Meeting Reagan in Hungary, now the nexus of commerce in Central Europe

John J. Metzler

BUDAPEST — I chanced upon Ronald Reagan walking towards Freedom Square here in Budapest. Actually his bronze statue, set in a brisk stride, larger than life, and facing a Soviet war memorial, sums up so many of the political emotions, poignant memories, and ghosts which still swirl round the Hungarian capital even in the bright Summer sunshine.

Budapest of course has seen darker days so it’s all the better to celebrate freedom.

Hungary remains one of the few former Soviet satellites states to proudly honor the U.S. President’s role in what became the extraordinary peaceful liberation of Central Europe in 1989.
Though Ronald Reagan never actually visited Hungary, his policies towards the former Soviet Union triggered the momentous political changes of Autumn 1989.

But 1989 is now a generation ago. I remind myself that the generations of young people who flock to Budapest for fun and frolic were not even born when Hungary became the first of the East Bloc regimes to open its border to Austria in summer that year. The symbolic and very real opening of the infamous Iron Curtain would trigger a political tsunami which swept the socialist so-called people’s republics into the dustbin of history.

The generation born in 1989 knows only a very fleeting memory of the old regime; theirs fortunately was a happier time. Hungary regained its sovereignty, established a parliamentary democracy, and integrated itself into the European institutions which today remain a bulwark and insurance policy for its continued freedom and prosperity. Hungary joined NATO in 1999 and the European Union in 2004.

Indeed by the late 1990’s Hungary was prospering economically emerging as a nexus for foreign investment and trade with Europe, the USA and the Far East. But bouts of a Socialist government combined with the global recession starting in 2008 has noticeably jolted and jarred the good times of a decade ago. While the Socialists, noted for corruption, were massively voted out by the current center-right coalition in 2010, the country still is paying the price for the profligate spending of their tenure.

Significantly the current government has made an early repayment of a $3 billion IMF loan it owed from 2008.

It hurts me to say, but Budapest, this magnificent capital on the Danube looks a bit more tattered and down than it was when we last visited a decade ago. Naturally the economic downturn plays a big role; while growth rates a decade ago averaged 5 percent, today they are anemic inching back towards just under one percent. Unemployment is high at ten percent despite what seems like massive public works projects just about everywhere even in front of the majestic Parliament building.

Hungary’s central geographic location, skilled workforce and still relatively low wages give the country a genuine comparative advantage for foreign investment. Investment from the United States, Germany, France and Japan is central to Hungary’s open export- oriented economy. Since 1989, Hungary has hosted $98 billion in direct foreign investment.

Germany’s AUDI automaker has expanded its factories in Gyor with a billion dollar plus new facility to ramp up car production from 33,000 today to a projected 125,000. French firms number 350 and have invested more than $13 billion. American investment plays a central role with more than 200 companies. Much of Hungary’s production is exported duty-free within the European Union.

Equally in 2012, U.S.. two-way trade with Hungary stood at $4.8 billion.

Hungary’s fractious but free political atmosphere is already clouded by parliamentary elections scheduled for next spring. The current conservative populist Fidesz/Civic Union government led by Prime Minister Viktor Orban, a former soccer player but an equally tough player on the political pitch, is prone to rhetorical flourishes. Recently Orban stated that despite its political freedom of the past twenty years, Hungary remained a “vulnerable and exploited” country. Such nationalist tones have not played well with much of the foreign business community.

The Socialists a descendent of the former communists, and the nefarious neo-Nazi Jobbik movement on the political fringe are among many political parties.

Indeed 1956 is a long time ago too. The indelible events of October and the Hungarian Revolution against the occupying Soviets, remain a political bellwether in a country defined by its proud and independent personality. The reformist Prime Minister Imre Nagy tried to pull socialist Hungary from the bear’s grip, only to be slammed back by a massive counter attack in November. Hungary would remain communist until 1989.

Those shadows still linger on Budapest’s streets and boulevards where the aspirations, the ghosts, and the memory of that brief whiff of freedom in 1956, have never quite disappeared. Just across from Parliament there’s a small monument with a bridge on which Imre Nagy stands, looking at the parliament but suspended in time as if wondering what would happen. Just down the same street, Ronald Reagan strides confidently towards Freedom Square.

John J. Metzler is a U.N. correspondent covering diplomatic and defense issues. He writes weekly for He is the author of Transatlantic Divide; USA/Euroland Rift (University Press, 2010).