habsburg Imperial army. The rebellion fails.

1848. A revolution against the Habsburg rule starting in Pest spreads to the whole country. Lajos Kossuth is elected governor after the Habsburg emperor is dethroned following several important Hungarian victories. The Hungarian revolutionary forces are defeated in 1849 by the Habsburgs, the ruling royal family of Austria, with the help of the Russian Army.

1867. A dual Austro-Hungarian monarchy begins following a compromise with the Habsburgs. A spectacular phase of industrial development begins.

1873. Pest, Buda, and Obuda are unified, and Budapest becomes a European metropolis, with the building of the Opera House, the National Gallery, and the Parliament. The first underground railway in continental Europe is put into operation.

1918. The Austro-Hungarian monarchy disintegrates following its defeat, along with Germany and its other allies, during World War I.

1920. The Treaty of Trianon is signed, redrawing the borders of Hungary. The new borders place one-third of Hungary's former population in other states and reduce its territory by two-thirds.

1944. The Nazis occupy Hungary in March during World War II. At the end of the war, fascists take over the country. In October, the Soviet Army liberates Hungary from fascist rule and occupies the country.

1947. The last relatively free election is followed by years of communist control, including show trials, executions, forced resettlements, forced industrial development, and a drop in living standards.

1956. Following the death of Soviet leader Joseph Stalin, a revolution against Soviet rule takes place in Hungary. The uprising is defeated by Soviet troops. János Kádár assumes power with Soviet assistance. Hundreds of Hungarians are executed, thousands more imprisoned, and about 200,000 flee the country.

1965. Cautious economic reforms are launched, causing a rise in living standards and a loosening of some of the more harsh measures of the communist system. In 1968 the New Economic Mechanism is introduced, reducing central control of the economy and allowing for greater freedom among individual business managers.

1982. Hungary becomes a member of the World Bank and the International Monetary Fund.

1988. A transition to democracy begins in Hungary, led by opposition parties demanding new institutions and the right to compete in legislative elections scheduled for 1990.

1989. The Hungarian Socialist Workers' Party agrees with opposition parties to end one-party rule and hold free elections in 1990.

1990. The Soviet Army leaves Hungary and the opposition Hungarian Democratic Forum wins the legislative elections held in March and April, ending 45 years of communist rule. Hungary also gains accession to the Council of Europe.

1991. Hungary, Poland, and Czechoslovakia sign the Visegrad Cooperation Agreement, a declaration to cooperate in preparation for accession to the European Union. Hungary also signs an agreement on cooperation with the European Union.

1992. Central European Free Trade Agreement pledging open and cooperative trade is signed by Hungary, Poland, and the Czechoslovak Customs Union.

1994. The Hungarian Socialist Party wins a legislative majority in elections held in May. Hungary joins the Partnership for Peace Program.

1996. Hungary joins the Organization for Economic Cooperation and Development (OECD).

1997. Hungary is formally invited by the European Union to begin accession talks.

1998. Hungary pays off its debts to the International Monetary Fund.The Fidesz-Hungarian Civic Party assumes power following elections held in May.

1999. Hungary becomes a full member of NATO.

FUTURE TRENDS

The future looks positive for Hungary's economy, given the trend since the end of the communist system. Growth has been steadily increasing, inflation has been declining, and unemployment has stabilized. Relative to other countries in the region, Hungary's economic conditions have proved quite favorable. The key economic event in the near future affecting Hungary will be accession to the European Union, something Hungary hopes will happen between 2004 and 2008. This event will bring about a significant restructuring of trade, employment, agriculture, and financial services. Hungary has already begun to introduce major fiscal and financial changes in preparation for accession, following the detailed guidelines issued by the European Union. Among other changes that accession would bring, Hungary intends to join the euro states adopting a single European currency. Doing so would link Hungary's inflation and interest rates to the European Central Bank in Frankfurt and remove the independence currently enjoyed by the Hungarian National Bank.

Hungary's main challenges for the future will be to manage its workforce, including some structural sectors where unemployment remains significantly high. There are also regions, especially in the eastern portion of the country, where unemployment and poverty remain significantly higher than the national average. In addition, Hungary in 2000 and 2001 has experienced problems with flooding that have caused significant disruption to people and to agriculture. These problems and more will have to managed in the future to enable Hungary's economy to grow and develop further.

DEPENDENCIES

Hungary has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Hungary. London: Economist Intelligence Unit, 2001.

Hungarian Statistical Office. Hungarian Statistical Yearbook 1999. Budapest: Statistical Office, 2000.

Ministry of Economic Affairs. <http://www.gm.hu/kulfold/index.htm>. Accessed September 2001.

Molnár, Éva, ed. Hungary: Essential Facts, Figures, and Pictures. Budapest: Media Data Bank, MTI Corporation, 1997.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed August 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Hungary. <http://www.state.gov/www/about_state/business/com_guides/2001/europe/index.html>. Accessed September 2001.

U.S. Department of Energy, Office of Fossil Energy. An Energy Overview of the Republic of Hungary. <http://www.fe.doe.gov/international/hungover.html>. Accessed September 2001.

Welcome to the Embassy of the Republic of Hungary. <http://www.hungaryemb.org>. Accessed September 2001.

—Kenneth Benoit

CAPITAL:

Budapest.

MONETARY UNIT:

Hungarian forint (Ft). One forint equals 100 fillérs. There are coins of 10, 20, and 50 fillérs and 1, 5, 10, 20, 50, and 100 forints, and notes of 200, 500, 1,000, 2,000, 5,000, 10,000, and 20,000 forints.

CHIEF EXPORTS:

Machinery and equipment, other manufactures, agriculture and food products, raw materials, fuels and electricity.

CHIEF IMPORTS:

Machinery and equipment, other manufactures, fuels and electricity, agricultural and food products, raw materials.

GROSS DOMESTIC PRODUCT:

US$79.4 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$22.6 billion (f.o.b., 1999). Imports: US$25.1 billion (f.o.b., 1999).

Hungary

Compiled from the August 2007 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:

Republic of Hungary

PROFILE

Geography

Area: 93,030 sq. km. (35,910 sq. mi.); about the size of Indiana.

Cities: Capital—Budapest (est. pop. 2 million). Other cities—Debrecen (220,000); Miskolc (208,000); Szeged (189,000); Pecs (183,000).

Terrain: Mostly flat, with low mountains in the north and northeast and north of Lake Balaton.

Climate: Temperate.

People

Nationality: Noun and adjective—Hungarian(s).

Population: (2006 est.) 9,981,334.

Ethnic groups: Magyar 89.9%, Romany 4% (est.), German 2.6%, Serb 2%, Slovak 0.8%, Romanian 0.7%.

Religions: Roman Catholic 68%, Calvinist 21%, Lutheran 4%, Jewish 1%, others, including Baptist Adventist, Pentecostal, Unitarian 3%.

Languages: Magyar 98.2%, other 1.8%.

Education: Compulsory to age 16.Attendance—96%. Literacy—99%.

Health: (2006 est.) Infant mortality rate—8.39/1,000. Life expectancy—men 68.45 yrs., women 77.14 yrs.

Work force: (2004 est. 5.2 million) Agriculture—8%; industry and commerce—42%; services—32%; government—7%.

Government

Type: Republic.

Constitution: August 20, 1949. Substantially rewritten in 1989, amended in 1990.

Government branches: Executive—president of the Republic (head of state), prime minister (head of government), Council of Ministers. Legislative—National Assembly (386 members, 4-year term). Judicial—Supreme Court and Constitutional Court.

Political subdivisions: 19 counties plus capital region of Budapest.

Political parties: Fidesz-Hungarian Civic Party—center-right; Hungarian Socialist Party (MSZP)—center-left; Alliance of Free Democrats (SZDSZ)—center-left; Hungarian Democratic Forum (MDF)—center-right.

Economy

GDP: (2006 est.) $113.1 billion.

Annual growth rate: (2006 est.) 3.8%

Per capital GDP: (PPP 2006 est.) $17,300.

Natural resources: bauxite, coal, natural gas, fertile soils, arable land.

Agriculture/forestry: (2006 est., 3.1% of GDP) Products—meat, corn, wheat, sunflower seeds, potatoes, sugar beets, vegetables, fruits.

Industry and construction: (2006 est., 32.1% of GDP) Types—machinery, vehicles, chemicals, precision and measuring equipment, computer products, medical instruments, pharmaceuticals.

Trade: (2006 est.) Exports ($67.99 billion)—machinery, vehicles, food, beverages, tobacco, crude materials, manufactured goods, fuels and electric energy. Imports ($69.75 billion)—machinery, vehicles, manufactured goods, fuels and electric energy, food, beverages, and tobacco. Major markets—EU (Germany, Austria, Italy), CEFTA, CIS, U.S. Major suppliers—EU (Germany, Austria, Italy, France), CIS, CEFTA, U.S.

PEOPLE AND HISTORY

Ethnic groups in Hungary include Magyar (nearly 90%), Romany, German, Serb, Slovak, and others. The majority of Hungary's people are Roman Catholic; other religions represented are Calvinist, Lutheran, Jewish, Baptist, Adventist, Pentecostal, and Unitarian. Magyar is the predominant language. Hungary has long been an integral part of Europe. It converted to Western Christianity before AD 1000.

Although Hungary was a monarchy for nearly 1,000 years, its constitutional system preceded by several centuries the establishment of Western-style governments in other European countries. Following the defeat of the Austro-Hungarian Dual Monarchy (1867-1918) at the end of World War I, Hungary lost two-thirds of its territory and nearly as much of its population. It experienced a brief but bloody communist dictatorship and counterrevolution in 1919, followed by a 25-year regency under Adm. Miklos Horthy. Although Hungary fought in most of World War II as a German ally, it fell under German military occupation following an unsuccessful attempt to switch sides on October 15, 1944. Under occupation, the Hungarian Government deported or executed and seized the property of hundreds of thousands of its minority citizens, mostly members of the Jewish community. On January 20, 1945, a provisional government concluded an armistice with the Soviet Union and established the Allied Control Commission, under which Soviet, American, and British representatives held complete sovereignty over the country. The Commission's chairman was a member of Stalin's inner circle and exercised absolute control.

Communist Takeover

The provisional government, dominated by the Hungarian communist party (MKP), was replaced in November 1945 after elections which gave majority control of a coalition government to the Independent Smallholders’ Party. The government instituted a radical land reform and gradually nationalized mines, electric plants, heavy industries, and some large banks. The communists ultimately undermined the coalition regime by discrediting leaders of rival parties and through terror, blackmail, and framed trials. In elections tainted by fraud in 1947, the leftist bloc gained control of the government. Postwar cooperation between the U.S.S.R. and the West collapsed, and the Cold War began. With Soviet support, Moscow-trained Matyas Rakosi began to establish a communist dictatorship.

By February 1949, all opposition parties had been forced to merge with the MKP to form the Hungarian Workers’ Party. In 1949, the communists held a single-list election and adopted a Soviet-style constitution, which created the Hungarian People's Republic. Rakosi became Prime Minister in 1952. Between 1948 and 1953, the Hungarian economy was reorganized according to the Soviet model. In 1949, the country joined the Council for Mutual Economic Assistance (CMEA, or Comecon), a Soviet-bloc economic organization. All private industrial firms with more than 10 employees were nationalized. Freedom of the press, religion, and assembly were strictly curtailed. The head of the Roman Catholic Church, Cardinal Jozsef Mindszenty, was sentenced to life imprisonment.

Forced industrialization and land collectivization soon led to serious economic difficulties, which reached crisis proportions by mid-1953, the year Stalin died. The new Soviet leaders blamed Rakosi for Hungary's economic situation and began a more flexible policy called the “New Course.” Imre Nagy replaced Rakosi as prime minister in 1953 and repudiated much of Rakosi's economic program of forced collectivization and heavy industry. He also ended political purges and freed thousands of political prisoners. However, the economic situation continued to deteriorate, and Rakosi succeeded in disrupting the reforms and in forcing Nagy from power in 1955 for “rightwing revisionism.” Hungary joined the Soviet-led Warsaw Pact Treaty Organization the same year. Rakosi's attempt to restore Stalinist orthodoxy then foundered as increasing opposition developed within the party and among students and other organizations after Khrushchev's 1956 denunciation of Stalin. Fearing revolution, Moscow replaced Rakosi with his deputy, Erno Gero, in order to contain growing ideological and political ferment.

1956 Revolution

Pressure for change reached a climax on October 23, 1956, when security forces fired on Budapest students marching in support of Poland's confrontation with the Soviet Union. The ensuing battle quickly grew into a massive popular uprising. Gero called on Soviet troops to restore order on October 24. Fighting did not abate until the Central Committee named Imre Nagy as prime minister on October 25, and the next day Janos Kadar replaced Gero as party first secretary. Nagy dissolved the state security police, abolished the one-party system, promised free elections, and negotiated with the U.S.S.R. to withdraw its troops.

Faced with reports of new Soviet troops pouring into Hungary despite Soviet Ambassador Andropov's assurances to the contrary, on November 1 Nagy announced Hungary's neutrality and withdrawal from the Warsaw Pact. He appealed to the United Nations and the Western powers for protection of its neutrality. Preoccupied with the Suez Crisis, the UN and the West failed to respond, and the Soviet Union launched a massive military attack on Hungary on November 3. Some 200,000 Hungarians fled to the West. Nagy and his colleagues took refuge in the Yugoslav Embassy. Kadar, after delivering an impasssioned radio address on November 1 in support of “our glorious revolution” and vowing to fight the Russians with his bare hands if they attacked Hungary, defected from the Nagy cabinet; he fled to the Soviet Union and on November 4 announced the formation of a new government. He returned to Budapest and, with Soviet support, carried out severe reprisals; thousands of people were executed or imprisoned. Despite a guarantee of safe conduct, Nagy was arrested and deported to Romania. In June 1958, the government announced that Nagy and other former officials had been executed.

Reform Under Kadar

In the early 1960s, Kadar announced a new policy under the motto of “He who is not against us is with us.” He declared a general amnesty, gradu-

ally curbed some of the excesses of the secret police, and introduced a relatively liberal cultural and economic course aimed at overcoming the post-1956 hostility toward him and his regime. In 1966, the Central Committee approved the “New Economic Mechanism,” through which it sought to overcome the inefficiencies of central planning, increase productivity, make Hungary more competitive in world markets, and create prosperity to ensure political stability. However, the reform was not as comprehensive as planned, and basic flaws of central planning produced economic stagnation. Over the next two decades of relative domestic quiet, Kadar's government responded to pressure for political and economic reform and to counterpressures from reform opponents. By the early 1980s, it had achieved some lasting economic reforms and limited political liberalization and pursued a foreign policy which encouraged more trade with the West. Nevertheless, the New Economic Mechanism led to mounting foreign debt incurred to shore up unprofitable industries.

Transition to Democracy

Hungary's transition to a Western-style parliamentary democracy was the first and the smoothest among the former Soviet bloc, inspired by nationalism that long had encouraged Hungarians to control their own destiny. By 1987, activists within the party and bureaucracy and Budapest-based intellectuals were increasing pressure for change. Some of these became reform socialists, while others began movements which were to develop into parties. Young liberals formed the Federation of Young Democrats (Fidesz); a core from the so-called Democratic Opposition formed the Association of Free Democrats (SZDSZ), and the neopopulist national opposition established the Hungarian Democratic Forum (MDF). Civic activism intensified to a level not seen since the 1956 revolution.

In 1988, Kadar was replaced as General Secretary of the MKP, and reform communist leader Imre Pozs-gay was admitted to the Politburo. That same year, the Parliament adopted a “democracy package,” which included trade union pluralism; freedom of association, assembly, and the press; a new electoral law; and a radical revision of the constitution, among others. A Central Committee plenum in February 1989 endorsed in principle the multiparty political system and the characterization of the October 1956 revolution as a “popular uprising,” in the words of Pozsgay, whose reform movement had been gathering strength as communist party membership declined dramatically. Kadar's major political rivals then cooperated to move the country gradually to democracy. The Soviet Union reduced its involvement by signing an agreement in April 1989 to withdraw Soviet forces by June 1991.

National unity culminated in June 1989 as the country reburied Imre Nagy, his associates, and, symbolically, all other victims of the 1956 revolution. A national roundtable, comprising representatives of the new parties and some recreated old parties—such as the Smallholders and Social Democrats—the communist party, and different social groups, met in the late summer of 1989 to discuss major changes to the Hungarian constitution in preparation for free elections and the transition to a fully free and democratic political system.

In October 1989, the communist party convened its last congress and re-established itself as the Hungarian Socialist Party (MSZP). In a historic session on October 16-20, 1989, the Parliament adopted legislation providing for multiparty parliamentary elections and a direct presidential election. The legislation transformed Hungary from a people's republic into the Republic of Hungary; guaranteed human and civil rights; and created an institutional structure that ensures separation of powers among the judicial, executive, and legislative branches of government. But because the national roundtable agreement was the result of a compromise between communist and noncommunist parties and societal forces, the revised constitution still retained vestiges of the old order. It championed the “values of bourgeois democracy and democratic socialism” and gave equal status to public and private property. Such provisions were erased in 1990 as the need for compromise solutions was obviated by the poor performance of the MSZP in the first free elections.

Free Elections and a Democratic Hungary

The first free parliamentary election, held in May 1990, was a plebiscite of sorts on the communist past. The revitalized and reformed communists performed poorly despite having more than the usual advantages of an “incumbent” party. Populist, center-right, and liberal parties fared best, with the Democratic Forum (MDF) winning 43% of the vote and the Free Democrats (SZDSZ) capturing 24%. Under Prime Minister Jozsef Antall, the MDF formed a center-right coalition government with the Independent Smallholders’ Party (FKGP) and the Christian Democratic People's Party (KDNP) to command a 60% majority in the parliament. Parliamentary opposition parties included SZDSZ, the Socialists (MSZP), and the Alliance of Young Democrats (Fidesz). Peter Boross succeeded as Prime Minister after Antall died in December 1993. The Antall/Boross coalition governments achieved a reasonably well-functioning parliamentary democracy and laid the foundation for a free market economy.

In May 1994, the socialists came back to win a plurality of votes and 54% of the seats after an election campaign focused largely on economic issues and the substantial decline in living standards since 1990. A heavy turnout of voters swept away the right-of-center coalition but soundly rejected extremists on both right and left. Despite its neocommunist pedigree, the MSZP continued economic reforms and privatization, adopting a painful but necessary policy of fiscal austerity (the “Bokros plan”) in 1995. The government pursued a foreign policy of integration with Euro-Atlantic institutions and reconciliation with neighboring countries. But neither an invitation to join NATO nor improving economic indicators guaranteed the MSZP's re-election; dissatisfaction with the pace of economic recovery, rising crime, and cases of government corruption convinced voters to propel center-right parties into power following national elections in May 1998. The Federation of Young Democrats (renamed Fidesz-Hungarian Civic Party (MPP) in 1995) captured a plurality of parliamentary seats and forged a coalition with the Smallholders and the Democratic Forum. The new government, headed by 35-year-old Prime Minister Viktor Orban promised to stimulate faster growth, curb inflation, and lower taxes. Although the Orban administration also pledged continuity in foreign policy, and continued to pursue Euro-Atlantic integration as its first priority, it was a more vocal advocate of minority rights for ethnic Hungarians abroad than the previous government.

In April 2002, the country voted to return the MSZP-Free Democrat coalition to power. The new government, led by Prime Minister Peter Medgyessy, had a very slim majority in Parliament following the closest elections of the post-communist era. The Medgyessy government placed special emphasis on solidifying Hungary's Euro-Atlantic course, which culminated in Hungary's accession to the European Union on May 1, 2004. Prime Minister Medgyessy resigned in August 2004 after losing coalition support following an attempted cabinet reshuffle. Ferenc Gyurcsany was selected by the governing coalition to succeed Medgyessy, and he was confirmed by the Parliament on September 29, 2004.

In the April 2006 election Prime Minister Ferenc Gyurcsany and his Socialist-liberal coalition were reelected, the first time since communism that a sitting government has renewed its mandate. The current coalition between MSZP and SZDSZ makes up the parliamentary majority with 210 seats. However, it does not have the “super majority” to produce the two-thirds vote necessary to enact constitutional, legal, and procedural changes. The present configuration of Parliament includes MSZP with 190 seats, SZDSZ with 20 seats, Fidesz with 164 seats, MDF with 11 seats, and the independent Somogyert party with one seat. The Prime Minister has reduced the number of ministries in the cabinet from 17 to 12. The new cabinet has eight ministers from the MSZP party, three ministers from the SZDSZ party, and one independent minister.

GOVERNMENT AND POLITICAL CONDITIONS

The President of the Republic, elected by the National Assembly every 5 years, has a largely ceremonial role, but powers also include appointing the prime minister. The prime minister selects cabinet ministers and has the exclusive right to dismiss them. Each cabinet nominee appears before one or more parliamentary committees in consultative open hearings and must be formally approved by the president. The unicameral, 386-member National Assembly is the highest organ of state authority and initiates and approves legislation sponsored by the prime minister. A party must win at least 5% of the national vote to form a parliamentary faction. National parliamentary elections are held every 4 years (the last in April 2006). A 15-member Constitutional Court has power to challenge legislation on grounds of unconstitutionality.

Principal Government Officials

Last Updated: 2/1/2008

Pres.: Laszlo SOLYOM

Prime Min.: Ferenc GYURCSANY

Min. of Agriculture & Rural Development: Jozsef GRAF

Min. of Defense: Imre SZEKERES

Min. of Economics & Transportation: Csaba KAKOSY

Min. of Education & Culture: Istvan HILLER

Min. of Environmental Protection & Water Management: Gabor FODOR

Min. of Finance: Janos VERES

Min. of Foreign Affairs: Kinga GONCZ

Min. of Health: Agnes HORVATH

Min. of Justice & Law Enforcement: Albert TAKACS

Min. for Local Govt. & RegionalDevelopment: Gordon BAJNAI

Min. of Social Affairs & Labor: Monik LAMPERTH

Min. in Charge of the Prime Min.'s Office: Peter KISS

Min. Without Portfolio for the Secret Services: Gyorgy SZILVASY

Min. Without Portfolio for Public Admin.Reform: Tibor DRASKOVICS

Governor, National Bank of Hungary: Andras SIMOR

Ambassador to the US: Feren SOMOGYI

Permanent Representative to the UN, NewYork: Gabor BRODI

The Hungarian embassy is located at 3910 Shoemaker St. NW, Washington, DC 20008 (tel. 202-362-6730). Hungary has consulates in New York City and Los Angeles.

ECONOMY

The Hungarian economy prior to WWII was primarily oriented toward agriculture and small scale manufacturing. Hungary's strategic position in Europe and its relative lack of natural resources also have dictated a traditional reliance on foreign trade. In the early 1950s, the communist government forced rapid industrialization after the standard Stalinist pattern in an effort to encourage a more self-sufficient economy. Most economic activity was conducted by state-owned enterprises or cooperatives and state farms. In 1968, Stalinist self-sufficiency was replaced by the “New Economic Mechanism,” which reopened Hungary to foreign trade, gave limited freedom to the workings of the market, and allowed a limited number of small businesses to operate in the services sector.

Although Hungary enjoyed one of the most liberal and economically advanced economies of the former Eastern bloc, both agriculture and industry began to suffer from a lack of investment in the 1970s, and Hungary's net foreign debt rose significantly—from $1 billion in 1973 to $15 billion in 1993—due largely to consumer subsidies and unprofitable state enterprises. In the face of economic stagnation, Hungary opted to try further liberalization by passing a joint venture law, adopting an income tax, and joining the International Monetary Fund (IMF) and the World Bank. By 1988, Hungary had developed a two-tier banking system and had enacted significant corporate legislation which paved the way for the ambitious market-oriented reforms of the post-communist years.

The Antall government of 1990-94 began market reforms with price and trade liberation measures, a revamped tax system, and a nascent market-based banking system. By 1994, however, the costs of government overspending and hesitant privatization had become clearly visible. Cuts in consumer subsidies led to increases in the price of food, medicine, transportation services, and energy. Reduced exports to the former Soviet bloc and shrinking industrial output contributed to a sharp decline in GDP, falling 18% from 1990 to 1993.

Unemployment rose rapidly—to about 12% in 1993. The external debt burden, one of the highest in Europe, reached 250% of annual export earnings, while the budget and current account deficits approached 10% of GDP. In March 1995, the government of Prime Minister Gyula Horn implemented an austerity program, coupled with aggressive privatization of state-owned enterprises and an export-promoting exchange rate regime, to reduce indebtedness, cut the current account deficit, and shrink public spending. By the end of 1997 the consolidated public sector deficit decreased to 4.6% of GDP—with public sector spending falling from 62% of GDP to below 50%—the current account deficit was reduced to 2% of GDP, and government debt was paid down to 94% of annual export earnings.

These reforms and a massive infusion of foreign direct investment (FDI) set Hungary on a path of high growth, falling inflation, and decreasing unemployment. Growth has averaged 4.5% since 1996; inflation fell from 28% to under 7%; and unemployment fell to under 6%, the envy of many EU countries. Eighty percent of GDP is now produced by the private sector, and foreign owners control 70% of financial institutions, 66% of industry, 90% of telecommunications, and 50% of the trading sector. Hungary is now one of Europe's fastest-growing and most open economies, deeply integrated into the European economy, a relationship that was enhanced with Hungary's accession to the European Union on May 1, 2004.

The Orban government, elected in 1998, maintained the broad macroeconomic reforms of its predecessor. However, it did little to address structural problems in agriculture, health care, and the tax system. Under the slogan “economic patriotism,” the government moved to increase the government's role in the economy and switch from an export-to a domestic demand-driven economy. In 2002, the consolidated fiscal deficit doubled to 9.9% of GDP, in part due to overspending by the previous administration prior to the last national elections and by the new government after the elections. The Medgyessy government sought to lower the deficit while creating a business-friendly environment. A large wage increase and a strongly appreciating local currency in 2002-2003, however, decreased Hungary's competitiveness somewhat. Prime Minister Gyurc-sany appointed Finance Minister Veres in April 2005 and continues to focus on deficit reduction. As part of his economic reform plan, proposed in June 2006, Prime Minister Gyurc-sany vowed to attack Hungary's budget deficit, more than 10% of GDP in 2006, by raising taxes and combating waste in the public sector. The plan consists of austerity measures that involve cutting subsidies on gas, electricity, and medicines as well as a series of deep reforms in four key areas: healthcare, state administration, local government, and education. The Prime Minister aims to cut down on ministry staff by 23%. His goal is to cut the budget deficit to 6.6% of GDP in 2007, about 4% in 2008, and about 3% in 2009. Such reductions could put Hungary on the path to join the Euro zone by 2012, two years later than its original target. In 1995 Hungary's currency, the forint (HUF), became convertible for all current account transactions, and subsequent to OECD membership in 1996, for almost all capital account transactions as well. In 2001, the Orban government lifted remaining currency controls and broadened the band around the exchange rate, allowing the forint to appreciate by more than 12% in a year. Conflicting fiscal and monetary policy in the summer of 2002 caused confusion briefly in the market, with the forint surging against the Euro for several months. In attempts to reassure the market, the Medgyessy government repeatedly said the country would join the ERM II as soon as possible, with hopes of adopting the Euro by 2008. Prior to the change of regime in 1989, 65% of Hungary's trade was with Comecon countries.

By the end of 1997, Hungary had shifted much of its trade to the West. Trade with EU countries and the OECD now comprises over 75% and 85% of the total, respectively. Germany is Hungary's single-most important trading partner. The United States has become Hungary's sixth-largest export market, while Hungary is ranked as the 72d largest export market for the United States. Bilateral trade between the two countries increased 46% in 1997 to more than $1 billion. The United States has Normal Trade Relations with Hungary and has extended to it Overseas Private Investment Corporation insurance, and access to the Export/ Import Bank.

Foreign investment was the key to Hungary's success. With more than $60 billion in FDI since 1989, Hungary has been a leading destination for FDI in central and eastern Europe—including the former Soviet Union. Of this, a little less than one-third has come from U.S. companies. The largest U.S. investors include GE, Alcoa, General Motors, Coca-Cola, Ford, IBM, and Pepsico. Foreign companies modernized Hungary's industrial sector and created thousands of new, high-skilled, high-paying jobs. As a result of extensive and continuing liberalization, the private sector produces about 80% of Hungary's output. Currently, foreign firms control two-thirds of manufacturing, 90% of telecommunications, and 60% of the energy sector. Inflation declined from 14% in 1998 to 3.7% in 2005. Policy challenges include cutting the public sector deficit to 3% of GDP by 2008, from about 6.5% in 2005, and orchestrating an orderly interest rate reduction without sparking capital outflows.

NATIONAL SECURITY

Hungary's key national security focus since joining NATO in 1999 has been contributing to the stability of the region while integrating its armed forces into NATO's force structure. As a “NATO island” in an area of instability, Hungary takes a keen interest in NATO expansion and in the transatlantic link. It shares a more acute sense of the threat than many other European countries and is watching the transition in the Balkans, Ukraine, and Russia with great interest. Hungarians believe that Hungary's own security and that of its ethnic minorities in neighboring countries will be best served by a peaceful, unified region, which will be achieved when EU and NATO membership is extended to the entire region.

Hungary has been slowly modernizing and downsizing its armed forces since it left the Warsaw Pact in 1990. The transition from a heavy, slow-moving Warsaw Pact force to a lighter, versatile NATO force has been a long road, and U.S. advisers have been involved in the process throughout. The force has gone from 130,000 in 1989 to 45,000 in 2001 while dozens of bases have been closed. New training, logistics, and leadership systems have been implemented, while considerable practical experience working with NATO and other forces has been achieved by Hungarians serving in peacekeeping missions (about 1,000 at any given time). Hungary was especially helpful during the Kosovo crisis in 1995, when its airbase at Taszar was used by coalition aircraft. Hungarian military personnel are also present in Afghanistan and Iraq. Hungary spends 1.2% of its GDP on defense, well below the NATO target of 2% and spending levels of other new members.

FOREIGN RELATIONS

Except for the short-lived neutrality declared by Imre Nagy in November 1956, Hungary's foreign policy generally followed the Soviet lead from 1947 to 1989. During the communist period, Hungary maintained treaties of friendship, cooperation, and mutual assistance with the Soviet Union, Poland, Czechoslovakia, the German Democratic Republic, Romania, and Bulgaria. It was one of the founding members of the Soviet-led Warsaw Pact and Comecon, and it was the first central European country to withdraw from those organizations, now defunct.

As with any country, Hungarian security attitudes are shaped largely by history and geography. For Hungary, this is a history of more than 400 years of domination by great powers—the Ottomans, the Habsburgs, the Germans during World War II, and the Soviets during the Cold War—and a geography of regional instability and separation from Hungarian minorities living in neighboring countries. Hungary's foreign policy priorities, largely consistent since 1990, represent a direct response to these factors. Since 1990, Hungary's top foreign policy goal has been achieving integration into Western economic and security organizations. To this end, Hungary joined NATO in 1999 and the European Union in May of 2004. Hungary also has improved its often-chilled neighborly relations by signing basic treaties with Romania, Slovakia, and Ukraine. These renounce all outstanding territorial claims and lay the foundation for constructive relations. However, the issue of ethnic Hungarian minority rights in Slovakia and Romania periodically causes bilateral tensions to flare. Hungary was a signatory to the Helsinki Final Act in 1975, has signed all of the CSCE/OSCE follow-on documents since 1989, and served as the OSCE's Chairman-in-Office in 1997. Hungary's record of implementing CSCE Helsinki Final Act provisions, including those on reunification of divided families, remains among the best in eastern Europe. Hungary has been a member of the United Nations since December 1955.

U.S.-HUNGARIAN RELATIONS

Relations between the United States and Hungary following World War II were affected by the Soviet armed forces’ occupation of Hungary. Full diplomatic relations were established at the legation level on October 12, 1945, before the signing of the Hungarian peace treaty on February 10, 1947. After the communist takeover in 1947-48, relations with Hungary became increasingly strained by the nationalization of U.S.-owned property, unacceptable treatment of U.S. citizens and personnel, and restrictions on the operations of the American legation. Though relations deteriorated further after the suppression of the Hungarian national uprising in 1956, an exchange of ambassadors in 1966 inaugurated an era of improving relations. In 1972, a consular convention was concluded to provide consular protection to U.S. citizens in Hungary. In 1973, a bilateral agreement was reached under which Hungary settled the nationalization claims of American citizens. In January 1978, the United States returned to the people of Hungary the historic Crown of Saint Stephen, which had been safeguarded by the United States since the end of World War II. Symbolically and actually, this event marked the beginning of excellent relations between the two countries. A 1978 bilateral trade agreement included extension of most-favored-nation status to Hungary. Cultural and scientific exchanges were expanded. As Hungary began to pull away from the Soviet orbit, the United States offered assistance and expertise to help establish a constitution, a democratic political system, and a plan for a free market economy. Between 1989 and 1993, the Support for East European Democracy (SEED) Act provided more than $136 million for economic restructuring and private sector development.

The Hungarian-American Enterprise Fund has offered loans, equity capital, and technical assistance to promote private-sector development. The U.S. Government has provided expert and financial assistance for the development of modern and Western institutions in many policy areas, including national security, law enforcement, free media, environmental regulations, education, and health care. Direct investment in Hungary by American companies is rising rapidly. When Hungary acceded to NATO in April 1999, it became a formal ally of the United States. This move has been consistently supported by the 1.5 million-strong Hungarian-American community.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

BUDAPEST (E) 1054 BudapEST Szabadsag Ter 12 Hungary, APO/ FPO UNIT 5270 Box 40, DPO AE 09731-0040, 36-1-475-4400, Fax 36-1-475-4520 (ADMIN), Workweek: Mon–Fri; 8:00AM-5:00PM, Website: http://www.usembassy.hu.

TRAVEL

Consular Information Sheet

August 23, 2007

Country Description: Hungary is a stable democracy with a market economy. Tourist facilities outside Budapest are widely available, if not as developed as those found in Western Europe. Visitors considering a trip are encouraged to read the Embassy's consular web site at http://budapest.usembassy.gov.

Entry Requirements: A passport is required. American citizens do not need a visa to travel to Hungary for business or pleasure for up to 90 days. That 90-day period begins with entry to any of the “Schengen group” countries: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Slovakia, Spain, and Sweden. Multiple visits to Schengen countries may not exceed 90 days in any 6 month period. If you plan to reside or study in Hungary for a period of more than ninety days, a visa must be obtained from the Embassy of the Republic of Hungary at 3910 Shoemaker Street NW, Washington, DC 20008, telephone (202) 362-6730. Internet address: http://www.huemb-was.org, or the nearest Hungarian Consulate in Los Angeles or New York.

Note: Although European Union regulations require that non-EU visitors obtain a stamp in their passport upon initial entry to a Schengen country, many borders are not staffed with officers carrying out this function. If an American citizen wishes to ensure that his or her entry is properly documented, it may be necessary to request a stamp at an official point of entry. Under local law, travelers without a stamp in their passport may be questioned and asked to document the length of their stay in Schengen countries at the time of departure or at any other point during their visit, and could face possible fines or other repercussions if unable to do so.

Safety and Security: Prior police approval is required for public demonstrations in Hungary and police oversight is routinely provided to ensure adequate security for participants and passersby. Nonetheless, situations may develop which could pose a threat to public safety. U.S. citizens are advised to avoid areas in which public demonstrations are taking place.

For the latest security information, Americans traveling abroad should regularly monitor the Department's Internet web site at http://travel.state.gov/, where the current Worldwide Caution Travel Alert, Travel Warnings and Travel Alerts can be found. Up to date information on security can also be obtained by calling 1-888-407-4747 toll free in the U.S., or, for callers outside the U.S. and Canada, a regular toll line at 1-202-501-4444. These numbers are available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays.

Crime: Hungary has a low rate of violent crime. However, street crime occasionally involving violence has been reported, especially near major hotels and restaurants and on public transportation. Theft of passports, currency and credit cards is a frequent problem, especially in train stations and on public transportation. The U.S. Embassy's Consular Section offers an informational brochure for tourists in Hungary, including a section on crimes and scams that have been encountered by other tourists. To consult the advisory, please visit the Embassy's consular web site at http://budapest.usembassy.gov/tourist_advisory.html.

Drivers should be cautious when stopping at gas stations and highway parking lots, or fixing flat tires or other mechanical problems, especially at night. There have been reports of scams perpetrated on unwitting victims while traveling the highways. One reported scam involves someone who attracts the driver's attention by saying that there is something wrong with his/ her car (e.g. a smoking hood or flat tire) in order to encourage the driver to pull over to the side of the road. Once pulled over, the people participating in the scam will remove purses, passports, etc., from the car and drive away. Luggage and valuables should not be left unattended inside any vehicle.

A common scam involves young women asking foreign men to buy them drinks. When the bill arrives the drinks cost hundreds of dollars each. Americans should avoid bars and restaurants promoted by cab drivers or people on the street. Every bar and restaurant should provide a menu with prices before ordering.

In many countries around the world, counterfeit and pirated goods are widely available. Transactions involving such products may be illegal under local law. In addition, bringing them back to the United States may result in forfeitures and/ or fines. More information on this serious problem is available at http://www.cybercrime.gov/18usc2320.htm.

Information for Victims of Crime: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy or Consulate staff can, for example, assist you to find appropriate medical care, to contact family members or friends and explain how funds could be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed. Tourists who become victims of a crime in Hungary are strongly encouraged to call a 24-hour multilingual crime reporting telephone number. The number from 8 a.m. to 8 p.m. is 01-438-8080; from 8 p.m. to 8 a.m., the number is 06-80660044. There is also a 24-hour police Tourist Information office that provides service in English and German and is located in one of downtown Budapest's busiest tourist area: Vigado Utca 6, 1051 Budapest.

Medical Facilities and Health Information: Medical treatment in Hungary is adequate, but hospital facilities and nursing support are not comparable to those in the United States. Physicians are generally well trained, but there is a lack of adequate emergency services. Some doctors, particularly in Budapest, speak English. Doctors and hospitals usually expect immediate cash payment for health services. Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877FYI-TRIP (1-877-394-8747) or via the CDC's Internet site at http://wwwn.cdc.gov/travel. For information about outbreaks of infectious diseases abroad consult the World Health Organization's (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning the Hungary is provided for general reference only, and may not be totally accurate in a particular location or circumstance. In Hungary, fatal traffic accidents number approximately 1,200 per year, with about 7,000 traffic accidents per year resulting in serious injuries. While this may seem low compared to the Untied States, Hungary has a much higher rate of accidents per miles driven. Americans should drive with caution and always be alert for other vehicles that may be violating traffic laws. Road travel is more dangerous during the Christmas season, summer months, and at night. Roadside assistance, including medical and other services, is generally available. English is usually spoken at the emergency numbers listed below. In case English is not spoken, dial 112.

Ambulance: 104 or 350-0388
Police: 107
Fire: 105
24-hour English speaker: 112
Bus, train and taxi services are readily available for inter-city travel.

Hungarian motorways and highways are generally in good condition. Urban roads and road maintenance are also good although areas under construction are not always adequately marked or blockaded. In Budapest, many roads are often under construction. In rural areas, however, roads are often narrow, badly lit, and can be in a state of poor repair in some areas. Pedestrians, agricultural machinery, and farm animals often use these small rural roads. This requires increased caution on the part of drivers. Additional information on road conditions is available from “Utinform” at phone number (38)(1)336-2400.

Hungary has a policy of zero tolerance for driving under the influence of alcohol. Police often conduct routine roadside checks where breath-analyzer tests are administered. Persons found to be driving while intoxicated face jail and/or fines. Possible penalties for a car accident involving injury or death are one to five years in prison. Police have instituted a widespread practice of stopping vehicles, particularly in Budapest, to check driver identity documents in a search for illegal aliens and residents in Hungary, and to check vehicle registration and fitness documentation. It is against the law to use a handheld cell phone while driving anywhere in Hungary. Hungary recognizes international driver's permits (IDP) issued by the American Automobile Association (AAA) and the American Automobile Touring Alliance when presented in conjunction with a state driver's license. American driver's licenses will be accepted in Hungary for one year after arrival provided that a certified Hungarian translation has been attached to the license. Those with IDPs do not need to have the license translated, but must present both IDP and state driver's license together. After one year in Hungary, U.S. citizens must obtain a Hungarian driver's license. For further information on this procedure visit our website at http://budapest.usembassy.gov.

The speed limit for cars and motorcycles on the motorway is 130 km per hour (approximately 80 mph); on highways, the limit is 110 km per hour (approximately 65 mph); and in town and village areas, the speed limit is 50 km per hour (approximately 30 mph). Many drivers, however, do not observe the speed limits, and extra care should be taken on two-way roads. Special seats are required for infants. Children under age 12 may not sit in the front seat of an automobile. Seats belts are mandatory for everyone in the car. Unless another instruction sign is displayed, yielding the right of way to cars approaching from the right is the general rule. Turning right on a red light is prohibited. The police write up tickets for traffic violations thus documenting the infraction and any applicable fine(s). The police will give the offender a postal check (money order) on which the amount of the fine to be paid is written, and this postal check may be presented and paid for at any Hungarian post office. Sometimes in disputes about fines or the offense, the police will confiscate the person's passport and issue a receipt for the passport with an “invitation letter” to appear at the police station the ext day or day after to resolve the dispute. The passport is returned after the resolution and/or the payment of the fine. For specific information about Hungarian driver's permits, vehicle inspection, road taxes and mandatory insurance, contact the Hungarian National Tourist Organization Office in New York via the internet at http://www.gotohungary.com.

Aviation Safety Oversight: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Hungary's Civil Aviation Authority as being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Hungary's air carrier operations. For more information, travelers may visit the FAA's Internet web site at http://www.faa.gov.

Special Circumstances: The acceptance of traveler's checks is not universal in Hungary. The presence of ATMs is increasing in Budapest and other major cities. Hungary's custom authorities may enforce strict regulations concerning temporary importation into or export from Hungary of items such as firearms, antiquities, and prescription medications. It is advisable to contact the Embassy of Hungary in Washington or one of Hungary's consulates in the United States for specific information regarding customs requirements.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the United States for similar offenses. Persons violating Hungarian laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Hungary are strict and convicted offenders can expect jail sentences and heavy fines. Engaging in illicit sexual conduct with children or using or disseminating child pornography in a foreign country is a crime, prosecutable in the United States.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy and Consulate Locations: Americans living in Hungary are encouraged to register with the nearest U.S. Embassy of Consulate through the State Department's travel registration web site, https://travelregistra-tion.state.gov/ibrs/ui/, and to obtain updated information on travel and security within Hungary. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate. By registering, American citizens make it easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy in Budapest is located at 1054 Budapest, Szabadsag Ter 12; telephone (36)(1) 475-4703 or (36)(1) 475-4929. The Consular Section's fax is (36)(1) 475-4188 or (36)(1) 475-4113, and the Consular Section's web site is located at http://hungary.usembassy.gov.

International Adoption

April 2006

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Patterns of Immigration: Please review current reports online at http://travel.state.gov/family.

Adoption Authority: Ministry for Youth, Family and Social Affairs, and Equal Opportunity; Department of Family and Guardianship Matters (Ifjusagi, Csaladugyi, Szocialis és Eselyegyenlosegi Miniszterium, Csaladjogi és Gyamugyi Osztaly); Address: 1054 Budapest, Akademia u. 3.; Phone: (36-1) 475-5788 or (36-1) 475-7983.

Eligibility Requirements for Adoptive Parents: Hungarian law does not specify an age limit for adoptive parents, but Hungarian authorities require that one of the adoptive parents be under age 45. Hungarian law permits single people to adopt; however, Hungarian authorities may deny an adoption based on the strongly held opinion that a child be raised in by a married couple in a traditional family. According to the Ministry of Youth, Family and Social Affairs, adoptions are approved based on the submitted documents and a detailed study of the case. An adoption may be denied because of the age, marital status or other circumstances of the adoptive parents.

Residency Requirements: There are no residency requirements for prospective adoptive parents. However, once a child has been identified, the prospective parents will have to travel to Hungary to meet the child and, if they decide to proceed with the adoption, remain in Hungary for up to six weeks.

Time Frame: After receiving the prospective adoptive parents’ application, the adoption authorities have 15 days to notify adoptive parents whether they have been approved to adopt in Hungary. Parents have 60 days to submit required documents. After prospective adoptive parents arrive to meet their child, it takes four to six weeks to complete the adoption.

Adoption Agencies and Attorneys: There are no officially accredited international adoption agencies in Hungary. However, there are U.S. adoption agencies registered with the Ministry of Youth, Family and Social Affairs. Local authorities prefer to work with the registered and known agencies. Prospective adoptive parents must work directly with the Child and Youth Protection Institute (GYIVI) in the Hungarian county where the child is residing. The Embassy usually advises adoptive parents to seek the assistance of a U.S. adoption agency or a lawyer with experience in intercountry adoptions from Hungary if no friends or relatives are available to help in Hungary in the complex adoption process. Please contact the Ministry of Youth, Family and Social Affairs for information on which U.S. adoption agencies are authorized to work in Hungary.

Adoption Fees: Although there are no fees for the adoption itself, other expenses of obtaining documents and translations, and lawyers’ fees, if any, can be high. For a translation of one page a translator may collect from $40 to $140. The U.S. Embassy in Budapest is not familiar with what Hungarian attorneys charges for adoption related services.

Adoption Procedures: People who are interested in adopting children in Hungary should send their requests (a letter expressing the intention to adopt a Hungarian child) to:

Ministry for Youth, Family and Social Affairs, and Equal
Opportunity
(Ifjusági, Családügyi, Szociális és
Esélyegyenlõségi Minisztérium)
Akademia u. 3
Budapest 5th District
(36-1) 475-5788 or (36-1) 475-7983.

Adoption requests can also be submitted through a Hungarian Consulate abroad. Please note, however, that the Consulate is required to forward the request to Budapest. Once a request for adoption is received, the adoption center has fifteen days to send the parents are sent an information packet about the necessary documents they must submit and adoption procedures. If the prospective parents fail to present the required documents within sixty days, the adoption center considers the request to adopt abandoned. Once the necessary documents are submitted, the adoption center will forward notification of registration to the adoptive parents. The documents are forwarded to the appropriate county Child and Youth Protection Institute (GYIVI). The county GYIVI will schedule an appointment for the prospective parents to travel to Hungary to meet the child. If, after meeting the child with whom they have been matched, the prospective adoptive parents agree to adopt this child, the GYIVI forwards all the documents with a recommendation to the Guardianship Office in the county where the child resides. This office has legal authority to adjudicate (approve or deny) all adoption requests. Once the final adoption decree is issued, the child must be re-registered at the birth registry of his/her place of birth. When the new birth certificate is issued, the adoptive parents submit a Hungarian passport application on behalf of the child. The adoptive parents must be prepared to stay in Hungary during the adoption process, which may take 3–6 weeks, including the passport application. If, after meeting the child with whom they have been initially matched, the prospective adoptive parents do not wish to adopt that child, the GYIVI returns their documents to the adoption center in Budapest for further consideration. The prospective adoptive parents’ application remains valid for two years, after which time the entire registration process must be repeated.

Required Documents: In order to be placed on the national register of adoptive parents, the following documents must be submitted upon receipt of the information packet.

• Home study performed by a U.S. licensed agency or a social worker;
• Proof of income;
• Psychological evaluation of adoptive parents by a psychologist;
• Notification of I-600A approval from U.S. Citizenship and Immigration Services;
• Evidence of citizenship;
• Statement of prospective adoptive parents regarding motivation for adoption and expectations about the child (separate from the original letter of intent);
• Prospective adoptive parents’ statements consenting to their registration on the national register;
• Certified copy of license of adoption agency, if applicable.

All of the documents must be original or certified copies issued within the last year, and must be accompanied by Hungarian translations authenticated by Hungarian consular officials abroad or certified translators in Hungary.

Embassy of Hungary
3910 Shoemaker Street, N.W.
Washington, D.C. 20008
Telephone (202) 362-6730
E-mail: info@huembwas.org
http://www.hungaryemb.org

Hungary also has consulates in Los Angeles and New York.

U.S. Immigration Requirements: Prospective adopting parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions.

Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Embassy of Budapest
1054 Budapest, Szabadsag ter 12
Budapest V, Hungary
Tel: 011-36-1-475-4400
Fax: 011-36-1-475-4188/4113
Email: usconsular.budapest@state.gov
http://budapest.usembassy.gov

Additional Information: Specific questions about intercountry adoption in Hungary may be addressed to the U.S. Embassy in Budapest. General questions regarding intercountry adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.