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Hungary's Record in Meeting NATO's Standards

Fact sheet prepared by the Bureau of European and Canadian Affairs, August 15, 1997.

Democratic Government

Hungary is a fully functioning, stable democracy. The country upholds Western standards on human rights, freedom of expression, rule of law, checks and balances among branches of government, an independent judiciary, and effective local government, especially in the major cities.

Hungary has had two complete democratic changes of government since the end of the Cold War regime in 1989. Free and fair elections in 1990 brought a center-right, anti-communist government to power. The next elections in 1994 gave reform Socialists a majority and resulted in a "coalition of national unity"-type government that includes the liberal Free Democrat Party of prominent former dissidents.

The government elected in 1994 continues to honor its priority platform commitments to free market restructuring, Hungary's integration into Western economic and political institutions, and improved relations with neighbors.

Free Market Economy

The current government undertook stringent economic reform measures in March 1995, and brought the economy back from the brink of default on the high per capita foreign debt and into compliance with the IMF. Stabilization measures have been successful. The stabilization program cut the current account and budget deficits and accelerated structural reforms.

With more than $15 billion in foreign direct investment (FDI) since 1990, Hungary has attracted about a third of all FDI in central and eastern Europe. Hungary has privatized almost all of the telecommunications and energy sectors and has almost completed the consolidation and privatization of its banking sector. Overall, the private sector in Hungary produces about 75% of GDP.

Hungary was admitted to the Organization for Economic Cooperation and Development (OECD) in May 1996. Over 70% of Hungary's trade is with OECD countries, including more than 60% with the EU. (Prior to 1990, 65% of Hungary's trade was with Comecon countries.) Its currency is convertible on the current account, and limits on private use of foreign currency for tourism were lifted January 1, 1997. Pending radical pension reform may boost private savings and equity markets. Other structural reform steps have included introduction in 1996 of a means test for health, maternity, and child benefits.

The current account deficit shrank to below $1.7 billion (or less than 4% of GDP) in 1996. The consolidated budget deficit in 1996 was 3.7% of GDP--below the IMF target of 4%. Hungary still has the highest per capita foreign debt in north central Europe ($2,690 per capita), or about one-quarter of the total debt owed by the region as of 1996.

Relations with Neighbors

Hungary's borders are not in dispute with any of its eight neighbors. Hungary brought down the "iron curtain" with Austria in June 1989.

Bilateral relations with Austria are excellent, with traditional close ties having been reestablished even before 1989. An Austro-Hungarian battalion, to which Hungary contributes a peacekeeping platoon, is part of the UN Peacekeeping Force in Cyprus.

Hungary concluded Basic Treaties on Understanding, Cooperation, and Good-Neighborliness with Slovakia and Romania in 1996. Relations with Romania are greatly improved, especially under the new government in Bucharest. The Hungarian Government has voiced concern about the state of democratization and human rights in Slovakia and in Serbia.

Bilateral relations with Slovenia are excellent, as demonstrated by the Hungarian-Slovenian Bilateral Defense Cooperation Agreement signed in 1996, and trilateral cooperation extends to Italy. Hungary has good relations with Croatia, as trade levels recover gradually from the effects of violence in the former Yugoslavia. Relations with Ukraine are good, and in the past year, bilateral cooperation agreements were signed against organized crime, terrorism, and drug trafficking.

Civilian Control of the Military

Hungary's constitutional parliamentary system has established effective civilian control over the military. Legislative and constitutional mechanisms are in place to guarantee extensive oversight of the military by the Defense Ministry, and of the Defense Ministry (and government as a whole) by parliament. These mechanisms are put to frequent use.

The Constitution gives parliament control of the military budget, structure, deployment, fielding, stationing, and senior leadership. The 1993 National Defense Law specifies that the Minister of Defense (a member of parliament) is the superior of the Chief of Staff (Commander) of the armed forces. The parliamentary defense committee has many levers at its disposal; e.g., the right of prior approval of any movement of more than 1,000 troops.

Interoperability with NATO

Although struggling with a tight budget and the need for fiscal austerity, the Hungarian Government has voted special appropriations to fund increased NATO interoperability and has restructured and downsized its military force to be NATO compatible and more readily attain NATO standards.

--Top priorities include the U.S.-sponsored Regional Airspace Initiative, the development of the NATO brigade, and building peacekeeping capability.

--The budget for the Ministry of Defense increased in real terms in 1997, and plans are to so again in 1998.

Hungary participates actively in Partnership for Peace (PfP), the NATO Planning and Review Process for Partner countries to adapt to alliance norms of military budgeting, and formation of the Euro-Atlantic Partnership Council.

Hungary contributes an engineering battalion to SFOR and has been an exemplary host to the U.S. IFOR/SFOR base at Taszar (near Kaposvar), where 1,500-5,000 (varies with time) U.S. troops for Bosnia serve or transit. To facilitate the U.S. presence, Hungary has brought into force a bilateral supplement to the NATO PfP Status of Forces Agreement, granting additional privileges and immunities to U.S. forces and contractors. This is the first such U.S. bilateral supplement to the NATO SOFA with a non-NATO country.

The military was recently restructured to correspond to a NATO corps/brigade organization, with a joint staff, and one of the brigades designated as the NATO brigade. Hungary is training nearly 35 potential NATO staff officers per year at its national language center and is emphasizing language capability for the military, because English is the key both to NATO integration and to the ability to contribute to peacekeeping efforts.

Most of the senior leadership of the Hungarian armed forces are graduates of Western military training and understand the importance of civilian control. The Chief of Staff is a graduate of the U.S. Army War College--the first Western-trained officer to command a former Warsaw Pact military force. A deputy is a National War College graduate. Recent agreed downsizing of the professional military to produce a smaller, more capable defense force has resulted in a new, streamlined officer corps with leadership under the age of 50.

Country Profile on Hungary

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