They stole to steal again

"Those who changed the political regime considered the dismantling of the party-state institutions as their main task. Perhaps they didn't even notice that Western capitalist forces had been controlling the process since the 1980s." Ferenc Sinkovics' interview with Zsuzsanna Borvendég, research fellow at the Research Centre for History of the Institute of Hungarian Research, on the functioning of communist networks in Hungary was published in the weekly Magyar Demokrata.

"By 1989 Hungary was on the brink of ruin. Zsuzsanna Borvendég, historian and research fellow of the Institute of Hungarian Research, analyses the responsibility of the communist deep state that took power in 1944 in her new study published in Kommentár 2021/4, citing a shocking $242 billion theft of assets. We interviewed Zsuzsanna Borvendég."

- The Kádár administration constantly branded people as lazy and sloppy. Work more diligently, more punctually, if you want to live better - this was also the mantra of the Kádárist heirs while they were plundering the country. Why is this 242-billion loss of wealth not in the spotlight?

- Research by a group of bankers in Scotland revealed this figure in 2012. There was no reaction. Yet it means that one out of every three years of Hungarian GDP ended up on foreign soil. When Miklós Németh's government handed over the budget in 1989-90, it turned out that the country was $22 billion in the red, pushing it to the brink of bankruptcy. The narrative at the time was that János Kádár wanted to maintain his power by constantly raising living standards to avert the threat of another 1956 revolution, and he could only do that by relying on loans.

- Indeed, we heard that we devoured the loans. Is that not what happened?

- The system blamed the people for the debt, claiming that they had consumed more than they had earned. But the main reason why the society saw a rise in their living standards was due to the fact that they exploited themselves in the second economy. It started with the introduction of backyard farming, and over time it spilled over into industry, commerce and the service sector.

- At the time, it was surprising that the West accepted Gyula Horn, a former military workers' guard and a typical Kádár-hero who actively participated in the crushing of the revolution, as Hungarian Prime Minister without any further ado...

- In fact, German Chancellor Helmut Kohl had already requested PM József Antall to give Horn the foreign affairs portfolio in his government. But there is more. We know that in 1989, the Social Democratic Party led by Anna Petrasovits tried to embed into the Western social democratic scene. The Austrian SPÖ then sent them the message that they had not gone hunting with them. This also shows that an informal network of contacts between the elite of the MSZMP (Hungarian Socialist Workers' Party) and the Western political left had been established decades earlier.

- What did the Western companies want here?

- If they brought their products here, they didn't have to deal with the competitors, they didn't have to worry about price competition, they could sell their obsolete, outdated goods here and they didn't owe anybody any responsibility. The decision as to which company could enter was made by the Hungarian foreign trade companies, the Impexes and the secret service network behind them. This became a real hotbed of corruption.

- Did everyone know about this, including János Kádár himself?

- Obviously, but if the incoming Western scrap made the Hungarians feel better off, he accepted it. The whole system was constructed by the Hungarian communists on the orders of the Soviets from 1944 onwards. They also had to create the economic bridge across the descending Iron Curtain, without which the globalised economy could not have functioned. The flow of capital had to be ensured, despite the Cold War and the political blockade. Multinational capital, led by the US, traditionally enjoyed good relations with every Soviet leader except Stalin. They built Trotsky and Lenin. The development of the Soviet economy was a great opportunity, for example Henry Ford - despite being a known anti-Semite and anti-communist - established a tractor factory in the country in 1920.

- It is unbelievable that in 1947 the Hungarian communists also contacted Nazi-turned-German businessmen who had served in Hungary during the war and played an important role in the plundering of our country and the deportation of the Jews...

- The Communist party sent István Bródy to make contact with them, which resulted in fruitful cooperation. Bródy wrote in the Haladás newspaper at the time that this was what real life demanded: we made a deal. There are several indications that the German and Soviet intelligence services remained in contact even during the war. The Hungarian communists who had travelled to the West after 1919 and then ended up in the Soviet Union could have been involved in this. Between the two world wars they were given important tasks, for example, in the management of the Comintern, in the financing of the Western left, and they gained a lot of experience in the Western network of influence built up by the Soviets. It is understandable that the Kremlin entrusted them with the task of developing a secret contact network with the West at home, which is how Zoltán Vas, the man who sent István Bródy, knew whom to approach among the former Nazis. I would like to add that this area has not yet been researched by historians. This is only my hypothesis for the moment.

- It is believed that at the end of 1972 the Hungarian debt was still $1.5-2 billion. Then it started to rapidly increase. What happened?

- Most people attribute the increasing dynamics of Hungarian indebtedness to the 1973 oil crisis. Yet, it was the persistent deficit in foreign trade that played the biggest role in the rise of the level of indebtedness. Many explained this by the non-competitiveness of the Hungarian industry. This is only half-truths: the products of Ganz, Ikarus, MOM, Rába and Videoton were competitive in the West. However, Hungarian foreign trade did not focus on these products, but on re-exports. As early as in 1959, the CIA noted that Hungary was the country that re-exported the highest percentage of its trade turnover of all the countries in the world. The method was first used by Moscow. The intermediary was always a communist party company and the commission received for the intermediation was used for covert party financing. The Hungarian leadership followed the same path, as early as the early 1950s. Oddly, most of the re-export took place between two Western companies. The question is why. I searched for a reason and discovered that the intermediary Hungarian company resold the goods cheaper than it had purchased them, thus creating extra profit for the real buyer. This caused considerable damage to the Hungarian Treasury, i.e. to the Hungarian society, but the Western company that realised the extra profit slipped a handsome commission back into the pockets of the Hungarian authorities. They were part of the party elite and the secret services, disguised as foreign merchants. The initial, ideologically based system was transformed into a corrupt and private system over the decades, which still functioned smoothly after the regime change. Huge sums of money were accumulated in offshore companies abroad, which were then brought back as working capital in the privatisation process, so that the stolen money could be used to steal again.

- You write that foreign financial centres invaded the country. First tanks and then banks?

- No, there were still plenty of tanks here in 1972, when a piece of legislation was passed that allowed domestic companies to conduct offshore transactions. The money was flowing out, in large quantities, and the national debt was growing rapidly, to which the young economist Gergely Szabó also attributed the deliberately unfavourable exchange rate policy, which was the domain of János Fekete, deputy president of the Hungarian National Bank. Western companies also started to arrive, Siemens, for example, which first signed a framework agreement with Moscow and then turned to Hungary. Siemens had tried to do major business here before, but had not had the opportunity before the 1972 legislation. Péter Vályi, the then Finance Minister, blocked the efforts of this group for a long time. Then he was toppled upwards, obviously not by accident, and his successor signed the legislation. Vályi fell into a cinder pit while visiting a factory in Diósgyőr in 1973. It was a slag pit at a Siemens smelter.

- Why was there no accountability at the time of the regime change? Unlike the informers, nothing could be heard of the perpetrators of the great heist...

- The regime changers saw the dismantling of the party-state institutions as their main task. Perhaps they did not even notice that Western capitalist forces had been controlling the process since the 1980s. In setting up what later became the SZDSZ (Alliance of Free Democrats), it was of course not in their interest to change the secret economic relations that had existed hitherto. Miklós Vásárhelyi, the former head of the Soros Foundation in Hungary, confessed in the last days of his life that they wanted to know what Viktor Orbán would speak about at Imre Nagy's reburial. No, they were not afraid of urging a Soviet withdrawal. They were afraid that Viktor Orbán might say that an old empire is leaving, but we should not let a new one take its place..."

The interview can be read on the website of Magyar Demokrata