Hungary

HUNGARY

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS HUNGARIANS
DEPENDENCIES
BIBLIOGRAPHY

Republic of Hungary

Magyar Népköztársaság

CAPITAL: Budapest

FLAG: The national flag, adopted in 1957, is a tricolor of red, white, and green horizontal stripes.

ANTHEM: Isten áldd meg a magyart (God Bless the Hungarians).

MONETARY UNIT: The forint (Ft) of 100 fillérs is a paper currency with flexible rates of exchange. There are coins of 10, 20, and 50 fillérs and 1, 2, 5, 10, 20, 100, and 200 forints, and notes of 50, 100, 500, 1,000, and 5,000 forints. Ft1 = $0.00508 (or $1 = Ft196.83) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Anniversary of 1848 uprising against Austrian rule, 15 March; Labor Day, 1 May; Constitution Day, 20 August; Day of the Proclamation of the Republic, 23 October; Christmas, 2526 December. Easter Monday is a movable holiday.

TIME: 1 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Hungary is a landlocked country in the Carpathian Basin of Central Europe, with an area of 93,030 sq km (35,919 sq mi), extending 268 km (167 mi) ns and 528 km (328 mi) ew. Comparatively, the area occupied by Hungary is slightly smaller than the state of Indiana. It is bounded on the n by Slovakia, on the ne by the Ukraine, on the e by Romania, on the s by Serbia and Croatia, on the sw by Slovenia, and on the w by Austria, with a total boundary length of 2,171 km (1,349 mi). Hungary's capital city, Budapest, is located in the north central part of the country.

TOPOGRAPHY

About 84% of Hungary is below 200 m (656 ft) in altitude, its lowest point, at the Tisza River, being 78 m (256 ft) above sea level and the highest being Mt. Kékes (1,014 m/3,327 ft) in the Mátra Mountains, northeast of Budapest. The country has four chief geographic regions: Transdanubia (Dunántúl), the Great Plain (Alföld), the Little Plain (Kisalföld), and the Northern Mountains. Hungary's river valleys and its highest mountains are in the north-east. Generally, the soil is fertile. The chief rivers are the Danube (Duna) and Tisza. The largest lake is Balaton, which has an area of 601 sq km (232 sq mi).

CLIMATE

Hungary lies at the meeting point of three climatic zones: the continental, Mediterranean, and oceanic. Yearly temperatures vary from a minimum of -14°c (7°f) to a maximum of 36°c (97°f). The mean temperature in January is -4°c to 0°c (25° to 32°f) and in July, 18° to 23°c (64° to 73°f). Rainfall varies, but the annual average is approximately 63 cm (25 in)more in the west and less in the eastwith maximum rainfall during the summer months. Severe droughts often occur in the summers.

FLORA AND FAUNA

Plants and animals are those common to Central Europe. Oak is the predominant deciduous tree; various conifers are located in the mountains. Among the abundant wildlife are deer, boar, hare, and mouflon. The Great Plain is a breeding ground and a migration center for a variety of birds. Fish are plentiful in rivers and lakes. As of 2002, there were at least 83 species of mammals, 208 species of birds, and over 2,200 species of plants throughout the country.

ENVIRONMENT

Chemical pollution of the air and water is extensive, but resources to combat pollution are scarce: a 1996 government study estimated that us$350 million were needed to combat pollution, but only us$7 million were allocated for this purpose. According to the study, air pollution affects 179 areas of the country, soil pollution affects 54 areas, and water pollution affects 32. Hungary is also one of 50 nations that lead the world in industrial carbon dioxide emissions, with a 1992 total of 59.9 million metric tons, a per capita level of 5.72 metric tons. However, the total carbon dioxide emissions dropped to 54.2 million metric tons in 2000. Hungary has 6 cu km of renewable water resources, with 55% used for industrial purposes and 36% used for farming activity. Hungary's principal environmental agency is the National Council for Environment and Nature Conservation, under the auspices of the Council of Ministers.

Geothermal aquifers lie below most of Hungary. The water brought from these to the earth's surface ranges in temperature from 40°c (104°f) to 70°c (158°f). In the southwest, geothermal aquifers have produced water at 140°c (284°f). Some of these waters are cooled and used for drinking water, but many aquifers are used to heat greenhouses.

In 2003, about 7% of the total land area was protected. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 7 types of mammals, 9 species of birds, 1 type of reptile, 8 species of fish, 1 type of mollusk, 24 species of other invertebrates, and 1 species of plant. Endangered species included the longicorn, the alcon large blue butterfly, the dusky large blue butterfly, and the Mediterranean mouflon.

POPULATION

The population of Hungary in 2005 was estimated by the United Nations (UN) at 10,086,000, which placed it at number 79 in population among the 193 nations of the world. In 2005, approximately 16% of the population was over 65 years of age, with another 16% of the population under 15 years of age. There were 91 males for every 100 females in the country. According to the UN, the population for 200510 was expected to decline annually by -0.4%, a rate the government viewed as too low. The fertility rate, which had been declining since the 1990s, reached just 1.5 births per woman in 2005. The projected population for the year 2025 was 9,588,000. The population density was 108 per sq km (281 per sq mi).

Since the early 1950s, there has been a fundamental shift of the population from rural to urban areas. The UN estimated that 65% of the population lived in urban areas in 2005. The urban growth rate has substantially slowed in recent years, with the UN estimating annual growth in urban areas at just 0.14% as of 2005. The capital city, Budapest, had a population of 1,708,000 in that year. Other urban areas include: Debrecen, 217,706; Miskolc, 211,000; Szeged, 178,878; Pécs, 172,177; Nyíregyháza, 115,643; Székesfehérvár, 111,478; and Kecskemét, 107,267.

MIGRATION

Sizable migration during the two world wars resulted from military operations, territorial changes, and population transfers. Peacetime emigration in the decades before World War I was heavy (about 1,400,000 between 1899 and 1913). Emigration of non-Magyars was prompted by the repressive policy of Magyarization; groups also left because of economic pressures, the majority going to the United States and Canada. In the interwar period, migration was negligible, but after 1947 many thousands left, despite restrictions on emigration. As a result of the October 1956 uprising, approximately 250,000 persons fled Hungary. The largest numbers ultimately emigrated to the United States, Canada, the United Kingdom, Germany, France, Switzerland, and Australia. Emigration totaled 42,700 between 1981 and 1989. By the 1990s, emigration was virtually nonexistent; only 778 persons left in 1991, according to official statistics.

Between 1990 and 2003, some 115,000 immigrants acquired Hungarian citizenship, granted almost exclusively to ethnic Hungarians from neighboring countries. At the end of 2000, 3% of Hungary's population (294,000) were foreign-born, resulting from international migration, and as a consequence of historic events such as border changes or citizenship agreements. According to Migration Information Source, from 1990 to 2003, the border guards recorded 152,000 cases of foreigners attempting to enter illegally, and 80,000 efforts to leave Hungary illegally. These activities indicate Hungary's transit role in illegal migration.

Since 1960, net migration from the villages to the cities has decreased, from about 52,000 that year to 20,814 in 1986. Since 1989, Hungary has received nearly 155,000 refugees, with major influxes from Romania in 198889 and the former Yugoslavia in 199192. About 5,400 asylum seekers have been recognized as refugees since 1989. In the 1990s Hungary provided temporary protection for over 32,000 Bosnians. Most of these refugees resettled to another country or repatriated. The Temporary Protection status of some 480 Bosnian refugees, who remained in Hungary in the latter part of the 1990s, was withdrawn by the government in mid-1999. As a result of the Kosovo crisis, 2,800 Yugoslav asylum seekers arrived in Hungary, including 1,000 Kosovo Albanians. The organized voluntary repatriation of refugees began in August 1999, when the first 185 Kosovars returned to their homeland. At the end of 2004 there were 7,708 refugees and 354 asylum seekers in Hungary. Asylum seekers were from Georgia and Turkey. In 2004, 832 Hungarians applied for asylum in Canada.

As a member of the European Union (EU) since 1 May 2004, Hungary's migration and illegal migration border controls have tightened. According to Migration Information Source, as of 2002 some 115,000 foreign citizens with a valid long-term permit (i.e., good for at least one year) or permanent residence permit resided in Hungary; 43% were Romanian citizens, 11% Yugoslavians, 8% Ukrainians, and most of these were ethnic Hungarians, and 6% were Chinese. This population amounted to 1.13% of Hungary's total population. These changing waves of labor migration are also characterized by a new form of labor migration within the EU, termed "walk-over-the-border for employment," where workers seeking higher wages travel from one country to a neighboring one, such as from Slovakia to Hungary.

In 2005, the net migration rate was estimated as 0.86 migrants per 1,000 population.

ETHNIC GROUPS

Ethnically, Hungary is essentially a homogeneous state of Magyar extraction. The 2001 census indicates that Hungarians constitute about 92.3% of the total population. Roma account for about 1.9%. Ethnic Germans make up about 0.7% of the population. There are also small groups of Croats, Poles, Ukrainians, Greeks, Serbs, Slovenes, Armenians, Ruthenians, Bulgarians, Slovaks, and Romanians.

LANGUAGES

Hungarian, also known as Magyar, is the universal language. In addition to the letters of the English alphabet, it has the following letters and combinations: á, é, í, ó, ö, ő, ú, ú, cs, dz, dzs, gy, ly, ny, sz, ty, zs. Written in Latin characters, Hungarian (Magyar) belongs to the Finno-Ugric family, a branch of the Ural-Altaic language group. Hungarian (Magyar) is also characterized by an admixture of Turkish, Slavic, German, Latin, and French words. In addition to their native language, many Hungarians speak English, German, French, or (since World War II) Russian. In 2002, 98.2% of the population spoke Hungarian; 1.8% spoke various other languages.

RELIGIONS

According to a 2001 census, approximately 55% of the people are nominally Roman Catholic, 15% are members of the Reformed Church, 3% of the population are Lutheran, and less than 1% are Jewish. About 3% of the population describe themselves as Greek Catholics. About 15% of the population claim no religious affiliation.

About one million Jews lived in Hungary before World War II and an estimated 600,000 were deported in 1944 to concentration camps. According to estimates from the World Jewish Restitution Organization, there are between 70,000 and 110,000 Jews currently residing in Hungary. There are also seven Buddhist and five Orthodox denominations. There are three Islamic communities.

A 1990 Law on the Freedom of Conscience provides for separation of church and state and safeguards the liberty of conscience of all citizens and the freedom of religious worship. However, the state does grant financial support to religious denominations for religious practice, educational work, and maintenance of public collections. To promote further support of religious institutions, between 199799 the government signed separate agreements with the country's four largest churches (the Roman Catholic, Jewish, Lutheran, and Calvinist churches) and two smaller groups (Hungarian Baptist and Budai Serb Orthodox). The government also provides funds each year for the revitalization of churches based on annual negotiations between the Ministry of Cultural Heritage and the Ministry of Finance.

TRANSPORTATION

Transportation facilities have improved steadily since the 1960s. Budapest is the transportation center. In 2002, roads totaled 159,568 km (99,251 mi), of which some 70,050 km (43,571 mi) were paved, including 527 km (328 mi) of expressways. In 2003, Hungary had 2,777,219 passenger cars and 394,988 commercial vehicles registered for use.

As of 2004, Hungary had 7,937 km (4,937 mi) of broad, standard and narrow gauge railroad lines. Of that total, standard gauge lines accounted for the largest portion at 7,682 km (4,778 mi), followed by narrow gauge lines at 219 km (136 mi) and broad gauge lines at 36 km (22 mi). Most freight is carried by trucks; railway transport is of lesser importance. The railroad and bus networks are state owned.

Permanently navigable waterways totaled 1,622 km (1,009 mi) in 2004, of which most were on the Danube and Tisza rivers. In addition to the government shipping enterpriseswhich operate the best and largest ships and handle the bulk of water trafficthe Shipping Cooperative, an association of small operators, continues to function. In 1999, the latest year for which data was available), the merchant marine fleet consisted of 2 cargo ships with a total capacity of 12,949 GRT.

Hungary had an estimated 44 airports in 2004. As of 2005 a total of 19 had paved runways, and there were also five heliports. Ferihegy Airport in Budapest is the most important center for domestic and international flights. All domestic traffic is handled by the Hungarian Air Transportation Enterprise (Magyar Légiközlekedési VallalatMALÉV). In 2003, about 2.369 million passengers were carried on scheduled domestic and international airline flights.

HISTORY

Ancient human footprints, tools, and a skull found at Vértesszóllós date the earliest occupants of present Hungary at a period from 250,000 to 500,000 years ago. Close to that site, at Tata, objects used for aesthetic or ceremonial purposes have been discovered, among the earliest such finds made anywhere in the world.

Celtic tribes settled in Hungary before the Romans came to occupy the western part of the country, which they called Pannonia and which the Roman Emperor Augustus conquered in 9 bc. Invasions by the Huns, the Goths, and later the Langobards had little lasting effect, but the two subsequent migrations of the Avars (who ruled for 250 years and, like the Huns, established a khanate in the Hungarian plain) left a more lasting impression.

The Magyars (Hungarians) migrated from the plains south and west of the Ural Mountains and invaded the Carpathian Basin under the leadership of Árpád in ad 896. For half a century they ranged far and wide, until their defeat by Otto the Great, king of Germany and Holy Roman emperor, near Augsburg in 955. They were converted to Christianity under King Stephen I (r.10011038), who was canonized in 1083. The Holy Crown of St. Stephen became the national symbol, and a constitution was gradually developed. The Magna Carta of Hungary, known as the Golden Bull of 1222, gave the nation a basic framework of national liberties to which every subsequent Hungarian monarch had to swear fidelity. Hungary was invaded at various times during the medieval period; the Mongols succeeded in devastating the country in 124142.

Medieval Hungary achieved its greatest heights under the Angevin rulers Charles Robert and Louis the Great (r.134282), when Hungarian mines yielded five times as much gold as those of any other European state. Sigismund of Luxembourg, king of Hungary, became Holy Roman emperor in 1410, largely on the strength of this national treasure. During the 15th century, however, Turkish armies began to threaten Hungary. The Balkan principalities to the south and southeast of Hungary developed as buffer states, but they did not long delay the advance of the Turks; nor could the victories of János Hunyadi, brilliant as they were, ultimately stem the Turkish tide. With the Turks temporarily at bay, the Hungarian renaissance flourished during the reign of Hunyadi's son, Matthias Corvinus (145890), but his successors in the 16th century overexploited the gold mines, brutally suppressed a peasant revolt, and allowed the Magyar army to deteriorate. Hungary's golden age ended with the rout by the Turks at Mohács in 1526.

Thereafter, warring factions split Hungary, but power was gradually consolidated by the Habsburg kings of Austria. With the defeat of the Turks at Vienna in 1683, Turkish power waned and that of the Habsburgs became stronger. The Hungarians mounted many unsuccessful uprisings against the Habsburgs, the most important insurrectionist leaders being the Báthorys, Bocskai, Bethlen, and the Rákóczys. In 1713, however, the Hungarian Diet accepted the Pragmatic Sanction, which in guaranteeing the continuing integrity of Habsburg territories, bound Hungary to Austria.

During the first half of the 19th century, in the aftermath of the French Revolution and the Napoleonic wars, Hungary experienced an upsurge of Magyar nationalism, accompanied by a burst of literary creativity. The inability of a liberal reform movement to establish a constitutional monarchy led to the revolt of 1848, directed by Lajos Kossuth and Ferenc Deák, which established a short-lived Hungarian republic. Although Hungarian autonomy was abolished as a result of intervention by Austrian and Russian armies, Austria, weakened by its war with Prussia, was obliged to give in to Magyar national aspirations. The Compromise (Ausgleich) of 1867 established a dual monarchy of Austria and Hungary and permitted a degree of self-government for the Magyars.

After World War I, in which Austria-Hungary was defeated, the dual monarchy collapsed, and a democratic republic was established under Count Mihály Károlyi. This was supplanted in March 1919 by a Communist regime led by Béla Kun, but Romanian troops invaded Hungary and helped suppress it. In 1920, Hungary became a kingdom without a king; for the next 25 years, Adm. Miklós von Nagybánya Horthy served as regent. The Treaty of Trianon in 1920 formally freed the non-Magyar nationalities from Hungarian rule but also left significant numbers of Magyars in Romania and elsewhere beyond Hungary's borders. The fundamental policy of interwar Hungary was to recover the "lost" territories, and in the hope of achieving that end, Hungary formed alliances with the Axis powers and sided with them during World War II. Hungary temporarily regained territories from Czechoslovakia, Romania, and Yugoslavia. In March 1944, the German army occupied Hungary, but Soviet troops invaded the country later that year and liberated it by April 1945.

In 1946, a republican constitution was promulgated, and a coalition government (with Communist participation) was established. Under the terms of the peace treaty of 1947, Hungary was forced to give up all territories acquired after 1937. The Hungarian Workers (Communist) Party seized power in 1948 and adopted a constitution (on the Soviet model) in 1949. Hungarian foreign trade was oriented toward the Soviet bloc, industry was nationalized and greatly expanded, and collectivization of land was pressed. Resentment of continued Soviet influence over Hungarian affairs was one element in the popular uprising of October 1956, which after a few days' successduring which Hungary briefly withdrew from the Warsaw Treaty Organizationwas summarily put down by Soviet military force. Many people fled the country, and many others were executed. From that time on, Hungary was a firm ally of the USSR. In 1968, the New Economic Mechanism was introduced in order to make the economy more competitive and open to market forces; reform measures beginning in 1979 further encouraged private enterprise. The movement toward relaxation of tensions in Europe in the 1970s was reflected in the improvement of Hungary's relations with Western countries, including the reestablishment of diplomatic relations with the FRG in 1973. A US-Hungarian war-claims agreement was signed that year, and on 6 January 1978 the United States returned the Hungarian coronation regalia.

The New Economic Mechanism that had been instituted in 1968 was largely abandoned, at Soviet and Comecon insistence, a decade later. This compounded the blows suffered by Hungary's economy during the energy crisis of the late 1970s, leading to a ballooning of the country's foreign indebtedness. By the late 1980s the country owed $18 billion, the highest per capita indebtedness in Europe.

This indebtedness was the primary engine of political change. The necessity of introducing fiscal austerity was "sweetened" by the appointment of reform-minded Karóly Grosz as prime minister in 1987. Faced with continued high inflation, the government took the step the following year of forcing János Kádár out entirely, giving control of the party to Grosz. In 1989 Grosz and his supporters went even further, changing the party's name to Hungarian Socialist Party, and dismantling their nation's section of the Iron Curtain. The action that had the most far-reaching consequences, however, came in October 1989 when the state constitution was amended so as to create a multiparty political system.

Although Hungarians had been able to choose among multiple candidates for some legislative seats since as early as 1983, the foundations of a true multiparty system had been laid in 198788, when large numbers of discussion groups and special interest associations began to flourish. Many of these, such as the Network of Free Initiatives, the Bajscy-Zsilinszky Society, the Hungarian Democratic Forum, and the Alliance of Free Democrats, soon became true political parties. In addition, parties that had existed before the 1949 imposition of Communist rule, such as the People's Party, the Hungarian Independence Party, and the Social Democrats, began to reactivate themselves.

All of these groups, or the parties they had spawned, competed in the 1990 general election, the first major free election to be held in more than four decades. No party gained an absolute majority of seats, so a coalition government was formed, composed of the Democratic Forum, Smallholders' Party, and Christian Democrats, with Forum leader Jozsef Antall as prime minister. Arpad Goncz, of the Free Democrats, was selected as president. An important indicator of Hungary's intentions came in June 1989, when the remains of Imre Nagy, hanged for his part in the events of 1956, were reentered with public honors; politicians and other public figures used the occasion to press further distance from Communism and the removal of Soviet troops. Another sign of public sentiment was the first commemoration in 40 years of the anniversary of the Revolution of 1848.

Under Antall Hungary pursued a vigorous program of economic transformation, with the goal of transferring 3035% of state assets to private control by the end of 1993. Hungary's liberal investment laws and comparatively well-developed industrial infrastructure permitted the nation to become an early leader in attracting Western investors. However, there were large blocs in society, and within the Democratic Forum itself, that found the pace of transition too slow, particularly since the government did not keep to its own time schedule.

In addition to its economic demands, this radical-right contingent also has a strongly nationalist, or even xenophobic, agenda, which has tended to polarize Hungarian national politics. Approximately 10% of the Hungarian population is non-Hungarian, including large populations of Jews and Roma (Gypsies). There are also large Hungarian populations in neighboring states, particularly in Romania, all of whom had been declared dual citizens of Hungary in 1988. The appeal to "Hungarianness" has been touted fairly frequently, widening preexisting tensions within the dominant Democratic Forum party, and weakening their coalition in parliament. The Smallholders Party withdrew from the coalition in 1992, and in 1993 other elements were threatening to do the same.

The Democratic Forum's loss of popularity was vividly exposed in the parliamentary elections of May 1994, when the party, led by acting head Sandor Leszak, lost almost one-third of the seats it had controlled. In that election voters turned overwhelmingly to the Hungarian Socialist Party, giving the former Communist party an absolute majority of 54%. Voter turnout in the two-tier election was as high as 70%, leaving little doubt that Hungarian voters had repudiated the Democratic Forum and its programs of forced transition to a market economy.

Hungary's international indebtedness remained very highthe country ran a $936 million trade deficit for the first two months of 1994 aloneobligating new prime minister Gyula Horn to continue most of the same economic reform programs which the Socialists' predecessors had begun. There was concern, however, that the Socialists' absolute majority could lead to a reversal of some of the important democratic gains of the recent past. Those concerns sharpened in July 1994, when Prime Minister Horn unilaterally appointed new heads for the state-owned radio and television, who immediately dismissed or suspended a number of conservative journalists.

On 8 January 1994 Hungary formally accepted the offer of a compromise on NATO membership. The offer involved a new defense partnership between Eastern Europe and NATO. By July 1997, NATO agreed to grant Hungary full membership (along with Poland and the Czech Republic) in the organization in 1999. In order to help them qualify to join NATO and the EU, Hungary and Romania signed a treaty on 16 September 1996 ending a centuries-old dispute between the two neighbors. The agreement ended five years of negotiations over the status of Romania's 1.6 million ethnic Hungarians. On 12 March 1999, Hungary, Poland, and the Czech Republic were formally admitted to NATO, becoming the first former Warsaw Pact nations to join the alliance.

Despite improvements in the economy, the position of the Socialists was undermined by dissatisfaction among those negatively affected by privatization and austerity measures, as well as by financial scandals in 1997. The Socialist government was toppled in national elections held in May 1998, and a new center-right coalition government was formed in July by Viktor Orbán, leader of the victorious Federation of Young Democrats-Hungarian Civic Party (Fidesz).

In 1997 Hungary was invited to begin negotiations leading to membership in the European Union. It was formally invited to join the body in 2002 at the EU summit in Copenhagen. It was accepted as a full member on 1 January 2004. In 2000, parliament elected Ferenc Madl as president.

Under Victor Orbán, Hungary experienced increasing prosperity, but also increasing social division. Fidesz is a strong supporter of ethnic Hungarians in neighboring countries. Indeed, parliament in June 2001 passed a controversial law entitling Hungarians living in Romania, Slovakia, Ukraine, Serbia, Croatia, and Slovenia to a special identity document allowing them to temporarily work, study, and claim health care in Hungary. In June 2003 the law was amended by the parliament, with a majority of the Hungarian population agreeing with it. However, the referendum held in December 2004, in conjunction with this law, was invalidated due to low turnout.

Orbán's party was challenged in the April 2002 general elections by the Socialist Party, which chose Péter Medgyessy as its candidate for prime minister. Although Medgyessy characterized his party as patriotic, he stressed it was less extreme than Fidesz, and supported diversity as well as traditional values of fairness and social justice.

The 2002 campaign was divisive, and saw nationalists come out in force in favor of Fidesz. Although it won the largest bloc of seats in the National Assembly in the second round of voting (aligned with the Hungarian Democratic Forum), it was the Socialists in concert with the Alliance of Free Democrats that formed a coalition government with Medgyessy as prime minister.

In June 2002, allegations surfaced that Medgyessy had worked as a counterintelligence officer in the secret service under the Communist regime in the late 1970s and early 1980s. Medgyessy claimed he never collaborated with Moscow's KGB, but instead sought out Soviet spies attempting to disrupt Hungary's efforts to join the IMF. Upon his admission, his popularity soared.

In the summer of 2004, internal problems within his own party, as well as growing opposition from the coalition partnersthe Alliance of Free Democrats, led Medgyessy to resign. He was replaced with Ferenc Gyurcsany, the former sports minister and one of the government's most popular figures. Gyurcsany received 453 votes, while his main contenderPeter Kissgot 166.

The new prime minister promised to strengthen the coalition, boost economic growth, and improve living conditions for Hungarians. However, strict budget controls (many imposed by the EU), and unfulfilled election promises dramatically decreased the popular support for his government, and party. In the 2004 European Parliament elections, the Young Democrats (the main opposition party) led the pack, and predictions for the 2006 national parliamentary elections showed Socialists as garnering only 20% of the votes.

In June 2005, opposition-backed Laszlo Solyom was elected as the new president of Hungary. He garnered 185 votes, in the third round of elections, followed closely by the Socialist's nomineeKatalin Sziliwith 182 votes.

GOVERNMENT

Hungary's present constitution remains based upon the 1949 Soviet-style constitution, with major revisions made in 1972 and 1988. The 1988 revisions mandated the end of the Communist Party's monopoly on power, removed the word People's from the name of the state, and created the post of president to replace the earlier Presidential Council.

The present system is a unitary multiparty republic, with a parliamentary government. There is one legislative house (the National Assembly), with 386 members who are elected to four-year terms. The head of state is the president, who is elected by the parliament, for a five-year term. In 2005, Laszlo Solyoma university professor and former president of the Constitutional Courtwas elected president by a simple majority of the legislative vote. The next presidential elections were scheduled for June 2010.

The head of the government is the prime minister, leader of the largest party seated in the parliament. The prime minister is elected by the National Assembly on the recommendation of the president. In the Antall government important ministerial and other posts were split among representatives of various parties. As of 2005, the prime minister was Ferenc Gyurcsany, a wealthy businessman and popular political figure. Gyurcsany replaced Péter Medgyessy in 2004, following dissentions within the ruling coalition.

POLITICAL PARTIES

Following the general elections of April 2002, four political parties were represented in the 386-member National Assembly, split into two coalitions. This situation raised fears that Hungary was drifting into a two-party state, divided by ideology and personalities, instead of reflecting other interests not represented in government.

The predominant party is the Hungarian Socialist Party (MSZP), whose government was toppled in 1998, but returned to power in 2002, receiving 42.05% of the popular vote and garnering 178 seats in the National Assembly. The MSZP is the Hungarian Communist Party renamed and, to a certain extent, reoriented. The party's platform indicates strong support for the market economy system, albeit with a wide net of social services. It supports diversity in Hungarian society, as opposed to the center-right's more populist, nationalistic party Fidesz.

The leading opposition party was the Federation of Young Democrats-Hungarian Civic Party (also known as Fidesz), which held 164 seats. The party's leader, Viktor Orbán, was named prime minister in 1998; he was out of office in 2002 when the Socialists came to power. Originally known as the Federation of Young Democrats, the party was formed on an anti-Communist platform by student activists and young professionals in 1988. During the 1990s, it evolved into a mainstream center-right party and was renamed in 1995.

The Alliance of Free Democrats (SzDSz), which holds 20 seats, is the coalition partner of the MSZP. This party was a liberal opposition party during the Antall government, with positions strongly in favor of closer integration with Europe, cooperation with Hungary's neighbors, and support for alien Hungarians. In economic terms their platform is very similar to that of the MSZP, which was the basis of their agreement to enter into a coalition. However, their alliance had frequent disputes that in result undermined their political strength.

The Hungarian Democratic Forum (MDF), which has been reduced to 24 seats, is a party of strong support for the ethnic minorities within Hungary. It is currently aligned with Fidesz. The Hungarian Justice and Life Party (MIEP) first gained parliamentary representation in 1998, winning 14 seats, and was founded by Istvan Csurka, who was expelled from the MDF for his nationalist and anti-Semitic sentiments. The party is populist in orientation, seeking to elevate "Hungarian values." It won 4.4% of the vote in 2002 but held no seats. The next legislative elections were scheduled for April 2006.

The Independent Smallholders' Party (FKgP), which held 48 seats in the 1998 government but no seats in the government formed in 2002, is a center-right party that seeks to ensure Hungarian interests in the context of European integration. It draws particular support from rural districts and among farmers.

Other parties include the centrist Center Party and the communist Worker's Party. Hungary also has a noticeable "skinhead" movement, which has provoked fights and other disturbances, especially with Gypsies.

LOCAL GOVERNMENT

Hungary is divided administratively into 19 counties, 20 urban counties, and the capital city of Budapest also has county status. At the local and regional level, legislative authority is vested in county, town, borough, and town precinct councils whose members are directly elected for four-year terms. Members of the county councils are elected by members of the lower-level councils. Hungary also has provisions for minority self-government, which is not based territorially, because minorities live dispersed throughout the country. Municipality councils must seek the approval of minority self-governments for matters affecting minority education and culture, among others.

JUDICIAL SYSTEM

Cases in the first instance usually come before provincial city courts or Budapest district courts. Appeals can be submitted to county courts or the Budapest Metropolitan Court. The Supreme Court is basically a court of appeal, although it may also hear important cases in the first instance. As of 2003, a new intermediate court of appeal was to be established between county courts and the Supreme Court, designed to alleviate the backlog of court cases.

The president of the Supreme Court is elected by the National Assembly. A National Judicial Council nominates judicial appointees other than those of the Constitutional Court. The state's punitive power is represented by the public prosecutor. Peter Polt was appointed as prosecutor general in 2000.

The Constitutional Court reviews the constitutionality of laws and statutes as well as compliance of these laws with international treaties the government has ratified. The 11 members of the Constitutional Court are elected by parliament for nine-year terms with a two-thirds majority; their mandates may be renewed in theory, but as of 2002, this had not happened in practice.

ARMED FORCES

In 2005, Hungary had a total of 32,300 active personnel in its armed forces, including an army of 23,950 and an air force of 7,500 personnel. The Hungarian Army operates 238 main battle tanks, 178 armored infantry fighting vehicles, 458 armored personnel carriers, and over 573 artillery pieces. The Air Force operates 14 combat capable aircraft, as well as 12 attack helicopters and 17 support aircraft. All major equipment is of Soviet design. There is a small Army maritime wing with 60 personnel operating three river craft to patrol the Danube River. Paramilitary forces, consisting of frontier and border guards, under the direction of the Ministry of the Interior, number about 12,000. There are about 44,000 military reservists. The defense budget was estimated at $1.43 billion in 2005. Hungary provides UN observers and peacekeepers to eight regions or countries.

INTERNATIONAL COOPERATION

Hungary has been a member of the United Nations since 14 December 1955 and participates in ECE and most of the nonregional specialized agencies except the IFAD. Hungary became a member of the OECD in 1996, a NATO member in 1999, and a member of the European Union in 2004. Hungary is also a member of the WTO, the Council of Europe, G-9, and the OSCE. The nation has observer status in the OAS and is a member affiliate of the Western European Union.

Hungary is part of the Australia Group, the Zangger Committee, the Nuclear Suppliers Group, the Organization for the Prohibition of Chemical Weapons, the European Organization for Nuclear Research (CERN), and the Nuclear Energy Agency. In environmental cooperation, Hungary is part of the Antarctic Treaty, the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Before World War II, industrial growth was slow because adequate capital was lacking. Since 1949, however, industry has expanded rapidly, and it now contributes a larger share than agriculture to the national income. The government has no capital investments abroad, but it participates in limited economic activities in developing countries. Substantial industrial growth continued through the 1960s and mid-1970s, but output in the socialized sector declined during 197980, and growth was sluggish in the 1980s.

After the fall of Communism in 1989, Hungary began a painful transition to a market economy. Between 1990 and 1992, GDP dropped by about 20%. Freed to reach their own level, consumer prices rose 162% between 1989 and 1993. The rate of unemployment was 12.2% at the end of 1992. By late 1998, private-sector output was over 85% of the GDP.

By 1994, Hungary was in an economic slump unknown since the reforms toward capitalism began. Export earnings were down, inflation was on the rise, and Hungary's gross debt rose to about $31.6 billion in mid-1995 (the highest per capita foreign debt in Europe). The IMF directed the government to curb social spending, but restricting social welfare during a period of high unemployment was unpopular with voters. The government began a stabilization plan in March 1995 designed to decrease the budget deficit by ft170 billion (34% of the GDP) and to decrease the current account deficit to $2.5 billion from the record high of $4 billion in 1994. The government cut expenditures, increased its revenues, devalued the forint by 9%, introduced a crawling peg exchange rate policy, added an 8% surcharge on imports, and called for wage controls at state-owned companies. As a result of the program, inflation and GDP growth rose. In addition, the black market economy was estimated to be as much as 30% of GDP.

In the years since its implementation, the stabilization program has borne fruit. By 1999, the IMF assistance had been repaid. The Hungarian economy exhibited strong growth rates with GDP increases of 4.6% and 5.1% in 1997 and 1998, respectively. Although a hard winter and the Kosovo conflict appeared to hamper Hungarian efforts to match the prior years' growth rate levels, the economy performed well in 2000, led by an increase in foreign direct investment. Since then, manufacturing output and productivity increased, and export industries did well, although increases in wages and a rapid appreciation of the forint in 2002 moderated export growth. The global economic downturn that began in 2001 had an impact on the Hungarian economy, as GDP rose by 3.3% in the first half of 2002, down from 6.6% in the first half of 2000. Although this growth rate was higher than most European nations in 2002, it was below the rate needed for Hungary to reach the wealth levels of EU countries.

Due to government efforts at privatization, over 80% of the economy was privately owned by 2001, and Hungary stands as a model for countries undergoing market reforms. In December 2002, Hungary was formally invited to join the EU; it was accepted as a full member in May 2004 as one of the most advanced of the 10 candidate countries slated for accession.

As an EU member, Hungary maintained its position as one of the most dynamic and strong economies in Central and Eastern Europe. Its position within the European Union, and the fact that it is still comparatively cheaper to do business there than in other Western European countries, makes Hungary a prime target for investments. However, Hungary is being challenged by some of its neighbors that have managed to maintain lower labor costs, and a more attractive tax system. Already some of the investments in the country have moved further east, to countries like Romania and Ukraine, and some of the bids for new investments have been lost for the same reasons.

Although the GDP growth was slower in 2002 and 2003 (3.3% and 2.9% respectively), it recuperated lost ground in 2004, with a 4% increase, and is expected to exceed 4% in 2005. Inflation decreased to 7% in 2004, and unemployment was only 5.9% in the same time period. However, in order to catch up with the developed economies in the EU, Hungary should register (according to the IMF specialists) annual growth rates of 55.25%. This means that further investments have to be attracted to generate funds for the state. Consequently, the governments planned to sell Budapest Airport and Antenna Hungaria in 2005. Attracting additional foreign investments is increasingly difficult though, as the country has to fight with rather high budget deficits (5.9% in 2004), and with increased competition from its neighbors.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Hungary's gross domestic product (GDP) was estimated at $159.0 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $15,900. The annual growth rate of GDP was estimated at 3.7%. The average inflation rate in 2005 was 3.7%. It was estimated that agriculture accounted for 3.9% of GDP, industry 30.9%, and services 65.3%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $295 million or about $29 per capita and accounted for approximately 0.4% of GDP. Foreign aid receipts amounted to $248 million or about $25 per capita and accounted for approximately 0.3% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Hungary totaled $56.30 billion or about $5,574 per capita based on a GDP of $82.8 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 1.6%. In 2001 it was estimated that approximately 25% of household consumption was spent on food, 17% on fuel, 6% on health care, and 20% on education. It was estimated that in 1997 about 17.3% of the population had incomes below the poverty line.

LABOR

Hungary's workforce in 2005 was estimated at 4.18 million. In 2003, agriculture accounted for 5.5% of the labor force, with 33.7% in manufacturing, and 60.7% in the services sector. In 2005, the estimated unemployment rate stood at 7.1%.

Before World War II, trade unions had not developed substantially; their combined membership was only about 100,000, principally craftsmen. After the war, the government reduced the number of the traditional craft unions, organized them along industrial lines, and placed them under Communist Party control. The Central Council of Hungarian Trade Unions (SZOT) held a monopoly over labor interests for over 40 years. Since wages, benefits, and other aspects of employment were state-controlled, the SZOT acted as a social service agency, but was dissolved in 1990 with the shift away from centralization to democracy. The National Federation of Trade Unions is its successor, with 735,000 members in 1999. There are now several other large labor organizations in Hungary, including the Democratic League of Independent Trade Unions, with some 100,000 members, and the Federation of Workers' Councils, with 56,000 members. Labor disputes are usually resolved by conciliation boards; appeal may be made to courts. Since 1991, most unions have been hesitant to strike, preferring instead to act as a buffer between workers and the negative side effects of economic reform. Collective bargaining is permitted but is not widespread.

The eight-hour day, adopted in several industries before World War II, is now widespread. The five-day week is typical, but many Hungarians have second or third jobs. The law prohibits employment for children under the age of 15 and closely regulates child labor. The minimum wage in 2002 was $140 per month which was not sufficient to provide a decent lifestyle for a family. Most workers earn more than this amount. Health and safety conditions in the workplace do not meet international standards, and regulations are not enforced due to limited resources.

AGRICULTURE

In 2003, 52% of the land (4,820,000 hectares/11,910,000 acres) was arable. More than half of Hungary's area lies in the Great Plain; although the soil is fertile, most of the region lacks adequate rainfall and is prone to droughts, requiring extensive irrigation. In 2003, some 230,000 hectares (568,000 acres) of land were irrigated. In 2003, agriculture contributed 4% to GDP.

Before World War II (193945), Hungary was a country of large landed estates and landless and land-poor peasants. In the land reform of 1945, about 35% of the land area was distributed, 1.9 million hectares (4.7 million acres) among 640,000 families and 1.3 million hectares (3.2 million acres) in state farms. In 1949, the government adopted a policy of collectivization based on the Soviet kolkhoz, and by the end of 1952, 5,110 collectives, many forcibly organized, controlled 22.6% of total arable land. Peasant resentment led to a policy change in 1953, and many collectives were dissolved, but the regime returned to its previous policy in 1955. As a result of the 1956 uprising, collectives were again dissolved; but a new collectivization drive begun in 1959 was essentially completed by 1961. Meanwhile, the proportion of the economically active population employed in agriculture decreased steadily. In 1949, agricultural employees accounted for 55.1% of the total labor force; in 2003, agriculture accounted for 10.7% of the engaged labor force and gross agricultural output was valued at over 1.95 billion. In 2004, Hungary had an agricultural trade surplus of $1.3 billion.

Hungary has achieved self-sufficiency in temperate zone crops, and exports about one-third of all produce, especially fruit and preserved vegetables. The traditional agricultural crops have been cereals, with wheat, corn (maize), and rye grown on more than half the total sown area. In recent years, considerable progress has been made in industrial crops, especially oilseeds and sugar beets. Fruit production (especially for preserves) and viticulture are also significant; the wine output in 2004 was estimated at 48 million liters. That year, over 650,000 tons of grapes were produced on 93,000 hectares (230,000 acres).

The principal field crops harvested in 2004 included (in tons): corn, 8,317,000; wheat, 6,020,000; sugar beets, 3,130,000; potatoes, 767,000; rye, 125,000.

ANIMAL HUSBANDRY

Although animal husbandry is second only to cereal cultivation in agricultural production, the number and quality of animals are much lower than in neighboring countries. An inadequate supply of fodder is one of the chief deficiencies. In 2005 there were 4,059,000 hogs, 1,397,000 sheep, 723,000 head of cattle, and 68,000 horses; poultry numbered 32,800,000. The 2005 out-put of livestock products was 1,034,000 tons (live weight) of meat, 2,043,000 tons of milk, and 5,000 tons of wool; egg production was 180,200 tons.

FISHING

Fishing was unimportant before World War II (193945), but production has increased in recent years. The best fishing areas are the Danube and Tisza rivers, Lake Balaton, and various artificial ponds. The catch is composed mainly of carp, catfish, eel, and perch. The 2003 catch was 18,406 tons, 64% from aquaculture. Hungary imports around $1520 million in seafood annually to meet demand.

FORESTRY

Forests totaled 1,840,000 hectares (4,547,000 acres), or 19.9% of Hungary's total land area, in 2000. The forest consists of the following main species: oak, 23%; black locust, 20%; pine and fir, 15%; Austrian and turkey oak, 11%; poplars, 9%; beech, 6%; horn-beam (blue beech), 6%; and others, 10%. Because of the relatively small forest area and the high rate of exploitation, Hungary traditionally has had to import timber. During the 1960s, a systematic reforestation program began. Reforestation affected about 440,000 hectares (1,087,000 acres) during 196068 but only about 65,000 hectares (161,000 acres) in 197074 and 64,322 hectares (158,942 acres) during 197581. From 19902000, some 136,000 hectares (336,000 acres) were annually reforested.

Roundwood production has remained stagnant in recent years, at 5,660,000 cu m (200 million cu ft) in 2004. Less than 12% of the production is softwood; Hungary's wood imports consist mostly of softwood, while exports are based on hardwood products. Production of wood products in 2004 (in thousands of cu m) included: sawn wood, 204; wood-based panels, 638; paper and paper-board, 579; and pulpwood, 653.

Privatization of agricultural land, including forests, finished in 1996. According to estimates from the Ministry of Agriculture's Forestry Office, 55% of forests were under state control, 44.5% were owned by private individuals, and 0.5% belonged to municipalities.

MINING

In 2002, Hungary produced modest amounts of fossil fuels and industrial minerals, cement and coal being the dominant components of industrial minerals and metals. Although the country had significant output of alumina and bauxite, the output of primary aluminum was modest, due to limited domestic energy sources. Construction aggregates and cement continued to play an important role in Hungary's economy, especially in view of the modernization process necessary for the country's infrastructure, for which planned highway construction through 2008 would be an important element. Mineral reserves were small and generally inadequate.

Bauxite mining and refining to alumina, as well as manganese mining, remained the only metal mining and processing operations in Hungary in 2002. Production of bauxite, found in various parts of western Hungary, was 720,000 tons in 2002, compared with 1 million tons in 2001. Total resources of bauxite were estimated to be 23 million metric tons, with commercial reserves at 16 million metric tons. Bakony Bauxitbany Kft. constituted Hungary's bauxite mining industry in 2002. Hungary also produced 40,000 metric tons of manganese ore concentrate (gross weight) in 2002, up from 338,000 metric tons in 2001, and 250,000 tons of gypsum and anhydrite in 2002. A total of 500,000 tons of calcined lime were also produced that same year. In addition, Hungary produced alumina (calcined basis), bentonite, common clays, diatomite, kaolin, nitrogen, perlite, sand (common, foundry, and glass) and gravel, dimension stone, dolomite, limestone, sulfuric acid, and talc. Although Hungary no longer mined copper, past surveys of the deeplying Recsk copper ore body, in the Matra mountains, discovered 172175 million tons of copper ore at a grade of 1.12% copper and about 20 million tons of polymetallic ore at a grade of 4.22% lead and 0.92% zinc as well as smaller quantities of gold, molybdenum, and silver. After failing to attract foreign investment, the exploration shaft and adit at Recsk was closed, the equipment removed, and the facilities flooded in 1999. Exploration for gold in the Recsk region continued in 2000, as 35 million tons of gold-bearing enargite copper ore was delineated with a grade of 1.47 grams per ton of gold.

ENERGY AND POWER

Hungary has modest reserves of oil, natural gas, and coal. In addition, the country's electric power sector relies upon nuclear power to provide a sizable portion of its electric power needs.

In 2002, Hungary's electric power generating capacity stood at 8.393 million kW, of which conventional thermal plants accounted for: 6.478 million kW; nuclear 1.866 million kW; hydropower 0.048 million kW; and geothermal/other 0.001 million kW. Electric output in 2002 came to 34.061 billion kWh, of which: conventional thermal sources accounted for 20.548 billion kWh; nuclear 13.255 billion kWh; hydropower 0.192 billion kWh; and geothermal/other 0.066 billion kWh. Electric power consumption in 2002 totaled 35.977 billion kWh. Imports and exports of electric power that year came to 12.6 billion kWh and 8.3 billion kWh, respectively. By the end of 1963, all villages were connected with electric power. Hungary's sole nuclear power plant, at Pécs, consists of four second-generation, Soviet-designed, VVER-440/213 reactors, which began production in 1982. As of 2002, modernization was planned to extend the operating life of the reactors by 20 years. The normal lifespan of the four units would end between 2012 and 2017. However, if the continuous operation of the power plant is to be maintained, the needed modernization would have to start in 2007.

Hungary's reserves of crude oil and natural gas are estimated, as of 1 January 2004, at 102.5 million barrels and 1.2 trillion cu ft, respectively. Refining capacity for that same date is estimated at 161,000 barrels per day. Coal reserves in 2001, were estimated at 1,209 million short tons. In 2003, Hungary's total oil production was estimated at 45,700 barrels per day, with natural gas and coal output estimated in 2002 at 110 billion cu ft and 14.2 million short tons, respectively. Consumption of oil, natural gas and coal outstrips domestic production. Demand for oil in 2003 was estimated at 137,000 barrels per day, while natural gas and coal consumption in 2002 were estimated at 473 billion cu ft and 15 million short tons, respectively. However, the consumption of coal has declined. Between 1993 and 2003, Hungary's demand for coal fell 21%. Brown coal, or lignite, accounted for all domestic coal out-put in 2002. Uranium, discovered in 1953 near Pécs, is expected to supply its nuclear station until 2020.

INDUSTRY

Hungary is poor in the natural resources essential for heavy industry and relies strongly on imported raw materials. Industry, only partially developed before World War II, has expanded rapidly since 1948 and provides the bulk of exports. Industrial plants were nationalized by 1949, and the socialized sector accounted for about 98.5% of gross production in 1985.

Hungary has concentrated on developing steel, machine tools, buses, diesel engines and locomotives, television sets, radios, electric light bulbs and fluorescent lamps, telecommunications equipment, refrigerators, washing machines, medical apparatus and other precision engineering equipment, pharmaceuticals, and petrochemical products. Textile and leather production has decreased in relative importance since World War II, while chemicals grew to become the leading industry in the early 1990s. Food processing, formerly the leading industry, provides a significant portion of exports; meat, poultry, grain, and wine are common export items.

In 1993, industrial production was only two-thirds of the 1985 level. In 1997, industrial output increased in the manufacture of road vehicles, consumer electronics, insulated cables, office equipment and computers, steel products, aluminum metallurgy, household chemical products and cosmetics, rubber and plastic products, and paper and pulp production. In 1992, Suzuki and Opel began producing automobiles in Hungary, the first produced there since before World War II. Suzuki increased annual output at the Magyar Suzuki Corporation from 29,000 to 50,000 units starting in the 1995 fiscal year. Since 1990, Hungary has developed industrial strength in the automotive field as well as an expanding automotive sourcing industry in plastics and electronics. In 2001, Hungary produced 144,313 automobiles, a 5% increase over 2000. In 2000, it produced 1,621 heavy trucks, a 24% increase over 1999. In 2000, close to 14% of total Hungarian industrial output was accounted for by the vehicle manufacturing industry.

The growth in manufacturing output and productivity in the early 2000s has been supported by a considerable amount of foreign investment. Successive Hungarian governments have pursued privatization policies and policies to restructure industry, so that by 2002, 80% of the economy was privately owned. Hightech equipment (computers, telecommunication equipment, and household appliances) showed the strongest industrial growth in 2001. Industries targeted for growth in 2003 were the automotive industry, the general industrial and machine tool industry, and the information technology industry. Housing construction was another growth sector in 2002.

In 2004, the share of the industrial output in the GDP was 31.4%, while its representation in the labor force was 27.1%. Agriculture contributed 3.3% to the GDP, while occupying 6.2% of the labor force; services came in first with a 65.3% share in the economy, and a 66.7% representation in the labor force. The industrial production growth rate was 9.6% in 2004, and most of this growth occurred in industries like motor vehicles, chemicals (especially pharmaceuticals), textiles, processed foods, construction materials, metallurgy and mining.

SCIENCE AND TECHNOLOGY

In 2002, there were 486 technicians and 1,473 researchers per million people that were actively engaged in research and development (R&D). Total expenditures on R&D during that year amounted to $1.374 million, or 1.01% of GDP. Of that total, the government sector accounted for the majority of spending at 58.6%, followed by business at 29.7%, foreign investors at 10.4%, and higher education at 0.3%. Undistributed funds accounted for the remainder. Hightech exports in 2002 were valued at $7.364 billion and accounted for 25% of manufactured exports.

Among major scientific organizations are the Hungarian Academy of Sciences (founded in 1825), the Association for Dissemination of Sciences (founded in 1841), and the Federation of Technical and Scientific Societies (founded in 1948), with 32 agricultural, medical, scientific, and technical member societies. In 1996, Hungary had 45 research institutes concerned with agriculture and veterinary science, medicine, natural sciences, and technology. There are 25 universities and colleges offering courses in basic and applied science. In 198797, science and engineering students accounted for 32% of university enrollment. In 2002, science degrees (natural sciences, mathematics and computers, and engineering) accounted for 11.9% of all bachelor's degrees awarded.

In addition to the National Museum of Science and Technology, Budapest has museums devoted to transport, electrical engineering, agriculture, natural history, and foundries.

DOMESTIC TRADE

Budapest is the business and trade center of the country, though most production facilities lie elsewhere. Over the past few years, the retail and wholesale sector has grown along Western standards. Throughout most of the country, small, family-owned and operated retail establishments predominate. However, in Budapest supermarkets, department stores, and indoor shopping malls have grown rapidly.

The Polus Center, the first American-style shopping mall in Central Europe, opened on the outskirts of Budapest in November 1996. West End City Center, the largest mall complex in Central Europe, was opened in Budapest in 1999. As of 2002, there were about 400 franchise operations nationwide. Several foreign chains are present. Retail purchases are still primarily cash based, though some banks are beginning to issue credit cards. A 12% value-added tax (VAT) applies to food, books, hotel accommodations and utilities. A 25% VAT applies to most other good and services. Additional excise taxes (ranging from 1035%) apply to some products, such as gold, coffee, wine, and automobiles.

New regulations passed in January 1997 concerning trade in food products and the operation of retail outlets focus on the reduction of black market activity, consumer protection, and harmonization with EU law. Nevertheless, the underground economy remained at around 30% in 1999.

Business hours extend from 9 or 10 am to 4 or 5 pm for offices and general stores and to 3 or 4 pm for banks. Early closing (between noon and 1 pm) on Saturdays is widespread; Sunday closing is general. Food stores open between 6 and 8 am and close between 7 and 9 pm weekdays; a few remain open on Sundays.

Country Exports Imports Balance
World 43,007.8 46,675.0 -3,667.2
Germany 14,572.2 11,672.2 2,900.0
Austria 3,475.3 2,981.3 494.0
Italy-San Marino-Holy See 2,484.7 3,362.9 -878.2
France-Monaco 2,467.9 2,285.4 182.5
United Kingdom 1,966.8 1,291.7 675.1
Netherlands 1,764.6 1,024.0 740.6
Sweden 1,396.7 558.7 838.0
United States 1,339.4 1,528.2 -188.8
Spain 1,173.6 918.6 255.0
Romania 1,100.0 598.2 501.8
() data not available or not significant.

Newspapers and general, trade, and technical magazines are used for advertising; there is also broadcast and outdoor advertising. A major industrial fair, held since 1906, takes place every spring and autumn in Budapest.

FOREIGN TRADE

Hungary imports raw materials and semifinished products and exports finished products. Within that general framework, however, the structure, volume, and direction of Hungarian foreign trade have changed perceptibly in recent years. The total trade volume expanded from huf18.344 million (foreign exchange) in 1959 to huf2.657 billion in 1994. In 2000, exports were estimated at $28.1 billion (up from $12.9 billion in 1995), while imports were estimated to be $32.1 billion (up from $15.4 billion in 1995).

The majority of Hungary's export market is concentrated in the manufacturing industry, including electrical machinery, motor vehicle parts, polymers, petroleum refining, telecommunications equipment, and aluminum. Manufactured goods make up 82% of all exports. Other important exports include apparel (4.4%), polymers (2.2%), and meat (2.1%).

In 2004, Hungary's exports reached $54.6 billion (FOBFree on Board), while its imports (FOB) grew to $58.7 billion; the trade deficit was $4.1 billion. The most important export partners were Germany (where 31.4% of Hungary's exports went), Austria (6.8%), France (5.7%), Italy (5.6%), and the United Kingdom (5.1%). The bulk of exports were made up of machinery and equipment (61.1%), and other manufactures (28.7%); other export commodities included food products (6.5%), raw materials (2%), fuels and electricity (1.6%). Imports came mainly from Germany (29.2%), Austria (8.3%), Russia (5.7%), Italy (5.5%), the Netherlands (4.9%), China (4.8%), and France (4.7%). The main import commodities included machinery and equipment (51.6%), other manufactures (35.7%), fuels and electricity (7.7%), food products (3.1%), and raw materials (2.0%).

BALANCE OF PAYMENTS

Having scrapped central planning, the Hungarian government is engaged in stabilizing the economy and taming inflation. In 1992, exports had grown by 7.4%, but recession in export markets, western European protectionism, an appreciating forint, bankruptcies of firms producing one-third of exports, and drought caused Hungarian trade to slow down. In 1994, Hungary had a current account deficit of $4 billion, but it shrank to $2.5 billion in 1995, and to a further $1 billion in 2001. Export markets were weak in 2003, and were not expected to rebound until mid-2004. Strong private consumption growth was sustaining the growth of the economy in 2003, but the current account deficit was forecast at 5.4% of GDP in 2003/04.

The US Central Intelligence Agency (CIA) reported that in 2002 the purchasing power parity of Hungary's exports was $31.4 billion while imports totaled $33.9 billion resulting in a trade deficit of $2.5 billion.

The International Monetary Fund (IMF) reported that in 2001 Hungary had exports of goods totaling $28.1 billion and imports totaling $30.1 billion. The services credit totaled $7.71 billion and debit $5.55 billion.

By 2004, the exports of goods and services expanded to $65.3 billion, while imports reached $68.3 billion; this resulted in a

Current Account -7,364.0
   Balance on goods -3,365.0
     Imports -46,594.0
     Exports 43,229.0
   Balance on services -197.0
   Balance on income -4,455.0
   Current transfers 653.0
Capital Account -77.0
Financial Account 7,311.0
   Direct investment abroad -1,598.0
   Direct investment in Hungary 2,506.0
   Portfolio investment assets 35.0
   Portfolio investment liabilities 2,900.0
   Financial derivatives 36.0
   Other investment assets -2,606.0
   Other investment liabilities 6,309.0
Net Errors and Omissions 466.0
Reserves and Related Items -336.0
() data not available or not significant.

negative resource balance of $3 billion. Also, the current account deficit worsened, growing from -$7.2 billion in 2003, to -$8.8 billion in 2004. The reserves of foreign exchange and gold grew from $11.5 in 2003 to $14.8 in 2004, covering less than four months of imports. Hungary is a major recipient of aid from the EUfor 200406 it had $4.2 billion available in structural adjustment and cohesion funds. The external aid is dwarfed however by the external debt, which grew from $47.4 billion in 2003 to $61.3 billion in 2004.

BANKING AND SECURITIES

Banking was nationalized in 1948, when the National Bank of Hungary was installed as the bank of issue, with a monopoly on credit and foreign exchange operations.

Following the 1987 reform of the banking system, the National Bank retained its central position as a bank of issue and its foreign exchange monopoly, but its credit functions were transferred to commercial banks. Three new commercial banks were established: the Hungarian Credit Bank, the Commercial and Credit Bank, and the Budapest Bank. Two other commercial banks, both founded in the 1950s, are the Hungarian Foreign Trade Bank and the General Banking and Trust Co. These six banks serve the financial needs of enterprises and government operations. The main bank for the general public is the National Savings Bank; in 1987 there were also 262 savings cooperatives. The Central Corporation of Banking Companies handles state property, performs international property transactions for individuals, and deals with the liquidation of bankrupt companies. The State Development Institution manages and controls development projects. In 1987 there were also three banks with foreign participation: the Central European International Bank (66% of shares held by six foreign companies), Citibank Budapest (80% owned by Citibank New York), and Unibank (45% owned by three foreign companies). In 1991 there were 10 government owned commercial banks, 16 joint-stock owned commercial banks, 5 government owned specialized financial institutions, one offshore bank, and 260 savings cooperatives. By 1997, Hungary had over 30 commercial banks, about 10 specialized financial institutions, and 260 savings cooperatives. By 1998, around 75% of all banks had been privatized and 70% of these shares had foreign owners. Upon joining the OECD in 1996, Hungary ceased its ban on the establishment of foreign branches, effective January 1998.

The International Monetary Fund reports that in 2001, currency and demand depositsan aggregate commonly known as M1were equal to $9.7 billion. In that same year, M2an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual fundswas $24.3 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 9.8%.

In Budapest, an authentic commodity and stock exchange functioned from 1867 until 1948, when it was closed down as the country transformed into a centralized socialist economy. The reorganization of the Hungarian securities market, after a pause of some 40 years, started at the beginning of the 1980s. The Exchange was founded eventually on 21 June 1990. The bull market on the Budapest Stock Exchange (BUX) continued during the final quarter of 1996. The BUX index closed 1996 at 4,125, up 170% compared with end-1995. The increase was the second strongest in the world, following the Venezuela market. By 7 February 1997, the BUX index had reached 5,657. By mid-2000, the index stood at over 8,800, but as of mid-2003, it had dropped to just over 8,000 amid the global recession. However, by the end of 2004, the BUX had recovered, rising 57.2% that year to close at 14,742.6. In 2004, a total of 47 companies were listed on the BUX, which had a market capitalization of $28.711 billion.

INSURANCE

Before World War II, 49 private insurance companies25 domestic and 24 foreignconducted business activities in Hungary. All insurance was nationalized in 1949 and placed under the State Insurance Institute, a government monopoly. A new institution, Hungária Insurance Co., was founded in 1986. As of 1997, the regulatory authority was the Insurance Supervisor (allami Biztositasfeluegyelet). Compulsory insurance in Hungary includes third-party auto liability, workers' compensation, and liability for aircraft, watercraft, and several professions. In 2003, the value of direct premiums written totaled $2.454 billion, of which nonlife premiums made up the largest portion at $1.473 billion. Allianz Hungaria was the country's leading nonlife insurer, with gross written nonlife premiums of $621.8 million for 2003. ING was Hungary's top life insurer in 2003, with gross written life premiums totaling $280.1 million.

PUBLIC FINANCE

In recent years, the government has presented its budget bill to the National Assembly sometime during the first several months of the year, but the budget itself becomes effective on 1 January, when the fiscal year begins. It is prepared by the Ministry of Finance. Although Hungary had one of the most liberal economic regimes of the former Eastern bloc countries, its economy still suffered the growing pains of any country trying to come out of communism

Revenue and Grants 6,338.1 100.0%
   Tax revenue 3,656.6 57.7%
   Social contributions 2,159.1 23.4
   Grants 34.1% 0.4%
   Other revenue 499 7.9%
Expenditures 7,781.6 100.0%
   General public services 2,188 28.1%
   Defense 231.5 3.0%
   Public order and safety 333 4.3%
   Economic affairs 1,599.3 20.6%
   Environmental protection 40.4 0.5%
   Housing and community amenities 33.8 0.4%
   Health 453.3 5.8%
   Recreational, culture, and religion 141 1.8%
   Education 407.4 5.2%
   Social protection 2,353.8 30.2%
() data not available or not significant.

and privatize its industries. The last few years, however, Hungary has enjoyed a remarkable expansion, averaging annual GDP growth of 4.5% between 1996 and 2002. Inflation in that period dropped from 28% to 7%, and unemployment fell to 6%, less than most EU countries. Eighty percent of GDP is now produced by privately owned companies. Still, Hungary's foreign debts remain large, putting a damper on the economy's otherwise spectacular performance.

The US Central Intelligence Agency (CIA) estimated that in 2005 Hungary's central government took in revenues of approximately $51.4 billion and had expenditures of $58.3 billion. Revenues minus expenditures totaled approximately -$6.9 billion. Public debt in 2005 amounted to 60.9% of GDP. Total external debt was $76.23 billion.

The International Monetary Fund (IMF) reported that in 2002, the most recent year for which it had data, central government revenues were Ft6,338.1 billion and expenditures were Ft7,781.6 billion. The value of revenues was us$25 million and expenditures us$30 million, based on an exchange rate for 2002 of us$1 = Ft257.887 as reported by the IMF. Government outlays by function were as follows: general public services, 28.1%; defense, 3.0%; public order and safety, 4.3%; economic affairs, 20.6%; environmental protection, 0.5%; housing and community amenities, 0.4%; health, 5.8%; recreation, culture, and religion, 1.8%; education, 5.2%; and social protection, 30.2%.

TAXATION

As of 2006, Hungary's corporate tax rate is 16%. Capital gains are also taxed at the 16% rate. However, only 50% of capital gains generated from stock transactions are subject to the tax. Capital gains from the sale of business assets are treated as business income. The withholding tax on dividends paid to foreign companies is 20% unless recipients reinvest them in Hungarian companies. Dividends paid to individuals are subject to a 25% withholding tax, and dividends that are in excess of 30% of the return on equity are subject to a 35% rate. However, most tax treaties with Hungary reduce the withholding tax to between 5% and 15%.

The progressive personal income tax schedule in Hungary has a top rate of 38%. Individuals receiving capital gains on immovable property or the sale of securities are subject to a 25% tax. Individuals also can take allowances against the taxes they owe in the form of tax deductions or tax credits. The main deduction from taxable income is 20% of annual income up to a certain maximum. The disabled are given an extra deduction. There are also partial deductions allowed for school fees, interest paid for the purchase of a house, and for donations to charity. Inheritance and gift taxes range from 1115%. There is a 26% tax on the transfer of housing, and a 10% tax on the transfer of large estates. Local authorities may levy individual income and corporate taxes.

The major indirect tax in Hungary is the value-added tax (VAT). The normal VAT rate is 25%, with a reduced rate of 15% for items of social value, food and other staple items. A 5% VAT applies to certain medical materials and supplies, and to textbooks. Housing leases, health and education services, and financial services are exempt from the VAT. Other taxes include a stamp tax and a consumption tax imposed on cars, jewelry, gasoline, alcohol, cigarettes, and cosmetics at rates between 10% and 200%.

CUSTOMS AND DUTIES

Under Hungary's liberalized import policies, 93% of all imports do not require licenses. Under World Trade Organization (WTO) rules, import licenses on certain products from WTO states are no longer required. Under the same regulations, duties for countries with most-favored-nation status stood at around 8% in 2002, but could be over 100% for selected commodities.

FOREIGN INVESTMENT

Even before the repudiation of communism, Hungary sought to enter joint ventures with Western countries. By the end of 1996, Hungary had attracted $15 billion in foreign direct investment. Since 1989, Hungary has attracted nearly one-third of all foreign direct investment in Central Europe and Eastern Europe. In 199596, the government adopted a stringent economic reform program of liberalization and privatization, and by 2002, the private sector, which had been 20% of the economy in 1989, was about 80%. Hungary has five free trade zones in which corporations are treated as foreign and are exempt from custom duties and taxes.

In the period 1988 to 1990, Hungary's share of world FDI inward flows was five and a half times its share in world GDP, the sixth-largest ratio in the world. Annual foreign direct investment (FDI) inflows into Hungary reached a peak in 1995 at about $4.5 billion, from which point they declined steadily until 2001, when there was an upswing to $2.4 billion from $1.6 billion in 2000. In 2002, FDI inflow fell to less than $1.5 billion. The average FDI in-flow from 1998 to 2001 was about $2 billion a year. For the period 1998 to 2000, Hungary's share of FDI inflows was about equal to its share of world GDP. Total FDI stock, from 1989 to 2002, is estimated at about $34 billion.

The largest single source of foreign investment has been the United States, followed by Germany, the Netherlands, Austria, the United Kingdom, and France.

Of foreign capital invested in Hungary through 2000, 50% has been in manufacturing, 15% in telecommunications, 13% in energy, 6% in banking and finance, and 10% in other areas. FDI out-flows from Hungary have averaged about $400,000 per year and as of 2001, foreign stock held by Hungarians totaled $2.2 billion.

The flow of foreign investment reached peak levels in 2003 and 2004, with 2.3 billion and 2.5 billion respectively. The Hungarian Ministry of Economics and Transportation estimated that by 2004 the total stock of FDI exceeded 42 billion, with the United States and Germany taking the lion's share of this total. The same agency expects the flow of FDI to grow to 33.5 billion in 2005. Most of the investments went to manufacturing (46%); real estate (12%); trade and repair (11%); finance (10%); transport, telecommunications, storage and post (10%); and the energy sector (5%). By 2003, the biggest investors in Hungary were: Deutsche Telekom A.G., Germany (with cumulative investments exceeding $1.7 billion); Audi A.G., Germany ($1.4 billion); General Electric, US ($1.1 billion); Telenor ASA, Norway ($1 billion); and, Vodafone, Netherlands ($850 million).

ECONOMIC DEVELOPMENT

During the first 20 years after World War II, Hungary had the following economic plans: the three-year plan (194749) for economic reconstruction; the first five-year plan (195054) which aimed at rapid and forced industrialization and which was slightly modified in 1951 and by the "new course" policy of 1953; the one-year plan of 1955; the second five-year plan (195660), designed to further industrialization but discarded as a result of the October 1956 uprising; the three-year plan (195860), which also emphasized industrialization, although it allocated greater investment for housing and certain consumer goods; and the new second five-year plan (196165), which provided for a 50% increase in industrial production. These were followed by the third five-year plan (196670); the fourth five-year plan (197175), with greater emphasis on modernization of industrial plants producing for export and housing construction; the fifth five-year plan (197680), which called for amelioration of the gap in living standards between the peasantry and the working class; the sixth five-year plan (198185), emphasizing investment in export industries and energy conservation and seeking to curb domestic demand; and the seventh five-year plan (198690), which projected growth of 1517% in NMP, 1316% in industrial production, and 1214% in agriculture.

Far-reaching economic reforms, called the New Economic Mechanism (NEM), were introduced on 1 January 1968. In order to create a competitive consumers' market, some prices were no longer fixed administratively, but were to be determined by market forces. Central planning was restricted to essential materials, and managers of state enterprises were expected to plan and carry out all the tasks necessary to ensure profitable production. In the early years of the NEM, the growth rate of industrial output surpassed target figures; national income rose substantially, surpassing any previous planning periods; and productivity increased significantly in all sectors of the national economy. However, following the huge oil price increases of 197374, the government returned to more interventionist policies in an attempt to protect Hungary's economy from external forces. Beginning in 1979, the government introduced a program of price reform, aimed at aligning domestic with world prices; changes in wage setting, intended to encourage productivity; and decentralization of industry, including the breakup of certain large enterprises and the creation of small-scale private ones, especially in services. New measures introduced in 1985 and 1986 included the lifting of government subsidies for retail prices (which led to sharp price increases) and the imposition of management reform, including the election of managers in 80% of all enterprises. The 199195 economic program aimed to fully integrate Hungary into the world economy on a competitive basis. The program's main features were to accelerate privatization, control inflation, and institute measures to prepare the way for the convertibility of the forint.

Reforms slowed in 1993 and 1994, and the privatization of state firms stopped. However, privatization accelerated in 1995 as the result of new laws passed in May of that year, which made the process simpler and allowed for the rapid privatization of small firms. Some large utilities were privatized in 1995; the first wave of the electricity and gas company privatization totaled $3.2 billion, primarily from German, Italian, and French interests. Budapest Bank, one of the country's largest banks, was sold to GE Capital Services. Hungary is now one of the few countries in Eastern Europe to have privatized major portions of its telecommunications and energy sectors. In 1995, the government received $4.5 billion in privatization proceeds. From the mid-1990s, a massive amount of foreign investment flowed into the country. (It stood at just under $23.5 billion by the end of 2001, which was equivalent to about 46% of GDP.)

In 1994, the Development Assistance Committee of the OECD distributed $68.3 million in aid to Hungary. Net concession flows from multilateral institutions that year amounted to $132 million. With the adoption of an International Monetary Fund (IMF)-backed stabilization program in 1995, Hungary exhibited consistent GDP annual growth of 4% in the late 1990s. Moreover, Hungary has repaid its entire debt to the IMF, and was formally invited to join the EU in 2002, and finally accepted in 2004, together with nine other countries.

The private sector now produces 80% of GDP. The economy was suffering from the effects of currency appreciation in 2003, and from rises in wages in 200102. Hungary's markets in 2003 were weak, given the dismal state of the global economy. (Exports in 2001 reached the equivalent of some 60% of GDP, up from 30.6% in 1991.) The current account deficit reached 5.9% of GDP for in 2004.

The Hungarian economy improved as it joined the EU, but the rate of improvement was deemed unsatisfactory. The GDP growth rate was 4% in 2004, but IMF specialists consider that the economy needs to grow by 55.25% annually if Hungary is to catch up with Western Europe in the timeline that it set for itself. The Hungarian policy makers are trying to attract additional investments in the country as a way of fostering additional growth. This task is made difficult however by increasing competition from neighboring countries, and the need to implement a leaner and more flexible tax system.

SOCIAL DEVELOPMENT

A national social insurance system was relatively well advanced before World War II for the nonagricultural population. A 1972 decree of the Council of Ministers extended this system to cover virtually the entire population, including craftsmen; by 1974, 99% of the population enjoyed the benefits of social insurance. Coverage includes relief for sickness, accidents, unemployment, and old age and incapacity, and provides maternity allowances for working women, allowances for children, and payment of funeral expenses. Men can collect old age pensions at the age of 62 after 20 years of employment. As of 2005, women collect at age 60, and will meet the same standards as men by 2009. The social insurance system also provides for disability and survivorship benefits. Medical care is provided directly to the insured through the public health service.

Women have the same legal rights as men, including inheritance and property rights. They hold a large number of the positions in teaching, medicine, and the judiciary, but generally earn less than men. Women are underrepresented in senior positions in both the private and public sectors. Sexual harassment in the workplace is commonplace, and it is not prohibited by law. Spousal abuse is a huge problem; approximately 20% of women were victimized in 2004. Sexual abuse, rape, and domestic violence are underreported due to cultural prejudice.

Minority rights are protected by law, allowing for the creation of minority local government bodies for limited self-rule. The law also preserves ethnic language rights and encourages minorities to preserve their cultural traditions. Despite these efforts, the Roma minority continues to face discrimination and prejudice. There were also reports of excessive police force in certain cases, as well as pretrial detention.

HEALTH

The Ministry of Health administers the state health service, with the counties and districts forming hospital regions. By the end of 1974, 99% of the population was covered by social insurance and enjoyed free medical services; those few not insured pay for medical and hospital care. Limited private medical practice is permitted. In 1992, the Ministry of Welfare proposed a compulsory health care scheme based on the German system, to be administered by the National Health Security Directorate. After the termination of socialism in 1989, the Hungarian health system was largely unchanged. About 5% of clinics were privatized and health care was available to nearly all of Hungary's people. Health expenditures comprised an estimated 6.8% of the gross domestic product.

As of 2004, there were an estimated 316 physicians, 852 nurses, and 46 dentists per 100,000 people. Hungary's birthrate was estimated at 9 per 1,000 people. Contraceptives were used by an estimated 73% of married women. Average life expectancy was 72.40 years in 2005. Free professional assistance given to insured pregnant women and to the mothers of newborn children, maternity leave and grants, and improved hygienic conditions helped lower the infant mortality rate to 8.57 per 1,000 live births in 2005. As of 2000, the total fertility rate was 1.3 per woman during her child-bearing years.

The country faces severe problems in maintaining an acceptable level of health care for its population. The UN considers its death rate unacceptable (13 per 1,000 in 1999). The heart disease occurrence is below the average for wealthier countries. The likelihood of death after age 65 from heart disease was 283 (male) and 283 (female) per 1,000 people during 19901993. The number of cardiovascular deaths in 1994 was 74,182 people. Arteriosclerosis is a major cause of death (100 per 100,000 people). Contributing factors include the incidence of cardiovascular disease, which is directly related to stress through pressures of work, together with smoking and dietary factors. Hungary has one of the highest smoking rates in Europe. In 1990, there were 40 reported cases of tuberculosis per 100,000 people. Virtually all children up to one year old were vaccinated against tuberculosis, diphtheria, pertussis, and tetanus, polio and measles.

Compulsory testing for HIV has been widespread since 1988 in Hungary's attempt to stop the spread of AIDS. Hungary has resisted pressure from international agencies to switch from compulsory to voluntary testing. The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 2,800 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

The construction rate for new dwellings has been greater in smaller cities and towns than in Budapest, where as of 1980, 17.3% of all housing units were built before 1900 and 56.3% before 1945. About 20,320 new dwellings were completed in 2000; about 31,511 dwellings were completed or under construction in 2001. According to national statistics, in 2005 there were about 4,127,743 dwelling units nationwide. About 84% were owner occupied. Only about 130,208 units were owned by municipal governments. Most homes have an average of four rooms. It has been estimated that about 1.2 million people are affected by overcrowding.

Low-income residents and other private builders generally rely on the labor of family and friends, buying the essential materials little by little; they may apply for loans if necessary to complete the dwelling.

EDUCATION

Before education was nationalized in 1948, most schools were operated by religious bodies, especially the Roman Catholic Church. The educational system is under the control of the Ministry of Education and is supervised by the local councils, which receive financial assistance from the central government. As of 2003, public expenditure on education was estimated at 5.5% of GDP, or 14.1% of total government expenditures.

Education is free for 12 years of study and compulsory for 10 years. The state also pays the bulk of costs for higher education. Primary school covers eight years of study. Secondary schools are divided into academic schools (gimnázium ) and vocational schools (szakközépiskola ). Programs at academic schools run from four to six years. Vocational school programs generally cover four years of study. In addition to its regular primary education, Hungary has over 100 primary schools with special music programs based on the pedagogy of the 20th-century composer Zoltan Kodály; at these "music primary schools," music receives as much emphasis as all other subjects. The academic year runs from September to June.

In 2001, about 80% of children between the ages of three and six were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 91% of age-eligible students. The same year, secondary school enrollment was about 94% of age-eligible students. Most students complete their primary education. The student-to-teacher ratio for primary school was at about 9.6:1 in 2003; the ratio for secondary school was about 11:1.

Hungary has about 77 institutions of higher education, including 25 universities and 47 colleges. Adult education expanded after World War II, especially through workers' schools and correspondence courses. Although there are university fees, many students are exempt from payment or pay reduced fees. In 2003, about 51% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 99%.

LIBRARIES AND MUSEUMS

Hungary's National Archives were established in 1756; among its treasures are some 100,000 items from the period prior to the Turkish occupation (1526). Hungary's National Széchényi Library is the largest and most significant in the country. Founded in Budapest in 1802, it has more than 2.5 million books and periodicals and more than 4.5 million manuscripts, maps, prints, and micro-films. Other important libraries are the Lóránd Eötvös University Library (1.5 million volumes) and the Library of the Hungarian Academy of Sciences (2.1 million volumes), both in Budapest; and the Central Library of the Lajos Kossuth University in Debrecen (1.27 million volumes). There are numerous local and regional public libraries.

There were over 500 museums (about 70 in Budapest) and many zoological and botanical gardens. One of the largest institutions is the Hungarian National Museum, which displays relics of prehistoric times as well as artifacts reflecting the history of Hungary from the Magyar conquest through 1849, including the Hungarian coronation regalia. A branch of the National Museum is the Hungarian Natural History Museum. Other museums, all in Budapest, include the Ethnographical Museum, the Museum of History, the Hungarian National Gallery, and the Museum of Fine Arts. Many castles and monasteries throughout the country have been converted to museums. There is also a Bela Bartok Museum, a Chinese Museum, a House of Terror museum (2002), and a Franz Lizst Memorial Museum and Research Center, all in Budapest.

MEDIA

Budapest is the principal communications center. Although tele-communication services in Hungary were long underdeveloped, services improved significantly during the 1990s, and investment in value-added services, such as the Internet and VSAT, grew. In 2003, there were an estimated 349 mainline telephones for every 1,000 people; about 28,000 people were on a waiting list for telephone service installation. The same year, there were approximately 769 mobile phones in use for every 1,000 people.

In 2004, there were two state-owned public service television stations and two national commercial television stations. The same year, there were one public service radio and two national commercial radio stations. There are some smaller regional stations. In 2003, there were an estimated 690 radios and 475 television sets for every 1,000 people. About 190.7 of every 1,000 people were cable subscribers. Also in 2003, there were 108.4 personal computers for every 1,000 people and 232 of every 1,000 people had access to the Internet. There were 210 secure Internet servers in the country in 2004.

Budapest has always been Hungary's publishing center. The largest dailies (with affiliations and 2002 circulation rates as available) are Népszabadság (Hungarian Socialist Workers' Party, 316,000), Népszava (Hungarian Trade Unions, 120,000), Mai Nap (100,000), Kurir (80,000), Magyar Hírlap (Budapest Party Committee and Metropolitan Council, 75,000), Expressz (75,000), and Magyar Nemzet (Patriotic People's Front, 70,000).

The constitution of Hungary provides for free speech and a free press, and the government is said generally to respect these rights. Although previously all means of communication had been government property, 1995 saw the beginning of the privatization process, with aims to put most print and broadcast media in private hands.

ORGANIZATIONS

There is a Chamber of Commerce in Budapest. The International Labour Organization has a subregional office in Budapest. Hungary is a member of the International Chamber of Commerce. Trade and professional associations exist representing a variety of occupations, including the steel and automotive workers, journalists, teachers, librarians, engineers, architects, and various medical professionals. There is a Confederation of Professional Unions based in Budapest.

Organizations promoting research and study of various medical and scientific fields also exist. Some of these are member organizations of the Federation of Hungarian Medical Societies and/or the Hungarian Academy of Sciences. A cultural organization particular to Hungary is the International Kodaly Society; named for the music composer, scholar, and teacher, this organization promotes appreciate and study of music, particularly for youth. The multi-national scientific organization of the International Measurement Confederation is based in Budapest.

Notable national youth organizations include the Federation of Young Democrats of Hungary, the Goncol Environmental Youth Alliance, the National Union of Hungarian Students, and Young Musicians of Hungary. The Hungarian Scout Association is also active, as are various chapters of the YMCA/YWCA. There are several sports associations promoting amateur competition in such pastimes as tennis, badminton, skating, and baseball. There is a national chapter of the Paralympic Committee. National women's organizations include the Association of Hungarian Women and the National Council of Hungarian Women.

Volunteer service organizations, such as the Lions Clubs and International, are also present. The Red Cross, Caritas, and Amnesty International have active chapters in the country.

TOURISM, TRAVEL, AND RECREATION

Among Hungary's diverse tourist attractions are Turkish and Roman ruins, medieval towns and castles, more than 500 thermal springs (some with resort facilities), and Lake Balaton, the largest freshwater lake in Europe. Budapest is a major tourist attraction and cultural capital, with 2 opera houses, over 200 monuments and museums, and several annual arts festivals.

Popular sports include handball, football (soccer), tennis, and volleyball. The Budapest Grand Prix, the only Formula-1 motor race in Eastern Europe, was inaugurated in August 1986. A valid passport is required of all foreign visitors. Citizens of the United States and Canada are not required to have a visa for stays of up to 90 days.

Hungary had 31,412,483 visitors in 2003, about 48% of whom came from Central and Eastern Europe. There were 64,091 hotel rooms with 158,634 beds and an occupancy rate of 38%. The average length of stay was three nights. Tourist expenditure receipts totaled $3.4 billion.

In 2004, the US Department of State estimated the daily expenses for staying in Budapest at $218. Other areas were much lower at $93 per day.

FAMOUS HUNGARIANS

The foundations for modern Hungarian literature begin with the movement known as the Period of Linguistic Reform, whose leaders were the versatile writer Ferenc Kazinczy (17591831) and Ferencz Kölcsey (17901838), lyric poet and literary critic. Among the outstanding literary figures was Dániel Berzsenyi (17721836) of the Latin School. Károly Kisfaludy (17881830) founded the Hungarian national drama. Mihaly Vörösmarty (180055), a fine poet, related the Magyar victories under Árpád in his Flight of Zalán. He was followed by Hungary's greatest lyric poet, Sándor Petöfi (182349), a national hero who stirred the Magyars in their struggle against the Habsburgs in 1848 with his Arise Hungarians. Another revolutionary hero was Lajos Kossuth (180294), orator and political author. János Arany (181782), epic poet and translator, influenced future generations, as did Mór Jókai (18251904), Hungary's greatest novelist. The outstanding dramatist Imre Madách (182364) is known for his Tragedy of Man. Endre Ady (18771919) was a harbinger of modern poetry and Western ideas; Attila József (19051937) is another well-known poet. Lyric poets of the contemporary era include László Nagy (192578), János Pilinszky (192181), and Ferenc Juhász (b.1928). Gyula Illyés (190283), a poet, novelist, and dramatist, was one of the outstanding figures of 20th-century Hungarian literature. Ferenc Molnár (18781952) is known for his plays Liliom, The Swan, and The Guardsman. György Lukács (18851971) was an outstanding Marxist writer and literary critic. Hungarian-born Arthur Koestler (190583), a former radical, was a well-known anti-Communist novelist and writer. Imre Kertész (b.1929) is a Jewish-Hungarian author, Holocaust concentration camp survivor, and winner of the Nobel Prize in literature in 2002.

János Fadrusz (18581903) and József Somogyi (191693) are among Hungary's best-known sculptors. The outstanding Hungarian painter Mihály Munkácsy (18441900) is best known for his Christ before Pilate. Victor Vasarely (190897), a world-famous painter of "op art," was born in Budapest and settled in France in 1930. Miklós Ybl (181491) was a leading architect; and Gyula Halasz (18991984), better known as Brassai, was a well-known photographer. The Hungarian-born Joseph Pulitzer (18471911) was a noted journalist and publisher in the United States. Hungarian musicians include the composers Franz (Ferenc) Liszt (181186), Ernst (Ernö) von Dohnányi (18771960), Béla Bartók (18811945), Zoltán Kodály (18821967), and György Ligeti (b.1923); violinists Jeno Hubay (18581937) and Joseph Szigeti (18921973); cellist János Starker (b.1924); and pianists Lili Kraus (190386) and Erwin Nyiregyhazi (190387). Renowned Hungarian-born conductors who became famous abroad include Fritz Reiner (18881963), George Széll (18971970), Eugene Ormándy (18991985), Antal Doráti (190688), and Ferenc Fricsay (191463). Miklós Jancsó (b.1921) is a distinguished film director, and Vilmos Zsigmond (b.1930) a noted cinematographer; Béla Lugosi (Blasko, 18821956) and Peter Lorre (Laszlo Loewenstein, 190464) were famous actors.

Notable scientists include Lóránd Eötvös (18481919), inventor of torsion balance; Ányos Jedlik (180095), known for his research on dynamos; and the psychoanalyst Sándor Ferenczi (18731933). Ignaz Philipp Semmelweis (181865) pioneered in the use of antiseptic methods in obstetrics. Béla Schick (18771967) invented the skin test to determine susceptibility to diphtheria.

Hungarian-born Nobel Prize winners are Róbert Bárány (18761936) in 1914, Albert Szent-Györgyi (18931986) in 1937, and Georg von Békésy (18991972) in 1961 in physiology or medicine, Georg de Hevesy (18851966) in 1944 in chemistry, and Dénés Gábor (190079) in 1971 for physics. Budapest-born scientists who contributed to atomic research in the United States were Leó Szilárd (18981964), Eugene Paul Wigner (190295), John von Neumann (190357), and Edward Teller (19082003). Theodore van Karman (Todor Kármán, 18811963) is the father of aerodynamics. Paul Erdős (19131996) was an important mathematician, as was John von Neumann (Neumann János, 19031957). Eugene Paul Wigner (19021995), physicist and mathematician, received the 1963 Nobel Prize in physics. George Andrew Olah (b.1927 as György Oláh), a Hungarian-American chemist, won the Nobel Prize in chemistry in 1994.

Imre Nagy (1895?1958) served as prime minister from 1953 to 1955, but was removed from office because of his criticism of Soviet policy; the uprising of October 1956 briefly brought Nagy back to the premiership. Arrested after the Soviet military intervention, Nagy was tried and executed in 1958. János Kádár (191289), first secretary of the HSWP since 1956, initially aligned himself with Nagy but subsequently headed the government established after Soviet troops rolled in. Kádár, who held the premiership from late 1956 to 1958 and again from 1961 to 1965, was the preeminent political leader in Hungary until his removal in May 1988. Gyula Horn (b.1932), a former communist, was named prime minister in 1994. He served in that post until 1998, when he was succeeded by Viktor Orbán (b.1963), who was prime minister between 1998 and 2002. Péter Medgyessy (b.1942) served as prime minister from 2002 until 2004, not completing his term. Ferenc Gyurcsány (b.1961) succeeded him.

George Soros (b.1930), philanthropist, was born in Budapest.

DEPENDENCIES

Hungary has no territories or colonies.

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