Political Rights: 1
Civil Liberties: 1
Status: Free
Population: 10,100,000
GNI/Capita: $6,350
Life Expectancy: 73
Religious Groups: Roman Catholic (51.9 percent), Calvinist (15.9 percent), Lutheran (3 percent), Greek Catholic (2.6 percent), other (26.6 percent)
Ethnic Groups: Hungarian (90 percent), Roma (4 percent), German (3 percent), other (3 percent)
Capital: Budapest


The popularity of the Hungarian Socialist Party (MSzP) suffered in 2005 as a result of the country's mediocre economic performance. During the year, the issue of the budget deficit dominated politics; Hungary is running the second-highest deficit in the European Union (EU), which it joined in 2004. Failure to bring the deficit under control threatens Hungary's chances of adopting the euro as its currency by 2010.

King Stephen I, who ruled from 1001 to 1038, is credited with founding the Hungarian state. In the centuries that followed, Hungarian lands passed through Turkish, Polish, and Austrian hands. In the mid-nineteenth century, Hungary established a liberal constitutional monarchy under the Austrian Hapsburgs, but two world wars and a Communist dictatorship in the twentieth century forestalled true independence.

The Soviet Union crushed an uprising by Hungarians seeking to liberalize the political and economic system in 1956, an event that remains prominent in the country's consciousness. Subsequent Communist policy was relatively liberal compared with policies in the rest of the Soviet bloc, but in the late 1980s, the country's economy was in sharp decline, and the Hungarian Socialist Worker's Party came under intense pressure to accept reforms. Ultimately, the party congress dissolved itself, and Hungary held its first free, multiparty parliamentary election in 1990. Since that time, government control in Hungary has passed freely and fairly between left-and right-leaning parties. The country has followed an aggressive path of reform and pursued the popular cause of European integration.

The current political landscape reflects the thin margin of power enjoyed by the governing coalition since a closely contested 2002 parliamentary election. After two rounds of voting, Prime Minister Viktor Orban's ruling coalition of the Hungarian Civic Party-Hungarian Democratic Forum (Fidesz-MDF) won just over 44 percent of the vote (188 mandates) and was unable to retain control of parliament. The Hungarian Socialist Party (MSzP) won 42.8 percent (178 mandates), and the Alliance of Free Democrats (SzDSz) narrowly exceeded the 5 percent threshold (19 mandates).

Voters elected one candidate on a joint MSzP-SzDSz ticket. Following the election, the MSzP formed a majority government in partnership with the SzDSz. The new Socialist-Liberal government elected Peter Medgyessy as prime minister.

Medgyessy focused on fiscal consolidation. He also sent Hungarian troops into Iraq, an unpopular move for many voters. After years of negotiation, and an 84 percent yes vote in a referendum in 2003, Hungary entered the European Union (EU) on May 1, 2004, as 1 of 10 mostly formerly Communist countries joining the bloc. However, shortly afterward, the MSzP, like most governing parties in the EU, did badly in elections to the European Parliament, winning just 9 of 24 seats.

In August, Medgyessy initiated a cabinet reshuffle, removing the SzDSz economy and transport minister, Istvan Csillag. When the SzDSz refused to accept the decision, Medgyessy offered to resign as a way of pressuring the party to accede. However, the MSzP accepted his resignation. After appearing ready to back Peter Kiss to replace Medgyessy, the party decided instead to back Ferenc Gyurcsany, a former businessman and sports minister.

In office, Gyurcsany's biggest challenge is to bring Hungary's finances under control while keeping the support of the left wing of the MSzP. Hungary's budget deficit of around 5 percent of gross domestic product (GDP) is the second-highest (as a percentage of GDP) in Europe, behind Greece. Hungary must maintain a deficit of 3 percent of GDP to adopt the euro as its currency (replacing the Hungarian forint), but the government will have to struggle to do so by the target date of 2010. The MSzP's relative weakness was shown when it failed to agree with the SzDSz on a nominee for the largely symbolic presidency, allowing the Fidesz-MDF-led opposition to pass its nominee, Laszlo Solyom, through parliament on a third ballot. A general election is due in 2006.

Political Rights and Civil Liberties

Citizens of Hungary can change their government democratically. Voters elect representatives every four years to the 386-seat, unicameral National Assembly under a mixed system of proportional and direct representation. A proposal to move to pure proportional representation has been discussed but has not yet been adopted, as has a proposal to shrink parliament to fewer than 300 members. The Hungarian parliament elects both the president and the prime minister.

Post-Communist elections in Hungary have been generally free and fair, although some problems persist. During the heated 2002 parliamentary elections, few parties respected campaign spending caps. The Organization for Security and Cooperation in Europe observed that state media coverage frequently favored the ruling Fidesz party, and that government-sponsored "voter education" advertisements appeared to mirror Fidesz-sponsored campaign ads.

The main political parties are the Hungarian Socialist Party (MSzP) and the conservative Fidesz-Hungarian Democratic Forum (Fidesz-MDF). The Alliance of Free Democrats (SzDSz), a free-market and limited-government party, is the third-largest party but has considerably less support than the other two, narrowly clearing the minimum 5 percent threshold required to enter parliament in 2002. No other parties won seats in the 2002 elections.

Prior to the 2002 election, Fidesz and Lungo Drom, a national Roma (Gypsy) party, concluded a political cooperation agreement. Despite this development, only four Roma candidates were elected to the National Assembly (two from Fidesz and two from the MSzP), the same number as in the previous election. Toward the end of 2002, the European Commission reported that Hungary was not meeting its constitutional obligation to ensure direct parliamentary representation of minorities. Hungary's constitution guarantees national and ethnic minorities the right to form self-governing bodies, and all 13 recognized minorities have exercised this right.

While challenges still remain, previous and current governments have taken measures to introduce stronger penalties for bribery and to implement a long-term anticorruption strategy. However, some corruption persists. In 2003-2004, a major corruption scandal involving Hungary's second-largest bank touched then-prime minister Peter Medgyessy and Laszlo Csaba, the finance minister. Csaba was a director of K & H, the bank involved in the scandal, and Medgyessy was the chairman of Inter-Europa, another bank involved in the affair. There were allegations of questionable public tenders in 2004, and Deputy Speaker of Parliament Ferenc Wekler resigned after his personal vineyard received large state subsidies. Hungary was ranked 40 out of 159 countries surveyed in Transparency International's 2005 Corruption Perceptions Index.

Freedom of speech is respected, and independent media operate freely in Hungary, although within a highly polarized atmosphere. However, political controversy continues to trouble state television and radio. A 1996 media law requires both ruling and opposition parties to share appointments to state media oversight boards. Left-leaning opposition parties had previously accused the Fidesz Party of stacking the oversight boards with supporters. After losing power in the parliamentary elections, Fidesz leaders accused the new Socialist-Liberal government of attempting to inappropriately influence state television and radio. A large number of libel suits in 2004, some resulting in suspended prison sentences for journalists, contributed to the tense media atmosphere. Foreign ownership of Hungarian media (7 of 10 national daily newspapers) is high, but the successful launch of a private Hungarian television station has challenged the argument that state-supported media are necessary for balanced coverage. Internet access is unrestricted

The constitution guarantees religious freedom and provides for the separation of church and state. While adherents of all religions are generally free to worship in their own manner, the state provides financial support and tax breaks to large or traditional religions, such as the Roman Catholic Church. Some critics have charged that these practices effectively discriminate against smaller denominations. The state does not restrict academic freedom.

The constitution provides for freedom of assembly, and the government respects this right in practice. Nongovernmental organizations are active in Hungary and operate without restrictions. The government respects citizens' rights to form associations, strike, and petition public authorities. Trade unions account for less than 30 percent of the workforce.

Hungary has a three-tiered, independent judiciary in addition to the Supreme Court and a Constitutional Court. The constitution guarantees equality before the law, and courts are generally fair. Limited budget resources leave the system vulnerable to outside influence, but court funding is being improved, as required by EU membership. The police have been criticized for racist attitudes toward the Roma minority despite a government campaign against anti-Roma racism. Prisons suffer from overcrowding but generally are approaching western European standards.

Hungary implemented a legal rights protection network in 2001 to provide legal aid to the Roma community and passed an antidiscrimination law that was introduced in 2003 as a requirement of EU membership. The government has also created the Roma Coordination Council, appointed special commissioners in the Ministry of Education and Employment and the Ministry of Labor to specifically oversee Roma issues, and named a minister-without-portfolio in the prime minister's office to promote equal opportunity. However, the Roma population continues to face widespread discrimination in many respects, and Roma are five times more likely to live in poverty than the population as a whole.

In 2001, parliament passed the controversial Status Law granting special health and educational benefits to ethnic Hungarians residing outside the country, causing concern in Romania and Slovakia, which have large Hungarian minorities. In 2003, Hungary modified the application of the law to address these concerns, as well as those of the EU. In December 2004, a referendum was held on extending citizenship to Hungarians abroad, reawakening some concern among Hungary's neighbors. Though a majority voted in favor, turnout was insufficient for the referendum to pass.

Women possess the same legal rights as men, although they face hiring and pay discrimination and tend to be underrepresented in senior-level business and governmental positions. Hungary is primarily a transit point, but also a source and destination country, for trafficked persons, including women trafficked for prostitution.

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