The New Regime in Hungary

By Heller, Henry | Canadian Dimension, October-November 1991 | Go to article overview

The New Regime in Hungary


Heller, Henry, Canadian Dimension


The end of Communist government in Hungary came on March 25, 1990 when, after elections, the Hungarian Forum of Democrats took over the government. The consequences of that election are described in the following interview, by HENRY HELLER, with Peter Bihari formerly a lecturer in the economics faculty of Karl Marx University who is at present lecturing at the University of Manitoba and York University. The interview was carried out on July 11, 1991.

CD: Could youd describe the present political landscape in Hungary?

BIHARI: The present government is based on a coalition between the Hungarian Democratic Forum and two smaller parties the Popular Christian Democrats and the Small Holders Party. The Hungarian Democratic Forum is a conservative Christian Democratic party whose slogan is "nation and God." It has close ties to the German Christian Democrats. The Small Holders Party which is an indispensible element of the governing coalition is really the old pre-war populist party and its central objective is the reprivatization of the land, including the land of the Church which prior to 1945 had enormous amount of property. The main opposition party is the Alliance of Free Democrats who champion economic liberalism and western democracy. They place great emphasis on economic and political individualism, looking to the West as the model and priding themselves on their cosmopolitan outlook. The former communist party has been reduced to insignificance.

CD: Have there been purges of the bureaucracy of universities?

BIHARI: There have been verbal attacks, threats and a climate of fear among those who were involved with the former government. The pensions of former officials have been reduced in some cases or their apartments seized. Restructuring of university departments and faculties have weeded out those no longer acceptable. No sooner did the new regime take power than it instituted new elections of managers in state enterprises in which seventy-five per cent of the old managers were re-confirmed in their pasts. The nomenklatura has since proved extremely adept in shifting its base from political to economic power and becoming party of the newly emerging economic elite, much to the chagrin of the new rulers.

CD: How far has privatization of the economy gone?

BIHARI: Much less far than the government expected. The government hoped that fifty per cent of all enterprises would be in private hands in three years. Many small shops and enterprises have been privatized but in sum these amount to a small percentage of the overall economy. The basic reason for this situation is that few Hungarians have the capital to buy such enterprises. Foreign investment, including takeovers and new investment, was likely 300 million dollars in 1990 and somewhat more in 1991. These investments are mainly in financial and other sevices involving little or no productive or infra-structural investment. In this respect Poland and Czechoslovakia have done better. The present government's ultra-nationalism and anti-semitism puts foreigners off. Economic policy amounts to kind of nationalist dirigisme with the government choosing foreign investors on essentially non-economic criteria.

CD: What effect has the transition had on living standards? …

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