Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

339. Telegram From the Embassy in Hungary to the Department of State¹

10805/Depto 6029.

Budapest, November 14, 1987, 1819Z

SUBJECT

• Deputy Secretary’s Meeting With General Secretary Kadar, November 13, 1987.

1. Confidential—Entire text.

2. Begin summary. In an hour-long meeting between Deputy Secretary Whitehead and Party General Secretary Kadar, the latter said he was pleased with the state of U.S.-Hungarian relations and pledged to continue Hungary’s economic reform policies. Kadar stressed that the improvement in U.S.-Soviet relations provided Hungary with increased flexibility in its relations with Western countries, including the United States. Mr. Whitehead said that the greater level of political and economic freedom in Hungary, as compared to elsewhere in Eastern Europe, had created a special interest on part of USG and he hoped that favorable trends of past years would be continued. The Hungarian policies of economic decentralization and limited controls on its citizens provided the opportunity for Hungary to play a special role in helping to promote East-West understanding. Kadar responded that the GOH would be pleased to do this as circumstances permitted. Kadar appeared fit and was articulate throughout the session, showing no signs of ill health. End summary.

3. Kadar began a long monologue with a comment on the state of U.S.-Hungarian relations. As a result of many years of efforts, these ties could now be described as normal and were developing further to the extent possible. There were limitations as to how far Hungary could go. First of all, there was a great disparity in size. In addition, the role both countries played in the world was very different; the U.S. played a determining role while Hungary was “only somewhere on the map.” Kadar expressed appreciation for recent U.S. steps to improve the international climate. The Geneva and Reykjavik summit meetings,² and an agreement with the Soviets to hold two additional summits showed a recognition of reality on both the U.S. and Soviet side. For many years in bilateral discussions Americans and Hungarians had talked about what each side wanted from the other. In moving to improve relations with the Soviets, the U.S. had done what Budapest had hoped for.

4. Kadar emphasized repeatedly that improved U.S.-Soviet relations enabled Hungary as well as other Eastern European countries to behave in a more independent manner. Hungary has strived to carry out a distinct program of economic decentralization and market-oriented reforms which would be continued into the future. While it was a continuing goal of the leadership to build a socialist system in Hungary, there was no way Hungary could isolate itself from the rest of the world given the fact that 50 percent of its national income was earned from foreign trade and half of that trade was with non-socialist countries. Despite the fact that the U.S. and Hungary belong to different military alliances, many similar rules applied in both countries. Certainly both had to be concerned with costs and profits as well as achieving greater efficiency.

5. Looking at the current world situation, Kadar said there were countless issues of concern to all mankind. Extremes of wealth and poverty in the world had created a situation where surpluses of goods were produced in the industrialized countries which poor countries wanted but did not have the resources to buy. The problems of the environment were also a paramount global concern. Kadar felt, on the basis of recent visits to both the Soviet Union and China, that both these countries wanted very much to open their doors further to cooperation. This, in turn, would also have a positive spin-off in the area of human rights.

6. Kadar characterized the traditional view of the struggle between socialism and capitalism as obsolete. The Bolshevik revolution had taken place 70 years ago in response to the problems of the world at that time. However, the situation which had created the conditions for revolution would not be repeated and future revolutions could not reoccur in the same manner. He mused that it seemed as if the world had moved into a situation which had been predicted by Engels in the 19th century that weapon stockpiles could become so great as to make war impossible. Kadar noted that Armand Hammer³ had once told him an ideal system might be created if the best could be taken from socialism and capitalism. Such a system might feature a far-reaching program of social security, guarantees of employment as well as opportunities for entrepreneurship. He added quickly this was an enticing idea, but philosophically he could not accept combining socialism with capitalism.

7. Turning to the Hungarian economy, he acknowledged that there were problems but that the foundations of a solution were that Hungarians had shown their ability to be compete in certain areas; even the Japanese were interested in Hungarian computer software and Hungarian industry had provided specialized equipment for both the U.S. and Soviet space programs. The fundamental problem of the moment was to get the population to consume less and produce more. Hungarians were great consumers but were less enthusiastic about production. Conditions had to be created under which people would be rewarded according to what they produced.

8. The Deputy Secretary responded by voicing his appreciation for the direction in which Hungary has developed in recent years. The Hungarian economic experiment was the most imaginative in Eastern Europe and there had been a steady growth in the degree of personal freedom allowed to individuals. We felt it important that these trends continue and that the Hungarian experiment be successful. Our bilateral relations had shown a continuing improvement and it was hard to find contentious issues. Trade had increased by 30 percent during the current year, and increasing numbers of American companies showed interest in the establishment of joint ventures. We had established an ongoing pattern of high level visits by officials of both countries. Hungary’s special character, its pioneering role in the reform process and its good relations with the U.S., gave it the possibility of serving as a bridge between the U.S. and USSR. Mr. Whitehead told Kadar we recognized Hungarians understood the Soviets better than we did. At the same time it perhaps also had greater appreciation than its East European neighbors as to why Soviet military intervention in places such as Afghanistan was unacceptable to the American people and had placed great obstacles in the way of our efforts to improve U.S.-USSR relations. He suggested that in the coming months as we intensified our dialogue with the Soviets it might also be useful to somehow find a way to have the Hungarians take an active role in trying to help the process along, as needed.

9. Kadar responded by expressing appreciation for U.S. understanding of Hungarian policies. Interestingly, American attitudes toward Hungary had much in common with appraisals he had recently heard from Chinese officials during his recent visit there. Kadar said Hungary’s deep crisis of thirty years ago had resulted in a decisive break with the catastrophic policies of the early 1950’s and a search for solutions which could command broad popular support. The first steps had been taken in agriculture and had proved to be highly successful. Unfortunately, attempts to stimulate industry along the same lines had not gone as well. Commenting on U.S. hopes for greater independence by East European governments in the implementation of policies, Kadar said that Hungarians preferred to think of their approach as being autonomous rather than independent. A small country such as Hungary could not afford the luxury of independence, although in today’s world it was increasingly difficult for large countries to be totally independent. As far as serving as an intermediary was concerned, Kadar said that it was not Hungary’s desire to act as a letter carrier between larger powers as President Mitterrand had once suggested. In the past Hungary had played a bridging role in a somewhat different way, for example, in its unwillingness to freeze contacts with Western countries in the wake of the INF deployment decision or its readiness to join the World Bank and IMF despite open Soviet opposition to this move. He promised that Hungarian leaders would be open and forthright in conveying messages and would provide the same version of events to American officials as they did to Soviets.

10. Comment: Despite various reports which have circulated about the poor state of Kadar’s health, he was vigorous and alert throughout the meeting. He spoke clearly, although at times his remarks rambled and tended to have a disjointed quality. However, this rambling quality seems to be characteristic of Kadar. At one point in the conversation, referring to his recent visit to China, Kadar reflected on a long and friendly discussion he had conducted recently with Chinese leader Deng Xiaoping. After Kadar had departed the session, Party Foreign Affairs Secretary Szuros drew our attention to what he described as the similarities between the two men, both of whom he described as master politicians. We suspect Kadar gets inspiration from the fact that Deng did not retire until after his 80th birthday and still seems to have discovered a solution for keeping his hand at the center of events. We can also suspect that Kadar, who continues to show little inclination to step down, sees the Deng example as a model for him to emulate.

11. Participants in the meeting were: US: Deputy Secretary Whitehead, Ambassador Palmer, EE Director Wenick, D Executive Assistant Grossman, DCM Kursch (notetaker). GOH: General Secretary Kadar, Party Foreign Affairs Secretary Szuros, Central Committee International Department Deputy Director Atilla Gecse, Central Committee International Department Officer Tamas Lovassy, MFA US Desk Officer Bela Szombati (interpreter).

12. Moscow minimize considered.

Palmer

1. Source: Department of State, Official Correspondence of Deputy Secretary of State John C. Whitehead, July 1982–January 1989, Lot 89 D 139, 11/87 EEur/USSR Trip Memcons. Confidential; Immediate. Sent for information to Eastern European posts, Moscow, Beijing, and Bonn.
2. See footnote 8, Document 286.
3. American businessman.