Unified Military Industries of the Soviet Bloc : Hungary and the Division of Labor in Military Production 9781498509077, 9781498509060

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Unified Military Industries of the Soviet Bloc

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THE HARVARD COLD WAR STUDIES BOOK SERIES Series Editor: Mark Kramer, Harvard University The Eisenhower Administration, the Third World, and the Globalization of the Cold War Edited by Kathryn C. Statler and Andrew L. Johns Stalin and the Cold War in Europe: The Emergence and Development of East-West Conflict, 1939–1953 Gerhard Wettig Eisenhower and Adenauer: Alliance Maintenance under Pressure, 1953–1960 Steven Brady The Prague Spring and the Warsaw Pact Invasion of Czechoslovakia in 1968 Edited by Günter Bischof, Stefan Karner, and Peter Ruggenthaler China Learns from the Soviet Union, 1949–Present Edited by Thomas P. Bernstein and Hua-yu Li Globalizing de Gaulle: International Perspectives on French Foreign Policies, 1958–1969 Edited by Christian Nuenlist, Anna Locher, and Garret Martin Solidarity with Solidarity: Western European Trade Unions and the Polish Crisis, 1980–1982 Edited by Idesbald Goddeeris Stalin and the Turkish Crisis of the Cold War, 1945–1953 Jamil Hasanli Securing the Communist State: The Reconstruction of Coercive Institutions in the Soviet Zone of Germany and Romania, 1944–1948 Liesbeth van de Grift Solidarity: The Great Workers Strike of 1980 Michael Szporer Imposing, Maintaining, and Tearing Open the Iron Curtain: The Cold War and East-Central Europe, 1945-1989 Edited by Mark Kramer and Vít Smetana The Vienna Summit and Its Importance in International History Edited by Günter Bischof, Stefan Karner, and Barbara Stelzl-Marx The Legacy of the Cold War: Perspectives on Security, Cooperation, and Conflict Edited by Vojtech Mastny and Zhu Liqun Displaced Terror: History and Perception of Soviet Camps in Germany Bettina Greiner Unified Military Industries of the Soviet Bloc: Hungary and the Division of Labor in Military Production Pál Germuska

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Unified Military Industries of the Soviet Bloc Hungary and the Division of Labor in Military Production

Pál Germuska

LEXINGTON BOOKS

Lanham • Boulder • New York • London

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Published by Lexington Books An imprint of The Rowman & Littlefield Publishing Group, Inc. 4501 Forbes Boulevard, Suite 200, Lanham, Maryland 20706 www.rowman.com Unit A, Whitacre Mews, 26-34 Stannary Street, London SE11 4AB Translation funded by the László Tetmájer Fund of the Hungarian Studies Program, Department of Central Eurasian Studies, Indiana University-Bloomington Copyright © 2015 by Lexington Books All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the publisher, except by a reviewer who may quote passages in a review. British Library Cataloguing in Publication Information Available Library of Congress Cataloging-in-Publication Data Germuska, Pál. Unified military industries of the Soviet bloc : Hungary and the division of labor in military production / Pál Germuska. pages cm. — (The Harvard Cold War studies book series) Includes bibliographical references and index. ISBN 978-1-4985-0906-0 (cloth) — ISBN 978-1-4985-0907-7 (electronic) 1. Military-industrial complex—Communist countries—History—20th century. 2. Defense industries—Hungary—History—20th century. 3. Defense industries— Communist countries—History—20th century. 4. Hungary—Foreign economic relations. 5. Communist countries—Foreign economic relations. I. Title. HC340.D4G47 2015 338.4'735500943909045—dc23 2014045219

™ The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992. Printed in the United States of America

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Contents

Acknowledgments

vii

Introduction

ix

1

The Roots of International Military Industrial Cooperation

1

2

Establishment of the Framework for Cooperation

3

Transformation of COMECON and the Warsaw Pact

105

4

Common Interests, National Interests

147

5

Crumbling Cooperation: Primary Developments of the 1980s

235

6

Integrated Military Industries

269

41

Bibliography

289

Index

299

About the Author

305

v

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Acknowledgments

This book is the result of more than five years of research conducted as part of Hungarian Scientific Research Fund program K 49465. I would at this time like to thank research supervisor Professor Miklós Horváth, who in his capacity as a first reviewer for this book provided me with many helpful suggestions and ideas. I would also like to convey my appreciation to the staff at the Military History Archives and the Central Archives, particularly to Erika Laczovics and Ida Hídvégi, without whose help I could not have assembled the enormous number of documents needed for this work. I also owe thanks to my former place of employment, the 1956 Institute Public Foundation, which supported my research. János Molnár deserves particular acknowledgment for his translation of extremely valuable Russianlanguage sources that would have otherwise been inaccessible to me. I thank my institutional and professional colleagues for their careful reading of all or parts of the manuscript for this book. I made abundant use of perceptive comments and suggestions from Péter Kende, János M. Rainer, János Tischler, Csaba Békés, Attila Szakolczai, János Kenedi and János Honvári. I would also like to offer special gratitude to retired Colonel László Bardócz, who helped me to revise the translation; and Mátyás Pánczél, for his courtesy of the cover photo from his private collection. I would also like to express my gratitude to the translator Sean Lambert who made a professional text from my manuscript. I am thankful to the László Tetmajer Fund for generously supporting the translation, and particularly to László Borhi and Mark Kramer who managed this long project. Last but not least, I give my abundant thanks to the publisher Rowman & Littlefield and especially all those who shaped my manuscript to an academic publication.

vii

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Introduction

At a conference held in Moscow between April 22–24, 1975, to commemorate the twentieth anniversary of the foundation of the Warsaw Pact, the chairman of the organization’s Unified Armed Forces Technical Committee, Soviet Army Engineer Major General I.A. Fabrikov, stated: The military industrial cooperation that came into being among our armies during the years of the Second World War underwent continual development and enhancement as a consequence of the collective efforts of our communist and working parties originating with the concrete political, economic, scientifictechnological and military tasks that party and government leaders of the countries placed in the forefront during the various periods of socialist construction. During the period of the post-war formation of the economies and armies of the socialist countries, the assistance that the Soviet Union provided through the transmission of its abundant experience with arms shipments, specialists and the development of military technology was a decisive factor in military industrial cooperation. Bilateral mutual relations among the countries characterized the next stage of cooperation, which subsequently evolved in proportion to the growth in the economic potential of the member states of the Warsaw Pact into a new phase of multilateral military industrial cooperation based on socialist economic integration.1

The Soviet major general then highlighted the advantages and importance of mutual cooperation, stressing the lead role of the Soviet Union: The development of the socialist economic integration of Council for Mutual Economic Assistance (COMECON) member states creates favorable opportunities for the coordination of efforts on the basis of the harmonization and specialization of production of the countries within the framework of COMECON. Member states will enact measures aimed at the coordinated solution of issues ix

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in all their phases—from the formulation of new models, the execution of research and editorial work, the preparation and testing of experimental models, the acquisition of mass production techniques and the determination of the scope of mutual deliveries, through operation and repair to the optimization of the performance of technical services. When we speak of the military industrial cooperation of the allied armies, it must be mentioned that arms shipments from the Soviet Union and the production of military technology in the allied countries on the basis of Soviet licenses has been and will continue to be the decisive and primary source of their continuing rearmament taking into account the perspectives and main directions of weapon development.2

It is apparent from the quotation that the Warsaw Pact (WP) and COMECON provided a framework for political, military, and economic cooperation within the Soviet bloc on the basis of close organizational interconnections and a detailed distribution of tasks. Holiday speeches and statements intended for public consumption naturally placed continual emphasis on “unbreakable friendship” and perfect agreement. However, documents that became accessible after 1989–1990 confirm earlier suspicions that neither political-military nor, to even a greater degree, economic cooperation among member states was free of discord. Sharp conflicts of interest and differences of opinion were often hidden below the mantle of meaningless public statements published in newspapers, though were still difficult to conceal from the outside world. These conflicts became even more intense in the 1970s and 1980s. Moscow forcibly maintained this false appearance of unity throughout the period in question. The Zrínyi Publishing House’s 1985 Military Encyclopedia, mapping the socialist alliance system’s value system in its entries, defined militaryindustrial cooperation as follows: The chief domain of military-economic cooperation and integration. The essence of military industrial cooperation: the collective and coordinated production on the part of the military industries of the states in the coalition of necessary military technology and matériel as well as the their provision of military-industrial services (such as repairs) necessary for the coalition within the framework of the international division of labor employing modes of product and production specialization. Military-industrial cooperation promotes the rational utilization of military-industrial capacities, reaching optimum production runs and decreasing the cost of production. Such cooperation makes it possible for member countries to participate in the coalition’s military production pursuant to their specific attributes and for their arms and matériel requirements to be satisfied through mutual deliveries. The objective of military industrial cooperation is to decrease the cost and increase the efficiency of the production of armament systems through the collective output of instruments (capital).

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Bilateral or multilateral interstate organizations are to be established for the purpose of organizing military-industrial cooperation.

This same encyclopedia defined the term military industry as follows: The segment of a country’s industry that manufactures military equipment and supplies. Industrial companies manufacturing civilian products to satisfy the needs of the army do not belong to the military industry. During peacetime, the term military industry refers exclusively to that segment of industry which was established (is being used) in order to produce or repair military technology and matériel. During wartime, all industrial companies that the government declares to be a producer of war materials qualifies as part of the military industry.3

The entry did not, however, address changes in Hungarian terminology stemming from the significant organizational transformation that had taken place. Beginning with the reorganization of the sector in 1948, either the designation military industry or the literal translation from Russian medium machine industry were used the most frequently. Following the elimination of the independent military industrial supreme authority in 1961, dual-profile companies placed under the authority of civilian ministries were increasingly defined as defense industry companies or as instruments of defense industry production.4 The term military industry remained in use as well, due in part to the fact that the name of the standing COMECON commission dealing with this sector had not changed. The specialization of production in communist economies was based on the premise that parallelism and competition must be eliminated and the manufacture of an individual product (group) in a country be concentrated within one company or one trust. There was a certain rationality to the division of labor within COMECON as a result of immediate opportunities for cooperation stemming from the natural attributes, geo-economic characteristics, and historical traditions of the organization’s member countries. Smaller COMECON members were naturally in greater need of a strengthening of international economic relations than was the Soviet Union. The national economies of most countries in Central and Eastern Europe struggled with problems inherent to small markets, such as limited production opportunities, uneconomical production runs, and inflexibility, in both their military industries as well as other branches of manufacture and trade. Military-technology companies in these countries attempted to escape this trap partially through the production of civilian products and partially through international cooperation and the division of labor. Specialization and rising exports effectively promoted the implementation of profitable (or at least break-even) production runs and the increased utilization of capacities. The Soviet Union also

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benefited from COMECON cooperation, releasing Soviet industry from the burden of producing conventional weapons and munitions through the distribution of these tasks to other member states within the organization. Economic histories and planning-office military analyses both demonstrate that for the aforementioned reasons it was in Hungary’s fundamental interest to introduce specialization and to participate in the international division of labor and cooperation.5 The post-Second World War history of Hungary’s national economy, particularly its military industry, cannot be analyzed or understood without considering the international power dynamics and foreign economic relations that prevailed during the period. From the beginning of my research on the domestic military industry, it was obvious that abundant space would have to be devoted to the issue of international cooperation and military industrial export in a future monograph. As I uncovered more and more archival documents in the course of my research, ascertaining the quantity of material and importance of the topic, it became evident to me that to concurrently address the subjects of COMECON cooperation, structuralorganizational changes and technological development within the military industry, and Hungarian military exports to developing countries would transcend the confines of a single book. The present volume, if taken as the first installment of a series, outlines and interprets the international economic context within the bloc as a means of establishing the necessary background for further analysis. Such inquiry has become all the more necessary as a result of the inability of scholarly research to keep pace with the exponential growth in the quantity of sources throughout Central and Eastern Europe beginning in the mid-1990s. Several collections of primary-source documents have been published over the past years about the Warsaw Pact in its capacity as the most important forum of political coordination in the Soviet bloc.6 Though it is a commonly held opinion that the process of socialist integration represented the decisive factor impacting the direction and room for maneuver of individual national economies, the only available synopses of Council for Mutual Economic Assistance operations are those published before the “archival revolution.”7 One of the main reasons for this is that neither COMECON’s decision-making organizations and higher-level governing bodies (sessions, executive committee) nor the organization’s Bureau has made documentary material available to researchers, while the legal status and accessibility of documents preserved in former member states has also been subject to dispute. (Member states agreed at COMECON’s forty-sixth and final session in Budapest that the government of the Soviet Union should take custody of the organization’s archives. Valid international agreements were transferred to the Soviet foreign

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ministry, while the Central State People’s Economic Archive of the Soviet Union, later the Russian State Economic Archive, assumed guardianship over COMECON archival documents from the period of the organization’s existence, 1949–1991.8) Delegates at COMECON’s final meeting adopted “minutes of fundamental importance,” which classified organizational documents as the common archival legacy of former member states, though stipulated that a multilateral agreement must be concluded declaring that these states support making the documents accessible and specifying the regulations governing their accessibility.9) In this way, one can read about the most important features of COMECON in works addressing smaller subthemes and in sections of larger recapitulations of economic history.10 The majority of works dealing with the military industry of the Soviet Union do not even mention other Warsaw Pact-COMECON member states. Notable among those that consider other countries in addition to the USSR is Irina Bistrova’s large-scale monograph, which contains an independent chapter addressing cooperation with the “people’s democracies.”11 Specialist military- and economic-history literature has so far devoted little attention to this question due to a lack of adequate sources.12 The first attempt to introduce the theme of international military-industry cooperation occurred in the preliminary study for this volume.13 Two formerly classified manuscripts that dealt extensively with this topic must be mentioned: National Planning Office (NPO) Military Deputy Chairman Ervin Jávor’s analysis A magyar honvédelmi gazdaságpolitika és a hadiipar fejlődéstörténete [The Developmental History of Hungarian National Defense Economic Policy and Military Industry] and NPO General Organizational Department Deputy Chairman Tibor Cserepes’s doctoral thesis A Varsói Szerződés tagállamainak katonai-gazdasági integrációja [The Military-Economic Integration of the Warsaw Pact Member States].14 Although these manuscripts drew attention to several important correlations, they did not offer a profound analysis of international cooperation. It is important to note here that Albania did not participate in COMECON activities following the Sino-Soviet split in 1961, while non-European countries that later joined the organization, such as the Mongolian People’s Republic (joined 1962), the Republic of Cuba (joined 1972), and the Socialist Republic of Vietnam (joined 1978), never become part of military-industrial cooperation conducted under the auspices of COMECON. In this volume I have used documents that have become accessible over the past decade in an attempt to present a nuanced depiction of COMECON military-industrial cooperation, particularly as seen from a Hungarian perspective. Because this book deals with economy, military affairs, and international relations, the five periods of various length into which it is divided are not neces-

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sarily based on established political and historical milestones. (Which does not, however, mean that they are totally independent of political developments.) Chapter 1 deals with the initiation of bilateral relations and the launching of mutual shipments of military technology within the Soviet bloc from the foundation of COMECON in January 1949 until the restructuring of the organization in 1954 and 1955. Chapter 2 considers the formulation of the organizational framework for military-industrial cooperation. Although the establishment of the COMECON Military Industrial (Cooperative) Standing Commission15 in the summer of 1956 laid the foundation for such bilateral and multilateral cooperation, the permanent forms thereof came into being only in the course of the following years. Specialization began in 1958, while COMECON approved the general principles governing this and other forms of cooperation in 1963. At the same time, various plans for reform were devised in 1962–1963 after member states began to voice increasingly intense criticism of weaknesses in the operations of COMECON and the MISC. Chapter 3 examines the period of dissent and attempts at optimization that occurred between 1963 and 1969, notably the laboriously implemented organizational restructuring of the Warsaw Pact and the building of relations between the Soviet bloc’s two primary institutions of integration. Chapter 4 surveys the eventful years between 1969 and 1979, a decade in which relations largely proceeded along their established course in routine fashion, though which also brought friction and conflict of interest among nations in the bloc to the surface. Chapter 5 outlines the main developments of the 1980s, while chapter 6 offers a comprehensive appraisal of the several decades of cooperation within the bloc. I summarized the primary themes of individual chapters in italics at the beginning of each chapter in order to help the reader gain an overview of presented subject matter. Regulations prevailing at the time of my research of issues related to the operations, organization and internal cooperation within COMECON’s Military Industrial Standing Commission made MISC documents stemming from before the year 1980 accessible without any separate reclassification procedure.16 Assorted documents originating from the early 1980s have been made available, such as the minutes of Council of Ministers meetings (and the short summaries of Defense Committee meetings contained therein) until 1983 and certain documents stemming from the Ministry of Defense (MoD) and the Hungarian People’s Army General Staff as well as the minutes of leading Hungarian Socialist Worker Party bodies until 1989–1990. However, neither documents from the National Planning Office nor those from the industrial ministry (ministries) nor those from the Defense Committee have been made accessible. Documents from the latter bodies are, however, indispensable to research on the present topic: the National Planning Office coordinated

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international cooperation, while the inner cabinet of the Council of Ministers approved reports on meetings of the COMECON’s Military Industrial Standing Commission, therefore proposals originating there were incorporated into the Hungarian legal system. The primary research sources for this book were therefore the wholly accessible MISC minutes and decrees from the years 1957 to 1979, which were distributed to all COMECON member states and officially translated from Russian into the given national language. In addition, I conducted supplementary research using documents from Hungarian military and civilian organizations. Due to my lack of access to an adequate summary of COMECON history, I was compelled to devote a significant amount of space in this book to presentation of the organization’s general organizational and institutional framework in order to provide the reader with the background necessary to an understanding of the MISC’s operations. I also consider in detail those Hungarian institutions and bodies (chief authorities and government committees) whose decision-making or executive powers exercised an influence over international military-industrial cooperation. I presumed in writing this book that the reader is familiar with the main international political events of the postwar period, including the primary episodes of the Cold War and Hungarian political and military history.17 I deal specifically only with lesser-known events and those directly relevant to the theme. As I mentioned above, a monograph on the history of Hungary’s military industry in the four decades following the Second World War will be published the beginning of 2015 (in Hungarian). It is for this reason that I do not cover in this book the issues of Hungary’s armed-forces and military-industrial development programs, the organizational and production structure of its military industry, etc. Neither do I examine the theme of military and military-industrial relations with the Third World and socialist or pro-socialist developing countries, because the necessary further detailed investigation of this topic would require access to classified documents from the 1980s. The issue of COMECON and military-industrial cooperation fits into a broader theoretical framework and provides the opportunity to test these constructions. The topic of relations between the Soviet Union and countries lying in the occupied and subsequently integrated region of Central and Eastern Europe—their characteristics and qualities and the nature of the Soviet exercise of power—has for decades been the source of sharp contention within the realm of social-sciences literature. Among the vast number of works on the subject, the introduction of László Borhi’s book Magyarország a hidegháborúban. A Szovjetunió és az Egyesült Államok között, 1945–1956 [Hungary in the Cold War. Between the Soviet Union and the United States, 1945–1956] surveys the Soviet Union’s territorial occupation of Central and

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Eastern Europe from a theoretical perspective. Borhi’s book also devotes an entire chapter to an analysis of Soviet economic penetration and territorial occupation of the region. In the conclusion of this work, Borhi affirms that with regard to Central and Eastern Europe, the Soviet Union “gained a hegemonic position, utilizing the countries under its control as imperial client states.” However, the Soviet Union was not able to establish unlimited rule over these countries in spite of the fact that their Stalinist dictatorships identified with Moscow’s great-power interests.18 In his Ph.D. thesis, “A szovjet Kelet-Európa-politika a Gorbacsovkorszakban, 1985–1991” [Soviet Eastern Europe Policy in the Gorbachev Era, 1985–1991], László Póti presents an expansive survey of internationalrelations theory concerning Soviet foreign policy, theoretical approaches to Soviet-Eastern European relations as well as Soviet international-relations theory. According to Póti, the terminological apparatus sphere of influencedominance-hegemony can be used to describe the system of relations between the Soviet Union and Eastern Europe in their broadest sense.19 The introduction of Mikael Nilsson’s book, Tools of Hegemony. Military Technology and Swedish-American Security Relations 1945–1962, can help to clarify discrepancies in terminology. In the course of his analysis of relations between the United States and its allies in Western Europe as well as Sweden, Nilsson offers the reader a survey of the various relevant terminus technicus. Among his terminological interpretations, Nilsson makes an explicit distinction between the hegemonic and imperial exercise of power, defining the former as that based on some degree of mutual interest, though not exempt from transitory periods of conflict, and the latter as that stemming from territorial expansion and occupation in which the conquerer forces its legal and institutional system upon the subjugated. The author concludes that links between the United States and its allies as well as relations between Washington and Stockholm obviously cannot be defined using the imperial model, but rather in terms of hegemonic cooperation.20 Adapting Nilsson’s approach, imperial theory may be even more valid with regard to relations between the Soviet Union and the countries of Central and Eastern Europe. The countries of the region solely escaped the Baltic model of Sovietization—they were not annexed and incorporated into the Soviet Union as constituent republics. Following Joseph Stalin’s death, Moscow was forced between 1954 and 1956 to alter its ineffective imperial methods of exercising power. Whereas Moscow encountered at most only passive resistance during Warsaw Pact consultations until the early 1960s, COMECON member states began making attempts to assert their (mutual) interests at organizational meetings beginning in the middle of the 1950s. Thus relations within the Soviet bloc moved somewhat in the direction of

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hegemonic cooperation beginning at this time. Central and Eastern Europe was not consequently a region subject to total Soviet exploitation, but a group of states cooperating both with one another and the Soviet Union on the basis of mutual interests and which displayed increasing autonomy on the international stage as well. In my examination of four-decade history of COMECON, I have repeatedly criticized the organization’s operations. It is, however, worth mentioning that having become familiar from the inside with the mechanisms of the European Union, one may conclude that the functioning of all consensus-based international organizations is cumbersome, circuitous, and slow. Ironically, it was precisely the highly bureaucratic nature of COMECON that prevented the Soviet Union from imposing its absolute will on the organization’s smaller states. I must also mention a problem related to my research for the present volume that I was unable to resolve. Data in this book referring to foreign trade in military technology within COMECON is shown in rubles as in the original sources, though, as was the practice at the time, without specifying the value in forints at the prevailing exchange rate. Retroactive exchangerate conversion presents numerous difficulties to which there at present appears to be no solution. Alongside (instead of) official currency exchange rates listed at the National Bank of Hungary (NBH), there existed various corrected, supplemented, and otherwise calculated exchange rates used in foreign trade. Ministry of Finance decree 12/1957. (III.31.) prescribed supplementary fees on the exchange of foreign currency, both that issued to cover the expense of official and private foreign travel as well as that stemming from foreign travelers in Hungary. Ministry of Finance decree 42/1967. (XII.31.) superseded the previous order, mandating charges on supplementary fees applied to the basic exchange rate. In practice a “multilevel” exchange rate came into being as a result of foreign-trade subsidies, price support and government deductions (“skimming”), generating a divergent exchange-rate mechanism for each currency, relation, and, nearly, product.21 Hungary’s New Economic Mechanism launched on January 1, 1968, established a threefold exchange-rate system, retaining the foreign-exchange forint rate and introducing a unified currency-exchange multiplier (which the National Bank of Hungary did not, however, officially list) that varied according to currency in addition to an exchange-rate used in non-commercial transactions (private business, tourism, etc.). The “exchange rate” for the two most important currencies was calculated according to actual domestic production costs at 40 forints to the ruble and 60 forints to the U.S. dollar.22 The subsequent Ministry of Finance decree 78/1975. (XII.31.) based on law decree No. 1 of 1974 regarding planned currency administration (published on January 17, 1974),

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stipulated that the NBH list separate commercial and non-commercial rates for exchange of the forint both into a foreign currency and vice versa. The NBH stopped listing the foreign-exchange forint at the same time. Beginning in 1968 the non-commercial forint exchange-rate for convertible foreign currencies was set at 50 percent of the commercial rate. Beginning on January 1, 1979, the multiplier between the two rates was reduced in order to curb significant losses stemming from illegal exchange.23 The multi-phase exchange-rate correction resulted in an elimination of these distinct commercial and non-commercial forint exchange rates on October 1, 1981.24 A uniform exchange rate did not, however, emerge for rubledenominated foreign trade. The use until 1975 of the aforementioned foreign-exchange forint, whose value differed from that of the forint used inside Hungary, further complicates the task of calculating the value of foreign trade. Even the Central Statistics Office’s synopsis of 100-year trends published in 1996 displays data from the periods 1946–1975 and 1976–1995 separately without offering any method for conversion of foreign-exchange forints to (domestic) forints.25 János Honvári managed to assemble a sequence of foreign-trade data from a five-year period between 1949 and 1954 based on archival sources and internal reports from the National Planning Office. This data showed, for example, that the value of Hungary’s exports in the year 1954 was 5.6 billion foreign-exchange forints, or the equivalent of 8.6 billion forints at unchanged plan prices and 9 billion forints at current prices.26 No extended sequences data containing such calculations with regard to foreign trade conducted after 1954 has yet been published. This absence of an extended series of chronological exchange-rate data makes conversion of the value of imports and exports in forint terms impossible. Coherent data from this period could perhaps be reconstructed only with the help of the National Bank of Hungary. Unfortunately converting the mentioned ruble amounts to U.S. dollars in historical perspective is not possible, as well. The accessible databases27 do not contain a single currency from the former Soviet bloc.

NOTES 1. I. A. Fabrikov, “A Varsói Szerződés tagállamainak haditechnikai együttműködése és további tökéletesítésének irányai,” Honvédelem, special issue, 1:4 (1975). The 20th Anniversary of the Warsaw Pact. Publication from the military-science conference held in Moscow between April 22–24 1975, p. 155. 2. Ibid., p. 157. 3. László Damó, ed., Katonai lexikon (Budapest: Zrínyi Katonai Kiadó, 1985), pp. 221–222.

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4. The encyclopedia defined the term military technics as follows: “Technical equipment produced by the military industry (or industry converted to military production) that either directly or indirectly helps armies perform their combat duties. The umbrella term military technics is composed of the aggregate of arms, battle implements and auxiliary equipment.” Ibid., p. 224. The latter category includes equipment needed to carry out tasks related to provision, shipping, maintenance and repair whose main features are identical to that used in civilian life. Ibid., p. 344. 5. The document “The Principles of Socialist International Division of Labor” approved in 1962 contains the following description of specialization among COMECON member states: “Production of identical product types will be concentrated in one or a few socialist countries in order to satisfy the needs of relevant countries, in this way improving the technique and organization involved in production as well as raising the level of production-related cooperation among the countries. The international specialization of production results in an increase in the volume of production, a reduction in costs and enhances the technical attributes of the products in question.” According to the document, cooperation in the domain of production was one of the most important aspects of concerted technical and scientific efforts among COMECON members, defining such cooperation as “Prolonged, preplanned collective activity . . . whose objective is the fabrication of final products on the basis of the distribution of the production of individual parts or main or secondary components. Planning-design work, the manufacture of spare parts, the development of the service network and sales will also be distributed in the course of production-related cooperation.” János Meisel, A KGST 30 éve (Budapest: Kossuth, 1979), pp. 91–92. 6. See Vojtech Mastny and Malcom Byrne, eds., A Cardboard Castle? An Inside History of the Warsaw Pact, 1955–1991 (Budapest: Central European University Press, 2005) and Mary Ann Heiss, ed. NATO and the Warsaw Pact: Intrabloc Conflicts (Kent, Ohio: Kent State University Press, 2008). 7. Jenny Brine (compiler), COMECON—the Rise and Fall of an International Socialist Organization (New Brunswick, New Jersey: Transaction Publishers, 1992); and Randall W. Stone, Strategy and Conflict in the Politics of Soviet Block Trade (Princeton: Princeton University Press, 1996). Noteworthy among economic literature are Sándor Ausch, Theory and practice of CMEA cooperation (Budapest: Közgazdasági és Jogi Könyvkiadó, 1972) and László Csaba, Kelet-Európa a világgazdaságban. Alkalmazkodás és gazdasági mechanizmus (Budapest: Közgazdasági és Jogi Könyvkiadó, 1984). (Its revisited English edition: László Csaba, Eastern Europe in the World Economy. Cambridge, U.K.—New York: Cambridge University Press, 1990.) It is also important to mention Peter John de la Fosse Wiles’ excellent 1968 book Communist International Economics (Oxford: Basil Blackwell, 1968), which provides a comprehensive analysis of international trade and cooperation among Communist countries. 8. Elena Aleksandrovna Turina and Attila Seres, “A KGST iratanyagának összetétele és tartalma,” Levéltári Szemle, 52:2 (2002): pp. 44–51. 9. György Majtényi and Attila Seres, “A KGST iratainak utóélete—a KGST történelmének nyitott kérdései,” Levéltári Szemle, 52:2 (2002): pp. 34–43. I have no information indicating that any progress whatsoever as been made over recent

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years regarding the accessibility of the documents. David R. Stone, for example, was given access only to documentation stemming from the Soviet Union’s COMECON representatives in the course of research in Moscow for his article on the history of COMECON’s International Bank for Economic Cooperation. See David R. Stone, “COMECON’s International Investment Bank and the Crisis of Developed Socialism,” Journal of Cold War Studies, 10:3 (2008): pp. 48–77. Suvi Kansikas studied the interblock cooperation on the documents of the East German representatives. See Suvi Kansikas, Trade Blocs and the Cold War: the CMEA and the EC Challenge, 1969–1976 (Helsinki: University of Helsinki, 2012). 10. See, for example, Hubert Bonin, “Business Interests Versus Geopolitics: The Case of the Siberian Pipeline in the 1980s,” Business History, Business History, 49:2 (2007): pp. 235–254. For a work of summary nature, see János Honvári, XX. századi magyar gazdaságtörténet (Budapest: Aula Kiadó, 2006). 11. See Irina Bystrova, Sovetsko voenno-promyslennyj kompleks: problemy stanovlenija i razvitija (1930-1980-e gody). (Moskva: IRI RAN, 2006); Peter Almquist, Red Forge: Soviet Military Industry since 1965 (New York: Columbia University Press, 2002); and John Barber and Mark Harrison, eds., The Soviet Defence-Industry from Stalin to Krushchev (London: Macmillan, 2000). 12. Worth mentioning are József Csobay, “A magyar hadiipart fejlődéséről (1968–1988),” Pénzügyi Szemle, 43:1 (1998): pp. 57–71 and Honvári, XX. századi magyar gazdaságtörténet. 13. Pál Germuska, “From Commands to Coordination: Defense Industry Cooperation within the Member-States of the Warsaw Pact, 1956–1965,” in Robert S. Rush and William W. Epley, eds., Multinational Operations, Alliances, and International Military Cooperation. Past and Future. Proceedings of the Fifth Workshop of the Partnership for Peace Consortium’s Military History Working Group, Vienna, Austria 4–8 April 2005 (Washington D.C.: Center of Military History United States Army, 2006), pp. 101–108. 14. Jávor prepared two variations of his manuscript, one in 1986 and another in 1993. See: Ervin Jávor, “A magyar honvédelmi gazdaságpolitika és a hadiipar fejlődéstörténete 1945–1980” (Military History Archives [HL] Hungarian People’s Army special collection, Budapest) and Ervin Jávor, “A magyar honvédelmi gazdaságpolitika és a hadiipar fejlődéstörténete 1945–1980, valamint következtetések és elgondolások a rekonstrukciójához” (HL Hungarian People’s Army special collection). Tibor Cserepes, “A Varsói Szerződés tagállamainak katonai-gazdasági integrációja” (Ph.D. Diss., Karl Marx University of Economic Sciences, 1978), National Archives of Hungary (MNL OL), XIX-A-16-aa 13. doboz [box] (d.). Though both Jávor and Cserepes were employees of the National Planning Office, the former had access to a much broader range of sources than did the latter. Therefore Cserepes was forced to rely exclusively on public sources just as any civilian researcher. 15. Hungarian and COMECON documents utilize both designations until the mid1960s, when the word Cooperative was permanently dropped from the commission’s name. The Abbreviation for the commission is thus either MICSC or MISC. 16. Law LXV of 1995 on state and public-service secrets stipulated that formerly classified documents originating from before 1980 be made available to research-

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ers. Classified documents from 1980 and after could be made accessible following a case-by-case official review and reclassification. Law CLV of 2009 on the protection of classified data repealed the previous law, declaring in paragraph 39 that classified documents already deposited at archives would be declassified on June 30, 2013, unless their secrecy was reconfirmed following an official reevaluation concluded by that date. The new law, which came into effect on April 1, 2010, thus does not significantly alter the range of documents accessible to researchers. In September 2014 most of the documents from the 1980s are still not accessible. 17. See the following works for information on these topics: Csaba Békés, Európából Európába. Magyarország konfliktusok kereszttüzében, 1945–1990 (Budapest: Gondolat Kiadó, 2004); László Borhi, Hungary in the Cold War, 1945– 1956 between the United States and the Soviet Union (Budapest: Central European University Press, 2004); Imre Okváth, Bástya a béke frontján. Magyar haderő és katonapolitika 1945–1956 (Budapest: Aquila Könyvkiadó, 1998); Gerhard Wettig, Stalin and the Cold War in Europe: The Emergence and Development of EastWest Conflict, 1939–1953 (Lanham, MD: Rowman & Littlefield, 2008); and Mark Kramer, and Vít Smetana, eds. Imposing, Maintaining, and Tearing Open the Iron Curtain: the Cold War and East-Central Europe, 1945–1989 (Lanham, MD: Rowman & Littlefield, 2014). 18. Borhi, Hungary in the Cold War, p. 330. 19. László Póti, “A szovjet Kelet-Európa-politika a Gorbacsov-korszakban, 1985–1991” (Ph.D. dissertation, Budapest University of Economic Sciences, 1999). 20. Mikael Nilsson, Tools of Hegemony. Military Technology and Swedish-American Security Relations 1945–1962 (Stockholm: Santérus Academic Press Sweden, 2007), pp. 32–33, 41. 21. Wiles devotes an entire chapter of his previously mentioned book Communist International Economics to the exchange-rate problem that generally occurred in Soviet-type economies. The author, for example, examines the disparity between the various official and non-commercial exchange rates for the Polish złoty in 1963. See Wiles, Communist International Economics, pp. 123–155, especially p. 141. 22. Honvári, XX. századi magyar gazdaságtörténet, p. 477. 23. See Guide for the Political Committee on the Reduction of the Disparity between Commercial and Non-Commercial Exchange Rates as well as Measures Aimed at Curbing the Illegal International Circulation of the Forint August 31, 1978. MNL OL, MDP–MSZMP Központi Szervek iratai [Documents from the Hungarian Workers’ Party-Hungarian Socialist Workers’ Party Central Organs] (M-KS) 288. f. 5. cs. 755. ő. e. pp. 162–164. Here and later all the cited archival sources (including their titles) are in Hungarian originally, but to save place I left only the translated titles. 24. Honvári, XX. századi magyar gazdaságtörténet, p. 478 25. Magyarország népessége és gazdasága. Múlt és jelen (Budapest: Központi Statisztika Hivatal, 1996) pp. 146–147. 26. Honvári, XX. századi magyar gazdaságtörténet, p. 278. 27. See for example, http://www.measuringworth.com/exchangeglobal/. Accessed 24 September 2014.

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Chapter One

The Roots of International Military Industrial Cooperation

It has become clear that following the defeat of Germany in the Second World War, the Soviet Union maintained occupation over Central and Eastern Europe in the interest of establishing a “buffer zone” aimed at enhancing the country’s security.1 At the Yalta Conference in February 1945, the United States and Great Britain sanctioned the status quo that had emerged at the end of the war, thus permitting the Soviet Union to establish a permanent presence in the region.2 The process of economic occupation and preparation for socialist transformation began during the post-war reestablishment of nation states in Central and Eastern Europe even in those countries of the region whose communist parties Joseph Stalin compelled to practice a certain degree of tactical self-restraint.3 The transition accelerated in 1947–1948, when communist parties officially seized power throughout the Eastern bloc, thus initiating a new phase in the Sovietization of the political institutions, the economies and societies of the countries lying within this conjunction of states. These communist-led satellites retained their formal sovereignty in international legal terms, though in fact acted pursuant to the commands and interests of the Soviet Union. Vaguely worded bilateral agreements governed interstate relations within the bloc, though the Soviet leadership routinely interpreted the stipulations contained in these covenants to its own advantage, interfering in the internal affairs of satellite states on a daily basis.4 The introduction of centralized economic planning in the states of Central and Eastern Europe entailed their adoption of the production model and technology used in the Soviet Union. An army of both military and civilian advisors oversaw this process.5 Isolation, autarky, repression, heightened reliance on coercive organizations, and the concomitant militarization and permanent preparation for war constituted coded, genetic characteristics of the Stalinist system. The 1

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tensions that emerged in international relations in 1948–1949 served to further strengthen these attributes, providing an external justification for the launching of an extensive military-development program. The satellite states hastened to reorganize their armed forces according to the Soviet model, subordinating the mid-term (five- and six-year) people’s economic plans formulated at this time to the expedited development of their militaries. The new “people’s democratic” armies received used Soviet military equipment from the Second World War at the inception of these development programs. The next step was to establish the necessary military-industrial background, which Moscow based on two main principles: autarky—that each Soviet bloc country be self-sufficient with regard to production of the greatest possible range of arms and matériel; and uniformity—that each military within the bloc be as similar as possible and equipped with armaments produced according to Soviet standards and licenses. The Soviet Union concluded a series of agreements at the end of the 1940s and beginning of the 1950s to deliver arms to countries in the bloc. These states received ten-year credit on two-thirds of the arms shipped as part of the agreements, compensating for the remaining third through the delivery of goods to the USSR. The Soviet Union incurred a significant degree of financial burden as a result of these arms pacts, providing 4.702 billion rubles in credit to the five countries with which it signed such agreements between 1951 and 1953—2.6 billion rubles to Poland, 1.2 billion rubles to China, 500 million rubles to Romania, 260 million rubles to Bulgaria, and 142 billion rubles to Albania. The USSR granted a further 1.36 billion rubles in credit on shipments of military technics to the “people’s democratic countries.”6 It must, however, be noted that at the same time these agreements essentially enabled the Soviet Union to replace its old armaments with the most up-todate weaponry at the partial expense of the satellite states. The Soviet Union and Hungary concluded a Treaty of Friendship, Cooperation, and Mutual Assistance on February 18, 1948. One paragraph of this agreement stipulated that the countries would provide mutual assistance in the event of war or if either of them were subject to attack from any direction. Stalin told members of the Hungarian delegation visiting Moscow to sign the agreement that the building of a strong Hungarian army was in the interest of the Soviet Union and that Moscow would therefore be willing to send arms shipments to Hungary.7 The first Soviet-Hungarian arms-delivery agreement signed on July 2, 1948, called for the Soviet Union to send 9.5 million U.S. dollars worth of weaponry and military equipment, some of it used, to Hungary on credit to be repaid over a period of ten years at an annual interest rate of 2 percent as well as through shipment of goods to the USSR.8 The Soviet Union and Hungary concluded subsequent credit-based

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agreements for the delivery of arms and military equipment in July 1949 and December 1950: the former for 118 million rubles;9 and the latter for 236.7 million rubles, also at a maturity of ten years.10 On July 8, 1950, the countries appended a protocol to the July 8, 1950, agreement specifying that the dollar-denominated credit contained therein be converted into rubles at a rate of four rubles to one dollar.11 Hungary therefore received 392.7 million rubles in credit in a period of just over twenty-eight months to acquire arms and military equipment from the Soviet Union.12 (Irina Bystrova’s previously cited work does not contain this figure.)

1.1 FOUNDATION OF THE COUNCIL FOR MUTUAL ECONOMIC ASSISTANCE In addition to the bilateral arms-delivery agreements, Stalin initiated the establishment of a new multilateral organization, the Council for Mutual Economic Assistance, in January 1949. There is some uncertainty surrounding the precise date of COMECON’s foundation: whereas most reference books identify January 25 (when Pravda published a communiqué regarding the council’s establishment) as the date on which the organization was founded, January 8 is usually cited as that on which COMECON’s founding charter was likely signed.13 The Hungarian Workers’ Party (HWP) Central Committee (CC) Secretariat issued a resolution on December 22, 1948, declaring that party deputy general secretaries Ernő Gerő and Mihály Farkas would represent Hungary at a conference to be held in Moscow between January 5–7, 1949, for the purpose of initiating “enhanced economic cooperation between the Soviet Union and the people’s democracies.”14 The minutes of this meeting are not available, though HWP General Secretary Mátyás Rákosi’s papers contain several unsigned, duplicated documents dated January 8, 1949, in both Russian and Hungarian regarding the foundation of COMECON. The proclamation-type document entitled The Foundation of the Council for Economic Mutual Assistance [sic] stated the following with regard to the organization’s establishment and objectives: In January of this year an economic conference took place in Moscow with the participation of representatives from Bulgaria, Czechoslovakia, Poland, Hungary, Romania, and the Soviet Union. The conference confirmed that the cited countries have attained significant success in the development of their economic relations, success that has manifested itself primarily in the largescale increase in the trade of commodities. . . . The conference furthermore established that the governments of the United States of America and certain

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4

Western European countries have essentially boycotted commercial relations with the people’s democracies and the Soviet Union, since these countries do not consider it possible to subjugate themselves to the dictate [sic] of the Marshall Plan, because this plan violates the sovereignty and national economic interests of these countries. . . . The conference found it necessary to establish the Council for Mutual Economic Assistance in view of establishing broader economic cooperation between the people’s democracies and the Soviet Union on the basis of equal representation among the delegates of the participating countries with the objective of exchanging economic experiences, providing technical assistance and helping one another with regard to raw materials, food, machinery and equipment, etc. The conference declared the Council for Mutual Economic Assistance to be an open organization that other countries in Europe may join as well if they agree with the fundamental principles of the Council for Mutual Economic Assistance and wish to participate in broad economic cooperation with the stated countries. The Council for Mutual Economic Assistance will adopt resolutions only with the consent of the concerned countries. The Council will hold periodic meetings successively in the capital cities of individual countries under the chairmanship of representatives from the country in which the meeting is held.

Two additional documents supplemented this declaration proclaiming the international political motives for founding the organization—one defining more concrete objectives (regarding the close cooperation between the Soviet Union and the people’s democracies) and another containing five improvised points outlining the regulations governing the composition of the council and its operational procedures. The former document declared the following to be the primary missions of the Council for Mutual Economic Assistance: a. To formulate plans pertaining to the economic relations of participating states, thus harmonizing their economic plans based on the specialization and coordination of production. b. To coordinate import-export plans regarding those commodities that are of significant importance in the economic relations of participating states. c. To coordinate plans regarding the development of transportation and transit [sic] traffic which are related to the development of economic relations among the participating states. d. To formulate the modes of mutual assistance in the event of natural disasters as well as in cases in which the capitalist countries resort to means of discrimination against the participating states. e. To resolve the issues of multilateral clearing and currency exchange rates. f. To formulate the modes of scientific and technical cooperation and the exchange of technical experiences under most favorable conditions (production prices, etc.) possible.

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g. To monitor the implementation of established plans and measures regarding economic cooperation. This same document stipulated that the council’s apparatus would consist of a permanent office (referred to commonly as the Bureau), which was to act in accordance with the council’s commands. The document stated that each of the organization’s member states would appoint one representative to the technical apparatus, while the council would designate the secretary to lead the office. The half-page document outlined only the most basic conditions regarding the composition and modus operandi of the council: 1. Each country will send two representatives to the Council of Mutual Economic Assistance. These representatives may have at their disposal specialists deemed necessary by their governments. 2. The Council will hold regular sessions every three months in 1949, while extraordinary sessions may be convened at the recommendation of any member. 3. The Council will determine the time and location of the subsequent session, or between sessions, the members of the Council on the basis of mutual agreement. 4. The costs and needs of individual Council sessions will be covered by government of the country in whose capital city the session takes place. 5. Participating countries will cover the necessary costs of maintaining the Council’s apparatus.15 The above declarations suggest that the Soviet leadership did not devise military-policy objectives at the time of COMECON’s foundation. Bulgarian sources, however, indicate that national-defense considerations played a role in the establishment of the organization from the very beginning. In his previously cited book, Jordan Baev quotes an assertion from Interior Minister Anton Tanev Yugov of Bulgaria indicating that the notion of establishing a defensive organization incorporating the states of Central and Eastern Europe and the issue of coordinating the intelligence activities of these countries emerged at the conference held in Moscow between January 8–12.16 The possibility that military motives were at play behind the scenes cannot at all be excluded in light of the fact that the Soviet blockade of West Berlin had begun more than a half year earlier and was the source of increasingly sharp tension with the Western powers.17 Moreover, the North Atlantic Treaty Organization was established in Washington D.C. on April 4, 1949, slightly more than two weeks following the publication of the draft of the organization’s founding treaty.18 An examination of the events that took place between

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February and April of 1949, leads me to suspect that the central Soviet leadership, perhaps even Stalin himself, had not determined precisely what to do with the newly established COMECON at this time. At its January 12, 1949 meeting, the Hungarian Workers’ Party CC Secretariat acknowledged Deputy General Secretary Ernő Gerő’s report, for which no minutes were kept, on COMECON’s founding conference and approved “the activity of comrades Gerő and Farkas” at the meeting. The secretariat’s resolution furthermore declared that “Care must be taken to ensure that the issue of economic cooperation between the Soviet Union and the people’s democracies pass through the council of ministers with appropriate confidentiality.”19 At its meeting on January 20, 1949, the HWP’s Political Committee delegated Gerő and Ministry of Foreign Trade official László Háy to the COMECON Council and party functionary István Friss to the COMECON Bureau. The committee also decided at this meeting to establish a planningcoordination department at the National Planning Office.20 COMECON Bureau delegates held consultations in Moscow for nearly two weeks beginning on February 2, 1949, initially within the framework of informal “working deliberations,” then as part of official meetings. Delegates identified sixteen topics classified under four primary thematic categories to be in need for debate: foreign-trade issues; coordination of economic plans; significant economic problems (such as Hungary’s iron works, the power-generation system to be built on the upper reaches of the Tisza River, intensification of oil extraction, non-ferrous metal mining, etc.); and organizational and methodological issues (standardization, planning, statistics, the consolidation of national income calculation). In his report on the meetings, István Friss stated that “we attempted during the consultations to figure out what was hidden behind these titles [sic] as well as what materials must be gathered in order to make decisions on the issues, how to prepare the issue for the Council meeting, what could be prepared for the next deliberations and what only for later.” Friss made the similarly conspicuous comment that “Not only did those who came from abroad not receive concrete instructions or advice at the consultations held so far, but it is my feeling that the locals have not either, at least not much.” Friss could not report that any resolutions had been concluded, since “the issues here are generally in a state of fluidity.”21 In the meantime, Albania joined COMECON amid somewhat obscure circumstances.22 The agenda and main themes for the next Council session took shape during COMECON Bureau consultations by the middle of February. Yet it appears that Stalin had not yet determined the scope of the organization’s duties. István Friss’s memorandum from the middle of March asserts that the Bureau’s Soviet delegates had failed to indicate “whether or not we have been fumbling about in the right direction at least”; neither, according

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The Roots of International Military Industrial Cooperation

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to Friss, had Soviet leaders who had spoken at the Bureau meetings (G. M. Malenkov, A. I. Mikoyan, V. M. Molotov) “consecrated our work.” “Stalin, on the other hand, on one occasion when the question was already on the agenda had it removed on the grounds that it must be examined more thoroughly and in detail,” Friss noted. A greater or lesser degree of consensus emerged among Bureau delegates regarding trade with capitalist countries as well as the need for closer harmonization of 1949–1950 plans. Soviet delegates designated fifteen fields requiring the involvement of specialists, though the military industry was not among them. Friss determined that “the contours of large-scale cooperation emerged already in the first draft resolutions,” emphasizing the Bureau’s commanding role: “In the future—if at least the outline form of the plans remain valid—the majority of the work takes place in the committees and at conferences. Draft resolutions to be submitted at the Council meetings will originate here, of course after passing beforehand through the filter of the Bureau.” At the same time, Friss maintained that the Bureau’s operations “although extremely important and upholding a great deal of responsibility, nevertheless entail primarily technical . . . to an even greater extent operative work, while it is greatly limited from the executive standpoint.” At the end of his memorandum, Friss specifically states that “the tone of the consultations was most friendly throughout, without even the most minor of disturbing moments, in the spirit of communist internationalism. . . . The representative of the Soviet Union, Kosyachenko, took great care to avoid even the appearance that the Soviet Union was more or wanted to be more than any one of the completely equal-ranking parties, Larishchev, the Council secretary, on the other hand was the very embodiment of national preeminency [sic].”23 At COMECON’s first regular session held in Moscow between April 26–28, 1949, government representatives from the council’s seven member states approved basic organizational measures (working plan, council secretary, council budget and apparatus) and determined the most important issues to be placed on the agenda of future meetings—foreign trade, the coordination of economic plans and “the elaboration of certain problems related to economic construction.” The delegates also adopted a separate resolution severing all commercial and financial relations with Yugoslavia, stipulating that “the strictest discontinuation of the sale and transport of all goods to Yugoslavia that are lacking in states participating in the Council as well as the discontinuation of the sale to Yugoslavia of substantial industrial equipment, arms and, furthermore, goods that are of military importance.”24 Neither the terse minutes of the session nor documents stemming from the following months reveal whether Friss’s trumpeted “comradely” tone had changed or if the Soviet leadership had begun to more forcefully assert its will. However,

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the themes approved for submission to the subsequent session of COMECON in Sofia, Bulgaria include objectives, such as increasing the volume of trade between member states, introduction of multilateral clearing, standardization, etc., that reflect a certain aspiration to attain a greater degree of integration.25 Neither does the short report available on COMECON’s second session held in Sofia between August 25–27, 1949, offer any indication of Soviet intentions and the methods of achieving them. Council representatives rejected submitted Bureau proposals to establish an independent subcommittee to coordinate trade with capitalist countries, contending that the Bureau’s operations were sufficient, and to implement standardization, declaring that separate meetings were necessary with regard to this issue. At the same time, representatives decided during the session that COMECON members would conduct commerce among one another using the unified price base calculated according to world prices and that the Soviet ruble would serve as their common currency in the settlement of trade accounts. The representatives discovered following their review of compliance with the resolution regarding Yugoslavia adopted at the council’s previous session that the volume of Soviet-Yugoslav trade had declined to a minimal amount, while that of trade between Yugoslavia and other COMECON member states had virtually ceased to exist.26 There is hardly any substantial information available with regard to COMECON’s third session that took place in Moscow. In April 1950, the Hungarian Workers’ Party CC Secretariat discussed the positions that Hungarian representatives would take regarding the COMECON Bureau’s proposed agenda items for the next meeting (textile plants, synthetic-fiber production, non-ferrous metal trade, oil exploration and the development of oil production, heavy machine-tool and tractor manufacturing, and the rationalization of vehicle production).27 Ernő Gerő and István Friss represented Hungary at the third session of COMECON in Moscow between November 24–25, 1950.28 However, no records were kept of Gerő’s November 29 report on the meetings to the Hungarian Workers’ Party CC Secretariat. HWP General Secretary Mátyás Rákosi, also in the course of a closed meeting, reported at this time that the Communist and Workers’ Parties Information Office Secretariat was working to broaden the office’s functions.29 According to Hungarian COMECON Bureau representative Aladár László’s report summarizing the operations of the office from 1949–1953, the main topics of discussion at COMECON’s third session were the formulation of a long-term trade agreement among member states, which now included the German Democratic Republic, and the coordination of their albeit extremely sparse commercial relations with capitalist countries. Aladár’s report stated:

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The Council’s resolution defined the long-term agreements as a form of coordinating people’s economic plans and recommended concluding such arrangements as soon as possible; it called for more industrially developed countries to promote the development of industrially less developed countries through the delivery of machinery and equipment; it called attention to the precise fulfillment of undertaken trade obligations.

Representatives at the meeting furthermore approved the establishment and formulated the operational regulations of the Bureau’s previously proposed committee to coordinate trade with the West. Member-state governments appointed the members of this committee, delegating primarily ministers of foreign trade or their deputies, while the body’s secretariat was composed of COMECON Bureau staff members. (The report did not describe the actual activity of the committee.) The activity of the COMECON Bureau in 1949–1950 does, however, provide clear evidence of the Soviet Union’s true aims of achieving absolute centralization and founding an intrabloc supreme planning office. Aladár László referred to this in a September 1953 memorandum to the Hungarian Workers’ Party Political Committee: The fact that the Council did not convene for almost three years resulted in the Bureau’s appropriation of the Council’s functions to a certain degree. The Bureau met several times a month at the beginning, though more infrequently later on. The Bureau formulated proposals for the Council’s second session in the course of the year 1949. During the period extending until the middle of 1950, the Bureau attempted to centrally coordinate the production plans of certain sectors of industry within participating countries. For example, the Bureau devised proposals regarding the mineral-oil industry, non-ferrous metal ore mining, mining exploration and drilling equipment, the tractor industry, and cotton production. Essentially those endeavors aimed at developing the Bureau into some type of international Planning Office manifested themselves in the course of these planning-coordination duties. The Bureau’s attempted method of coordinating people’s economic plans was defective. Plans formulated by the Bureau were more or less acceptable in terms of the rational division of production. The economic effects of the planned division of labor were not, however, taken into account. The countries had no guarantee that the mutual shipments of goods connected to the planned division of labor would come into existence under mutually beneficial conditions. This is why the method of coordination attempted by the bureau did not produce results. . . . The circumstance that the countries were able to exercise little initiative in the Bureau and therefore gave up on influencing the work of the Bureau to a significant degree prompted the Council Secretariat to appropriate the work of the Bureau for the most part.30

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The latter assertion again provides an indication of the Soviet Union’s endeavor to gain supremacy within COMECON in light of the fact that the Soviet Union appointed the organization’s secretary and therefore was able to staff the Secretariat almost exclusively with Soviet cadres.

1.2 THE STALINIST ARMAMENTS PROGRAM As previously shown, COMECON formally came into existence as a multilateral coordination forum, though it appears that Stalin actually viewed the organization as a vehicle for the economic integration of the Soviet bloc. Intrabloc relations and the flow of information became completely one-directional in any event, for the most part diminishing to the maintenance of bilateral relations between the Soviet Union and individual satellite states. The Soviet leadership issued directives, particularly with regard to military and military-industrial affairs, to these countries, whose immediate implementation of these directives was monitored by a multilevel advisory apparatus. Along with the launching of military-development programs in every state of the Soviet bloc, including Hungary, began the evaluation of militaryindustrial capacities, the reorganization of the military-industrial sectors and the conversion to Soviet technology in these countries. Hungary’s newly established Military Economy Party Committee debated the Hungarian army’s 20-billion-forint, five-year development plan in April 1949. This plan called for 43 percent of this enormous sum to be spent on the acquisition of matériel during the first two years.31 At the end of April, the HWP State Defense Committee approved a preliminary list of 1.8 billion forints worth of Soviet matériel to be delivered to Hungary in two installments, the first by March 1, 1950, and the second by March 1, 1951.32 On June 7, the Military Economy Party Committee approved a slightly amended military-development plan and allocated five-billion forints in support for the building of Hungary’s military industry between 1950 and 1954.33 On May 4, 1949, the Industrial Development Committee decided at the recommendation of Chief of the General Staff Lieutenant General László Sólyom that the Industrial Development Directorate of the Industrial Affairs Ministry “shall similarly to the military sphere compose a summary report on the situation [sic] that the Hungarian military industry has achieved so far as well as its results until now and its further problems. The report must emphasize those questions for which we need the help of [the] Soviet Union to resolve. Deadline: June 15.”34 On June 1, the HWP CC Secretariat agreed to send István Friss and Lieutenant General Sólyom to Moscow to discuss the matériel to be delivered from the Soviet Union to Hungary in 1949, authoriz-

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ing the latter to “fittingly provide the competent Soviet organs with information on matters related to the Hungarian military.”35 It is almost certain that the MoD’s sixty-page 1949 report on military development in Hungary (mobilization, airport construction, the status of military-technology research, licenses, etc.) was based on the Central Committee’s two resolutions pertaining to the visit of Friss and Sólyom to Moscow. The report, which was preserved dated June 15, 1949, among the papers of CC Secretary Mihály Farkas, contained a document entitled “Report on the Status and Problems of the Hungarian Military Industry” that outlined the following objectives: We will multiply the former system’s military-industrial capacity. We will increase our capacity particularly in terms of gunpowder and explosive material, whose former quantity will increase about six-fold over the next five years. Our principle regarding the development of the military industry was that we should manufacture all matériel here at home that Hungarian industry is capable of producing. Our further goal was, with respect to gunpowder, to be able to provide the modified Hungarian army with all its wartime needs.

The report presented details regarding the military-industrial development plan, targeted budgetary allocations for investment and production, required industrial equipment, machinery and raw materials as well as the country’s projected import needs following the conclusion of the plan. The authors of the report also called attention to the significant unused capacities that the wartime production quotas targeted in the plan would produce within the military industry at times of peace: In 1950, between 15–60 percent with regard to various articles of matériel, in 1951, between 7–50 percent. We would be very grateful if the Soviet government would offer us a means of engaging this free capacity. This would be achievable if, on the one hand, they would place at our disposal the raw materials necessary for production that are unavailable domestically and, on the other hand, would take delivery of the surplus production of the Hungarian military industry during peacetime. Although this is not a current issue at the moment, we are nevertheless of the opinion that we are proceeding correctly if we provide information in advance concerning all the possibilities appearing in the future so that the Soviet government may incorporate them into its plans.

One of the report’s appendices, that specifying matériel to be exported in the future, indicated that if capacity targets were reached, Hungary’s military industry would by 1954 be capable of exporting for sale abroad 1,300 anti-tank guns, 700 mortars, 45,000 pistols, 28,000 machine guns, 30,000 rifles, several

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thousand pieces of telecommunications and optical equipment, 350 million pistol rounds and 1 billion rifle rounds.36 The Moscow meetings resulted in the previously mentioned 1949 armsdelivery agreement between the Soviet Union and Hungary, though there is no additional information yet available regarding the details of the talks. The Hungarian Workers’ Party State Defense Committee acknowledged Lieutenant General Sólyom’s account, for which no minutes were kept, of the meetings on July 21 and requested that he document the obligations and duties incumbent upon Hungary as a result of the agreement.37 At the same time, the increasingly rapid development of Hungary’s armed forces led to a continual rise in domestic demand for matériel. The number of active military personnel increased from 32,000 to 41,000 with the introduction of the new Klapka Order of Battle between September 16–30, 1949, climbing to 53,000 by March 14, 1950, with the launching of the Petőfi Order of Battle.38 Renovation, remodeling, and reconstruction began at twenty-one companies and factories in Hungary in 1949. The most significant among these were the expansion of gunpowder-production capacity at the Nitrokémia Industrial Plants, the new heavy-gun factory in Diósgyőr and the infantry-ammunition factory built into the side of a mountain outside the village of Jobbágyi, the first such subsurface factory in Hungary.39 Soviet arms deliveries also began, as scheduled, in 1949, though the transfer of technical documentation necessary for the organization of production and the dispatch of Soviet military-industry specialists to Hungary was continually delayed. Plans for the reconstruction of outdated military-industrial plants and the building of new ones were, however, based almost exclusively on adaptation of Soviet documentation. In order to expedite the reconstruction and construction of such factories, the Soviets furnished Hungarian planning institutions with various types of documentation and (standard) design—construction drawings for military industrial products, descriptions of manufacturing technology (so called TUs), quality and military orders of receipt and the most important relevant GOST standards.40 In several instances, the Soviets also provided technological-installation and workshop-arrangement plans, specifications for production machinery and equipment, and information detailing the required workforce according to occupation, etc.41 It is important to note that in order to maintain confidentiality, protect information and confine the undervalued armies of the satellite states to their subordinate position, the Soviet Union delivered mostly second-rate technology to these countries. Not only did the USSR not want to provide the new socialist states with the most up-to-date technology, it also wanted to (re)export in somewhat more developed form that which it had imported from the United States and other Western countries early in the 1930s.42 The

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primary mission of military-technology specialists who arrived to Hungary from the Soviet Union beginning in the spring of 1950 was to implement and monitor the adoption of Soviet standards, without exception, according to original licensing stipulations regardless of their technological quality. This conversion of the processes of manufacturing primary materials and parts, tooling and inspection entailed serious conflicts, supplementary work and extensive additional costs. It took industry several years of determined effort to learn how to comply with GOST standards, most of which were somewhat stricter than those previously in place.43 A detailed report similar to that which had been drafted a half year earlier was drawn up in January 1950 regarding the Hungarian military delegation’s talks in Moscow. This document examined organizational measures, preparations for mobilization and the general condition and political disposition of the armed forces and provided an extensive analysis of development that had taken place within the military industry. This report detailed the conspicuous Hungarian request for several dozen licenses in addition to those already received for Soviet arms and matériel, including patents for three types of artillery gun, ten types of artillery round, gunpowder and explosives, etc. However, no mention was made in the report of excess Hungarian production capacity or export possibilities. The document contains one page concerning military-industrial cooperation with Czechoslovakia, the only instance in which it considers such cooperation with neighboring states. This report stated the following in this regard: Cooperation would consist of the exchange of experiences, the joint resolution of certain problems, and the provision of production specialists. Cooperation and the exchange of experiences would pertain specifically to the area of explosives, the material of technical units, mechanization, river-crossing mechanisms, means of water provision and the motorization and mechanization of the army. It would also include the exchange of information aimed at resolving issues related to radio location. The Hungarian army would send optical specialists to the Czechoslovak military-technology institute and optical plants in order to study results obtained there, while the Czechoslovaks would place specialists on high explosives at our disposal in order to support Hungarian production.44

There is, however, no evidence of any initiative aimed at establishing military or military industrial relations during these months—the satellite states were presumably preoccupied with the provision of their own armed forces at this time. Planning, site-determination, and construction of about a dozen new military-industrial plants had begun in Hungary at a cost of nearly 700 million forints. Hungary’s army, which had grown in size to almost 120,000 troops by the end of 1950, consumed an ever greater amount

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of raw and primary materials. The inadequacy of Hungary’s domestic military-industry made it necessary for the Hungarian army to import 93 percent of the 1.3 million forints in matériel it purchased in 1950 from the Soviet Union, while obtaining only the remaining 7 percent at home. The outbreak of the Korean War in June 1950 prompted the United States and other Western countries to heighten embargo restrictions, thus increasing the world-market prices and difficulty of obtaining strategically important raw materials (non-ferrous metals, foundry coke, etc.) and semi-finished products (rolled steel).45 The potential outbreak of a Third World War represented a real threat in late 1950 and early 1951. Although both the United States and the Soviet Union were preparing for direct conflict as a result of the escalation of the Korean War, Stalin concluded in January 1951 that the United States was not only reluctant to wage a new war, but was also insufficiently prepared to assert military control over even a small country like Korea.46 At a January 9 meeting with party leaders and ministers of defense from Hungary, Bulgaria, Czechoslovakia, Poland, and Romania (those from fellow COMECON members Albania and the German Democratic Republic and were apparently not invited), Stalin asserted that the socialist countries of Central and Eastern Europe must take advantage of the following two or three years, during which time he expected the United States to be tied down in Asia, to develop their militaries. The Generalissimo of the Soviet Union specified a long list of modern equipment and military technics that the armed forces of these states required (long-range radars, fighter bombers), though at the same time emphasized that no single one of them could be expected to manufacture military technics of all types (tanks, artillery guns, etc.). Stalin declared that it would therefore be expedient to distribute the production of military equipment proportionally among the countries in the Soviet bloc, committing the task of formulating a proposal with regard to such a division of labor to a newly established, Soviet Minister of Defense Marshal Aleksandr M. Vasilevskyled ad hoc committee. According to a memorandum from Minister of Defense General Emil Bodnăraș of Romania, disagreement emerged within this committee concerning two issues—the peacetime and wartime sizes of the armed forces of individual countries and whether the committee, which Stalin had given two or three days to come up with a proposal, should be permanent or convene only periodically. Delegates nonetheless voted unanimously at a plenary session on January 12 to approve Marshal Vasilevsky’s proposal to establish a permanent committee to coordinate the provision of matériel, electing Marshal Nikolai A. Bulganin to serve as chairman of the new body. At the end of a fifteen-minute meeting later that evening, Stalin issued the following admonition to the departing party and government officials:

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I draw your attention to [the fact] that the two, three years which lie before us, are a time span not to work but to arms ourselves and to arm ourselves well. Why is this necessary? It is necessary since the imperialists have their own logic: They use to attack unarmed or weakly armed countries to annihilate them; but they avoid the well-armed countries. Therefore, it is necessary that you arm yourselves well in order to be respect by the imperialists and to be left by them in peace.47

The obligations undertaken in Moscow required that Hungary’s first fiveyear plan be modified over the following few weeks. In February 1951, delegates at the Second Congress of the Hungarian Workers’ Party adopted the drastically increased plan targets regarding development of the armed forces and building of the military industry needed to satisfy these commitments.48 In the meantime, on January 26, party General Secretary Mátyás Rákosi had appointed deputy general secretaries Ernő Gerő and Mihály Farkas to serve as Hungary’s representatives on the permanent committee.49 Participating countries were supposed to send one civilian and one military delegate each to attend the founding session of the Coordinating Committee scheduled to take place in March 1951, though this meeting never took place.50 There is no truly logical explanation for the failure of the committee to convene, since every state in the Soviet bloc stood to benefit from the planned distribution of military-industrial production. It is possible that the Korean War and negotiations with China diverted Stalin’s attention from this objective for an extended period of time, thus causing him not to insist that his orders be implemented. The expansion of the Soviet apparatus dealing with the “people’s democratic countries” at this time is, nevertheless, very apparent. The Central Committee of the Communist Party of the Soviet Union (CPSU) and the Military Industrial Commission of the Presidium of the Council of Ministers issued permission in principle for arms deliveries, while subdivisions of the Ministry of Foreign Economic Relations and the Ministry of Defense Industry handled concrete duties related to military-industrial exports. The Tenth Directorate was established in 1951 within the General Staff (GS) of the Ministry of Defense in order to perform these tasks.51

1.3 THE BEGINNINGS OF HUNGARIAN MILITARY INDUSTRIAL EXPORT Moscow remained silent on the issue of the permanent committee throughout the summer and fall of 1951, thus Hungary was under no external pressure to begin talks regarding the military industry. The attention of party, military

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and industrial leaders was focused exclusively on raising production to satisfy the needs of Hungary’s armed forces as quickly as possible. At its meeting on September 5, 1951, the Hungarian Workers’ Party CC Secretariat discussed a nineteen-page analysis of organizational and production problems impairing the military-industrial sector, though neither the report nor the secretariat’s subsequent resolution even mention the possibility of intrabloc arms trade.52 This began to change only in the late spring and early summer of 1952. It is not inconceivable that the results of the initial year of the fifth Soviet fiveyear plan launched in 1951 prompted the USSR’s State Planning Committee (Gosplan) to conclude that mutual deliveries among the armed forces of the satellite states would accelerate the process of sufficiently equipping them. It is, in any case, certain that a Soviet delegation arrived to Budapest furnished with an ample supply of data and estimates. Major General Mihály Horváth, who served as the head of the Material and Equipment Directorate of the Hungarian People’s Army GS, presented the delegation’s proposals to Minister of Defense Mihály Farkas at the end of July 1952. In his report, Major General Horváth asserted that it would be possible to establish close cooperation with fellow people’s democracies in the production and transportation of various pieces of military equipment. Major General Horváth furthermore informed Farkas that the Soviets had pressed for cooperation among Hungary, Czechoslovakia, Romania, and Bulgaria, noting that the latter two countries wanted to order 2.6 billion forints worth of military equipment from Hungary. The general recommended, however, that Hungary’s military industry begin exporting production only in 1954, following the replenishing of the mobilization stocks of the Hungarian People’s Army in 1953.53 The directors of Hungary’s military industry also saw promising opportunities in the prospect of international cooperation. Medium Machine Industry Ministry Deputy Minister Ferenc Bíró visited seven factories in Czechoslovakia and four factories in the German Democratic Republic during a visit to the countries in late May and early June of 1952.54 Officials in Czechoslovakia, whose formerly export-capable military industry possessed significant unused capacities, expressed keen interest in the prospect of delivering machine guns, infantry ammunition, aircraft parts, and explosives to Hungary. Since East Germany had not yet launched military-industrial production, the Hungarian delegation visited two powder-metallurgy plants and two heavymachinery factories in that country. Deputy Minister Bíró reported that the latter factories had vast production capacity, although the pace at which they functioned was “generally rather comfortable.” Bíró declared that officials from the East German Military Production Coordination Office had likewise exhibited interest in cooperation of various types. In his report to HWP Gen-

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eral Secretary Mátyás Rákosi, the deputy minister proposed, based on his experiences in Czechoslovakia and the German Democratic Republic, that the possibility of cooperation and mutual deliveries be examined.55 Following this period of inactivity, Hungary conducted military-diplomatic negotiations with fellow Central and Eastern European socialist states throughout July and August of 1952. On July 26, Hungary and Poland concluded their first military-equipment agreement, which in addition to stipulating the transfer of documentation, called for Hungary to deliver eighty-three complete field telephone stations to Poland. The countries originally planned to conclude specific delivery treaties stemming from the agreement on September 30.56 However, they ended up signing them on August 21 instead.57 Representatives from Romania presented a detailed account of their import needs to a National Planning Office Chairman Zoltán Vas-led Hungarian delegation during talks held in Budapest between July 31 and August 2. The parties concluded an interstate agreement on military-industrial cooperation, also in Budapest, on August 28, signing the final HungarianRomanian delivery treaties on November 10.58 According to these treaties, Hungary was to deliver 173,000 rubles worth of military equipment to Romania in 1952 and a further 63.8 million rubles in military equipment to the country in 1953.59 Representatives from Hungary and Czechoslovakia held negotiations in Prague in August 1952, signing a protocol at the conclusion of the talks on August 29.60 During the meetings, Hungary announced that in order to meet the most urgent needs of the Hungarian People’s Army, it would like to import 240 T-34 tanks, 120 MiG-15 jet fighters and other military aircrafts as well as artillery guns from Czechoslovakia for 963 million forints in 1953–1954. In a September 1 letter to Minister of Defense Mihály Farkas, HWP Deputy General Secretary Ernő Gerő expressed a negative assessment of the protocol, noting that Hungary could have undertaken only 35 million forints in exports of military equipment in 1953, compared to imports of 464 million forints in that year.61 In his recapitulation of the talks, Ferenc Bíró told National Planning Office Chairman Zoltán Vas that “Czechoslovakia will cover Hungary’s needs for aircraft and tanks,” although Czechoslovak representatives had shown little interest in what Hungary would like to export in return and did not appear to be enthusiastic about the prospect of joint production of aircraft instruments either.62 During another round of talks in Budapest at the end of November, Czechoslovak officials inquired about the possibility of cooperation in the low-current industry and the import of special radar. Hungary proposed dividing the manufacture of three-ton trucks with Czechoslovakia, though in the end the two countries merely signed a preliminary document-exchange agreement.63

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The National Planning Office General Operations Department and the Hungarian People’s Army General Staffs’ Material and Equipment Directorate prepared a joint report on the above negotiations at the end of October that forecast 570–580 million forints in military technics trade in 1953—400 million forints in exports and 170–180 million in imports. The data contained in the report, which noted that the process of formulating prices had still not been completed, indicates that Hungary was not, in fact, planning to import the large volume of military equipment from Czechoslovakia stipulated at the August talks.64 In January 1953, the National Planning Office sent a mandate to the Ministry of Medium Machinery regarding military technics to be manufactured for export in which the office estimated that exports would constitute 8 percent of the industry’s annual output. Companies initiated production based on the mandate, though the Ministry of Foreign Trade concluded a detailed interstate agreement only with Romania. Lacking valid export contracts, many factories were compelled to deposit much of their production in warehouses. The Lamp Factory, for example, stored the 30,000 rifles it had manufactured for export in the plant’s cellars, cultural hall and at the Western Railway Station in Budapest, while the Heavy Machine Tool Factory kept the fifty artillery guns it had assembled for export uncovered in the plant’s yard, etc. The Defense Council therefore issued a resolution on April 13 calling for the Foreign Trade Ministry to sign the relevant treaties as soon as possible and for the National Planning Office to find a temporary solution to the problem of storing military equipment that had already been produced.65 There were, however, significant delays in the manufacture of military technics to be exported to Romania. National Planning Office Deputy Chairman Ferenc Herczeg informed Mátyás Rákosi in a March 31 letter that nearly 20 percent of the products that Romania had ordered could be delivered only significantly later than stipulated or not at all.66 Once again only the issues of increasing Hungarian military industrial exports and excess capacities emerged during trade negotiations with Poland in April 1953. Deputy Minister Ferenc Bíró summarized the difficulties in an April 24 letter to Mátyás Rákosi: Comments from the Polish comrades and the ordered quantities led us to conclude that, primarily with respect to our precision-engineering industry products, Poland had already begun manufacturing these goods and would furnish their future needs themselves. The capacity of our precision-engineering industry greatly exceeds our domestic needs, which in the event of an export shortfall means that our companies producing such goods must be provided with other work of some kind. It would be necessary in the interest of preparing our 1954 plans and occupying our capacity:

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1. The establishment of a certain institution concerning military-industrial production among the People’s Democratic states that would determine the profile of military-industrial goods by country for at least two to three years. 2. If the establishment of such an institution is not possible, the engagement of our relevant military industrial and particularly our precision-industrial factories with civilian orders must be arranged.

Ernő Gerő wrote the following comment regarding the above letter two days later: “I do not know if it is possible to conclude a long-term agreement for such deliveries. It must be attempted.”67 Officials from Hungary and Romania discussed possible cooperation in the military-chemical industry as well as projected Romanian demand for the year 1954 during a new round of talks in June 1953. The utilization of surplus capacities expected to materialize within the domestic medium-machinery industry as a result of a projected decrease in orders from the Hungarian People’s Army already constituted an important issue at the talks.68 Significant problems emerged, however, with Czechoslovakia. A Hungarian delegation traveled to Prague once again at the end of June to conclude an agreement on mutual deliveries of matériel in 1953 and to clarify preliminary orders for 1954. The Hungarian delegation received authorization from the government to sign only such an agreement as prescribed deliveries of an equal value. However, the Czechoslovak delegation continued to regard Hungarian needs specified in the August 1952 protocol as the actual quantities to be delivered. The talks broke off without an agreement as a result of these fundamentally divergent positions.69 The appearance of provisional prices in the Foreign Trade Ministry Technical Department’s contracts served to further increase the uncertainty surrounding exports. Final agreements were supposed to be completed with Romania and Poland in August and September of 1953, therefore the Defense Council established a separate Price Resolution Committee with the participation of the National Planning Office, the Foreign Trade Ministry and the Ministry of Metallurgy and Machine Industry.70 In September 1952, Hungary and Bulgaria began talks at which the latter country indicated that it would like to order 1.2 billion forints worth of matériel in the years 1953–1954. Reciprocal exports, however, seemed extremely doubtful, as Major General Mihály Horváth (head of the Material and Equipment Directorate) wrote in his report: “Bulgarian industry cannot deliver anything to us in the area of matériel. Indeed, there is not even any possibility of cooperation, because the building of their military industry has just begun and in volume terms production is significantly less than that which their own armed force’s needs.”71 In July 1953, the Bulgarian government (again) sent a request to the Hungarian Ministry of Defense

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for the import of approximately 96 million rubles in matériel, 80 percent of which it wished to purchase on credit with a maturity of ten years. The Defense Council deemed it necessary to continue the talks, though placed a maximum value of 60 million rubles on matériel to be exported to Bulgaria, at most 60 percent of which could be purchased on credit with a maturity of five years. The council furthermore wanted to receive a portion of Bulgaria’s compensation for the exports in “hard goods.”72

1.4 THE DOMESTIC COORDINATION OF INTERNATIONAL COOPERATION The domestic institutional system coordinating military-industrial cooperation formed around the quality and quantity of tasks to be completed and resolved. The International Economic Relations Secretariat was established alongside the Council of Ministers on the Soviet model in July 1950 in order to manage economic and scientific relations with the Soviet Union and other socialist countries.73 However, because this secretariat was established as a civilian governmental organization, its authority did not extend to military affairs. Therefore the General Staff of the Hungarian People’s Army and its Material and Equipment Directorate handled the majority of tasks related to international military and military-industrial cooperation. They established the independent Technical Section within the Foreign Trade Ministry only on February 1 to perform the following duties: • The commercial and financial administration of the import and export of matériel as well as the preparation and conclusion of treaties in those instances in which no interstate agreement governs their delivery; • The receipt of orders for special goods to be imported for armed organizations, the forwarding of these orders to the competent foreign-trade companies and supervision over their execution.74 The Defense Council decided on January 12, 1953, to elevate the Technical Department to the status of department in order to relieve the Foreign Trade Ministry of some of the additional tasks that delivery treaties concluded during the second half of 1952 had imposed upon it. The size of the department’s staff subsequently rose from ten to fifteen, while technical and communications Hungarian People’s Army officers were transferred from the MoD to the Foreign Trade Ministry.75 The latter ministry considered it necessary to establish a “front organization” to direct foreign-trade traffic and manage orders and administration for companies and the railway. The Defense Coun-

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cil therefore issued a resolution calling for the foundation of the “Technics” Stockpiling Company, which was to be exempted from taxation as well as the obligation of preparing the customary financial plans, balance sheets, tax returns, and statistical reports.76 As a result of the growing intensity of Hungary’s foreign trade relations, National Planning Office Military Deputy Chairman Colonel Károly Szuszki submitted proposals to the office’s General Operations Department, the Foreign Trade Ministry’s Technical Department, the Hungarian People’s Army General Staff, and the Medium Machine Industry Ministry to establish international cooperation groups (secretariats).77 Medium Machine Industry Deputy Minister Ferenc Bíró deemed the foundation of such a group within his ministry to be unnecessary, while the Industrial Economy Council adopted a resolution in November 1952 in which it instructed the president of the National Planning Office to organize a three-to-fivemember international military-industry cooperation group under Colonel Szuszki’s direct authority.78 The Technical Cooperation Group began operations at the National Planning Office shortly thereafter, although due to the newly concluded treaties, the Defense Council considered the uniform administration of international defense relations to be necessary. The council therefore issued a resolution entitled “The Performance of Duties Connected to Military-Related Economic and Scientific-Technical Cooperation with the Fraternal States,” which stipulated that the Defense Council would continue to determine the guiding principles with respect to international talks and treaties, while a permanent government body called the Technical Cooperation Committee would be established to handle daily tasks surrounding the talks. Bíró was appointed to serve as chairman of the new committee, while Colonel Szuszki (the deputy chairman of the planning office), Major General Mihály Horváth (GS Material and Equipment Directorate), László Háy (First Deputy Foreign Trade Minister), and an unnamed deputy minister of the General Machine Industry Ministry, were selected to serve as members of the committee. The cooperation group established a few months previously continued to operate as a secretariat of the Technical Cooperation Committee.79 It appears, however, that the organization and conduct of international military industrial relations was by no means free of difficulty. The Defense Council first had to conduct correspondence with the “fraternal countries,”80 subsequently regulating the management of tasks pertaining to goods exchange and scientific-technical cooperation through the issue of separate resolutions.81 These resolutions stipulated that orders be systematized according to item based on goods-exchange supplements appended to approve interstate relations. This was then used as the premise for formulating an-

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nual and quarterly targets concerning the exchange of military technics in foreign-exchange forints by relation. The Internal and Foreign Trade Ministry concluded treaties with the foreign partner on the basis of interstate agreements, then prepared orders for goods to be exported and transferred them to the MoD.82 The ministry arranged export duties by branch of service, monitoring the implementation of these tasks and incorporating them into its own material-supply plans before sending them on to be manufactured in the form of its own orders. The organization of international consultations to discuss technical experiences was likewise a rather complicated process. The Defense Council resolution prescribed that detailed treaties be signed on the basis of approved interstate agreements. The resolution stipulated that treaties regarding the exchange of technical information must contain information regarding the number of specialists traveling to and from Hungary, the time of their arrival, the topics to be discussed, and the length of the consultations, a work program and possible foreign-currency expenses. Finally, the resolution called for the establishment of technical committees to elaborate plans for international cooperation, while the Technical Cooperation Committee would discuss the proposals with its relevant foreign counterpart before submitting them to the Council of Ministers for approval. In order to correct previous deficiencies, the Defense Council’s resolution furthermore stipulated that the task of formulating policy with regard to military cooperation must be concentrated in the hands of the council’s chairman, while the Technical Cooperation Committee would be responsible for determining the feasibility of obligations undertaken pursuant to international agreements and overseeing compliance with these commitments. The resolution specified that the committee should meet at least every other month in order to examine issues related to the implementation of the agreements and make preparations for interstate negotiations.83 The minutes of the Technical Cooperation Committee’s founding session have not yet been uncovered. At its second meeting on November 17, 1953, the committee requested that the Defense Council conduct an expedited procedure to forge the final details of the 1954 mutual Hungarian-Czechoslovak delivery agreement. The committee furthermore asked the Domestic and Foreign Trade Ministry to conclude the detailed versions of delivery agreements with Poland, Romania and Bulgaria by December 31, at the latest.84 At its subsequent meeting on November 30, the Defense Council issued a resolution outlining the position to be taken at forthcoming HungarianCzechoslovak talks on the exchange of military-industrial goods. Czechoslovakia had presented 26 million rubles in orders, for which Hungary wanted to receive compensation in the form of military equipment whose domestic supply was inadequate (mostly aircrafts and tanks). The Defense Council

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appointed Technical Cooperation Committee members Károly Szuszki and Mihály Horváth to represent Hungary at the negotiations with Czechoslovakia, which took place in Prague over a period of two weeks in February 1954.85 The countries signed a protocol regarding the mutual exchange of technical observations and the transfer of documentation on February 20, though reached no goods-exchange agreement as a result of Czechoslovakia’s reluctance to offset its exports of matériel to Hungary with a corresponding volume of imports.86 In February 1954, the Defense Council appointed Lieutenant General Géza Révész to serve as president of the Technical Cooperation Committee in place of Deputy Minister Ferenc Bíró.87 At the end of March, the Defense Council selected Ministry of Metallurgy and Machine Industry Deputy Minister Richárd Kolos, who headed the military industry, to serve as a member of the committee alongside Károly Szuszki, Mihály Horváth, and László Háy.88 Minutes from the committee’s 1954 meetings clearly demonstrate that Hungary had established its most active relations with Czechoslovakia and Poland, while Hungarian officials were still in talks with their counterparts from Romania and Bulgaria as well.89 However, it became evident in the course of committee activities that Hungary lacked adequate institutional representation to handle issues related to military industry in precisely the most important bearing, those vis-à-vis the Soviet Union. Earlier, in a letter dated February 25, 1953, Defense Minister Mihály Farkas authorized Hungary’s ambassador to the Soviet Union, Ágoston Szkladán, to conduct negotiations regarding military equipment with representatives from the Soviet government. However, the ambassador was instructed not to hold talks or sign agreements concerning the purchase of military technics of substantial expense or volume without specific authorization from the government. The ambassador had to seek the opinion through the intermediary of the Foreign Ministry of both the Defense Ministry and the Domestic and Foreign Trade Ministry with regard to transactions with the Soviet Union in this domain, thus the process of concluding such deals was exceptionally protracted. Ambassador Szkladán and the Foreign Ministry therefore essentially played the role of messenger between the Soviet Foreign Ministry’s Engineering Department (GIU MVT) and Hungary’s military organizations. Szkladán complained in an April 5, 1954, letter about the failure of officials in Hungary to provide him with explicit instructions with regard to the signing of protocols, stating that “I conclude from the confusion that the pathway of our relations from the [Soviet] Engineering Department to the competent Hungarian organs is not entirely in order.”90 Likely at the urging of Ambassador Szkladán, the National Planning Office prepared a proposal entitled “Establishing the Connection of the Technical

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Cooperation Committee with the Competent Soviet Organs” to be presented the Defense Council. The proposal, discussion of which was placed on the committee’s June 2 agenda, stated that the lack of direct relations entailed the following disadvantages: 1. We do not know what valid delivery treaties we have with the Soviet Union and therefore no owners are to be found for arriving invoices, even the incoming goods, themselves, frequently sit for months before they reach the place from which they were ordered. 2. We are not present during the hammering out of our requests, thus it occurs that in the event of a reduction in our demands the most important materials are left out, while those of lesser importance are left in and with regard to the deadline we have no means of making our wishes known. 3. In absence of direct connection, we receive authorization for our deliveries and acquisition of practical experience related to Soviet licenses only after a lengthy time, most often late. The planning office proposed that a government delegation be sent to Moscow to perform the following tasks: • clarify the treaties; • discuss the matter of 1955 deliveries, requests for documentation and exchange of technical experiences; • establish direct relations between the [Soviet] Foreign Ministry Engineering Department (GIU MVT) and the [Hungarian] Ministry of Domestic and the Foreign Trade Technical Department.91 The Defense Council did not, however, place discussion of the proposals on the agenda for its subsequent meeting on July 26, 1954, then did not convene again until May 7 of the following year.92 The following proposals, which the Technical Cooperation Committee submitted to Foreign Trade Ministry Technical Department Director Lieutenant Colonel Ferenc Baki on February 18, 1955, regarding issues to be discussed at his forthcoming talks in Moscow, suggest that the establishment of relations was still in its early phases: • Clarification of Hungarian payment obligations; • Finalization of 1955 import requirements and conclusion of the contract with the Technical Department; • Assuring the continuity of the supply of parts.93

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The Foreign Trade Ministry Technical Department’s organizational and operational regulations were revised in February 1956. The new regulations countersigned by Deputy Foreign Trade Minister Ferenc Bíró, stipulated that the department would be placed under the indirect authority of the minister, while the first deputy minister would exercise direct control over the body. According to the regulations, the department’s mission would be to “conduct the export and import of military equipment based on agreements between governments as well as tasks related to military-industrial and technical cooperation and to oversee the provision and receipt of documentation related to cooperation.” The body therefore maintained the following duties: • • • •

Export of military equipment; Import of military equipment; Preparation, conclusion and administration of interstate treaties; Management of foreign-trade and financial issues related to the peaceful use of atomic energy.

The regulations established the following organization units within the department: The Interstate Unit; the Technical Unit; the Company Group (Technical Stockpiling Company); The Confidential Office (management, document handling).94

1.5 THE REORGANIZATION OF COMECON Following Stalin’s death in March 1953, high-ranking Soviet officials expressed the need to establish firmer coordination and closer cooperation between the Soviet Union and the satellite states. In August 1953, the COMECON secretary asked member-state representatives to inform the secretariat of their stance regarding the organization’s scheduled fourth session. In response, the Hungarian delegate assigned to the COMECON Bureau submitted a summary in September 1953 of events that had taken place within the organization since its previous session in November 1950. Aladár László’s aforementioned report voiced subtle criticism of the Soviet Union’s attempt to centralize COMECON (bloc-level planning) and pointed out several irregularities in the operations of the organization’s Bureau. The latter body held seventeen consultations in 1951, nine in 1952 and five in the first eight months of 1953, while from the summer of 1950 until the spring of 1953, the Soviet Council representative Anastas Mikoyan took part in Bureau meetings in absence of a regular delegate from the Soviet Union. (The participation of a

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higher-ranking government member such as Mikoyan in the Bureau’s operations can also be interpreted as Moscow’s attempt to bring the body under its direct control.) Among the duties defined at the third session of COMECON, the Bureau was given responsibility between the years 1951–1953 for formulating and approving proposals regarding general delivery conditions, the operative recording of foreign-trade data and the accounting and statistics system. At the same time, the fact that the Bureau did not handle the proposal regarding the centralized implementation of a comprehensive clearing system indicates that multilateral relations among COMECON members’ states had failed to advance beyond a rudimentary stage at this time. The following main themes appeared on the Bureau’s agenda in the summer of 1953: coal; iron ore; coke; combustibles; ferroalloys; electric power; roller bearings; textile industry and textile raw materials; sheep farming; agricultural mechanization; Chinese shipping; Danube shipping; the operative recording of foreign-trade data; the accounting and statistics system; unified foreign-trade goods list; standard civil law foreign-trade treaties; standardization of railway rolling stock; consolidation of energetics equipment; and scientific-technical cooperation. The process of integrating the national plans of COMECON members nevertheless made little progress: “the countries . . . made feeble use of possibilities regarding the coordination of plans stemming from the method of concluding long-term agreements.” Hungary’s Bureau delegate believed that COMECON should convene another session as soon as possible in order to “reestablish the direction with regard to the economic cooperation of countries belonging to COMECON.” Aladár László identified three themes to be placed on the agenda of the organization’s subsequent session: cooperation; trade with capitalist countries; and the operations of the Bureau. László declared that “today one of the most important aims of economic cooperation is to make it possible to satisfy existing and growing needs without new investments or with only minimal investments through the better utilization of present production capacities.” (This condition was at least as relevant to the military industry as it was to many civilian sectors of the economy.) With regard to the official position that Hungary was to adopt at the next session of COMECON, László asserted that “the basic outlines of our concepts with regard to international profiling leading to better utilization of Hungary’s production capacities . . . are to be communicated. In the interest of avoiding new, economically unwarranted investments through the conclusion of long-term trade agreements, we should also state which important production sectors most suited to Hungary’s economic and natural attributes we are considering for further development.” Hungary’s Bureau delegate furthermore asserted that the issue of establishing commercial relations with capitalist countries which COMECON member states had

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previously shunned commercially for political reasons should be raised at the organization’s subsequent session. Finally, László suggested that the Bureau would provide COMECON members with a greater degree of assistance if they were to “prepare composite balance sheets and status reports concerning the most important production sectors in the people’s democratic countries and the GDR, taking into account both the present situation as well as the projected development of the countries over a period of several years.”95 Proposals aimed at prompting change were also made with regard to the military industry—within Gosplan as well. The authors of a committee report entitled Measures Necessary in the Interest of Perfecting the Operations of the 13th Directorate Dealing with the Issue of the Military Industry of People’s Democratic Countries proclaimed that “the strengthening of the defensive capability of countries belonging to the democratic camp will be accomplished more quickly and economically if when developing the military industry of individual countries the military-industrial development of the other countries—primarily the Soviet Union—is taken into greater consideration.” Gosplan’s Thirteenth Directorate highlighted the productivity of Czechoslovakia’s military industry, which in 1953–1954 would have been capable of meeting the entire domestic need for aircrafts, tanks, firearms, mortars, and other military equipment. The Gosplan report concluded that “the Czechoslovak military industry must either be conserved or should manufacture arms for other people’s democratic countries. It is capable of meeting this objective in such a way as to only partially engage the capacities Czechoslovak industry.” In July 1953, the Council of Ministers of the Soviet Union ordered that an assessment be made of the capacities of Czechoslovakia’s military industry, while in November and December of that year, the Soviet Ministry of Foreign Affairs conducted negotiations with representatives from Czechoslovakia, Poland, Hungary, Romania, and Bulgaria. During these talks, Soviet officials offered to provide partner countries with credit covering two-thirds of the cost of military technics imported from Czechoslovakia. At the same time, officials from the latter country agreed to begin the licensed production of IL-14P cargo-transport aircraft, MiG-15 jet fighters, T-34/85 tanks, SU-100 tank destroyers, and 85 mm KS-18A anti-aircraft guns and to export them to Poland, Hungary, Romania, and Bulgaria. (The Soviet Union purchased nearly 1 billion rubles in military technics from Czechoslovakia between 1954–1956 pursuant to agreements reached at this time, while offering the aforementioned countries around 350 million rubles in credit to pay for their imports of the Czechoslovak aircraft, tanks and weaponry.)96 Hungarian officials participating in bilateral negotiations also advocated the launching of more substantial international military-industrial cooperation. Hungarian representatives taking part in a June 1954 meeting of the

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Hungarian-Polish Defense Industry Cooperative Joint Committee proposed that the issue of military cooperation and profile arrangement between Hungary and Poland be examined according to the following production categories: artillery weapons; infantry weapons; artillery munitions; infantry and air force munitions; military precision technology and optics; aircraft parts; tank parts; military chemical-industry; telecommunications; and technical troop equipment. Hungary’s preliminary negotiating strategy placed particular importance on coordination of needs and plans regarding military equipment for the years 1956–1960 so that potential mutual deliveries could be taken into consideration during the formulation of the next five-year plan. The Budapest meeting of the joint committee concluded with the signing of two protocols—one regarding the possibilities for providing technical assistance (technical exchanges) and another regarding production cooperation. The latter protocol prescribed the establishment of mutual working committees according to production sector (weapons, ammunition, etc.) in order to determine the magnitude of cooperation and formulate the nomenclature for products to be manufactured.97 The beginning of work in April 1954 on the formulation of the second five-year plan for the Hungarian People’s Army to be launched in 1956 also made advancement of the cooperation talks imperative. The MoD remarked in this respect that the previously mentioned Coordinating Committee had not yet been established. In a letter written to HWP General Secretary Mátyás Rákosi in April 1954, Hungary’s defense minister, Lieutenant General István Bata, asserted that if the committee conducted “operations similar to those of COMECON, profiling in certain respects and mutual provision with regard to certain items would again to a very significant degree facilitate the equipping of the armies with up-to-date matériel on behalf of the military industries of the people’s democracies.”98 The Soviet Union placed increasing pressure on both Hungary and the other satellite states to provide their medium-range needs for military technics. Foreign Trade Ministry Engineering Department (GIU MVT) Director G. S. Sidorovich declared in a May 11, 1954, letter to the Council of Ministers of the Soviet Union that orders for the delivery of military equipment “arrived at various times, though most frequently following the completion of the part of the following year’s Soviet people’s economic development plan dealing with military and special sectors.” Sidorovich asserted in the letter that Poland, Czechoslovakia, Hungary, Romania, Bulgaria, China, and North Korea should place their 1955 orders by July 1 and provide a preliminary indication of their needs for the period 1956–1960 by August 1.99 The pace of intrabloc civilian economic negotiations also accelerated from the beginning of 1954. The Soviet Union submitted a proposal, which the Hungarian Workers’ Party Political Committee debated on January 20,

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1954, regarding the reorganization of the Council in order to increase the effectiveness of COMECON’s operations.100 Following a pause of four years, the COMECON Council’s primary decision-making forum, the session, was reconvened in 1954. During the organization’s consultations held in Moscow between March 26–27 of that year, the Soviet Union submitted a proposal entitled “The Reorganization of COMECON and its Further Activities.” The recommendations contained in the Soviet proposal resembled in many respects those articulated in the course of military-industry negotiations (redundant parallel production, for example), while at the same time placing distinct emphasis on the question of consumer-goods production—the pet issue of Council of Ministers Chairman Giorgi Malenkov and, later, Communist Party of the Soviet Union First Secretary Nikita Khrushchev.101 The document characterized the prevailing situation in the following manner: The circumstance that the economic development plans of the European people’s democracies are prepared without sufficient mutual consultation and that they do not coordinate these plans with the people’s economic plans of the Soviet Union in such a way as to promote the further development of the initiatives of people’s democratic countries regarding the building of their economies as well as the interests concerning the general expansion in the socialist construction of countries participating in the Council represents a serious deficiency. As a consequence, it occurs in numerous instances that economically unwarranted plants are devised without taking into account the existing possibilities in the other people’s democratic countries and the Soviet Union, that the development of certain sectors of industry takes place without sufficient consideration of real possibilities regarding the assurance of raw materials and suitable cadres as well as placement possibilities for the product and other necessary conditions, while there is unwarranted parallelism (sic) in the development of certain sectors—at the same time when there are shortcomings in other sectors, moreover in the establishment of industrial plants; they do not pay enough attention to the boosting of agriculture and the production of consumer goods.

The Soviet proposal concluded that for the above reasons, the reorganization of COMECON and the development of relations was by all means necessary.102 Officials participating in the Moscow meeting of COMECON signed a protocol establishing the organization’s form and operating principles. This protocol stipulated that regular sessions of COMECON be convened at least twice a year in the capital cities of member states under the chairmanship of the representative from the host country. The agreement furthermore designated the Moscow-based Secretariat to be COMECON’s permanent body conducting administrative and coordinative duties and managing the duplication, distribution, and filing of received documents. Hungary delegated

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one councilor to the Secretariat’s apparatus, while the deputy chairman of the Council of Ministers served as the country’s COMECON representative and a Hungarian deputy representative was posted permanently in Moscow. Hungary likewise reorganized its internal coordination of COMECON affairs following the meeting in Moscow, transferring the primary responsibility for supervision over such matters from the International Economic Relations Secretariat operating alongside the Council of Ministers to the National Planning Office’s International Relations Department.103 The agenda of the fifth session of COMECON that took place in Moscow on June 24–25, 1954, consisted primarily of issues that had not been resolved at the organization’s meeting in March—preparations for the coordination of investment plans, member-state trade with capitalist countries, the organization’s 1954 working plan, and the election of deputy secretaries.104 The reorganization of COMECON presumably contributed to the decision of the Soviet Union’s military and military-industrial apparatus to examine the results of developments implemented over the previous years. According to a Gosplan report drafted in September 1954, the uncoordinated provision of licenses resulted in the production of hybrid and for the most part obsolete weaponry in the countries of Central and Eastern Europe. For example, while Hungary and Poland were manufacturing the 1939 version of the 85 mm KS18/A anti-aircraft gun, Czechoslovakia was making the 1944 model of the weapon and had even begun production of a new design of the gun (the KS18). The Gosplan report explicitly defined further tasks as well: the weaponry and equipment of the allied armies must be integrated and unified plans must be formulated with regard to the bloc’s military industry. The report stated that “There are presently significant possibilities in the people’s democratic countries with regard to the military industry, in the people’s democratic countries of Central Europe alone there are approximately 180 factories with some 500,000 workers, who amid circumstances prevailing in the Soviet Union could manufacture products worth around 20 billion rubles.” The Gosplan report concluded that “the rational utilization of the possibilities contained in this sector of industry in the interest of fortifying the defensive capabilities of the democratic countries can be conducted only with the existence of a unified weapons system and a unified military-industrial development plan based on the existing needs of the people’s democratic countries for weaponry at times of both war and peace.” Also in September 1954, the Soviet Ministry of Defense prepared an analysis of possibilities for military development in the “people’s democracies” during the period of 1955–1959. The report, which was addressed to the Central Committee of the Communist Party of the Soviet Union, identified the following issues to be discussed with the defense ministers of these states: “1. The size and battle composition of

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the armies as well as the organizational structure of units and troops—during periods of peace and war. 2. The weapons systems of the armies. 3. The fundamental principles regarding the material and technical provision of the armies, the plans of the people’s democratic countries for military-industrial production, deliveries of military technics between the countries as well as such deliveries from the Soviet Union.”105 In the course of formulating its medium-term plans, Hungary’s political leadership counted on increasing opportunities for the export of military equipment. The Hungarian Workers’ Party Political Committee approved the long-range development program of the Hungarian People’s Army on August 25, 1954. The army’s general staff submitted development plans for the years 1955–1960 based on this program to the HWP Political Committee on October 30 in which Defense Minister István Bata asserted that Hungary had the possibility to export 3.5 billion forints in matériel.106 However, in a February 1955 letter to Minister of Metallurgy and Machine Industry János Csergő regarding the expected duties of Hungary’s military industry, Lieutenant General Bata cited foreign demand for only 2.8 billion forints worth of matériel, stating that the production plan for the most important weaponry and military equipment had to be completed by April 1. The defense minister concluded in his letter that “It is necessary to finish this work quickly, because talks with the people’s democracies regarding the establishment of military-industrial cooperation begin in April and concrete delivery treaties will foreseeably be concluded by October.”107

NOTES 1. A February 1989 report from the Communist Party of the Soviet Union Central Committee International Department to Central Committee Propaganda Department chief Alexander Nikolaevich Yakovlev analyzing the political situation in the socialist countries of Europe contained the following assertion: “From a geopolitical standpoint, the importance of the European socialist countries to the Soviet Union was based on the fact that from the beginning they constituted a security zone ensuring strategic defense for the center of socialism.” Magdolna Baráth and János M. Rainer, eds., Gorbacsov tárgyalásai magyar vezetőkkel. Dokumentumok az egykori SZKP és MSZMP archívumaiból 1985–1991 (Budapest: 1956-os Intézet, 2000), p. 249. The establishment of the Soviet bloc see in detail Mark Kramer, “Stalin, Soviet Policy, and the Establishment of a Communist Bloc in Eastern Europe, 1941–1949,” in Kramer and Smetana, Imposing, Maintaining, and Tearing Open the Iron Curtain, pp. 3–38. 2. For a detailed description of Allied plans regarding Europe and, specifically, Germany between 1941 and 1945 see István Németh and Gábor Tollas, eds., Berlin, a megosztott város (Budapest: ELTE Eötvös Kiadó, 2008), pp. 25–34.

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3. Krisztián Ungváry argues convincingly that Stalin maintained overtly expansive, imperialistic ambitions. Ungváry contends in his study that the issue at stake following the Second World War was not whether the Soviet system would be introduced in Central and Eastern Europe, but how far Soviet forces would reach in their westward advance. Krisztián Ungváry, “Magyarország szovjetizálásának kérdései” in Ignác Romsics, ed., Mítoszok, legendák, tévhitek a 20. századi magyar történelemről (Budapest: Osiris Kiadó, 2002), pp. 279–308. 4. See Borhi, Hungary in the Cold War, pp. 17–46. For Stalin’s concepts and policies with regard to Central and Eastern Europe see in detail Wettig, Stalin and the Cold War in Europe and Kramer, “Stalin, Soviet Policy, and the Establishment of a Communist Bloc.” 5. For information on Soviet advisors see Pál Germuska, “In a State of Technological Subjection: Soviet Advisers in the Hungarian Military Industry in the 1950s,” in Martin Kohlrausch et al. eds. Expert Cultures in Central Eastern Europe. The Internationalization of Knowledge and the Transformation of Nation States since World War I. (Osnabrück: Fibre Verlag, 2010). pp. 199–221. A total of thirty-three Soviet military-industry advisors and approximately fifty Soviet military advisors were working in Hungary in 1951. The number of Soviet military advisors climbed to eighty-two by 1956. Ibid. There were 280 Soviet military-industry and military advisors working in Czechoslovakia during this same period. See Mikhail Stefanski, “Soviet Impact on the Czechoslovak Armed Forces,” in Robert S. Rush and William W. Epley, eds., Multinational Operations, Alliances, and International Military Cooperation. Past and Future. Proceedings of the Fifth Workshop of the Partnership for Peace Consortium’s Military History Working Group, Vienna, Austria 4–8 April 2005 (Washington D.C.: Center of Military History United States Army, 2006), p. 97. A total of fifty-two Soviet Army generals and 670 officers held leading positions within the 410,000-strong Polish army at beginning of 1953, while a further two hundred Soviet advisors were operating in Poland at this time, primarily in the country’s military industry. Andrzej Paczkowski, Fél évszázad Lengyelország történetéből. 1939–1989 (Budapest: 1956-os Intézet, 1997), p. 178. There were sixty-five Soviet advisors working in Bulgaria at the beginning of 1955, though only thirty-one to thirty-seven following the establishment of the Warsaw pact in May of that year. Jordan Baev, “The Organizational and Doctrinal Evolution of the Warsaw Pact (1955–1969)” in 125 godini ot osvobojdavaneto na Bulgaria i vuzstanoviavaneto na bulgarska armiia (Sofia, 2003), pp. 62–75. Accessed September 5, 2014. http://www.coldwar.hu/html/en/publications/organizational.html. 6. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 319–320. 7. Borhi, Hungary in the Cold War, p. 130. On the friendship treaties see in detail Douglas Selvedge, “The Truth about Friendship Treaties: Behind the Iron Curtain,” in Dan Stone, ed., The Oxford Handbook of Postwar European History (Oxford: Oxford University Press, 2012) pp. 319–336. 8. For the text of the agreement as well as a detailed list of items contained therein see Okváth, Bástya a béke frontján, pp. 390–399. This 9.5 million U.S. dollars would be worth 91.9 million U.S. dollars nowadays if someone valorize it with the consumer price index, or 74.5 million U.S. dollars using the GDP deflator. This calculation is based on http://www.measuringworth.com/uscompare/relativevalue.php.

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9. Pact regarding the Transfer on Credit on the Part of the Government of the Union of Soviet Socialist Republics to the Government of the Hungarian People’s Republic of Armaments and Military Equipment. July 8, 1949, HL Hungarian People’s Army documents (MN) 1952/T 85. d. For the more detail on the agreement and its appendices, see Okváth, Bástya a béke frontján, pp. 400–408. 10. Ibid., pp. 409–431. 11. Protocol to the July 2, 1948, Agreement between the Government of the Hungarian People’s Republic and the Government of the Union of Soviet Socialist Republics. July 8, 1950. HL MN, 1952/T 85. d. 12. An August 1950 memorandum from Major General Mihály Horváth (the head of the Material and Equipment Diretorate of the Hungarian People’s Army GS) illustrates the uncertainty that had developed with regard to the arms-delivery agreements and the import of matériel. Major General Horváth’s memorandum indicated that he had no data regarding Hungary’s payments on Soviet credit, though information from the Hungarian People’s Army branch commands suggest that the actual value of arms and military equipment sent from the Soviet Union to Hungary exceeded that stipulated in the agreements by approximately 60 million rubles. (Statements from the branch command show, for example, that the Soviet Union in fact delivered 137 tanks and thirty-two combat vehicles to Hungary rather than the 105 tanks and sixteen assault guns specified in the agreements.) HL MN 1952/T 53. d. 1. cs. 13. For more detail regarding the ambiguity surrounding the date of COMECON’s foundation see Jozef M. van Brabant, Socialist Economic Integration: Aspects of Contemporary Economic Problems in Eastern Europe (Cambridge, U.K.: Cambridge University Press, 1980). 14. MNL OL, M-KS 276. f. 54. cs. 22. ő. e. p. 1. 15. MNL OL, M-KS 276. f. 65. cs. 254. ő. e. p. 1., 6–8., 12. 16. Baev, “The Organizational and Doctrinal Evolution of the Warsaw Pact.” 17. For more information on the Berlin Blockade see Németh-Tollas, Berlin, a megosztott város, pp. 93–96.; Manfred Wilke, The Path to the Berlin Wall: Critical Stages in the History of Divided Germany. (Oxford—New York: Berghahn, 2014). 18. The North Atlantic Treaty Organisation. Facts and Figures. (Brussels: NATO Information Service, 1989), p. 11. 19. MNL OL, M-KS 276. f. 54. cs. 25. ő. e., p. 1. 20. MNL OL, M-KS 276. f. 53. cs. 19. ő. e., p. 1. Only Friss’s appointment was submitted to the Council of Ministers for approval. See the minutes of the council’s February 4, 1949, meeting. Minutes No. 275. MNL OL, XIX-A-83-a, Microfilm No. 51002. 21. Report to Ernő Gerő, February 19, 1949. MNL OL, M-KS 276. f. 65. cs. 254. ő. e., pp. 27–31. 22. At the Council of Minister’s meeting on February 25, 1949, Prime Minister István Dobi announced that Hungary would support Albania’s admission to COMECON. 278th Minutes. MNL OL, XIX-A-83-a, microfilm No. 51002. 23. Memorandum on the Operations of the COMECON Bureau, March 12, 1949. MNL OL, M-KS 276. f. 65. cs. 254. ő. e., pp. 44–59. The fifteen fields in which the Bureau wanted to employee full-time specialists were as follows: machine industry;

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light industry; transportation; currency issues; the balance sheets of raw-materials and production sectors; agriculture; statistics; legal issues; economics of individual countries; electronic machine industry; synthetic planning; foreign trade; metallurgy; mining; hydroelectric power-plant sites. 24. Minutes for COMECON’s Meetings of April 26, 27 and 28, 1949. MNL OL, M-KS 276. f. 65. cs., pp. 80–99. 25. See proposals debated at the Hungarian Workers’ Party Central Committee Secretariat’s June 1, 1949, meeting and the document that the body approved at its August 3, 1949, meeting, MNL OL, M-KS 276. f. 54. cs. 48. ő. e., pp. 41-46 and M-KS 276. f. 54. cs. 56. ő. e. pp. 41–65, respectively. 26. Report to the Secretariat regarding COMECON’s Second Session, August 31, 1949. MNL OL, M-KS 276. f. 54. cs. 60. ő. e., pp. 32–33. Operation of the multilateral clearing system became possible only following the conclusion of a separate agreement regarding such an arrangement on October 1, 1957. The volume of multilateral barter exchange remained minimal in comparison to that of bilateral trade even following this agreement. This situation did not improve significantly following COMECON’s foundation of the International Bank for Economic Cooperation in 1964. See Honvári, XX. századi magyar gazdaságtörténet, p. 442. 27. Proposal to the Secretariat. Issues to be Placed on the Agenda of COMECON’s Next Session. April 19,1950. MNL OL, M-KS 276. f. 54. cs. 95. ő. e, pp. 42–49. 28. Minutes of the HWP Central Committee Secretariat’s November 22, 1950 Meeting. MNL OL, M-KS 276. f. 54. cs. 119. ő. e., p. 1. 29. Minutes of the HWP Central Committee Secretariat’s November 29, 1950 Meeting. MNL OL, M-KS 276. f. 54. cs. 120. ő. e., p. 7. 30. Report on the work of the COMECON Bureau and Questions Related to the Council’s Next Session. September 28, 1953. MNL OL, M-KS 276. f . 53. cs. 139. ő. e., pp. 107–114. 31. Okváth, Bástya a béke frontján, p. 197. The HWP Central Committee decided on April 6, 1949 to establish the Military Economy Party Committee. (MNL OL, M-KS 276. f . 54. cs. 37. ő. e. pp. 2–3.) The Central Committee’s decree stipulated that the Military Economy Party Committee would operate as a technical body under the authority of the HWP State Defense Committee established on September 7, 1948. For detailed information regarding these committees as well as the party and state administration of national-defense and military-industrial affairs between 1948 and 1956 see Pál Germuska and Tamás Nagy, “Az MDP Államvédelmi Bizottsága, Honvédelmi Bizottsága és a Honvédelmi Tanács,” Múltunk, 49:1 (2004): pp. 180–210.; Pál Germuska, “Der Rat für Landesverteidigung und das Komitee für Landesverteidigung in Ungarn von 1952 bis 1980” http://www.nationaler-verteidigungsrat.de/de/ verteidigungsraete_im_warschauer_pakt/ungarn. Accessed September 5, 2014. 32. Minutes of the HWP State Defense Committee Meeting. MNL OL, M-KS 276. f. 84. cs. 17. ő. e., p. 3. Summary for the State Defense Committee Regarding the Army’s Planned Request for Additional Credit for the Year 1949. April 15, 1949. 33. Okváth, Bástya a béke frontján, pp. 206–207. 34. Minutes of the May 4, 1949, Meeting of the Industrial Development Committee. MNL OL, XIX-F-6-ee 22. d. The quotation appears on p. 3. This committee was

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established under the chairmanship of Mihály Farkas on October 23, 1948 in order to coordinate the reconstruction, building and development of the domestic military industry as well as to formulate policy for the Industrial Development Directorate of the Industrial Affairs Ministry. The Industrial Development Committee operated until October 19, 1949. See Germuska–Nagy, “Az MDP Államvédelmi Bizottsága, Honvédelmi Bizottsága és a Honvédelmi Tanács.” 35. MNL OL, M-KS 276. f. 54. cs. 48. ő. e., p. 4. 36. MNL OL, M-KS 276. f. 67. cs. 159. ő. e. The quotations appear on pages 34 and 36. The cited appendix is on pp. 51–54. 37. MNL OL, M-KS 276. f. 84. cs. 18. ő. e., p. 1. The appendices to the minutes are missing. 38. Tamás Nagy, “Fordulattól—forradalomig. A Magyar Dolgozók Pártja katonapolitikája 1948–1956,” (Ph.D. Diss., Miklós Zrínyi National Defense University, Budapest, 2003) p. 71. 39. For details regarding the completion of investments during the first ten months of the plan see Industrial Development Directorate of the Industrial Affairs Ministry Investments in 1949 According to the Situation on October 15, 1949, MNL OL, XIXF-6-ee 22. d. 40. GOST is the Russian acronym for gosudarstvenniy standard, or state standard. 41. Károly Grohe, “Az Általános Géptervező Iroda Története.” Manuscript, 1985. HL Hungarian People’s Army special collection, pp. 2–3, 7–10. 42. For example, manufacturing documentation for gunpowder and explosives delivered to Hungary, Czechoslovakia and Poland between 1951–1953 were based on procedures utilized in the Soviet Union between 1941–1945. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 329. 43. See in detail Germuska, “In a State of Technological Subjection.” 44. The Military Committee’s Negotiating Material for the Moscow Talks. January 18–20, 1950. MNL OL, M-KS 276. f. 67. cs. 166. ő. e. , pp. 1–108. The cited passage is from p. 104. 45. László Bencze, A néphadsereg kiépítése és a gazdaságfejlesztés közötti néhány összefügés. Manuscript, no date. HL Hungarian People’s Army special collection. pp. 25–26, 45. For detailed information regarding the impact of the Western embargo on China and Korea see: Shu Guang Zhang, Economic Cold War: America’s Embargo Against China and the Sino-Soviet Alliance, 1949–1963 (Washington, D.C.: Woodrow Wilson Center Press, 2001), pp. 79–112. 46. For information regarding the intense communications between China and the Soviet Union during these weeks as well as extensive documentation regarding the Korea War see: Cold War International History Project Bulletin 6–7, 1995–1996. 47. Wettig, Stalin and the Cold War in Europe, pp. 204–206 and Constantin Cristescu, “Ianuarie 1951: Stalin Decide Înarmarea României, Magazin Istorie, 29:10 (1995), pp. 15–23. The quote appears in Wettig, p. 206. No minutes exist for this meeting. General Bodnăraș’s memorandum provides the most detailed account of this event. See Cristescu. (I would like to thank Katalin Somlai for translating this article.) HWP General Secretary Mátyás Rákosi also wrote a memorandum regarding this meeting. See Mátyás Rákosi, Visszaemlékezések. 1940–1956. vols. I-II, edited by

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István Feitl, Mrs. Márta Gelléri Lázár and Levente Sipos (Budapest: Napvilág Kiadó, 1997), pp. 860–863. 48. See in detail Pál Germuska, “A szocialista iparosítás Magyarországon 1947– 1953” in Zsuzsanna Kőrösi, János M. Rainer and Éva Standeisky, eds., Évkönyv 2001 IX (Budapest: 1956-os Intézet, 2001), pp. 147–172. 49. János M. Rainer, “Sztálin és Rákosi, Sztálin és Magyarország 1949–1953” in György Litván, ed., Évkönyv VI: 1998 (Budapest: 1956-os Intézet, 1998), pp. 91–100. 50. Minister of Defense István Bata’s Memorandum to HWP General Secretary Mátyás Rákosi, April 21, 1954. MNL OL, M-KS 276. f. 65. cs. 195. ő. e., pp. 553–556. 51. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 315–316. 52. Minutes of the Hungarian Workers’ Party Central Directorate Secretariat Meeting. Report on the Military Industry and Proposal on the Improvement of the Military Industry’s Operations. September 5, 1951. MNL OL, M-KS 276. f. 54. cs. 159. ő. e., pp. 1–3, 11–29 and 30–37. 53. Report of the Hungarian People’s Army GS Material and Equipment Directorate to the Minister of Defense: Import Possibilities with regard to Certain Military Equipment. July 24, 1952. HL MN 1952/T 51. d. 8. cs. For a detailed presentation of export plans see Okváth, Bástya a béke frontján, pp. 271–272. 54. Statutory decree No. 1 of 1952 proclaimed the establishment of an independent ministry of military industry. Law VI of 1953 abolished the ministry effective July 7 of that year, formally integrating administration of affairs related to the military industry into the newly reconstituted Ministry of Metallurgy and Machine Industry (KGM) under the rubric KGM/B. 55. Deputy Minister Ferenc Bíró’s Memorandum [to Mátyás Rákosi] regarding his visit to Czechoslovakia and the German Democratic Republic. June 12, 1952. MNL OL, M-KS 276. f. 65. cs. 195. ő. e., pp. 244–249. 56. Agreement between the People’s Republic of Poland and the Hungarian People’s Republic regarding the Delivery of Special Goods and Documentation from the Hungarian People’s Republic to the People’s Republic of Poland in the Years 1952– 1953. MNL OL, XIX-G-3-ae 2. d. Ferenc Bíró presented a report to Mátyás Rákosi regarding the negotiations of the Polish defense and military-industrial delegation, though oddly did not mention the signing of the agreement. Bíró stated in the report that the possibility of mutual deliveries existed with regard to artillery, ammunition and military radios. MNL OL, XIX-F-6-cc 4. d. 57. Major General Vasilchenko’s Letter to Hungarian People’s Republic Minister of Defense Mihály Farkas. November 15, 1952. HL MN 1952/T 88. d. In the middle of November 1952, the Soviet Union issued permission for the mutual delivery between Hungary and Czechoslovakia as well as Hungary and Poland of products manufactured according to Soviet license. Ibid. 58. Minutes H-0752 I-V regarding the July 31–August 2 Hungarian-Romanian Budapest Talks and Agreement No. H-0653. August 28, 1952. MNL OL, XIX-G3-ae 1. d. The fifth point of the agreement stipulated that the cost of the delivered products was to be calculated at Soviet prices. In the event that Soviet prices could not be determined, such costs were to be calculated through comparison to similar

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Soviet products. If this did not work, then Hungarian production costs were to be utilized as the price base. Point VI of the agreement reveals that Romania wanted to pay for the military equipment in kind, through the shipment of goods pursuant to the earlier trade agreement. Point X of the agreement stipulated the signing of concrete agreements regarding arms and military equipment manufactured according to Soviet license could begin following the approval of the Soviet government. 59. Contracts No. H-0739 and No. H-0740, November 10, 1952. MNL OL XIXG-3-ae 1. d. 60. Major General Vasilchenko’s Letter to Hungarian People’s Republic Minister of Defense Mihály Farkas. November 15, 1952. HL MN 1952/T 88. d. 61. Okváth, Bástya a béke frontján, pp. 272–273. 62. Ferenc Bíró’s letter to Zoltán Vas. September 10, 1952. MNL OL, XIX-F-6-cc 4. d. It will be clearly demonstrated later in the book that Czechoslovakia’s military industry was not only able to satisfy domestic demand, but possessed significant surplus production capacities as well. It is therefore unsurprising that Czechoslovakia did not want to import military equipment from Hungary. 63. Minutes H-0751 of the Czechoslovak Republic’s Talks with the Government Delegations from the Hungarian People’s Republic in Budapest in the Month of November 1952. November 24, 1952. MNL OL, XIX-G-3-ae 1. d. 64. Memorandum Prepared on October 31, 1952, at the Hungarian People’s Army General Staffs’ Material and Equipment Directorate. HL MN, 1952/T 51. d. 3. cs. 65. Defense Council Resolution No. 95/9/1953, the 1953 Military-Industrial Export of the Medium Machine Ministerium. April 13, 1953. MNL OL, XIX-F6-kb 78. d. 66. To Comrade Mátyás Rákosi: Amendment of the Hungarian-Romanian Treaty. March 31, 1953. MNL OL, M-KS 276. f. 65. cs. 195. ő. e., pp. 403–407. 67. MNL OL, M-KS 276. f. 65. cs. 195. ő. e., p. 475. 68. Romania appeared to be prepared to export the sulfite cellulose, toluene and diglycol that were of such vital importance to the domestic explosives industry. Defense Council Resolution No. 153/13/1953, Cooperation with the Romanian People’s Republic in the Defense Industry. June 15, 1953. MNL OL, XIX-F-6-kb 78. d. For information regarding the conversion of the military industry to civilian production see Pál Germuska, “Military Industry versus Military-related Firms in Socialist Hungary Disintegration and Integration of Military Production during the 1950s and Early 1960s” Enterprise and Society, 11:2 (2010): pp. 316–349. 69. Defense Council Resolution No. HT 164/14/1953, The Hungarian-Czechoslovak Extraordinary Talks on Cooperation Held in Prague between June 30–July 4. July 27, 1953. MNL OL, XIX-F-6-kb 78. d. 70. Defense Council Resolution No. 161/14/1953, the Final Settlement of Prices of Military-Industrial Goods. July 27, 1953. MNL OL, XIX-F-6-a 117. d. 71. Okváth, Bástya a béke frontján, p. 273. 72. Defense Council resolution No. 175/15/1953 on talks to be conducted with the Bulgarian People’s Republic regarding the Export of Matériel. August 10, 1953. MNL OL, XIX-F-6-cc 5. d.

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73. The Council of Ministers decided to establish the International Economic Relations Secretariat on July 7, 1950, appointing Ministry of Heavy Industry State Secretary Imre Karczag to lead the organization. Minutes of the 345th meeting of the Council of Ministers. MNL OL, XIX-A-83-a microfilm No. 52223. The Council of Ministers approved the statutes governing the operations of the new secretariat on September 1, 1950. Minutes of the 350th meeting of the Council of Ministers. Ibid. The president of the National Planning Office assumed the duty of supervising the council from the president of the People’s Economic Council on February 15, 1952. Minutes of the 422nd Meeting of the Council of Ministers. MNL OL, XIX-A-83-a microfilm No. 52226. 74. Resolution No. 21/32/1952 of the Industrial Economy Council. January 28, 1952. MNL OL, XIX-G-3-ae 39. d. 75. Resolution No. 34/3/1953 of the Defense Council on the establishment of the Foreign Trade Ministry Technical Department as well as the Ministry’s Relevant Submission. MNL OL, XIX-G-3-ae 39. d. The decision to abolish the Industrial Economy Council, which had been operating since October 1950, and to establish the Defense Council was made on November 27, 1952. See in detail Germuska and Nagy, “Az MDP Államvédelmi Bizottsága, Honvédelmi Bizottsága és a Honvédelmi Tanács.” 76. Defense Council Resolution No. 42/4/1953 on the Establishment of the “Technics” Stockpiling Company. January 26, 1953. MNL OL, XIX-G-3-ae 39. d. 77. Exchange of Letters between Károly Szuszki and Ferenc Bíró. September 26 and October 1, 1952. MNL OL, XIXF-6-cc 4. d 78. Industrial Economy Council Resolution No. 201/50/1952. Cooperation in the Area of Defense Industry. November 17, 1952. HL MN 1956/T 48. d. 3. cs. 79. Defense Council Resolution No. 70/7/1953. March 16, 1953. MNL OL, XIXF-6-a 117. d. 80. Defense Council Resolution no.192/16/1953, Correspondence and Maintaining Relations with Fraternal States in the Area Cooperation with Respect to Defense Industry. August 31, 1953. MNL OL, XIX-F-6-a 117. d. 81. Defense Council Resolution No. 216/18/1953. Amendment and Supplementation of Defense Council Resolution No. 70/7/1953. October 19, 1953. MNL OL, XIX-F-6-kb 78. d. 82. The Ministry of Domestic and Foreign Trade was established through the merger of the Domestic Trade Ministry and the Foreign Trade Ministry pursuant to Law VI of 1953 in July of that year. On June 20 of the following year, the ministry was divided back into distinct domestic- and foreign-trade ministries. 83. Defense Council Resolution No. 216/18/1953. MNL OL, XIX-F-6-kb 78. d. 84. Resolutions Adopted at the Technical Cooperation Committee Session No. 2, November 17, 1953. MNL OL, XIX-F-6-cc 9. d. 85. Defense Council Resolution No. 252/20/1953 regarding Defense-Industry Cooperation with the Czechoslovak Republic. MNL OL, XIX-F-6-cc 5. d. 86. Report on Hungarian-Czechoslovak Talks regarding the Defense Industry Held in Prague between February 8–20, 1954. February 27, 1954. MNL OL, XIXF-6-dd 58. d.

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87. Defense Council Resolution No. HT 39/23/1954. February 22, 1954. MNL OL, XIX-F-6-a 117. d. 88. Excerpt from Defense Council Resolution No. 51/24/1954. March 29, 1954. MNL OL, XIX-F-6-a 117. d. 89. MNL OL, XIX-F-6-dd 58. d. 90. MNL OL, XIX-J-1-u 77. d. The Engineering Department of the Foreign Trade Ministry of the Soviet Union: Glavnoye Inzhenernoye Upravleniye Ministerstvo Vneshney Torgovli. The latter department was established in 1953 to coordinate and monitor issues related to arms exports. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 315. 91. MNL OL, XIX-F-6-dd 58. d. 92. Report on the Implementation of Defense Council Resolutions. July 28, 1955. HL MN, 1956/T 48. d. 3. cs. 93. MNL OL, XIX-F-6-dd 58. d. 94. MNL OL, XIX-G-3-ae 39. d. 95. Report on the Operations of the Bureau and Issues Related to the Next Session of the Council. September 28, 1953. MNL OL, M-KS 276. f. 53. cs. 139. ő. e., pp. 107–114. 96. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 323–325. The Soviet government issued a resolution on March 19, 1954, calling for the purchase of 900 MiG-15UTI jet fighters, 400 Yak-11 trainer aircraft, 300 IL-14P cargo-transport aircraft, and 400 KS-18A anti-aircraft guns from Czechoslovakia. Ibid., p. 326. 97. National Planning Office Technical Cooperation Committee: Material Prepared by the Hungarian Delegation for Its Own Use during Negotiations of the Hungarian-Polish Cooperation Committee. June 11, 1954, and Protocol No. 3 of the Hungarian-Polish Defense Industry Coordination Joint Committee, June 24, 1954. MNL OL, XIX-F-6-dd 58. d. 98. MNL OL, M-KS 276. f. 65. cs. 195. ő. e. pp. 553–556. 99. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 327–328. The mutual coordination of medium-term civilian people’s economic plans for the years 1956– 1960 was the main theme of the fifth session of COMECON in Moscow in May 1954 as well as the sixth session in Budapest in December 1955, N. V. Faggyejev, KGST. Budapest: Kossuth Könyvkiadó, 1975. p. 415. Nikolaj Vasilevic Faddeevs’ Russian book was translated to several languages. See, for example the German edition: Nikolaj Vasilevic Faddeev, and Peter Hübler, Der Rat für Gegenseitige Wirtschaftshilfe. Berlin: Verlag Die Wirtschaft, 1975. 100. MNL OL, M-KS 276. f. 53. cs. 157. ő. e. 2, pp. 13–21. 101. Malenkov publicly proclaimed his consumer-oriented political objectives during a session of the Supreme Soviet on August 5, 1953, stating that industry producing consumer goods must grow at a faster rate than that manufacturing goods for producers. Philip Hanson, The Rise and Fall of the Soviet Economy: An Economic History of the USSR from 1945 (London: Longman, 2003), pp. 50–52. 102. Minutes No 1/4 regarding the COMECON Session Held in Moscow on March 26–27, 1954. MNL OL, M-KS 276. f. 53. cs. 169. ő. e., pp. 29–47. For citation see pp. 31–32.

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103. Communiqué on the Questions to be Addressed at COMECON’s Next Session. June 22, 1954. MNL OL, M-KS 276. f. 53. cs. 182. ő. e., p. 89. On June 30, 1954, delegation leader Ernő Gerő presented the Political Committee of the Hungarian Workers’ Party with a summary of the events that had taken place at the session, though the minutes of the committee’s meeting included no information regarding this non-agenda item. MNL OL, M-KS 276. f. 53. cs. 183. ő. e., p. 1. 104. See in detail Majtényi and Seres, “A KGST iratainak utóélete.” 105. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 328–330. 106. Report to the HWP. October 30, 1954. MNL OL, M-KS 276. f. 53. cs. 202. ő. e., pp. 9–12. 107. To Comrade János Csergő, Ministry of Metallurgy and Machine Industry. February 11, 1955. General István Bata. MNL OL, XIX-F-6-aa 7. d. According to the letter, there was foreign demand for 8,000 Goryunov machine guns, 850 anti-aircraft guns (including 57 and 85 mm guns), 3,000 anti-tank guns, more than 200 PUAZO directors and several dozen director radars.

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Chapter Two

Establishment of the Framework for Cooperation

Beginning with the convocation of a conference dealing with the “European collective security system” in November 1954, Soviet leaders took a succession of measures aimed at strengthening the political, military, and economic integration of the bloc. During the consultations held in Moscow between November 29–December 2, 1954, representatives from the Soviet Union, China, Poland, the German Democratic Republic, Czechoslovakia, Hungary, Romania, Bulgaria, and Albania discussed the possibilities for security and military cooperation. The draft charter for the future Warsaw Pact organization was circulated in February 1955. Hungary’s party leadership approved the document on March 10, while the Warsaw Treaty Organization of Friendship, Cooperation, and Mutual Assistance was formally established on May 14, 1955. Talks between the Soviet and Hungarian general staffs regarding mobilization orders, the rounding out of military organizations, the peacetime and wartime structure of the Hungarian army, etc., took place parallel to the establishment of the political-organizational framework.1 The initial steps necessary for the integration of member states were taken only in 1955. The modus operandi of the Warsaw Pact’s Joint Armed Forces Supreme Command were established in September.2 The Hungarian Workers’ Party Political Committee approved these procedures on October 6, 1955.3 An intensification of relations was apparent primarily in the form of detailed proceedings related to military and trade diplomacy. During the summer of 1955, for example, Hungarian-Soviet consultations took place concerning the special import-export situation related to the second five-year plan, the Hungarian-Czechoslovak Military Industry Permanent Mixed Committee and specialist subcommittee were formed, negotiations occurred with respect to the organization of cooperative production of tank parts among 41

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Poland, Czechoslovakia, and Hungary, further talks were held regarding items to be exported to Bulgaria, etc.4 A considerable degree of uncertainty nevertheless prevailed concerning the long-term operations of Hungary’s military industry. In September 1955, the MoD significantly reduced its orders for 1956 and made its demand for following years contingent upon later talks in Moscow.5 The ministry’s chief Soviet advisor, Lieutenant General Mikhail Tikhonov, designated the projected timetable and themes for the consultations in a September 13 letter to Defense Minister István Bata. Lieutenant General Tikhonov indicated in his letter that Soviet officials wished to discuss the following topics: • annual military-industrial and mutual delivery plans by October 15, 1956; • the long-range development program of the Hungarian People’s Army between October 15 and November 15; • Hungary’s weapons exports and import needs for the years 1956–1960 by December 15; • mutual military-industrial delivery plans between the Soviet Union and the people’s democracies by March 1, 1956; • the finalization of the new military-industrial plan and mutual weaponsdelivery plan by May 1, 1956; • furthermore the conclusion of an agreement regarding the coordination and mutual deliveries of the military industry of people’s democratic countries by August 1, 1956.6 The chief advisor’s letter reveals that the Soviet leadership had already formed long-term plans aimed at establishing closer military-industrial relations. A Defense Minister Bata-led Hungarian delegation held talks in Moscow in October 1955 regarding the development and modernization of the Hungarian People’s Army between the years 1956 and 1964.7 The HungarianSoviet protocol stemming from these negotiations was signed on December 23. Hungary’s MoD prepared a report based on this document examining the technical details and budgetary impact of the planned development program. The report also reviewed preliminary talks that had taken place during the meeting in Moscow regarding potential mutual deliveries of military technics, noting that provisional demand from member states indicated that the value of Hungary’s military-industrial exports could undergo a multifold increase over the following five years, from 57.4 million forints in 1956 to 821.7 million forints in 1960. The report stated that the projected composite value of Hungary’s exports of military equipment between the years 1956 and 1960 was 2.3 billion forints, equal to projected imports during the period.

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The report indicated that further negotiations were necessary regarding the subsequent six-year period (1960–1965) during which the value of Hungary’s exports of military equipment was estimated at 3.86 billion forints, compared to imports of 4.3 billion forints.8 Gauging the possibilities for the coming years, both the National Planning Office and Hungarian industry vigorously advocated strengthening economic cooperation with fellow socialist countries. Among the papers of high-ranking Hungarian Workers’ Party official András Hegedüs, who served as chairman of the Council of Ministers between April 1955 and October 1956, is a draft proposal containing a summary of issues to be clarified regarding COMECON in the course of international negotiations. Point 11 of this document outlined the following topics: “Development of the specialization of military products among countries on the basis of the integrated development plan, by way of mutual allowances and technical assistance. The issue of mutual deliveries of military equipment and artillery guns, taking into consideration the level of defense expenditures in individual countries.”9 Preparation for substantial international cooperation within the civilian sector pursuant to the above began at the time of the sixth session of COMECON held in Budapest between December 7–11, 1955. In addition to coordination of the 1956–60 people’s economic plans, the organization’s main objective at this session was to conduct consultations with regard to specialization of the machine industry. Member states held sharply contested debates regarding the series of proposals—many of which contained items that had not been previously coordinated—that the COMECON Secretariat submitted during the session. The means of eliminating shortages of various goods and products constituted the main subject of debate throughout the talks.10

2.1 ESTABLISHMENT OF COMECON’S MILITARY INDUSTRIAL STANDING COMMISSION Soviet bloc states held a summit meeting in Moscow between January 6–11, 1956, the first time the countries had convened for consultations of this magnitude since January 1951. The HWP’s Political Committee discussed the negotiating positions that the Hungarian delegation was to take at this summit on January 2, 1956. The committee based its deliberations on a report, presumably drafted at the National Planning Office, focusing on the issues of trade, deliveries, and specialization within COMECON from the perspective of Hungary’s second five-year plan under preparation at the time. The report expressed unconditional support for strengthening economic and industrial cooperation among COMECON’s member states:

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The Hungarian Workers’ Party and the Government of the Hungarian People’s Republic persistently and without reservation wish to participate in the deepening of the international division of labor among the countries of the socialist camp and fully support all proposals that promote the broadening of specialization and cooperation among the countries of the socialist camp in all spheres of the people’s economy and, particularly, industry.

The report furthermore identified the specialization as one of the primary means of increasing exports: We must make progress in the increase of specialization especially within the machine industry through more decisive measures than those taken so far. The primary impediment to the development of the machine industry in the people’s democratic countries is that these countries produce machinery types of the most diverse range in small quantities and with low efficiency and obsolete technology. Despite the fact that there are unused capacities in most of the countries, including Hungary, parallel production has emerged in the fraternal countries in more than one industrial sector. . . . It is likewise well-known that Hungary possesses developed vacuum-technology and telecommunications industries and is to a large degree capable of making deliveries of products for serving both civilian needs and military objectives. . . . We consider it appropriate from the standpoint of the interests of the socialist camp for the fraternal countries to increase their import of Hungarian machines as well and we would ensure through mutual agreements that, for example, the Hungarian military industry, only 28 percent of whose capacity we currently utilize for its original purpose, would receive sufficient orders from the fraternal countries.

The Political Committee issued a resolution, which, besides confirming the above assertions, declared that representatives should refer during the summit to Hungary’s previously voiced criticisms that the “formulation of offers has become extremely protracted” and the “implementation of decrees often falters.” However, HWP Secretary General Mátyás Rákosi considered this criticism to be excessive, deleting from the resolution the statement that “the guarantee of the sovereignty of the people’s democratic countries cannot imply that the division of labor be disordered and the resolution of important economic problems be delayed.” The committee therefore considered more operative functions to be desirable: The broadening and strengthening of cooperation demands that COMECON truly fulfill its role, not acting merely as an organ carrying out consultative and preparatory tasks, but one that delivers binding resolutions connected to issues with a significant bearing upon the socialist camp. This would place the division of labor on firm foundations. In this behalf, we propose that competent and

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broadly mandated leaders of countries belonging to COMECON convene every six months to discuss and resolve emerging issues.

The HWP Political Committee authorized the Hungarian delegation selected to participate in the Moscow summit to advance the following positions “in order to signal that we intend to satisfy our obligations”: • “The country’s air defense is extremely underdeveloped, therefore we consider it necessary that in the course of our defense development the strengthening of air defense come decisively into the foreground. • We believe that the M [mobilization] plan is oversized, that the disparity between the number of personnel in the actual, active military and that projected in the M plan is too great, therefore it would be appropriate to decrease the number of personnel in the M plan. • We believe the thorough coordination of the people’s economic section of the M plan to be necessary.”11 During his opening address at the summit on January 6, Communist Party of the Soviet Union General Secretary Nikita Khrushchev urged partner countries to participate actively in foreign affairs in order to relieve the Soviet Union of the duty of always acting first vis-à-vis the West. At the same time, Khrushchev emphasized the continued importance of preserving a unified policy foundation among the countries. The general secretary’s speech, which took place less than six weeks before the CPSU’s historic Twentieth Party Congress, reflected a doctrinal transformation aimed at making the satellite states suitable for a role on the international stage, while at the same time accelerating the bloc’s military, political, and economic integration through the maintenance of the Soviet Union’s leading role.12 In the course of his address, Khrushchev examined various economic issues, including problems connected to military-industrial cooperation: The enemy is very fearful of a decrease [sic] in the Cold War, because they want to force us to maintain large armed forces so that we become economically exhausted. In this way, it wants to prevent us from raising our standard of living, which significantly increases the influence of our camp throughout the entire world. We must not allow ourselves to be diverted from our original objectives. Defense must be kept at a level that corresponds to our defense requirements. Certain reallocations must be made in the area of industry as well in the interest of defense and great efforts must be made to develop production of titanium, various heat-resistant steels and suitable aluminum alloys. We must avoid accumulating a large quantity of obsolete matériel. Such a danger exists, because the people’s democracies in large part manufacture out-of-date weaponry. It is

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important for us to supply the army with modern weaponry and it may perhaps additionally be possible to continue to reduce the armed forces. Air defense must not be geared toward passive defense, but must be built upon active means.

The CPSU General Secretary closed his address with the following, somewhat repetitive, conclusion: Within the domain of military equipment the phenomenon can be seen that in several countries—Czechoslovakia, Poland, for example—they are manufacturing matériel that is no longer useful, no longer modern. This matériel fails to meet the needs not only of the present year, but of the past year as well. In its new five-year plan, the Soviet Union regards production of military aircraft and furthermore rocket technology and atomic power to be the main direction from a military perspective. Development of these contributes to the postponement of war. Neither is it possible, at the same time, to neglect conventional weaponry, the most important of which must be selected.13

For lack of other documentation, Khrushchev’s closing address on January 9 provides the only indication of the topics discussed and resolutions adopted at the summit: The industry of the DDR and Czechoslovakia must be engaged to the most complete degree; this engagement must of course be accomplished sensibly. . . . At the same time, the industries of the other countries must naturally also be engaged, including that of Hungary, whose military industry according to Comrade Rákosi’s statement is not fully burdened. The issue of the development of industry and the issue of cooperation must be carefully elaborated with respect to all the countries, both within individual countries and between countries. Proposals in this regard must be drawn up within one month, which COMECON will debate so that they can be settled conclusively.

Khrushchev unequivocally advocated further integration during the speech: With regard to the speeches, everybody spoke well and convincingly, though it is clear that there would be a need for a higher degree of mutual understanding and confidence. It is necessary to let ourselves be guided by higher considerations, and subordinate matters of detail to the general interest. We must not be afraid that the shoe will begin to pinch because of this. It is a ridiculous notion that individual countries should develop all branches of production at once. Not a single country can manage this with its own means—any country that tries this would be lost. It would not be appropriate to reach this objective relying on credit, this would prove to be unreasonable. We are competing with the capitalist world and we will emerge victorious from this competition if we produce rationally and with a great degree of efficiency. One must only imagine what

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would happen if every republic of [the] Soviet Union would strive to produce everything itself.14

The Chief Directorate for Economic Relations with People’s Democratic Countries (Moscow) prepared a more than twenty-page report for the summit on issues related to intrabloc economic cooperation. The report stated that rapid (heavy) industrial growth had taken place over the five-year period, though noting that “the underdevelopment of agriculture inhibited the development of the light and food industries” and that serious shortcomings existed in the development of machine production, particularly with regard to its coordination. The report asserted that the volume of mutual commodities-exchange among COMECON member states had nearly doubled, from 13 billion rubles in 1950 to 24 billion rubles in 1954. The report concluded, however, these states had initiated too many investments, attributing weaknesses apparent in the economies of people’s democratic countries to “the unsatisfactory development of the raw materials base for the main branches of industry.” The report devoted an independent subsection to the subject of the military industry, presenting a thorough assessment of the main developments that had taken place over the previous years and recommending the further strengthening of cooperation: The results that the people’s democratic countries have achieved in the area of industrialization with the cooperation of the Soviet Union have made it possible to establish a firm basis for modern weapons production, which the countries did not previously produce [sic]. At the same time, experienced cadres have grown up from among engineers, technicians and workers. As a result of this, the people’s democratic countries have now organized the production of jet fighter and training aircraft, tanks, infantry and artillery weapons, radio-communications and radio-locator equipment, munitions of all types and other kinds of military equipment as well. In the interest of a more complete and effective utilization of the defense-industry capacity of the countries, it is necessary to improve the coordination of matériel production in such a way that every country not manufacture all varieties of weaponry and in the field of weapons production, the organization of a rational division of labor among the countries is desirable. For example, there are two countries that must engage in the manufacture of jet fighter airplanes and tanks: Czechoslovakia and Poland, to cover both their own needs and those of the other people’s democratic countries. Large-caliber anti-aircraft guns must be manufactured in Czechoslovakia for all the countries, 57 mm anti-aircraft guns can be manufactured in Hungary and Poland, likewise for all the countries. Romania could manufacture quadruplebarreled anti-aircraft guns on behalf of all the countries. In this respect, the plan for specialization of military production must be formulated so that we avoid unnecessary parallelisms in the area of weapons production and do not increase

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military expenditures. In addition to this, the specialization of production makes it possible to more rapidly supply the armies of the countries with adequate quantities of necessary weaponry.

The leaders of COMECON members states were presumably satisfied to read the section of the report dealing with Soviet Union’s continued role in providing them with certain types of weaponry: The Soviet Union can, as it has until now, provide assistance with regard to the delivery of certain kinds of weapons whose production is not expedient in the countries in view of their insignificant existing need for them. Preliminary work is already taking place in the countries with regard to the coordination and specialization of military production as well as the mutual delivery of weapons for the specified armies. Weapons production is presently occurring in the people’s democratic countries, primarily on the basis of documentation provided by the Soviet Union. The Soviet Union can continue to place technical documentation and new types of weapons at the disposal of the countries in the future as well. But this is just one side of the matter. It has become necessary to include to a greater degree the engineering and technical cadres from the people’s democratic countries in both the improvement of the organization of military production as well as the development of new types of weaponry. The organization of mutual exchanges among the countries must be improved. The organization of such exchanges has been insufficient with regard to military production and particularly with regard to scientific-research work.

The chief directorate’s report also contained an organizational proposal regarding the military industry, referring to certain unfamiliar antecedents: It would be expedient to debate the issue of establishing a commission operating permanently with respect to the production of combat technology and technical exchanges in this domain. Some commissions consisting of representatives from the countries were established in 1955 for certain kinds of military technology, which was completely inadequate, since these commissions do not embrace the basic types of military production. With regard to the previously mentioned considerations concerning the coordination of military production among the countries, it would be beneficial to enact measures aimed at the formulation of mutual military-production plans and arrangement of mutual deliveries and likewise to enact measures for the preparation of a mobilization plan for the people’s economies of the countries.15

Hungary’s summit delegation presented a report on the talks to the Hungarian Workers’ Party Political Committee on January 13, 1956. The minutes of the Political Committee meeting indicate that in their otherwise brief account of the summit, delegation members emphasized the decision to establish

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several new COMECON commissions. According to the delegation’s onepage memorandum submitted to the committee, “On the basis of agreements concluded at the Moscow consultations, the COMECON Secretariat proposes that commissions—agricultural, machine industry and optical, metallurgical (including the issues of iron ore and coke supplies) as well as coal-mining commissions composed of delegates from countries participating in COMECON discuss the most important issues related to cooperation during the month of March.” After hearing the report, the HWP Political Committee approved the establishment of the specialist commissions and discussed possible Hungarian delegates to them as well.16 Party leaders from the Eastern bloc reconvened in Prague on January 27–28, 1956 to hold further talks. The Warsaw Pact Political Consultative Committee decided to establish the alliance’s military organization, the Unified Armed Forces Supreme Command, and discussed the general integration of weaponry as well as other organizational issues.17 Other matters connected to military equipment did not, however, appear on the agenda of the talks. Ernő Gerő’s papers include a report dated February 7, 1956, which not only reviews the resolutions adopted at the January summit in Moscow, but examines the results of talks that had taken place within the newly established specialist commissions between January 30 and February 4 as well. The report reveals that two more commissions had been founded in addition to the four mentioned above—the Moscow-based Commission of Planning Offices and the “Special Industrial Commission.” (The latter was presumably established to deal with the military industry, though the report contains no further details.) Planning-office chairmen were conducting negotiations in Moscow at this time regarding the foundation of the Commission of Planning Offices, while Hungary had to muster seventy representatives to serve on the other four specialist commissions under formation at the time. The COMECON Secretariat wanted to organize an independent secretariat to administer the affairs of each new commission, while between three and eleven working committees per commission were assigned the task of processing material emanating from member countries.18 All of this suggests that COMECON had founded these organizations to conduct long-term operations. On February 16, the HWP Political Committee discussed the negotiating positions that Hungarian delegates were to take at meetings of specialist commissions preparing for the next session of COMECON. By this time the agricultural and metallurgical commissions had convened in Moscow, while the machine industry and coal-mining commissions had assembled in East Berlin and Warsaw, respectively.19 The specialist commissions concluded their talks in the second half of March, issuing proposals regarding the proportions and volume of mutual deliveries—until the year 1965.20 (The minutes from this

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meeting of the Political Committee do not mention the Commission of Planning Offices or the Special Industrial Commission.) The close of talks showed that the four commissions proved to be temporary after all. At the same time, it also became clear that detailed discussion of issues related to individual sectors of the economy strained the limits of single COMECON sessions. It was for this reason that the organization’s secretariat (or the Soviet economic apparatus) had expressed the need to establish permanent specialist commissions with the participation of ministries and offices from the interested countries to oversee economic and scientifictechnical cooperation. Hungary’s leadership learned of this idea from the proposed agenda contained in an invitation, which the HWP Political Committee approved on May 11, to COMECON’s next session in East Berlin.21 The Soviet Council of Ministers issued a special decree on May 14 regarding the permanent commissions to be organized within COMECON.22 Representatives at the COMECON session held in the capital of the German Democratic Republic between May 18–25, 1956, debated proposals that the specialist commissions had submitted regarding the coordination of the most important sectors of the people’s economies and the proportions of mutual deliveries until 1960. The delegates furthermore undertook to sign an agreement to introduce a multilateral clearing system for settling accounts among COMECON countries by January 1, 1957. Finally, the representatives concluded an agreement to establish the following sector-based permanent commissions based in the designated cities: iron metallurgy (Moscow); nonferrous metallurgy (Budapest); coal mining (Warsaw); mineral oil and gas production (Bucharest); chemical industry (East Berlin); machine industry (Prague); agricultural and food industry (Sofia); geology (Moscow); foreign trade (Moscow); complex transport (Moscow); wood and cellulose (Budapest); and military industry (Moscow).23 The organization defined the duties of the economic and scientific-technical permanent commissions as follows: • Formulation of proposals affecting the interests of multiple countries concerning economic issues related to appropriate people’s economic sectors, the rational development of production in the countries based primarily on local raw-material sources in the interest of utilizing economic resources and production capacities; the further broadening of the specialization of production and cooperation among countries based upon coordination of the developmental plans of economic sectors. • Elaboration of technical problems affecting the interests of multiple countries in order to prepare for technical conferences as well as specialist consultations held so that the scientific and technical forces of each coun-

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try are involved in the process of resolving current technical problems, furthermore the coordination of the plans for technical development and scientific-research and design-construction work of the countries participating in the Council. • Formulation of offers concerning the integration of basic sectoral parameters and the methodological formulas pertaining to the methods of calculating technical coefficients, the accounting of production, etc.24 In the meantime, consultations regarding deliveries of military equipment during the second half of the 1950s took place in the spring of 1956 more or less according to the timetable that Soviet Lieutenant General Tikhonov had outlined in his September letter to Hungarian Defense Minister István Bata. In May, military specialists from the Soviet Union and Hungary conducted negotiations regarding the main directions of the second five-year plan under preparation at the time. National Planning Office Military Deputy Chairman Lieutenant General Géza Révész notified Minister of Metallurgy and Machine Industry János Csergő of the results of the talks in a May 29 communiqué. This dispatch contained definitive production targets for the most important military-industrial goods, which the National Planning Office used as the basis for its subsequent instructions to the Ministry of Metallurgy and Machine Industry regarding planning and preparations for production.25 The communist and socialist parties of the Soviet bloc held a meeting in Moscow on June 22–23, 1956, at which they discussed the long-range people’s economic plans as well as the coordination of the military-industrial production and mutual special delivery plans of the member states. With regard to the latter, officials at the meeting decided not to approve the agreement proposed in May, giving the general staffs and planning offices of member states one month to formulate a final version of the agreement in accordance with modifications that some countries had requested. In an unfavorable development for Hungary, representatives from Romania and Bulgaria announced at the conference that they did not want to order the amount of matériel stipulated provisionally in previously signed protocols. As a result, a 200 million ruble shortfall appeared in Hungary’s foreign-trade balance for the period 1956–1960 and an 800 million ruble shortfall for the period 1956–1965. Members of the Hungarian, Czechoslovak and Polish delegations all indicated that the insufficient use of the military-industrial capacities in their countries presented serious problems. During the meeting, Khrushchev declared that to fully engage the capacities of the military industry during times of peace was not even possible. According to the Hungarian delegation’s report on the meeting, the CPSU general secretary asserted that “Military-industrial cooperation among the countries that belong

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to COMECON should be organized much more on the basis of cooperative participation in certain aspects of production and proposed that a competition be organized among the constructor offices in individual countries in the interest of manufacturing new artillery, radio, technical, etc. products at the highest-possible standard.”26 Representatives from the Soviet Union, Poland, the German Democratic Republic, Czechoslovakia, Hungary, Romania, and Bulgaria gathered again in Moscow from July 20–30, just one month after the previous meeting, to discuss the provision of allied armies with weapons systems and the most effective use of the production capacities of their defense industries. The officials debated and determined the division of military-industrial production among the countries, resolving to conclude bilateral delivery treaties for the years 1957–1960 in October and November of 1956. Although the representatives proclaimed that the “possibilities stemming from the use of multilateral clearing” must be taken into consideration, each country essentially wanted to purchase military equipment on credit, both from the Soviet Union and from one another. Delegates decided at the ten-day meeting to distribute production of weapons, vehicles, and equipment of seventy types among the COMECON member states. Hungary’s projected import-export balance underwent a radical improvement as a result of the agreements, rising to an expected 145 million ruble surplus from 1957–1965 from a previously forecast deficit of 254 million rubles during that period. According to the agreements, Hungary was (supposed) to begin deliveries of electronic detonators and R-104 radio transmitters in 1957 and PUAZO-6 directors, SON-9A director radar and 57 mm S-60 anti-aircraft guns in 1958.27 In the meantime, preparations were being made for the first consultations of the new COMECON permanent commission established to coordinate military-industrial specialization and the distribution of production among the organization’s members. Hungary’s government selected Lieutenant General Géza Révész to serve as chairman of the Hungarian section of the Military Industrial Cooperative Standing Commission (MICSC) on August 23, while the Defense Council appointed the section’s members on September 3.28 The proposed statutes for the new commission, the agenda for its initial meeting and the body’s preliminary six-month work plan arrived from Moscow in the middle of September. The proposed statutes declared that the purpose of the Military Industrial Cooperative Standing Commission would be to oversee “the further development of economic relations and the organization of direct, multilateral cooperation among the competent ministries, offices and planning organs of individual countries taking into consideration their mutual interests.” In

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order to achieve these objectives, the statutes called for the new commission to formulate proposals with regard to the following issues: • the rational utilization of existing capacities and introduction of new military-industrial capacities as well as mutual deliveries of matériel among the member countries—coordinated with the cooperation and specialization of industry in individual countries; • the resolution of technical problems affecting multiple countries, holding scientific and technical conferences and meetings and organization of specialist exchanges; • the coordination of plans for military industrial scientific research and experimental construction work and determining thematic programs; • integration of weaponry prototypes, integration of unified technical specifications, tolerance systems, and state standards; • provision of mutual military-industrial assistance through the holding of consultations, the furnishing of licenses and technical documentation and the exchange of information. The submitted statutes stipulated that the Military Industrial Cooperative Standing Commission could issue resolutions only with the approval of the affected countries, which would transmit offers and proposals to the body through their designated representatives. According to the proposed regulations, the commission was to be composed of delegates from the competent ministries, offices and planning organs of COMECON member states, convening at least twice a year to conduct talks based on preliminary work plans. Due to the extraordinary nature of the commission, COMECON was to report on its operations in closed session. The proposed statutes called for the establishment of temporary work groups as well as sections based on the following sectors: aircraft industry; armored materials and artillery tractors; infantry, artillery and mortar weapons; munitions, explosives and special machinery needed for their manufacture; radio-electronic and telecommunications equipment; technical and chemical instruments; and naval ships. Finally, the MICSC was to establish a Secretariat under the auspices of the COMECON Secretariat. According to a resolution adopted at the organization’s seventh session in East Berlin, this secretariat was to be based in Moscow.29 COMECON’s Military Industrial Cooperative Standing Commission held its founding session in Moscow from September 23–28. Although no minutes have yet been uncovered for this session, an abridged report on the event states that seven subsections were established at the meeting based on the following production branches: aircraft industry; infantry, artillery, and

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mortar weapons; armored materials and artillery tractors; munitions, explosives, and gun powder; telecommunications; naval ship building; technical materials; and chemical-defense materials.30 The commission also endorsed its proposed statutes, which had to be submitted to the COMECON Council for final approval.31 (It should be noted that the other standing commissions—those pertaining to the machine industry, agriculture, non-ferrous metals-metallurgy, wood, and cellulose as well as the petroleum and gas industry—held their founding sessions in the second half of September or early October as well.)32 Hungary’s Technical Cooperation Committee discussed a report on the initial meeting of the COMECON Military Industrial Cooperative Standing Commission on October 5. The Technical Cooperation Committee, which submitted this report to the Defense Council for approval, decided to simultaneously request that the latter body establish a new organization to be called the Military Industrial Economic and Scientific-Technical Cooperative Permanent Government Committee in its place with identical membership and authority.33 On October 22, one day before the start of the 1956 Hungarian Revolution, the Defense Council called a meeting of the organization under the slightly simplified name of Military Industrial Permanent Government Committee to be held on October 26 to discuss issues stemming from the first session of the COMECON Military Industrial Cooperative Standing Commission’s aircraft industry section.34 However, the outbreak of the revolution prevented this meeting from taking place.

2.2 SEARCHING FOR SOLUTIONS— SECTIONS, WORK GROUPS Beginning on October 23, 1956, demonstrators and revolutionaries in Budapest and other cities in Hungary attempted to obtain weapons from militaryindustrial factories and warehouses in the country. Workers at the plants were among the first to side with the revolution and in some instances, such as in the cities of Székesfehérvár and Miskolc, were among those who initiated mass demonstrations and other pro-revolutionary activity. Following the November 4 Soviet intervention to suppress the revolution, workers throughout the military-industrial sector went on strike, later joining the Greater Budapest Central Workers Council. In order to prevent further armed resistance, Hungarian security forces and subunits of the Soviet Army collected all weaponry and matériel from military-industrial plants throughout the country beginning in the second half of November. Production was resumed at these plants to a greater or lesser degree only in the spring of 1957.35

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As a result of the suspension of military-industrial production in Hungary during the revolution, the country’s János Kádár-led Revolutionary WorkerPeasant Government decided at its meeting on December 6, 1956, to initiate talks with fellow Warsaw Pact member states regarding an extension of the deadlines stipulated in its mutual delivery treaties.36 At its initial session on December 22, Hungary’s newly reconstituted Defense Council approved a proposal from Military Industrial Permanent Government Committee Chairman Lieutenant General Géza Révész. Among other things, Lieutenant General Révész’s proposal reiterated the obligations that Hungary had undertaken during talks in July of that year: “Other than one type of artillery gun, the Hungarian side engaged to manufacture primarily telecommunications and precision-technology goods for export, since these products are less materialintensive, while their production is more economical. On the other hand, we would have purchased tanks, airplanes and other heavy weaponry.” Lieutenant General Révész, who also served as the National Planning Office’s deputy chairman, also recommended that the government start negotiations with fraternal countries regarding a revision of mutual delivery protocols: Under the new circumstances it is obvious that we cannot uphold the original agreements, on the one hand as a result of lost preparation time and, on the other hand, due to the lack of certain documentation and, furthermore, to energy and other shortages that occurred in 1957. Another reason why we cannot uphold these agreements is that we do not require the imports stipulated in them. Our partners will certainly modify their requirements toward us as well. Under the changed conditions we find it advantageous to offer to deliver 57 mm antiaircraft guns, SON-9A radars and R-104 radio transmitters to our partners. In this case, the value of products offered for export would be 390 million rubles. Originally, there existed 716 million rubles in export possibilities for arms and matériel during the years 1957–1961.37

Hungary’s import requirements had dropped to almost zero as a result of an approximately 40 percent reduction in the size of the Hungarian People’s Army to just over 50,000 troops. At its December 22 session, the Defense Council deemed the acquisition of modern military technics possible beginning only in 1959, allocating between 120–150 million rubles for this purpose in 1959–1960.38 A Deputy Council of Ministers Chairman Ferenc Münnich-led delegation had obtained approval to reduce the size of the army during talks held in Moscow between January 28 and February 2, 1957, with representatives from the Soviet Union’s Defense Ministry and the Warsaw Pact’s Unified Armed Forces Supreme Command. Soviet officials had also consented to the Hungarian delegation’s request that the

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Hungarian People’s Army be permitted to continue using its outdated military technics until 1960.39 Lieutenant General Révész traveled to all the partner states in February 1957 in order to inform officials of Hungary’s decision to cancel its orders for military equipment and matériel as well as to determine if under the circumstances there was any import demand in these countries. Révész discovered that the GDR, Czechoslovakia, Romania, and Bulgaria had maintained their demand for 324 million rubles in anti-aircraft guns, radars, and radios. However, the lack of technological specifications and documentation for these items compounded the difficulties that Hungary already faced in meeting its delivery obligations, preparations for which should have already begun.40 The assignment of completing this task fell to Major General Mihály Horváth, who succeeded Lieutenant General Révész as chairman of the Military Industrial Permanent Government Committee following the promotion of the latter to the post of defense minister on March 1, 1957.41 On May 22, Major General Horváth proposed to the Defense Council that another trip be made to fellow COMECON member states in order to gauge their need for Hungarian imports. The advanced stage of negotiations among these countries as well as between them and the Soviet Union regarding the distribution of militaryindustrial production further increased the urgency of organizing such a trip. The Defense Council therefore decided to provide the necessary authorization to conduct the proposed talks.42 It is necessary at this point to briefly examine the extent to which Hungary’s previous mutual-delivery agreements were fulfilled. Hungary had concluded trade treaties stipulating the delivery of at least 110.6 million rubles in matériel to Poland, Czechoslovakia, Romania, and Bulgaria from the summer of 1952 until August 1956, while these four countries were to deliver approximately 20 million rubles in matériel to Hungary during this period.43 Although there is no direct information regarding the implementation of these treaties, the National Planning Office later compiled data regarding the balance of special commodities trade that included the value of Hungary’s imports and exports of military equipment with other COMECON member states (see table 2.1 below). According to the data, the majority of Hungary’s imports emanated from the Soviet Union, while the majority of its exports were sent to smaller partner states. The aggregate data showing nearly 160 million rubles in exports suggests that more treaties were concluded in addition to those for which records exist. The data also shows that Hungary accrued a composite deficit of over 840 million rubles (or around 2.5 billion forints) as a result of the transactions between the years 1950 and 1956. Officials from the Military Industrial Permanent Government Committee held talks with representatives from East Germany, Czechoslovakia, Ro-

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Table 2.1. The Value of Military-Industrial Trade Turnover between 1950 and 1956 Year

Exports

Imports

Balance

1950 1951 1952 1953 1954 1955 1956 Total

— — — 70.7 43.6 32.4 12.9 159.6

168.4 339.6 116.9 122.2 122.7 87.1 44.4 1,001.3

–168.4 –339.6 –116.9 –51.5 –79.1 –54.7 –31.6 –841.7

Note: The National Planning Office calculated the data making retroactive use of the new Soviet ruble, which had to be converted into the old Soviet ruble at a rate of 1 new ruble (SUR) to 4.4444 old rubles (ORB). Source: Personal calculation based on Analysis of the Development of Economic Activity Serving the Country’s National Defense and Internal Security for the Period 1950–1970. MNL OL, XIX-L-1-qqq 9. d.

mania, and Bulgaria from June 1 to 13, 1957. Members of the commission indicated during the talks that Hungary wished to import matériel, mostly parts, worth approximately 150 million rubles in the years 1959–1960, while officials from the four countries maintained their previously stipulated demands, both in terms of quantity and composition. Hungary would have generated 334 million rubles in revenue from the delivery of anti-aircraft guns and radars pursuant to these orders during this two-year period. On June 28, the Defense Council summoned the National Planning Office, the Ministry of Ministry of Defense and the Ministry of Metallurgy and Machine Industry to begin preparations for the production of S-60 57 mm anti-aircraft guns and SON-9A radars in accordance with Major General Horváth’s previously mentioned proposal. In a letter to Soviet Council of Ministers Chairman Nikolai Bulganin, Hungarian Socialist Workers’ Party (HSWP) General Secretary János Kádár requested that the Soviet Union provide Hungary with missing technical documentation needed for the production of these items.44 While Hungary was busy stabilizing the country’s international trade positions and preparing for the implementation of pledged deliveries, COMECON organizations were striving to finalize the scope of cooperation among member states. At a meeting in Moscow on July 10, 1957, deputy representatives from these countries approved the Military Industrial Cooperative Standing Commission’s statutes in slightly modified form compared to those devised the previous fall.45 On September 19, 1957, the CPSU Central Committee and the Soviet Government issued a resolution, which exercised a significant influence on

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the further course of planning, calling for the preparation of a seven-year production plan to begin in 1959 for the Soviet people’s economy, including the military industry.46 At another meeting in Moscow on October 5, the delegation leaders of the Military Industrial Cooperative Standing Commission discussed Soviet ideas connected to the long-range plan, selected the dates for meetings of sections and work groups, began preparing the commission’s 1958 agenda and determined the issues to be considered at its next session on December 10.47 On October 15, the Defense Council discussed tasks stemming from the above consultations. A proposal that Major General Horváth submitted at the Defense Council’s meeting suggests that the MICSC did not wish to conduct detailed discussion of the very issues that were most important from Hungary’s point of view—the distribution of military-industrial production and mutual deliveries. The planning-office presidents from COMECON member states agreed that all the people’s democratic countries should devise medium-term plans for the period 1959–1965 to be coordinated in the spring of 1958. This agreement presented a serious risk for Hungary, because it placed exports planned for the years 1958–1960 in jeopardy. These factors prompted the MoD to order the National Planning Office, the Finance Ministry, and the Foreign Trade Ministry to initiate talks aimed at clarifying the payment and delivery conditions surrounding trade in the military industry.48 Meanwhile, the Soviet party and state apparatus began to gradually elaborate the principles governing the selection of information to be shared with the satellite countries and the optimal depth and type of cooperation with them. While Soviet officials wanted to retain access to the results and conclusions stemming from research and development activity conducted in fellow COMECON member states, they wanted to share as little information as possible with them. Various directives were issued in the Soviet Union during the fall of 1957 stipulating the sectors of industry in which cooperation of any kind whatsoever could take place and the types of technology whose transmission or detailed presentation to the satellite countries would be prohibited. These fundamental information- and technology-protection measures determined the extent of specialization and cooperation with regard to various military goods. The Military Industrial Cooperative Standing Commission’s Soviet section drafted plans pursuant to a September 12, 1957, Soviet Council of Ministers decree regarding the international coordination of scientific-research and experimental-development activities. According to the plans, discussion of the most modern types of weaponry—atomic weapons and missiles—would not be permitted during international consultations. The Soviet section of the commission did, however, ask for COMECON member states to submit proposals regarding other issues to be considered in the course of consulta-

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tions, the scheduling of meetings, etc. The MICSC secretariat distributed the received plans among the Soviet leaders and members of the sections according to branch of service. These delegates belonged to the staffs of various sector-based state commissions (ministries), military institutions and planning offices, which examined and evaluated the proposals. The secretariat then dispatched draft resolutions based on the latter assessments to the relevant countries. Only those themes that had elicited observations from member states or toward which the Soviet Union had shown an interest were discussed at section meetings. Information protection was one of the primary factors taken into consideration during the meetings, whose agenda included no discussion of plans for newly developed fighter planes, tanks, mediumsized and large naval ships, and modern radar.49 In this way, several COMECON sections and subcommissions held sessions in Moscow between late October and early December of 1957: the Military Industrial Cooperative Standing Commission’s Armored Weapons and Artillery Tractors Subcommission between October 25–28 and Aircraft Industry Subcommission between November 15–20; the Infantry and Artillery Weapons and Instruments Subcommission between November 20–23; the Munitions Section between November 27–30; and the Radio Electronics and Telecommunications Section between November 28 and December 3.50 The Gosplan, the State Committee for Foreign Economic Relations (GKES) and the Soviet Defense Ministry were instructed in September 1957 to “clarify issues related to products manufactured in the people’s democratic countries according to Soviet license” and to submit proposals to the CPSU Central Committee regarding the development and specialization of the military industries in those countries as well as the available resources and timetable for equipping their armies. These authorities were to consider in the course of completing these tasks the “immense vulnerability of the military industries of the Western people’s democratic countries” as well as the strictly classified nature of newly developed weapons and the economic efficiency of their production. On December 6, Soviet Military Industrial Complex (VPK) leaders Rodion Malinovsky, Mikhail Hrunichev, and Alexey Shakhurin presented General Secretary Khrushchev with a proposal containing the following fundamental principles regarding military industrial cooperation between the Soviet Union and the countries of the socialist camp: • The people’s democratic countries are obliged at times of both peace and war to supply themselves—maximally if possible—with firearms, artillery implements, mortars and the necessary munitions, military telecommunications equipment, engineering personnel, chemical-defense gear, and radiation detectors.

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• Production of the specified military equipment must be ensured through the utilization of existing military-industrial capacity as well as through the incorporation into the military industry of industrial sectors manufacturing civilian products in these countries and the organization of deliveries of military equipment between them. • New military-industrial factories do not generally need to be built in the people’s democratic countries of Europe; neither do old factories need to be expanded. • The new, most-developed, secret, and rapidly changing types of military equipment—anti-aircraft and guided missiles, jet fighter planes, radar instruments and the most recently developed experimental prototypes of other equipment—should not generally be provided to the people’s democratic countries until we have started mass production of them and until they have been circulated within the Soviet army.51 The second session of the COMECON Military Industrial Cooperative Standing Commission took place in Moscow from December 10–14 based on the above principles and a prepared Soviet script. In terms of organizational issues, members of the committee decided to establish a work group instead of an independent section to handle matters related to military supplies and not to establish a section dealing with missile technology on the grounds that only one or two COMECON member states besides the Soviet Union conducted activities in this field. Commission officials attempted to schedule fewer section and work-group meetings for the year 1958, though various technical problems and standardization issues largely prevented them from achieving this objective. In the course of coordinating the long-range military-development programs of member states, a dispute arose between Polish and Czechoslovak representatives, who advocated the formulation of plans extending to as far as 1975, and Soviet representatives, who asserted that the rapid development of military technology made any plans ranging beyond the year 1965 unrealistic. In the end, the MICSC adopted a resolution stipulating that representatives from the general staffs of COMECON member states would meet in January or February of 1958 to clarify and elaborate plans for the development of weapons systems until 1965, while the commission would convene in April or May of the former year to discuss itemized yearby-year targets for military-industrial production and mutual deliveries until 1960 and general estimates in these domains until the year 1965.52 After approving a report on the above session of the MICSC at its meeting on January 3, 1958, the Defense Council endorsed a proposal from Foreign Trade Minister Jenő Incze defining the payment and credit conditions for export deliveries between the years 1958 and 1960. The proposal recalled the favorable trade terms that the Soviet Union had extended to both Hun-

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gary and its fellow COMECON member states—ten-year credit at 2 percent interest on imports of matériel until 1953 and ten-year credit on two-thirds of such imports and cash payment on the remaining one-third between 1953 and 1956. The foreign-trade minister’s proposal noted that both Romania and Bulgaria, citing economic factors, had indicated that they wished to import military equipment from Hungary on credit. The proposal asserted that maintaining exports was vitally important for two reasons: One is that we can recompensate [sic] to greater degree the acquisition of expensive heavy military-industrial products, such as airplanes, tanks, etc., necessary for the [Hungarian] army through the sale of military-industrial goods. The other reason is that if we do not secure markets for these goods—radar and antiaircraft guns, for example—and only manufacture them for the Hungarian army, the quantity will decrease to such an extent that their production will become very uneconomical. If on the other hand we do not manufacture the above items even for ourselves, then they would have to be acquired through imports, which would further increase special import procurements by several hundreds of millions of rubles, all of which would have to be offset with civilian products. From the perspective of the national economy, this would be much more unfavorable than the planned credit construction.

The Defense Council decided based on the proposal to send 75 percent of exports to Romania and Bulgaria and 50 percent of exports to the German Democratic Republic on credit, appointing the members of Hungary’s delegation to negotiate the terms of the necessary agreements with these countries as well.53 A delegation from Romania held talks in Budapest from between February 24–28 regarding imports of military equipment from Hungary, though did not accept the proffered payment conditions, insisting that 100 percent of deliveries be conducted on credit. Based on the failure to reach an export agreement with Romania, officials from the Ministry of Foreign Trade concluded that both Bulgaria and the German Democratic Republic were also likely to reject the payment terms outlined above. The ministry estimated that in the absence of these export deliveries, radar and artillery factories would essentially be compelled to switch over to entirely civilian production. The Defense Council adopted a resolution on March 14, 1958, authorizing the introduction of the ten-year credit construction “established among fraternal countries.” At the same time, Council of Ministers Chairman Ferenc Münnich dispatched a letter to Khrushchev requesting that the Soviet Union apply the same construction to the 500–600 million rubles worth of matériel scheduled to be delivered to Hungary until 1965.54 A few days later, Defense Minister Géza Révész led a Hungarian delegation to Moscow in order to discuss Hungary’s long-range development plans

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with Soviet and Warsaw Pact officials. At the end of talks held between March 17–19, representatives from the Armed Forces Ministry of the Soviet Union and the Warsaw Pact’s Joint Armed Forces Supreme Command signed a protocol specifying changes to the weapons system and the peacetime and wartime order of battle for the Hungarian People’s Army.55 The Joint Armed Forces Supreme Command made decisions regarding the organization and weapons systems of Warsaw Pact members states at the end of April or beginning of May. Although the details of these decisions are unknown, the National Planning Office’s General Organizational Department did issue a report summarizing the main points affecting Hungary.56 According to this report, the Moscow resolutions had sharply curtailed Hungary’s export opportunities, decreasing production demand to only 15 percent of the military equipment previously scheduled to be delivered to the German Democratic Republic, Romania and Bulgaria and reducing targeted export orders for the period 1959–1965 from 700 million rubles to 100 million rubles. The National Planning Office report emphasized the continued importance of international cooperation: It would be desirable for the Hungarian People’s Republic that the distribution of military-industrial production with regard to radars, radio relays and other types of modern high-capacity radio would ensure enough demand and delivery opportunities for our military telecommunications industry to at least partially counterbalance import needs stemming from the developmental tasks of the Hungarian People’s Army.

The report urged that COMECON member states implement a strict system of specialization and extend cooperation to the production of larger parts and subassembly units: It could be achieved through the distribution of production in such a way that the people’s democracies would purchase the newest types of modern military technics from the Soviet Union, while the other various military equipment could be satisfied through the cooperation of people’s democratic countries.

The report furthermore specifically cited the need to coordinate mobilization plans.57

2.3 AGREEMENT ON THE DIVISION OF LABOR Leaders from the communist and workers’ parties of the COMECON member states gathered in Moscow for consultations between May 20–23, 1958,

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to discuss issues related to the further development of cooperation and the coordination of the international division of labor and the specialization of production in light of the Warsaw Pact Joint Armed Forces Supreme Command’s long-range resolution cited above. The officials considered the topic of military-industrial specialization in closed session as the second point on the meeting’s agenda. During this meeting, CPSU representatives submitted an agenda-item proposal based on the Soviet Military Industrial Complex’s previously mentioned fundamental principles regarding military industrial cooperation between the Soviet Union and its fellow COMECON member states. This proposal stated that in spite of the establishment of the Military Industrial Cooperative Standing Commission, delivery treaties had not been concluded among these states, primarily as a result of problems related to the settlement of financial accounts. Noting that demand for military equipment had changed significantly as a result of the decisions of the Joint Armed Forces Supreme Command, the proposal declared that military needs must be satisfied through mutual deliveries and that it was not generally necessary to build new military-industrial factories or expand existing such plants except within new branches of industry (vacuum technology, etc.). The Soviet proposal furthermore affirmed the willingness of the Soviet Union to deliver matériel of the most modern variety to partner countries under the favorable credit conditions established earlier. In their reaction to the proposal, Hungarian representatives argued that it would be necessary to reconsider the nomenclature in its entirety, redefining the military-industrial profile of individual countries based on existing capacities. Hungary’s representatives endorsed the 1959–1965 trade objectives and expressed support for the proposal to coordinate mobilization plans as soon as possible as well.58 The resolution that party leaders adopted at this meeting essentially incorporated the ideas that Soviet representatives had articulated at the second session of the COMECON Military Industrial Cooperative Standing Commission in Moscow the previous December. The resolution reconfirmed the emphasis to be placed on mutual deliveries between the organization’s member states: The European people’s democratic countries . . . will supply themselves to the maximum degree possible with armored combat implements, firearms, artillery implements, mortars and necessary munitions, military telecommunications equipment (including that which can be installed in military aircraft and tanks), ground and air radar, vacuum mechanisms, radio parts, equipment for technical units, chemical-defense gear, radiation detectors and military hauling and transport vehicles.

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The resolution called for the use of existing capacities to satisfy delivery demand: New military-industrial factories do not need to be built in the European people’s democratic countries, neither do old factories need to be expanded to manufacture new types of conventional weapons. Only rapidly developing technical articles and certain types of weapons represent exceptions for which demand is much greater than the manufacturing capacities of the countries.59

Hungarian Socialist Workers’ Party General Secretary János Kádár, who had led Hungary’s delegation at the Moscow talks, presented the HSWP’s Central Committee with a detailed account of the consultations at its session on June 6, 1958. Kádár familiarized committee members with the general operations of COMECON as well as the course of negotiations that had taken place in Moscow regarding formulation of the organization’s system of recommendations and guarantees. The HSWP leader stated the following with regard to military-industrial specialization: The issue of military-industrial production and delivery was a separate agenda. Here, the situation is that in previous years this production and delivery worked with great difficulty. The fact that individual countries did not manage to come to an agreement on payment conditions in the course of bilateral negotiations in a significant number of instances was the primary cause of the great difficulties. . . . In the past two years some disorder has arisen in production itself as well for various reasons. One reason is . . . that military technology has itself developed very rapidly, which makes the production of other materials necessary, because today specialists evaluate traditional arming [sic] among certain products, let’s say aircraft production, differently than even two years ago, although it is well-known that the Polish and the Czechs, for example, have built up sufficient aircraft-industry capacities. This applies to other goods as well. . . . Besides this, the fact that here certain complications have emerged in production has also played a very significant role. The events that took place in Hungary, for example, which caused production of all kinds to stop here for a certain period of time, and I think in Poland as well. And so both the Hungarians and the Polish went full speed ahead with the building of the military industry [at the beginning of the 1950s] without a particular agreement, since at that time we didn’t really confer much with anybody on what they thought about it. The decrease in [military] personnel also played a role. The development of military technology is connected most of all to the reduction in the size of the armies and, of course, with the peace policy, which also had something to do with it. . . . Here this manifested itself in such a way that two years ago, in 1956—prior to October—Hungarian military-industrial imports and Hungary’s military-industrial exports covered one another according to the theoretical program. They covered one another 100 percent, they were of

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identical value.60 Last year there were consultations of some kind—by that time the situation had changed so that our exports [of military equipment] covered only 40 percent of our imports, while this year things have developed so that exports have covered just 15 percent of imports. We ourselves have advocated the position that, taking into account the development of the military industry, taking into account the changes that have occurred in the size of the armies . . . it is necessary for the competent COMECON organ . . . to reevaluate demand and available capacity and conduct an appropriate arrangement. Within a limited deadline. The payment issues. Here it was our opinion that . . . Hungary should provide deliveries under identical payment conditions as those which it enjoys from its main supplier. In our case, we are willing to extend preferences identical to those that the Soviet Union extends to us to those who approach us with orders. Because there are some who do, Bulgarians, Romanians, others. That is to say, it happened earlier that there is a generally accepted preferential system in theory, which the Soviet Union itself established, that in the year of the delivery one-third of the delivery must be paid and the other two-thirds in ten years. . . . This is a general principle from the Soviet Union’s side. We met with some requests to delivery this and that, though without paying for ten years or five years, then they would start to pay or they would start to pay right away, but not one-thirds, two-thirds . . . annual installments—that is, something of which the Hungarian people’s economy is not capable.61

Hungary and other COMECON members states attempted to improve their foreign-trade balances in terms of military equipment at the next session of the Military Industrial Cooperative Standing Commission in Moscow between August 25 and September 5. Hungary’s projected seven-year trade deficit in this domain improved significantly as a result of preliminary agreements concluded at the meeting, dropping over 25 percent to 1 billion rubles on imports of 1.3 billion rubles and exports of 300 million rubles over the period. The leader of the commission’s Hungarian section, Major General Mihály Horváth, indicated in his report on the consultations that governments of individual COMECON member states were expected to approve the protocol signed at the meeting by November 1, after which time they would have three months to conclude bilateral or multilateral trade treaties. These consultations produced key decisions regarding the distribution of military industrial production that were to be felt in Hungary for the next decade. In conformity with Soviet principles drafted in December 1957 and resolutions adopted at the May 1958 meeting of communist- and workers’party leaders from COMECON member states, atomic and missile technology was not included in this distribution of production, although the Soviet Union did permit its allies to manufacture several types of modern aircraft, such as MiG-19PM fighter jets and Mi-4 transport helicopters, and combat vehicles, such as the T-54A medium tanks and ZSU-57-2 self-propelled anti-

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aircraft guns. The first item on the meeting’s agenda was “coordination of the mutual military-industrial delivery plans of the western people’s democratic countries for the years 1959–1965 and measures connected to the further specialization of their military industries.” In formulating their plans for the coordination of mutual deliveries of matériel, commission representatives took into account established military-industrial specialization and the best possible use of production capacities. As a result of the talks, the Military Industrial Cooperative Standing Commission recommended that these areas of specialization be preserved and that development be conducted according to a nomenclature. The distribution of production for nearly sixty types of military equipment and matériel was based on existing capacities. The three countries with the greatest military-industrial capacity—the Soviet Union, Czechoslovakia, and Poland—gained the most significant role in production of aircraft, combat vehicles, artillery guns, and telecommunications equipment, while Hungary, in accordance with the country’s priority on civilian economic development, was primarily involved in the manufacture of telecommunications, vehicles and, to a lesser degree, weapons. Romania and Bulgaria played a conspicuously small part in mutual deliveries. The COMECON commission recommended that production of these items be launched according to the following distribution among member states: • Soviet Union: jet fighter aircraft; bomber, torpedo and reconnaissance aircraft; new types of jet fighter aircraft; helicopters (MI-4); medium tanks; amphibious tanks; anti-aircraft assault guns; armored transport vehicles; anti-tank guns; divisional guns; howitzers; directors (PUAZO); mortar and artillery reconnaissance radar transmitters; general-staff radio-transmitters (R-110); front radio-transmitters (R-102); army radio-transmitters (R-118); divisional radio-transmitters (R-104); regimental radio-transmitters (R105); company radio-transmitters (R-116); R-108 and R-109 artillery radio transmitters; cooperative radio-transmitters (R-114); radar (P-30, P-15, P-10); R-403 radio relay-transmitters; reconnaissance-amphibious vehicles; landing transport trucks; minelayers; and self-propelled ferry boats. • Czechoslovakia: jet fighter aircraft (such as the MiG-19); new types of jet trainer aircraft; passenger aircraft; medium tanks; recoilless guns (for own use); regimental radio-transmitters (R-105); R-108 and R-109 artillery radio transmitters; landing transport trucks (for own use). • Poland: medical, delivery, and transport aircraft; helicopters (MI-1); medium tanks; caterpillar-tracked artillery tractors; divisional guns; antiaircraft guns (the 57 mm gun for own use only); recoilless guns (for own use); army radio-transmitters (R-118); company radio-transmitters (R-116 for own use), tank radio-transmitters (R-113).

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• Hungary: armored transport vehicles; anti-aircraft guns; RPD light machine-guns; artillery radar; front radio-transmitters; (R-102); army radiotransmitters (R-118, for own use); divisional radio-transmitters (R-104); regimental radio-transmitters (R-105, for own use); R-108 and R-109 artillery radio transmitters (for own use); cooperative radio-transmitters (R-114); R-403 radio relay-transmitters. • German Democratic Republic: turboprop aircraft; periscopes; telephotographic cameras. • Romania: rocket-propelled grenades. • Bulgaria: recoilless guns. The Military Industrial Cooperative Standing Commission recommended that COMECON member states purchase E-2 directors developed in Hungary. The German Democratic Republic reported that it had made significant independent developments with regard to military radios. The Soviet Union was the only country in the organization to manufacture airport equipment and communications instruments for aircraft. The commission did not distribute production of munitions, stipulating that as a fundamental principle COMECON member states should manufacture their own infantry, mortar and artillery munitions, air-to-ground bombs, and chemical-defense gear unless they lacked the necessary production capacity, in which case they would import these items through mutual deliveries or from the Soviet Union. Representatives from Poland, the German Democratic Republic, Romania, and Bulgaria approved the commission’s recommendation that only smaller warships be built in their countries, committing the task of manufacturing most naval ships, weapons, munitions, and matériel to the Soviet Union. MICSC delegated discussion of many further proposals to the body’s sections. However, due to the lack of discussion regarding cooperation in the area of production, the commission adopted the following resolution: Considering that the specialization of output cannot develop properly without broad cooperation in production, the commission deems expedient the organization of work connected to the development of extensive cooperation through the mutual delivery of products (assembly units) among the interested countries on the basis of bilateral and multilateral talks.62

In order to determine the objectives and precise duties related to militaryindustrial specialization and cooperation it was necessary to clarify needs for mobilization and wartime. At the end of October 1958, representatives from the general staffs and planning offices from Warsaw Pact member states as well as of several observer states, including China, North Korea, North Vietnam, and Mongolia, met in Moscow to examine the coordination

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of the Mobilization plans. In their evaluation of the needs for the first year of a possible war, these officials discovered serious deficiencies in defense equipment, supplies of raw and basic materials as well as transportationtelecommunications capacities. Officials from Warsaw Pact member states, which already prepared their mobilization plans according to a uniform methodology, committed the task of conducting further development and coordination to Gosplan. Representatives attending the meeting approved a resolution calling for the internationally coordinated M plans to be completed by 1959 and for countries to draft their individual M plans for one mobilization period based on maximum industrial capacities.63 Warsaw Pact general-staff and planning-office representatives convened for another meeting between July 11–13, 1959, to discuss the needs of the organization’s member states both over the long-term and for the given Mplan year.64 The officials furthermore requested that member states send their long-range plan proposals to the COMECON Military Industrial Cooperative Standing Commission and approved the nomenclature of matériel needed for coordination of the plans.65 In addition to preparation of these mobilization plans, issues related to peacetime specialization and cooperation also placed enormous burdens on the specialist apparatus of member states. Military and production branch-based sections and work groups held nearly twenty meetings. These bodies had to resolve numerous problems ranging from the formulation of payment conditions to the standardization of previously disparate technical requirements for radio-technology equipment, taking into consideration the interests of all relevant parties if possible.66 The COMECON Military Industrial Cooperative Standing Commission held its next regular session from July 7–11 1959, at nearly the same time as the above meeting of Warsaw Pact general-staff planning-office officials. The main item of the session’s agenda was to further examine the coordination and specialization of military-industrial developments. Commission representatives concluded that it was necessary in this connection to define the main direction of development for a period of five years in the interest of providing orientation for ongoing research. The commission also decided to refer most specialization issues as well as new requests from the Polish, Czechoslovak, East German, and Romanian delegations to the sections for consideration. Representatives proposed convening the commission’s next meeting in December 1959 in order to finalize the details surrounding mutual deliveries scheduled to begin in 1960.67 The Soviet State Committee for Foreign Economic Relations Engineering Department (GIU GKES), which had been responsible for management of the Soviet Union’s military industrial exports and military-industrial relations since 1957, was not, however, satisfied with the work of the Military

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Industrial Cooperative Standing Commission’s sections. On February 9, the department submitted a report to Council of Ministers First Deputy Chairman Alexei Kosygin regarding “scientific-technical cooperation and the provision of technical assistance connected to military equipment and other defense issues between the Soviet Union and the socialist countries.”68 The report maintained that the operations of the Military Industrial Cooperative Standing Commission were too fragmented, noting with regard to the commission’s recent consultations that “a large number of specialists from Western people’s-democratic countries and observers from China participated, in whose countries there are often not even any such factories and where no work of any kind takes place using the discussed technical methods.” The committee report strongly condemned the unmonitored and parallel flow of confidential military and military-industrial information through the Council of Ministers State Scientific-Technical Committee, The Soviet Academy of Sciences, the Ministry of Foreign Economic Relations, the Naval Ministry, the Interior Ministry, the Health Ministry, and the Ministry of Post-Secondary and Secondary Technical Education. The report declared that the flow of information was unfavorably unilateral, recommending that “transfer to the socialist countries of the Soviet Union’s scientific-technical achievements in the domain of military equipment and its experiences related to production” should be restricted, since certain COMECON member states were not even capable of making practical use of the information. In order to increase the efficiency and centralization of its oversight activities, the Engineering Department of the Soviet State Committee for Foreign Economic Relations (GIU GKES) recommended that issues concerning civilian scientific-technical cooperation be incorporated into its sphere of authority and that multilateral COMECON consultations thereafter be restricted to bilateral cooperation between the Soviet Union and the relevant socialist country. This proposal evoked strong opposition from both Gosplan and the State Scientific-Technical Committee.69 The CPSU Central Committee ultimately took action to resolve this dispute, deciding at the beginning of October 1960 that it was unnecessary to make changes to the organization responsible for coordination of scientific-technical cooperation among socialist countries.70 The next session of the Military Industrial Cooperative Standing Commission was delayed as a result of the session of COMECON held in Sofia, Bulgaria, between December 10–14 in order to adopt the organization’s charter and, presumably, the protracted dispute in Moscow described above. During the first half of 1960 this pause in Military Industrial Cooperative Standing Commission meetings seriously inhibited the operations of the sections and work groups, whose proposals required approval from the commission in

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order to become binding. The Hungarian section of the commission therefore officially requested that the body’s annual session be convened as soon as possible in order to expedite implementation of these proposals.71 During this period the sections and work groups made a significant effort to define common directions in the area of military-industrial development and to standardize the various types of military technics and communications equipment produced in COMECON member states in order to ensure the interchangeability of their parts and compatibility of their operations. The standardization of equipment and technology had, in fact, already begun, resulting in concrete financial savings in the area of munitions production, for example. The Military Industrial Cooperative Standing Commission’s annual meeting finally took place in Moscow between October 4–6, 1960. The commission proceeded to dissolve the sections and the work groups in order to increase efficiency, assuming all of the duties formerly assigned to these bodies and leaving the task of coordinating technical-developmental plans to be performed within the scope of bilateral talks. Individual country delegations and the MICSC’s Moscow-based secretariat therefore received a greater role in preparing for the commission’s annual sessions. The commission furthermore requested that the Warsaw Pact’s Unified Armed Forces Supreme Command urgently devise the order according to which tacticaltechnical requirements related to development of the new military-industrial goods would be introduced. The MICSC also approved the nomenclature for special munitions produced in small quantities as well as unified technical specifications for a wide variety of telecommunications equipment. Finally, in what was perhaps its most important action from a Hungarian perspective, the commission finalized the distribution of production for radio technology, apportioning the manufacture of seven types of equipment (radio transmitters, radio-relay lines and television and telegraphic equipment to Hungary).72 The Military Industrial Cooperative Standing Commission adopted its procedural regulations during the organization’s annual session in Moscow as well. These regulations, which were based on the model procedures approved at COMECON’s thirteenth session held in Budapest between July 26–29, 1960, called for the MICSC to hold biannual meetings, whose precise dates the commission would determine.73 These regulations contained detailed stipulations regarding the method of conducting commission sessions (convocation, work procedure, agenda, and minutes) and the duties of the secretariat and editorial groups, etc. It is important to present a verbatim citation of the frequently misunderstood passage of the regulations pertaining to MICSC proposals: The commission will make its proposals pursuant to point VII/3 of the COMECON Charter and the commission’s organizational procedures. The member

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states will implement adopted commission proposals through resolutions of their governments or other competent organs in accordance with the existing legislative order in the relevant country. The delegations will notify the secretariat within sixty days of the signing of the commission minutes of what their governments or other competent organs decided in the course of their discussion of the commission’s proposals. The secretary of the commission will inform the other delegations of these results within a brief period of time. . . . The commission adopts its proposals and resolutions only with the approval of the interested parties and every country retains the right to assert its interests with regard to any issue debated by the commission. The proposals and resolutions will be approved in the form of commission motions.74

The Military Industrial Cooperative Standing Commission held joint consultations with the delegation leaders of Warsaw Pact countries a little more than a week after the end of this session, on October 10. Representatives attending this meeting debated preliminary Soviet proposals regarding the increase of mobilization capacities, the production of military equipment, and the extraction of raw materials as well as the planning targets for mutual deliveries for the year 1962. The officials adopted a resolution, presumably in the interest of restricting the flow of information, stipulating that coordination of mobilization plans take place in the course of bilateral talks, not within the commission. At the same time, they asked Gosplan to undertake responsibility for the harmonization of the people’s-economic mobilization plans of countries belonging to the Warsaw Pact.75 The transformation of military doctrine beginning in the middle of the 1950s exercised a significant impact on military-industrial development in the Soviet bloc. The introduction of atomic weapons and missile technology triggered serious disputes among Soviet military leaders and strategists. The rapid development of atomic striking capacity and missile forces temporarily pushed traditional branches of the military into the background. Beginning in the spring of 1960, military training had to be adapted to changes in doctrine, preparing troops for the outbreak of an unexpected war involving the massive use of missiles and atomic weapons. In order to enhance the Warsaw Pact’s reaction capacity, Hungarian People’s Army divisions and units placed under the command of the Unified Armed Forces had to be transformed in order to be ready for immediate deployment without prior mobilization.76 The Soviet Union’s military leadership did, however, realize by 1960– 1961 that the development of conventional armed forces should not be neglected, because following possible nuclear strikes, it would be up to them to mop up remaining NATO troops with “Blitzkrieg”-like speed. This meant that “military technics such as tanks, armored transport vehicles, antiaircraft artillery, towing implements, radar stations, radiation-measurement

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instruments, telecommunications equipment, and chemical-protection gear will preserve their importance along with the use of nuclear weapons.” It was for this reason that the Warsaw Pact’s Unified Armed Forces Supreme Command insisted upon the sufficient development of industrial companies producing conventional weaponry in member states. In order to promote such development, Soviet officials proposed organizational measures aimed at achieving the following conditions: • military-industrial companies are able to manufacture civilian products as well at times of peace; • and civilian industry (tractor factories, companies producing heavy goods vehicles, watch and instrument factories, etc.) are prepared to manufacture military-industrial goods as well at times of war.77

2.4 KHRUSHCHEV’S ACCELERATED REARMAMENT PROGRAM At the end of January 1961, Nikita Khrushchev sent a letter to party leaders in the socialist-bloc countries in which he proposed the structural reorganization of allied armies and modernization of their weaponry, noting that such modernization would entail surplus expenditures which the Warsaw Pact would approve at it next meeting.78 Unified Armed Forces Supreme Commander Marshal Andrei Grechko held talks in Budapest on February 15–16 aimed at elaborating this proposal. The Soviet general requested during the consultations that Hungary implement its projected five-year military-development program in just two or three years, arguing, much as Soviet officials had ten years previously, that the significant effort of rival states, now acting under the auspices of NATO, to rapidly modernize their armed forces had compelled the countries of the socialist camp to likewise “enhance their defensive capabilities.” The planned modernization program would entail further military reorganization, increasing the number of active personnel serving in the armed forces and significant technical developments, including the acquisition of new fighter aircraft, the addition of anti-aircraft, anti-tank missiles, and armored transport-vehicles as well as an expansion in the number of tanks, etc.79 In separate meetings with National Planning Office Chairman Árpád Kiss and Minister of Metallurgy and Machine Industry János Csergő, Marshal Grechko recommended that Hungary manufacture tank parts, armored combat-vehicles, special motor vehicles and radios of various types both for the country’s own use as well as export to partner states. The Unified Armed

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Forces supreme commander told the Hungarian officials that planning-office leaders would be summoned for consultations following the Soviet Defense Ministry’s publication of a report reviewing the results of his talks in Hungary and other Warsaw Pact member states.80 Delegation leaders from the Military Industrial Cooperative Standing Commission and representatives from the general staffs of the armed forces of Warsaw Pact member states met in Moscow between March 13–17 to discuss future tasks categorized under the rubric “Further Measures Related to the Acquisition of Required Amounts of Certain New Weaponry, the Production and Mutual Delivery Thereof and the Order of Settling Accounts for Such Deliveries among the Western Warsaw Pact States.” The officials based the distribution of tasks on existing areas of specialization, though representatives from several delegations expressed their desire to discuss a further division of labor with regard to new types of infantry weapons. The generalstaff representatives and commission delegation leaders adopted a resolution regarding the measures needed to reach the specified objectives, phrasing the document in somewhat euphemistic fashion in order to downplay the significant production burdens to be placed on smaller Warsaw Pact and COMECON member states: “It would be expedient to make more complete use of existing production capacities and resources and, in case of need, to ensure minimal sums for the expansion of existing military-industrial capacities or the inclusion of civilian factories in the implementation of these tasks.”81 The Warsaw Pact’s Political Consultative Committee approved the launching of the rearmament and modernization program at its session in Moscow on March 28–29, 1961. The program called for member states to spend a total of 2.8 billion rubles on military-development investments over the following four years, equaling 70 percent of the Soviet Union’s annual military expenditures.82 The committee’s resolution instructed the Warsaw Pact Unified Armed Forces, the Military Industrial Cooperative Standing Commission and member-state defense ministries and state planning offices to update their economic-mobilization plans, particularly with regard to the objective of eliminating bottlenecks. In the interest of achieving a greater degree of specialization and cooperation, the committee approved as a foundation the production and mutual-delivery targets for the years 1962–1965, calling attention to the need for coordination of plans as they pertained to production of vacuum technology, semiconductors, fireproof alloys, armored plates, and other items in short supply.83 Hungarian Defense Minister Lieutenant General Lajos Czinege held talks with officials from the Unified Armed Forces Supreme Command and the Soviet Defense Ministry on March 30 regarding the tasks of the Hungarian People’s Army, stipulating in a resolution the Warsaw Pact joint military

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leadership’s requirements regarding the peacetime and wartime size of the army and the most urgent measures needed in connection to Hungarian units operating under the organization structure of the Unified Armed Forces and Hungary’s air-defense capabilities. Unified Armed Forces Supreme Commander Grechko stated during the talks that the Soviet Union was willing to provide Hungary with two hundred used T-34 tanks and enough 100 mm anti-aircraft guns to arm an air-defense regiment at a token price in order to help the country equip its armies as soon as possible.84 Soviet military leaders presumably informed their counterparts from other Warsaw Pact member states of similar obligations in the course of bilateral talks as well. On June 10, 1961, Hungarian Socialist Workers’ Party General Secretary János Kádár presented the HSWP Central Committee with the following recapitulation of the Political Consultative Committee’s March session: There is presently cooperation in the production of military material, though it turned out that its does not meet the requirements, that there is a need for much broader cooperation. That is, over the past years the situation has been that the Soviet Union produced most of the military equipment and material for the countries united in the Warsaw Pact. . . . There is military production of some sort in every country, though we know what that’s like—infantry, munitions and things like that—this is not the main implements of war [sic]. The current international situation is such that there is a need for the manufacture of the most modern military equipment and only the Soviet Union is capable of manufacturing the most modern military equipment. It has the most suitable conditions. In order to make it possible for us to relieve the Soviet Union of some of the burdens of military production, other countries must also switch over to the production of certain types of military equipment. This is the essence of the further development of cooperation. One or another of the socialist countries that have the production capacity should take over the manufacture of additional types of aircraft, tanks, armored vehicles, radars and other such products. So that the Soviet Union’s military-industrial production may turn to manufacturing the most modern weaponry [sic].85

Following approval from the supreme political leadership, the Soviet military and planning apparatus formulated detailed recommendations regarding the measures that individual member states needed to take in order to increase production, particularly during the mobilization period. Soviet military and planning officials urged that as many companies as possible be included in (or prepared for) military production so that the dramatic rise in wartime demand for weaponry could be satisfied. The Soviets suggested that Hungarian factories could be included in Czechoslovak and Polish tank-production activity, proposing that both Poland and Hungary increase production of S-60 anti-aircraft guns. The officials recommended that Romania, in cooperation

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with Bulgaria, begin production of light artillery tractors as a result of the insufficient motorization of the country’s armed forces. The Soviet proposal called for Czechoslovakia and Poland to play a heightened role in the provision of fellow COMECON member states with military equipment. The proposal stated the following with regard to Czechoslovak industry: Opportunities must be found to increase mobilization capacities, to manufacture (in cooperation with Poland) jet fighter aircraft similar to the MiG-21 and the necessary jet engines and to furthermore produce medium tanks (taking into account Bulgaria’s needs), armored tractors, armored transport vehicles, radar stations, radio bases, BM-14 multiple rocket launchers, air munitions, etc. They must acquire the capability to manufacture SNAR-2 and ARSOM-2 radar stations and they must maintain production of SON-9A fire-control radar mechanisms.

The proposal recommended that Poland increase its production capacity for MiG-21 jet fighters, An-2 and Yak-12 aircraft, Mi-1 helicopters, aircraft motors, artillery and anti-aircraft guns, radar stations, radio bases, medium artillery tractors, armored transport vehicles, torpedo boats, artillery and infantry weapons, air munitions, and ammunition of other types. Soviet military and planning officials called for Bulgaria to increase it production capacity for B-10 82 mm recoilless guns, and to begin production of AKM assault rifles and required ammunition and depth charges. The Soviet proposal stipulated that Romania should undertake production of 100 mm tank guns, AKM assault rifles (for the country’s own army), light-artillery tractors (in cooperation with Bulgaria), armored transport vehicles, and munitions. This proposal was distributed to Soviet ambassadors accredited in Warsaw Pact members states with instructions to present the documentation to state planning-office leaders and chiefs of staff in those countries.86 Officials from the “interested COMECON countries” discussed the Soviet recommendations outlined above as well as the specialization of newly launched products and the 1963–1965 delivery plans at a meeting held in Moscow between July 25–27, 1961. Representatives from the countries decided at the talks to slightly modify the distribution of production stipulated in the 1958 agreements, expanding the number of countries manufacturing armored vehicles and military radios and transferring production of new missile technology to the two most experienced partner countries. The officials further resolved that all COMECON member states would supply themselves with parts, subcomponents, and materials so that the Soviet Union could focus on production of advanced technology. The COMECON representatives also determined the manner in which Bulgarian industry could be included in cooperation:

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In the interest of integrating the industry of the People’s Republic of Bulgaria in the military production and the supply of the armed forces of the countries, the conference is establishing a temporary work group composed of representatives from the countries in order to examine possibilities regarding the engagement of the Bulgarian military industry taking into account the wish of the Bulgarian Side that its industry be specialized in production of infantry weapons.

In order to consolidate the weaponry of the allied armies, the representatives at the meeting authorized the Warsaw Pact’s Unified Armed Forces Supreme Command to “establish an order by which the incorporation into weapons systems and serial production of the main military equipment developed in Warsaw member states takes place following the Unified Command’s assessment.” (Over the subsequent decades, the Soviet-dominated Unified Armed Forces Supreme Command invoked this authority to essentially prevent the adoption of weapons and matériel not developed in the Soviet Union, thus inciting a series of conflicts with other Warsaw Pact member states.) Serious difficulties emerged in the coordination of deliveries. As a result of the launching of production of new military equipment, member-state officials were unable to finalize production targets or mutual military-industrial delivery plans for the years 1963–1965, leaving these issues to be resolved in the course of bilateral talks later that year.87 Defense Minister Lieutenant General Lajos Czinege informed Marshal Grechko of the initial steps that had been taken in Hungary in connection with the newly launched development program during talks held on July 21–22, 1961, notifying the supreme commander of the Warsaw Pact’s Unified Armed Forces that the country’s entire air-defense structure had been reorganized, entailing the establishment of an air-defense divisional command in the city of Veszprém, that units of the Hungarian People’s Army had been redeployed to western Hungary and that the joint armed-forces Fifth Army Command would be founded on August 1.88 The leaders of communist and workers’ parties in the Eastern bloc held consultations in Moscow between August 3–6, 1961, at which the main theme of discussion was the Berlin Crisis and Sino-Albanian deviationism.89 The sharp antagonism and preparation for war that stemmed from the erection of the Berlin Wall provided the Soviet Union with an opportunity to radically accelerate the development program approved in March of that year. The Warsaw Pact Unified Armed Forces Supreme Command issued an ultimatum-like mandate to the Hungarian People’s Army to prepare itself within one month “for full-scale combat engagement,” that is, to fight a possible war.90 On September 5, Hungary’s Defense Council approved a plan to reschedule the program that the the Hungarian Socialist Workers’ Party Central Committee had formulated at meetings on August 24 and 29.91 On

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September 8–9, defense ministers and chiefs of staff from Warsaw Pact member states briefed Marshal Grechko on the progress their countries had made in carrying out the stipulated measures.92 The sudden surge in the demand for military equipment and the incapacity of the military industries in the member states sharpened discord between the states of Central and Eastern Europe and the Soviet Union. Soviet delegations held bilateral consultations with planning-office and general-staff representatives in Warsaw, Prague, Budapest, Bucharest, and Sofia in September and October of 1961. In the course of these talks, member-state officials expressed their reluctance to accept the elevated production and mutual-delivery targets contained in the cited Soviet recommendations. In a report summarizing the results of the talks submitted to the CPSU Central Committee, Gosplan Chairman Vladimir Nikolayevich Novikov and Chief of the General Staff Matvei Vasilevich Zakharov declared that the military industries in member states were not adequately prepared for war, asserting that the Soviet Union would be unable to satisfy the rising wartime demand of these countries for military equipment, 85 percent of which they already wished to import from USSR during the period 1961–1965. The report cited MiG-21 fighter jets as an example of military technics for which the Soviet Union had no surplus production capacity to meet rising demand, noting that the revised production mandates has raised the number of such aircraft needed in member states to 1,800, of which Czechoslovakia could export a total of just seven (!). The report indicated that the Czechoslovak military industry would have been capable of raising its output of the jet fighter had Polish officials not rejected a proposal to begin manufacturing MiG-21 parts for export to Czechoslovakia on the grounds that Poland wanted to follow through with planned production of the obsolete MiG-17, including 220 such aircraft in 1962. The authors of the report furthermore acknowledged, in contrast with the euphemistically termed Military Industrial Cooperative Standing Commission resolution, that the rise in mutual deliveries would necessitate substantial supplementary investments. The increase of Czechoslovakia’s tank production to 2,000 units per year would have required the conversion of automobile factories in Prague and Plzeň and the expansion of metallurgical plants in Ostrava at an estimated cost of 1.5 billion koruna. Finally, the report stated that it would be necessary to conduct further negotiations with member states as a result of the failure to conclude agreements in the course of previous bilateral negotiations.93 Between September 18 and October 6, 1961, representatives from the National Planning Office’s Military Department and the MoD Material Planning Directorate held more bilateral talks with planning-office and general-staff officials from Poland, Czechoslovakia, Romania, and Bulgaria

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in order to discuss possibilities for mutual deliveries and harmonize mobilization plans for the year 1962. Among the numerous difficulties and deficiencies that came to light during the consultations, it became evident that neither Poland nor Czechoslovakia would be able to undertake delivery of even a single tank during the M period and that there were significant shortages of trucks, railway freight cars as well as many types of raw and basic material, such as alloys, non-ferrous metals, military chemical-industry substances, activated carbon, etc.94 Talks were held in Moscow between January 5–10, 1962, to coordinate mobilization plans. Hungary’s delegation arrived to the talks with a nine-page list of military equipment and matériel, including aircraft, tanks, armored vehicles, high-power radar, large-caliber artillery guns and munitions and telecommunications equipment, as well as raw and basic materials that Hungary had been unable to import from fellow Eastern bloc states and therefore hoped to obtain from the Soviet Union during the mobilization period. With regard to these import shortfalls, Soviet representatives indicated that talks conducted with other member states showed that similar difficulties had emerged elsewhere as well: The current rearmament period has created a situation in which the needs of the armed forces in certain countries significantly exceed production possibilities. This partially explains the phenomenon that the majority of countries undertake to export smaller quantities of military equipment during M periods than at times of peace so that are able to increase the satisfaction [sic] of their own armies. . . . It is for this reason . . . that it appears to be necessary to reexamine the further development of the M capacities of certain countries and the possibility of expanding the production of M military equipment based on approved areas of specialization.

Hungarian representatives assented to every one of the production requests that their Soviet counterparts submitted during the meeting, agreeing to meet stipulated output quotas for telecommunications equipment, railway locomotives and wagons and, above all, food industry and agricultural products such as sugar, ethanol, leather gloves, panofix coats, wine, fresh fruits, and tobacco.95 In the meantime, Unified Armed Forces Supreme Commander Andrei Grechko informed Hungarian Minister of Defense Lajos Czinege in a letter dated December 9, 1961, that “as a consequence of the changed international situation” he considered it possible to annul the extraordinary measures adopted during the fall of 1961 and for the Hungarian People’s Army to revert to the order of battle defined in the March 30, 1961, Moscow protocol.96 The pace of efforts to rearm the allied armies did not, however, subside in late 1961 and early 1962. One of the first significant steps in the

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integration of the armed forces in Warsaw Pact states was the development of a unified domestic air-defense system under the direction of one of the deputy supreme commanders of the Unified Armed Forces. The Hungarian Socialist Workers’ Party Political Committee approved a resolution regarding consolidation of the air-defense system on March 20, while the Defense Council did the same on March 22.97 The tempo of armed-forces development is reflected in data showing that the production of military equipment in Warsaw Pact member states in the year 1962 doubled in comparison to that in 1958. (The rise in production of military technics varied considerably among member states: whereas Bulgaria recorded a seven-fold growth in military industrial output over the stated period, countries with higher base production such as Czechoslovakia and Poland posted increases of only 1.9 percent and 1.8 percent, respectively, during this span. Hungary’s production of military equipment rose five-fold during the period, while that of Romania, another country with a low base, was flat). However, these states continued to depend on Soviet imports to meet their demand for conventional weapons even after the rise in output described above. This deficiency, which “represented a substantial burden for Soviet industry and reduced the possibility for Soviet industry to manufacture an even greater quantity of modern missile technology, etc.,” was among the main topics of debate at the COMECON Military Industrial Cooperative Standing Commission’s session held in Moscow between May 8–11, 1962. In the course of discussion regarding the meeting’s agenda item entitled “Implementation of Proposals Connected to the Specialization of Military-Industrial Production and Military-Industrial Deliveries, Problems Concerning Production of Parts and Materials Comprising the Shortfall,” commission representatives concluded that preparations for production of new military technics was proceeding slowly, particularly with regard to high-quality parts and basic materials. Although the distribution of production had taken place according to type of military equipment and matériel, the member states were unable to produce sufficient quantities of these items to meet the demand of their allies. Primarily as a result of the failure to agree upon deadlines for the beginning of production of new military technics, the process of concluding mediumrange mutual-delivery treaties dragged on into 1962. In order to eliminate the previously mentioned deficiencies, the commission proposed that individual countries again review production and mutual-delivery possibilities and conclude bilateral trade agreements for the years 1963–1965 by August 1962. Commission representatives established a temporary work group composed of planning-office officials in order to examine established areas of production specialization and make necessary corrections.

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In the interest of integrating and standardizing military equipment and its production techniques, the Military Industrial Cooperative Standing Commission established unified tactical-technical requirements for VHF radio transmitters and telegraphic equipment, merged specifications for certain munitions-production machinery and regulated production of the main elements of special vehicles and trailers, for example. The commission did not, however, complete the task of formulating unified specifications for numerous types of telecommunications equipment and parts as well as artillery ammunition and cartridge cases. The commission requested that, “for the purpose of making its work more systematic,” member states inform the body of progress they had made in implementation of proposals by February 1 and again by August 1.98 Orders for weapons and equipment to be manufactured in the Soviet Union as part of mutual deliveries of military technics until the year 1965 were finalized by July 1962. In a report submitted to the CPSU Central Committee summarizing orders from Warsaw Pact member states, Vasiliy Ryabikov and Rodion Malinovsky stated that these countries planned to import 1.47 billion rubles in military technics from the Soviet Union, noting that Poland, the German Democratic Republic, Hungary, Romania, and Bulgaria wished to import a combined 600 million rubles worth of this technology on credit. However, as a result of delivery treaties previously concluded with countries in the Third World, the Soviet Union declined to undertake delivery of several types of radar and telecommunications equipment to fellow Warsaw Pact member states.99 The dynamic growth in mutual deliveries of both civilian commodities and military technics among COMECON member states required urgent measures aimed at strengthening mechanisms of multilateral coordination. In March 1960, the Central Committee of the Polish United Workers’ Party and the Polish Council of Ministers drafted a sixty-page report recommending reforms to COMECON’s institutional structure needed to attain this objective. The report, entitled Current Problems regarding the Development of Economic Cooperation among COMECON Countries, proposed changes affecting almost all of the most important areas of the organization’s operations, urging the implementation of various initiatives intended to achieve greater integration of production and trade, such as the establishment of common research institutes and joint ventures, and the acceleration of specialization, particularly within the machine industry. The final paragraph of the Polish report even suggested that the name of the organization be changed: The increased duties of COMECON require the formulation of a new international agreement defining COMECON’s objectives, missions and operational procedure. We recommend that documents relevant to this purpose be

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prepared and signed as soon as possible. We believe that the time has come to transform COMECON into a new international organization for the socialist countries of Europe and change its name as well (for example: Economic Cooperative Organization).

Although the leadership of the Hungarian Socialist Workers’ Party rejected the proposed name change and elimination of the standing-commission system, it did support most of the main reforms to COMECON proposed in the Polish report. As a result of the start of work on twenty-year plans for COMECON member states, the HSWP Central Committee issued a resolution on May 15 declaring that debate on the following issues was absolutely necessary: • • • • • • •

integration of standards; coordination of scientific research; introduction of common statistical and planning methodology; establishment of multilateral payment turnover; possibilities for the conclusion of long-range commercial treaties; increasing the mutual turnover of consumer goods; and improving coordination of activity on the capitalist market.100

Representatives from communist and workers’ parties of COMECON member states not only approved the document entitled “Fundamental Principles of the Socialist International Division of Labor” during consultations held in Moscow on June 6–7, 1962, but established the COMECON Executive Committee (EC) composed of deputy heads of state from these countries during the organization’s extraordinary Sixteenth session on June 7. At the Executive Committee’s founding session in the middle of July, these government officials declared that the first phase of socialist integration had come to a close, defining the newly formed body’s main objectives following the establishment of its organizational framework to be strengthening cooperation in the area of production and increasing the efficiency of the international division of labor.101 The committee amended the COMECON charter, approved the organization’s operational procedures, resolved to establish a Plan Recapitulation Department and approved the fundamental principles governing the specialization of the machine industry.102 There were other COMECON member states in addition to Hungary that were dissatisfied with the pace and implementation of measures aimed at transforming the organization. At a meeting in Moscow on October 25–26, 1962, delegation leaders from the COMECON Military Industrial Cooperative Standing Commission discussed the body’s duties and operations during a session for which minutes were not kept. On November 1, the chairman of the Hungarian delegation, Colonel Ervin Jávor, presented the Defense

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Committee with the following description of what had taken place during the session, referring to MICSC Chairman Vasiliy Ryabikov, who also served as the first deputy chairman of Gosplan: He recommended that the structure of the commission remain unchanged, though that every country strengthen its own apparatus in the interest of the improving the administration of work. He did not even mention the [June 1962] meeting of first secretaries and the designation of duties incumbent upon the commission as a result of the resolutions of COMECON’s extraordinary sixteenth session. The opinion of the delegations leaders was, without exception, that it was not possible to talk about the organizational forms until the new duties of the commission were clarified. . . . The most important duties of the commission can be summarized as follows based on the debate which took place: the international division of labor, coordination of subassembly units and parts; cooperation with the other COMECON commissions; coordination of technical-developmental, research and structural principles; harmonization of joint investments and long-range plans; and development of the standing commission’s organization.

Colonel Jávor informed the Defense Committee that Ryabikov had voiced the following viewpoints during the meeting: 1. He agrees that in the future cooperative deliveries must be determined at the same time as specialization. 2. It would be expedient for the military-industrial commissions in individual countries to participate in the formulation of the long-range people’s economic plans. 3. The coordination of scientific research work does not presently fall under the authority of the commission—this issue must must be discussed in advance with the Unified Armed Forces Supreme Command. 4. Investments until 1970 must be prepared with regard to the military industry along with the people’s economic plan. 5. Relations with COMECON’s other commissions must be improved within the given country. 6. The precondition for integration and standardization is that the Unified Armed Forces Supreme Command provide the relevant requirements. 7. More care must be directed toward the production of spare parts. 8. He considers it expedient that the MICSC occasionally provide reports on its activities to the inner leadership of the COMECON Executive Committee. 9. Individual countries should strengthen their military-industrial commissions and apparatus and in addition to this there should be plenary and presidium sessions, secretarial meetings and ad hoc specialist consultations.

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There were no approved minutes pertaining to this part of the session.103 Hungary’s political leadership expressed doubts regarding COMECON in the course of preparations for the organization’s seventeenth session and the next meeting of the Executive Committee. In a report submitted to the Hungarian Socialist Workers’ Party Political Committee on November 26, permanent COMECON representative Antal Apró stated: We would like to offer a basically positive assessment of COMECON’s operations over the past half year inasmuch as the implementation of the most important measures has begun. The pace of development, however, has remained slow and we are still quite far from the point at which COMECON’s new activity truly leads to palpable changes in the economic life of the countries. The slowness of this progress manifests itself in the following ways, among others: a) delays appear in the harmonization of long-range plans; b) the work of the permanent committees is adapting slowly and unevenly to the new requirements; c) the establishment of joint institutions is commencing slowly; d) the appointment of personnel to serve on the Secretariat’s staff is commencing more slowly than planned.

Hungarian officials wanted to make fundamental changes to the existing method of specialization in which the production of individual items was invariably assigned to between three and five countries, thus reducing the efficiency of the division of labor. Apró asserted in his report that further organizational-reform measures were needed: Coordination between individual standing commissions must be organized, because today this is for all intents and purposes completely lacking. In order to relieve the overburdening of the Executive Committee, the standing commissions should decide all the issues they can and not submit them to the EC. Through new methods such as asking the standing commissions to present reports on their work, for example, the Executive Committee should monitor the work of these bodies and ensure that they are operating in accord with the resolutions adopted at party conferences.104

COMECON officials discussed the implementation of changes adopted at earlier consultations between party leaders at the organization’s session held in Bucharest between December 14–20. The Executive Committee decided during its third session to reorganize the COMECON Secretariat as well.105 According to the organizational order established at this time, the militaryindustrial department, which was to operate under the cover name General Department, was to receive a staff of thirty, making it one of the largest departments in the 800-member Secretariat.106

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2.5 DISSATISFACTION AND CRITICISM The ferment within COMECON spread to the Military Industrial Cooperative Standing Commission as well. At the commission’s session held in Moscow between January 23–30, representatives from Central and Eastern Europe sharply criticized established operational practices. The meticulously worded minutes of the meeting contained some unusually direct criticism of the commission, while the planning-office report on the consultations was even more explicit. According to Hungarian delegation Chairman Colonel Jávor, representatives at the meeting had identified the following significant deficiencies in the operations of the MICSC: • The work of the Military Industrial Cooperative Standing Commission did not develop following fifteenth and sixteenth sessions of COMECON and, in fact, as a result of a certain degree of retrogression is behind in comparison to that of the work of other commissions. • The most important conceptual and methodological questions are unresolved. Examples of these are conceptual issues connected to specialization as well as the question of coordinating current deliveries and Mobilization preparations. • The participation of the Unified Armed Forces Supreme Command in the work of the commission is unsatisfactory and unresolved in an organizational sense. As a result of this, the formulation and harmonization of 1966–1970 military industrial plans does not presently appear to be a feasible task. Criticism of this intensity had scarcely been voiced since the establishment of the MICSC in 1956. Colonel Jávor’s own assessment of the commission’s work was even more pessimistic: “The course of events at the session itself also demonstrated that it was not possible to pass final resolutions regarding those issues whose settlement could have taken place precisely on the basis of a regulation of the cited conceptual and organizational questions.” In spite of the euphemistic title of the session’s agenda—“Further Improvement of the Organization of International Cooperation in the Area of Strengthening the Armed Forces of Countries Participating in the Warsaw Pact”—the official minutes of the meeting show that commission representatives had expressed grave doubts regarding such cooperation: Delegations from the People’s Republic of Bulgaria, the Hungarian People’s Republic, the German Democratic Republic, the People’s Republic of Poland, the People’s Republic of Romania and the Czechoslovak Socialist Republic suggested in their comments that the current framework of cooperation

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regarding the strengthening of the armed forces of countries participating in the Warsaw Pact does not assure the resolution of an entire sequence of critical tasks. These tasks can only be addressed successfully and effectively on the basis of resolutions approved mutually by the countries. . . . The speakers indicated that issues such as the further development of military-technics and weapons systems, the multilateral coordination of people’s economic M plans, scientific-research plans and plans pertaining to scientific-research work within the countries of the Warsaw Pact and defense issues related to telecommunications, transportation, health and the people’s economy are almost completely not included in cooperation. The delegations mentioned above note that in the future this situation could lead to significant underdevelopment among our countries in comparison with the necessary standards of the armed forces and propose the expansion of the present framework defining the authority of COMECON’s Military Industrial Commission or the establishment of another permanently operating organization belonging to COMECON and the Unified Command. The commission deems it expedient to submit this question to the COMECON Executive Committee for approval.

Disagreement arose over the organizational structure of the COMECON Secretariat’s Military Industrial Department therefore the issue was referred to the organization’s Executive Committee. According to the minutes of the session, representatives from Czechoslovakia had, furthermore, voiced opposition to “the expediency of filling the Military Industrial Department’s staff allocation with Soviet specialists.” Hungarian delegation Chairman Colonel Jávor wrote in his report on the meeting that “The twenty-fivemember staff of the Military Industrial Department has to be filled with Soviet specialists. With the exception of the Czechoslovak delegation [italics mine], the commission approved the proposal regarding the organization. The Czechoslovak delegation submitted a separate opinion, because it does not consider the international character of the department to be guaranteed.” The Hungarian delegation, as it had at many previous intrabloc meetings, displayed cautious loyalty toward the Soviet Union. According to Colonel Jávor’s report, “The opinion of the Hungarian delegation is that this organizational form is correct, because—taking into consideration the special character of the field—Soviet specialists can establish more operative connections with Soviet institutions dealing with the development of military equipment and specialists engaged in the work of the department on behalf of the interested countries can always serve as the primary source of knowledge with regard to domestic conditions.” Conflict emerged for the first time regarding specialization at this session of the Military Industrial Cooperative Standing Commission as well. Soviet representatives castigated Romania for having placed domestically made transmissions and other components into BTR-60P armored personnel-

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carriers manufactured in the country under license without first having sought permission from the Soviet Union and the Warsaw Pact Unified Armed Forces Supreme Command to depart from production stipulations contained in provided documentation. In response to this rebuke, Romanian representatives asserted that it was not economically beneficial to manufacture the BTR-60P using such imported parts and components, thus Romania would not even begin serial production of the armored personnel-carrier. The minutes indicate that the commission asked the Warsaw Pact’s Unified Armed Forces Supreme Command to determine if the Hungarian-made BRDM armored vehicle was suitable for incorporation into the organization’s weapons system.107 However, the criticisms of Moscow did by no means come to an end. Planning-office and general-staff representatives from Warsaw Pact member states held talks in Moscow on January 30–31 regarding preparations for mobilization. Although the minutes of these negotiations, contrary to those kept for the Military Industrial Cooperative Standing Commission meeting described above, contain almost no reference to the presence of dissent among officials participating in the consultations, Colonel Jávor’s report on the talks indicate that they had uncovered the following deficiencies in the operations of the commission: • The periodic meetings of planning-office and general-staff representatives to discuss coordination of M preparations and M plans cannot, in absence of definite organizational and operational procedures, substantially ensure the conduct of unified administration and the systematic resolution of emerging tasks. • As a result of the ambiguities within the organization, the organ established to direct M duties is not in systematic contact with COMECON’s standing commissions—not even the Military Industrial Committee—and does not have satisfactory connections with the Unified Armed Forces Supreme Command either. • Tasks are not clearly defined and, partially for this reason, operations have essentially narrowed to coordination of annual M deliveries of military industrial products and the most important raw materials. The direction of M preparations with regard to transportation, telecommunications, and healthcare has not been settled. • The essential methodological principles governing M preparations have not been resolved. Colonel Jávor, who attended the talks in his capacity as deputy chairman of the National Planning Office, subsequently stated in his report that rep-

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resentatives attending the talks adopted a resolution aimed at regulating the operations of the MICSC’s operations: Sharp criticism was voiced with regard to the above on the part of almost every delegation at the meeting. As a result of this, a resolution was taken stipulating that the work of the organization must be made more systematic and that the international division operating within the Mobilization Department of the People’s Economic Council of the Soviet Union (previously the State Planning Committee) must formulate a work plan for the year 1963 to be approved at the next meeting on the basis of observations from individual countries.108

As “acting chairman,” G. S. Sidorovich dispatched letters to the permanent COMECON chairmen from each of the organization’s member states informing them of the criticisms that had been expressed at the Military Industrial Cooperative Standing Commission’s January meeting. In his letter to Hungarian representative Antal Apró dated February 2, 1963, Sidorovich also stated that it was up to the COMECON Executive Committee to make the decision with regard to the Military Industrial Department and that the MICSC proposed establishing a new standing commission to deal with telecommunications. Though Sidorovich did not reveal the opinion of Soviet leaders with regard to the issues mentioned in the letter, Colonel Jávor wrote in his report that he had interpreted the text contained in the Soviet acting chairman’s dispatch to mean that they supported the expansion of the MICSC’s authority.109 After approving the minutes of the January meeting in Moscow, the Defense Committee ordered the chairman of the Hungarian section to devise the domestic order governing international military-industrial cooperation in accordance with the new organization of the COMECON Secretariat’s Military Industrial Department and to develop proposals aimed at improving the operations of the Military Industrial Cooperative Standing Commission.110 Comments from Hungarian Defense Minister General Lajos Czinege at three-day talks between defense ministers and chiefs of the general staff from Warsaw Pact member states in Warsaw beginning on January 26 suggests that the prevailing tone of the consultations was similarly critical: “We must acknowledge that we have not achieved the results that would have been desirable. . . . in the domain of military-industrial cooperation, in questions connected to research and development, as the experiences of the recent period have shown—there is no such progress.” General Czinege made two primary proposals at the meeting: first, that the Warsaw Pact Unified Armed Forces Supreme Command initiate talks between defense ministers and planningoffice chairmen from member states in order to discuss cooperation and the division of labor with regard to military-industrial development and production; and second, that in the absence of a suitable organization, the Supreme

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Command convene a meeting of specialists from member states in order to coordinate concrete issues related to scientific research and development activity and the preparation of operational theaters.111 Unusually sharp debate took place at the next two sessions of the COMECON Executive Committee. At the committee’s fourth meeting held in Moscow between February 15–21, 1963 officials made several recommendations aimed at reforming the organization, improving economic cooperation and establishing a new Planning Office. Romanian representatives, who had already expressed their reservations with regard to increased integration at earlier meetings, now gave open and coherent voice to their opposition to the suggested establishment of new organizations, claiming that such proposals exceeded the authority of both the Executive Committee and the entire COMECON organization in their curtailment of national sovereignty. These officials indicated that in the event that such organizations were founded, Romania did not wish to take part in their operations.112 At the Executive Committee’s fifth meeting, again held in Moscow, between April 17–25, 1963, representatives discussed the coordination of long-range plans, specialization and the establishment of sectoral and technical-production associations, among other issues. Romanian representatives said that Romania would not participate in the organization of the latter bodies and explicitly rejected the notion of COMECON approving not only recommendations, but resolutions as well.113 Romania’s opposition to these proposals was based on several factors and motives: Romanian leaders clearly perceived that the Soviet Union was attempting to impose unified planning within the bloc just as it had in the early 1950s; while at the same time, Romania had begun to pursue increasingly nationalist policies proclaiming the country’s separate path and individuality. From this time on, Romanian officials opposed and essentially vetoed various forms of higher-level cooperation within both the Executive Committee and COMECON that would have presumably entailed more advantages than disadvantages for Hungary and other countries within the bloc, particularly in economic terms.114 Hungary’s planning-office apparatus submitted proposals to the Defense Committee in the middle of March regarding the duties and organization of the COMECON Military Industrial Cooperative Standing Commission. According to proposal signatories Colonel Jávor and Antal Apró, the following steps were required in order to implement the changes stipulated at the 16th session of COMECON: • The duties and authority of the Unified Armed Forces Supreme Command in this direction as well as its connection to the standing commission must be resolved.

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• The duties and authority of the Military Industrial Cooperative Standing Commission must be broadened in order to ensure that cooperation between the countries serves to satisfy the needs of the Warsaw Pact Unified Armed Forces for military equipment and matériel at both times of peace and times of war. • The organizational conditions for implementation of these tasks must be established. The proposal contained a summary of suggested modifications to the powers of the Warsaw Pact Unified Armed Forces Supreme Command and the Military Industrial Cooperative Standing Commission deemed necessary to achieve their optimal operation. Among these, the proposal recommended that the Unified Armed Forces Supreme Command be charged with the following technical-economic duties: • Define the directions and proportions of military industrial production as well as the nomenclature of products to be manufactured for individual plan periods so that the distribution of production can be established, the introduction of surplus capacities avoided, and the necessary expansion of capacity conducted in a timely and economical manner. • Review of the peacetime and wartime distribution of military equipment. • Direction of scientific-research and experimental-construction operations, and determination of the tactical-technical requirements that constitute their points of departure. • Specification of the standards and norms for the weaponry and matériel of troops and higher-level units. • Stipulation of requirements connected to the preparation of Unified Armed Forces operational theaters (transportation, telecommunications, etc.). • Active participation in the operations of the Military Industrial Cooperative Standing Commission and its temporary work groups. The proposal stated that “it would be expedient to establish a materialtechnical organization composed of military representatives from individual countries to coordinate these duties—with adequate authority—within the Unified Armed Forces Supreme Command as well as between the Command and the Military Industrial Cooperative Standing Commission.” The proposal stipulated that the MICSC should take the following steps in order to improve the efficiency of its operations: • Organize specialization so that the needs of the armies are satisfied fully at times of peace and to the greatest possible degree during M periods.

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• Reconcile plans regarding military-industrial production, transportation, development, and investment. • Determine investments and research to be conducted by two or more countries. Organize mutual construction offices in case of need. • Harmonize people’s-economic plans for mobilization periods. • Coordinate the most important issues related to the conversion to wartime economy as well as economic and organizational measures formulated for the opening phase of war. Finally, the proposal advocated the establishment of a separate section within the COMECOM Secretariat’s Military Industrial Department to coordinate M-related work. At its April 5 session, the Defense Committee approved a resolution stipulating that the National Planning Office’s submitted proposals constitute Hungary’s official position.115 The session of the COMECON Military Industrial Standing Commission held in Moscow between April 20–25, 1963, produced significant progress toward strengthening cooperation among the organization’s member states in the development and production of military equipment for the years 1966–1970. Officials attending the meeting discussed the main directions of development and the organizational and methodological principles governing the coordination of production plans during the period, though removed the issue of the methodology to be used in coordination of scientific-research and experimental-construction work from the agenda at the request of the Soviet delegation. With the exception of the latter issue, which could not be included among the basic principles governing specialization, the delegations essentially approved the provisions contained in the document entitled The Principles of International Specialization and Cooperation in the Production of Military Equipment in Member States of the COMECON Military Industrial Standing Commission. Representatives at the meeting identified the rational utilization and development of existing capacities and the continual modernization of the technical standards of established technology to be among the fundamental objectives of the division of labor and cooperation, stipulating that specialization and cooperation be implemented “taking into account the interests of all the commission’s member states” and that specialization be conducted multilaterally and amid continual communication with member states regarding its results. According to this document, the commission would formulate recommendations regarding the specialization of production, which if approved would remain valid until the emergence of new circumstances warranted their modification. The document stipulated that in the interest of eliminating redundant parallel production and expanding production runs, the manufacture of individual product groups would be

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assigned to single member states or—in the event that this country lacked sufficient production capacity—to a maximum of two member states, which would undertake the duty of satisfying the needs of fellow member states with the product in question. The Military Industrial Cooperative Standing Commission did not discuss issues connected to mobilization, because the COMECON Executive Committee had not yet approved the proposed expansion of its authority. Peculiarly, the COMECON Secretariat’s Military Industrial Department (in essence the Soviet Union) prevented the resolution of investments for the years 1964–1965, asserting that the plans member states had submitted to the department in this regard had contained not a single common theme, therefore there was nothing to be settled. The MICSC, however, rejected this claim for reasons articulated in a report from Hungarian delegation leader Ervin Jávor: In our opinion this task is much too complex to be simplified in this way. The objective of the talks is to enable the countries to save as much on investment costs as possible, which can only be achieved if the member states are familiar with one another’s investments. Only in this way is it possible to prevent the launching of investments for which sufficient production capacity already exists in other countries.

In this same report, Colonel Jávor recapitulated the results of the M meeting of planning-office and general-staff leaders that had taken place in April. Jávor stated in his report that the decision to discuss mobilization issues on a regular basis parallel to sessions of the MICSC represented one of the positive outcomes of the meeting, noting, however, that the Soviet Union and other member states had continued to disagree about the coordination of mobilization plans: The standpoint of the Soviet side was that it did not consider the multilateral coordination of M work to be expedient, recommending that in the interest of confidentiality discussion of the issues be restricted to bilateral meetings and consultations in the future. During the meetings, delegation leaders from the countries opposed the restriction of work to bilateral consultations without exception, asserting that multilateral coordination touches only upon methodological questions and that, as previously, they do not believe it expedient to discuss actual numeric values multilaterally. The Soviet side will process the material, thus the possibility of unauthorized parties gaining access to Soviet data can be excluded.

According to Hungarian delegation leader’s report, the following issues emerged in an “extremely sharp” manner at the meeting: “The necessary methodological coordination of plans regarding the initial stages of war, the

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coordination of unified preparatory work, the placing on the agenda of other points raised in work-plan proposals and, through this means, the assertion of the guarantee of systematic progress with regard to M questions.” Though resolution of these issues would have required the convocation of multilateral talks, officials at the meeting finally agreed that neighboring countries would conduct bilateral coordination of preparations related to transportation and telecommunications. Colonel Jávor concluded his report with the following, moderately optimistic, assessment of the meeting: We regard the work of the present session of the Military Industrial Cooperative Standing Commission as having emerged from the impasse in which it stood for some one and a half years. At the same time, it was again demonstrated that the commission can only perform work of full value and accomplish tasks connected to the joint defense of Warsaw Pact member states if relations between the Unified Armed Forces Supreme Command and the commission are resolved and the duties and authority of the two organs are completed. The detrimental effects of this are felt particularly in M-related work.116

The COMECON Executive Committee did not consider the question of the Military Industrial Cooperative Standing Commission until the summer of 1963, assessing the performance of the General (Military Industrial) Department of the COMECON Secretariat at a closed session in Moscow on July 5 following a report from commission Chairman Vasiliy Ryabikov and determining the final structure of the department with an assigned staff of twenty-five people. The chairman of the Military Industrial Cooperative Standing Commission directed the operations of the department which functioned as a secretariat of the MICSC, while the COMECON Secretariat was authorized to handle only the organizational and economic affairs of the commission and department, thus affording the body a large degree of autonomy within the COMECON apparatus. The COMECON Executive Committee chose to preserve the Soviet Union’s supremacy within the department, drawing the organization’s entire technical staff from the ranks of the Soviet Army on the grounds that “In consideration of the singularity of the department’s activity, it is expedient to approve filling the staff with Soviet specialists, considering that the countries are designating permanent staff specialists whom the department will include in preparation of issues to be brought before the Military Industrial Commission.” The Military Industrial Department of the COMECON Secretariat consisted of the following organizational units: • group dealing with complex issues (four people); • aircraft-industry group (two people);

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• shipbuilding industrial group (two people); • group connected to industry producing armored vehicles, missiles, artillery and infantry weapons, and munitions (three people); • radio-technology and electronics-industry group (three people); • group connected to industry producing atomic and chemical-defense technology and technical products for the home front (three people); • clerical division (auditors, stenographers, secretaries–five people) The Executive Committee preserved in unaltered form the bilateral process of coordinating military-industrial mobilization plans as well as scientificresearch and experimental-planning activity aimed at the development of military equipment. Soviet officials promised to enact measures intended to reduce the transfer time of research and development recommendations. As a result of the rapid improvement of radio technology and electronics, the Executive Committee decided to establish a new standing commission to deal specifically with these matters and to coordinate military-telecommunications issues with the Military Industrial Standing Commission. The Executive Committee, however, lacked the authority to consider the issue of strengthening cooperation between the Warsaw Pact Unified Armed Forces Supreme Command and the COMECON Military Industrial Standing Commission.117 At consultations held in Moscow on July 26, 1963, the Political Consultative Committee examined developments conducted in Warsaw Pact members states pursuant to the March 1961 program. Committee officials discussed and approved a report from Warsaw Pact Unified Armed Forces Supreme Commander Andrei Grechko evaluating work done over the previous two years and determined the tasks to be completed by the year 1970. In its subsequent resolution, the committee summed up the obligations undertaken as part of previous bilateral treaties, concluding that “the technical equipment, mechanization and supply of modern weaponry has improved substantially among the [Warsaw Pact] troops.”118 At its ninth session held in Moscow between November 28–December 3, 1963, the COMECON Military Industrial Cooperative Standing Commission finalized and incorporated into a unified document the fundamental principles determining military-industrial specialization and cooperation previously described in detail. Taking into account the summer resolutions of the COMECON Executive Committee, delegates attending the meeting approved new organizational statutes regulating, as did the 1956 statutes, the commission’s duties and authority, the adoption and validity of recommendations and resolutions as well as the body’s connection to the Military Industrial Department of the COMECON Secretariat. The new statutes did not, however, expand the authority of the MICSC as stipulated in the Executive Committee resolutions,

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providing the body with a single new and significant prerogative—that of making proposals regarding the potential application of advancements made in the production of military equipment to civilian production. In addition to the new statutes, the committee approved new operational procedures as well. The Military Industrial Cooperative Standing Commission also approved the order of cooperation governing its relations with COMECON’s other standing commissions, stipulating that these bodies would coordinate their activities in the following areas: a) the mutual transfer of various ideas regarding the issue to be examined; b) the exchange of technical information and the transfer of the various technical documentation; c) the establishment of joint specialist-groups; d) the formation of proposals in cooperation with the appropriate COMECON sectoral department; e) the joint consultations of standing-commission chairmen; f) the joint consultations of delegations leaders from member states; g) the joint sessions of relevant permanent standing commissions. Warsaw Pact Unified Armed Forces Supreme Command representative General N. P. Dagayev informed the delegates attending the meeting that in January 1964 the command would send to member states a catalogue of arms recommended for incorporation into the alliance’s weapons system by the year 1970. The delegates were asked to provide the Military Industrial Department with a list indicating the needs of their countries for the main types of military equipment as well as their production targets. The committee determined the schedule for consultations to be held over the coming year based on these factors and, furthermore, elected Soviet candidate G. N. Leykov to serve as the head of the Military Industrial Department.119 Hungarian People’s Army Colonel Ervin Jávor stated the following in his account to the Defense Committee of the M meeting held parallel to the Military Industrial Cooperative Standing Commission session: No significant progress has been made with regard to the international settlement of M issues. This important field continues to lack coordination. As a consequence, the provision of the army is disproportionate, no central distribution system has been established. . . . His opinion is that it would not be fitting to submit another Hungarian proposal regarding a resolution of M issues, since at the COMECON Executive Committee session one year ago we presented a proposal that they did not approve. Further progress should be expanded along military lines, such as through the establishment of a material organ within the Unified Armed Forces Supreme Command. Besides this, our

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bilateral relations must be developed to a greater degree, particularly with the neighboring countries.”

Minister of Defense Lajos Czinege made the following comment with regard to the proposal: “We are preparing a proposal for the [Warsaw Pact] Political Consultative Committee, though in this we are not only documenting the present situation, but we are pointing out possibilities for certain constructive progress as well.”120

NOTES 1. See Károly Urbán, “Magyarország és a Varsói Szerződés létrejötte,” Társadalmi Szemle, 50:11 (1995): pp. 69–82; Okváth, Bástya a béke frontján, pp. 337–341. 2. Mastny and Byrne, A Cardboard Castle? pp. 80–82. 3. Nagy, “Fordulattól—forradalomig.” p. 117. 4. Minutes of the Technical Cooperation Committee’s Meeting on August 26, 1955. MNL OL, XIX-F-6-dd 58. d. 5. HWP Central Committee Department of Industry and Transportation: Memorandum on Problems Related to the Ministry of Metallurgy and Machine Industry Military Industry Department’s Second Five-Year plan. October 18, 1955. MNL OL, M-KS 276. f. 95. cs. 230. ő. e., pp. 81–82. 6. HL MN, 1955/T 2. d. 1. cs. 7. Okváth, Bástya a béke frontján, p. 343. 8. Report to the Hungarian Workers’ Party Political Committee. December 24, 1955. Minutes regarding the December 29, 1955, Session of the Hungarian Workers’ Party Political Committee. MNL OL, M-KS 276. f. 53. cs. 263. ő. e., pp. 125–130. 9. Preparatory Materials for the 1956 COMECON Conference. Supplement. The Approximate Listing of Economic Issues that Would Be Desirable to Discuss. No date. MNL OL, MOL XIX-A-2-p 20. d. 10. Minutes of the Political Committee’s December 15, 1955, Meeting. MNL OL, M-KS 276. f. 53. cs. 261. ő. e. For Ernő Gerő’s verbal report see pp. 12–17, and for the session minutes, pp. 18–40. 11. Minutes of the HWP Political Committee’s January 2, 1956, Session, Resolution [Fair Copy] and Draft Report. No Date. MNL OL, M-KS 276. f. 53. cs. 264. ő. e, pp. 1–4, 6–9 and 10–20. Citations from pp., 17–18, 19 and 3–4. 12. Csaba Békés, “Magyarország és a nemzetközi politika az ötvenes évek közepén,” in Csaba Békés, ed., Evolúció és revolúció. Magyarország és a nemzetközi politika 1956-ban (Budapest: 1956-os Intézet—Gondolat Kiadó, 2007), pp. 12–13. 13. January 6 [1956] Introductory Speech. MNL OL, M-KS 276. f. 62. cs. 84. ő. e., pp. 1 and 8. 14. Closing address. [1956] January 9. Ibid., pp. 9–11. 15. Ibid., pp. 58–88. The citations appear on pp. 84–85. 16. MNL OL, M-KS 276. f. 53. cs. 265. ő. e., pp. 3 and 16.

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17. For documents from the talks see: http://www.php.isn.ethz.ch/collections/colltopic.cfm?lng=en&id=17116&navinfo=14465. Accessed September 30, 2014. 18. Report on Talks Regarding the Organization of the Work of Commissions Composed of Representatives Participating in COMECON. No date. MNL OL, M-KS 276. f. 66. cs. 54. ő. e., pp. 132–136. 19. MNL OL, M-KS 276. f. 53. cs. 271. ő. e., pp. 3–4 and 20–36. 20. Minutes of the HWP Political Committee’s April 19, 1956, session. National Planning Office: Report to the Political Committee regarding COMECON Coalmining, Metallurgy, Machine-industry and Agricultural Talks. April 10, 1956. MNL OL, M-KS 276. f. 53. cs. 281. ő. e., pp. 78–87. 21. Minutes of the HWP Political Committee’s May 11, 1956, Session. The Proposed Agenda for the COMECON Session. MNL OL, 276. f. 53. cs. 286. ő. e., pp. 6–7 and 167–169. 22. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 331. 23. Report on the Results of COMECON’s Seventh Session in Berlin. May 30, 1956. MNL OL, M-KS 276. f. 53. cs. 289. ő. e., pp. 8–18. The existence of the Military Industry Standing Commission was never made public, therefore literature dealing with COMECON never mentions the body. See Meisel, A KGST 30 éve, p. 13 and 92. For detailed information regarding the duties of the standing commissions see the latter work, pp. 67–99. Even more standing commissions were established later. 24. Minutes, No. 1/7 regarding the Session of COMECON Held in Berlin from May 18 to May 25. June 2, 1956. MNL OL, M-KS 276. f. 66. cs. 60. ő. e, pp. 2–57. The cited material can be found on pp. 53–54. 25. MNL OL, XIX-F-6-dd 7. d. 26. Memorandum on the Conference Held in Moscow on June 22–23. Minutes of the HWP Political Committee’s June 28, 1956 Meeting. MNL OL, M-KS 276. f. 53. cs. 293. ő. e., pp. 15–18. Nagy, “Fordulattól—forradalomig.” pp.138–139. 27. Minutes of the Meeting of Representatives from the People’s Democratic Countries of Europe and the Soviet Union Held in Moscow between July 20 and 30, 1956, to Discuss Issues Related to the Proposed Plan for the Mutual Delivery of Military-Industrial Goods and Matériel during the Years 1956–1965. Furthermore the National Planning Office Technical Cooperation Committee Secretariat: Submission to the Political Committee. Report on the Negotiations Held in Moscow between July 20 and 30, 1956. MNL OL, M-KS 276. f. 53. cs. 300. ő. e., pp. 115–143. 28. Minutes of the Meeting of the Military Industrial Permanent Government Committee on October 5. October 8, 1956. MNL OL, XIX-F-6-dd 59. d.; and Defense Council Resolution No. 51/34/1956 regarding the Appointment of Members to the Military Industrial Standing Commission’s Hungarian Section. September 3, 1956. MNL OL, XIX-F-6-a 118. d. The council named the following people to serve on the committee: Major General Mihály Horváth (head of GS Material and Equipment Directorate); deputy ministers Richárd Kolos and Mihály Farkas [not equal to the former minister of defense] from Ministry of Metallurgy and Machine Industry; 2nd Industrial Director Nándor Horniák from Ministry of Metallurgy and Machine Industry; and Colonel Tibor Sárdy (head of the Hungarian People’s Army Military Technics Directorate).

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29. Regulations of the [COMECON] Military Industry Cooperative Standing Commission. MNL OL, XIX-F-6-dd 59. d. The plan was distributed to Technical Cooperative Commission members on September 20, 1956. 30. Abridged Report regarding the Moscow Talks of the Military Industrial Standing Commission. October 1, 1956. MNL OL, M-KS 276. f. 66. cs. 43. ő. e. 31. Technical Cooperative Committee Meeting Agenda. October 17, 1957. MNL OL, XIX-F-6-dd 59. d. This agenda was approved in July 1957, see below. 32. For the minutes of the founding sessions see: MNL OL, M-KS 276. f. 66. cs. 61. ő. e. The Economic Relations Committee discussed the reports on the sessions on October 16, 1956. Ibid., pp. 118–119. 33. Minutes of the Military Industrial Permanent Government Commitee’s Session Held on October 5, 1956. MNL OL, XIX-F-6-dd 59. d. The minutes mistakenly report that the Military Industrial Cooperative Commission held its meeting from October 23–28. 34. MNL OL, XIX-F-6-dd 59. d. 35. For detailed information regarding the history of the military industry in 1956 and the operations of military-industrial plants in Hungary during the revolution and weapons removed by the revolutionaries see Pál Germuska, “A magyar hadiipar 1956-ban” in Ferenc A. Szabó, ed., Tanulmányok és emlékmozaikok az 56-os forradalomról (Budapest: Zrínyi Miklós Hadtudományi Alapítvány, 2007), pp. 89–113. 36. Minutes of session No. 8 of the Hungarian Revolution Worker-Peasant Government. MNL OL, XIX- A-83-a 161. d. 37. Defense Council Resolution No. 2/101/1956, export of defense-industry products during the period of the second five-year plan and the relevant proposal. MNL OL, XIX-A-98 1. d. vol. 1. 38. Defense Council resolution No. 1/101/1956. MNL OL, XIX-A-98 1. d. vol.1. 39. Report. February, 1957. MNL OL, XIX-A-98 1. d. vol. 1. The Ferenc Münnich-signed report refers on several occasions to the minutes of the talks, though these are not appended to the document. The Defense Council moreover acknowledged the minutes of the talks in its resolution No. 1/103/1957 on March 12, 1957. Ibid. 40. Defense Council Resolution No. 8/104/1957, Report from the President of the Technical Cooperative Committee on Issues Related to Certain Military-Industrial Exports. MNL OL, XIX-A-98 1. d. vol. 2. 41. Defense Council Resolution No. 4/103/1957, March 12, 1957. MNL OL, XIXA-98 1. d. vol. 1. 42. Defense Council Resolution no. 8/104/1957, Report from the President of the Technical Cooperative Committee on Issues related to Certain Military-Industrial Exports. MNL OL, XIX-A-98 1. d. vol. 2. 43. Treaties No. H-0739, H-0740 (MOL XIX-G-3-ae 1. d.), H-006154, H-00551, H-00552, H-001350/1954. (MOL XIX-G-3-ae 3. d.), V-0001/55, P-0010/55 (MNL OL, XIX-G-3-ae 5. d.) as well as treaties No. 221/56 and 3404 (MNL OL, XIXG-3-ae 6. d.) Due to the destruction in 1976 of most of the Foreign Trade Ministry Technical Department’s documents, hardly any records remain from the 1950s other than the treaties. It is thus impossible to determine the total number of treaties or the degree to which those available were fulfilled.

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44. Defense Council Resolution No. 1/105/1957, approval of report based on 8/104/1957 and letter from János Kádár. MNL OL, XIX-A-98 1. d. vol. 3. 45. Procedural Statutes of the [COMECON] Military Industrial Cooperative Standing Commission. Excerpt from the Minutes No. 30/57 of the Meeting of COMECON Deputy Representatives in Moscow on July 10, 1957. MNL OL, XIX-F-6-dd 59. d. 46. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 336. 47. Minutes of the Meeting of [COMECON] Military Industrial Cooperative Standing Commission Delegation Presidents Held in Moscow on October 5, 1957. MNL OL, XIX-F-6-dd 59. d. Hungarian delegation leader Major General Mihály Horváth arrived to the meeting one day later, thus the committee’s president and secretary informed him of the resolutions. Ibid. 48. Defense Council Resolution No. 1/107/1957. MNL OL, XIX-A-98 1. d. vol. 3. 49. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 332. 50. For the minutes of the section and subcommittee meetings see: MNL OL, XIX-F-6-dd 59. d. 51. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 336–337. VPK: Voyenno-promishlennaya Komissiya, Voyenno-promishlennuy Kompleks. 52. Mihály Horváth’s Proposal to the Defense Council, December 30, 1957. MNL OL, XIX-A-98 1. d. vol. 4. 53. Defense Council Resolution 6/108/1958, Payment and Credit Proposal regarding Export-Import Plans for Special Materials 1958–1960. January 3, 1958. MNL OL, XIX-A-98 1. d. vol. 4. 54. Defense Council Resolution No. 9/109/1958, Ministry of Foreign Trade Proposal to the Defense Council. March 13, 1958; and Letter from Ferenc Münnich, 28 March 1958. MNL OL, XIX-A-98 1. d. vol. 5. 55. Defense Council Resolution No. 1/110/1958 of May 7, 1958 approved the minutes of the negotiations. MNL OL, XIX-A-98 1. d. vol. 6. For details regarding Lieutenant General Révész’s report see Róbert Ehrenberger, ed., “A dolgozó népet szolgálom!” Forráskiadvány a Magyar Néphadsereg Hadtörténelmi Levéltárban őrzött irataiból 1957–1972 (Budapest: Tonyo-Gráf Nyomdai és Grafikai Stúdió, 2006) pp. 39–42. 56. In an April 23, 1958, letter to Council of Ministers First Deputy Chairman Antal Apró, the head of the GS Material and Equipment Directorate indicated that he did not yet have any knowledge of this decision. See: Observations with regard to the Proposal on the Operations of the Ministry of Metallurgy and Machine Industry’s Military-Industry Department. MNL OL, XIX-A-2-gg 63. d. The General Organizational Department of the National Planning Office was, however, aware of the fundamental aspects of the decisions when it submitted its proposal to the office’s president. See: Opinion of the Hungarian Party with Regard to the Second Point on the Meeting’s Agenda. May 9, 1958. MNL OL, XIX-A-16-i 10. d. 57. Opinion of the Hungarian Party with Regard to the Second Point on the Meeting’s Agenda. May 9, 1958. MNL OL, XIX-A-16-i 10. d. 58. Concepts of the Soviet Party Concerning the Coordination of Plans for Military-Industrial Production and the Mutual Deliveries of Military Equipment. No date. MNL OL, XIX-A-16-i 8. d.; and Proposal to the [HSWP] Political Committee

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with Regard to High-Level Talks Beginning in Moscow on May 20. MNL OL, XIXA-16-i 10. d. 59. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 337–338. 60. Previously cited data shows that Hungary, in fact, had already begun to run an enormous trade deficit in terms of military technics. 61. Minutes of the Central Committee’s June 6, 1958, Meeting. MNL OL, M-KS 288. f. 4. cs. 17. ő. e., pp. 13–15. 62. Defense Council Resolution No. 3/112/1958, Minutes of the Military Industrial Economic and Scientific-Technical Cooperative Permanent Committee Session from August 25–September 5, 1958, and Proposal from the Defense Council. October 1958. MNL OL, XIX-A-98 2. d. vol. 7. 63. Meeting of Planning-Office and General-Staff Representatives from Warsaw Pact Member States between October 27–November 5, 1958, regarding Coordination of People’s-Economic M Plans. MNL OL, XIX-A-98 2. d. vol. 8. 64. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 338. 65. Minutes No. 2 of the Meeting of Planning-Office and General-Staff Representatives from Warsaw Pact Member States regarding Coordination of People’sEconomic M plans. MNL OL, XIX-F-6-dd 60. d. 66. Report on the 1959 Operations and Future Activity of COMECON’s Military Industrial Standing Commission. Addendum to the minutes of the COMECON Military Industrial Standing Commission’s session No. 5/60. Moscow, October 4–6, 1960. MNL OL, XIX-F-6-dd 60. d. 67. Minutes No. 4/59 of the COMECON Military Industrial Economic and Scientific-Technical Cooperative Standing Commission July 7–11, 1959. MNL OL, XIX-A-16-aa 103. d. 68. The Soviet Ministry of Defense, the Aviation Technology State Committee, the Radio Electronics State Committee, the Military Industrial State Committee and the Shipbuilding State Committee all agreed with the conclusions of the report. 69. The State Scientific-Technical Committee (Gosudarstvennuy Nauchno-Technicheskiy Komitet) supervised international cooperation with regard to civilian radio electronics, air transport, ship building, research and meteorological rockets, space objects, civilian optics, hunting weapons and ammunition and industrial explosives. 70. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 333–335. 71. Minutes of the Technical Cooperative Committee’s April 22, 1960, Meeting. MNL OL, XIX-F-6-dd 60. d. 72. Minutes of Session 5/60 of the COMECON Military Industrial Cooperative Standing Commission. October 4–6, 1960. MNL OL, XIX-F-6-dd 60. d; and Report on the 1960 Operations and Further Activities of the COMECON Military Industrial [Cooperative Standing] Commission. March 26, 1961. MNL OL, XIX-F-6-dd 61. d. 73. These COMECON procedures are recorded in the following source: MNL OL, XIX-F-6-dd 60. d. 74. Minutes of session 5/60 of the COMECON Military Industrial Cooperative Standing Commission. October 4–6, 1960. MNL OL, XIX-F-6-dd 60. d. For information regarding the misunderstandings and misinterpretations of COMECON’s role see Honvári, XX. századi magyar gazdaságtörténet, pp. 433–436.

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75. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 338–339, 342. 76. Imre Okváth, “A magyar hadsereg háborús haditervei, 1948–1962,” Hadtörténelmi Közlemények, 119:1 (2006): p. 42. For information regarding the preparations of the Hungarian People’s Army for a possible nuclear war, see Ibid. pp. 46–50. 77. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 340–341. 78. Magdolna Baráth, A Kreml árnyékában. Tanulmányok Magyarország és a Szovjetunió kapcsolatainak történetéhez, 1944–1990 (Budapest: Gondolat Kiadó, 2014) p. 267. 79. Okváth, “A magyar hadsereg háborús haditervei,” p. 43. 80. M. Szabó Miklós, “Adalékok a Magyar Néphadsereg 1961–1962. évi történetéhez,” Új Honvédségi Szemle, 61:9 (2007): pp. 87–88. For detailed information regarding restructuring and other measures that took place within the Hungarian People’s Army see Okváth, “A magyar hadsereg háborús haditervei.” 81. Minutes No. 6/1961 of the March 13–17, 1961, Meeting of COMECON MICSC Delegation Leaders and General Staff Representatives from the Warsaw Pact Member States. MNL OL, XIX-F-6-dd 61. d. 82. Matthias Uhl: Nuclear Warhead Delivery Systems for the Warsaw Pact, 1961–65: Documents from the Russian State Archives of Economics and the German Federal Military Archives on the Reorganization and Modernization of the Armed Forces of the Soviet Bloc. June 2002. ftp://budgie3.ethz.ch/php/collections/coll_8. htm. Accessed September 5, 2014. 83. The Warsaw Pact Political Consultative Committee resolution regarding the reorganization and modernization of WP military forces. March 29, 1961. Mastny and Byrne, A Cardboard Castle? pp. 116–117. 84. Proposal to the Defense Council—Approval of the March 30, 1961, Minutes. April 10, 1961. MNL OL, XIX-A-98 4. d. vol. 17/a. 85. Minutes of the HSWP Central Committee’s June 10, 1961, Session. MNL OL, M-KS 288. f. 4. cs. 41 ő .e, pp. 3–4. 86. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 342–345. The quoted passage appears on p. 343. 87. Minutes No. 1/61 of the Meeting of Representatives from Interested COMECON Countries. July 25–27, 1961. MNL OL, XIX-F-6-dd 61. d. This meeting of countries participating in the COMECON Military Industrial Cooperative Standing Commission under the chairmanship of Vasiliy Ryabikov was not classified as an official gathering of the commission for reasons that are unknown to me. 88. M. Szabó, “Adalékok a Magyar Néphadsereg 1961–1962. évi történetéhez,” pp. 93–95. 89. Hungarian Socialist Workers’ Party General Secretary Kádár presented an account of this meeting to the HSWP Central Committee at its session on August 10, 1961. MNL OL, M-KS 288. f. 4. cs. 42. ő. e. For documents related to the (second) Berlin Crisis (1958–1961) see: Németh and Tollas, Berlin, a megosztott város; Frederick Kempe, Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth. New York: G.P. Putnam’s Sons, 2011. 90. General Staff of the Hungarian People’s Army: Proposal to the Defense Council-Report on the Tasks of the Hungarian People’s Army. September 4, 1961. HL

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MN, 1963/T 68/015/4.6. cs., pp. 1–12. The Hungarian People’s Army was instructed to implement the following measures by October 1, 1961: reorganize three mechanized rifle divisions; expand one division into a fully combat-worthy division following mobilization; begin raising a tank division; review and refine the operational plan; build five motorized battalions with a capacity of 1,000 tons each; stockpile large-scale reserves of fuel for the use of allied armies; and establish the conditions necessary to accommodate Soviet tactical and operation missiles and fighter squadron newly deployed in Hungary. See Ibid. 91. See MNL OL, M-KS 288. f. 5. cs. 240/1. ő. e. és 241. ő. e and Defense Council Resolution No. 1/128/1961: The Tasks of the Hungarian People’s Army. MNL OL, XIX-A-16-aa 104. d. 92. Okváth, “A magyar hadsereg háborús haditervei,” p. 45. 93. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 345–346. 94. Proposal to the Defense Council—harmonization of 1962 M plans. November 1961. MNL OL, XIX-A-98 83. d. 48. 95. Report on Bilateral Soviet–Hungarian Negotiations regarding Coordination of 1962 M Plans. January 19, 1962. MNL OL, XIX-A-98 83. d. 52. The quoted passage appears on p. 3. 96. Proposal on Defense Council Resolution No. 1/128/1961 of September 5, 1961, Prescribing the Modification of Certain Measures Connected to the Combat Readiness of the Hungarian People’s Army. January 10, 1962. MNL OL, XIX-A-98 83. d. 51. Defense Council Resolution No. 6/133/1962 of January 11, 1962, approved the Unified Armed Forces directive. HL Honvédelmi Bizottság iratai (HB) [Defense Council/Committee documents] 1. d. 97. Resolution regarding the Unified Domestic Air-Defense System of States Participating in the Warsaw Pact. Addendum to the Minutes of the Hungarian Socialist Workers’ Party’s March 20, 1962 session. MNL OL, M-KS 288. f. 5. cs. 261. ő. e., pp. 42–50; and Defense Council Resolution No. 6/137/1962. HL HB 1. d. 98. Proposal to the Defense Council. May 26, 1962.; and COMECON MICSC Minutes No. 6/62, Moscow May 8–11, Minutes of the Meeting in Moscow of General-Staff and Planning-Office Representatives from Warsaw Pact Member States in Moscow between May 8–15, 1962. MNL OL, XIX-A-98 139. d. 57. 99. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 350. 100. Minutes of the Hungarian Socialist Workers’ Party Central Committee’s May 15, 1962 Meeting. MNL OL, M-KS 288. f. 5. cs. 265. ő. e. For information regarding the Polish proposals see Ibid., pp. 51–110. 101. Meisel, A KGST 30 éve, pp. 14, 16–17. For detailed information regarding the duties and authority of the COMECON Executive Committee see Ibid., pp. 64–65. 102. Memorandum regarding the Moscow Session of the COMECON Executive Committee and Talks Conducted with Comrade Mikoyan. July 16, 1962. MNL OL, M-KS 288. f. 5. cs. 271. ő. e., pp. 69–71. Hungary’s delegation leader, Antal Apró, met with Mikoyan to determine the dates of Hungarian-Soviet economic negotiations. 103. Minutes of the Defense Committee’s 143rd Meeting Held on November 1, 1962. HL HB 1. d. pp. 8–10. At the Defense Council’s meeting on May 2, 1962, Deputy Chairman Béla Biszku announced that the body would thereafter be called

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the Defense Committee. The committee’s new operational procedures were adopted at this same meeting. Defense Committee Resolution No. 1/138/1962. HL HB 1. d. 104. Report for the Hungarian Socialist Workers’ Party Central Committee on the Agenda of COMECON’s Seventeenth Session and the Executive Committee’s Third session and Proposal regarding the Composition of the Participating Hungarian Government Delegation. November 26, 1962. MNL OL, M-KS 288. f. 5. cs. 286. ő. e., pp. 59–60. 105. The departments of the COMECON Secretariat were divided into cooperative committees, standing committees and conferences. For information regarding the Secretariat’s civilian division see Meisel, A KGST 30 éve, pp. 70–71. 106. Minutes of the COMECON Executive Committee’s Third Session. Bucharest, December 1962. MNL OL, XIX-F-6-na 1011. d. 107. Report on COMECON Military Industrial Standing Commission’s Session Held between January 25–30, 1963, as well as the M Meeting of Planning-Office and General-Staff Representatives from Countries Participating in the Warsaw Pact. February 12, 1963; and Minutes No. 7/63 of the Commission’s Seventh Meeting. Moscow, January 25–30, 1963. MNL OL, XIX-A-98 147. d. 65. The quotation appears on pp. 1–2 of the report and pp. 10–11 of the minutes. 108. Minutes of the Meeting Held in Moscow on January 30–31, 1963, of State Planning-Organization Delegation Leaders and General-Staff Representatives from Countries Participating in the Warsaw Pact; and Report on the Session of the COMECON Military Industrial Cooperative Standing Commission Held between January 25–30, 1963 as well as the M meeting of Planning-Office and General-Staff Representatives from Countries Participating in the Warsaw Pact. February 12, 1963. MNL OL, XIX-A-98 147. d. 65. The cited passage appears on pp. 3–4 of the latter report. 109. MNL OL, XIX-A-98 147. d. 65. 110. The Defense Committee approved the minutes in its resolution No. 3/147/1963. HL HB 1. d. 111. Miklós M. Szabó, “A Varsói Szerződés és a Magyar Néphadsereg viszonyrendszerének néhány kérdése az 1960-as években,” Hadtudomány, 18:1–2 (2008): p. 5. 112. Report to the HSWP Political Committee on Issues Debated in Connection with the High-Level Consultations, Approved Resolutions and Soviet Proposals Promoting More Efficient Cooperation in the Area of Production among COMECON Countries at the Fourth Session of the COMECON Executive Committee. February 28. 1963. MNL OL, M-KS 288. f. 5 cs. 293. ő. e., pp. 25–42. 113. Report for the HSWP Political Committee on the Fifth Session of the COMECON Executive Committee. April 27, 1963. MNL OL, M-KS 288. f. 5. cs. 299. ő. e., pp. 64–70. 114. For information regarding debate within COMECON on the Romanian viewpoint see János Honvári, XX. századi magyar gazdaságtörténet, pp. 435–437.; and Maria Mureşan, “Romania’s Integration in COMECON. The Analysis of a Failure,” Romanian Economic Journal, 11:4 (2008): pp. 27–58. For information regarding the internal causes and details surrounding Romania’s aspiration for autonomy within the WP see Dennis Deletant, Mihail Ionescu and Viorel Buda, Romania and the Warsaw

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Pact 1955–1989. Cold War International History Project Working Paper Series, 43. (Washington, DC: Woodrow Wilson International Center for Scholars, 2004). 115. Submission to the Defense Committee: The duties and organization of the COMECON Military Industrial Cooperative Commission. March 15, 1963. MNL OL, XIX-A-98 148. d. 66., and Defense Committee Resolution No. 1/148/1963. April 5, 1963. HL HB 1. d. 116. Report on April 20–25 the Session of the COMECON Military Industrial Cooperative Standing Commission and the May 1963 M Meeting of Planning-Office and General-Staff Representatives from Countries Participating in the Warsaw Pact; and Minutes No. 8/63 on the Committee’s Eighth meeting. Moscow, April 20–25, 1963. Approved via Defense Committee Resolution No. 7/149/1963, May 30, 1963. MNL OL, XIX-A-16-aa 107. d. 117. Minutes of the COMECON Executive Committee’s Seventh Session on Issues Related to the Military Industry. Moscow, July 1963. Approved via the Defense Committee’s Resolution No. 5/152/1963 of August 10, 1963; and Report on Behalf of the Defense Committee. July 1963. HL HB 1. d. The cited passage appears on p. 4. 118. July 26, 1963, Resolution of the Political Consultative Committee of States Participating in the Warsaw Pact regarding Unified Armed Forces Supreme Commander Comrade Grechko’s Report on the Battle Readiness and Training Status of the Unified Armed Forces of States Participating in the Warsaw Pact. Supplement to the HSWP Political Committee’s September 10, 1963 Meeting. MNL OL, M-KS 288. f. 5. cs. 312. ő. e., pp. 81–83. 119. Minutes of the COMECON Military Industrial Standing Commission’s Session Held in Moscow between November 28–December 3, 1963. MNL OL, XIX-A16-aa 108. d. 120. Minutes on the Defense Committee’s 156th session held on January 23, 1964. HL HB 2. d., pp. 5–6.

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Transformation of COMECON and the Warsaw Pact

An era in the operations of COMECON and the Military Industrial Commission ended late in 1963 with the establishment of basic organizational structures, the separation of the authority of various bodies and the member states’ acquisition of experience in the conduct of multilateral talks. At the same time, COMECON’s functional weaknesses became increasingly evident: the primarily bilateral, natural exchange of goods, the rigid quota system, the inadequate regulation of specialization, the sharp conflicts of interest between member states, etc. Poland, Czechoslovakia, and Hungary became increasingly dissatisfied with the operations of COMECON in light of the measures taken to promote integration in Western Europe, and therefore these countries attempted to gain approval for several proposals aimed at improving the organization’s efficiency.

3.1 INITIATIVES OF SMALLER MEMBER STATES COMECON’s primary task for the year 1964 was to begin coordination of military-industrial investment and production plans for the subsequent fiveyear planning period beginning in 1966. At talks held in Moscow between February 25–27, Military Industrial Standing Commission (MISC) delegation leaders discussed specialization and possibilities for cooperation in the production of the Vozdukh automated aircraft ground-control system and the Parus radio transmitter, overhaul of the MiG-21 jet fighter, and provision of several member states with armored vehicles. Reflecting the inadequacy of communication between the WP and COMECON, the Unified Armed Forces Supreme Command and the MISC had issued contradictory deadlines to the chiefs of the general staff from member states for the coordination of long105

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range needs for military equipment. The Soviet leadership corrected this inconsistency during the talks, requesting that member states formulate their proposals in this regard by the beginning of April.1 The Military Industrial Cooperative Standing Commission held a session in Moscow between May 12–14, 1964. Hungary’s delegation leader, Colonel Ervin Jávor, told the Defense Committee in June that the meeting had been “the most productive compared to the earlier ones” in terms of progress made in the coordination of long-range plans. Colonel Jávor’s account of the session indicated that the adopted methodology of harmonizing investment plans had truly begun to reflect alliance-level interests: The coordination of investment plans must be made using calculations taking into account not just national, but all needs in the construction of new factories and expansion of existing factories. . . . Implementation of the investments required to increase the production of military technics must be based on the need for maximal utilization of existing capacities. The possibility must be taken into consideration of reorganizing existing companies with the objective of introducing supplementary capacities and reducing expenses to be incurred in the course of new construction or else the conversion of factories for production of new military technics. Investments planned for the complex development of military industrial production must, where possible, serve to promote the proportional development of industry in the Commission’s member states. In the process of coordinating investments, the expediency of those to be implemented in two or more interested member states must be jointly examined, particularly with the aim of organizing the manufacture of the new types of military equipment whose production is difficult to master.

Sharp contention did, however, emerge during the session with regard to the organization and distribution of the production of armored vehicles. Test runs of OT-64 SKOT armored personnel-carrier had revealed the presence of several technical flaws, thus rendering the planned introduction of the vehicle into the armed forces of member states uncertain.2 MICSC representatives attending the meeting recommended that the previous plan to launch joint Hungarian-Romanian production of another type of armored personnel-carrier be reexamined. Hungary’s Defense Committee subsequently rejected this possibility on the grounds that cooperative production of the vehicle would be too expensive and would entail too many technical difficulties.3 Member states held talks in Moscow between October 8–19, 1964, regarding their plans for deliveries of military equipment for the years 1966–1970. The National Planning Office identified three main problems that had emerged during the talks at which Hungarian officials had conducted bilateral consultations with counterparts from all member states to discuss projected imports and exports during the period. First, inefficient use of the capacities

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of Hungary’s telecommunications industry. The planning office noted that the Soviets had again rejected a Hungarian offer to export telecommunications equipment on the grounds that newly built factories manufacturing such equipment in the Soviet Union were not yet receiving enough orders to operate at full capacity. Second, due to the insufficient coordination of technical development, in certain instances Central and Eastern European member states and the Soviet Union were both producing military equipment in spite of the planned specialization of production in the former states. The Soviet Union did not notify fellow member states of this redundancy until the last moment, thus completing production of the relevant military equipment before these states and presenting it to the Unified Armed Forces Supreme Command for incorporation into the Warsaw Pact’s arsenal. This happened to Hungary on two occasions: first with a single-sideband radio transmitter produced parallel to the Soviet Vystrel transmitter; and second with the VHF radio-transmission system developed jointly with Czechoslovakia and Poland parallel to the Soviet Dnieper system. Hungary and the latter two countries demanded that talks be held with the Soviet Union regarding the introduction of the BudaDuga-Csajka system they had developed. Third, lack of regard for specialization decisions on the part of purchasers, which increasingly ordered military equipment from the Soviet Union rather than the member state specialized in its production. At Hungary’s request, Soviet delegates emphatically insisted that member states place orders for military technics from the relevant specialized country, though officials from the German Democratic Republic and Romania expressed reluctance to change existing orders. East German delegates declared that they wanted to order the same armored personnel-carrier as that which Soviet forces stationed in the GDR used, while Romanian delegates asserted that maintaining their country’s balance of payments required that they order infrared devices and amphibious vehicles from the Soviet Union. As a result of the significant number of unresolved issues, MISC delegation leaders convened a meeting, postponing its session planned for the end of the year until the first quarter of 1965.4 Hungarian officials did not, however, forget about the operational problems with the organization taken as a whole in spite of the partial results that had been achieved. On March 9, 1965, the National Planning Office and the MoD submitted a joint report to the Defense Committee based on a detailed examination of production in the domestic military-industrial sector. The report, entitled The Status of Military Industrial Specialization and Technical Development as well as the Provision of Military Industrial Products during M Periods, contained a detailed account of the “common

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fundamental causes” of the deficiencies to be found in the designated areas. The document stated that specialization was exceptionally important for Hungary in the field of military industry, noting that specialized products constituted 40 percent of the value of the domestic military industry’s total projected production of 14 billion forints during the period of the second five-year plan and 71 percent of the country’s projected 4.7 billion forints in exports of military equipment during this period. According to the report, such export possibilities basically improved the efficiency of production. At the same time, the document asserted that the following problems continued to exist with regard to specialization: • Specialization has slowed extraordinarily and in certain areas stalled completely since the beginning of 1963, thus seriously impeding the preparation of the third five-year plan. • Specialization of the production of certain products was assigned to more countries than necessary. • Member states routinely ignored recommendations and the failure to comply with these entailed no sanctions. Therefore the volume of orders announced at the time of specialization decreased drastically by the time treaties were signed or were even cancelled altogether. On several occasions, certain countries ordered the given product from the Soviet Union in spite of specialization recommendations because Moscow offered more favorable payment conditions and delivery deadlines. • Disorder surrounding technical development and wartime provision created permanent uncertainty in the area of specialization. The MICSC’s authority (in spite of Hungarian proposals) continued to extend exclusively to specialization. The COMECON Executive Committee left issues related to technical development to be resolved within the framework of bilateral consultations, while the Soviet Union in principle undertook coordination of these issues, though failed to take effective steps in this regard. This may be explained to some degree by the fact that slightly more than two-thirds of the military equipment manufactured in Hungary, for example, was produced based on Soviet license. Such production entailed the benefits of decreasing the startup time for serial production, reducing the required input of domestic technical knowledge, cutting developmental costs and possessing ready markets for unified Warsaw Pact weaponry. Domestic development obviously had to be compatible with civilian economic-development and industrial objectives as well. Hungary’s military-industrial developments therefore focused on four main products: the D-442 FUG armored vehicle; the single-sideband

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divisional radio transmitter; tactical VHF relay transmission-technology devices; and radio-reconnaissance equipment. The joint National Planning Office—Defense Ministry report identified specialization and profitability as the primary problems: Based on the aforementioned domestic developmental activity, including its proportion to all developmental activity, could be deemed appropriate if the deficiencies existing within the system of international cooperation did not subsequently call into question the justifiability of even these few domestic developments in terms of the return on the significant sums invested.

The report claimed that the frequently cited mobilization-supply problems could be resolved only through a greater degree of alliance-level harmonization of economic and operational planning. In their conclusion, the authors of the document repeated and partially supplemented the arguments raised over the previous years: The army’s M duties, which form the direct foundation of peacetime and M procurements and therefore exercise an indirect impact on work related to the development of specialization and technology, are based on military and operational concepts. Experience shows that the present organization and system of M preparations intended to produce the material requisites for implementation of these duties do not ensure the compatibility of military objectives and economic possibilities. . . . The Warsaw Pact, in its capacity as a military-defense alliance, in fact possesses no true economic organ. The mission of such an organ would be to outline operational M duties and plan the means necessary for their implementation and to gauge economic possibilities based on which the definitively formulated complex tasks could be achieved as a synthesis of military needs and economic possibilities. Without the establishment of such an organization, all other measures, including those proposed henceforth, can only result in partial solutions of uncertain effectiveness.

The National Planning Office–Defense Ministry report recommended that the authority of the MICSC be extended to coordination of technical development and that common development plans for military equipment be devised: The leading state in the development of individual themes would be the Soviet Union, while countries designated on the basis of specialization resolutions would participate in this development. The design of a piece of equipment would take place as a result of development coordinated in this way whose production would be organized in accordance with the specialization resolution.

The report proposed that the MICSC undertake the duty of managing both the production and distribution of military equipment during M periods. The

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Defense Committee resolution called for Hungary’s permanent COMECON Executive Committee representative to initiate talks with the competent Soviet government organ and the defense minister with the WP Unified Armed Forces Supreme Command aimed at resolving the aforementioned problems.5 Hungary had two opportunities to again express its points of view within a short period of time. At the Military Industrial Cooperative Standing Commission’s session held in Moscow between April 9–13, 1965, members of Hungary’s delegation articulated the viewpoints contained in the Defense Committee resolution cited above, recommending that the Military Industrial Commission submit a coordinated proposal to “the competent superior organ.” At the initiative of the Polish delegation, the MICSC agreed to before the end of the year examine the perspectives and conditions for improving the commission’s operations as well as the possibilities for broadening its duties. In his report on the meeting, Hungarian delegation leader Colonel Ervin Jávor expressed doubts in this regard: “The submission of these issues by the Commission to international organs (COMECON, Executive Committee, Political Consultative Committee) depends on the degree to which common viewpoints can be established within the Commission, since the Soviet and Romanian delegations did not completely agree with this proposal.” (The temporary common platform of Romania and the Soviet Union, which often stood in opposition to one another, demonstrates the paradoxical nature of the situation.) The MICSC approved a resolution at the session asking member states to send their proposals for improving the work of the commission to the COMECON Secretariat’s Military Industrial Department. The MICSC made significant progress toward agreement on mutual deliveries for the years 1966–1970, calling upon member states in its resolution to intensify international cooperation. At the same time, it became apparent that, with the exception of the German Democratic Republic, the military industries in every one of the organization’s member states possessed significant unused capacities. Colonel Jávor offered the following explanation for this situation in his report: This can be explained primarily by the fact that the true demand for articles already under production is much lower than the previously announced demand upon which production capacity was established. The parties tendering orders do not [furthermore] always comply with specialization recommendations and in certain instances, guided by various considerations, do not procure their needs from the specialized country, but from the Soviet Union.

The MICSC made final decisions with regard to specialization of front and army radio-transmitters (the Polosana-N, production of which was assigned to Poland and Hungary) and single-sideband divisional radio transmitters

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(Vystrel-M, production of which was assigned to Hungary). However, the commission took the contradictory step of stipulating deadlines for the conclusion of long-term foreign-trade treaties before completing plans for specialization of a half-dozen further products. (A previous COMECON Executive Committee resolution designated the mid-summer 1965 deadline, which the commission did not have the authority to change.)6 Neither the minutes nor the resolutions stemming from consultations, likewise held in Moscow, of Warsaw Pact planning-office and general-staff representatives on April 14–15 contain any evidence of the fierce disputes that took place.7 Based on Soviet sources, Irina Bystrova, conversely, documents in detail the Czechoslovak delegation’s sharp criticisms as well as the less explicit criticism of the Polish delegation and the even more moderate disapproval of the Hungarian delegation.8 These three delegations presented numerous proposals, though did not have the support needed to elevate them to the status of resolution. Colonel Jávor’s report to the Defense Committee reveals that the Mobilization Department of the People’s Economic Council of the Soviet Union compiled a memorandum detailing the responses of representatives at the meeting to a preliminary study the Czechoslovak delegation had prepared regarding the coordination of mobilization planning. In his summary of the results of the consultations, Colonel Jávor concluded that “resolution of only the most important and, from a planning standpoint, the most significant tasks should be established as objectives.”9 According to Soviet sources, the Hungarian delegation called attention to the following, previously mentioned, problems: disorganization surrounding specialization—in Hungary’s case concerning the D-442 FUG armored vehicle; the redundancy of developmental activity in several countries if almost exclusively Soviet military equipment is incorporated into the recommended unified weaponry systems of member states; and the dual authority of the MICSC and other standing commissions, such as the chemical-industry standing commission, to deal with long-range tasks to be completed after the year 1970. Hungarian delegates proposed that, taking into account the extraordinary situation stemming from the obsolescence of military equipment, the MICSC ask the WP Unified Armed Forces Supreme Command and the competent Soviet organs to formulate longer-term recommendations regarding the system of military industrial products. Delegations from the German Democratic Republic, Poland, and Bulgaria advocated the expansion of cooperation in order to avoid parallel activity in the development and production of military technics. In the course of drafting industrial plans for the years 1966–1970, delegates discovered that significant unused capacities existed for the production of aircraft in Czechoslovakia and Poland, for the production of radar in Poland and Hungary and for the production of armored personnel-carriers in all three countries.

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Polish delegates attending the consultations asserted that the system of bilateral coordination governing the distribution of scientific-research and experimental-development work between the Soviet Union and the other member states was inefficient, recommending that a special international organization be established under the authority of the WP Unified Armed Forces Supreme Command to oversee such coordination of mobilization plans between member states on a voluntary basis. Delegates from Poland likewise proposed that the Supreme Command and the MICSC engage in closer cooperation in the systematization of newly developed weaponry. The Czechoslovak delegation voiced the most explicit criticism of the MICSC during the meeting, focusing their censure on the lack of bilateral coordination. The critical points were similar: “the path and effective forms of agreement have not yet been found, or at least—with the active participation of the appropriate organs of the Unified Armed Forces Supreme Command—research and experimental-developmental work has not yet been harmonized.” Czechoslovakia’s delegation attributed the ineffectiveness of the MICSC’s recommendations and decisions and the regular failure of member states to comply with them to the commission’s inattention to general economic issues related to the production and mutual delivery of military equipment. The delegation claimed, furthermore, that the provision of Soviet-designed weaponry to member-state militaries was inconsistent, that party and government leaders were not kept sufficiently informed and that the belated transfer of license and assembly-operational documentation caused significant losses in terms of both time and money. The Czechoslovak delegation presented the following proposals to be discussed at later meetings of the organization aimed at improving the operations of the MICSC: 1. “The Military Industrial Standing Commission currently existing within COMECON must be transformed into a standing commission operating within COMECON to deal with economic and scientific-technical cooperation related to military affairs.” The commission should furnish effective and complex solutions to economic, technical, organizational, and methodological issues connected to the provision of defense needs. 2. The commission should deal with the scientific and experimental-design background of the people’s democratic countries, issues related to production (specialization, cooperation, parts supply, scientific-technical cooperation, etc.) and the delivery of military equipment among member states. 3. The multilateral coordination of people’s-economic mobilization plans and the preparation of the people’s economies for an intensification of the international situation and the period following the outbreak of war (par-

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ticularly in the area of industry, transportation, telecommunications, and health affairs) should be arranged through the commission. 4. The commission should deal with questions connected to the impact of weapons of mass destruction as well. 5. The activity of the Unified Armed Forces Supreme Command must be better coordinated with the expanded duties of the MICSC. “The Unified Command should discuss possibilities for the development of military equipment in the member states of the Warsaw Pact, make proposals regarding prospects, suitability and consolidation, call the attention of countries to parallelisms and the possibility for bilateral cooperation; a unified system should be set up in order to conduct experiments and technical achievements should be incorporated into the weaponry system. Through activity of this type, the Unified Command could contribute to the elimination of the currently prevailing cavalcades of types, particularly in the domain of conventional weapons and technical matériel, which at times of war, during the possible subordination of national units [military forces] to the fronts, could lead to difficulties not only on the battlefield, but in the field of ammunition and parts supply as well as in the event that other equipment is used.”10 The minutes of this meeting of Warsaw Pact planning-office and general-staff representatives did not reflect the heated debate that had actually taken place during the consultations. The following recommendation was adapted in connection to mobilization preparations: The formulation and coordination of the people’s-economic mobilization plans of countries participating in the Warsaw Pact must be conducted, along with the annual adjustment of these plans, in accordance with the general developmental level of the people’s economy of the country as well as the development of industrial mobilization capacities and the systematization of new military equipment and matériel on the basis of the mobilization-period plan, which is prepared once every five years. The mobilization-period plan must be supplemented with a more detailed elaboration of first-quarter measures so that this can be put into effect, depending on the existing situation, long before the start of the war or, in the event of an unexpected attack, in the course of [the] war.

According to the minutes, the Bulgarian delegation voiced the only dissenting opinion at the meeting, proposing that the 1966 mobilization plan be reviewed based on concerns that largely corresponded to those expressed in the course of previous consultations: The opinion of the delegation of the People’s Republic of Bulgaria is that the resolution approved by party and government leaders in May 1958 regard-

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ing the supplement through domestic production and mutual deliveries of the peacetime and wartime needs for classic weaponry of the armed forces of the people’s-democratic countries will not be fulfilled and it proposes that the Unified Command and the Special Group of the People’s Economic Council of the Soviet Union analyze the situation regarding mobilization capacities and their developmental perspectives for the years 1966–1970 as well as the degree of satisfaction of the needs of the armed forces; and that they prepare an appropriate report and recommendations for examination at the [Warsaw Pact] Political Consultative Committee session. The opinion of the delegation of the People’s Republic of Bulgaria is that more concrete recommendations must be made regarding the developmental direction and degree of the mobilization capacities of people’s-democratic countries as well as the establishment of mobilization raw-material and material reserves based on presently existing conditions.11

Just one week later, on April 21, 1965, Hungary’s MoD presented a separate report to the Hungarian Socialist Workers’ Party Political Committee identifying operational problems and unresolved, disputed issues, particularly those related to the weakness of the COMECON MISC, the absence of a collective-leadership body and anomalies surrounding the office of the Unified Armed Forces Supreme Commander (i.e., member-state defense ministers, as deputies to the Supreme Commander, operate as his military subordinates). Defense Minister General Lajos Czinege identified some of the commission’s organizational deficiencies and their ramifications in the report: Bilateral talks constitute the basic form of ensuring the weaponry and military equipment of the armies as well. Thus—lacking an adequate governing (coordinating) organ—the wartime distribution of available material resources in harmony with operational duties is unresolved. As a consequence of this, for example, only 10.5 percent of the needs of the Hungarian People’s Army for the import of military equipment are ensured in the first year of the war. Nobody deals with the coordination of technical-development of military equipment—likewise lacking an adequate organ. In absence of recording-keeping and coordination of research, parallel efforts are being made in individual member states which often cause avoidable losses of a considerable magnitude. For example, modern radio technology developed at great effort by the Hungarian telecommunications industry was not systematized because other countries conducted parallel development of equipment of identical purpose in spite of the fact that we are the profile holders. Although the COMECON Military Industrial Standing Commission does handle the specialization of military industrial production, its recommendations are not effective and are not capable of compelling member states to comply with agreements. Production capacities have remained unused in certain member states, while other member states make needless efforts to introduce identical capacities. For such reasons, for example, the provision of the Hungarian People’s Army with armored personnel-carriers in the second five-year plan is unsettled

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and the export of Hungarian-manufactured reconnaissance amphibious-vehicles has declined significantly compared to originally stipulated demand. We have no means of quantitatively demonstrating the surplus material burden weighing upon the country, though it can be estimated to be in the many billions.

The MoD report declared that these problems could be resolved through the establishment of a member-state Military Council, which would also deal with weapons-technology issues.12 At its April 27 session, the Hungarian Socialist Workers’ Party Political Committee decided that the proposals outlined above should be presented to the leadership of the Central Committee of the Communist Party of the Soviet Union.13 At meetings in Prague in November 1965, the Military Industrial Cooperative Standing Commission achieved a breakthrough toward resolving the longstanding organizational issues that Hungarian representatives had raised on several occasions. Soviet delegates presumably came to recognize the utility of the proposed modifications to the organization’s operations, while Romanian officials elected not to oppose these changes at a joint meeting of MICSC delegation leaders and general-staff representatives between November 16–19 and the commission’s session between November 19–23. MICSC delegation leaders and general-staff representatives debated organizational reform measures based on previously circulated preliminary recommendations at the November 16–19 meeting. Delegates and representatives at the meeting fully supported a Soviet proposal to conduct multilateral coordination of scientific-research and experimental design work within the commission, some of them even raising the possibility of implementing specialization already during the technical-development phase. The Soviet delegation maintained that the MICSC’s previous difficulties could be resolved if a working group (body) were established alongside the WP Unified Armed Forces Supreme Command specifically for this purpose. (Romanian delegates raised objections to the proposal on the procedural grounds that it should have been submitted to the latter body before being debated within the MICSC.) The Unified Armed Forces Supreme Command representative present at the meeting supported the proposal, though reminded commission delegation leaders and general-staff officials that it had not yet been presented to the WP Supreme Commander Andrei Grechko or the general staffs of member-state armies for approval. Representatives finally agreed to submit the proposal regarding multilateral coordination of technical-development plans—with the exception of work done in the Soviet Union―to the COMECON Executive Committee pursuant to the following objectives and procedures: • It is expedient to implement cooperation within the frameworks of the Unified Armed Forces Supreme Command and the MICSC.

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• The Unified Armed Forces Supreme Command should be asked to examine the possibility of organizing cooperation. • Following the decision of the Unified Armed Forces Supreme Command, the MICSC should devise the order of implementation for coordination. With regard to the specialization of military industrial production, delegation leaders and general-staff representatives at the November 16–19 meeting declared that the MICSC must in the future make a greater effort to prevent the establishment of parallel production capacities. They likewise wanted to refine the basic precepts governing specialization. Partially as a result of Hungarian initiatives, the issue of more efficient use of financial and material resources surfaced from a completely new standpoint at this level. For the first time, the notion emerged that several variations of individual development programs should be devised in cooperation with the Unified Armed Forces Supreme Command. “To this end, the Commission and individual delegations must in the future concern themselves with more economicefficiency considerations and analysis than they have until this time.” The Soviets, recognizing the succession of difficulties related to the transfer and naturalization of licenses, promised to accelerate the process. Soviet officials attending the meeting proved to be open to change concerning mobilization issues, asking member states to send proposals in this regard to Gosplan. Delegation leaders and general-staff representatives also debated the possibilities for specialization surrounding the industrial overhaul of military equipment and the fundamental principles guiding cooperation between the MICSC and the Radio Electronic and Electronic Standing Commission. At the MICSC session in Prague from November 19–23, delegates approved measures aimed at improving the commission’s operations to be submitted to the COMECON Executive Committee and the Warsaw Pact Unified Armed Forces Supreme Command. The commission also reviewed previous decisions regarding specialization, determined the specialization of new products based on demand and production possibilities for the years 1966–1970 and adopted nomenclature contained in a new, unified structure. The report on the session from Hungary’s delegation leader, National Planning Office Deputy Chairman Colonel Ervin Jávor, reveals that the value of Hungarian exports of specialized products was expected to double during the period of the third five-year plan as a result of the new distribution of production. Colonel Jávor stated in his report that “with regard to specialization, work completed by the commission in 1965 partially rectified the deficiencies that the Hungarian delegation had raised on several occasions. In the future the main task is to ensure that both the delivering and the producing

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countries comply with approved specialization.” Colonel Jávor asserted that the increased focus on military-economic analysis represented significant progress that could serve to promote more efficient use of available resources. The deputy chairman of the National Planning Office concluded that the “friendly, sincere atmosphere” that had prevailed at the session had enabled the commission to reach compromise on numerous delicate issues.14 There were no significant changes in the 1965 recommendations in comparison to the 1958 distribution of production. There was, however, a conspicuous rise in the proportion of telecommunications equipment and electronic- and radio-reconnaissance devices. The strengthening of Bulgaria’s electronics industry and the continuing significant role of Hungarian telecommunications were also striking. The Czechoslovak and Polish telecommunications and precision-instrument industries received new tasks connected to tank and aircraft production, while Romania continued to make the smallest contribution among all member states, likely due to political factors rather than the country’s limited industrial capacity.

3.2 AT THE LIMITS OF OPERABILITY The “friendly and sincere” understanding that existed in the field of militaryindustrial cooperation proved, it seems, to be temporary on other fronts. The unresolved questions surrounding the organization of the Warsaw Pact, among which those pertaining to military industrial mobilization were not even the most important, produced several reform proposals. Delegations from four countries submitted proposals for transformation in January–February 1966: Hungary (January 18–19); Poland (January 21 and 26); Romania (February 4–9); and Czechoslovakia (February).15 The numerous unsettled issues regarding the peacetime and wartime authority and duties of both the WP Political Consultative Committee and the Unified Armed Forces Supreme Command provoked disagreement that endured for nearly four years. Romanian representatives, just as they had within COMECON, sharply opposed any higher-level cooperation that would have provided either the Political Consultative Committee or the Unified Armed Forces Supreme Command with certain supranational rights. The details of this dispute do not fall strictly within the scope of the present subject, thus only those episodes of the conflict that concern the military industry will be considered in this book. In January 1966, Hungary’s Foreign Ministry and Defense Ministry drafted separate proposals aimed at strengthening the political structure of the Warsaw Pact and transforming the leadership system of the Unified Armed Forces, respectively. The Hungarian Socialist Workers’ Party Political Com-

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mittee approved the plans on January 21 as the Hungarian position to be represented at meetings of WP foreign and defense ministers.16 Deputy defense ministers held consultations in Moscow between February 4–9 during which they conducted detailed debate on the scope of authority and structure of the WP Unified Armed Forces Supreme Command and raised the possibility of establishing a Technical Corps (Committee) to coordinate the development of military technology. At a meeting of deputy foreign ministers held in East Berlin between February 10–12, Romania’s representative staunchly opposed every proposed change on the grounds that even the measures that had already been taken violated the fundamental principles of the Warsaw Pact.17 In his report to the Central Committee of the Communist Party of the Soviet Union in Moscow on February 28, 1966, Warsaw Pact Unified Armed Forces Supreme Commander Andrei Grechko described the dissatisfaction of member states with the supply of parts and components connected to military equipment delivered from the USSR. Following its investigation of this complaint, Gosplan’s Radio Industry Department drafted a package of proposals “on the further development of cooperation among the member states of the Warsaw Pact in the area of production of military technics.” Among other things, the Gosplan proposals called for the establishment of an organization functioning alongside the Unified Armed Forces Supreme Command to plan the production of weapons and military equipment as well as the formation of a military scientific-technical council which, in addition to directing the operations of the WP Unified Armed Forces Committee and the COMECON Military Industrial Standing Commission, would be responsible for organizing cooperation within the Warsaw Pact in the area of scientific research and experimental-planning work connected to military-industrial production.18 After arriving to Moscow for talks on May 26, member-state defense ministers received copies of a draft resolution that the Soviet military, militaryindustrial and planning-committee apparatus had prepared by the middle of that month. Ministers from both Romania and the Soviet Union displayed a much more constructive approach to the meetings on May 27–28 than delegates from those countries had previously, therefore making it possible for agreements to be reached concerning the role and duties of the Political Consultative Committee, the Unified Armed Forces Supreme Command as well as the Supreme Commander and his deputies. Further talks were needed regarding the functions of the proposed Military Consultative Council due to opposition from Romania. However, no debate took place surrounding the establishment and authority of the so-called Technical Corps. The draft resolution circulated among officials at the meeting described the composition and duties of this body as follows:

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A Technical Corps should be established alongside the Unified Armed Forces Supreme Command. The leader of the Technical Corps is at the same time the Supreme Commander’s deputy. The Technical Corps will formulate proposals regarding Warsaw Pact member-state weapons systems, military equipment, scientific-research and experimental-structural activity and other issues that are related to the provision of weaponry and military equipment to the armed forces of WP member states. The Supreme Commander will submit recommendations based on consultations with the Defense Ministers regarding the introduction of new types of weaponry and military equipment to the governments of WP member states for approval. The Technical Corps will operate in close cooperation with the COMECON Military Industrial Commission. The Technical Corps will periodically convene the military scientific-technical council, whose staff will be composed of either of the deputies of Ministers or the Chiefs of General Staff or of persons appointed specifically by them. The president of this Council will be the leader of the Technical Corps. The military scientific-technical council will submit its expert opinions concerning examined questions to the Unified Armed Forces Supreme Commander for approval.19

At its sessions on June 21 and 28, the HSWP Political Committee provided Hungary’s delegation with a flexible negotiating mandate in the interest of facilitating approval of WP reform. Although the Political Committee believed that the proposed Military Consultative Council would be more effective, it also considered the establishment of a Military Council composed of the Supreme Commander and his national deputies to be acceptable. Romania appeared to be willing to support the latter alternative as well.20 A session of the WP Political Consultative Committee and another meeting to discuss unresolved issues related to COMECON were held in Bucharest at the beginning of July 1966. The Hungarian Socialist Workers’ Party Central Committee’s State Economy Department drafted a report assessing the operations of COMECON in connection to the latter meeting. The Central Committee department’s report contained the following analysis of civilian cooperation: Harmonization of the plans essentially took place bilaterally. Multilateral plan coordination did not occur in the strict sense of the term. Reconciliation of plans within COMECON was, in fact, limited to a summation of the national plans. Neither bilateral nor multilateral implementation of the main objectives of the people’s economic-development plans and coordination of the most important investments was successful. In spite of this, our assessment of plan coordination is generally positive, because it contributed to a strengthening in the foundation of national plans.

While these assertions were much less true with regard to military-industrial cooperation, by this time factors inhibiting the expansion of relations within

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the organization seem to have applied to both the civilian and military sectors. The report stated, somewhat self-critically: The level of development of the economic structure of the countries and, consequently, their economic interests are divergent. Presently only those proposals are implemented—and their number is quite small—with the agreement of all the member states that provide sure economic profit without risk for all participants in the cooperation. We nurtured excessive notions with regard to the developmental possibilities for multilateral economic cooperation. We did not sufficiently account for the differences in interests stemming from the diverse economic circumstances in the countries. There is not even a coordinated viewpoint within COMECON concerning the manner in which economically optimal development can be reconciled with the necessity of equalizing economic standards in the course of cooperation.

The report asserted that “In the present situation there is no possibility for proposals aimed at more vigorous cooperation within the framework of COMECON to be approved. Therefore it must be expected that over the coming period the cooperation of interested countries outside COMECON will come increasingly into the foreground.” (Examples of this were the Bearing Industry Cooperative Organization, INTERMETALL and INTRANSMAS, which were founded and operated by only certain member states.) The report contained the symptomatic claim that “More flexible methods taking mutual interests into greater account should be utilized within the framework of COMECON. Experience shows that not every country is equally interested in the resolution of a number of cooperation problems. It is expedient to support the notion that if only some countries are interested in a certain field of cooperation that the other countries not prevent the implementation of cooperation within the framework of the COMECON.”21 In preparation for the meeting in Bucharest, the COMECON Executive Committee drafted an extensive report on developments that had occurred since July 1963.22 The Hungarian Socialist Workers’ Party Central Committee’s State Economy Department remarked, however, that the report provided only a descriptive account of the organization’s problems, while “critical comments appear only where individual countries express their separate opinion.” The department concluded that the COMECON Executive Committee’s proposals were too general and repetitive.23 The COMECON Secretariat’s Military Industrial Department also prepared a report on this period, which the Military Industrial Standing Commission debated at its session in Moscow between June 8–10, 1966. The first paragraph of the report essentially summarized the more important progress that had been made:

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Further development and consolidation of cooperation among the member states participating in the Commission in all areas of the military industry has characterized the activity of the COMECON Military Industrial Standing Commission during the period since 1963. The countries have adopted the production of numerous new, modern types of weaponry (supersonic aircraft, rockets, certain types of tank weaponry, anti-tank devices and radio-technology devices, etc.) that have made it possible to improve the technical provision of the armies of countries participating in the Warsaw Pact; the mutual deliveries of military equipment have become more rational from a military and economic standpoint.

With the exception of some communications equipment, the provision of member-state armies from 1966–1970 was ensured through the coordination of production plans. No parallelisms came to light during the harmonization of investment plans, though neither did they prepare joint investments. In consideration of the latter as well as production-specialization agreements, the department (and the commission) regard the expansion of cooperative deliveries and the specialization of the (sub)components of complex products to be an important future task.24 The COMECON Military Industrial Standing Commission debated developments connected to the planned transformation of the WP Unified Armed Forces Supreme Command as well, recommending that the MISC assume the duty of dealing with the following issues in the event of the establishment of a Technical Corps: • The cooperation, including complex developmental cooperation, of member states in the completion of scientific-research and experimental-design work. • The organization of mutual technical assistance and exchange of technical experience. • The standardization and integration of complementary products, units and parts.25 • The coordination of technology related to scientific-research and experimental-design work and military-industrial production prescribed by other standing commissions.26 In spite of the promising signs before the meeting, the Bucharest consultations essentially concluded in failure. Although the WP Political Consultative Committee approved without debate the declaration regarding European security-issues at its session between July 4–6, Romania’s delegation did submit a counterproposal to the Soviet–Polish submission analyzing the situation in Vietnam. Though they managed to adopt this following a sharp exchange of words, the proposed transformation of the political and military

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organization of the Warsaw Pact foundered completely. Romania’s delegates withdrew concessions made at the May meeting of foreign ministers, thus eliminating the possibility of reaching a consensus agreement and prompting officials to suspend debate for an indefinite period. At July 7 consultations regarding COMECON, Romania’s attempt to loosen ties within the organization clashed with that of Poland, the German Democratic Republic, Czechoslovakia, and Hungary to strengthen them. No formal resolution was passed at the meeting as a result of this lack of agreement.27 COMECON did not succeed in resolving the conflicts within the organization during preparations for its twentieth session in Sofia, Bulgaria. Representatives attending an extraordinary meeting of the COMECON Executive Committee in Moscow on November 1–2 managed to agree upon the text of only eight of sixteen draft proposals for the session. As a result of Romania’s continual opposition, which had begun to verge on obstructionism, the delegations from Poland, the German Democratic Republic, Czechoslovakia, and Hungary agreed to conduct separate talks. Hungarian delegates maintained that since no new circumstances or considerations had emerged since the Bucharest meeting, it was unnecessary to formulate new positions.28 The outcome of the twentieth session of COMECON held between December 8–13, 1966, as well as the organization’s Executive Committee meeting substantiated the negative expectations with regard to these events. In his report on the consultations to the Hungarian Socialist Workers’ Party Political Committee, Hungarian COMECON representative Antal Apró stated that “The session also showed that bilateral or trilateral consultations must be initiated with regard to a series of issues in the near future. . . . Therefore groupings must be established within the integration of COMECON between immediate neighbors or among the interested countries with regard to questions such as the energy issue and similar matter[s].” The organization of smaller lobbies and Hungary’s change of tactics were the consequences of the nearly insurmountable difficulties that had emerged surrounding multilateral coordination. With regard to Romania’s resistance to measures aimed at increased integration of COMECON, Apró wrote: The following circumstance must be taken into account in an appraisal of Romanian conduct: following the high-level consultations in Bucharest—based on a correct interpretation and utilization of the question of interest—a practice has begun to emerge in the Executive Committee and some standing commissions—at the initiative of Hungary, among others—that the position of the interested countries rise to the level of resolution and on this basis suitable tasks devolve upon the COMECON Secretariat. Romania’s representatives, on the other hand, attempt to impede adoption of all resolutions within these organs and to prevent the Secretariat from carrying out genuine work.

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Representatives nevertheless managed to approve a few general principles identifying the primary areas of cooperation: • Coordination of the long-range plans of member states; • Specialization and cooperation regarding their production; • The specialization of products “taking into account the world’s technical achievements”; • Coordination of the most important scientific and technical research; • Coordination of mutual goods-trade and foreign-trade with capitalist countries and the continuation of cooperation in the field of economic and technical assistance provided to developing countries. A separate interesting aspect of COMECON’s session in Sofia was that representatives from Yugoslavia were, for the first time, in attendance as observers and thus witnessed the dispute between member states. Apró indicated in his report that the intensity of the conflict had stunned the Yugoslavs, while Hungarian Socialist Workers’ Party General Secretary János Kádár reacted to the situation in the following manner: “Incidentally, it doesn’t really bother me that the Yugoslavs heard the altercation all the way through, because they would have become aware of the situation on the other side the fence anyway. If we think that this is a secret, we are fooling ourselves.”29 From the standpoint of military-industrial cooperation, the session of COMECON’s Executive Committee in Sofia entailed the serious deficiency of not even placing the issue of multilateral coordination of military industrial R&D plans on the agenda. Delegates clashed again at the COMECON MISC’s second session of 1966 held in Moscow between November 29– December 1 to celebrate the tenth anniversary of the commission’s foundation. While delegations from Poland, the German Democratic Republic, Czechoslovakia, Hungary, and Bulgaria lauded the leading role of the Soviet Union, representatives from Romania asserted that “achieved results were the outcome of the work of all delegations.” Delegates from Czechoslovakia did, however, choose the festive occasion to challenge one of the fundamental Soviet principles of military-industrial cooperation established in 1957–1958, proposing that “the possibility of organizing cooperation with the Soviet Union in the manufacture of military industrial products should be examined in the future. The viewpoint of the Czechoslovak side is that this would serve to promote the resolution of payment difficulties in connection to the delivery of military industrial products between the Soviet Union and the interested countries.” The Czechoslovak proposal was based on both technological and fiscal grounds. The Soviet Union did not want to work jointly with Central and

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Eastern European member states or depend on them to even a minor degree. At the same time, Poland, the German Democratic Republic, Czechoslovakia, and Hungary felt that they were quite capable of acting as an equal partner with the Soviet Union in certain areas of military-industrial production. Moreover, the quantity of matériel that smaller member states imported form the Soviet Union regularly exceeded that of their military exports to the USSR in spite of the general objective of attaining an equal balance of trade in the exchange of goods of all types. Czechoslovakia clearly wanted to improve this balance through cooperative deliveries, while Hungary had already indicated that it would like to organize joint production of the Vystrel-M radio transmitter with the relevant Soviet company. Czechoslovakia’s proposal failed, however, to elicit response and was not placed on the agenda. The dispute that arose surrounding production of the 23 mm Shilka lightly armored, self-propelled, radar-guided anti-aircraft weapon-system provided a clear illustration of the disparity in interests. Poland indicated that it did not, after all, want to undertake assembly of the Shilka system as previously indicated and instead wanted to manufacture radar that Hungary had originally wanted to produce. Czechoslovakia and the German Democratic Republic also declared their interest in the production of radar, inducing officials to initiate the usual procedure utilized in such instances of dispatching a work group to prepare a production-specialization proposal. Following an extended period of preparation, the Military Industrial Department submitted an elaboration of the principles governing the specialization of military technics production to the MISC. One of the most important new aspects of these principles was the planned introduction of the “manufacturing-specialization treaty,” which attempted in a certain way to sanction non-compliance with recommendations.30

3.3 REFORM OF THE HUNGARIAN INSTITUTIONAL SYSTEM Hungary’s institutional system dealing with international military industrial cooperation assumed its final structure at the beginning of the 1960s. However, the transformation of the centrally planned economic-mechanism beginning in the middle of the decade triggered new movement within the system, requiring Hungary to harmonize the indirect specialization that had assumed a key role in domestic reform with COMECON’s unaltered command mechanism.31 On February 8, 1962, the Defense Council dismissed the officials who had been serving as the chairman and members of Hungary’s COMECON MICSC section since March 1957. The council appointed National Planning Office Military Deputy Chairman Colonel Ervin Jávor to head the section and

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Deputy Minister of Metallurgy and Machine Industry Gyula György, Deputy Defense Minister Major General Béla Lakatos and Ministry of Foreign Trade Technical Department Chairman Ferenc Baki to serve as its members.32 Over a period of many years sources refer to the inter-ministerial body in charge of organizing domestic coordination alternatively as both the Technical Cooperative Committee and the Military Industrial Cooperative Standing Committee. By 1963 the number of members serving in this body decreased to three—one representative each from the Ministry of Metallurgy and Machine Industry, the Foreign Trade Ministry and the Hungarian People’s Army General Staff. The Defense Committee reorganized the committee in October 1963, establishing the Military Industrial Government Commission with an identical scope of authority. The latter commission consisted of five members—one deputy minister each from the Ministry of Metallurgy and Machine Industry and the Foreign Trade Ministry, the head of the General Staff Material and Equipment Directorate, the chief of the Defense Committee secretariat and the leader of the National Planning Office’s General Organizational Department.33 The Defense Committee approved the Military Industrial Government Commission’s statutes in November 1964. At the same time, the National Planning Office’s General Organizational Department appointed one of its section leaders to serve as the chief of the government commission’s secretariat. According to the statutes, the Military Industrial Government Commission functioned as the Hungarian delegation of the COMECON Military Industrial Standing Commission and would represent Hungary in joint commissions established on the basis of bilateral military-industrial and defense cooperation treaties. The Military Industrial Government Commission was subordinate to the Defense Committee and was accountable to the latter in the conduct of its operations. Only the National Planning Office, the MoD and the Defense Committee’s delegates dealt with international matters related to the mobilization preparations of the people’s economy. The Military Industrial Government Commission possessed the authority to establish permanent and temporary work groups to examine specific issues and problems. The duty of the commission’s Secretariat, which functioned within the organizational structure of the National Planning Office, was to maintain relations with the COMECON Secretariat Military Industrial Department.34 The National Planning Office’s military deputy chairman performed the duties of the commission’s chairman starting from this time. The Material Planning Directorate, which was also responsible for handling matters related to military equipment, functioned in direct subordination to the MoD from 1961–1963 before being reintegrated in September of the latter year into the operational hierarchy of the Hungarian People’s Army General

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Staff as the Fourth Directorate. Shortly thereafter, an independent subdepartment operating in close cooperation with the National Planning Office’s military segment was established to deal with international matters. The Fourth Directorate was responsible for the annual and medium-term provision of the Hungarian People’s Army both in peacetime and during M periods, the acquisition of domestic and imported military equipment and matériel for the army. The Directorate also participated in domestic and international talks of the Military Industrial Government Committee and the COMECON MISC on behalf of the MoD as well as the General Staff.35 Although operational difficulties were already perceptible in the organizational functions of COMECON, the rapid expansion of military industrial exports significantly increased its foreign-trade duties. The Technics Stockpiling Company was detached from the Foreign Trade Ministry Technical Department in 1964 in order to separate administrative, conceptual, supervisory and operative daily procedures. The Defense Committee sanctioned these measures in a June 1964 resolution. From this time on, the Technical Department performed ministerial administrative tasks with a staff of twelve. The Technics Foreign Trade Company assumed the duty of conducting commercial affairs as an autonomous, full-fledged legal entity with an initial staff of fifty.36 Thus by the end of 1964 the institutional system connected to Hungary’s military-industrial sector had reached a point of equilibrium. However, at this time the leadership of the Hungarian Socialist Workers’ Party began considering ways in which the functions of the centrally planned economic system could be optimized in order to stimulate the stagnating economy. At is session between December 8–10, 1964,37 the HSWP Central Committee authorized the establishment of eleven work groups to conduct a “critical analysis” of the command mechanism and the regulatory system. In September 1965, the party’s Political Committee debated a report outlining the conclusions reached in the course of this analysis to that point.38 The party’s central leadership determined the initial principles governing the planned economicreform in January 1966, submitting them for broad debate shortly thereafter.39 The committee examined conclusions stemming from debate, preliminary reports, and plan proposals in November 1966, holding talks in June 1967 on the economic policy to be used during the introductory period of reform.40 The Ministry of Metallurgy and Machine Industry’s Planning and Labor Affairs Department prepared one of the first preliminary plan-proposals and analyses concerning the military industry in September 1966. The proposal, which focused on the circumstances surrounding international cooperation, summarized the fundamental objectives and probable outcome of reform: Every one of the COMECON countries is dealing with the modernization of command methods. The direction of this is so similar that everywhere they are

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striving to pare down the unwarranted rigid outgrowths of the planning system, to increase company initiative and independence and to impose market price regulation. However, these measures differ from one another in many respects depending on the internal attributes of the country and thus a situation is emerging in which the command systems in individual COMECON countries will show a greater number of contrasting features than they have until this time.

The plan proposal attributed the conflict and turbulence in international cooperation partially to similar factors: Revision and modernization of substantive and organizational issues related to cooperation among COMECON countries came into the foreground simultaneously to that of the command system, essentially on the basis of the motives warranting the transformation of the internal command system. Naturally the disparate level of economic and political development in the countries comes into play here as well, requiring differing measures; and harmonization of these is a much more difficult and more prolonged task than the modernization of the command system within a single country.

In the course of determining their new duties, the organs directing and coordinating industry, foreign trade, and defense deemed important the establishment of “connecting elements” providing a flexible connection between the interior command system and the established institutions of international cooperation. The changing domestic mechanism was forced to adapt in the latter regard to the following series of preconditions: • The Military Industrial Standing Commission will remain within the COMECON organization and its annual work plan will continue to be mandatory. • The military-industrial government committees of the countries will serve as the organs overseeing bilateral military-industrial economic and technical relations internationally and within the country. • Coordination of the annual and medium-term plans will continue to form the fundamental framework for cooperation. • Multilateral cooperation will continue to be based on the decisions stemming from the sessions of the MISC chief commission, while preparation and the implementation of work-plan stipulations will continue to be the duty of the COMECON Secretariat’s Military Industrial Department. The Ministry of Metallurgy and Machine Industry plan proposal also contained a comprehensive appraisal of the first decade of international militaryindustrial cooperation:

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In its work until this time—taking into account the economic positions of our country as well—the operations of the [COMECON] MISC can be considered productive, particularly with regard to specialization work, the coordination of technical parameters and the consolidation of tactical-technical requirements. Despite this, its activity aimed at the formulation and harmonization of longrange plans and expansion of the scope of standardization of tactical-technical requirements must be enhanced. Industrial and trade companies and armed bodies, including their ministerial organs, can only be indirectly incorporated, by its very nature, into the operations of the MISC, and then only in relation to issues affecting their own areas of specialty. Since the economic repercussions of the organization’s work are felt for the most part only in connection to the implementation of medium-range plans, the economically beneficial effect does not in every case appear directly in annual terms at the competent ministry or its companies. . . . International cooperation will manifest itself more imperatively in the New Economic Mechanism than it has until this time, precisely because analytical work prior to undertaking obligations and examination of the economic preconditions for the practicability of the commitments will demand greater circumspection than it has until now. Prior to making the decisions, the feasibility of funding investments connected to specialization and deliveries, the prerequisites for satisfaction of technical-development commitments, cooperation connected to the fulfillment of exports and imports, price issues, tactical-technical requirements, etc., must be examined. The analysis must be conducted in all cases with the participation of the interested parties and the established specialist committees. In this way, it will be possible to increasingly assert independent company volition and to ensure that decisions and positions taken at appropriate international and domestic levels regarding the companies are of binding force.41

In March 1967, the National Planning Office’s General Organizational Department established the guiding principles determining the modus operandi of international cooperation in the domain of military industry to come into effect with the introduction of the New Economic Mechanism. The Military Industrial Government Commission approved a resolution shortly thereafter declaring these to be the fundamental principles guiding such international cooperation. The National Planning Office remarked that internal and external circumstances were likely to deviate significantly as a result of Hungary’s relatively radical reform: Considering the current situation, the methods of the new mechanism will not assert themselves as quickly in external relations as they will in relations within the country. . . . Sooner or later, reform of the mechanism of international cooperation will become necessary as well . . . [although] we cannot count on substantial, rapid changes taking place within COMECON in the near future. . . . As a consequence of this, new methods to be introduced in the area of the

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military industry on the basis of the domestic mechanism (which with the improved preparation of certain questions are first of all coupled with the more prudent assessment of economic-technical factors) will not in every instance be in harmony with the method of cooperation among the COMECON countries.

The fundamental principles specified that numerous factors limited the autonomy of production companies and their right to make individual decisions in the area of international cooperation (as well): the maximal assurance of the material-technical conditions for national defense; the assertion of military considerations in the course of establishing production capacity for military equipment; the country’s foreign-currency situation, which could perhaps make the organization of domestic production of certain military equipment essential; compliance with the regulations of military secrecy, etc. On the basis of all this, the National Planning Office saw the possibility of listening to leaders and specialists from relevant Hungarian companies in the course of making various decisions concerning international cooperation in specialization and production. The office also declared that “without the company, the undertaking of tasks entailing economic-financial consequences affecting it are not practicable.” The Military Industrial Government Commission continued to conduct coordination of company interests and other special factors. Change was to be expected following the introduction of reform inasmuch as the Military Industrial Government Commission would have the involved companies draft some of the proposals regarding cooperation in specialization and production. In the interest of effective long-range (company) decision-making, the National Planning Office considered it desirable for the MoD and the Military Industrial Government Committee to advocate within the Hungarian People’s Army General Staff and the COMECON Military Industrial Standing Commission, respectively, the systematic formulation and elaboration of the long-term nomenclature of military equipment in the form of Unified Armed Forces Supreme Command recommendations.42 The broad changes included the reorganization of the National Planning Office’s General Organizational Department effective January 1, 1968. Beginning on this date, the department’s operational procedures included a greater number of analytical and coordination tasks than previously. The department, which following its reorganization bore the Roman numeral IV in its name, continued to handle important issues in the area of international military-industrial cooperation. The department furthermore planned military industrial production and services required to satisfy the needs of the armed forces in Hungary and other Warsaw Pact member states in cooperation with the relevant ministries (Ministry of Metallurgy and Machine Industry, Heavy Industry Ministry, Foreign Trade Ministry, Ministry of Defense and Ministry

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of Interior Affairs). The department also oversaw coordination of bilateral and multilateral military industrial cooperation, including issues related to mutual deliveries and the international division of labor. On the basis of these duties, the General Organizational Department calculated medium- and shortterm plan estimates for military-industrial export and import deliveries and determined mandatorily prescribed military industrial tasks. The thirty-eightmember department’s Cooperation Section was responsible for coordination of military-industrial and scientific cooperation within the framework of COMECON and performed the duties of the Military Industrial Government Commission’s Secretariat as well.43 In preparation for the introduction of the New Economic Mechanism, the Foreign Trade Ministry also conducted a review of the structure of Hungary’s external trade in military equipment. In December 1967, the Defense Committee approved a resolution defining in detail the range of duties of the Technical Department and the Technics Foreign Trade Company. The resolution stipulated the following duties to be among those falling under the authority of the ministerial department: • To assist in the calculation of annual and multi-annual plan estimates and issue directives to the Technics Foreign Trade Company stipulating special foreign-trade targets contained in Defense Committee resolutions. • To prepare and conclude long-term agreements and annual reports and oversee their implementation. • To monitor commercial-political objectives in this relation and oversee their coordination with defense interests. • To direct and supervise the operations of delegates working at the Moscow section. • To assess proposals on the agenda of domestic and international talks in order to assist the Hungarian delegation of the COMECON MISC and Hungarian sections of bilateral joint committees in their work. • To participate in the operations of the National Planning Office’s Military Industrial Price Determination Committee and other specialist importexport committees. Two distinct sections with a staff of twelve were established within the department to handle these duties—the Interstate and Planning Section and the Economic and Goods Section. On the basis of the resolution, the Technics Foreign Trade Company handled company foreign-trade tasks connected to the import, export, and scientific-technical cooperation of military equipment as an autonomous and fully competent foreign-trade enterprise. In the course of preparing interstate treaties, the company could assess those questions of principle which “basi-

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cally touch upon the activity and economic efficiency of the company.” The Defense Committee provided a staff of 114 to the foreign-trade company. The Defense Committee defined the division of labor between the National Planning Office, the Foreign Trade Ministry and the Technics Foreign Trade Company as follows: The National Planning Office will formulate plan targets for the import-export of military equipment in accordance with duties related to specialization and taking into account the opinion of the Foreign Trade Ministry. On the basis of targets approved by the Defense Committee, the Foreign Trade Ministry will prepare plans for long-term import agreements and send them to the relevant parties in cooperation with the appropriate armed bodies and the competent ministries. The drafting of official annual reports will take place in a similar manner. In terms of export, the National Planning Office, the competent ministerial organs, production companies as well as the Technics Foreign Trade Company must be included in the preparation of foreign-trade agreements.44

The issue of the Foreign Trade Ministry Technical Department and the Technics Foreign Trade Company still did not come to rest. The decision to separate the Technics Foreign Trade Company in 1968 was based primarily on the premise of establishing autonomous, profit-oriented economic management. However, in a May 1971 letter to Deputy Minister of Foreign Trade Jenő Tordai, company CEO Tivadar Mácsay declared that redundant organizational dualisms-parallelisms existed in the department and the company. Mácsay asserted in the letter that maintenance of relations with partner countries suffered as a result of the obligation of technical departments, which in most instances operated as budgetary organs, to perform both official and administrative functions (in the Soviet Union, Poland, Romania, and Bulgaria; whereas in the German Democratic Republic, Czechoslovakia, and Hungary, autonomous military-industrial foreign-trade companies functioned as well.) Mácsay proposed, in agreement with the leadership of the Foreign Trade Ministry, that the department and the company be reunited in light of these difficulties.45 Hungary’s foreign-trade minister (re)united the Technics Foreign Trade Company and the Foreign Trade Ministry’s Technical Department in October 1971 in order to facilitate “the elimination of negative phenomena impeding settlement of the problems, the more expedient and successful organization of work related to import-export [and] the more rapid and direct assertion of central will.” The minister appointed a single leader to head the unified organization, while previous directives stipulating the duties of the company and the department remained valid. According to the ministry’s subsequent assessment of the measure, a separate division performed company, trade, and operative tasks within the new organization, while interstate, planning,

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statistical, economic, and administrative duties were handled collectively.46 Following debate of a comprehensive Central People’s Oversight Committee report on Hungary’s foreign trade in military equipment in December 1972, the Defense Committee instructed the foreign-trade minister to formulate a proposal outlining the final structure of operations within this domain in the interest of fortifying central management.47 The Foreign Trade Ministry apparently considered the operations of the unified organization to be efficient even if they produced paradoxical situations. (Technics Foreign Trade Company CEO Colonel Tivadar Mácsay served as head of the Technical Department and thus functioned as his own boss, for example.) In a report submitted to the Defense Committee in September 1976, Deputy Minister József Bíró argued that the arrangement should remain unchanged for the following reasons: It has succeeded in eliminating the high degree of bureaucracy stemming from the previous multitude of directives and reports between the two organs that hindered the substantive and timely completion of tasks. Company management of affairs has accelerated. Open, problematic questions reach high-level consideration and settlement more rapidly. Central will emanating from the defense-related command system asserts itself more effectively.

However, the Defense Committee revised the proposal, issuing the following instructions to the Foreign Trade Ministry: In the interest of strengthening ministerial oversight, facilitating cooperation with the ministries and demarcating ministerial and company duties regarding the import-export of military equipment: revoke the ministerial rights and authority delegated to the Technics Foreign Trade Company and its leader and at the same time guarantee the conditions necessary for the effective ministerial management of the company and the performance of ministry-level importexport duties related to military equipment.48

In November 1976, Deputy Minister Jenő Tordai arranged for the reestablishment of the Technical Department within the framework of the Foreign Trade Ministry.49 The company and the department operated separately from this time all the way until 1990.

3.4 THE ORGANIZATIONAL JUNCTURE OF COMECON AND THE WARSAW PACT The winds of reform also reached COMECON and the MISC in 1967—in principle at least. In the course of discussion regarding the Military Industrial

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Standing Commission’s 1966 work report at the organization’s session in Moscow between June 6–9, 1967, the notion emerged of organizing an exchange of technical experiences regarding the new modes of economic management and planning in the production of military equipment. Romania’s delegation vigorously opposed this idea, claiming that this issue represented an internal affair that did not require multilateral coordination. However, the commission decided that this must be performed on the basis of the regulation entitled Effective Measures for the Improvement of Production-Specialization and Cooperative Work, Including the Order of Preparation, Institution and Implementation of the Specialization and Cooperation of Production approved at the previous session of the COMECON Executive Committee. The most important stipulation of this regulation was the introduction of the specialization treaty, which was designed to “assure the conditions necessary for the preparation of production in the country of specialization and provide insurance of the procurement of necessary military equipment in the country of utilization.” This type of treaty finally guaranteed that parties deviating from the stipulations contained in specialization agreements would be obliged to compensate the injured party for damages and expenses resulting therefrom. The MISC removed specialization of the Shilka anti-aircraft weapon-system from the agenda after every one of the organization’s member states declined to undertake assembly of the system and the Soviet Union indicated that it did not require delivery of components for it. At the recommendation of Czechoslovakia’s delegation, planning-office and general-staff representatives present at the four-day MISC session held talks as well. In the Presence of Warsaw Pact Unified Armed Forces Supreme Command Chief of Staff Soviet Army General Mikhail Kazakov, the delegations from Poland, the German Democratic Republic, Czechoslovakia, Hungary, and Bulgaria complained (again) that talks connected to mobilization preparations had not taken place since 1965. The deputy chairman of Czechoslovakia’s planning committee proposed directly to General Kazakov that “by the end of the year he request information from the competent organ of the Unified Armed Forces Supreme Command regarding assurance of the M preparations of the countries [and] coordination of them among the countries. The deputy chairman also proposed that insofar as the Soviet Side was unable to undertake the multilateral coordination of the methodological materials drafted according to protocol no. 8 of 1965, Czechoslovakia could assume the duty of organizing such cooperation.” At the initiative of Hungary’s delegation, an agreement was approved calling for member states to provide one another with their theme proposals.50 Although the Soviet apparatus remained unwilling to concede on the issue of mobilization coordination, several proposals aimed at making progress in

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other regards emerged at the COMECON MISC’s session in Sofia between November 21–25, 1967. The organization of cooperation in the production of new military technics constituted one of the main points in the organization’s 1968 work plan as a result of the lack of progress made in this area. Soviet officials presented a proposal, entitled The Provision of Information Connected to the Supply of the Armies with the Newest Types of Military Technics and the Unified Order of Submission of Data as well the Transmission of Relevant Production License Documentation, aimed at establishing a new, more effective order of introducing new military equipment and acquainting relevant parties with licensing documentation. The consultations can be divided into two phases on this basis: 1) incorporation of the new military technics into the weapons system and the decision regarding whether the technology would be produced under license or if the given party would import it; and 2) the final decision regarding the organization of domestic production based on familiarity with the licensing documentation. In a substantial departure from previous practice, the Soviets assented to the establishment of direct inter-company relations as well in the interest of accelerating the organization of production. The Hungarian delegation encountered several initiatives aimed at the possibility of exchanging ideas regarding new methods of planning and stimulating production. The commission approved the schedule for coordination of production and mutual-delivery plans for the years 1971–1975. According to this timetable, the involved parties were to coordinate this in the following three phases over a period of between one and a half and two years: 1) the demonstration of new military equipment; 2) the completion of specialization work; and 3) the bilateral and multilateral coordination of the plans. The German Democratic Republic-led interim work group’s proposal aimed at establishment of a unified code system represented an initiative of great importance. This proposal called for the introduction of material codes within every Warsaw Pact army (from the troops to international deliveries) in order to establish a unified registration system for the planning, ordering, delivery, and distribution of military equipment. The delegations from the German Democratic Republic and Czechoslovakia asserted that formulation of the code system would produce tasks of such quantity and complexity that a separate international organization should be established just for this purpose.51 Major General Ervin Jávor, the head of the Hungarian section of the Military Industrial Standing Commission, submitted a report to Hungary’s permanent COMECON representative, Antal Apró, in January 1968 regarding several important resolutions adopted at the MISC’s session in Sofia. The report highlighted two Soviet resolutions in particular—those regarding the unified order of presenting new military equipment and licensing documentation. Major General Jávor stated in his report that he considered these

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resolutions to be of primary importance because they appeared to create the conditions necessary to significantly shorten the time required to organize the serial production of new products, reduce material risk, and improve planning and provision. Major General Jávor asserted that he expected the plan for unified material codes and the utilization of up-to-date mathematical methods to significantly increase the efficiency of record keeping and to serve as a model for a general and unified people’s-economic code system to be used throughout the COMECON organization. In his report, Major General Jávor openly called attention to deficiencies in organization and coordination as well. Major General Jávor pointed out, for example, that the Soviet Union essentially failed to harmonize technicaldevelopment plans in spite of the COMECON Executive Committee’s July 1963 resolution. Hungarian officials submitted their plans for the years 1963–1965 and 1966–1970 in 1963, though the Soviets did not offer an official reaction to them until 1966 (!). Although the Soviet response to the plans was very detailed, it contained no information whatsoever concerning those of other member states, thus prompting National Planning Office to intensify bilateral consultations, particularly with Poland, the German Democratic Republic, and Czechoslovakia. Hungary’s failure to conclude a long-term agreement with the Soviet Union for the delivery of military equipment during the period of the third five-year plan represented another difficulty, making it necessary to sign annual agreements. The diversification of military-industrial deliveries is reflected in data showing that the value of Hungary’s imports of military equipment from Poland, the German Democratic Republic, Czechoslovakia and Bulgaria in the years 1966–1970 rose to over two-thirds that of such imports from the Soviet Union during this interval. The fact that Hungary’s export of military equipment to Poland, the German Democratic Republic, Czechoslovakia, and Bulgaria significantly exceeded its import of military equipment from these Central and Eastern European countries over this five-year period can also be attributed to specialization. However, it should be noted that Hungary’s import and export of military equipment with Romania remained negligible during the period (see Table 3.1 below). Major General Jávor asserted in his report that Hungary had benefited from specialization in the following ways: Specialization, or rather the absence of export stemming therefrom . . . would have made satisfaction of the needs of our armed bodies exceptionally uneconomical, which would have had repercussions in terms of their provision of military equipment. This particularly applies above all to the telecommunications industry, where the specialization of military equipment plays a major role in absorbing capacities from the standpoints of economic efficiency, export capability and development, though is also of great significance in that it has raised

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Table 3.1. The Value of Hungary’s Mutual Deliveries of Military Equipment Stipulated in Agreements Country

Imports

Exports

Poland Czechoslovakia German Democratic Republic Bulgaria Romania Total Soviet Union Grand Total

60.0 43.7 2.1 11.0 0.3 117.1 168.2* 285.3

60.0 67.5 47.9 8.5 1.5 185.4 6.2 191.6

Note: *Hungary imported military equipment from the Soviet Union on credit with a maturity of ten years. Source: Summary Report on the Activities of the COMECON MISC. January 5, 1968. MNL OL XIX-B-1-ai 47. d. p. 5.

the technical level of the civilian telecommunications industry—primarily as a consequence of the higher specified requirements in the production of parts.

Table 3.2 below shows that specialized products constituted around 40 percent of Hungary’s total production of military equipment between 1961–1970 and over 60 percent of the country’s total exports of military equipment during the period. Major General Jávor characterized the specialization treaties that Hungary wanted to conclude for production of all military equipment pursuant to the new, comprehensive COMECON recommendations as an “indispensable requirement” within the context of the New Economic Mechanism. Major General Jávor noted, however, that the indication of several member states, notably Poland and Czechoslovakia, that they “wanted to adhere more closely than before to the balanced delivery of military equipment” represented an obstacle to further Hungarian expansion. That is, not one of these member states wanted to purchase more military equipment than they sold, just as Poland during the period 1966–1970. Table 3.2. Percentage of Specialized Production within Hungary’s Total Production and Export of Military Technics

Percentage of Specialized Production within total Production of Military Technics Percentage of Specialized Production of Military Technics Exported Percentage of Specialized Production within Hungary’s total Export of Military Technics

1961–1965

1966–1970

38.0

42.4

60.8

66.1

72.8

66.5

Source: Summary Report on the Activities of the COMECON MISC. January 5, 1968. MNL OL XIX-B-1-ai 47. d. p. 7.

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Major General Jávor urged in his report that Hungary undertake the cooperative manufacture of items subject to specialization in several member states and for which production of parts and components could therefore be distributed. Hungary’s launching of cooperation with Poland on production of the Polosana-N radio transmitter and P-35 radar and with Czechoslovakia on production of the Duga-Buda-Pest transmission-technology installation came about in this way.52 While the Military Industrial Standing Commission took small steps that succeeded in improving the organization’s efficiency to a certain extent, officials continued to engage in political mud wrestling within the highest forums of COMECON and the WP. Remarks from permanent COMECON representative Antal Apró at the Hungarian Socialist Workers’ Party Political Committee session on December 28, 1967, provided an accurate reflection of the attitude of Hungary’s leadership and the prevalent mood within the organization. Speaking with regard to the 21st session of COMECON and the 32nd session of the Executive Committee held in Budapest between December 12–19, Apró outlined the reasons for which change was necessary: The Budapest session was essentially a summary of work completed so far, we did not count on new reform proposals. . . . We consider the most important issue at the session to have been that, in addition to us, the following manifested itself in more decisive form among the other countries as well: let’s examine tasks stemming from systematic reforms implemented in the countries on the basis of appropriate international consultations and propose to COMECON organs that they be placed on the agenda, since these tasks, these reforms, do not end at the national borders, they have an impact on international cooperation, and more and more problems are arising that require change.

Instead of the long-needed approval and implementation of organizational reforms, the meager outcome of the session were the decisions to organize an exchange of information and experiences regarding systematic reforms in the interest of improving cooperation and to hold talks with regard to planningcoordination.53 The Warsaw Pact’s establishment of the Technical Corps was of considerable significance in terms of the development and production of military equipment, though was not nearly as important as settlement of the alliance’s basic operational issues. Following the May 1966 meeting of defense ministers, more talks were held to consider this range of issues in February 1968, while Soviet officials stepped forward with another plan in April of this year. In a memorandum submitted to the Hungarian Socialist Workers’ Party Political Committee, the MoD characterized the fundamental differences in attitude as follows:

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We are attempting to approach the solution through a clarification of unsettled basic issues, while the Soviet comrades are still primarily attempting to resolve only practical questions, sidestepping the settlement of basic issues; in our opinion a clear distinction must be drawn between peacetime and wartime conditions, whereas in the viewpoint of the Soviet comrades the two are interwoven. . . . they have backed away in many regards [from their position in May 1966 and February 1968], and represent formally more rigid standpoints standing closer to those contained in documents from 1955–1966.54

The HSWP Political Committee discussed problems related to the Warsaw Pact’s military structure on April 30 and May 14, 1968, while the Defense Committee considered this matter on May 21 of that year.55 Defense Minister General Lajos Czinege summarized the issues discussed at the meetings in a single sentence: “With regard to the interpretation of the content of the charter of the Warsaw Pact, it is necessary to clarify such basic questions as the relation between integration and sovereignty so that the text is not ambiguous.” The idea emerged at the meeting of the Defense Committee that Hungary, the Soviet Union, Poland, the German Democratic Republic, Czechoslovakia and Bulgaria should hold consultations with Romania only after having coordinated their positions in advance.56 Over the following months attention was naturally focused on the Prague Spring and its reception in both the Soviet Union and the other countries of the Eastern bloc, while in August these states put Warsaw Pact military cooperation to the test in their invasion of Czechoslovakia and suppression of the reforms that were taking place in that country.57 In spite of this upheaval, bargaining and negotiations regarding organizational transformation continued to take place in the background practically unimpeded. Hungarian Council of Ministers Chairman Jenő Fock’s somewhat partial observation at the HSWP Political Committee’s session on October 1, 1968, offers a characteristic portrayal of these organizational-reform efforts within the Warsaw Pact: We have been fighting for months for our proposals—the Czechs were rooting for us to succeed, while the Soviet comrades were angry at us for it, which the Polish came out and stated openly. But it was worth it to fight it out and struggle tenaciously and now all interested parties are happy that the Hungarians stood up and fought. The Soviet comrades are happy first of all, though they were also of the opinion that we were making their work more difficult. It is also thanks to our political work that they began to take the Romanians into consideration and put emphasis on becoming familiar with the opinion of the Romanians as well.

By this time, the Warsaw Pact deputy chiefs of the general staff had already clarified several disputed points at a meeting between September 13–17.58 WP foreign ministers approved the following draft documents at their con-

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sultations in Moscow on October 29–30: Resolution on the Commission of Defense Ministers; Resolution on the Unified Armed Forces and the Unified Command; Resolution on the Unified Armed Forces Military Council; Resolution on the Unified Air Defense System; Conceptual Outline of the Number of Personnel and Structure of the Unified Command’s General Staff and Technical Corps.59 Meanwhile, the COMECON MISC spent much of the year 1968 dealing with technical issues. At its session in Moscow between May 28–30, the commission approved the specifications pertaining to types of military equipment for which member states wished to coordinate 1971–1975 plans. The commission furthermore established the time and order for completion of production-specialization work and held talks on the formulation of a unified code system for military technics and problems connected to the standardization of various products such as field telecommunications centers, VHF radio transmitters for the tactical command of troops, and anti-aircraft gun munitions.60 Contrary to the practice of previous years, perhaps due to the overburdening of the military apparatus, only the chairmen of MISC delegations met in the fall of 1968, while the organization held no plenary sessions during these months. During their consultations in Moscow, the delegation leaders elaborated the planned timetable for the coordination of mid-term production and mutual-delivery plans and heard an interim work group’s report on the formulation of a unified material code system.61 The Warsaw Pact’s Consultative Committee should have approved the previously cited draft proposals in November 1968, however, Romania’s objection to a point in the armed-forces resolution defining the scope of authority in the declaration of danger periods triggered renewed wrangling. Finally, unable to reach consensus on this issue, committee officials simply omitted the disputed passage from the draft resolution, thereby renouncing the objective of furnishing the WP with binding regulatory powers during periods of war. Thus the transformation that had dragged on for years within the military structure of the socialist camp was completed at the meeting of the Warsaw Pact’s Political Consultative Committee in Budapest on March 17, 1969. Due to their significant differences of opinion, Warsaw Pact member states had to make numerous compromises in order to approve the organization’s declaration appraising the international situation (Federal Republic of Germany, Vietnam, the Middle East, etc.) and the appeal subsequently leading to the Helsinki Accords on European security.62 They also signed the following five military covenants: • Resolution on the Commission of Defense Ministers of Warsaw Pact member states;

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• Resolution on the Unified Armed Forces and Unified Command of Warsaw Pact member states; • Resolution on the Military Council of the Unified Armed Forces of Warsaw Pact member states; • Resolution on the unified air-defense system of Warsaw Pact member states; • Conceptual outline on the organization of the leading organs of the supreme commander of the Unified Armed Forces of Warsaw Pact member states.63 The process of establishing the WP Unified Armed Forces Technical Corps began during the summer of 1969. Hungary’s government, through its adoption of resolution no. 3241/1969 on August 4, 1969, ratified the appointment of engineering Lieutenant General Illarion V. Stepanyuk to serve as the WP Unified Armed Forces Supreme Command’s weapons deputy and, at the same time, the head of the Technical Corps.64 Defense Minister General Lajos Czinege issued a ministerial decree on September 30 establishing the Hungarian People’s Army’s section of the WP Unified Armed Forces Supreme Command General Staff based on the resolutions outlined above. General Czinege appointed Major General László Szilágyi to serve as Hungary’s deputy chief of staff of the Unified Armed Forces Supreme Command and Colonel Imre Bereczki to serve as deputy head of the Unified Armed Forces Technical Corps effective October 1. On the basis of the Defense Ministry’s proposal, the Hungarian Revolutionary WorkerPeasant Government subsequently appointed Chief of the General Staff of the Hungarian People’s Army Lieutenant General Károly Csémi to serve as Hungary’s deputy to the Unified Armed Forces Supreme Commander and as member of the Military Council operating alongside the Unified Armed Forces Supreme Command.65 At the beginning of December 1969, Warsaw Pact Unified Armed Forces Supreme Commander Marshal Ivan Yakubovsky submitted a report to the heads of member-state governments regarding implementation of the resolutions adopted at the Budapest session of the Political Consultative Committee. According Marshal Yakubovsky’s report, the Unified Armed Forces Supreme Command General Staff and Technical Corps were formed on November 25, while the Unified Armed Forces dealt specifically with the resolution of the staff and the corps on December 9–10.66 During its first session, likewise in Moscow, on December 22–23, the Committee of Defense Ministers again discussed the establishment and work of the staff and the Technical Corps. Deputy Chief of the General Staff Major General Gyula Reményi appraised the importance of the transformation of the Warsaw Pact in a January 1970 report to high-ranking Hungarian

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People’s army officers. In the report, Major General Reményi characterized the standardization of basic weaponry and military equipment to have been a significant achievement, adding that it had been necessary to establish a WP organ—the Technical Corps—to increase the speed and efficiency of the process of modernizing the military technics of member-state armies as well as the Military Scientific Technical Council to examine the more important recommendations prepared by the corps. With regard to the Technical Corps, Major General Reményi noted: We initiated the establishment of this organ, we expect very much from its work. It is for this reason as well that the recent visit from comrade Lieutenant General Stepanyuk, the deputy of the supreme commander and leader of the Technical Corps filled us with satisfaction. He examined the technical provision of the Hungarian People’s Army, familiarized himself with our technical-development and scientific-research plans as well as the military-industrial potential of the Hungarian People’s Republic. We are filled with joy and confidence that he was very satisfied with what he saw, that he has reached a totally identical conclusion regarding the things that need to be done in research and production and the necessity of eliminating parallelisms and making better use of intellectual and production capacities.67

The foundation of the Unified Armed Forces Supreme Command Staff and the Technical Corps, as well as the Committee of Defense Ministers and the Military Council brought a five-year dispute to an end. Following the passage of a decade and a half, the military and military industrial institutions and organs came into being within the Warsaw Pact without which cooperation in certain areas had stalled repeatedly.

NOTES 1. Report for the Chairman of the Defense Committee—regarding the February 1964 Talks in Moscow of Delegation Leaders from Countries Participating in the COMECON Military Industrial Standing Commission. March 9, 1964. HL HB 2. d. 2. The acronym SKOT was derived from the Czech- and Polish-language names for the vehicle: Střední Kolový Obrněný Transportér and Średni Kołowy Opancerzony Transporter, respectively. 3. Minutes of the Defense Committee’s 160th session held on June 4, 1964. HL Defense Committee documents, 2. d., pp. 5–6; and Minutes of the COMECON Military Industrial Standing Committee’s session No. 10/64 held in Moscow between May 12–14. MNL OL, XIX-A-16-aa 109. d. 4. Report on Bilateral Talks held in Moscow between October 8–19, 1964, on 1966–1970 Planning Targets for Military Industrial Products and Other Consultations. October 1964. MNL OL, XIX-A-98 88. d. 83.

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5. Proposal to the Defense Committee and Defense Committee Resolution No. 1/169/1965. MNL OL, XIX-A-16-aa 110. d. The cited passages appear in the Defense Committee proposal, pp. 7–8. 6. Proposal for the Defense Committee. The 11th Session of the COMECON Military Industrial Standing Commission as well as the M Meeting of Planning Office and General Staff Representatives of Countries Participating in the Warsaw Pact. April 16, 1965; and Minutes No. 11/65 of the COMECON Military Industrial Standing Commission’s 11th Session Held in Moscow between April 9–13. MNL OL, XIX-A-16-aa 110. d. 7. Minutes No. 8 on the Meeting Held in Moscow from April 9–until (sic!) 15 of Delegation Leaders of Planning Organs and General Staff Representatives from WP Member States regarding Issues Related to the Further Improvement of the Methodology of People’s Economic Mobilization Planning. MNL OL, XIX-A-16-aa 110. d. It becomes apparent from Colonel Jávor’s report that the MICSC session took place before the meeting of planning-office and general-staff representatives. 8. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 352–356. 9. The 11th Session of the COMECON Military Industrial Standing Commission. MNL OL, XIX-A-16-aa 110. d. p. 5. 10. Bystrova, Sovetsko voenno-promyslennyj kompleks, pp. 352–356. This author refers to the “parasitical inclinations” of the Central and Eastern European countries on p. 345 and p. 352 of this book when writing about the severe criticism of the Soviet Union’s methods of exercising power. Bystrova presumably adopted this term uncritically from Soviet sources, which is difficult to understand in light of the enormous military developments and expenditures imposed upon these states. 11. Minutes No. 8. MNL OL, XIX-A-16-aa 110. d. The quoted passages or on pp. 1 and 6. 12. Report for the HSWP Political Committee regarding the Situation of the Leadership of the Unified Armed Forces. April 21, 1965. Ehrenberger, “A dolgozó népet szolgálom!,” pp. 139–141. 13. Minutes of the HSWP Political Committee’s April 27, 1965, Meeting. MNL OL, M-KS 288. f. 5. cs. 364. ő. e., p. 4. 14. Proposal to the Defense Committee. Meeting of Delegation Leaders and General Staff Representatives from Countries Participating in the COMECON Military Industrial Standing Commission, the 12th Session of the COMECON Military Industrial Standing Commission and the Joint Session of the COMECON Military Industrial Standing Commission and the Radio Technology Standing Commission. 8 December 1965. MNL OL, XIX-A-16-aa 111. d. The cited passages are from pp. 9–10. 15. See Mastny–Byrne, A Cardboard Castle?, pp. 195–211. 16. Minutes of the HSWP Political Committee’s January 21, 1966, session. MNL OL, M-KS 288. f. 5. cs. 385. ő. e, pp. 4–5, 72–74 and 75–79. 17. Report on the Meeting of Warsaw Pact Member State Deputy Foreign Ministers in Berlin and Deputy Defense Ministers in Moscow. February 1966. MNL OL, M-KS 288. f. 5. cs. 388. ő. e., pp. 42–46. 18. Bystrova, Sovetsko voenno-promyslennyj kompleks, p. 351.

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19. Report to the Defense Ministers of Warsaw Pact Member States on the Meeting Held in Moscow between May 27–28, 1966, regarding Formulation of the Draft Resolution of the Unified Armed Forces and Improvement of the Structure of its Leading Organs. June 2, 1966, as well as [Draft] Resolution on the Unified Armed Forces of Warsaw Pact Member States. No date. MNL OL, XIX-J-1-u Papers of Károly Erdélyi, 15. d. The report can also be found as a supplement to the to the HSWP Political Committee’s June 28, 1966, session. See MNL OL, M-KS 288. f. 5. cs. 399. ő. e., pp. 54–60. 20. MNL OL, M-KS 288. f. 5. cs. 398. and 399. ő. e. 21. Proposal to the Political Committee on the Position of the Delegation Participating in the High-Level Meeting Connected to COMECON June 16, 1966. MNL OL, MOL M-KS 288. f. 5. cs. 398. ő. e., pp. 116–126. The cited passages are on pp. 117–119. The HSWP Political Committee approved the report on June 21. Ibid. p. 3. For detailed information regarding the unification and cooperation of the metallurgical-steel industry see: Dagmara Jajeśniak-Quast, “The ‘European Coal and Steel Community’ of the East: the COMECON and the Failure of Socialist Integration,” in Uwe Müller and Helga Schultz, eds., National Borders and Economic Disintegration in Modern East Central Europe (Berlin: Berlin-Verlag, 2002), pp. 223–244. 22. The COMECON Executive Committee Report: Activities Conducted in the Period Following the July [1963] Meeting of the General Secretaries of Communist and Worker’s Parties and Heads of States of COMECON Member States and Further Tasks Related to the Development of Economic Cooperation of Member States- Moscow, June 1966. MNL OL, M-KS 288. f. 5. cs. 399. ő. e., pp. 76–134. 23. MNL OL, M-KS 288. f. 5. cs. 398. ő. e. pp. 124–126. 24. Report to the COMECON Military Industrial Standing Commission on the July Meeting of the General Secretaries of the Central Committees of Communist and Workers’ Parties and the Heads of Government of Member States Participating in COMECON on Work Completed in the Period following July [1963] and Further Tasks Related to the Development of Cooperation among Member States Participating in the Military Industrial Commission. No date. MNL OL, XIX-A-16-aa 112. d. 25. Necessary repair and maintenance materials to be delivered along with military-industrial products. Such articles included many types of materials, from parts to complex training and operational systems. 26. Minutes No. 13/66 of the [COMECON Military Industrial Cooperative Standing] Commission’s 13th Session. Moscow, June 8–10, 1966. MNL OL, XIXA-16-aa 112. d. 27. Report to the Political Committee and Member of the Council of Ministers regarding the Session of the WP Political Consultative Committee and the High-Level Consultations of COMECON in Bucharest between July 4–7, 1966. July 11, 1966. MNL OL, M-KS 288. f. 5. cs. 400. ő. e., pp. 73–86. For the WP Political Consultative Committee’s approved declaration regarding the convocation of a European security conference see Csaba Békés, “Titkos válságkezeléstől a politikai koordinációig. Politikai egyeztetési mechanizmus a Varsói Szerződésben, 1954–1967” in János M. Rainer, ed., Múlt századi hétköznapok. Tanulmányok a Kádár-rendszer kialakulásának időszakáról (Budapest: 1956-os Intézet, 2003), pp. 42–45.

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28. Report to the HSWP Political Committee on the 26th, Extraordinary Session of the COMECON Executive Committee. November 9, 1966, as well as Minutes of the HSWP Political Committee’s November 15, 1966, Session. MNL OL, M-KS 288. f. 5. cs. 409. ő. e. 4., pp. 128–134. 29. Minutes of the Political Committee’s Session Held on December 27, 1966, and Report to the Hungarian Socialist Workers’ Party Central Committee regarding COMECON’s 20th Session and the Executive Committee’s 27th Session (Sofia, December 8–13). December 16, 1966. MNL OL, M-KS 288. f. 5. cs. 413. ő. e. 15., 39., 40–41, p. 19. 30. Submission to the Defense Committee. Report on the COMECON MISC’s 14th Session. December 7, 1966. MNL OL, XIX-A-16-aa 112. d. 31. For detailed information regarding the connection between the 1968 reform and the military industry and the sector-based impact of the reform see Pál Germuska. “A haditechnikai termelés és az új gazdasági mechanizmus” in János M. Rainer, ed., “Hatvanas évek” Magyarországon (Budapest: 1956-os Intézet, 2004) pp. 126–160. 32. Defense Council Resolution No. 5/135/1962. HL HB 1. d. 33. Defense Committee Resolution No. 1/154/1963. Regarding the Order and Organization of Work within the Country Connected to Military-Industrial International Cooperation. October 16, 1963. HL HB 2. d. 34. Defense Committee Resolution No. 2/165/1964. Regarding the Statutes of the Military Industrial Government Committee and the Proposed Personnel Changes to the Composition of the Government Committee. HL HB 2. d. For the statutes see the supplement of the resolution. 35. Mrs. Imre Szenes, “Az MNVK Anyagtervezési Csoportfőnökség története” Manuscript, 1978. HL Hungarian People’s Army Collection. pp. 22–24. 36. Defense Committee Resolution No. 1/161/1964. June 25, 1964. HL HB 2. d. 37. For the minutes of the session of the HSWP Central Committee see: MNL OL, M-KS 288. f. 4. cs. 71–72. ő. e. 38. See the September 21, 1965, session of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 375. ő. e. 39. See the January 4, 1966, session of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 384. ő. e. 40. See the November 15, 1966, session of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 409. ő. e. And the June 6, 1967, session of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 426. ő. e. 41. Preliminary Proposal for Military Industrial International Cooperation within the Framework of the New Economic Mechanism. September 1966. MNL OL, XIXF-6-ra 45. d. The cited passages are on pp. 1, 3–4. 42. Assertion of the Fundamental Principles of the New Economic Mechanism in International Cooperation. March 1967. MNL OL, XIX-F-17-s 40. d. The quoted passages appear on pp. 4–5, 7. 43. See in detail Pál Germuska, “Military-economic Planning in Socialist Hungary: The History of the General Organisational Department of the National Planning Office, 1948–1971,” Europe-Asia Studies, 60:5 (2008): pp. 809–830.

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44. Defense Committee Resolution No. 3/191/1967. Foreign Trade Activity Connected to Military Equipment in the New System of Economic Management. HL HB 3. d. 45. Proposal Regarding the Merger of the Foreign Trade Ministry’s Technical Department and the Technics Foreign Trade Company. May 3. 1971. MNL OL, XIX-G-3-ae 39. d. 46. Report on Behalf of the Defense Committee. Observations Regarding the Merger of the Foreign Trade Ministry’s Technical Department and the Technics Foreign Trade Company and its Permanent Structure. September 17, 1976. MNL OL, XIX-A-16-aa 129. d. 47. Defense Committee Resolution No. 4/236/1972. December 7, 1972. Examination of Military Technological Foreign Trade Activity. MNL OL, XIX-A-16-aa 121. d. 48. Defense Committee Resolution No. 5/271/1976. September 23, 1976. Regarding the Termination of the Technics Foreign Trade Company’s Ministerial Rights and Authority and the Strengthening of Ministerial Direction of the Company. MNL OL, XIX-A-16-aa 129. d. 49. Memorandum on Behalf of Comrade Maros: Defense Committee Resolution 5/271/1976—Separation of the Technics Foreign Trade Company and the Foreign Trade Ministry Technical Department. November 4, 1976. MNL OL, XIX-G-3-p 76. d. 50. Submission to the Defense Committee. Report on the 15th Session of the COMECON MISC. June 16, 1967. MNL OL, XIX- A-16-aa 113. d. The cited passage appears on pp. 8–9. 51. Report on the Session of the COMECON MISC Held in Sofia in November 1967. December 5, 1967. MNL OL, XIX-A-16-aa 113. d. The cited passage appears on pp. 8–9. 52. Summary Report on the Activities of the COMECON MISC. January 5, 1968. MNL OL XIX-B-1-ai 47. d. 53. Minutes from the December 28 Session of the HSWP Political Committee, as well as Report for the HSWP Political Committee. December 20, 1967, MNL OL, M-KS 288. f. 5. cs. 442. ő. e., p. 8. 54. Memorandum. No date. Supplement to the Document Entitled Submission to the Political Committee regarding the Military Situation of the WP and Proposal regarding the Hungarian Position to Be Represented at the Forthcoming Talks. MNL OL, M-KS 288. f. 5. cs. 455. ő. e., pp. 40–52 and 53–60. 55. See MNL OL, M-KS 288. f. 5. cs. 454. ő. e and M-KS 288. f. 5. cs. 455. ő. e. 56. Minutes on the Defense Committee’s 195th Session Held on May 21, 1968 and Defense Committee Resolution No. 1/195/1968 on the Military Situation of the WP and Proposal regarding the Hungarian Position to Be Represented at the Forthcoming Talks. HL HB 3. d. 57. For detailed information regarding the Prague Spring and the Warsaw Pact’s military intervention in Czechoslovakia see: Stefan Karner, et al., Prager Frühling. Das Internationale Kriesenjahr 1968. Beiträge (Cologne-Weimar-Vienna: Böhlau Verlag, 2008); and Günter Bischof, Stefan Karner, and Peter Ruggenthaler, The Prague Spring and the Warsaw Pact Invasion of Czechoslovakia in 1968. (Lanham, MD: Lexington Books, 2010). For documents regarding the participation of the Hun-

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garian People’s Army in the invasion see: József Solymosi ed., “Zala” 1968. Az MN 8. Gépkocsizó Lövészhadosztály hadműveleti naplója Csehszlovákia megszállásának időszakából (Budapest: Puedlo Kiadó, 2012). 58. Minutes on the HSWP Political Committee’s Session Held on October 1, 1968, and Proposal to the Political Committee on Work Done since April 1968 in the Interest of Establishing the Leading Organs of the Unified Armed Forces. MNL OL, M-KS 288. f. 5. cs. 473. ő. e., p. 14. 59. Report to the Political Committee regarding the October 29–30 Meeting of Defense Ministers of Warsaw Pact Member States. November 1, 1968. MNL OL, 288. f. 5. cs. 476. ő. e. , pp. 51–54. 60. Minutes No. 17/68 on the [COMECON Military Industry Standing] Commission’s Seventeenth Session. Moscow, May 28–30, 1968. MNL OL, XIX-A-16-aa 114. d. 61. Minutes No. 9/68 of the Meeting of Delegation Leaders of Countries Participating in the COMECON Military Industry Standing Commission. Moscow, November 12–14, 1968. MNL OL, XIX-A-16-aa 115. d. 62. For detailed information regarding the WP Political Consultative Committee’s Budapest declaration see Csaba Békés, “Hungary and the making of the CSCE Process, 1965–1970,” in Carla Meneguzzi Rostagni, ed., The Helsinki Process: A Historical Reappraisal (Padova: CEDAM, 2005) pp. 29–44. 63. Note to Comrade János Kádár on the March 17, 1969, Budapest Session of the Warsaw Pact’s Political Consultative Committee. March 19, 1969. MNL OL, M-KS 288. f. 5. cs. 486. ő. e., pp. 14–20. The foreign ministry’s report quoted the Soviet general secretary’s statement regarding the dispute surrounding the declaration: “Although everybody agrees with the approval of the military documents, Comrade Brezhnev nevertheless said in his description of the hotel meeting [on Margaret Island in Budapest] that he met with a new opinion in every room he entered.” Ibid., p. 16. For some of these documents as well as the declaration initiating the convocation of the European Security Conference, see Mastny–Byrne, A Cardboard Castle?, pp. 323–331. 64. Hungarian Revolutionary Worker-Peasant Government Resolution No. 3241/1969. MNL OL, XIX-A-83-b 486. d. 65. M. Szabó, “A Varsói Szerződés és a Magyar Néphadsereg viszonyrendszerének néhány kérdése az 1960-as években,” p. 19. 66. Report on the Implementation of Resolutions Adopted by the Political Consultative Committee of WP Member States at its March 17, 1969, Session. MNL OL, XIX-A-98 125. d. 67. Presentation of Hungarian People’s Army Deputy Chief of the General Staff Major General Gyula Reményi before the Leading Officer Staff of Hungarian People’s Army regarding the Situation and Strengthening of the Warsaw Pact’s Military Organization. January 31, 1970. “A dolgozó népet szolgálom!,” pp. 244–251. The quoted passage appears on p. 250.

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Common Interests, National Interests

The year 1969 represented a turning point in economic relations within the Soviet bloc. Whereas the issue of reform had barely managed to make it onto the agenda at COMECON’s session in Budapest in December 1967, beginning in the spring of 1968 the increasingly more impatient Polish–Czechoslovak–Hungarian “axis” was able to compel the parties governing bloc states to deal seriously with the question of increasing the efficiency of cooperation. The Polish United Workers’ Party Central Committee drafted the first plan for the economic integration of the socialist countries of Central and Eastern Europe in May 1968, distributing this document among its fraternal parties in the region. By the end of the year, the Soviet Union, the German Democratic Republic, Czechoslovakia, Hungary, and Romania had all circulated similar proposals. With the exception of Romania, the countries all expressed the opinion that “there is a need to significantly improve the economic cooperation of the socialist countries and modify COMECON’s operational procedures.” The Economic Policy Committee of the Hungarian Socialist Workers’ Party summarized these proposals in a January 1969 report: The Polish, Hungarian, Czechoslovak and Soviet proposals also contained the recognition that closer economic integration of the COMECON countries is the path toward progress and that an important vehicle for this is the increased assertion of commodities and financial conditions in cooperation. It is for this reason that these countries—alongside the development of cooperation in planning and production—consider the increased flexibility of foreign trade, the realistic determination of exchange rates, the transformation of the bank and credit system and partial currency convertibility to be indispensable. Romania, on the other hand, considered the improved utilization of the existing framework for cooperation to be timely, while the German Democratic Republic cautioned member states not to “yield to fashionable Western economic theories.” 147

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While the Polish, Czechoslovak, and Hungarian proposals considered interrelated, complex measures to be necessary, the Soviet recommendation again advocated the introduction of joint planning, though contrary to the Soviet Union’s 1962 initiative, did not propose the foundation of a joint planning office. The various proposals contrasted most sharply in their assessment of relations with the “capitalist world.” The Soviet, East German and, in places, even the Polish plan condemned the (commercial) opening toward the West—the Soviet proposal even went so far as to refer to the notion of joining international financial organizations such as the International Monetary Fund and (IMF) the World Bank as “attempted subversion.”1 On the basis of these plans, the leadership of the Hungarian Socialist Workers’ Party established the following maximum objectives to be reached at the next high-level intrabloc meeting: a. declare the necessity of heightened integration; b. designate the most important objectives of integration and the method of achieving it; c. provide a mandate for drafting the measures necessary over the next one or two years. Hungary accordingly deemed it necessary to devise a complex program that through the concentration of forces would enable the socialist community to more effectively connect itself to global economic processes and promote the heightened integration of the socialist countries without infringing upon established political principles.2

4.1 THE COMPLEX PROGRAM OF SOCIALIST INTEGRATION Over the subsequent weeks, comprehensive, multilateral talks took place between member states. By the beginning of March 1969, only the precise dates of COMECON’s 23rd, extraordinary, session remained undecided. On March 4, the Hungarian Socialist Workers’ Party Political Committee approved the speech that committee member Rezső Nyers wished to present at the session as well as the Hungarian draft proposal to be submitted at the meeting. The latter proposal—along with a concrete action plan—cautioned that heightened integration should not entail economic isolation: The strengthening of economic integration among the COMECON countries cannot lead to economic separation from the rest of the countries of the world. The socialist internationalist division of labor is part of the international division of labor extending throughout the entire world. Appropriate measures must be

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taken to promote the development of economic and scientific-technical relations with socialist countries not participating in COMECON as well as with both developing and developed capitalist countries.

The plan, among other things, recommended increased assertion of commodities and financial conditions, the harmonization of economic-policy concepts, the further development of the monetary systems of COMECON countries, and the establishment of a COMECON investment bank.3 The conclusion of an agreement between Czechoslovakia and Poland following bilateral talks in Prague on March 8 declaring that a working meeting must be held as soon as possible in order to approve “a minimal action program at the very least” provides a clear demonstration of the increasing impatience of some countries. Czechoslovakia and Poland also agreed at the talks that if Romania did not wish to participate in integration, then the country must be excluded from higher-level forms of cooperation.4 The extraordinary session of COMECON was finally convened in Moscow on April 23.5 During the four-day meeting of the organization celebrating the twentieth anniversary of its foundation, general secretaries of member-state communist and workers’ parties and heads of government from these countries took steps commensurate with the Warsaw Pact’s reform measures. A report submitted to the Hungarian Socialist Workers’ Party Political Committee highlighted the following steps taken at the session: • The collective formulation of the program aimed at the economic integration of the socialist countries within the framework of COMECON received political approval and impetus. • The definition of interest was approved in such a way as to make it possible to enact within the framework of the program measures in which not all countries participate and to terminate the use of the principle of interest as grounds for veto. • The proposals of the eight countries were summarized in a single unified document in a resolution regarding the administration of work and the organizational order connected to the program of socialist economic integration. The resolution stipulated that the integration program should be submitted at COMECON’s 1970 session, identifying the following objectives beyond those related to legal and organizational issues: • The development of economic-policy, planning-coordination, productionspecialization, and scientific-technical cooperation; • and the further development of the foreign-trade system, commodity and financial conditions, as well as the credit system.

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The resolution called for the broad introduction of the following forms of either unused or little used cooperation: • Coordination of economic policy and trade policy to be followed with regard to third countries; • the joint planning of certain industrial sectors and products; • the establishment of new production, trade and other international organizations; • the foundation of joint technical-scientific institutes; • the introduction of foreign trade in non-quota products;6 • the examination of customs issues; • the harmonization of the methodology of internal pricing; • the analysis and preparation for introduction of realistic currency rates; • the establishment of a joint investment bank. Following the session, the COMECON Executive Committee also held consultations regarding formulation of the necessary work plan.7 The COMECON Military Industrial Standing Commission held a session in Budapest in May 1969, three weeks after COMECON’s session in Moscow and two months after the Warsaw Pact Political Consultative Committee’s session in Budapest at which delegates only managed to define the issues to be considered. The MISC’s tasks at the session were to formulate new regulations with recently formed WP Unified Armed Forces Supreme Command organs and to clarify the ways in which the new integration plans would affect the military-industrial sector. The MISC therefore requested proposals from member states as well as the Military Industrial Department. Officials at the session resumed work aimed at determining the specialization of military-industrial production and cooperation for the years 1971–1975, completing the process of establishing standardization principles for products with the adoption of a resolution subject to final approval from the WP Unified Armed Forces Supreme Command.8 At the COMECON MISC’s session in Moscow from November 11–14, 1969, the Military Industrial Department submitted proposed measures intended to promote implementation of the resolutions adopted at COMECON’s extraordinary 23rd session. The commission asked member states to prepare plans and estimates required for the formulation of the national components of the complex program. The commission authorized Chairman Vasiliy Ryabikov to devise the order of cooperation in conjunction with the WP’s Unified Command. The commission also approved production-specialization recommendations, thus completing an important phase in plan-coordination work for the years 1971–1975.9

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The recommendations strengthened established production profiles, granting the greatest number of new production duties to Bulgaria’s expanding military industry. The conspicuously large number of recommendations for the production of various radiation-detection and chemical-reconnaissance devices and equipment suggests that the commission was preparing for possible nuclear conflict. The specialization of production of radio-reconnaissance equipment and other types of new military electronics presented Hungary with both significant opportunities and challenges. Based on the results of bilateral talks regarding mutual deliveries held in Moscow from February 10–14, 1970, the National Planning Office projected that Hungary would export 525 million rubles worth of military equipment in the years 1971–1975 and import 515 million rubles worth of military equipment during the period. The nearly 100 percent rise in the value of exports of military equipment, the large majority of which stemmed from the export of specialized telecommunications and precision-engineering instruments, had begun to cause capacity problems in Hungary. The expected rise in orders was concentrated at a few companies, such as the Precision Technology Company, the Mechanical Laboratory, the Telephone Factory, and the Gamma Works, which consequently required significant increases in manpower and production space. In a development that represented a source of significant uncertainty for Hungary, the Soviet Union indicated that it did not wish to continue deliveries of military equipment on credit. This was an issue of major importance in light of the fact that, according to the February estimates, Hungary’s balance of foreign trade in military equipment would have nearly reached equilibrium. Taking all of these factors into account, the Defense Committee requested at its March 12, 1970, session that the National Planning Office prepare a detailed analysis.10 While various government organs, the military and military-industrial apparatus were both working at full speed on the expansion of integration opportunities, the talks held in the spring of 1970 revealed basic limitations to COMECON cooperation. As a result of the organization’s failure to establish an effective multilateral clearing system, member states took painstaking care to ensure balance in bilateral deliveries, avoiding excessive surpluses just as much as they did deficits since compensation for surplus exports took place only in the calculation of delivery quotas for the following five-year period. It is important to note that member states conducted trade in kind, thus no true cash movement attended the deliveries of either civilian goods or military equipment among them. The Defense Committee examined the issue of foreign-trade in military equipment within COMECON during the period of the next five-year plan from two perspectives—the balance of payments and the feasibility of deliveries. The National Planning Office’s General Organizational Department

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proposed a slight reduction of about 10 million rubles in imports and a nearly 100 million ruble decrease in exports. The General Organizational Department confirmed earlier reports that the Soviet Union wanted to discontinue delivery of military equipment on credit beginning on January 1, 1971, though still forecast that Hungary would record a significant trade surplus in the years 1971–1975 as a result of a 597-million-ruble positive balance in trade of civilian goods, compared to a 323-million-ruble negative balance in trade of military equipment during the period. The department expected Hungary to post a 164-million-ruble trade surplus with the German Democratic Republic, a 44-million-ruble surplus with Czechoslovakia (reducing the positive balance with the latter country from a preliminary projection of 120 million rubles through the delay of many deliveries until the years 1976–1980), and the modest surpluses of 10 million rubles with each Poland and Romania. Hungary’s exports were therefore expressly limited in the interest of maintaining equilibrium in the bilateral balance of payments. The issue of clearing prices manifested itself with increasing trenchancy. The German Democratic Republic, for example, wanted to order 1,240 armored personnel-carriers at a price of 38,000 rubles per unit, while Hungary manufactured only half this number of such vehicles per year at an estimated cost-effective production price of 42,000–44,000 rubles per unit. At the same time, it was not possible to gauge the cost-effectiveness of domestic production solely on this basis, because special factors that were difficult to quantify also played a role: • The cost-effectiveness of goods produced to satisfy internal demand increases as a result of exports, thus reducing domestic prices; • expenses related to the maintenance of military-industrial (cold) capacities decline as a result of the more efficient use of capacities; • factories involved in the peacetime production of military equipment are in a more favorable position in terms of engagement in wartime production. The National Planning Office outlined several sources of uncertainty surrounding production within the military industry as compared to production within the civilian sector: Specialization and the government’s undertaking of export commitments with regard to a portion of new products occur at a time when neither production expenses nor export-treaty prices can be estimated with the degree of precision on the basis of which the rate of the forint-ruble index can be determined with complete accuracy. With few exceptions, new civilian-sector products differ from previous models of the same type only in form and in terms of a few units, their world-market price is generally given and therefore the cost-effectiveness

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of its production can be estimated with a high degree of certainty. New military equipment, contrarily, generally differs significantly from previous models of the same type and in certain cases contains completely different parts and components. Consequently, the cost of producing new versions of military equipment can be estimated to only a very approximate degree prior to the arrival and processing of relevant documentation. Export prices, whose world-market value is generally based on Soviet prices, and specialization decisions are not accessible with sufficient certainty at the time of undertaking export commitments. The Hungarian side is presently urging at international talks that the countries of specialization be regularly included in the process of determining the export prices of specialized products, though results related to this issue can be expected only in later years as a function of successful progress in integration work.

The above statement reveals that at the time of international talks it was still not possible to know how economical dynamically growing military-industrial exports would be. The numbers were, at any rate, impressive: exports were projected to rise by nearly 250 percent in 1975 as compared to 1970, while total production within the military-industrial sector was expected to rise by 150 percent during this period. As a result of specialized exports, officials in Hungary also expected positive changes to take place with regard to the type of military equipment produced in 1971–1975 as compared to 1966–1970: production of military telecommunications and instruments was expected to rise to 53 percent of total production of military equipment in the period 1971-1975 from 36 percent in the period 1966-1970, while that of weapons and ammunition was expected to drop to 12 percent in 1971-1975 from 24 percent in 1966-1970 and that of military vehicles to remain at 30 percent. On the whole, exports must have exercised a positive impact on the military-industrial sector and the entire national economy, because the Defense Committee authorized the Hungarian delegation to implement the moderation of exports through the extension of orders until after the year 1975.11 At the COMECON MISC’s 20th session held in East Berlin from May 26–29, 1970, member states successfully concluded agreements on mutual deliveries to be conducted within the framework of the next five-year plan. Soviet delegates attending the meeting officially announced, moreover, that the Soviet Union did not wish to continue providing member states with credit for the import of military equipment. Additionally, the head of the Warsaw Pact Unified Armed Forces Technical Corps furnished delegates with information regarding the provision of member-state armies with weaponry and combat technology that had an influence on long-term cooperation. The Technical Corps chief informed delegates that the technology used in member-state armies was essentially up-to-date, though further development was required in this regard. The head of the WP Technical Corps furthermore

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asserted that it was necessary to prepare the order of cooperation between the Unified Armed Forces Supreme Command and the MISC in the interest of coordinating technical development. Delegations debated several proposals regarding integration measures aimed at facilitating implementation of resolutions adopted at COMECON’s 23rd session. The following issues emerged in the course of these discussions: • Exchange of opinion regarding projections for the further development of production of military equipment. Member-state officials, contrary to the head of the Unified Armed Forces Technical Corps, determined that only the Unified Armed Forces Supreme Command held a comprehensive view of military, battlefield and technical-development requirements. • The mutual coordination of production must extend to the areas of development, planning, and the launching of production, sales, and repair. • The improvement and development of cooperation and the specialization of production of military equipment among countries participating in the commission, particularly with regard to the clarification of the rights and obligations of the specialized and purchasing countries. • The establishment of direct connections and cooperation between the ministries. This would have represented a breakthrough in relations with the Soviet Union, whose production ministries, according to established practice, could only be reached via the State Committee for Foreign Economic Relations (GKES). The commission also approved the volumes classifying the three-year activity of the work group dealing with the formulation of unified material-codes based upon which the national coding of military equipment was to begin. (According to the publications, Hungary had to prepare for the classification of several hundred finished products and approximately 150,000 parts!)12 At the COMECON MISC’s second session of 1970, which took place in Moscow from November 17–19, delegates approved two important documents, which served to strengthen integration efforts. That entitled Recommendations concerning Fundamental Methodological Questions Related to the Formulation of Production-Development Forecasts for Military Technics defined the objective of this process as follows: Production-development forecasts constitute the initial phase in the general process of planning and a precondition for the preparation of long-term and five-year development, production and mutual-delivery plans for military equipment. Cooperation on the forecast plan represents the necessary foundation for the determination and settlement of important economic and scientific-technical tasks connected to the provision of the armies of member states participating in the Warsaw Pact with modern military equipment.

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The document identified the following factors, which deviated in many regards from civilian requirements, as those governing the calculation of military industrial forecasts: • The approved Warsaw Pact Military doctrine; • The mutual obligations of Warsaw Pact member states; • The trend in the potential enemy’s development of weapons and military equipment; • The high value and rapid change of modern equipment. The primary objectives of the mutual exchange of information among the countries participating in the commission were the determination of the main directions of development, the identification of the most effective distribution of production-specialization and the establishment of the conditions necessary for the introduction of advanced technology. The determination of the main directions of development took place within the framework of the Unified Armed Forces, while coordination occurred within that of the MISC. In the course of devising the forecasts, officials deemed it expedient to make the following decisions at a national level: the amount of money to be allocated for military equipment; the basic distribution of individual types of military equipment; the degree of domestic use; the volume of import-export; the optimal volumes of industrial production; the most effective specialization of production; the magnitude of production-capacity development; and the projected volume of investments. The second important document specified the direction, order, and form of mutual activity between the Warsaw Pact Unified Armed Forces Technical Corps and the COMECON MISC. According to the document, the Technical Corps would be responsible for carrying out the following tasks: • Examination of the developmental prospects for the weapons and equipment of Warsaw Pact armies, coordination of scientific-research and experimental-design work in relation to provision of the armies; • Formulation of recommendations regarding the unified tactical-technical requirements for prototypes of new weaponry and military equipment; • and coordination of joint testing of prototypes for new military technics. The document assigned the following obligations to the MISC: • Coordination of annual, five-year and long-term production and delivery plans for military technics; • preparation of long-term production-development forecasts for military equipment;

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• coordination of scientific-research and experimental-design work in industry and at research institutions and structural-design offices; • specialization of production and cooperation with regard to military equipment and utilization of production capacities; • integration, standardization, and typification of technology, materials, technical-analysis norms, and methodology. In order to promote the successful completion of the duties outlined above, delegates at the session agreed to establish regular working relations, called for the exchange of documents and reports, and prescribed joint participation at various talks and consultations.13 At its session held in Mangalia, Romania, from May 25–28, 1971, the Military Industrial Standing Commission approved a document entitled The Order of Multilateral Cooperation Connected to Scientific-Research and Experimental-Design Work Conducted within the Framework of the COMECON MISC. The primary objective of this document, whose adoption had been advocated since the mid-1960s, was to facilitate the selection of the optimal course of research and development, accelerate the latter to the maximum degree and promote the efficient use of the scientific-technical potential of member states. The document defined the commission’s fundamental duties with regard to cooperation as follows: • Development of the most up-to-date product designs, components, and parts based on the schematic recommended by the Unified Armed Force Supreme Command; • planning and perfection of production engineering for military equipment, individual technological processes, and production; • the formation and perfection of special equipment and technology needed for serial production; • the improvement of utilized materials, the search for suitable substitutions for lacking and expensive materials; • the planning and perfection of the methodology concerning the factory testing of military equipment and its parts and components. The document contained a detailed examination of the order and form of coordinating research and development work, from the distribution of Unified Armed Forces Supreme Command recommendations, through bilateral and multilateral talks to cooperation in the field of theoretical and experimental research. Technical Corps Chairman Lieutenant General Stepanyuk announced at the MISC session that the corps had begun processing developmental reports and preparing recommendations. The other main theme dis-

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cussed at the session was the new international unified material-code—problems connected to its introduction and use, the establishment of a numerical control system and other issues related to coding. The National Planning Office warned against premature expansion of the code: Participants in the debate concluded that the Commission and its working organ had achieved significant results in the formulation of the unified material-code, although the work was much more extensive and complex than previously expected. All delegation leaders agreed that we have reached a difficult phase in the work, when it is necessary to begin establishing foreigntrade delivery relations on the basis of the numbering system contained in the material code. The further expansion of the unified material-code is not warranted until we obtain adequate experience in use of the code in the course of international deliveries (indication of demand, orders, deliveries, invoicing, complaints, etc.).14

While numerous previously unsettled organizational issues that had impeded cooperation in the military industry were resolved, the preparation of COMECON’s complex program made little progress as a result of the various conflicts of interest. In a February 1971 report to the Hungarian Socialist Workers’ Party Political Committee related to preparations for the 51st session of the COMECON Executive Committee, HSWP Central Committee secretary and Political Committee member Rezső Nyers asserted that the notion of integration had not yet been completely clarified: Work done so far in the interest of promoting integration has essentially been successful. Operating under extraordinarily complex circumstances, we succeeded in establishing a work program aimed at resolving a difficult problem. We did not, however, arrive at a complete clarification of the concept of integration. . . . Let us not refer the prepared program, which was too general and in large part resembled a work plan, as the program for integration, but as the work program for integration.

On this basis, Hungary’s political leadership had by this time established the maximum objective of merely completing the complex program by the year 1973 and ensuring that this program be ready for finalization in the form of an interstate agreement or interstate agreements. In the course of preparing this program, emphasis centered on issues related to cooperation in the area of production even though no significant progress had been made with regard to the financial and trade relations that would have served to promote such cooperation. The Hungarian Socialist Workers’ Party Political Committee approved a resolution urging that the COMECON program include development of the currency system and, furthermore, deal with relations to be

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conducted with capitalist integrations and countries and the customs system to be utilized in trade with them.15 Following the mid-February session of the Executive Committee, another round of talks regarding the complex program was held in Moscow from April 27–29, 1971. Most of the contested issues were resolved at the 52nd session of the COMECON Executive Committee, though only at the cost of heavy compromise. In a report to the Hungarian Socialist Workers’ Party Political Committee, Hungarian COMECON representative Antal Apró identified the following obstacles to finalization of the program: • The developmental disparities between the people’s economies of the member states; • the disparate weight of international relations in individual people’s economies; • the significant disparities existing in the internal (economic) command systems of the individual countries • significant differences of opinion regarding the establishment of the conditions for integration; • and Romanian conduct in opposition to integration. Hungary’s political leadership had concluded that the process of integration would be prolonged, though presumed that as a result of external pressure member states would provide more vigorous support for cooperation: Experience also shows that over the coming years the further development of internal mechanisms, global market pressure and unresolved internal economic problems will lead to increasing recognition in the COMECON countries of how much our countries lose through the delay in establishing international socialist production and market integration and that national isolation particularly afflicts the smaller socialist countries due to the further growth of parallelism and uneconomical production in the people’s economies.

Romania, in contrast to the coordinated position of the other six member states, submitted 150 proposed amendments, which were referred to the June session of the Executive Committee.16 The number of dissenting Romanian opinions declined to four at the 53rd session of the COMECON Executive Committee, though these touched upon fundamental issues, calling for the omission of further development of currency and financial relations and the elimination of economic-policy consultations, etc. In spite of the doubts, on July 13 the Hungarian Socialist Workers’ Party authorized Hungary’s delegation to support the elevation of the Executive Committee’s program to the status of resolution at the session.17

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Officials attending COMECON’s 25th session in Bucharest on July 27–28 approved the proposed complex program under extremely tense circumstances. Delegates had initially decided to adopt the program resolution without their Romanian counterparts, who had presented them with new proposed amendments to the program following their arrival to Bucharest. However, following protracted talks that required much flexibility from the parties involved, all seven member states elected to sign the document entitled Complex Program Aimed at Further Deepening and Improvement of Cooperation and Development of the Socialist Integration of the COMECON Member States. At a joint session of the Council of Ministers and the Hungarian Socialist Workers’ Party Central Committee on August 4, 1971, Council of Ministers Chairman Jenő Fock offered the following appraisal of the program: After much debate, we approved it, the importance of which must be duly recognized, though not overestimated. I would like to emphasize that integration is a lengthy process and we cannot entertain illusions that it will exercise a significant impact on the development of individual people’s economies, including the Hungarian people’s economy, in the near future. . . . The immediate benefit that all countries can enjoy from this perspective and which we Hungarians have utilized to perhaps the greatest degree is that the coordination of longer-term forecasts and plans placed the five-year plans of individual countries on a more accurate footing. . . . From now on it must be expected that the coordination of five-year plans will take place already between individual countries at an increasingly early period precisely because we are negotiating fifteen-, twenty-, thirty-year joint investments that have a fundamental influence on the people’s economies of every country, every participating country.

Central Committee Secretary Rezső Nyers identified the most important elements of the Complex Program as follows in a speech he delivered at the joint session: It determines the course of the development of integration . . . defining the process of integration as 15–20 years of continual development. The phases of this 15–20-year development must still then be worked out, because it will not be a one-phase, purely evolutionary development, but we must determine different types of actions at various times. The Complex Program defines . . . the direction of the development of integration as follows: firstly, the coordination of economic policy and the harmonization of people’s-economic plans; secondly, the development of international cooperation in production within the leading branches of technology all the way through to the mutual economic enterprise and the joint planning of thereof; thirdly, the utilization of identical pricing principles in the formulation of internal prices and foreign-trade prices; and fourthly, the development of the system of foreign-trade and currency coopera-

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tion. . . . The Complex Program consists of two parts: a public part . . . while the second part will be secret . . . [The second part] concerns cooperative tasks within industrial sectors of importance from the standpoint of military security, themes related to the coordination of economic policy vis-à-vis non-socialist countries and, finally, specific issues that one or more countries requested to have handled secretly. They asked, for example, on behalf of the German Democratic Republic that the task, according to which we are seeking to gradually ease restrictions on currency exchange for citizens, not become public, because this could cause problems for them.18

The classified section of the Complex Program mentioned by Nyers was the document’s addendum 3/a, whose military-military industrial aspects may have concerned the passages pertaining to cooperation in the area of radio technology and the electronics industry, specifically the development of computer and automated telecommunications systems.19 Nyers did not, however, mention that in spite of Hungary’s efforts, the cause of financial reform within COMECON had made little progress, thus, according to László Csaba’s analysis, dooming the objective of strengthening cooperation to failure.20 COMECON had therefore established a new legal framework, which the individual standing commissions, sector-based coordination bodies and, through bilateral and multilateral cooperation, the organization’s member states themselves had to elaborate. At its session held from November 16–19, the Military Industrial Standing Commission declared with some degree of pride that over the previous years it had achieved significant progress toward integration of the production of military technics. The COMECON Secretariat’s Military Industrial Department received the task of devising a concrete action plan stemming from the resolutions of the 25th session. In order to make it possible to establish firm national plans, the commission began preparations for the coordination of production and deliveries for the years 1976–1980. COMECON member states determined that it was possible to forecast production development, which was connected closely to the issue of integration, until 1985 at the very latest with the help of the WP Unified Armed Forces Supreme Command. Decisions were made regarding the specialization of production for some further products as well: Hungary received specialization for production of the NSP-3 night sight and the Strela-1 surface-to-air missile system, while Poland, Romania, and Bulgaria received specialization for production of other night-vision equipment and Poland, Czechoslovakia, and Bulgaria received specialization for production of the Strela-2M surface-to-air missile system. The Military Industrial Standing Commission issued a separate report to the COMECON Executive Committee regarding its activity in the years 1963–1971. The MISC requested permission from the Executive Commit-

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tee to amend the organization’s statutes so that the increase in duties for the period 1969–1971 could be implemented via the operational document. Progress had been made in numerous regards during the nearly ten-year period examined in the report. By the year 1970, the Soviet Union had furnished member states with documentation for the production of 560 different types of weaponry and military equipment and sent more than 7,000 military specialists to work in these countries, while receiving 6,600 experts from the latter states to participate in consultations and production training. Unfortunately the report did not contain time-series or country-specific data, though did forecast that rising demand would result in a 64 percent increase in the value of mutual deliveries of military equipment in the years 1971–1975 as compared to the years 1966–1970. The report projected a threefold increase in the production of tanks, ammunition, and telecommunications and radar equipment in the years 1971–1975, thus decreasing the Soviet Union’s share in total mutual deliveries from 62 percent to 50 percent during the period. According to the MISC report, the progress of specialization had been one of the most important results achieved in the years 1963–1971: Specialization serves to stabilize the profile of the military industry in the countries and provides them with the opportunity to forecast the developmental outlook of their military industries with a greater degree of assurance. The fact that the conclusion of bilateral mutual-delivery agreements is based on the specialization of production recommended by the commission also contributes to this.

The report proposed that the proportion of specialized products within all mutual deliveries between member states be increased to 85 percent in the years 1971–1975 from 77 percent in the years 1966–1970 and that 95 percent of the production of warships, radar and telecommunications equipment, and 90 percent of the production of military aircraft and armored vehicles in these countries during the former period take place on the basis of specialization agreements. The report indicated that progress in the organization of cooperation had been much more modest in the years 1963–1971, citing only joint Polish–Czechoslovak production of amphibious transport-vehicles and joint Polish–Hungarian production of radar stations and tactical radio transmitters as examples of such cooperation during the period. Standardization and typification consumed an enormous amount of energy. In order to ensure the compatibility of military equipment, the commission defined, in cooperation with the Unified Armed Forces Supreme Command, the uniform tactical requirements for military telecommunications equipment, integrated the specifications for tanks, aircraft, and certain artillery and technical products, and standardized the technology used in production of chemical-defense equipment and ammunition. An increasing amount of hu-

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man resources were required to handle the immense volume of data stemming from the dynamic growth in mutual deliveries of military equipment. In order to lay the groundwork for the automated processing of this data, the commission began to devise material codes in 1967, assigning individual number codes to all military equipment based on broad types and specific groups and subgroups. At the same time, the notion of extending coding to civilian products used by the army, such as food and clothing, emerged at this time, though the involvement of numerous other COMECON organs and commissions became necessary in order to implement this idea.21

4.2 NEW CHALLENGES—THE THIRD WORLD A certain turning point occurred in COMECON’s military industrial relations with states outside the organization in the spring of 1971, when as the result of an increasing number of requests, the Defense Committee instructed the Military Industrial Government Committee to draft proposals for cooperation with non-COMECON socialist countries as well as Arab and other developing countries. Hungary concluded its initial treaties for the delivery of military equipment to countries outside COMECON with Syria, the United Arab Republic, Iraq, and other Arab states following the Six-Day War in June 1967.22 (For data regarding Hungary’s deliveries of military equipment to non-COMECON countries between 1966 and 1970 see Table 4.1 below). WP and COMECON member states did not, however, confer regarding exports of military equipment to Third World Countries at this time, though, as will be demonstrated below, Hungary proposed holding such consultations on several occasions. At the beginning of the 1970s, Hungary’s military and military-industrial apparatus was not prepared to formulate rapid price offers, to promptly appraise opportunities and handle trade that diverged from the usual COMTable 4.1. Value of Hungary’s Exports of Military Technics to non-COMECON Countries, between 1966 and 1970 Country United Arab Republic Syria Nigeria Iraq Yugoslavia Democratic People’s Republic of Korea Total

British Pounds

U.S. Dollars

Soviet Rubles

4,200,000 2,900,000 — — — — 7,100,000

— — 600,000 100,000 500,000 — 1,200,000

— — — — — 700,000 700,000

Source: Report to the Defense Committee on the Results of the Special 1966–1970 Trade Plan. MNL OL, XIX-A-16-aa 118. d.

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ECON order. The sluggishness of administration and the postponement of deliveries solicited a negative reaction in the Arab countries, thus necessitating action at the highest level. The Defense Committee Secretariat submitted a proposal in which it specified several factors, in addition to the foreign-policy benefits, that made development of export with non-COMECON countries both valuable and necessary: The maintenance of up-to-date technical standards for established production capacities and the development of design is necessary due to its beneficial effect on the production of both military technics as well as civilian goods. . . . As a result of Mobilization requirements, established capacities significantly exceed those needed to satisfy “peacetime needs” (particularly concerning various types of ammunition). Sustaining these capacities requires budgetary support. Modernization and development of the technical standards of production is not possible as a result of an insufficient degree of production, thus presenting the danger of technical obsolescence with regard to these technological processes. The modernization of inadequately utilized production equipment can only be resolved by way of budgetary investment. An examination of the present situation can lead to the conclusion that the requests of Arab and developing countries aimed at the establishment of military-industrial relations must be considered from all standpoints in correlation with the policy objectives of the HSWP and the government of the Hungarian People’s Republic and, giving priority to these objectives, on the basis of our economic possibilities. . . . This complex examination entails the longer-term assertion of our position in international politics in the course of our relations with these countries and the adjustment of market interests to this as well. . . . As a fundamental principle, it must be stated that resolutions approved in the COMECON Military Industrial Standing Commission in the interest of developing Warsaw Pact armies enjoy precedence in the course of building our relations with these countries.

On the basis of the above, the Defense Committee on May 6, 1971, approved a resolution investing the Military Industrial Government Committee with the task of careful consideration and ad hoc examination of these issues.23 The Defense Committee approved the Military Industrial Government Committee’s revised organizational statutes on September 24. According to the new statutes, the duties of the Military Industrial Government Committee would be to promote socialist international cooperation and the suitable division of labor in the domain of the military industry and to foster socialist integration. The commission’s authority extended to the internal coordination of tasks aimed at satisfying international obligations. A resolution approved on May 6 incorporated the task of coordinating cooperation with non-COMECON socialist countries and developing countries into the authority of the Military Industrial Government Committee as well. The

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National Planning Office’s deputy chairman in charge of military affairs continued to serve as the head of the commission, while the members of the body consisted of representatives from the general staff of the Hungarian People’s Army, the Ministry of Metallurgy and Machine Industry, the Foreign Trade Ministry, the Finance Ministry, and the Defense Committee Secretariat.24 At a session held five days later, commission members decided that it was necessary to establish work methods that would make it possible to swiftly formulate operative positions with regard to individual concrete requests and issues. Arab and developing countries routinely submitted their demands for military equipment without prior notification. The duty of the Military Industrial Government Committee, however, remained within the boundary of domestic coordination and assessment, while the Foreign Ministry and the Ministry of Defense continued to exercise the prerogative to conduct talks and conclude treaties.25 The expansion of export possibilities required additional comprehensive analysis, which the National Planning Office’s General Organizational Department completed at the end of the winter of 1972. The objective of the department’s report submitted to the Defense Committee was to outline a concept aimed at harmonizing defense, military-industrial, and trade policy. From a foreign-policy perspective, the concept deemed military support for “the progressive countries” and “armed liberation movements” to provide the benefit of strengthening the unity of the anti-imperialist camp. From a defense standpoint, the delivery of mostly used weapons and matériel, some of which had been slated for withdrawal, served to renew the stockpiles of the Hungarian People’s Army and provided domestic industry with orders to replenish the army’s supply warehouses. The National Planning Office, just as it had one year earlier, highlighted the importance of more efficient utilization of military-industrial capacities. From the standpoint of trade policy, the primary issue was the expansion of activity on high-demand developing markets and the conclusion of U.S. dollar-based delivery treaties. The report emphasized that the export market for military equipment was, moreover, exceptionally stable, since the decision to adopt a specific weaponry system guaranteed long-term trade relations. The planning office concluded that Hungary therefore stood to benefit from the delivery of military equipment to these countries and movements. The expansion of Hungary’s military industrial exports to developing countries under economically beneficial conditions at both a company and national-economic level depended on the capacity of domestic industry to provide a sufficient production base. Domestic production could be increased either through more efficient utilization of existing capacities or implementation of new developments. The National Planning Office warned

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that “the latter can be recommended unequivocally only if it is compatible with developmental objectives established on the basis of the needs of the armies of Warsaw Pact countries and our own army or if it serves to guarantee the long-lasting satisfaction of export demands.” At this time, the demand of developing countries focused on weapons and ammunition, items that diverged somewhat from Hungary’s specialized nomenclature and the main directions of domestic development. The planning office did, however, consider it possible to reshape the demands of these countries through adequate market-research and propaganda activity. Based on preliminary estimates, the Ministry of Metallurgy and Machine Industry could guarantee 70 million U.S. dollars in additional production in the years 1973–1975 beyond that stipulated in the fourth five-year plan. Pricing represented the critical factor in the increase of exports. Numerous developing countries had begun to use Soviet military equipment, which several WP-COMECON member states manufactured and delivered to these countries under Soviet License. Hungary exercised limited authority over the pricing of such military equipment, though did have a greater degree of control over the delivery price of domestically developed products. The sector also lacked established modes of coordination. In addition to the insufficiently broad stock of goods at our disposal, the fact that organized cooperation with socialist countries has not been introduced in this field increases the difficulty of our efforts aimed at expanding the market and establishing economically beneficial export. A certain parallelism can be discerned in the array of products available from individual COMECON countries. This is partially understandable as a result of the unified weapons system, although it would be possible through adequate cooperation to reduce the effect of such competition whereby one socialist country damages the sales conditions of another. It is desirable that competent Hungarian organs initiate the implementation of organized cooperation in place of the ad hoc contacts that have taken place so far.26

The other key issue connected to the increase of exports was Hungary’s willingness to provide credit, which was particularly widespread in the delivery of military equipment. As the National Planning Office noted, “This is a concomitant phenomenon not only in terms of exports to developing countries, but—particularly among capitalist countries—has become an established practice characterized by long-term maturities and low interest rates.” It was therefore necessary for Hungary to attempt to obtain the most favorable conditions possible, while concluding cash-based agreements for the delivery of ammunition and parts. A certain competition developed among COMECON member states with regard to credit terms. According to a National Planning Office report, Hun-

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gary’s fellow member states had established the following credit conditions for the export of military equipment: • The Soviet Union has provided developing countries primarily with maturities of ten to fifteen years on 2 percent interest without asking for down payment and calculated accounts in clearing rubles. The Soviets did not accept the mediation of brokers. The starting price on products was the same as that for which it made deliveries to other WP member states, though it consistently offered a “political rebate” of 20–25 percent. It conducted free-currency trade only with Lebanon and Libya. Specialists in the use of military technology received free training either on location or in the Soviet Union. • Czechoslovakia provided credit with a maturity of three to ten years at an interest rate of 2.5–3 percent, asking for a down payment of 15–30 percent. It made deliveries in convertible currency to Lebanon, Libya, Nigeria, Pakistan, and India and signed eight- and ten-year credit agreements with Egypt and Syria for the delivery of military equipment. It utilized brokers to conclude all deals on progressive commissions of 3–10 percent. • Poland delivered primarily tanks and ammunition to Egypt, Syria and India in clearing currency with a maturity of five to ten years at an interest rate of 2–2.5 percent. • The GDR, whose trade turnover was minimal at this time, concluded prompt payment deals in free currency with Egypt and Syria. • Bulgaria made deliveries to Algeria, Nigeria, Egypt, Syria, Iraq, and India with the mixed use of free currency and clearing under conditions similar to those of Poland. The Defense Committee adopted a resolution on March 23, 1972, instructing the Military Industrial Government Committee to examine the possibility of establishing a special export allocation to be used to satisfy unexpected needs. The resolution charged the commission’s chairman and the foreign-trade minister with the task of coordinating deliveries of military equipment to developing countries with partner states. The Defense Committee approved a credit framework of 28–33 million U.S. dollars to finance exports of military equipment, stipulating that it be handled separately from civilian credit.27 The COMECON Executive Committee convened in Moscow for its 57th session on April 19–20, 1972, in order to discuss the report on the activity of the Military Industrial Standing Commission as its main agenda item. Competition was clearly developing between member states on the newly opening markets. The willingness of the Soviet Union to deliver military

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equipment under the onerous credit conditions outlined above suggest that even the USSR was more interested in the long-range expansion of its geographical sphere of influence than it was in the coordination of trade among COMECON member states with newly opening markets. Hungary’s permanent COMECON representative, Council of Ministers Deputy Chairman Péter Vályi, proposed at the Executive Committee session that the Military Industrial Standing Commission hold multilateral talks in order to coordinate the delivery of military equipment to developing countries and to discuss the continued lack of assurance that mobilization-period needs could be satisfied. Executive Committee members summarily rejected Vályi’s proposal on the grounds that the Military Industrial Standing Commission was not authorized to deal with these issues. The COMECON Executive Committee endorsed the MISC report finalized at its November 1971 session and acknowledged the role the commission played in further strengthening the defensive capabilities of member states. The Executive Committee also determined that it would be expedient to conduct the multilateral coordination of scientific-research and experimental-design work within the framework of the MISC, thereby approving the expansion of the commission’s scope of authority. The committee requested that the COMECON Secretariat draft proposals regarding the general expansion of the material code-system within the people’s economies. In a report to the Defense Committee, Vályi contended that it would be necessary to reintroduce the issues connected to mobilization and coordination within the WP Political Consultative Committee and a higherlevel COMECON forum, respectively.28 Following the Executive Committee’s approval, the COMECON MISC held a session in Kołobrzeg, Poland, from May 30–June 2, 1972, at which the commission elaborated the principles governing the production-specialization of military equipment and cooperation as well as the body’s operational procedures. Based on the resolutions approved at the twenty-fifth session, the MISC summarized the integration measures incorporated into the commission’s operational functions: • The methodology of forecasting the development of production of military equipment and the plan for preparing forecasts. • The order of coordinating production of specific military equipment. • Recommendations regarding the further improvement and development of coordination related to the issues of production specialization and cooperation. • Recommendations regarding the development of adequate relations between ministries in the interested countries.

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• The order of conducting relations between the MISC and the Unified Armed Forces Technical Corps. • The order of implementing multilateral cooperation in the area of scientific-research and experimental-design work conducted by member states participating in the commission according to the military thematic. • Proposals regarding the improvement of the currently valid order governing the mutual transmission and examination of delivery requirements for military equipment. These tasks essentially covered all areas in which there was mutual resolve to engage in coordination and cooperation. Substantial debate emerged in connection to further needs for coordination. In the course of talks on specialization principles, the representative from the German Democratic Republic proposed that the country of specialization assume the obligation to conduct the industrial repair and overhaul of the relevant military technics as well. Hungary’s representative asserted during these talks that member states needed more information and original documentation regarding given technology before undertaking its specialized production. The majority of the commission’s representatives rejected these proposals, just as they had the recommendations aimed at further examination of pricing principles that representatives from the German Democratic Republic and Hungary had likewise advanced. The development of an automated command system for ground troops, a task for which a separate specialist group had been established, put cooperation between the Technical Corps and the Military Industrial Standing Committee to the test.29 In July 1972, member states received a somewhat surprising memorandum from the Soviet State Committee for Foreign Economic Relations (GKES) stipulating that the Soviet Union wished to utilize the following principles to govern the transfer of licenses and documentation beginning on January 1, 1973: • The presentation of military equipment and attendant documentation for informational purposes will remain free of charge. • Licenses and production documentation to be provided for military equipment pursuant to COMECON specialization resolutions will likewise be free of charge or will be subject to compensation on the basis of the scientific-technical standard of the documentation. • Licenses and documentation for unspecialized military equipment either under production or scheduled for production will be subject to compensation based on the world market price for similar military equipment.

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• The Soviet Union wishes to levy a licensing commission of up to 10 percent—in the currency stipulated in the signed agreement—from January 1, 1973, on military equipment exported to countries other than WP member states, Vietnam, Mongolia, and Cuba. • The Soviet side wanted to establish payment conditions and the scale of licensing commissions in a separate license-transfer agreement to include itemized fees to be utilized in the case of documentation transferred by December 31, 1972. The Soviet Union’s demand for license fees came as an unpleasant surprise for Hungarian officials, who had been among those responsible for initiating the COMECON Executive Committee’s approval at its 48th session in July 1970 of new conditions surrounding the transfer of scientific-technical results that dispensed with the previous dogma of gratuitousness. (In absence of the license fees customarily paid according to international practice, member states were understandably not enthusiastic about transferring the most modern technology and research results. This factor became an explicit obstacle to technological development by the late 1960s and early 1970s.) With regard to this issue, COMECON’s Complex Program declared that the individual and mutual interests of member states must be taken into account in the course of transferring scientific-technical results. It was therefore hardly possible to raise conceptual objections to the Soviet Union’s demands, though there were quite a few persuasive practical arguments against them. The cost of processing license fees and assembling production documentation raised the previous purchase price from the outset, while the licensing commission represents a surcharge on deliveries to developing countries. The assessment of a licensing commission, moreover, would serve to increase the price of military equipment produced in Hungary and other member states, thus undermining their market position vis-à-vis the Soviet Union, which already offered a significant discount on the price of military equipment delivered to Third World countries. Hungary’s Foreign Trade Ministry considered the new license fee on military equipment such as infantry guns and ammunition of all types to be unfair, since according to a May 1958 resolution such items were classified as basic equipment and were therefore not subject to specialization. Hungarian officials planned to adhere to the principle that licensing fees not be imposed on such basic equipment during subsequent talks with counterparts from the Soviet Union. It was also true that the Soviet license fee of a maximum of 10 percent was squarely within the range of license fee of between 0.5 percent and 20 percent imposed on civilian products according to international practice. Furthermore,

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as a result of compatibility requirements extending to the level of parts and components, smaller member states minimized their independent development of military equipment and did not without reservation switch over to almost total license-based production. This raised numerous more far-reaching problems, which the Foreign Trade Ministry summarized as follows: The production of military technics on the basis of Soviet licenses results in savings in the area of development, though adaptation generates surplus costs and the fact that the small-scale domestic production of standardized Soviet elements that cannot be obtained through import results in a very high level of expenses [sic]. The Soviet Side’s establishment of export prices, in most cases based on its own production volume and cost levels, while the production volume of the country receiving the license is much lower than that of the Soviet Side also serves to increase the cost of domestic production. Delivery to developing countries promoted the more efficient utilization of capacities and the more complete return on investments. Moreover, the foreign-policy ramifications of these deliveries are significant. Considering that the introduction of the licensing commission will exercise an impact on the volume of deliveries made in a non-socialist relation and the recovery of expenses related to investments for products manufactured under Soviet license, greater latitude must be provided to domestic development in the future if we want to maintain the export market for military equipment in developing countries.

The license fee raised other types of issues as well. Hungary, for example, signed civil-law agreements regarding deliveries for the years 1973–1975 in which the stipulated prices could not be modified retroactively. Although the imposition of fees on previously transferred licenses was clumsy, it was legally possible as a result of the requirement to obtain permission from the Soviet Union to deliver military equipment produced under license to third countries. The proposal of Hungary’s Foreign Trade Ministry and Finance Ministry aimed to at least postpone the assessment of license fees and commissions until 1976 in order to avert difficulties stemming from previously concluded agreements with countries both within and without the socialist camp extending through 1975. Hungarian officials attempted to ascertain the standpoint of partner states regarding the license fee at the time of the session of the COMECON MISC in November 1972. These countries also supported the strengthening of compliance with COMECON specialization resolutions, though regarded the transfer of licenses at no cost as one of the necessary elements of preparations for collective defense. Since no Hungarian–Soviet talks concerning the license fees had taken place by the beginning of December, the Defense Committee decided at its December 7 session to advocate the delay of the fee system.30

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The Soviet demand for license fees also entailed the potential drawback of curbing the increasing deliveries of member states to Third World countries in the manner outlined above. According to a National Planning Office report issued in September 1972, Hungary had exported 15 million U.S. dollars worth of military equipment to non-socialist countries in the years 1968–1970 and could expect to export 32.7 million U.S. dollars worth of military equipment to these countries in the years 1971–1975. Maintaining this rate of growth was also important because Hungary was scarcely able to alter its commitments toward fellow COMECON member states even if the country wished to reduce its imports of military equipment for financial reasons. Hungary’s feelers in this regard quickly revealed Poland, Czechoslovakia, Romania, and Bulgaria also wanted to reduce their orders of military equipment if Hungary would also curtail its imports. (Hungary’s Defense Ministry, for example, decreased its demand for imports of 23 mm ammunition from Bulgaria, while the latter country reduced its total demand for imports of military equipment from Hungary by 1.4 million rubles by the year 1973.) The effort to achieve balanced bilateral trade with all partner countries thus began to impose an increasing obstacle to growth: Table 4.2 below shows that a projected fourfold rise in exports between the periods 1961–1965 and 1971–1975 managed to raise the value of exports to just over three-quarters of the value of imports. The National Planning Office report also called attention to two other factors that posed a threat to the positive trend outlined above: first, delays in the launching of production of new, complex military equipment threatened to prevent the fulfillment of delivery commitments; and second, the Soviet Union ceased to provide preferential terms on credit for the import of military equipment beginning in 1971, while repayment of credit received before the latter year, already twice deferred, was to begin in 1976. Therefore, the continued acquisition of increasingly expensive Soviet military equipment Table 4.2. The Actual and Projected Value of Trade in Military Technics with COMECON Member States, 1961–1975 (in millions of rubles) Imports Years

Exports

Defense Ministry

Total

Percentage of Exports to Imports

1961–1965 (actual) 1966–1970 (actual) 1971–1975 (projected)

100.0

343.5

2.9

37.2

383.6

26.0

164.2

213.3

4.2

55.1

272.6

60.2

418.5

400.0

8.0

131.8

539.8

77.5

Interior Ministry

Industry and Other

Source: Report to the Defense Committee. The Status of Special Deliveries (Export-Import). September 15, 1972. MNL OL, XIX-A-16-aa 120. d., p. 4.

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already reflected in Warsaw Pact recommendations appeared to be financeable only through the maximization of export possibilities.31

4.3 THE LIMITS OF COOPERATION Implementation of the Complex Program’s stipulations concerning the military industry presented member states with a serious challenge. Memberstate officials proposed incorporating an increasing number of issues into the COMECON MISC’s work plan, though some half-dozen of them were eventually transmitted to the Unified Armed Forces Technical Corps and the COMECON Standardization Standing Commission. The MISC approved the schedule for talks regarding plans for the years 1976–1980 at its session in Moscow from November 21–24, 1972. The transfer of WP Unified Armed Forces Supreme Command recommendations expected during the first quarter of 1973, the country-by-country presentation of new military technics planned for the spring of 1973 and production-development forecasts represented important preconditions for coordination. The Soviet delegation wished to prepare such forecasts only in the most important areas, while several other member states requested to have their own specialized military equipment included among those for which projections were formulated. The commission eventually proposed preparing forecasts for the following product groups: • Aircraft technology; • armored vehicles; • telecommunications and radar technology (including radio reconnaissance, radio-counteraction equipment, and automated command systems); • missile technology; • ships; • artillery and infantry weapons; • technical equipment; • other. The MISC recommended taking both established and planned specialization into account during the preparation of forecasts. Commission officials proposed that member states discuss around forty themes related to scientific-research and experimental-design work, suggesting that temporary work groups be set up to deal with some of these topics, while others be handled through the exchange of information. The developmental analysis of technology required for the automated command system for

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ground forces provides a clear illustration of the complexity of the ongoing tasks and the difficulty of coordination. A group of Soviet specialists and representatives from the Unified Armed Forces Technical Corps and the COMECON Bureau’s Military Industrial Department visited thirty-seven industrial plants and research institutes in member states in order to assess national interests and opportunities for research, production, and specialization. Projected tactical-technical demands calculated on the basis of these visits were distributed to member-state representatives attending the MISC’s November session for further study. From Hungary’s standpoint, one of the most important issues stemming from the report was preparation for assembly of the Strela-1 surface-to-air missile system, whose production required a significant degree of cooperation with Poland.32 These same issues constituted the main topics of discussion at consultations the COMECON MISC held in Moscow a half year later, from May 29–June 1, 1973. Coordination of ensuing five-year plans was delayed somewhat due to the reorganization of the presentation of military equipment. The Soviet delegation assumed the task of preparing forecasts for the production of the most important types of military equipment (armored vehicles, missile technology, telecommunications, and radar), while other member states were to formulate projections for production in their areas of specialization. With regard to automated command systems, member states specified the types of equipment and components that they wished to produce. (Hungary indicated that it wished to undertake production of the following items: small computers and minicomputers; data-transfer technology; cathode-ray tube display equipment; punched-tape technology; magnetic memory; magnetic cassettetape peripherals and information-storage devices; automatic detectors, and data-transfer and display equipment.) Member-state delegates also debated a composite thematic proposal regarding scientific-research and experimentaldesign work. In their debate of a report from the relevant work group, delegates also resolved an issue that had remained unsettled since 1965, electing to specialize the repair and overhaul of the most complex military technics. In the latter regard, Hungary received specialization for the repair and overhaul of the Mi-8 helicopter and three types of radar.33 In the course of debate regarding forecasting and automated systems, it became apparent that, in addition to weaponry, increasing attention had begun to focus on military electronics and the newest branch of industry—computer technology. Soviet supremacy in the research and development of information technology was not nearly as overwhelming as it was in that of missile technology, for example, thus the distribution of developmental duties was in the interest of all smaller member states. Due to the broad recognition of the importance of these emerging sectors, competition of sorts developed

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between Poland, the German Democratic Republic, Czechoslovakia, and, in certain respects, Bulgaria for the right to specialized production of new types of computer technology.34 Delegates held extended talks on the specialization of computers designed for use in the military at the COMECON MISC’s session held in Špindlerův Mlýn, Czechoslovakia, from November 20–23, 1973, though this agenda item was not recorded in the minutes of the session due to the insistence of Soviet delegates and the body’s (Soviet) chairman that it was “too early” to make a decision regarding this matter. In his report on the consultations, Hungarian People’s Army Major General Jávor urged that a decision be taken as soon as possible with regard to this promising sector. It was obvious that the need to automate control and command systems would lead to an immense increase in the demand for computer technology over the subsequent six to ten years. Member states therefore conducted intensive research and development aimed at preparation for the military application of computer technology. However, in a slight departure from the practice utilized until that time, these states advocated specializing production of computer technology in the country serving as the producer or cooperative supplier of the specific systems (the Vozdukh-1M, the Asuv, etc.) for which it was to be used. In his report, Major General Jávor argued that Hungary should actively participate in the production of computer technology: It is in the utmost interest of the Hungarian People’s Republic to receive specialization for the production of military computer-technology equipment, peripheries and data-transfer devices that are nearly or fully compatible with the computer-technology central-development program and its objectives, because, for example, the significant majority of small computers and minicomputers are for military use. . . . Sharp competition is likely to emerge for acquisition of certain profiles. The talks held at the recent session were already indicative of this. A portion of the fraternal countries holds a certain advantage over us because they are engaged in continual technical development of equipment for military use. The People’s Republic of Poland, [the] German Democratic Republic, and [the] Czechoslovak Socialist Republic and, partially, the People’s Republic of Bulgaria are in a more advantageous position because their computer-technology industries are significantly more advanced than ours in the manufacture of integrated electrical circuits needed for the equipment. In Hungary, the establishment of the mass-production base has been on the agenda for years, though in terms of a resolution of this issue, the situation is unsettling.

It was for the above reason that Jávor, who continued to serve as the leader of Hungary’s MISC delegation, asserted that it was necessary to take the following measures:

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• Select the items related to the civilian profile based on tactical-technical data provided by the Unified Armed Forces [Supreme Command] and prepare for the talks with a readiness to undertake commitments and with concrete developmental proposals. It would be expedient to draft a military chapter for the central computer-technology target program as soon as the conditions for this have been established. • Accelerate the testing of military applications for computer technology manufactured for use in the people’s economy and extend such testing in order to provide us with adequate experience and references. We do not plan to fundamentally change constructions and services in the scope of this work; we will make minor adjustments at the very most, since serial production will be implemented through the manufacture of equipment meeting unified tactical-technical requirements. • Necessary steps must be taken immediately to establish the parts and components base for expected military-purpose computer technology so that by the time of the production period—around 1980—this base will be capable of satisfying needs in terms of both quality and quantity. This is, incidentally, necessary for civilian products as well and should actually be introduced earlier than it is with regard to military equipment. Jávor also pointed out in his report that Hungary, as a country specialized in the production of small machines, would pay a heavy price if it did not take prompt and effective action: Member states, recognizing the importance of the issue, are attempting to break into the domain of small computers and minicomputers even at the expense of violating the mentioned [civilian] specialization resolutions and if they succeed in doing this in terms of production of military equipment, that is, if we cannot take appropriate measures in due time before them, then it is to be feared that we will later lose civilian markets for these instruments as well.

Although the issue of computer technology had been removed from the agenda at the November 1973 session of the COMECON MISC, the body achieved significant progress in numerous other regards, clarifying mutual-delivery demand for the years 1976–1980 and concluding an agreement specifying the most important items to be produced under specialization. The commission also approved both the product nomenclature and a register specifying which military equipment individual member states would like to begin manufacturing with the expansion of specialization to multiple countries. The latter document presumably reflected the intention of member states to increase the production and export of military equipment. This listing contained the new-

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est types of military equipment, such as the Gvozdika 122-mm self-propelled howitzer, whose cooperative production Poland, Czechoslovakia, Hungary, and Bulgaria all indicated they would like to undertake. Delegates attending the MISC session in Špindlerův Mlýn made decisions concerning two other crucial matters. The representatives approved the thematic scheme for scientific-research and experimental-design work in which they assigned the responsibility for organizing consultations and exchanges of information regarding individual themes to specific member states. In the course of preparing the long-term forecast for production of military equipment extending to the year 1990, it had become apparent that member states had not arrived at a uniform interpretation of previously approved methodology and that further talks were therefore necessary to clarify organizational practices and procedures. The wish of the representative of the WP Unified Armed Forces Technical Corps attending the session to have deleted from the minutes of the meeting the MISC’s request that the Unified Command provide the commission with projections regarding development trends likely caused some bewilderment among delegates.35 The Technical Corps representative’s misgivings in this respect were likely based on data-protection concerns, notably the Soviet Union’s desire to retain exclusive access to information regarding the comprehensive operations of the Warsaw Pact. The National Planning Office prepared the long-range developmental concept on behalf of the Ministry of Metallurgy and Machine Industry and the Defense Ministry for the domestic production of military equipment based on the previously mentioned specialization recommendations beginning in late 1973 and ending in the spring of 1974, although the Defense Committee had ordered the office to do so already in February of the former year.36 Since exports constituted almost half of all sales of military equipment in the period 1971–1975 and were expected to rise to more than 60 percent of all such sales during the subsequent five-year planning period, the international division of labor fundamentally determined the future of the entire sector. The degree of mutual dependence among member states also increased: Hungary, for example, imported 15–20 percent of all the parts used in the country’s total production of military equipment. The National Planning Office’s April 1974 submission did not envision significant structural changes and did not even recommend such. The planning office’s developmental concept stipulated that Hungary would continue to acquire the most up-to-date aircraft, tanks and missiles solely from the Soviet Union. The document asserted that the manufacture of products for which Hungary had received specialization could be profitable only if these products were exported to fellow member states, thus it appeared to be neces-

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sary to strengthen the country’s position as a supplier in the domain of military telecommunications, both in terms of that produced under license and that developed independently. As a result of COMECON’s recommended phase-out of truck production, the National Planning Office suggested developing armored vehicles and closed vehicle bodies. At its own initiative, possibilities for independent research and development had arisen in the newest production segments, such as those for reconnaissance equipment and systems, electronic jamming devices, infrared instruments, etc. The National Planning Office considered it important to become involved in the development and cooperative production of major systems in areas in which Hungary possessed suitable intellectual engineering and production capacities. Among licensed products, the launching of production of the Vasilek gunmortar and the Gvozdika self-propelled howitzer and some types of telecommunications equipment presented the greatest challenge during the period of the fifth five-year plan. Although production of these items entailed a substantial number of technological difficulties, their ruble-based export prices represented the main problem. Even in the third and fourth years following the start of production, Hungarian enterprises could hardly approach Soviet domestic price levels that constituted the standard within the bloc. According to the forecasts, the disparity between Hungarian and Soviet producer prices was likely to become even wider. Moreover, as officials from Hungary had already asserted on several occasions, there was not enough information available at the time when specialization commitments were made to determine the cost-efficiency of production. These factors led officials to raise the issue of restructuring the regulatory environment and the state support system. The National Planning Office outlined three developmental trajectories based on the above: first, dynamically increasing military industrial production with the introduction of a considerable number of new products; second, maintaining the production level for the year 1975 until the year 1980; and third, a 35 percent decline in production over a period of five years with the introduction of practically no new products. At its session on May 9, 1974, the Defense Committee unanimously supported the first trajectory (dynamic development) with the provision that the second variation be adopted if international planning-coordination talks dictated doing so. The committee asked Defense Minister General Lajos Czinege to write a letter aimed at gaining further orders for telecommunications equipment from the Soviet Union in order to fully utilize domestic capacities. Council of Ministers Deputy Chairman Mátyás Timár repeated his request that the balance of deliveries with individual countries be taken into account and stated that it would be expedient to import or to continue to import military equipment whose production was uneconomical.37

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Sharp disputes took place with regard to specialization issues that held significant implications for Hungary at the COMECON MISC’s session held in Moscow from May 28–31, 1974. In concluding the first phase of plan-coordination talks for the years 1976–1980, the commission determined that optimal utilization of the production capacity of certain member states—Poland, Hungary, and Bulgaria—was not fully guaranteed. Poland and Bulgaria accordingly requested that partner states place further orders from them in order to reduce their negative balances in the trade of military equipment. As a result of the rise in mutual deliveries planned at this session of the MISC, the Soviet Union’s projected share of total deliveries would fall from 50 percent to 48 percent. Two member-states, Poland and Bulgaria, requested at the session to receive the right to conduct specialized production of the Gvozdika selfpropelled howitzer, the latter country in cooperation with Hungary. All three of these countries wished to manufacture the weapon in order to make greater use of their industrial capacities. Because both Poland and Bulgaria already manufactured the MT-LB multi-purpose amphibious armored personnel-carrier that served as the vehicle base for the Gvozdika, both of these countries would therefore be capable of producing the entire howitzer. Hungary regarded assembly of the Gvozdika as a means of engaging the capacity of the country’s sole plant manufacturing artillery guns, while Bulgaria wanted to undertake specialized production of the howitzer in order to provide the country with a high-cost export item to counterbalance its imports of military equipment. Representatives at the session finally arrived at a compromise solution, granting specialized production of the Gvozdika to Bulgaria, while permitting Poland to manufacture the howitzer for its own use and, if necessary, in order to help Bulgaria satisfy its orders for the weapon. However, due to extremely low demand for the Vozdukh-1M, representatives made no decision with regard to the specialized manufacture of this automated aircraft ground-control system that had already been recommended for cooperative production.38 Although the MISC had already made decisions regarding specialization, high-ranking officials from Hungary and the Soviet Union met on several occasions during the summer of 1974 to discuss issues related to the technical aspects, cooperative production and cost of products the countries wished to manufacture during the subsequent five-year planning period. These talks revealed that producer prices in Hungary were 40–70 percent higher for the relevant military equipment than they were in the Soviet Union (see Table 4.3 below). The magnitude of this disparity required Hungary to make the political decision of whether to give priority to economic factors or to its obligations within the alliance. At a session of the Defense Committee on August

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Table 4.3. Difference in the Soviet and Hungarian Producer Prices of Selected Military Products (in rubles) Product Missile for the Strela-1M Surfaceto-Air Missile System Vasilek Gun-Mortar BTR-70 Armored Personnel Carrier

Soviet Price

Hungarian Price

Difference

11,200

18,000

6,800

8,000–15,000 44,000

30,000–31,000 80,000

16,000–22,000 36,000

Source: Excerpt from the Minutes of the 250th Session of the Defense Committee Held on August 29, 1974. MNL OL, XIX-A-16-aa 123. d., p. 1.

29, 1974, National Planning Office military Deputy Chairman Major General György Doró maintained that declining the opportunity to initiate production of any type of military equipment would entail a loss of prestige. Moreover, National Planning Office Chairman György Lázár noted during the session that similar price discrepancies existed with regard to civilian products as well. The Defense Committee concluded its session with the approval of resolution no. 14/250/1974 calling for detailed information pertaining to technological and other conditions surrounding the launching of production of stipulated military equipment.39 The Ministry of Metallurgy and Machine Industry completed an analysis of the planned production of the types of military equipment listed in the above table on September 19, 1974, proposing to the Defense Committee that production of the Strela-1M surface-to-air missile system and the BTR-70 armored personnel-carrier be canceled, while that of the Vasilek be implemented only under the condition that the state provide subsidies to defray manufacturing costs. To the best knowledge of the author of this book, this represented the first of the very few cases in which Hungary renounced production of military equipment for which the country had been assigned specialization. The Ministry of Metallurgy and Machine Industry’s proposed cancellation of production of the Strela-1M and the BTR-70 was based on serious economic considerations and counter-incentive: in his report on the issue, the head of the ministry asserted that Hungary was capable of producing all three types of military technics, though doing so would require the establishment of new capacities, which could hardly result in the desired improvement in the utilization of existing capacities. The issue of price disparities stemming from the structure of costs and the methodology used to determine them could not be resolved through negotiation, thus production of the Strela-1M, the BTR-70, and the Vasilek was not in Hungary’s economic interest. (The detailed cost analysis revealed that Hungary’s producer-price system contained greater realized net income than that of the Soviet Union,

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therefore Hungarian prices were closer to real consumer prices.) The Ministry of Metallurgy and Machine Industry’s exhaustive analysis basically served to expose numerous symptomatic problems impeding more efficient cooperation within COMECON. Production of the missile for the Strela-1M system composed of missile boxes mounted on an armored combat vehicle and a separate technical vehicle presented an enormous challenge for Hungary, which essentially lacked the necessary background industry to manufacture such products as special metallurgical and synthetic materials, rubber, and propellant and therefore would have been dependent on the import of parts from the Soviet Union and on cooperative production of the system’s self-guided missile head with the German Democratic Republic. There were, furthermore, no missile ranges in Hungary that were large enough to accommodate test firing of the Strela-1M, while the Soviet Union was not eager to provide the country with access to one of its own ranges of adequate size. In terms of cost-effectiveness, member states confirmed demand for only around 3,000 of the 11,000 Strela-1Ms contained in their original orders submitted in 1972, therefore significantly reducing the potential profitability of producing the system. Finally, the small-scale production of the Strela-1M’s missile boxes at the Gödöllő Machine Factory northeast of Budapest would have further increased manufacturing costs. Thus, taking all these factors into account, the economically efficient production of the surface-to-air missile system would have required state subsidies of several hundreds of millions of forints. The Soviet Union, in fact, wished to order the BTR-70 armored personnelcarrier for its own use in order to relieve the excessive burden that had been placed on the country’s industrial capacities. Under these conditions, the USSR obviously did not want to deliver parts for production of the vehicle in another country, thus Hungary was forced to seek domestic sources for these parts. However, Hungarian industry was unwilling to undertake the small-scale production of instruments, pumps, filters, ventilators, transmissions, and numerous other special parts needed for the planned assembly of 700 BTR-70s in Hungary per year. The company managing production of the BTR-70, the Rába Hungarian Wagon and Machine Factory located in the city of Győr, would have been able to provide the labor force required for production of the armored personnel-carrier through the takeover of two smaller plants in the city of Szombathely, about sixty miles to the southwest, though this would have necessitated 2.15 billion forints in state developmental loans and budgetary allocations as well as 140 million forints in investment and working capital for domestic suppliers involved in cooperative production. The Ministry of Metallurgy and Machine Industry estimated that domestic production of the BTR-70 would cost 90,000 rubles, more than double the

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maximum price that the Soviet Union wished to pay for the vehicle. The ministry therefore concluded that it would be unrealistic to undertake assembly of the BTR-70 in Hungary, recommending that development of the domestically designed and produced D-944 PSzH armored scout-car be taken into consideration as a means of fulfilling the needs of the Hungarian People’s Army. Hungary had earlier requested the possibility of manufacturing the Vasilek gun-mortar in order to (partially) utilize capacities at the Diósgyőr Machine Factory (DIGÉP) in the city of Miskolc. However, since the Unified Armed Forces Technical Corps had not yet incorporated this weapon into its arsenal, Hungary counted only on orders from the Soviet Union. Since the USSR did not want to start domestic production of the Vasilek at that time, it essentially intended to complete development of the gun-mortar through the launch of assembly at DIGÉP. This factory, however, received continual orders for the S-60 anti-aircraft gun from countries in the Middle East until 1978, while manufacture of the gun for the Gvozdika 122-mm self-propelled howitzer appeared to sufficiently utilize the plant’s capacity beginning in 1979. Officials from Hungary were nevertheless reluctant to renounce production of the Vasilek, instead attempting to find a compromise between the Soviet Union’s proposed purchase price of 15,000 rubles for the gun-mortar and Hungary’s proposed selling price of 30,000 rubles for the weapon. The Ministry of Metallurgy and Machine Industry proposed satisfying Soviet demand for the Vasilek if the margin between the export price and the producer price for the gun-mortar remained in the 20–25 percent range and under the condition that the state provided long-term export subsidies for production of the weapon.40 Hungary announced its decision to abandon planned production of the Strela-1M and the BTR-70, to the understandable displeasure of the Soviet Union and the German Democratic Republic, at the session of the COMECON MISC held in Varna, Bulgaria, from October 14–18, 1974. As a result, officials had to revise Hungary’s projected trade in military industry for the 1976–1980 planning period during plenary sessions and bilateral talks between delegation leaders at the meeting. Representatives from Hungary proposed to their counterparts from Poland that the demand of the Hungarian People’s Army for the Strela-1M surface-to-air missile system be satisfied through cooperative production between the countries. Hungarian delegates also approached their counterparts from Romania about the possibility of cooperative production, in this instance with regard to the BTR-70 armored personnel-carrier. The Soviet Union and other partners helped to offset Hungary’s loss of exports stemming from the decision not to manufacture the Strela-1M and the BTR-70 as previously planned through the order of large quantities of telecommunications and precision-engineering instruments. However, due to the failure of the relevant parties to agree on prices for

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telecommunications equipment, notably the R-155P Brusnika radio receiver, Soviet officials made the precise value of orders for these products contingent upon the conclusion of price agreements. Representatives from Hungary and Bulgaria did, however, manage to sign a bilateral protocol stipulating that cooperative production of the Gvozdika self-propelled howitzer would begin in 1978. Based on the talks held in Varna, the National Planning Office forecast that Hungary would export 650 million rubles worth of military equipment during the period of the fifth five-year plan and import 758 million rubles worth of military equipment during this period, thus producing a negative balance of over 100 million rubles. According to the National Planning Office’s estimates, Hungary would record surpluses in the trade of military equipment with only two countries during the period of the fifth five-year plan, generating a positive balance of 146 million rubles with the German Democratic Republic and of 38 million rubles with Czechoslovakia. The planning office urged foreign-trade organs to take effective measures aimed at reaching these projected surpluses. At the same time, the office emphasized that specialization commitments required Hungary to satisfy demand from partner states, even if doing so entailed financial losses. The office asserted that the country should attempt to increase turnover in civilian products to correct resulting imbalances in bilateral foreign-trade. In addition to coordinating the production and mutual delivery of military equipment during the subsequent planning period, representatives at the session of the COMECON MISC in Varna prepared production-development forecasts, organized scientific-research, and experimental-design work aimed at strengthening integration. However, intense opposition emerged among the delegations attending the session to the Soviet Union’s plan, announced already in the summer of 1972, to impose a separate license fee on exports of military equipment from member states to non-Warsaw Pact countries to be paid in the currency used in the given transaction (primarily U.S. dollars) in proportion to the value of the exported products. Representatives from the Soviet Union and other member states agreed only that informational documentation should continue to be provided free of charge. Soviet officials agreed to prepare a new draft resolution regarding the subsequent transfer of production documentation. It is important to note that Soviet State Planning Committee Deputy Chairman Georgy Alexeyevich Titov replaced General Vasiliy Ryabikov as chairman of the MISC at this time.41 In its new proposal regarding license fees presented to member states in December 1974, the Soviet Union reduced the maximum commission to 5 percent, exempted all small arms and ammunition produced in member states from license fees and stipulated that the transfer of documentation would

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remain cost-free in the event that the receiver of the documentation delivered the relevant military equipment exclusively to the provider, as in the case of the Vasilek gun-mortar, and in the case of free deliveries of military equipment to developing countries and liberation movements. The Soviet Union did, however, uphold the right to impose fees of an amount to be determined via bilateral agreement on licenses transferred even before the 29th session of the COMECON MISC in October 1974.42 Due to the considerable amount of money that was at stake the issue of license fees continued to inspire strong resentment among delegates attending the COMECON MISC’s session in Leningrad from May 27–30, 1975. The dispute centered on the Soviet Union’s plan to impose retroactive fees, which other member states considered unacceptable. Since no agreement was reached regarding this matter during the commission’s plenary session, delegation leaders and foreign-trade specialists attempted to find a solution to the disagreement in the course of separate consultations. Officials from all member states except Romania, which continued to oppose the retroactive fees, subsequently approved the Soviet proposal pursuant to the following conditions: • Licenses pertaining to the production of military equipment on the basis of specialization endorsed by the COMECON MISC must be provided either free of charge or upon payment of a fee through bilateral agreement in accordance with its technical-scientific level and value. • Those licenses pertaining to the production of military equipment for which the commission has made no specialization recommendation must in effect be provided only upon payment of a fee. • Those licenses pertaining to the production of military equipment whose delivery will be made exclusively to the country holding proprietorship over the documentation must be provided free of charge. Moreover, the country receiving the documentation may manufacture relevant military equipment to meet its own needs without payment commensurate to the value of the license. • Licenses pertaining to the production of pistols, submachine guns, light machine-guns, rocket-propelled grenade launchers, cartridges, artillery ammunition, land mines, flying bombs, and gas masks for provision of a given country’s own army or delivery to Warsaw Pact member states must basically be provided free of charge. • In the case of sales of military equipment manufactured or to be manufactured based on the license of another country . . . to a third country (with the exception of Warsaw Pact member states, the Socialist Federal Republic of Yugoslavia, the Democratic Republic of Vietnam, the People’s Republic of

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Mongolia, Cuba, and the Korean People’s Democratic Republic), license commissions of up to 5 percent of the value of the relevant product must be paid in transferable rubles or another stipulated currency pursuant to an agreement between the interested countries depending on the type and value of the military equipment to be delivered. • The amount of license commissions, the deadline for payment and other conditions must be stipulated in all license agreements based on the relevant agreement between the countries involved. • License commissions do not have to be paid in the case of delivery without charge of military equipment to developing countries or national liberation movements. The resolution did not, therefore, explicitly designate the date on which the payment of license fees would, or had, become obligatory. Employing an established Soviet negotiating tactic, State Committee for Foreign Economic Relations Deputy Chairman General G. S. Sidorovich issued a verbal promise to Hungarian National Planning Office Deputy Chairman Major General György Doró in the course of bilateral talks that the Soviet Union would not impose fees on previously transferred licenses or licenses for production of military equipment already stipulated in existing protocols; the new agreements, however, stated only that the amount of license fees would be commensurate with the technical level of the given product. The conclusion of mutual-delivery agreements for the years 1976–1980 in almost all relations awaited only the approval of the final version of national five-year plans. The COMECON MISC in the meantime examined the implementation of agreements pertaining to the current planning period (1971–1975). Member-state officials reported that compliance with the terms of the agreements for the period was above 90 percent and that some of these provisions had, in fact, been satisfied earlier than scheduled, noting that instances of non-implementation had been connected to production of newly developed military technics. MISC delegates from Hungary indicated at this time that specialized products had accounted for 75 percent (or 188.8 million rubles) of the country’s exports of military equipment to partner states, while cooperative deliveries had accounted for a further 15 percent (or 38.7 million rubles). The MISC also elaborated the methodology to be used in making forecasts with regard to production development for military equipment. The MISC asked national foreign-trade organs to actively utilize the unified material-codes, which the commission concluded could be completed in the year 1975.43

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4.4 NEW PRICE SYSTEM AND UNIFICATION EFFORTS Negotiations regarding the price of the Vasilek gun-mortar continued during the spring and summer of 1975 on the basis of the Soviet–Hungarian protocol signed at the October 1974 session of the COMECON MISC held in Varna, Bulgaria. Officials from both the Soviet Union and the Hungary made concessions during the talks: while the Soviets appeared to accept Hungary’s stated production costs, the Hungarians, following a strict review of price calculations, reduced the customary 18 percent profit margin to 5 percent. By August, Soviet representatives had raised the possible purchase price for the Vasilek to 20,000 rubles per unit, though officials from the Diósgyőr Machine Factory and the Ministry of Metallurgy and Machine Industry did not want to sell the gun-mortar for under 22,700 rubles per unit (on production costs of 28,000 rubles per unit), providing the Defense Committee with a report containing detailed data to support this asking price. According to the estimates in this report, the state would have to provide 500 million forints in subsidies for production of the Vasilek over a period of five years even at a price of 22,700 rubles per unit. Defense Committee Chairman János Borbándi stated that production of the Vasilek had become a political issue, cautioning that excessive focus should therefore not be placed on the potential profitability of manufacturing the gun-mortar. Hungarian People’s Army Chief of Staff Lieutenant General Károly Csémi concluded candidly, “if we do not change our present decisionmaking practices, in five-six years we will have to acquire all our military equipment through imports.” National Planning Office Deputy Chairman György Doró declared that “if the Soviet Union, citing the Hungarian trend toward raising prices, were also to resort to increases, our economic burdens would skyrocket. Based on this consideration and economic motives, the National Planning Office believes that efforts should be made to attain the highest possible price, though fulfillment of Soviet needs must not be refused under any circumstances.” The Defense Committee finally approved a resolution setting the maximum selling price for the Vasilek to be used in the course of subsequent foreign-trade talks at 21,500 rubles per unit.44 This price dispute constituted one of the central themes discussed at the session of the COMECON MISC held in Balatonkenese, Hungary, from October 13–17, 1975. Numerous examples of difficulties stemming from the diverse national price-bases and the lack of harmony between domestic and export prices have been cited previously in this book. The significant rise in the price of fuel and raw materials following the 1973 oil crisis were built into the cost of finished products, thus triggering general inflation on world

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markets. The primary objective of the Bucharest Price Principle used within COMECON beginning in 1958 was precisely to shield intrabloc trade from the effects of global economic trends. Pursuant to this principle, prices within COMECON were adjusted to world-market trends only once per planning cycle, that is, every five years. However, as a result of the increasingly rapid price changes that occurred as a result of the 1973 oil crisis, COMECON was compelled to devise some sort of mechanism to track such fluctuations. At its 70th session held in Moscow from January 21–23, 1975, the COMECON Executive Committee approved the so-called Sliding Average Price Principle according to which prices were to be determined annually based on the prices over the previous five years.45 This foreshadowed a period of extreme difficulty within COMECON trade, which was based on interstate agreements containing strict five-year planning quotas: while the relation between internal, national prices, and foreign-trade prices did not strengthen as a result of the conversion to the sliding price-scale, certain world-market effects were admitted, in contradiction to the previous price principle, to benefit rawmaterial producers (primarily the Soviet Union).46 As the representatives of the largest exporter in the Council for Mutual Economic Assistance, Soviet delegates attending the COMECON MISC’s session in Balatonkenese, Hungary, insisted that the sliding price-scale should be applied to deliveries of military equipment as well. Delegates from the German Democratic Republic, Hungary, Romania, and Bulgaria, however, advocated prolonging the socialist prices valid for the period 1971–1975 until 1980 in order to ensure the smallest-possible price increases. Delegates failed to reach consensus on this matter during the MISC’s plenary session; thus a separate work group was established to continue discussion of the issue. The MISC ultimately approved the following principles with conceptual and formal remarks from Bulgaria and Romania, respectively: a) With regard to the years 1976–1980: • the modification of contractual prices must not affect the provision of the armies of COMECON member states with military equipment; • it is not necessary to modify the nomenclature and natural quantity of mutual deliveries based on prices valid at the time of the previous fiveyear plan; • member states must act to ensure that their industries are at least as interested in the manufacture of military equipment as they are in that of civilian products; • and the price of specific military equipment must be uniform within all COMECON member states.

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b) With regard to 1976 prices: • prices valid for the year 1976 must be calculated by the end of the first half of the year based on the average world-market price base for the period 1971–1975; • contractual prices valid during the years 1977–1980 may be modified through bilateral agreement; • and all contractual prices become valid on January 1, 1976, regardless of the date on which the relevant agreement was concluded. In remarks appended to the protocol outlining the above principles, Bulgaria’s MISC delegation declared that it was necessary to calculate prices according to the base for the years 1971–1975 and that only price changes for energy, raw materials, and supplementary products should be taken into account. The second-most important theme discussed at the MISC session in Hungary was coordination of production and delivery plans for military equipment to be implemented during the period 1976–1980. Delegates at the meeting approved plans that were advantageous for Hungary, guaranteeing the provision of the Hungarian People’s Army for the fifth five-year planning period and furnishing the country’s military industry with suitable development opportunities. Due to the surplus duties stemming from the Complex Program, the MISC amended and elaborated the organization’s statutes, one new provision of which stipulated the organization would hold sessions alternately in each of its member states.47 The price disputes taking place within COMECON and Hungary’s decision to renounce production of several specialized products prompted the Hungarian financial apparatus to conduct a detailed analysis of the pricing and costefficiency of military technics. The Finance Ministry examined 1974 data from twelve machine-industry companies that generated 76 percent of the Ministry of Metallurgy and Machine Industry’s production of military equipment. The Finance Ministry determined that these companies had realized average profits of 15 percent in proportion to revenue from their military-industrial production, while export sales were, for the most part, more profitable than domestic sales. The Finance Ministry discovered that only two ammunition companies—the Bakony Works and the Mechanical Works—required state export-subsidies amounting to around 30 million forints.48 The ministry concluded, however, that the profitability of such production would likely decline beginning in 1975 as a result of the changes to the product profile and regulations. COMECON began to utilize the sliding price-scale to determine the price of civilian products traded within the organization beginning in 1975, thus increasing the price of such products, though still did not use the scale to determine the cost of mili-

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tary equipment. Countries exporting the same amount of military equipment therefore received fewer civilian products in return. At the recommendation of the Soviet Union, as described above, the new pricing system was introduced to calculate the value of products involved in the exchange of military-industrial goods beginning in 1976. Hungary hoped to feel the effects of this change to the smallest possible degree as an importer, while continuing to assert its ambition to raise prices as an exporter. Due to specialization and the consequent lack of alternate supply sources, exporting member-states were generally able to convince the importing state (with the exception of the totally self-sufficient Soviet Union) to accept the increased price. This produced dual prices—a Soviet price and a price for goods trade conducted between other member states, a condition that was incompatible with the resolutions adopted at session 31/1975 of the COMECON MISC. The Finance Ministry believed that the conversion to the sliding price-scale would mitigate the conflict of interest between importers and exporters. At the same time, the ministry considered the establishment of “realistic and acceptable” export prices to be essential for Hungarian industry in the course of determining specialization and coordinating long-term plans. The Finance Ministry interpreted selective industrial-development policy to mean that “the manufacture of military equipment is just as much an issue of economics as it is of defense.” Thus, the ministry supported launching production of only that military equipment whose “economic development and production conditions conform to general cost-efficiency requirements.”49 At its session on January 27, 1976, the Military Industrial Government Committee approved the Finance Ministry’s assessment in its entirety, requesting that the competent ministries investigate methods of decreasing production costs and increasing export prices and take greater care to clarify price information in the course of specialization talks. The commission, moreover, concluded that it would be necessary to conduct an annual analysis regarding the cost-efficiency of production of military equipment.50 The Military Industrial Government Committee updated its statutes in March 1976 as a result of the previous amendment of the COMECON Charter and the COMECON MISC’s statutes and operating procedures. Officials classified prescriptions pertaining to the daily operations of the Military Industrial Government Committee under a separate procedural regulation, thereby transforming the body’s statutes into a collection of its most important operational principles. The composition and range of duties of the commission did not change, though it was assigned the task of formulating mid- and long-range concepts aimed at the development of cooperation with developing countries.51 In April 1976, the Ministry of Foreign Trade compiled statistics regarding Hungary’s trade turnover in military equipment during the completed fourth five-year plan. The data in Table 4.4 below reveals that the value of exports

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14.2 92.3 64.7 147.0 19.9 20.0 358.1

Poland German Democratic Republic Czechoslovakia Romania Bulgaria Soviet Union Total

24.1 53.5 73.5 6.0 11.6 335.0 503.7

Import –9.9 +38.8 –8.8 +141.0 +8.3 –315.0 –145.6

Balance 10.6 83.8 72.9 135.8 19.0 35.0 357.1

Export 19.8 47.3 72.9 8.6 16.5 399.3 564.4

Import

Protocol

–9.2 +36.5 0 +127.2 +2.5 –364.3 –207.3

Balance

8.2 83.7 72.7 129.5 24.7 31.7 350.5

Export

22.0 46.7 73.1 9.5 18.3 410.3 579.9

Import

Fulfillment

–13.8 +37.0 –0.4 +120.0 +6.4 –378.6 –229.4

Balance

Source: Report to the Defense Committee on the Fulfillment of Government Goods Exchange-Turnover Agreements for Military Technics in the Years 1971–1975. April 1976. MNL OL, XIX-A-16-aa 127. d., p. 2.

Export

Agreement

Value of Hungary’s Import and Export of Military Technics with fellow COMECON Member States, 1971–1975 (in millions of rubles).

Country

Table 4.4.

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forecast in annual protocols was lower than that stipulated in mid-range framework agreements, while imports grew continually. The data shows that Hungary failed to reach export targets, while exceeding import targets, especially in relation to the Soviet Union. As a consequence, the country’s foreign-trade balance in military equipment deteriorated by 50 percent over a period of five years. The rise in the value of Hungary’s imports was due both to expedited deliveries and other transactions, such as Syria’s return to the Defense Ministry of 31.6 million rubles worth of military equipment that it had sent to the Arab country urgently in 1973 and the Technics Foreign Trade Company’s re-export of 19 million rubles worth of military equipment, generating revenue of 27 million U.S. dollars. The failure to reach export targets was the result of design problems, price disagreements, and the cancellation of orders. Hungary nevertheless managed to dramatically increase its exports of military equipment during the years 1971–1975, more than doubling the value of military equipment it sold abroad during the period as compared to the years 1966–1970 and generating as much revenue from the export of military equipment in the year 1975 alone as it had during the entire period 1961–1965 (see Table 4.5, both on its own and in comparison to targets contained in Table 4.2). Modern military technics whose production began after 1970 constituted two-thirds of that which Hungarian industrial companies exported in the years 1971–1975, while cooperative deliveries of parts and components composed a greater proportion of such exports, rising to over one-quarter (28 percent) during the period. Exports of labor-intensive military technics rose to 67 percent of all Hungary’s exports of military equipment in the years 1971–1975, up from 55 percent in 1966–1970, while exports of material-intensive military technics such as vehicles, weapons and ammunition decreased to a commensurate degree during the period. Material-intensive military technics such as tanks, airplanes and missiles conversely constituted the majority of Hungary’s imports of military technics during the period. The data in Table 4.4 shows that subtracting the country’s immense deficit with the Soviet Union, which served as the sole source for the import of certain types of military equipment, Hungary had a surplus of over 150 million rubles in the trade of military equipment with fellow COMECON member states during the period 1971–1975.52 The export of the Vasilek gun-mortar to the Soviet Union, even if it required state subsidization, was intended to reduce Hungary’s significant deficit in the trade of military equipment. Based on concluded government agreements, the Foreign Trade Ministry confidently forecast in May 1976 that Hungary’s trade turnover in military equipment would rise 63 percent (!) during the fifth five-year planning period. The ministry estimated that

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100.0 164.2 350.5

1961–1965 (actual) 1966–1970 (actual) 1971–1975 (actual)

Source: same as table 4.4.

Exports 343.5 213.3 409.4

Ministry of Defense 3.0 4.2 9.9

Ministry of Interior Affairs

Imports

35.3 55.0 128.8

Ministry of Metallurgy and Machine Industry

1.8 4.1 37.8

Other

383.6 272.6 579.9

Total

Value of Hungary’s Trade in Military Technics with COMECON Member States, 1961–1975 (in millions of rubles)

Years

Table 4.5.

–238.6 –108.4 –229.4

Balance

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Hungary’s exports of military equipment to the Soviet Union would increase sixfold in the years 1976–1980, though would still amount to only one-third of the projected 600 million rubles in imports of military equipment from the USSR during the period. The Foreign Trade Ministry’s estimates were not, however, based on final prices, which member states had until June 30 to submit.53 Officials from the Soviet Union assented to certain price corrections in the 1976 Soviet–Hungarian mutual-delivery protocol, which contained nearly one-tenth of the total projected turnover in military industrial trade, signed at the beginning of the summer. For example, the Soviets agreed to pay an increased price for the Brusnika radio receiver, thus increasing the value of Hungary’s projected exports to the Soviet Union by 2.5 million rubles. At the same time, deliveries were still calculated based on prices valid in the period 1971–1975, and thus they could not be considered to be definitive.54 The Defense Committee discussed Hungary’s exports of military equipment to developing countries at its session on July 29, 1976. Committee officials noted that such exports had risen eightfold, albeit from a low base, to 91 million U.S. dollars during the years 1971–1975 from the previous fiveyear period as a result of the heightening of the Middle East crisis and the outbreak of the 1973 Arab-Israeli War (see detailed data in table 4.6 below). The Foreign Trade Ministry, with the support of the Defense Committee, recommended expanding Hungary’s exports of military equipment to developing countries, targeting revenue of 130–150 million U.S. dollars in such exports by the year 1980. This objective entailed numerous difficulties with regard to markets and coordination: Third World countries frequently modified their demand, often requested immediate delivery and compelled socialist exporters to vie with one another in order to provide them with the most favorable purchase conditions. This required Hungary to maintain Table 4.6. Value of Hungary’s Exports of Military Technics to Selected Developing Countries, 1971–1975 (in millions of U.S. Dollars) Country

1971

1972

1973

1974

1975

Total

Iraq Syria United Arab Republic (Egypt) Lebanon and Emirates of Dubai Third Country via Bulgaria Total

— 4.6 9.3 — — 13.9

1.9 6.1 0.9 — — 8.9

8.6 3.0 — — 0.3 11.9

21.5 0.9 — — 2.2 24.6

25.6 0.4 — 3.6 2.2 31.8

57.6 15.0 10.2 3.6 4.7 91.1

Note: the data in the table does not include the delivery of 2.1 million U.S. dollars worth of military equipment to Yugoslavia. Source: Report to the Defense Committee on the Export of Special Products between the Years 1971–1975, as well as Estimated Deliveries to Developing Countries in the Planning Period 1976–1980. July 21, 1976. Addendum. MNL OL, XIX-A-16-aa 128. d.

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flexibility in its approach to exports to these countries and necessitated the use of stocks from the Hungarian People’s Army and the Workers’ Militia as well. Moreover, the Soviet Union prohibited Hungary from selling numerous types of military radio produced under Soviet license to developing countries and imposed a 5 percent license fee on the sale of other types of military equipment beginning in January 1, 1976. Hungary therefore placed increasing emphasis on domestically developed telecommunications, notably radio-reconnaissance instruments, and military training equipment, etc. The Technics Foreign Trade Company’s portfolio already contained 73.8 million U.S. dollars in contracts for the years 1976–1978 by the time the Foreign Trade Ministry issued the above target, thus providing all domestic interests with grounds for optimism that it could be achieved. In order to expedite Hungary’s response to orders, the Defense Committee again asked the Foreign Trade Ministry to examine the possibility of establishing central stocks of military equipment.55 COMECON member states similarly expected the turnover in military equipment delivered pursuant to goods-exchange agreements to rise significantly. At the COMECON MISC’s session held in Leipzig from June 1–4, 1976, delegates targeted a 59 percent increase in total exports of military equipment among them in the years 1976–1980. This would entail a rise in the share of exports from smaller member states to 48.4 percent during the period 1976–1980 from 45.8 percent in the years 1971–1975, thus relieving the Soviet Union of some of its production burdens. Delegates also planned to raise the volume of cooperative production, targeting cooperative deliveries worth 1.5 billion rubles in the years 1976–1980, including 1.2 billion rubles in deliveries of Soviet parts and components. Finally, the MISC requested that member states submit proposals regarding the manner in which the organization should celebrate the upcoming twentieth anniversary of its foundation. During the otherwise quiet session in Leipzig, MISC Chairman Georgy Alexeyevich Titov (the first deputy chairman of the Soviet State Planning Committee, the Gosplan) criticized the organization’s operations during a separate meeting of delegation leaders. In his report on the session, the head of Hungary’s delegation, Major General György Doró, detailed Chairman Titov’s complaints: He is not fundamentally satisfied with the Commission’s activity, which has been permeated with many formal elements, bureaucratism and administrative phenomenon over recent years. At the same time, progress on important issues, such as the specialization of military industrial production, cooperation, the development of new products and the resolution of price questions, is very slow and requires much time. In the end, this has an impact on the development of the military industry, the provision of the armed forces with military

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equipment and the defensive capabilities of the armies. An agreement was made that every delegation would draft proposals connected to this issue and debate them at the next session.

These criticisms, though legitimate, sounded somewhat strange from the representative of a country that had previously failed to support reforms proposed by Poland, Czechoslovakia, and Hungary. “Identically to the others,” Hungary’s delegation delicately suggested that “As a consequence of the special character of the Commission, the role of the Soviet Union’s delegation, the Commission’s [Soviet] chairman and the Military Industrial Department in its work is of decisive importance.” Hungary began work on its proposals under the guidance of the Military Industrial Government Committee in August 1976.56 The above commission and the National Planning Office’s General Organizational Department completed their comprehensive assessment of the COMECON MISC’s twenty years of activity on October 12, 1976. The document was written in the customary moderately critical, gently initiatory and fundamentally loyal style, likely in order to attract the greatest possible degree of support. According to the Hungarian appraisal of the MISC, its operations contributed significantly to an increase in the defensive capabilities of Warsaw Pact member states. Industry evolved in member states, which enabled them to produce the most modern types of military equipment, encouraging these countries to devote significant intellectual and material resources to their further development. According to the joint General Organizational Department Military Industrial Government Committee evaluation, specialization and the coordination of mid-range plans made it possible for “us [Hungary] to resolutely and systematically (establishing harmony between our defensive and industrial-development objectives) develop our military industry.” Specialization played a particularly significant role in the development and strengthening of the military-telecommunications industry, leading to the establishment of production capacities in certain segments that were sufficient to supply militaries throughout the Warsaw Pact with certain types of telecommunications equipment. As a result of the specialization of radio-reconnaissance technology in Hungary, for example, the country established a developmental and production base that was capable of satisfying the demand of all WP member states, not including the Soviet Union, with such equipment. Hungary’s National Planning Office identified inadequate implementation of MISC resolutions regarding fundamental principles as the organization’s most serious problem and proposed the review of regulations governing specialization, the preparation of forecasts and the transfer of license documentation, etc. The MISC’s specialization work-groups took a long time to

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make decisions regarding specialization of individual product-groups, thus hampering the preparations of the relevant member state for production. The Hungarian assessment of the commission’s operations also considered the issue of profitability, stating that “We believe that in addition to factors related to defense and technology, examination of the organization of cooperation must give adequate weight to the clarification of economic conditions as well.” The import of parts for specialized military equipment, particularly in the field of telecommunications and electronics, had become increasingly cumbersome. On the one hand, member states did not devote sufficient attention to the development and manufacture of modern parts; while on the other hand, they were compelled to utilize obsolete parts in the production of military equipment as a result of the protraction of the specialization process. The Hungarian appraisal stated that the specialization of the manufacture of parts had created the possibility of economically efficient development and production, recommending that the COMECON Radio-Electronic Standing Commission be included in any relevant talks. The National Planning Office deemed the failure of the MISC to assign priority to more important issues to be another of the organization’s significant shortcomings, noting that commission bodies dealt extensively with relatively minor matters such as corrosion prevention and placing documentation on microfilm, while they did not find enough time to consider vital topics such as common production capacities, trade-policy affecting the provision of armies, deliveries to non-Warsaw Pact countries, and cost-calculation principles. The office proposed asking work groups handling issues of less importance to present reports on their work less frequently in order to clear room on the MISC’s agenda for more significant concerns (the commission typically considered 14–16 agenda items in the course of a three- or four-day session). The Hungarian proposal suggested holding regular meetings of memberstate representatives and more frequent consultations with national organs in order to improve the efficiency of the COMECON Secretariat’s Military Industrial Department. According to the proposal, this would accelerate the process of compiling the various methodologies, work plans and regulations and ensure that only previously coordinated recommendations would be submitted to the MISC. The National Planning Office recommended that the MISC streamline its activity in order to enhance its effectiveness: We believe that the further development and improvement of the operations of the COMECON MISC in the interest of augmenting the defensive capabilities of WP member states can be reached through concentration of the Commission’s focus on achieving objectives stipulated in the complex program of socialist economic integration and resolving related issues taking into account the specific character of the relevant area of activity.

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Because the Defense Committee convened only on October 21, two days after the start of the COMECON MISC’s session, the committee decided to endorse the document in the form of a resolution adopted under the authority of the body’s chairman.57 The 33rd session of the MISC, held from October 19–22, 1976, in Wrocław, Poland, did not produce any significant changes to the organization’s established operational procedures. The Military Industrial Standing Committee received a written salutation from COMECON Secretariat Secretary N. V. Faddeev in honor of the twentieth anniversary of the body’s foundation and it also acknowledged commission Chairman Georgy Titov’s assessment of the MISC’s operations. The commission presented certificates and commemorative medallions to specialists and delegation members who had participated in the organization’s work. MISC representatives then began preparations for the coordination of production and mutual-delivery plans for the years 1981–1985 based on resolutions approved at the 30th session of COMECON and discussed the following issues: the commission’s 1977 work plan; the status of the International Unified Material Code; the corrosion-prevention system; the introduction of plastic in the production of military equipment; the microfilming of technical documentation; provision of supplementary products; the overhaul of new military technics; the development of high-grade gunpowder and explosives; the supply of spare parts for MiG-21 jet fighters; and new cutting and welding methods for armored steel. The minutes of the 33rd session of the MISC suggest that the Romanian delegation’s submission of separate opinions regarding certain agenda items essentially constituted the sole manifestation of criticism of the commission’s work to emerge during the four-day meeting.58 A separate report from Major General György Doró offers the only information regarding the meeting of delegation leaders that took place during the MISC session in Wrocław. According to Major General Doró’s report, delegation leaders agreed that the increasing complexity of new military technics required greater international cooperation, while the heads of several delegations repeated their earlier criticism that the MISC was unable to devote adequate attention to important issues during the session due to the presence of too many items on the agenda. Delegation leaders determined during the meeting that the reinstatement of regular consultations between MISC sessions represented one possible method of alleviating this problem.59 The Warsaw Pact’s Political Consultative Committee approved an extensive military-technology development program at its session held in Bucharest on November 25–26, 1976.60 At the initiative of the Soviet Union, the committee recommended following its review of the state of the Unified Armed Forces and developments conducted over the previous years that member states make significant additional procurements. According to a

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report submitted to the Hungarian Socialist Workers’ Party Political Committee in March 1977, Political Consultative Committee members who attended the November meeting “consider it advisable that all allied armies possess the units (subunits) furnished with the most modern types of weaponry and military equipment in order to ensure that cadres will be trained in the use of the new technology at the proper time and to guarantee the acquisition of experience in the operation of the technology.”61 As a result of this resolution, the Warsaw Pact’s Committee of Defense Ministers placed the issue of development on the agenda of items to be debated at its 9th session held in Sofia. In their analysis of the preparedness of NATO member states, defense ministers concluded that the increased coordination of the WP’s development and production of military equipment was “an important duty demanded by life.” Agreement emerged among the ministers based on a proposal from Unified Armed Forces Command Technical Corps leader Soviet Army Engineer Major General I. A. Fabrikov that, in cooperation with the COMECON MISC, “steps must be taken toward the further standardization of weapons and military equipment.” Soviet Defense Minister Marshal Dmitriy Ustinov itemized planned measures in a speech to his colleagues: They expect to save 10 billion rubles during the current five-year plan through the drastic improvement of consolidation and standardization; they want to increase the productivity of the military industry to a significant degree; they are going to extend the lifespan of materials by two or three times through the use of uniform anti-corrosion substances of the highest quality; they are decreasing the number of types of fuel used in the army to one-third its current total, thus facilitating peacetime and wartime provision to a great extent; they are substantially reducing the number of types of vehicles used in the army and typifying their parts and, particularly, their loading area. They regard all of this as just a beginning step and want to accelerate the process . . . through further decisive measures.

The Committee of Defense Ministers determined that implementation of standardization was assured during the period of the fifth five-year plan ending in 1980, though considered it necessary for the Unified Armed Forces Command Technical Corps to draft proposals based on an examination of weapons and military equipment recommended for standardization in order to prepare developmental concepts and plans for the post-1981 period. The committee expected the relevant COMECON standing commission to take initiatives concerning the standardization of military equipment. The body also concluded that it would be necessary to establish a separate organization for this purpose:

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An organization with a staff of 35–45 should be founded within the framework of the Unified Armed Forces Technical Corps with the primary task of formulating requirements connected to the standardization of military equipment and performing work aimed at fulfilling them in cooperation with national military commands, which will likewise establish organizations to perform these duties. The Unified Armed Forces Technical Corps should determine the structure of the organization and its functional missions and coordinate them with memberstate Defense Ministries, providing the Unified Armed Forces Military Council and the Committee of Defense Ministers with continual reports on its work.62

On December 30, 1976, Hungary received the recommendations of the WP Unified Armed Forces Supreme Command containing an itemized list of the military equipment the country was expected to contribute to the order of battle: fighter aircraft; combat helicopters; tanks; amphibious armored-vehicles; and self-propelled guns. According to estimates from the Defense Ministry and the National Planning Office, fulfillment of these recommendations would have generated surplus costs of 16 billion forints, more than the annual operational costs of the Hungarian People’s Army at the time, and would have required 390 million rubles in additional imports of military equipment. In light of the miserable condition of the national economy, in March 1977 Defense Minister General Lajos Czinege proposed to the Hungarian Socialist Workers’ Party Political Committee that it approve a more modest increase of 9–10 billion forints in budgetary funding for military development, including 230 million rubles in supplementary imports of military equipment.63 The Political Committee made the largely obligatory decision at its March 22 session to approve General Czinege’s proposed rise in funding for the acquisition of military equipment under the condition that the Soviet Union be asked to provide Hungary with credit of 6.4 billion forints (or 180 million rubles).64 As member states sought new resources to finance increased procurement of military equipment, they also waged a price war with one another, preventing them from determining 1976 delivery prices by the late-June deadline and causing certain countries to inform trade partners of their plans two months late. Instead of a price correction, Hungary faced significant price increases: wholesale exporters and manufacturers of material-intensive military technics planned to conduct significant increases in the average cost of their products—Poland by 54 percent, Czechoslovakia by 51 percent and Bulgaria by 46 percent. The Soviet Union also announced substantial price increases of 18–21 percent for the price of exported military equipment. Hungary was prepared to accept the Soviet Union’s proposed price increase already in June 1976, though Soviet officials declined to sign a relevant agreement until concluding price negotiations with all trade partners. Poland, Czechoslovakia, and Bulgaria reduced their planned price increases in the course of

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subsequent negotiations, whereas the Soviet Union boosted its planned price increase to 22–25 percent at the beginning of September. On September 22, 1976, officials signed the Soviet–Hungarian pricecorrection agreement stipulating average price increases of 22.2 percent for Soviet imports and 11.6 percent for Hungarian exports. Due to the insistence of the Soviet Union that it finalize prices with other countries before signing similar agreements with them, Hungary managed to conclude a price-correction accord with only Czechoslovakia over the subsequent weeks, agreeing to average price increases of 28.7 percent for Czechoslovak imports and of 22.7 percent for Hungarian exports. In a report regarding the results of price-correction talks, the Ministry of Foreign Trade Ministry estimated that Hungary’s deficit in the trade of military equipment with fellow COMECON member states would increase by 27.1 million rubles in 1976 and by 20.6 million rubles in 1977 as a result of the corrections. The ministry report asserted that Hungary was unable to gain more favorable conditions in the course of the talks as a result of the fact that labor-intensive products, such as telecommunications, constituted 80 percent of the country’s special exports, while material-intensive products, which were more sensitive to fluctuations in the global market-price for raw materials, constituted 70 percent of the country’s imports.65 The difficult negotiations had by no means come to an end. In its subsequent update on price-correction talks issued in mid-February 1977, the Foreign Trade Ministry reported to the Defense Committee that Hungary had concluded agreements with the German Democratic Republic, Romania, and Bulgaria. The ministry noted in its report that Poland and Czechoslovakia, citing the general rise in prices for machine-industry products, planned to increase the cost of tanks they produced by 54 percent, though Hungary considered any rise of more than 36 percent to be unacceptable. In order to ensure that the Hungarian People’s Army would remain adequately equipped, Poland and Czechoslovakia continued to deliver tanks and other items to Hungary at a provisional price under the condition that they could later request further compensation at the higher prices. Poland proved to be particularly obstinate in the course of price-correction talks with Hungary, refusing to settle prices for any of the country’s export products after failing to come to an agreement regarding the six most important types of military equipment, notably the S-5M rocket, whose price Poland wanted to increase by 60 percent. As predicted, specialization had undermined Hungary’s negotiating position with regard to military equipment that could be acquired from only a single country, such as the S-5M rocket from Poland. In an attempt to resolve the disagreement over price corrections, Hungary proposed applying the same price freeze to military equipment that prohibited

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raising the cost of civilian machine-industry products placed into circulation in 1976 until 1978—though the country’s trade partners rejected this notion. Based on the outcome of prior talks, the Foreign Trade Ministry forecast that the price of Hungary’s imports of military equipment would increase by 5 percent annually until 1980, while the price of its exports of military equipment would increase by 3–5 percent annually until that year. According to even this optimistic premise, Hungary’s imports of military equipment from fellow COMECON member states would cost 37.2 percent more during the period of the 1976–1980 five-year plan than they had during the previous five-year plan, while its exports of military equipment to fellow COMECON member states would cost only 24.5 percent more during the period than they had during the years 1971–1975. The ministry concluded that even in the event that Hungary reached its targets for the period, the country’s deficit in the exchange of military equipment would increase by slightly below 80 percent, from 191.7 million rubles to 343.5 million rubles. The Defense Committee acknowledged the report with the proviso that the Military Industrial Government Committee propose at the next session of the COMECON MISC that the price of military equipment be subject to review at the most once or twice every five years rather than annually.66 If the Military Industrial Government Committee did submit such a proposal, the COMECON MISC did not include it on the agenda of its session held in Braşov, Romania from May 24–27, 1977. Two of the primary themes considered at the session were the production of the T-72 tank and cooperation in the supply of its parts as well as organization of the assembly of the PASUV automated field-command system for ground forces.67 Poland and Czechoslovakia undertook production of tanks pursuant to earlier specialization agreements, while the German Democratic Republic, Hungary, Romania, and Bulgaria tendered requests to participate in cooperative enterprises in this field. The Soviet information regarding the PASUV revealed that development and production of the system would require 5–7 years. MISC delegates also discussed the agenda item “Approval of general principles regarding the provision of supplementary products for the production of military equipment based on licenses to be acquired by COMECON member states.” These principles stipulated that the providers and recipients of license must come to an agreement regarding the delivery of parts and supplementary products during both the period of acquiring production techniques and of serial production. That is, the provider of the license stipulated exactly which products it was willing to deliver and the precise length of time for which it was prepared to deliver them. (The Soviet Union transferred production of hundreds of types of military technics to member states and expected them to produce the greatest possible number of the required parts. However, smaller member

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states regularly proved unable or reluctant to organize production of special parts, most of which were to be manufactured in small number; thus they continued to order these parts from the Soviet Union. Soviet officials were understandably dissatisfied with this practice, since the Soviet Union would continue to bear the burden of delivering these parts to partner states in spite of its objective to “outsource” their production.68) Delegates from Hungary asserted that it would be important to organize the specialized production of supplementary products in order to avoid irregularities. Similar problems emerged in connection to the provision of spare parts necessary for the operation and repair of imported military technics. Unfilled orders for spare parts reached 15 percent of all such orders in the years 1976– 1980, a deficiency that several member states and the Unified Armed Forces Supreme Command believed could jeopardize the readiness of Warsaw Pact armies for battle. There was also a lack of information regarding the resupply of spare parts, while the provision of technical documentation was often delayed and the production of small numbers of special parts was economically inefficient. The COMECON MISC established a temporary work-group to analyze these shortcomings and requested that member states expand their production of spare parts. The commission furthermore approved a separate resolution pursuant to suggestions made at the 78th session of the COMECON Executive Committee aimed at “increasing the effectiveness of recommendations.” The resolution stipulated that “From now on recommendations approved by the Commission will contain a precise designation of the recipient, a clear and accurate description of measures proposed to the countries, and the period of their implementation.” Representatives from the Soviet Union admonished their peers from fellow member states during the meeting of delegation leaders. Soviet delegates presumably aimed their displeasure primarily at Hungary, since representatives from the latter country regularly called the efficiency and economic benefit of cooperation into question. Hungarian People’s Army Major General Doró stated in a report on the meeting that MISC Chairman Georgy Titov and other Soviet officials had drawn attention to WP Political Consultative Committee resolutions advising allied armies to introduce more modern military technics: The cited tasks must be implemented, according to Soviet officials, so that . . . all countries can do their fair share and the production of the most important products can begin at the beginning of the 1980s, which is extraordinarily important from the standpoint of defense. They acknowledge the investigations of the countries connected to the launching of production of new products, though they consider it natural that the timely and adequate provision of the armies and

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the guarantee of security be given top priority when deciding these issues. It is more over [sic] natural that economic questions must be taken into account as well, though defense must be the decisive factor (italics mine).

The three issues that officials debated in detail at the meeting revealed the critical weaknesses that existed in the system of cooperation. Delegation leaders from Romania and Bulgaria, countries whose industry was previously too underdeveloped to undertake considerable production tasks, and the German Democratic Republic, which had generally not manufactured weapons of any type, raised the issue of possible redistribution of specialization assignments based on the premise that all member states should be capable of producing complex military equipment and that increasing exports was necessary in order to improve their foreign-trade balances. Delegation leaders from these countries requested to assume specialization duties for the manufacture of electronics and precision instruments, which constituted Hungary’s primary export products. Thus, Hungary was obviously not interested in redistributing specialization in this way. There was also a palpable conflict of interest between the Soviet Union and the other member states with regard to coordination of scientific-research and experimental-design work. Not only did the lack of effective international cooperation in the area of research and development represent an obstacle, but the entire future of national development capacity was doubtful as well. Countries engaged in the production of military equipment under Soviet license, which as previously shown represented a significant proportion of all such production among member states, were hardly able to undertake independent development, at most performing minor supplementary development. Delegation leaders did not explicitly criticize the Soviet Union, though asserted that “all of this serves to hinder the quickest possible development and the provision to the armies of military equipment of a more modern technical standard.” Delegation leaders concluded an agreement stipulating that the Warsaw Pact Unified Armed Forces Technical Corps must “coordinate and direct more efficiently than it has until now the development activity taking place in individual countries, defining concrete proposals and tasks for them within the framework of a harmonized development plan.” A rather paradoxical situation emerged with regard to the third theme. The production methods used to manufacture most weaponry and both infantry and artillery ammunition had become obsolete in all member states, with the exception of the Soviet Union, by the second half of the 1970s. (Production of military equipment in these states, including Hungary, took place in factories built in the 1950s according to Soviet design and under the direction of Soviet advisors.) There had been attempts to manufacture certain machinery and components within the scope of international cooperation, though according

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to delegation leaders, such endeavors had not produced adequate results. The Soviet Union was the only member of COMECON to produce such military equipment and machinery, though would not export them, citing a lack of capacity. Officials from the Soviet Union merely promised to guarantee the possibility of direct cooperation between the ministries of fellow member states and Soviet sector-based authorities and, if possible, to provide finished licenses.69 The objective of smaller member states to modernize their production of weapons and ammunition was therefore unattainable as a result of their inability to obtain up-to-date technology within COMECON. Hungary’s Foreign Trade Ministry issued an assessment in June 1977 regarding the projected impact of military-technics price-agreements concluded in the spring of that year. Noting the significant disparity in the prices during the previous planning period (essentially the year 1972) and those actually stipulated in 1976 trade agreements, the ministry expected the difference in such prices during the period 1976–1980 to amount to 1 billion forints. According to the assessment, the value of Hungary’s exports to fellow Warsaw Pact member states had changed as a result of the following factors: • The ruble’s foreign-trade exchange rate decreased by 12.5 percent (from 40 forints to the ruble to 35 forints to the ruble (–3.1 billion forints). • The natural disparity between the approved mid-range plan and the final government agreements (–500 million forints). • The rise in the stipulated prices (+ 2.7 billion forints). The value of five-year exports of military equipment thus amounted to 26.5 billion forints, compared to 27.5 billion forints calculated at 1972 prices.70 Following nearly a year of preparation, officials submitted the Soviet Union’s specialization concepts issued in December 1976 at the session of the COMECON MISC held in Vranov nad Dyjí, Czechoslovakia, from November 22–25, 1977. Following a report from Soviet Standardization Office Deputy Chairman A. M. Nikiforenko, delegates approved the proposed regulations regarding military standardization and standards. The MISC then established a new section, under Soviet leadership, aimed at performing further standardization tasks. The newly approved regulations stipulated the following objectives for standardization: Military standardization establishes in accordance with the current level of science and technology the optimal norms, indices, requirements, regulations, terminology and methods to be utilized in the development, production, operation, repair and storage of military equipment. . . . Standardization is intended to achieve the following primary objectives:

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• improvement of the battle readiness and effectiveness of military equipment; • joint use of military equipment developed in various countries; • compatibility of reserve products and components and operational materials for military equipment; • reduction of prescribed deadlines and budgets for the development, production and operation of military technics; • organization and development of cooperation and production of specialized military equipment; • increasing the mobilization readiness of industry in COMECON member states.

The regulations identified the concrete objects of military standardization based on the COMECON MISC and Unified Armed Forces Technical Corps to be detailed in annual and five-year standardization plans. The regulations stipulated that COMECON’s Standardization Standing Commission and Industrial Sector Standing Commissions must send planned standards pertaining to the people’s economy to the MISC Standardization Section so that the latter could identify which of them needed to be considered from the standpoint of defense. Delegates considered the formulation of supplementary regulations regarding the “extraordinary period” to be necessary in order to attain the following objectives: • increase the mobilization readiness of industry and the possibilities for utilization of people’s-economic goods serving the defense needs taking into account the (re)settlement of industry during the extraordinary period; • expand production of military equipment and other products and reduce their costs during the extraordinary period; • ensure the possibility of organizing military production at unspecialized companies. The supplements to the COMECON standards stipulated “the replacement of materials in short supply with those in less short supply, the broadening of tolerance, the simplification of external work, the abbreviation of guaranteed storage times, the modification of the methods and extent of shipping-receiving inspections, etc.; while preserving primary tactical-technical characteristics and operational reliability of products to be standardized.” Delegates approved the regulations regarding military standards as a separate document, which separated the types of standards listed below according to products, semi-finished products, materials, raw materials and fuels: • general technical-condition standards; • general technical-requirement standards;

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• • • • • • •

parameter and (or) size standards; type, main parameter, and (or) size standards; design and size standards; brand standards; product-type standards; receiving-procedure standards; inspection-methodology and -instrument (investigation, analysis, measurement) standards; • designation, packaging, delivery, and storage standards; • operational- and repair-regulation standards; • standards pertaining to certification methodology and devices for special systems, inspection outlines, and measuring devices and instruments. The regulations contained detailed descriptions and stipulations regarding every type of standard cited above. The Standardization Section was responsible for examining COMECON’s military standards and submitting them to the MISC for approval, sometimes in cooperation with the Unified Armed Forces Technical Corps. The operational principles and order of the Standardization Section were specified in a separate regulation. Pursuant to the wishes of the Warsaw Pact Committee of Defense Ministers, member states held military industrial exhibitions in order to promote coordination of 1981–1985 production and mutual-delivery plans. The commission acknowledged the dates in June and July of 1978 that participating countries proposed for the exhibitions, which were to last three days on average. The Soviet delegation recommended establishing a separate Intergovernmental Committee (Coordinating Organ) to coordinate the development of the PASUV automated field-command system that had been on the agenda of previous sessions as well. Based on previous negative experiences, Hungary’s delegation submitted a statement of principle stipulating that the specialization of production should be assigned to that country which manufactured the given product in a civilian capacity at times of peace. The statement furthermore specified that specialization of individual military equipment should be accorded to at most two countries in order to ensure the economic efficiency of production. A heated dispute emerged between delegates from Hungary and Bulgaria in the course of preliminary talks regarding specialization recommendations for production of the numerous parts and components for the PASUV system. Hungary’s delegation rejected an appeal from the Bulgarian delegation to withdraw its request to undertake the specialized production of certain components of the PASUV, such as the system’s magnetic data-storage unit, prompting the latter to ask for a unilateral entry into the

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minutes of the negotiations. This conflict served as another example of the assertion of national interests within the Warsaw Pact, whose smaller member states regarded production of electronics (computer technology) as a possible breakthrough opportunity and as a means of significantly strengthening their domestic development and production bases. Delegates attending the session of the COMECON MISC in Vranov nad Dyjí examined deficiencies in the supply of radio-electronic parts as a separate agenda item. Delegates called upon member states to increase their development and production of parts and asked the COMECON Radio Technology and Electronic Industry Standing Commission to assist in the coordination of measures needed to reach this objective. The session produced the following directive regarding the use of parts (semi-finished products) imported from the West: The utilization of parts stemming from production in non-COMECON countries . . . is only permissible during the period of preliminary and technical planning under the condition that these be replaced at the time of manufacturing prototypes for military equipment. Any country developing military equipment using parts originating in non-COMECON countries must implement every possible measure in order to develop and manufacture analogous military equipment or must through its own national delegation request the relevant COMECON standing commission to develop or manufacture it for COMECON member states.71

The inventory of radio-electronic products approved at the MISC session in Vranov nad Dyjí contained over 3,000 product types, 75 percent of which the Soviet Union produced, nearly 24 percent of which Poland, Czechoslovakia, Hungary, and Bulgaria produced, and just over 1 percent of which the German Democratic Republic and Romania produced. Production of 48 percent of these radio-electronic products began after 1970, while production of 34 percent of them began between 1960 and 1970, production of 12 percent of them began in 1960 and production of 6 percent of them began at an unknown time.72 The resolutions adopted at Vranov nad Dyjí regarding standardization are noteworthy because alliance-level unification and standardization, along with the unified material-code, represented one of the most important initiatives taken within COMECON. The enormous scope of this work is reflected in data showing that in the area of corrosion protection for military equipment, the COMECON MISC formulated sixteen military standards over a period of several years, preparing for their introduction in Hungary for a further year following their approval. According to records from the Defense Ministry and the Hungarian Standardization Office, the MISC planned to devise military standards in 159 various areas (including several standards per area) over the subsequent years. Hungary had to make a great effort to engage itself in

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the operations of the alliance in a significant way and to establish the domestic institutions necessary to participate in mutual work.73 The agenda of the COMECON Military Industrial Standing Commission session held in Minsk from May 15–19, 1978 included important themes that had emerged over the previous years and still stood in need of attention. The commission’s coordination group submitted production-distribution recommendations for the T-72 tank following advanced talks regarding the cooperative production. Delegates from Poland and Czechoslovakia announced that their countries could complete the trial model for the T-72 by the last quarter of 1980, while those from the German Democratic Republic, Hungary, Romania, and Bulgaria confirmed the list of parts and components they were to produce for the tank. Member-state representatives also decided to establish a separate coordination body under the authority of the MISC called INTER ASU (International Organization of Cooperation) to oversee development of the PASUV system, stipulating that the operations of the new organization would be outlined in a separate agreement. Based on preliminary specialization recommendations concluded during the session, Hungary was to prepare its industry for the assembly of specially designed vehicles (staff cars) and computer-technology components and equipment (displays, keyboards, consoles, parallel, printers). Delegates also debated methodological guidelines prepared by the standardization section. The introduction of the unified material-code reemerged as an agenda item at the MISC’s session in Minsk, revealing that member states had fallen significantly behind schedule in their coding operations. Hungary’s delegation stated that the delay was due to the necessity of renumbering several hundred previously coded products as a result of the repeated modification of the classification system. The MISC also listened to a report from the work group dealing with production equipment and machinery for explosives, ammunition, and pyrotechnical equipment. Though a catalogue of such equipment and machinery was available to socialist countries, it did not include the type of complete production lines and complex systems that Hungary, for example, needed to rebuild the country’s explosives-industry sector. The issue of prices again came into focus during coordination of production and mutual-delivery plans for military equipment in the period 1981–1985. Hungary’s delegation stipulated in the minutes of the session that member states should utilize planning-calculation prices in the course of coordinating plans. In the case of new products, which would undoubtedly be systematized at the Warsaw Pact level, Hungarian delegates proposed that preliminary planning prices be established as well. At the same time, member-state delegations determined that the cited planning-calculation prices did

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not constitute the basis for concrete delivery agreements, thus further talks were necessary regarding this issue.74

4.5 DYNAMIC GROWTH AND INTERNAL CONTRADICTIONS Discord mounted within COMECON in the second half of the 1970s, particularly as a result of difficulties in the mutual delivery of energy and raw materials. There was increasing evidence that the Soviet Union could not and did not want to satisfy the increasing demand of member states for deliveries of oil and natural gas; moreover, the USSR requested that it receive compensation for its deliveries to member states in “harder” goods. Hungary’s governmental apparatus, the Secretariat of International Economic Relations, proposed to the Council of Ministers Economic Committee in March 1978 that several previously undertaken obligations be modified due to the change of conditions within COMECON.75 Numerous conflicts of interest and unfavorable trends also emerged with regard to military-industrial cooperation within COMECON. The National Planning Office and the Military Industrial Government Committee examined these problems and proposed alternatives aimed at their resolution at the beginning of 1978. The National Planning Office’s General Organizational Department issued a report already in November 1975 regarding the longrange development of Hungary’s military industry during the period of the fifth five-year plan. According to the report: Further change is necessary within the structure of our military industry in the direction of relatively less material-intensive and more labor-intensive products that are compatible with the perspectives for the development of our machine industry. In the majority of cases, the volume of orders from the Hungarian armed forces is not adequate to ensure economically efficient production, even for products constituting our profile. Only demand from the Warsaw Pact member states, or at least a portion of them, makes this possible. Thus, the outlook for our military industry depends to a significant degree on the development of international integration, including specialization and cooperation.

The General Organizational Department’s report stated that the following courses of action should be taken in order to strengthen the position of Hungary’s military industry, which had obviously placed under a certain degree of constraint: With regard to the future, production according to Soviet license can still be considered essential, and it is advisable to adhere with even greater consistency than before to the principle that significant domestic development work must

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be performed only on the basis of requirements coordinated and approved at the international level. Additionally . . . we must promote with our fraternal states, particularly the Soviet Union, our inclusion in the development and cooperative production of equipment and systems of greater importance—already in the course of design work—in areas where we possess adequate intellectual capacities and other requirements.76

Hungary’s political and industrial leadership, as seen above, attempted to comply with these fundamental principles, though processes taking place in the global economy and the Soviet bloc had established increasingly difficult export conditions. The multilateral forecast-analysis conducted within the framework of the COMECON MISC examining demand and production possibilities for military equipment among member states during the period of the sixth five-year plan (1981–1985) and until the year 1990 was completed by the end of 1977. Parallel to this analysis, Hungary’s Military Industrial Government Committee discussed the preliminary development-concept for domestic military-industrial activity in September 1977. The Defense Committee Secretariat submitted a report outlining concepts regarding the long-range plans to Defense Committee Chairman János Borbándi on April 5, 1978. According to the report, production within Hungary’s military industry had developed dynamically in the first half of the 1970s, while exports accounted for an increasingly significant proportion of this production. The report asserted that weaponry became obsolete in a shorter period of time as a result of the “technological revolution,” reducing the length of rearmament periods to such a significant degree that some weapons barely outlasted mid-range planning periods. The Defense Committee Secretariat report stated that it was increasingly difficult for even “countries of intermediate development” such as Hungary to maintain the required tempo of production in both economic and financial terms. The report stated that the long-range plans were necessary for the following reason: The unbroken development of the military-industrial sector over the coming years can only be ensured if we conduct an examination regarding the performance of duties incumbent upon us as a member of the Warsaw Pact, the management of the sector, the establishment of harmony between decision-making and implementation and the maximal utilization of our resources based on highlevel party and state defense, political and economic resolutions.

The report called attention to the following significant problems and contradictions: • The most important technical development and production of military equipment in company plans is presently a mandatory, government-

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stipulated activity. The conditions must consequently be centrally mandated as well. Since the companies are only able to influence the range of products and the optimal size of production runs to a minor degree and because they enjoy an advantage in the provision of the conditions, they are able to assert their influence on cost-efficient production on a subjective basis only without a unified standard. • The launching of production of military equipment requires more time than the launching of production of civilian products, because the consolidation and standardization considerations of member states must be taken into account and technical conditions must be harmonized. This increases expenses related to preparation for production and risk related to production to a significant degree. • Warsaw Pact member states use unified weapons and weapons systems, therefore companies must manufacture them according to strict technical specifications that they are unable to modify themselves. As a result, the total cost of production is higher than it is for civilian products. Costly individual delivery-receipt transactions due to the high technical (climatic, mechanical, shock- and vibration-resistance) requirements and confidentiality (security, supplementary wages) have an impact on expenses. The internationally attainable price, however, exercises an opposite effect. In most cases the price level accepted by the countries is based on prices in the Soviet Union, where calculation and settlement systems, the size of production runs for given products and, consequently, the utilized technologies differ from those employed by Hungarian companies, thus making the country’s costs incomparably lower as well. • In the area of technical development, the fact must be taken into account that the results of the Soviet Union must be followed in most branches of military equipment; therefore, production can only be implemented through the acquisition of licenses. Undertaking production of military equipment already being manufactured in the Soviet Union entails the likelihood of more rapid obsolescence, while engagement in the production process during the developmental period will likely require continuous technical modification, which raises production costs to a significant degree. There will continue to be severe restrictions on sales, which have an impact on the possibilities for establishing optimal production runs. COMECON MISC forecasts revealed that the Soviet Union would be the most significant importer of Hungarian military equipment over the coming planning period. Based on the previous decision to provide budgetary subsidies for the manufacture of Vasilek gun-mortars and Brusnika radio receivers destined for export to the Soviet Union, the Defense Committee Secretariat

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concluded that “very prudent, thorough analysis” was necessary regarding the possibility that military equipment whose production had not yet been launched might also require support. At the same time, the Defense Committee Secretariat recommended the following steps be taken in order to derive greater benefit from the manufacture of military equipment: We can achieve greater results in the area of military industrial production if we broaden [our] participation in international cooperation and engage in more energetic activity in the commercial domain. A comprehensive examination is necessary in order to decide if similar distribution of collective production should be introduced in all of the Warsaw Pact’s member states. . . . We could promote greater cooperation if we were to jointly manufacture with other Warsaw Pact countries a portion of the military equipment we are planning to procure from the Soviet Union. Effective specialization of the production of parts and fittings as well as products manufactured on a mass scale would also serve to enhance exploitation of the advantages of international cooperation. In the event that specialization is not possible in this area, it is absolutely necessary to conclude a bilateral agreement with the Soviet Union, because satisfying forecast demand would otherwise become impossible as a result of deficiencies in parts-procurement constructions.

The Defense Committee Secretariat characterized U.S. dollar-based exports of military technics, which had increased substantially since the middle of the 1970s, as a market dependent on economic trends. The secretariat advocated examining numerous methods of uncovering and exploiting possibilities connected to the production of military equipment—market research, joint deliveries with other countries, strengthening domestic development, etc. The Defense Committee Secretariat recommended that a comprehensive examination be launched under the direction of the National Planning Office aimed at preparing complex decisions regarding this problem.77 At around this same time, in early April of 1978, the Military Industrial Government Committee discussed Hungary’s revised military-industrial concept taking into account the Hungarian Socialist Workers’ Party Central Committee’s October 20, 1977, resolution entitled “Development of the Production Mechanism and the Fundamental Principles Governing Relevant Long-Range Foreign-Economic Policies.”78 The Military Industrial Government Committee concluded that coordination of international deliveries and the preparation of the mid-range national plan required that Hungary’s longrange development concept be finalized by the end of 1978. The committee determined that the desired expansion of production within the military industry could be achieved only through a rise in exports, targeting an increase in the percentage of the sector’s total production sold abroad to at least 70 percent by the year 1985.

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The Defense Ministry compiled a summary of its objectives regarding development of the military industry based on information from allied armies, the Unified Armed Forces Supreme Command, the Technical Corps and their subordinate organs. The ministry’s targets included finalization of the technical and development forecasts for the Hungarian People’s Army until the year 1990 by April 1978 and completion of the army’s ten-year development plan by the end of the latter year. The ministry also prepared, among other things, a register of Hungarian-made military equipment that it recommended for introduction into the Warsaw Pact’s unified weapons-system and a list of such military equipment to be exported in the period 1981–1985. The significance of certain product groups changed already during the process of estimating demand. Both allied armies and developing countries exhibited keen interest in radio-reconnaissance technology, for example. Developing countries, moreover, indicated that they wanted to purchase not only individual pieces of radio-reconnaissance equipment, but entire complex systems including transport vehicles and other types of communications technology. These new demands required that Hungary expand and accelerate its development of vehicle-superstructures and special containers, etc. Analysis of preliminary orders from both inside and outside COMECON revealed that Hungary’s military-telecommunications sector would have to increase its production capacity by between two and two-and-a-half times by 1990 in order to satisfy demand. This appeared to be impossible without significant investment. The Military Industrial Government Committee arranged tasks related to the formulation of the long-range concept into four groups: • Urgent matters, such as the production of military-vehicle-superstructures, tropospheric radio transmitters, radio counteraction equipment, the autopilot for the Strela surface-to-air missile system, etc. • Issues requiring more detailed analysis: production of radio counteraction equipment, development and production of radio-reconnaissance systems, prospects for the production of artillery ammunition, utilization of the capacities of factories producing infantry weapons and ammunition, the status of the military chemical industry, etc. • Comprehensive problems: retooling within the military industry, retaining mobilization capacities, increasing dollar exports, etc. • Duties to be performed pursuant to international obligations: development of the PASUV, cooperation in production of the T-72 tank and infantry ammunition. The Military Industrial Government Committee wanted to submit a detailed work plan to the Defense Committee based on the above tasks in order to produce a well-founded development concept in the prescribed time.79

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The National Planning Office’s General Organizational Department submitted its proposal to the Defense Committee along with an outline of fundamental principles governing the concept and a detailed work plan. The department’s proposal asserted that the following conditions and prescriptions should serve as the basis for examination and planning: • The pace of growth in military-industrial production should be commensurate with the development of the machine-industry sector. • The structure of military-industrial production requires further modification: the weight of telecommunications, electronics, and the precisionengineering industry should increase. • Based on existing orders, it is realistic to expect the Hungarian military industry to become increasingly export-oriented. The proportion of exports within total domestic production of military equipment should, if possible, rise from 66 percent in the period 1976–1980 to 70 percent in the period 1981–1985 and 75 percent in the period 1986–1990. • “In addition to satisfying the demand of domestic armed forces and bodies and fulfilling inter-state obligations undertaken toward WP member states, an effort must be made to steadily increase dollar-based export to developing countries, conducting independent developments in case of need.” • The manufacture of new military technics that can be produced in a costefficient manner and is compatible with the general developmental directions of the people’s economy should be advocated in accordance with the selective industrial-development policy. • “Retooling efforts aimed at ensuring the long-term maintenance of production capacities for weapons, ammunition, and military chemicals should be started or continued and completed over the period of several five-year plans taking into account the capacity of the people’s economy to sustain them.” • An attempt must be made to develop an economical production-structure, and in the event that defense considerations overshadow this, production must be ensured through individual commands and specific stipulations. The National Planning Office’s General Organizational Department recommended that the Defense Ministry, the Ministry of Metallurgy and Machine Industry, the Ministry of Heavy Industry, and the Foreign Trade Ministry draft complex military and technical-economic reports pertaining to twelve comprehensive themes connected to specific branches of industry (such as the military chemical industry), specific companies (such as the Videoton electronic company) and specific products (such as the T-72 tank). The department stipulated that these ministries must send their reports to the National Planning Office by January 31, 1979.80

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During the Defense Committee’s debate on this theme, Council of Ministers Deputy Chairman Gyula Szekér, who not by coincidence served as Hungary’s permanent representative in the COMECON Council, declared that it would be necessary to launch a comprehensive development program aimed at increasing both the civilian and military production of electronics, remarking that the increasing prominence of electronics at international military industrial exhibitions reflected the growing importance of such products within the military industry. National Planning Office Deputy Chairman György Doró voiced support for this notion, since the command-mechanization program pertained primarily to the military sector. Doró also drew attention to the importance of access to a sufficient supply of spare parts and components for military equipment, contending that since the COMECON MISC had failed to act upon several Hungarian proposals intended to ensure the adequate provision of such supplies, expansion of domestic production of parts and components appeared to be the only means of achieving this objective. The National Planning Office deputy chairman ventured to predict that the value of Hungary’s combined ruble-denominated and U.S. dollar-denominated exports of military equipment would rise to equal that of imports of such equipment during the next planning period.81 On June 29, 1978, the Defense Committee adopted resolution no. 9/292/1978 approving the proposal.82 On July 10, National Planning Office Chairman István Huszár issued guiding principles and tasks along with an itemized work program based on the Defense Committee’s resolution to the competent ministries.83 A delegation of officials from Warsaw Pact member states viewed an exhibition of military equipment produced in Hungary at the Budapest International Fair on June 20–21.84 The National Planning Office General Organizational Department submitted a detailed report regarding the military industrial exhibitions of other member states to planning office Deputy Chairman György Doró. There were several important lessons to be drawn from the department’s broad overview of nearly the entire range of military technics produced within the Soviet bloc. The General Organization Department’s report highlighted the following conclusions: • With the exception of the Soviet Union, other member states hardly dealt with the development and production of radio-reconnaissance equipment, thus Hungary’s role as a supplier in this domain was not in jeopardy. For this reason, “It is expedient for us to continue to proceed in this direction when formulating our five-year and long-range plans so that our salient specialization role in this area persists.”

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• It was evident that the German Democratic Republic, Romania, and Bulgaria had begun developing and manufacturing military equipment that belonged to Hungary’s profile. The department determined that Hungary could defend its specialization position only through more assertively undertaking and more rapidly mastering the production of military equipment. • Much parallel activity was taking place in the development and production of chemical- and radiation-protection instruments, particularly in the domain of computer technology. The introduction and examination of this issue thus appeared to be necessary both within international specialization work-groups and the COMECON MISC. • Based on the product structure of military equipment displayed at international exhibitions, the General Organizational Department deemed it important for Hungary to place greater emphasis on classic machine-industry products such as the Gvozdika self-propelled howitzer and the Vasilek gun-mortar, “otherwise it would appear like our participation in work connected to the military industry is disproportionate to our strength.” • The Soviet Union was utilizing informal discussions in order to exert pressure on other member states. The notion based on an appraisal of exhibited military equipment that it might be possible to counterbalance imports from the Soviet Union through exports to other member states seemed to be futile. “The Soviet stance that has begun to take form in the course of unofficial discussions with competent Soviet comrades before and during the exhibitions is that they would like to make the magnitude of our exports of military equipment contingent upon our imports from the Soviet Union. While not accepting this Soviet aspiration, it would nevertheless be advisable to take it into consideration to a certain degree.” Soviet officials thus wanted to compel Hungarian decision makers to commit themselves to the greatest possible volume of delivery to the Soviet Union, even if it was uneconomical. • Attempts to make preliminary (cost-efficiency) estimates of any kind had failed as a result of the fact that Hungary did not even know planning prices at exhibitions of military industry. This made it extremely difficult to make advance calculations regarding the amount of matériel to be ordered from the Soviet Union. The national exhibitions of military technology held in the summer of 1978 offer some insight into the profile and capacity of member-state military industries. According to Hungary’s National Planning Office, Bulgaria’s exhibition held from June 7–9 revealed that the Bulgarian military industry was undergoing moderate, though continuous, development. The office noted that Bulgarian industry was producing the following military equipment:

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weapons and ammunition; missiles; mines and other explosive devices; tracked armored combat-vehicles; military-supply equipment; and computer technology related to command mechanization. The National Planning Office concluded that while complying with specialization resolutions, Bulgaria was attempting to increase its production of more technically advanced products such as computer technology and chemical-defense instruments, etc. The National Planning Office reported that the German Democratic Republic’s exhibition held from June 12–14 showed that the GDR excelled in the production of technical mechanisms, medical-healthcare devices, propaganda material, optical instruments, and pyrotechnical equipment. The office remarked that the German Democratic Republic was developing 2.5-ton and 4.5-ton military all-terrain vehicles slated for mass production beginning in 1980. According to the National Planning Office, the GDR continued to conduct independent development of shortwave radio transmitters, some of which intersected with Hungary’s development of this equipment. The office concluded that Poland’s exhibition held on June 15–16 provided evidence of the diversity of the Polish military-industry and the high proportion of independently developed military equipment that it produced. (The office did, however, note that the Polish “generally classify equipment that they have developed further based on Soviet license as being of their own development.”) According to the National Planning Office, the Polish military industry had achieved the most significant progress in production of the following military equipment: weaponry mounted on the chassis of tracked and all-terrain trucks; technical mechanisms; medical-healthcare devices; various helicopters; ammunition and small missiles; laser technology for tanks; computer technology; warships; and radar capable of locating low-flying targets. The National Planning Office reported that Czechoslovakia’s exhibition held on June 26–27 focused on products that were still under domestic development, such as military vehicles, armored and artillery technology, training and light cargo aircraft, and airport equipment. The office remarked that hardly any mass-produced military equipment was displayed at the exhibition, noting that the exhibited products clearly indicated some overlap in the development of computer technology and chemical- and radiation-detection instruments in Czechoslovakia and Hungary. The office identified four types of TAB armored personnel-carrier as the most prominent military equipment displayed at Romania’s exhibition held from June 27–29. The office reported that Romania had made significant progress in production of certain computer technology (displays and printers), though “had not achieved the same success in the field of military electrical-engineering, although we have seen greater evidence of ‘rip-offs.’”

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The Soviet Union displayed its most recently developed military technics at exhibitions held at various sites from July 17–July 20. (Exhibitions of armored technology, weaponry, military telecommunications, and cartographical devices were held in Moscow and three other locations, while a naval exhibition was held in Sevastopol.) The various exhibitions were organized according to the areas of specialization of the various member states; thus Hungary’s delegation did not even attend the naval exhibition on the Crimean peninsula. The Soviets also took information-protection considerations into account in the selection of military equipment placed on exhibit, electing not to display the USSR’s newest radio-reconnaissance equipment, since a delegation of intelligence officials from the Hungarian People’s Army General Staff’s 2nd Chief Directorate had already viewed this equipment two weeks earlier.85 The 32nd session of COMECON and the 82nd session of the organization’s Executive Committee took place at the time of the military industrial exhibitions described above. The Executive Committee drafted several proposals containing the following stipulations for improving the body’s operations: • the operations of COMECON organs must be concentrated on the main areas of cooperation; • consultations regarding economic policy must be conducted within a broader sphere; • the autonomy and responsibility of standing sector-based commissions must be increased; • the analytical activity of the COMECON Secretariat must be improved; • and coordination must be strengthened among member states in their cooperation with third countries. The fundamental principles that the Hungarian Socialist Workers’ Party leadership established to govern Hungary’s positions at these consultations placed particular emphasis on the issue of improving cooperation. Council of Ministers Chairman György Lázár stated during a meeting of the party’s Political Committee that “Requirements pertaining to international economic cooperation have made the development of the economic means for cooperation increasingly urgent.” Party officials deemed the filling of the economic-policy consultations with meaning at all negotiating levels to be especially important.86 The main theme on the agenda at both the 32nd session of COMECON held in Bucharest from June 27–29, 1978, and of the 82nd session of the organization’s Executive Committee was the long-term cooperation plan

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that Soviet delegates submitted in the areas of energy and raw-material supply, agriculture and the food industry as well as machine industry. Another main item on the agendas of these consultations was improvement of COMECON’s efficiency, an objective both the Hungarian and Polish delegations emphasized. In his appraisal of COMECON’s operational flaws, Soviet Council of Ministers Chairman Alexei Kosygin declared that “the concrete resolution of primary tasks is often substituted with general resolutions that are not mandatory in any regard.” Delegates attending the 32nd session of COMECON adopted no concrete organizational-reform measures, though did approve a schematic text submitted by the Executive Committee. Council of Ministers Chairman György Lázár’s verbal addendum to the report on the consultations revealed that the possibility of recording unanimously supported proposals in agreements rather than recommendations had emerged during the session, but Romania’s delegation had opposed changing any fundamental COMECON document.87 Following the 32nd session of COMECON and the resolutions adopted at the 82nd session of the COMECON Executive Committee, the Military Industrial Standing Commission placed the issue of “further modernization” of the organization’s operations on its agenda. At the session of the MISC held in Sofia from November 14–17, 1978, Hungary’s delegation pointed out several operational deficiencies that the COMECON Bureau’s Military Industrial Department had not considered in its submitted proposal. Among the shortcomings that delegates from Hungary cited were the lack of economic-policy consultations regarding the developmental direction of member-state military industries, the disjunction between technical development and production and the absence of cooperation on third markets. Hungary’s delegation proposed that a work group be established in order to formulate a complex package of measures aimed at optimizing the operations of the Military Industrial Standing Commission. Although the chairman of the MISC voiced support for this proposal in the course of preliminary talks, commission delegations opposed the foundation of a work group, assenting only to Hungary’s submission of substitute recommendations at the body’s next session. MISC delegates did, however, approve amended operational and procedural regulations intended to increase the effectiveness of the commission’s activity. The MISC also approved the final text of the intergovernmental agreement regarding preparations for the joint development and manufacture of the PASUV automated field-command system as well as the operational regulations for both the international INTER ASU organization coordinating development of the PASUV system and the Technical-Economic Council. (Member states signed this agreement in Moscow from December 11–13.) The Soviet delegation highlighted the importance of this agreement, which

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for the first time established the possibility of international cooperation from the research-and-development phase all the way through production. The MISC furthermore drafted specialization proposals in the process of coordinating mutual-delivery plans for the years 1981–1985, placing the task of finalizing nomenclature on the agenda of the commission’s next meeting. Hungary’s delegation again raised the issue of specializing the production of parts, though discussion of this matter was delegated to the specialization work-group. During its session in Sofia, the MISC also dealt with the cooperative production of the T-72 tank, military standardization and the commission’s 1979–1980 work plan.88 Specialization of production for the following five-year planning period represented the main item on the agenda of the COMECON MISC’s session held in Debrecen, Hungary, from May 29–June 1, 1979. Approved recommendations called for the specialization of the production of 114 products and the overhaul of fifty-five products, of which Hungary was to receive specialization for twenty-four products. However, contrary to previous practice, specialization recommendations were classified according to specific products rather than product groups. This was an unfavorable change for Hungary, because it enabled other member states to acquire specialization for products classified in the country’s main profile of military telecommunications as a result of the relatively frequent changes that took place to product types within this sector. The MISC also began formulating the specialization possibilities for parts and components in accordance with the concepts that the commission had previously developed in this regard. The composition of products chosen for specialization at the MISC’s session in Debrecen provides an accurate reflection of new advances in military technics and the increased prominence of radio reconnaissance and radio counteraction. Equipment of the latter types accounted for nearly one-third of all the products designated for specialization at the mid-1978 session of the MISC, compared to one-fifth, at most, ten years previously. The distribution of major repair work underwent significant diversification at this time, while the number of specialized products underwent a multifold increase. The MISC evaluated the results of preliminary talks regarding mutualdelivery plans for military equipment in the period 1981–1985 (member states held bilateral consultations in the nearby town of Hajdúszoboszló from May 21–26). Following the initial consultative phase, the COMECON Secretariat’s Military Industrial Department determined that the value of planned deliveries exceeded those scheduled to take place during the current planning period by 50 percent, thus fundamentally satisfying mutual demand. However, Unified Armed Forces Command Technical Corps leader Soviet Army Engineer Major General I. A. Fabrikov expressed extreme displeasure with

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the results, complaining that talks held until that time had ensured production of only 30–50 percent of the weaponry and military equipment necessary for the development of member-state armies as stipulated in Unified Armed Forces Supreme Command recommendations. Major General Fabrikov declared that this volume of delivery would jeopardize implementation of the WP Political Consultative Committee’s program adopted in November 1976. The Technical Corps leader asked member-states to examine the possibility of increasing their production of military equipment. Major General Fabrikov was particularly alarmed at the lack of interest among member states in acquiring licenses to manufacture Soviet products, noting that these countries had sought to obtain only about one third of the approximately eighty licenses that the Soviet Union had placed on offer. The MISC entered into the minutes of the session both the failure to fulfill Unified Armed Forces Supreme Command recommendations and the request to increase production. According to a report to Hungary’s Defense Committee from National Planning Office Deputy Chairman Major General György Doró, Warsaw Pact member states had as a result of various technical and financial factors submitted preliminary orders for only 50–60 percent of the weaponry prescribed in Unified Armed Forces Supreme Command recommendations. The situation thus arose in which Soviet officials protested the failure to comply with developmental directives even as smaller member states nearly discharged their orders in full. In his report, Major General Doró attributed the decline in orders of military technics in large part to the effort of member states to wholly offset imports with exports in every relation. According to preliminary agreements, Hungary forecast 1.3 billion rubles in exports of military equipment in the years 1981–1985, including 700 million rubles in exports to the Soviet Union, and 1.5 billion rubles in imports of military equipment during the period, including 900 million in imports from the Soviet Union. In a proposal recorded in the MISC minutes, Hungary’s delegation requested that in the case of products whose price was subject to disagreement among member states (such as the Deimos radio transmitter, the Vasilek gun-mortar, the Gvozdika self-propelled howitzer and the Brusnika radio receiver), conclusion of a final agreement be made contingent upon the determination of a price at which production could be implemented economically. Major General Doró concluded in his report that “There are no objective possibilities and conditions on the basis of which satisfaction of demands stemming from Unified Armed Forces Supreme Command recommendations could be ensured to a significantly greater degree than that described previously.” The pressure that the Soviet Union exerted on member states in connection with Unified Armed Forces Supreme Command recommendations is particularly strange in light of the latter judgment and the fact that Soviet officials deemed

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only 700 million rubles of the Hungarian Defense Ministry’s 1.2 billion rubles in demand for military equipment to be feasible. At its session in Debrecen, the COMECON MISC heard a report from INTER ASU Technical-Economic Council Chairman Pyotr Pleshakov, who also served as the Soviet Union’s Minister of Radio Industry, regarding the work that the international organization coordinating development of the PASUV automated field-command system had completed until that time. Pleshakov told commission delegates that the PASUV system’s first developmental phase, which entailed production of the system’s tactical prototype, would likely be completed in 1982 and requested that all established deadlines be rigorously observed. The interstate agreement concerning production of T-72 tanks had been signed at the beginning of 1979, thus Poland and Czechoslovakia undertook to manufacture ten tanks each by 1980 and 500 tanks per year by 1983. Member states responsible for the manufacture of parts and components for the T-72 tanks were instructed to adapt their production plans to this timetable. The Soviet Union was supposed to make a proposal in 1978 aimed at eliminating the chronic shortage of parts that emerged in the process of cooperative production through an elaboration of the document entitled General Principles Pertaining to the Supply of Supplementary Products Necessary for the Production of Military Technics Manufactured under License. Soviet State Committee for Foreign Economic Relations (GKES) Deputy Chairman M. Sergeychik ascribed the delay to the Soviet Union’s compliance with repeated requests from member states to examine the possibility of concentrating the responsibility of handling the delivery of supplementary products, materials in short supply and parts in a single office. (According to established practice, civilian products used in the manufacture of military equipment had to be ordered from the authorized Soviet foreign-trade company.) According to Sergeychik, the Soviet Council of Ministers had approved a resolution at the beginning of 1979 calling for the establishment in 1981 of an independent department operating under the auspices of the State Committee for Foreign Economic Relations (GKES) Technical Office (GTU) in order to deal with these issues. However, the Soviet draft proposal distributed at the session of the MISC pertaining to an elaboration of General Principles continued to require member states to submit orders for parts to the foreign-trade companies. The MISC therefore compelled the Soviet Union to withdraw its draft proposal, requesting that the Soviet delegation formulate a new plan.89 Indirect sources reveal that Warsaw Pact Unified Armed Forces Supreme Commander Ivan Yakubovsky sent a letter to Hungarian Defense Minister Lajos Czinege in which he complained that Hungary had failed to undertake a sufficient amount of mutual deliveries of military equipment (other member

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states presumably received similar letters). This placed Hungarian officials in an extremely delicate situation, since it had been orders from precisely the Soviet Union that they had been reluctant to place. Both the National Planning Office and the Ministry of Metallurgy and Machine Industry had, in fact, clearly demonstrated that the economic efficiency of production within Hungary’s military industry would deteriorate significantly with an increase of exports of military equipment to the Soviet Union. Deliveries worth nearly 300 million rubles had become uncertain as a result of price disagreements between Hungary and the Soviet Union.90 The production-development concept for the domestic military-industry that the Hungarian Socialist Workers’ Party Central Committee’s Economic Policy Commission finalized by September 1979 therefore stated: Decisions may become necessary at high political and state levels as a result of the previously mentioned uncertainty surrounding export prices and the problem of unsatisfied demand if agreements cannot be reached regarding these issues during the second phase of planning coordination.

Fellow member states continued to signal demand for military industrial imports worth 700 million rubles from Hungary. However, the country’s industrial capacity could accommodate only a limited volume of new orders. The National Planning Commission’s General Organizational Department stipulated that the following factors should be used to determine the longrange military-industrial concept valid until 1990: 1. 2. 3. 4. 5.

Compatibility with defense-policy requirements. Cost-efficiency of production and export. Impact on the foreign-trade balance. Congruence with the direction of industrial development. Harmony between development objectives and requisite conditions.

In preparing Hungary’s sixth five-year plan pursuant to the above factors, the National Planning Office projected dynamic growth in U.S. dollar-based exports of military equipment and selected orders from partner countries according to their cost-efficiency. The office emphasized the importance of economical production: Targeted military-industrial development for the years 1981–1985 can only be achieved if the efficiency of production corresponds to the average within the machine industry. The fact that the increase in production and exports of military equipment stems nearly exclusively from an improvement in efficiency in terms of the most promising telecommunications and precision-engineering

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products serves to promote the fulfillment of this requirement. Profitability comparable to that of the machine industry must be attained through a decrease in production costs and stipulation of suitable prices for ruble-based exports as well. In order to ensure the cost-efficiency of the increased orientation toward exports, it would be expedient to introduce—as much as possible—competition between civilian and military-industrial products through satisfaction of rublebased machine-industry quotas. This is particularly warranted in the case of the electronics industry, the capacities of which are, for the most part, convertible.

At the recommendation of the military and military-industrial planning apparatus, Hungary’s political leadership had therefore given explicit priority to national economic interests over maximal satisfaction of the alliance’s defense expectations. A proposal submitted to the Hungarian Socialist Workers’ Party Central Committee’s Economic Policy Commission called for the establishment of a complex planning system: The coordination of military-industrial economic-policy concepts, forecasts, production and product development, investments, specialization and cooperation must be promoted above all within this framework. Cooperation must be further developed with regard to the technical development of specialized products, the specialized production of parts, the establishment of all conditions for the transfer of licenses, exports to developing countries and coordination of procurements from capitalist countries.91

Hungarian representatives attempted to consistently uphold the previously described principles in the course of further talks regarding mutual-delivery plans for military equipment. By the middle of October 1979, fellow COMECON member states had submitted orders to Hungary for a recordhigh 2.2 billion rubles worth of military equipment to be delivered during the sixth five-year planning period from 1981–1985 (see Table 4.7). This represented a more than threefold overall increase as compared to the fifth five-year planning period from 1976–1980, including a sixfold increase with the Soviet Union. The data in Table 4.7 reveals that Hungary was able to satisfy just over 60 percent of demand for exports of military equipment produced in the country, including only slightly more than half of that from the Soviet Union. Hungary managed after a series of foreign-trade talks with Bulgaria to conclude a price agreement regarding the Gvozdika self-propelled howitzer that would make production of the weapon profitable for the Diósgyőr Machine Factory (DIGÉP). Hungary also drew close to concluding to price agreements with the Soviet Union regarding the Deimos radio transmitter and the Brusnika radio receiver, though the countries remained very far apart in their proposed prices for the Vasilek gun-mortar. Moreover, DIGÉP

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Table 4.7. Value of Hungary’s Exports of Military Technics in the Fifth and Sixth Five-Year Planning Periods (in millions of rubles at 1979 prices) Fifth Five-Year Planning Period, 1976–1980 Country Poland German Democratic Republic Czechoslovakia Romania Bulgaria Soviet Union Total

Demand for the Sixth Five-Year Planning Period, 1981–1985

(forecast)

preliminary

final

Contracted Deliveries

125.6 176.4 80.0 9.7 35.9 233.0 633.0*

135.0 184.2 203.6 22.6 105.0 1,291.0 1,941.4

235.7 200.0 175.4 44.7 141.5 1,400.0 2,197.3

200.0 183.0 127.0 21.2 116.0 708.0 1,355.2

Note: *Includes 2.4 million rubles in exports to other socialist countries. Source: Proposal regarding the Hungarian Position to Be Represented regarding Some Military Industrial Products at COMECON MISC Plan-Coordination Talks. October 15, 1979. MNL OL, XIX-A-16-aa 134. d.

decided to delay production of 380 Vasileks until the following five-year planning period because the factory’s 1978 financial reorganization would have required the state to cover 65 percent of the production costs for the gun mortar. In a report outlining Hungary’s recommended position at subsequent price negotiations, the Military Industrial Government Committee concluded that it would not be possible for DIGÉP to satisfy the Soviet Union’s proposed purchase price of 22,000 rubles per unit for the Vasilek through cuts in production costs. The committee therefore advocated halting production of the Vasilek in the event that Hungary was unable to come to an acceptable price agreement with the Soviet Union.92 The Defense Committee, however, considered the latter option to be unacceptable. At the same time, it only became apparent in the course of remarks from Minister of Metallurgy and Machine Industry István Soltész at an October 18, 1979, meeting of the committee that the drastic rise in the price of the Vasilek gun-mortar stemmed largely from exchange-rate losses due to the strengthening of the Hungarian currency to 28 forints to the ruble from 35 forints to the ruble. DIGÉP had conducted all the technical preparations necessary in order to manufacture the Vasilek, though could have adapted the capacities it had developed for this purpose to production of the Gvozdika self-propelled howitzer or the dollar-export S-60 anti-aircraft gun. The Defense Committee was therefore faced with the following alternative: either subsidize production of the Vasilek or terminate production of the gun mortar, a move which would have upset the Soviets. National Planning Office Chairman István Huszár asserted during the Defense Committee’s October 18 meeting that although export of the Vasilek constituted

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only 8 percent of Hungary’s total exports of military equipment to the Soviet Union, “subsidies cannot be overlooked, because we must strive to attain maximum cost-efficiency in all our production.” Huszár nevertheless believed that the awkward prospect of halting production of the Vasilek should, at the very most, be floated at talks with the Soviet Union, suggesting that it would likely be to Hungary’s greater benefit to request improved conditions surrounding export of the Vasilek as a result of the continuous increase in the import prices of military equipment.93 The Defense Committee finally decided to rank military technics being exported to the Soviet Union according to cost-effectiveness and to attempt to obtain the highest possible prices for exports to the country at subsequent talks. With regard to the Vasilek, the committee elected to maintain the previous asking price of 40,700 rubles per unit and to classify the weapon as “an item requiring further negotiation” if the Soviet Union continued to reject this price.94 In spite of their mutual efforts, representatives from Hungary and the Soviet Union failed to agree on a price for the Vasilek over the subsequent weeks. At bilateral talks held during the COMECON MISC’s session in East Berlin from November 19–22, 1979, Soviet officials raised their proposed purchase for the Vasilek to only 32,000 rubles per unit. Based on preliminary calculations from the Videoton electronics company, Hungarian representatives increased the maximum number of Deimos radio transmitters that Hungary could deliver, while coordination of import-export plans for the period 1981–1985 neared conclusion in other regards. Hungary’s projected exports of military equipment ultimately rose to 1.4 billion rubles, while projected imports reached 1.59 billion rubles. Hungary’s projected trade in military equipment with Poland, Bulgaria, and Romania was essentially balanced. The National Planning Office estimated that Hungary would have a surplus of 145 million rubles in such trade with the German Democratic Republic and a deficit of 318 million rubles with the Soviet Union. These projections corresponded to preliminary Hungarian forecasts both in terms of aggregate trade and in terms of trade with individual countries.95 On June 25, 1980, the Defense Committee approved the concept for Hungary’s military-industrial activity during the period of the sixth five-year plan pursuant to the September 1979 decision of the Hungarian Socialist Workers’ Party Central Committee Economic Policy Committee. This concept, which served as the basis for Hungary’s subsequent mid-range plan, forecast that the total value of domestic military-industrial production would increase to 68.9 billion forints in the subsequent five-year planning period beginning in 1981 from 41.1 billion forints in the five-year planning period concluding at the end of 1980, while the value of military-industrial exports would rise to 1.39

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billion rubles in the years 1981–1985 from 684 million forints in the years 1976–1980. The Defense Committee resolution called upon the National Planning Office to develop specific methodology to gauge the cost-efficiency of production of military equipment.96

NOTES 1. János Honvári, “Magyarország IMF-csatlakozásának előtörténete,” Valóság 48:10 (2005): pp. 82–102. 2. Proposal to the Political Committee regarding the Hungarian Position to Be Represented at the High-Level Meeting. No date. Supplement to the Minutes of HSWP Political Committee’s January 21, 1969, Session. MNL OL, M-KS 288. f. 5. cs. 482. ő. e., pp. 22–26. 3. Preliminary Hungarian Plan for the Internal Resolution of COMECON’s 23rd (extraordinary) Session. No date. MNL OL, M-KS 288. f. 5. cs. 485. ő. e., pp. 22–26. 4. Honvári, XX. századi magyar gazdaságtörténet, p. 450. 5. Letter from General Secretary L. Brezhnev and Prime Minister A. Kosygin to János Kádár and Jenő Fock. April 4, 1969. MNL OL, M-KS 288. f. 5. cs. 487. ő. e., p. 65. 6. COMECON established itemized and valuated annual and five-year production quotas at the bilateral goods and exchange talks. 7. Report to the Political Committee and the Council of Ministers regarding COMECON’s Extraordinary Session Held in Moscow from April 23–26 with the Participation of the General Secretaries of Member State Communist and Workers’ Parties and the Heads of State of These Countries. April 30, 1969. MNL OL, M-KS 288. f. 5. cs. 489. ő. e., pp. 11–17. 8. COMECON MISC Minutes No. 18/69 on the Commission’s Eighteenth Session. Budapest, May 13–16, 1969. MNL OL, XIX-A-16-aa 116. d. 9. Minutes No. 19/69 regarding the Nineteenth Session of the COMECON MISC Held in Moscow from November 11–14, 1969. MNL OL, XIX-A-16-aa 116. d. 10. Minutes on the 210th Session of the Defense Committee Held on March 12, 1970. HL HB 4. d; and Defense Committee Resolution No. 5/210/1970 on the Results of Bilateral Talks on Mutual Deliveries of Military Technics for the Years 1971–1975. MNL OL, XIX-A-16-aa 116. d. 11. Minutes on the 212th Session of the Defense Committee Held on May 21, 1970. HL HB 5. d.; Proposal to the Defense Committee on the Payment Situation Connected to Deliveries of Military Technics in the Years 1971–1975. May 9, 1970., Proposal to the Defense Committee on the Foundation of Military Industrial Exports in the Years 1971–1975. May 11, 1970 (the cited passage appears on p. 6); and Defense Committee Resolutions No. 3/212/1970. and 4/212/1970. MNL OL, XIXA-16-aa 116. d. 12. Report to the Defense Committee—The 20th Session of the COMECON MISC. No date. MNL OL, XIX-A-16-aa 116. d.

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13. Minutes No. 21/70 on the Commission’s Twenty-First Session. Moscow, November 1970. MNL OL, XIX-A-16-aa 117. d. The cited passage appears on p. 18. 14. Minutes No. 22/71 on the Twenty-Second Session of the COMECON MISC Held in Mangalia from May 25–28, 1971 and Report to the Defense Committee on Session No. 22/71 of the COMECON MISC. June 9, 1971. MNL OL, XIX-A-16-aa 118. d. 15. Report to the Political Committee on the Formulation of the Program of Socialist Integration. February 5, 1971; and the Political Committee’s February 9, 1971, Resolution. MNL OL, M-KS 288. f. 5. cs. 544. ő. e., pp. 10–17 and 18–20. The cited passage appears on p. 10. 16. Report to the HSWP Political Committee on the 52nd Session of the COMECON Executive Committee. May 3, 1971. MNL OL, M-KS 288. f. 5. cs. 555. ő. e., pp. 60–69. The cited passage appears on p. 61.; Honvári, XX. századi magyar gazdaságtörténet, pp. 450–451. 17. Submission to the Political Committee regarding the Hungarian Position to Be Represented at the 25th session of COMECON. July 6, 1971.; and Minutes of the Political Committee Session Held on July 13, 1971. MNL OL, M-KS 288. f. 5. cs. 559. ő. e., pp. 2 and 9–15. 18. The Joint Session of the Central Committee and the Council of Ministers Held on August 4, 1971. MNL OL, M-KS 288. f. 4. cs. 113. ő. e., pp. 79–80. 19. See MNL OL, M-KS 288. f. 5. cs. 559. ő. e., pp. 138–155. 20. See in detail Csaba, Kelet-Európa a világgazdaságban, pp. 19-53. 21. Report to the Defense Committee on Session No. 23/71 of the COMECON MISC. January 1972; and Minutes No. 23/71 on the Committee’s Twenty-Third Session. Moscow, 1971. Month of November. MNL OL, XIX-A-16-aa 119. d. 22. See in detail Pál Germuska, “The Arab-Israeli Wars and the Hungarian Armaments Export,” in Dariusz S. Kozerawski, ed. Military Conflicts in the 20th Century—Political and Military Aspects. Papers from the 10th Annual Conference of the Euro-Atlantic Conflict Studies Working Group. Warsaw, 25–27 May 2010 (Warsaw: National Defence University, 2010) pp. 240–252. 23. Proposal to the Defense Committee. May 4, 1971; and Defense Committee Resolution No. 6/221/1971. MNL OL, XIXA-16-aa 118. d. 24. Defense Committee Resolution No. 2/224/1971. MNL OL, XIX-A-16-aa 119. d. 25. Minutes No. 7/71 on the Military Industry Government Commission’s September 29, 1971 Session. MNL OL, XIX-L-1-qqq 9. d. 26. Member states regularly underbid one another in an attempt to win contracts for trade in military equipment. The prices at which the German Democratic Republic, Poland and Czechoslovakia, for example, offered to deliver tanks, parts, light weapons, and ammunition were 30–50 percent lower than those at which Hungary offered to deliver these same items. The former countries even offered Syria credit with a maturity of eight to twelve years at an interest rate of 2.5 percent. The 1969 Report of the Technics Foreign Trade Company’s Permanent Representative in Demascus. MNL OL, XIX-G-3-p 2. d. 27. Submission to the Defense Committee, 16 March 1972; and Defense Committee Resolution No. 3/229/1972 on Measures Connected to Special Deliveries to

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Developing Countries. March 23, 1972. MNL OL, XIX-A-16-aa 119. d. The cited passages appear on pp. 5, 7–8 and 9. 28. Submission to the Defense Committee regarding the Session of the COMECON Executive Committee Held in Moscow on April 19–20, 1972. MNL OL, XIX-A-16-aa 120. d.; and Minutes on the 231st Session of the Defense Committee Held on June 16, 1972. HL HB 5. d. 29. Report to the Defense Committee on the COMECON MISC’s Session Number 24/72. July 1972; and Minutes of the COMECON MISC’s 21st Session. MNL OL, XIX-A-16-aa 120. d. 30. Report to the Defense Committee on the Soviet Proposal regarding the Order of Transferring Production Licenses and Documentation for the Production of Military Technics. December 1, 1972; and Defense Committee Resolution No. 3/236/1972. December 7, 1972. MNL OL, XIX-A-16-aa 121. d. 31. Report to the Defense Committee. The Status of Special Deliveries (ExportImport). September 15, 1972. MNL OL, XIX-A-16-aa 120. d. 32. Submission to the Defense Committee. Report on Session No. 25/72 of the COMECON MISC. December 1972. MNL OL, XIXA-16-aa 121. d. 33. Submission to the Defense Committee. Report on Session No. 26/1973 of the COMECON MISC. June 18, 1973. MNL OL, XIXA-16-aa 121. d. 34. For information regarding the Soviet computer industry and cybernetics see: Slava Gerovitch, From Newspeak to Cyberspeak: a History of Soviet Cybernetics (Cambridge, MA.: MIT, 2004). For information regarding COMECON cooperation in the area of computer technology and Hungary’s computer-technology industry see the following short summary based on somewhat outdated sources: Nigel Swain, “Socialist Autarky and Failed Socialist Internationalism: COMECON and ‘Perverse Successes’ of the Hungarian Computer Industry” in Uwe Müller and Helga Schultz, eds., National Borders and Economic Disintegration in Modern East Central Europe (Berlin: Berlin Verl., 2002), pp. 209–221. For information regarding the “(pre) historic age” of Hungary’s information-technology industry see Győző Kovács, Válogatott kalandozásaim Informatikában—történetek a magyar (és a külföldi) számítástechnika (h)őskorából (Budapest: Gáma-Geo KFT., 2002). 35. Report on Session No. 27/1973 of the COMECON MISC. December 20, 1973. MNL OL, XIX-A-16-aa 123. The cited passages appear on pp. 8., 9–11. 36. Defense Committee Resolution No. 5/338/1973 regarding the Ministry of Metallurgy and Machine Industry’s Performance of Military Industrial Tasks in the Year 1972. February 15, 1973. MNL OL, XIX-A-16-aa 121. d. 37. Report on Present Military-Industrial Activity and Related Technical Development Objectives regarding Military Technology and Concepts Pertaining to the Five-Year and Long-Range Planning Period. April 17, 1974; and Defense Committee Resolution No. 6/248/1974. May 9, 1974. MNL OL, XIX-A-16-aa 123. d. Also Minutes on the 248th Session of the Defense Committee Held on May 9, 1974. HL HB 6. d. 38. Submission to the Defense Committee. Report on Session No. 28/1974 of the COMECON MISC. August 5, 1974. MNL OL, XIX-A-16-aa 123. d. 39. Excerpt from the Minutes of the 250th Session of the Defense Committee Held on August 29, 1974. MNL OL, XIXA-16-aa 123. d.

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40. Report on Analyses Related to the Launching of Production of the Strela1M Surface-to-Air Missile System, the BTR-70 Armored Personnel Carrier and the Vasilek Automatic Gun-Mortar. September 19, 1974; and Defense Committee Resolution No. 4/251/1974. September 26, 1974. MNL OL, XIX-A-16-aa 124. d. 41. Submission to the Defense Committee. Report on Session No. 29/1974 of the COMECON MISC. November 27, 1974. MNL OL, XIX-A-16-aa 124. d. 42. Report to the Defense Committee regarding the New Order of Transferring License and Production Documentation for Military Technics. May 15, 1975. MNL OL, XIX-A-16-aa 125. d. 43. Submission to the Defense Committee. Report on Session No. 30/1975 of the COMECON MISC. August 8, 1975; and Minutes No. 30/75 on the Thirty-Third Session of the [COMECON Military Industrial Standing] Commission. Leningrad, May 1975. MNL OL, XIX-A-16-aa 125. The cited passage appears in addendum no. 5 of the minutes, pp. 1–2. 44. Submission to the Defense Committee regarding Preparations for the Production of the 82 mm Vasilek Automatic Gun-Mortar. August 21, 1975; and Defense Committee Resolution No. 1/259/1975. MNL OL, XIX-A-16-aa 125. d. And Minutes on the 259th Session of the Defense Committee Held on August 28, 1975. HL Defense Committee Documents 6. d. The cited quotations appear on pp. 4–5 of the minutes. 45. Honvári, XX. századi magyar gazdaságtörténet, p. 441. The Hungarian Socialist Workers’ Party approved György Lázár’s report on the COMECON Executive Committee’s January 21–23, 1975 Session on January 28, 1975, though the report was not appended to the relevant document. MNL OL, M-KS 288. f. 5. cs. 656. ő. e. , p. 5. 46. Csaba, Kelet-Európa a világgazdaságban, p. 81. 47. Submission to the Defense Committee. Report on Session No. 31/1975 of the COMECON MISC. December 1975; and Minutes No. 31/75 regarding the 31st Session of the [COMECON Military Industrial Standing] Commission. Balatonkenese. October 1975. MNL OL, XIX-A-16-aa 127. d. 48. For detailed information regarding state subsidies and repayment conditions for the military industry see: Germuska, “A haditechnikai termelés és az új gazdasági mechanizmus,” pp. 141–153. 49. Report to the Military Industrial Government Committee regarding the Analysis of Cost-Efficiency, Pricing and Specialization Issues Related to Military Technics. January 1976. MNL OL, XIX-F-6-ae 33. d. The cited passages appear on pp. 15–16. 50. Minutes No. 123/1976 regarding the Military Industrial Government Committee’s Session Held on January 27, 1976. MNL OL, XIX-L-1-qqq 21. d. 51. Submission to the Defense Committee. Defense Committee Resolution No. 10/265/1976 and Statutes of the Military Industrial Government Committee. March 11, 1976. MNL OL, XIX-A-16-aa 127. d. 52. Report to the Defense Committee on the Fulfillment of Goods-Exchange Agreements regarding Military Technics with the Countries of the Warsaw Pact. April 1976. MNL OL, XIX-A-16-aa 127. d. 53. Report to the Defense Committee on the Conclusion of Goods-Exchange Agreements with Warsaw Pact Member States regarding Military Technics for the years 1976–1980. May 13, 1976. MNL OL, XIX-A-16-aa 128. d.

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54. Report to the Defense Committee on the Conclusion of the Soviet Union– Hungarian People’s Republic Government Protocol regarding the 1976 Mutual Delivery of Military Equipment. July 21, 1976. MNL OL, XIXA-16-aa 128. d. 55. Report to the Defense Committee on the Export of Special Products between the Years 1971–1975 as well as Estimated Deliveries to Developing Countries in the Planning Period 1976–1980. July 21, 1976; and Defense Committee Resolution No. 7/269/1976. MNL OL, XIX-A-16-aa 128. d. 56. Report on Session No. 32/76 of the COMECON Military Industrial Standing Commission. August 10, 1976. MNL OL, XIX-A-16-aa 128. d. The cited passage appears on pp. 9–10. 57. Submission to the Defense Committee regarding Hungarian Observations Concerning the Assessment of the COMECON MISC’s Activity. October 13, 1976; and Defense Committee Resolution No. 2/272/1976. MNL OL, XIX-A-16-aa 129. d. The cited passages appear on pp. 2–3, 4 and 7. 58. Minutes No. 33/76 on the 33rd Session of the COMECON MISC Held in Wroclav (sic) from October 19–22, 1976. MNL OL, XIX-A-16-aa 129. d. 59. Report on Session No. 33/76 of the COMECON MISC. November 30, 1976. MNL OL, XIX-A-98 105. d. 192. 60. For a general political report prepared for the Hungarian Socialist Workers’ Party Political Committee see the following source: MNL OL, M-KS 288. f. 5. cs. 706. ő. e., pp. 13–22. 61. Report to the Hungarian Socialist Workers’ Party Political Committee on Issues regarding Military Development. March 18, 1977. At the March 22, 1977 Session of the Hungarian Socialist Workers’ Party Political Committee. MNL OL, M-KS 288. f. 5. cs. 714. ő. e., p. 163. For the propositions contained in the Unified Armed Forces Supreme Command’s report entitled ”The Implementation of Resolutions Adopted at the Sessions of the Political Consultative Committee in the Years 1969–1974 regarding the Perfection of the Warsaw Pact’s Military Organization. The State and Development of the Unified Armed Forces” see the following source: HL Központi Irattár [Central Archives] (KI) 3/33/162. 62. Report on the 9th Session of the Committee of Defense Ministers of Warsaw Pact Member States Held in Sofia. December 22, 1976. MNL OL XIX–B–1–ai 132. d. The cited passages appear on pp. 3–5. 63. Hungary sustained around 92 billion forints in losses during the period 1972– 1976 as a result of the change in foreign-trade prices. While the cost of imported energy, raw materials and modern technology continued to increase, that of Hungarian export products did not. Hungary took out convertible-currency loans in order to cover these losses, thus causing the country’s debt to soar. See Submission to the Political Committee: The Fundamental Principles of Long-Term Foreign Economic Policy. March 1977. MNL OL, M-KS 288. f. 5. cs. 715. ő. e. pp. 29–71. For the impact of the global economic-crisis on Hungary see Honvári, XX. századi magyar gazdaságtörténet, pp. 459–463., and Pál Germuska, “Failed Eastern Integration and a Partly Successful Opening up to the West: the Economic Re-orientation of Hungary during the 1970s,” European Review of History, 21:2 (2014): pp. 271–291.

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64. Minutes of the Session of the Hungarian Socialist Workers’ Party Political Committee Held on March 22, 1977. MNL OL, M-KS 288. f. 5. cs. 714. ő. e. It is important to mention two remarks that high-ranking officials made during the Political Committee’s debate of this issue: first, Presidential Council Chairman Pál Losonczi’s observation, made in connection to his support for approval of the proposal: “although this is necessary, there are other weapons as well with which we can fight to implement the principles of peaceful coexistence”; and second, Defense Minister Lajos Czinege’s reply to a question regarding the military expenditures of other socialist countries: “Frankly, it must be said that we obtain information about one another from the publications of the London strategic institute [the International Institute for Strategic Studies]. It is not a reliable source, with accuracy of 90–95 percent. This is also the case with the effective strength as well.” Ibid., pp. 16–17. 65. Submission to the Defense Committee—the Status of Implementation of the Resolution regarding the Correction of Contractual Prices of Military Technics for the Year 1976 at the 31st Session of the COMECON MISC. November 12, 1976. MNL OL, XIX-A-16-aa 129. d. 66. The Correction of the Price of Military Technics in the Year 1976 and its Expected Impact in the Years 1977–1980. February 15, 1977; and Defense Committee Resolution No. 2/276/1977. MNL OL, XIX-A-16-aa 130. d. 67. Polevaya Avtomatizirovannaya Sistema Upravleniya Voyskami (Automated Field Troop Command System). 68. For detailed information regarding these problems see Submission to the Defense Committee regarding Measures to Be Taken in Order to Eliminate Problems in the Import of Materials, Parts and Supplementary Products Necessary for the Domestic Production of Military Technics, the Separate Acquisition of Civilian Products and Establishment of the Required Informational System. July 1978. MOL XIX-F-17-s 186. d. 69. Minutes No. 34/77 regarding the Thirty-Fourth Session of the COMECON MISC Held in Braşov from May 24–27. MNL OL, XIX-A-16-aa 130. d. The cited passage appears on p. 13; and Report on COMECON MISC Session No. 34/77. July 5, 1977. MNL OL, XIX-A-98 106. d. 200. The cited passages appear on pp. 11–14. 70. Report to the Defense Committee on the Impact of Government Agreements regarding Mutual Deliveries of Military Equipment and the Change of Socialist Contractual Prices in the Years 1976–1980 on Military-Industrial Activity during the Period of the Five-Year Plan. June 22, 1977. MNL OL, XIX-A-16-aa 130. d. 71. Report on Session No. 35/1977 of the COMECON MISC. December 21, 1977. MNL OL, XIX-A-98 108. d. 206. Minutes No. 35/77 regarding the 35th Session of the COMECON MISC Held in Vranov from November 22–25, 1977. MNL OL, XIXA-16-aa 132. d. The cited passages appear in addendum no. 4, pp. 1–2, 14, addendum no. 5, p. 3, and Minutes, p. 16. 72. Report on the 1977 Work of the COMECON MISC. Addendum No. 2 to the Minutes of the 36th Session of the COMECON MISC. May 1978. MNL OL, XIXA-16-aa 132. d. 73. For information on this issue see Defense Committee Resolution No. 7/288/1978 of February 23, 1978—Establishment of the Domestic System of Military

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Standardization. MNL OL, XIX-A-16-aa 132. d. For the relevant proposal see MNL OL, XIX-A-98 108. d. 206. 74. Report on COMECON MISC Session No. 36/78. August 1978. MNL OL, XIX-A-16-aa 132. d. 75. See Honvári, XX. századi magyar gazdaságtörténet, p. 448. 76. The Main Long-Range Directions of Military-Industrial Activity. Addendum No. 1 to the 1976–1980 Plan for Military-Industrial Activity. MNL OL, XIX-A16-aa 126. d. 77. Memorandum to János Borbándi on Concepts regarding Problems Related to Hungarian Military-Industrial Development and Long-Range Plans. April 5, 1978. MNL OL, XIX-A-98 128. d. The cited passages appear on pp. 3–6. 78. MNL OL, M-KS 288. f. 4. cs. 151–152. ő. e. 79. Report on the Debate of Agenda Item No. 1 at Session No. 140 of the Military Industrial Government Committee. April 12, 1978. MNL OL, XIX-A-16-aa 9. d. 80. Report on the Status of Formulating the Long-Term Development Concept for Military-Industrial Activity and Tasks to be Completed. June 22, 1978. MNL OL, XIX-A-16-aa 132. d. The cited passages appear on p. 2. 81. Minutes of the 292nd Session of the Defense Committee Held on June 29, 1978. HL Defense Committee Documents 8. d., p. 7. 82. MNL OL, XIX-A-16-aa 132. d. 83. Guiding Principles and Tasks Related to the Formulation of Long-Range Planning Concepts for Military-Industrial Activity, Including That for the Sixth Five-Year Plan. July 10, 1978. MNL OL, XIX-A-16-aa 10. d. 84. Minutes of the June 13th Session of the Hungarian Socialist Workers’ Party Political Committee. MNL OL, M-KS 288. f. 5. cs. 748. ő. e. 12, pp. 127–128. 85. Memorandum to Deputy Chairman Comrade Major General György Doró regarding the 1978 Military Industrial Exhibitions. Preliminary National Planning Office Reports Prepared at the Location of the 1978 Military Industrial Exhibitions in Cooperation with Representatives of the Ministry of Metallurgy and Machine Industry for the Defense Ministry. July 31, 1978. MNL OL, XIX-A-16-aa 10. d. The cited passages appear on pp. 2–3. The Hungarian People’s Army GS 2nd Chief Directorate and Hungarian industrial companies cooperated closely in the development of radioreconnaissance equipment. See in detail István Dékány and István Szőnyi, A magyar katonai rádiófelderítés története (Budapest: Zrínyi Kiadó, 2009). For information regarding the industrial and technological background to the development of radioreconnaissance equipment in Hungary see pp. 85–109 of the latter work. 86. Submission to the Political Committee regarding Hungarian Policies to be Represented at the 32nd session of COMECON. June 6, 1978. MNL OL, M-KS 288. f. 5. cs. 748. ő. e., pp. 17–26. The cited passage appears on p. 8. 87. Report to the Political Committee on the 32nd Session of COMECON and the 86th Session of the Executive Committee. June 30, 1978; Soviet Delegation Leader A.N. Kosygin’s Speech at the 32nd Session of COMECON; and Minutes of the Political Committee’s Session Held on July 11, 1978. MNL OL, M-KS 288. f. 5. cs. 748. ő. e., pp. 20–28, 45–57., 221–225. The cited passage appears on p. 55.

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88. Report on Session No. 37/78 of the COMECON MISC and the Activity of the Hungarian Delegation Participating in the Session. January 4, 1979. MNL OL, XIX-A-16-aa 133. d. 89. Report on the 38th Session of the COMECON MISC. August 1979. MNL OL, XIX-A-16-aa 134. d. The cited passage appears on p. 7. 90. Memorandum to [Council of Ministers Deputy Chairman] Comrade Gyula Szekér. Opinion on the [HSWP] Economic Policy Committee’s Report Entitled Guiding Principles regarding Development of Military-Industrial Production. July 4, 1979. MNL OL, XIX-A-2-ma 31. d. 91. Submission to the Economic Policy Committee of the Hungarian Socialist Workers’ Party Central Committee. Proposal regarding the Fundamental Principles Governing the Development Concept for Military-Industrial Production. August 1979. National Archives of Hungary, M-KS 288. f. 15. cs. 385. ő. e. The cited passages appear on pp. 13, 22, 24. 92. Proposal regarding the Hungarian Position to Be Represented at COMECON Price-Coordination Talks regarding Various Military Industrial Products. October 15, 1979. MNL OL, XIX-A-16-aa 134. d. 93. Minutes of the 306th Session of the Defense Committee Held on October 18, 1979. HL Defense Committee Documents 8. d. The cited passage appears on p. 10. 94. Defense Committee Resolution No. 3/306/1979. October 18, 1979. MNL OL, XIX-A-16-aa 134. d. 95. Report on Resolutions Approved at Session No. 309 of the Defense Committee Held on January 24, 1980. January 28, 1980. MNL OL, XIX-A-83-a, film 53016, folio 240–242. 96. Report on Resolutions Approved at Session No. 314 of the Defense Committee Held on June 25, 1980. July 1, 1980. MNL OL, XIX-A-83-a, film 53027, folio 367–370.

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Behind the hackneyed language contained in the development program that the Warsaw Pact Political Consultative Committee approved in Bucharest in November 1976, lay large-scale Soviet armament plans, as later became clear. In the course of preparing for the committee’s annual meeting for the year 1978, Hungary’s military leadership gained access to the theses of WP Unified Armed Forces Supreme Commander Marshal Viktor Kulikov regarding the implementation of the 1976 resolution and proposing new developments. In its analysis of the Soviet submission, the Ministry of Defense concluded that it represented a “far-reaching proposal determining the course and tempo of Unified Armed Forces developments for a long period of time.” It was for precisely this reason that Defense Ministry State Secretary Major General Károly Csémi, who also served as the supreme commander’s Hungarian deputy, initiated a meeting with Marshal Kulikov in order to examine and clarify certain stipulations contained in the proposal. At their November 15 meeting, Marshal Kulikov provided Major General Csémi with reassuring responses to his questions regarding the types of weaponry deemed obsolete and therefore expendable (Kulikov considered the weaponry of the Hungarian People’s Army to be up-to-date). Moreover, Marshal Kulikov informed Major General Csémi that in the event of war, reserve regiments and divisions would be raised only “as a function of existing possibilities” and that mobilization-period stockpile targets for matériel and other items would be defined flexibly in any resulting resolution. In his report on the meeting, Major General Csémi declared that “All of this could serve to decrease the material burdens that would become incumbent upon us through a rigid, literal, routine interpretation of the resolution related to the development of the Hungarian People’s Army.”1 235

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At its meeting in Moscow on November 22–23, the WP Political Consultative Committee approved the Unified Armed Forces Supreme Command’s report stipulating, among other things, that “the provision of troops and naval forces operating under the Unified Armed Forces Command with new, unified weaponry and military equipment should increase in comparison to the current five-year planning period.” At the request of Hungary’s delegation, the word “significantly” was omitted with regard to the magnitude of the recommended increase, which entailed enormous savings for both Hungary and other member states.2 The pressure that the WP Unified Armed Forces Supreme Command exercised on member states concerning implementation of weapons and military-equipment development and the expansion of production capacities has already been described in this book (see subchapter 4.4). Although military-industrial orders fell short of the targets contained in Unified Armed Forces Supreme Command recommendations, the volume of mutual deliveries still increased considerably. The Soviet Union therefore armed itself consciously and meticulously and did everything under its power to ensure that the tempo of development among allied armed forces did not lag too greatly behind that of the Soviet Army. The rise in international tension following the Soviet Union’s invasion of Afghanistan in December 1979 threatened to revive the atmosphere that prevailed during the most intractable years of the Cold War, serving as an external justification for the accelerated pace of military development.3 However, relations within the Soviet bloc had changed considerably since the 1950s, when it had been possible to thrust almost anything upon satellite states. Warsaw Pact-COMECON member states now declined to accept recommendations in excess of their national-economic capacities from both the Unified Armed Forces Supreme Command and the standing commissions. On October 14, 1980, the Hungarian Socialist Workers’ Party Political Committee approved the Hungarian People’s Army development plan for the next five-year planning period. In its appraisal of the results achieved during the period 1971–1980, the plan stated that “Around 60 percent of the weaponrytechnology [of the Hungarian People’s Army] is of the most up-to-date and modern type, while the remaining 40 percent is of an older variety, though is still suitable for the intended purpose. We regard this proportion to be acceptable and justified over the long-term.” The plan defined the objective of development as “the continuation of comprehensive, steady, proportionate, and high-quality development without increasing the peacetime or wartime size of the army.” The plan also revealed that on the basis of Warsaw Pact Unified Armed Forces Supreme Command recommendations, Hungary was expected to import military equipment worth 4.4–5.3 billion rubles (or 130–150 billion forints) in the course of the sixth five-year plan, though the national economy

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had the capacity to import only 1.34 billion rubles (or 37.8 billion forints) worth of military equipment during the period.4 This was not, of course, the first time that a serious gap had emerged between Soviet expectations and domestic possibilities. On November 27, 1980, the Defense Committee approved Hungary’s fiveyear military-industrial plan finalizing the steep long-range growth trajectory mentioned above. The plan projected 65 billion forints in domestic militaryindustrial production during the period 1981–1985, of which 70–75 percent would be exported to markets both within and without the alliance. According to the plan, Hungary would have to generate the forecast 10 percent annual growth in domestic military-industrial production in spite of the failure to obtain the needed investment resources. The plan called for 1.33 billion rubles in exports within COMECON, including a 77.5 percent increase in cooperative deliveries to 355 million rubles in the years 1981–1985 from 200 million rubles in the previous five-year period. The Defense Committee Secretariat’s report on the plan suggested that member states encountered obstacles to reaching military-industrial growth targets already in the final quarter of 1980, stating that “In view of the fact that certain socialist countries have failed to meet their stipulated delivery obligations, it is necessary for us to hold back certain products as well.” The Defense Committee requested that a proposal be submitted aimed at compensating domestic manufacturing companies in some way for the disadvantages they incurred as a result.5 Though it would be important to comprehensively analyze the course of military-industrial cooperation in the 1980s as well, the lack of sources pertaining to this decade makes doing so impossible. Due to the informationprotection regulations and confidentiality laws described in the introduction of this book, very few sources originating from the period following January 1, 1980, are accessible to researchers. Thus the current chapter can do no more than introduce the primary trends and developments that took place with regard to military-industrial cooperation in the 1980s.

5.1 STANDING IN PLACE The international political tension and economic difficulties of the early 1980s served to heighten the interdependence of COMECON countries and increase the tendency within the organization to substitute imports with autarkic policies. At the same time, the crisis enhanced conflicts of interest among the COMECON countries, generating particularly harsh friction between the energy-exporting Soviet Union and energy-importing member states. In May 1980, the Hungarian Socialist Workers’ Party Political Committee instructed

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delegates preparing to represent Hungary at the upcoming 34th session of COMECON that they should seek to ensure that demand for raw materials and energy could be satisfied to the greatest possible degree through intrabloc deliveries and to promote the development of unused capacities within the agricultural, food, and processing industries.6 However, it was precisely the Soviet delegation that proposed at the COMECON session held in Prague from June 17–19, 1980, that specialization be extended to the newest technology, that member states take measures aimed at reducing demand for raw materials and energy and that the efficiency of production be increased.7 The long-term security of fuel, energy, and raw-material supplies continued to represent the strategic objective at talks held in the first half of 1981 regarding goods-exchange turnover for the sixth five-year planning period.8 The Hungarian Socialist Workers’ Party Political Committee was forced to recognize after the end of bilateral negotiations in July 1981 that the following negative factors governing relations among COMECON member states had become more conspicuous: “the focus on short-term national interests”; “the assertion of developmental and structural advantages”; the increasing need of developing member states (such as Mongolia, Vietnam, and Cuba) for support and the maintenance of preferences; and the wish of the Soviet Union, which was profiting greatly from the rise in the price of energy, to conduct goods trade at current prices, while member states attempted to finance deliveries through external resources (credit). The magnitude of the price changes is reflected in the fact that Hungary was expected to increase its exports to the Soviet Union by 70 percent over a period of five years in order to compensate for imports from the USSR.9 At the recommendation of the Soviet Union, COMECON officials, perceiving the unfavorable circumstances that had emerged, began in the summer of 1982 to organize a high-level meeting to address the issue of “further developing” cooperation within the organization. Permanent COMECON representatives convened in September to coordinate the documents to be debated at this meeting.10 At the beginning of February 1983, the leadership of the Hungarian Socialist Workers’ Party placed on its agenda discussion of draft proposals formulated until that time and the party’s planned position at the meeting. The Political Committee wanted to conduct more critical discussion of the “economic situation of the entire community,” including its flaws and difficulties. The Political Committee deemed it important to clearly identify the underlying reasons that had caused socialist countries to become indebted to the West: • Along with rising prices, the growth in deliveries of energy and raw materials within the COMECON has been slowing for a long time.

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• The acquisition of modern technology from COMECON countries has encountered difficulties, while specialization and the level of cooperation have lagged behind the material-technical possibilities of member states. • The deepening crisis in the capitalist world economy and the deterioration in foreign-trade exchange proportions have exercised a significant impact on the economic development of the socialist countries. At the same time, Hungary supported the harmonization of member-state economic policies, the strengthening of trade-policy coordination and the improvement of the cooperation mechanism.11 At the multilateral consultative meeting of central-committee secretaries from Soviet bloc countries held in Moscow on February 8–9, the delegate from the CPSU Central Committee reassured his cohorts that the notion of economic-policy coordination merely entailed the regular exchange of information and did not represent common planning directed from Moscow. The delegate asserted that the consultations were aimed at coordinating the technical-scientific and structural policies of individual member states. According to the Hungarian report on the meeting, there was near total agreement among delegates as long as they discussed modernization of COMECON in general terms, though increasingly sharp conflict emerged as more concrete issues, such as trade in convertible currency and the change of the structure of goods turnover, came up for debate.12 It became apparent during further talks held in Moscow from April 26–28 that preparatory work would require more time than previously expected due to the differences of opinion that existed among member states. The summit meeting of member-state leaders therefore had to be delayed and subsequent coordination of the documents entrusted to an international drafting-committee established at that time. There were certain indications at the consultations that the Soviet Union was attempting to use its position as an energy supplier in order to pressure fellow COMECON member states to provide the country with needed products and technologies. The Hungarian delegation’s report on the consultations complained that the Soviets had been unwilling to undertake risks and obligations at the consultations: The Soviets . . . are still not willing to undertake the obligation of satisfying the long-term import needs of the other COMECON member states. On the contrary, representatives of the Soviet Planning Committee attempted to draft a text further undermining the security of importers that would have made Soviet deliveries of fuel and raw materials contingent upon so-called compensatory counter-deliveries. Moreover, complete uncertainty would continue to surround the magnitude of Soviet fuel and raw-material deliveries, which they would make dependent upon the realistic possibilities prevailing in the Soviet Union, the degree to which the Soviets were are able to conclude agreements regarding

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counter-deliveries of necessary goods and, furthermore, the implementation of joint measures aimed at resolving individual problems. Their recommended text stipulates a threefold guarantee of the conditions of Soviet deliveries on one side, though contains no guarantee whatsoever on the other.13

At COMECON’s 37th session held in East Berlin from October 18–20, 1983, member-state heads of government and party leaders debated the closing documents for the planned meeting. The draft resolutions were completed by May 1984 and distributed to COMECON countries. The Economic Policy Department and Foreign Policy Department of the Hungarian Socialist Workers’ Party had adopted a realistically pessimistic view of the situation: It is obvious that compromises reached in the wording of the document did not eliminate the conflicts of interest that exist in the bilateral and multilateral relations of COMECON member states with regard to several vitally important issues. Therefore the compromises established in the text do not provide a sufficient guarantee that the ambitions embodied in the original ideas of certain countries—above all the Soviet Union—will not reemerge in the course of bilateral cooperation and the concretization of resolutions within COMECON organs. This represents a real danger not only in the period after 1985, but in certain respects in the years 1984–1985 as well. It can thus be expected that efforts aimed at extending the scope of economic-policy coordination in a manner that is not compatible with our interests will continue. The resolution does not ensure the increase or even the preservation of current levels of fuel, energy and raw-material supplies. The decisive factor will be the degree to which the Soviet Union truly takes into account the objective conditions, needs and possibilities of individual COMECON member states. The draft indirectly continues to call upon countries to reapportion investment resources in order to reach common objectives, mostly to the benefit of the Soviet Union and certain less developed COMECON member states, while it fails to place adequate emphasis on the possibility of redistributing resources in order to satisfy needs regarding food and agricultural products as Hungary has urged. . . . The issue of maintaining the Soviet Union’s desired total balance in foreign-trade and liquidation and the elimination of trade presently conducted in convertible currency has not been removed from the agenda. The notion of applying special contractual prices which are lower than world prices to products delivered within the framework of specialization and cooperation will again emerge in the course of developing the foreign-trade pricing system. . . . The contradiction between the relatively detailed description of cooperative production goals and the perfunctory, occasionally trite treatment of the system of interests and resources represents an unfavorable aspect of the draft resolution. Neither did it contain any new ideas serving to promote the process of integration of the currency-financial system of socialist economic-cooperation that would make it possible to increase the role of trade and financial conditions in economic relations among COMECON member states. Although the draft resolution does not reinforce the movement

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toward isolation evident at the beginning, another of its considerable shortcomings is that it does not stipulate any direct cooperative measures in terms of either objectives or resources that would serve to significantly improve the world-market competitiveness of COMECON member states in certain areas.14

It is important to note that Hungarian economic literature published at this time considered these same defects in COMECON’s monetary system to represent one of the main obstacles to closer integration. The weaknesses of the financial system, of course, constituted a linear process stemming from natural planning and the bilateral character of commerce and settling accounts.15 COMECON held its first highest-level summit meeting in fifteen years and the extraordinary 38th session of the organization’s Secretariat in Moscow from June 12–14, 1984. Leaders attending the meeting approved four documents, publishing their short statement, declaration, and closing communiqué, though not their detailed resolution. In a report to the HSWP Political Committee on June 9, 1984, Central Committee Secretary Ferenc Havasi, who was responsible for the body’s economic policy, asserted that the unpublished resolution had established the objective of providing a fifteen to twenty-year economic-policy program for COMECON integration. Havasi said that the resolution had proposed that COMECON preserve its energy self-sufficiency through increased raw-material and energy production in the Soviet Union supported through investment contributions. The Central Committee secretary stated that, to the relief of numerous member states, Soviet officials had promised to maintain deliveries of oil from the Soviet Union at their 1985 levels until the year 1990. According to Havasi, the resolution contained four further objectives in addition to those described above: to increase food production in COMECON member states in order to minimize their need for imports; to improve the range of available consumer goods through specialization and cooperation; to reduce member-state imports of modern technology and strengthen the development of these countries; and improve the road and transportation systems in member states. At its extraordinary session, the COMECON Secretariat transferred the initiatives approved at the organization’s summit meeting to executive-action plans. Remarks from Hungarian Socialist Workers’ Party General Secretary János Kádár at a meeting of the party’s Political Committee reveal that Soviet officials used the summit meeting as an opportunity to place pressure on member states to take various measures deemed beneficial to the interests of the Soviet Union. Kádár stated, for example, that Soviet Defense Minister Marshal Dmitriy Ustinov, who had received the duty of escorting the Hungarian delegation, continually attempted to convince him of the necessity for Hungary to purchase the most modern weaponry for the country’s military forces.16

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As a result of the resolutions adopted at the June 1984 summit meeting, COMECON member states and organs began to formulate various longrange cooperation programs, enacting measures aimed at concluding separate agreements regarding cooperation in the production of atomic-energy equipment, development of industrial robots, and microelectronics. Moreover, the COMECON Executive Committee approved the development program for Unified Electrical Energy Systems until the year 2000, while a cooperation program intended to promote rational and efficient use of material resources and a complex program for construction of nuclear power plants and heating plants until the year 2000 as well as technical-scientific development for the following fifteen to twenty years was still under preparation. During the first half of 1985, COMECON member states were engaged primarily in coordination of people’s-economic plans for the next five-year planning period (1986–1990). A June 1985 report to the HSWP Political Committee regarding the issues on the agenda of COMECON’s 40th session suggests that there were substantially more unsatisfied demands following talks between member-state officials than there had been in previous planning cycles: “The volume of trade turnover stipulated in the course of planning coordination does not even guarantee the minimal necessary conditions for the dynamic development of the [Hungarian] people’s economy.”17 The election of Mikhail Gorbachev to serve as general secretary of the Communist Party of the Soviet Union in March 1985 precipitated further changes within COMECON. On September 12, 1985, Gorbachev dispatched letters to member-state leaders requesting that they discuss the possibility of accelerating technical-scientific cooperation during the next meeting of the Warsaw Pact Political Consultative Committee. The CPSU’s newly appointed general secretary made the following statement with regard to his assessment of COMECON’s difficulties during a meeting with Hungarian Socialist Workers’ Party General Secretary János Kádár in Moscow on September 25: On the one hand, we have achieved major successes in the realms of political, economic, social and economic life and elsewhere as well. The positions of socialism in the global arena have further strengthened. On the other hand, we see those alarming tendencies that hamper and retard our development. . . . The problems have long been ripe. It would be important to collectively conduct scientific analysis in order to identify the modes of our further progress without hesitation and improvisation and free of voluntarism.

At the WP Political Consultative Committee’s session in Sofia on October 22–23, Gorbachev again emphasized the importance of expediting the preparation of the complex program valid until the year 2000 in order to avoid lagging too far behind the West:

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If our countries delay integration and count upon existing relations with the West in a decisive way, then even in the best case they will fall seven to ten years or more behind the scientific-technical policies of the West. A lag of this magnitude would entail both economic and political consequences and exercise an unfavorable impact on the destiny of individual countries and on the entire cause of socialism. In our opinion, we must proceed in an organized and unified manner in the direction of international technological cooperation.18

All delegations present at the meeting of the Political Consultative Committee supported Gorbachev’s proposal: All delegation leaders agreed that extensive cooperation in the establishment and serial production of completely new technical and technological product groups should begin at the start of the next five-year plan and that in the implementation of our technical-scientific development program we must seek the possibility of cooperation with Western Europe.19

Following debate within the COMECON Executive Committee and Technical Scientific Cooperative Committee, the proposal for the new complex program was submitted at the organization’s extraordinary session held in Moscow on December 17–18, 1985, as Gorbachev had recommended. The draft program focused on five areas: the computerization of the people’s economies; complex automation; atomic energy; biotechnology; and new materials and the establishment of their production and processing technologies. The program ambitiously targeted a twofold increase in productivity and a significant decrease in specific energy and raw-material use in member states by the year 2000. The draft program called for the establishment of socalled chief organizations in addition to existing COMECON organs in order to coordinate and direct concrete research tasks to be financed partially from national resources and partially from the affiliated International Investment Bank and International Bank for Economic Cooperation. The classified portion of the program specified ninety research themes, each one of which was attached to a competent Soviet ministry or supreme authority. This part of the draft program furthermore designated the interested countries, institutions and COMECON organs.20 Delegates attending COMECON’s December 1985 extraordinary session approved the proposed complex program, while Hungary’s Council of Ministers issued a decree in March 1986 addressing national tasks and duties stemming from the program.21 Member-state communist-party leaders met in Budapest on June 10–11, 1986, to discuss the session of the Warsaw Pact Political Consultative Committee.22 The first and general secretaries of member-state communist parties met again in Moscow on November 10–11, 1986, in order to examine possibilities aimed at making COMECON’s operations more dynamic. Although

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Gorbachev had not implemented a paradigm shift, he had explicitly proclaimed respect for the right of all socialist countries to pursue their own paths. According to HSWP General Secretary János Kádár, Gorbachev made the following statement with regard to the self-determination of member states: The CPSU Central Committee adopted the resolute position that the type of patronage and guardianship that prevailed for a long period of time during an earlier phase of development cannot continue. They are of the opinion that modes of cooperation in the development phase must wholly respect the independence of the parties in socialist countries and the sovereignty and unique characteristics of socialist countries and take into account their interests as well. He added that it is incumbent upon every single country, including the Soviet Union, to consider the interests of the collectivity in addition to their own interests. Gorbachev also emphasized the need for economic cooperation with the capitalist world, suggesting that companies in socialist and capitalist countries might even establish joint enterprises.

At a November 18, 1986, meeting of the HSWP Political Committee, General Secretary Kádár said that Gorbachev and other officials had stressed the importance of implementing the stipulations contained in the approved complex program: With regard to COMECON and bilateral economic cooperation, comrade Gorbachev and the other speakers underscored elements that have long been on the agenda. They highlighted the need to modernize products and production. The successful implementation of this depends to a large degree upon implementation of the Complex Program. . . . They emphasized that goods exchange, as an early main model, is no longer satisfactory today and that more developed forms of cooperation, common research and joint enterprises must receive a much greater role.

According to Kádár, party leaders had conducted prolonged debate regarding prices and pricing principles and that several of them had asserted that it would be necessary in the interest of facilitating joint operations to introduce a “genuine, truly functioning currency” in place of the physically non-existent transferable ruble used for settling accounts. Many of these party leaders also criticized the slow, clumsy, and highly bureaucratic operations of the COMECON apparatus.23 COMECON prepared for another extraordinary session on October 13–14, 1987. Though records are unavailable regarding the draft resolutions for the session, the report submitted to the HSWP Political Committee regarding Hungary’s position at the session reveals that none of the planned resolutions contained measures aimed at the radical transformation of COMECON.

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The HSWP CC Economic Policy Department’s report asserted that the draft resolutions were not sufficient to significantly enhance cooperation within the organization: Based on resolutions drafted so far, we have determined that our effort to achieve a breakthrough in the development of the system of conditions for cooperation has again failed. The current resolutions represent only the launching of the first phase in the transformation of integration. . . . The collective concept for the international division of labor must focus on strategic issues related to cooperation and feasible goals must be established. Its implementation cannot take place solely from a natural perspective with the administrative designation of tasks and must include the primary directions of the cooperative mechanism.

According to the report, the draft resolution regarding the establishment of direct relations between enterprises was significant, though lacked the necessary legal and financial foundation. The Economic Policy Department analysis identified the continued underdevelopment of the currency-financial credit system as one of the primary obstacles to integration, calling for the fundamental transformation of this arrangement. At the same time, it was in Hungary’s interest to preserve the existing system of planning-coordination as a means of guaranteeing the supply of energy and raw materials and numerous other measures aimed at long-term integration.24 Delegates approved these resolutions at the 43rd session of COMECON in Moscow, thus launching the process of transforming the organizational structure of the organization’s representative organs and Secretariat, decreasing latter body’s staff, reducing parallel operations, etc. However, Hungarian officials were dissatisfied with the pace and magnitude of progress. A proposal submitted to the HSWP Political Committee in June 1988 regarding preparations for the next session of COMECON asserted repeatedly that the organization could increase the efficiency of its operations only through the strengthening of market trade and financial conditions. At the 44th session of COMECON held in Prague from July 5–7, 1988, the organization’s council placed the issues of the collective conception for the division of labor, the status of the work program for the computerization of the people’s economies and the timetable for planning coordination for the years 1991–1995 on the agenda of the meeting.25 CPSU General Secretary Gorbachev, who had previously expressed such optimism with regard to the future of cooperation within COMECON, had by this time begun to declare privately that the program of socialist integration was dead. At a March 10, 1988, session of the party’s Political Committee, Gorbachev voiced harsh criticism of COMECON’s existing practices: “There is almost no trade taking place within COMECON. That

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which does occur is primitive barter. . . The type of economic cooperation that has characterized our relations over the past decades has become an insupportable burden.”26 Soviet officials nevertheless continued to harbor illusions regarding the continued operation of COMECON, especially as a result of the rational interests that sustained them. In a February 1989 memorandum to CPSU CC Propaganda Department Chairman Alexander Nikolaevich Yakovlev regarding the USSR’s relations with socialist countries in Europe, the CC’s International Department characterized the prevailing circumstances within COMECON as follows: The quality of economic relations has become increasingly important from a political standpoint as well. The role of economic relations has become completely obvious for the majority of socialist countries. And they are extraordinarily important for us as well. We must finally abandon the stereotype that these countries depend on us. Contrary to the generally accepted notion, the truth is that trade conducted with European COMECON countries is rather beneficial to us. . . . Imports from COMECON countries account for 40–50 percent of the Soviet Union’s total demand for metal-industry technology, 40 percent of foodindustry technology, 50 percent of textile-industry technology, 35 percent of chemical-industry technology, approximately 30 percent of logging and woodprocessing technology and more than 40 percent of printing-industry equipment. . . . According to our calculations, we generate four rubles in profit for every one ruble in revenue stemming from the sale of oil to COMECON countries (earnings from our oil exports to these countries was 493 percent in 1987). Moreover, the acquisition of food-industry products and consumer articles from them and its sale at Soviet retail prices generates significant proceeds for our budget. . . . The conditions surround the procurement of grain in COMECON countries is much more favorable for us than it is on the world market. For example, we must sell approximately 1.45–1.5 tons of oil in order to purchase one ton of grain on the world market with convertible currency; in the COMECON countries, we have to sell a total of one ton of oil for the same thing.

The barter-based system of trade within COMECON was beginning to languish, if for no other reason than that the Soviet Union was no longer capable of satisfying the rising demand of fellow member states for energy and raw materials. Soviet officials had even made plans to decrease exports of oil to these countries within a period of five years. According to Soviet estimates, the steady decline in the world-market price was expected to result in a foreign-trade deficit of up to seven billion rubles with European COMECON countries by the end of the following five-year planning period in 1995. The CPSU CC’s International Department continued to consider the strategic objectives of socialist integration, such as the establishment of a common COMECON market and currency convertibility, to be “completely relevant.”

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The International Department acknowledged that attempts to increase cooperation within COMECON had not achieved their intended results: Along with the numerous mutual decisions, economic cooperation is obviously stagnating. The Comprehensive program of scientific and technological cooperation among COMECON member states that once served as grounds for true hope has in effect failed. Cooperation within COMECON increased somewhat following the 1986 summit meeting. Certain companies established direct relations with one another and joint ventures were founded as well. These new forms of association did not, however, exercise a palpable impact on the volume or structure of trade (the direct relations account for less than one percent of all trade volume).

The Central Committee International Department arrived to the cursory conclusion that “the problem of economic integration cannot be solved with the help of general programs (no matter how good they may be).” The Soviet Union attached exaggerated hopes to the network of connections surrounding military equipment as well: The coordination of efforts to reorganize the military industry could represent one of the new channels of our economic influence over the socialist countries, especially since the military-industrial complex of these countries is integrated to a greater degree than their civilian economies.27

The Soviet Union increasingly advocated the notion, obviously inspired by the economic integration that had taken place in Western Europe, of establishing a common COMECON market. Poland, Czechoslovakia, and Bulgaria all supported this idea, though again envisaged creating this common market through administrative measures and political decisions. Hungary had a much different opinion in this regard, espousing the introduction of an open market-economy.28 On March 14, 1989, the HSWP Political Committee debated a proposal signed by Council of Ministers Chairman Miklós Németh entitled “The World Economic Opening and the Fundamental Renewal of Our COMECON Relations.” The proposal, whose very title denoted radical transformation, declared that the unchanged structural, institutional, and developmental policies of the 1980s had served to curb economic production. The flawed economic policy of this decade required change, which Németh referred to concisely as “world economic opening.” The report emphasized the need to open Hungary’s economy to the global market: The essence of the change in foreign-economic direction is to gear export development to the import of modern products. In a stricter sense, it means the

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restructuring of foreign-economic relations in such a way as to decrease the focus on COMECON countries (primarily the Soviet Union) and increase that on world-market trade conducted in convertible currency. The necessity of this is based on the recognition that the main reason for the inability of the Hungarian economy to export to capitalist markets is the structure established consciously over the past forty years for ideological and political reasons in which a significant portion of the economy operating to a great degree on Western inputs is capable of producing only for the domestic and COMECON markets. . . . It must be emphasized: not only are we bearing the consequences of the defects contained in former development policy, but the structure established in the 1950s and 1960s has been continually reproducing itself because our economic policy has remained committed to this development strategy and to this day is not capable of clearly and credibly proclaiming another type of policy. The change in foreign-economic direction therefore entails the permanent, centrally directed and, by its very nature, conscious renunciation of the “COMECONautarkic” extensive economic-development strategy.

The proposal therefore advocated the formulation of a fundamentally new COMECON policy subordinating the objective of cooperation within the organization to that of economic opening. The resolution asserted that Hungary’s attempts to transform COMECON into an organization that was “market- and efficiency-oriented and open toward the world economy” had been futile. According to the resolution, unilateral Hungarian measures had become necessary for the following reason: Over the past four decades, COMECON, as an institution, has proven to be unsuccessful in its entirety: it has led to a loss of ground in the world economy, severe problems with regard to internal balance and technical underdevelopment in the majority of member states. Recovery is not possible in a collective manner—it can only be achieved through the transformation of national economic-policies through reform of economic systems and foreign-economic opening in all member states. Under these circumstances, the reform and “transformation,” most recently as part of the campaign pursued under the slogan of the unified market of COMECON countries, have, from Hungary’s standpoint, become the scene of a rear-guard action, the stakes of which are merely whether it is possible to retard to some degree the process of decreasing previously existing advantages and the increase of disadvantages. The planned establishment of a unified Western European market in the year 1992 tacitly inspired the notion of a unified COMECON market that the Soviet Union had recently begun to espouse with extraordinary vigor. Yet a unified market—as a matter of course—can only come into being among market economies, while COMECON countries are, at present, not only far from qualifying as such . . . but among them some even reject market-type reforms. And what’s more: these market economies, if they have not aimed at creating a collective autarky, must become open toward the world.

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In terms of practical measures, the above required the elimination of the system of obligatory trade quotas and the dismantling of the poorly working system of planning coordination that existed at the time. Council of Ministers Chairman Miklós Németh recommended that Hungary’s trade policy vis-à-vis the Soviet Union must undergo complete review as a result not only of the Soviet economy’s underdevelopment, lack of delivery discipline, and other mounting difficulties, but of the Hungarian economy’s need to abandon its “single-market orientation” as well. Németh wished to declare at an international level as well that Hungary’s economic relations with COMECON countries must promote the objective of worldeconomic opening. The remaining parts of the proposal outlined an action program dealing with a range of issues from the future financial regulation of Hungarian-Soviet trade and the management of debt to the liberalization of imports and the boosting of convertible-currency exports. The HSWP Political Committee adopted a resolution supporting economic opening and supported taking unilateral measures—even with regard to the Soviet Union.29 The position of the Hungarian Socialist Workers’ Party negotiating delegation attending a meeting of central-committee economic-policy secretaries from COMECON member states in Prague on March 6–7, 1989, was essentially based on the above resolution. The Social Policy Department of the HSWP Central Committee issued a very critical report regarding this meeting. The report asserted that the reform proposal submitted by the Communist Party of Czechoslovakia contained serious internal contradictions, while Soviet ideas regarding a unified socialist-market “failed to consider the principle of building from below in the establishment of market conditions.” The report also criticized the proposal that the Soviet Union submitted during the consultations from several other standpoints, declaring the entire draft conception presented at the meeting to be, on the whole, groundless. On March 21, 1989, the HSWP Political Committee approved the following points based on this report to serve as Hungary’s official position: 1. World-economic opening is needed in place of COMECON autarkia, this is of primary importance for the Hungarian economy. The development of COMECON cooperation must promote this opening. 2. Fundamental change must be achieved with respect to COMECON cooperation. Progress must be sought with interested countries in a bilateral and multilateral order rather than waiting for the establishment of complete agreement at the COMECON level. 3. The development of socialist economic integration is the duty of the member states, we reject notions urging supranational solutions and institutions.

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4. The basic prerequisites for the fundamental transformation of COMECON cooperation are the development of internal economic mechanisms and the establishment of a system of economic conditions and instruments corresponding to the value system of the world economy. Relations between companies based on a significant increase in the role of trade and financial conditions and modernization of the currency and financial system must be strengthened considerably in the course of reforming cooperation. 5. Under the present circumstances it is not a realistic and feasible objective for member states to establish a unified market. Over the long term, it is possible to support the effort to increase the free flow of production factors within COMECON. However, introduction of the unified market requires the existence of national markets.30 On June 13, 1989, the HSWP Political Committee approved the Council of Ministers proposal regarding the position that Hungary’s delegation would espouse at the upcoming 45th session of COMECON in Sofia. According to the proposal, the delegation would advocate gradual transformation of the economic model pursuant to the fundamental change in direction that had been adopted in March, at all times taking into account the interests of individual member states. The adopted proposal stated that “COMECON, as an organ of multilateral economic cooperation, will have no reason for existence if this does not take place.” The Council of Ministers proposal declared that the scientific-technical complex program and the planning-coordination work plan for the years 1991–1995 on the agenda of the COMECON meeting to take place from June 27–29 were both unfounded and unrealistic. According to the proposal, it was extremely important that Hungary’s delegation instead advocate market-based cooperation.31 In September 1989, Czechoslovakia’s party leadership submitted another draft program to fellow COMECON member states that was intended to serve as the basis for high-level talks to be held in the near future. However, the Social Political Department of HSWP CC determined that this program did not represent a significant shift in the official viewpoint of Czechoslovak party leaders. The Social Political Department concluded that COMECON member states had become divided into three main groups: those in favor of reform (Poland, Czechoslovakia, Bulgaria, and the Soviet Union); those in favor of correcting the existing system (the German Democratic and Romania); and non-European countries (Vietnam, Cuba, and Mongolia). The department noted that none of ideas under consideration within COMECON were close to those of Hungary. Based on this consideration, the Presidium of the HSWP decided that it was not an opportune time to hold high-level COMECON talks.32

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The Velvet Revolution in Czechoslovakia, the fall of the Berlin Wall, the Romanian Revolution, and the proclamation of the republic and holding of free elections in Hungary represented a fundamental turning-point in the history of Central and Eastern Europe. However, Soviet leaders appeared not to recognize the implications of these events for a considerable period of time, instead continuing to focus on the best methods of asserting the Soviet Union’s interests via the existing organizations. Presidential advisor Vadim Valentinovich Zagladin, who had previously served as the head of the CPSU CC’s International Department, analyzed the situation in Eastern Europe in a memorandum to Gorbachev in October 1990. In this memorandum, Zagladin asserted that all states in the region were in some stage of transition, and that communist parties were on the defensive in each of them—even in countries such as Romania and Bulgaria where “they had retained their positions in a new form.” Zagladin advised President Gorbachev to undertake increased political activity in the region in order to compensate for the fact that the Warsaw Pact and COMECON were no longer performing their previous functions. Zagladin’s memorandum emphasized the importance of the Soviet Union’s economic relations with the countries of Eastern Europe: The necessary transition to the system of mutual profit and settlement of accounts in convertible currency could, without a doubt, destroy established relations and cause us serious damage. While not deviating from the established course, it would obviously be advisable to find certain non-traditional, temporary forms of exchange as quickly as possible, including the republics, regions and certain companies [within the Soviet Union] in this process, initially conducted without currency, in an effort to obtain the goods and services that we need.33

On January 22, 1991, the CPSU Central Committee Secretariat adopted a resolution that offered a similar assessment of the situation in Eastern Europe and the Soviet policy objectives in the region. The resolution identified the preservation of the Soviet Union’s economic positions in Eastern Europe as one of the primary objectives of Soviet foreign policy: In order to promote this, pragmatic policies based on a balance of interests should be pursued vis-à-vis Eastern European countries, policies that illuminate for them the advantages of cooperation with the Soviet Union and motivate them to establish their own policies in a manner that is favorable to us, while taking into consideration our needs and problems. Resolute defense of Soviet interests represents one of the requirements for such policy, though attempts at domination must be repudiated and the distinction between such rejected interference and the utilization of legitimate means of exercising influence must be

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understood. Although our possibilities have diminished, Soviet policy continues to possess certain room for maneuver in the implementation of its duties in Eastern Europe. Energy and raw materials from the Soviet Union are crucial for the countries of Eastern Europe (Soviet sources account for 70–78 percent of their demand for oil and 95–100 percent of their demand for gas). It is not in our interest for their dependence on Soviet deliveries to weaken. The export of energy to Eastern Europe is the most important element of our general strategy toward the region. The Soviet market will remain of great importance to our Eastern European partners. Our interests, the ability of the Soviet economy to satisfy its contractual obligations and the general reliability of the Soviet Union as an economic partner exercise a significant impact on the value of this market.34

However, the now independent former Soviet satellite-states in Central and Eastern Europe had already established the objective of joining the process of integration that was taking place in Western Europe and did not wish to remain under Soviet guardianship. On June 28, 1991, the COMECON Council proclaimed the dissolution of the Council for Mutual Economic Assistance during the organization’s 46th session in Budapest.35

5.2 MUTUAL INTERDEPENDENCY Several attempts were made to strengthen the efficiency of civilian cooperation within COMECON through the introduction of new programs and the modification of the organization’s operational mechanisms. There is very little information regarding military industrial cooperation among COMECON member states in the 1980s due to the lack of access to sources. Available documentation reveals that, in addition to material coding and standardization, two large-scale projects determined the course of work within COMECON—joint tank production and introduction of a mutually developed field command-system. One striking feature of cooperation until the year 1983, the last for which there is a sufficient number of accessible sources related to this topic, was that while several member states were making serious attempts to develop electronics and computer technology, such development was not part of the agenda of talks held during this period. Delegates examined the following issues at the meeting of the COMECON Military Industrial Standing Committee held in Poznań from May 27–29, 1980: the coordination of deliveries for the years 1981–1985 and principles regarding the determination of contractual prices; supplies of supplementary products, parts and components; the manufacture of motor-vehicle chassis and completed motor vehicles.36 The COMECON MISC held its second session of 1980 at the end of the year in Bucharest. Delegates considered the

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following issues at this meeting: tasks stemming from resolutions that the COMECON Council adopted at its 44th session; specialization of component and parts production; planning coordination connected to long-range agreements; cooperative production of the T-72 tank; and the operations of the military standardization-section and the International Organization of Cooperation (INTER ASU).37 At the session of the COMECON MISC held from May 26–28, 1981 in Poprad, Czechoslovakia, delegates discussed measures adopted at the 34th session of the COMECON Council in the interest of accelerating the pace of technical development. Delegates attending the session also did the following: elaborated principles governing international specialization and cooperation; investigated opportunities for specializing production of supplementary products, components and parts; evaluated compliance with agreements for the delivery of military equipment during the period of the previous five-year plan; approved the order of planning coordination for the years 1986–1990 based on the proposal of the Military Industrial Department; discussed methods aimed at eliminating delays experienced in the production of the T-72 tank; and examined issues related to military standardization and the unified material-code.38 Activity at the session of the COMECON MISC held in Kiev from November 24–26, 1981 focused on the celebration of the twenty-fifth anniversary of the organization’s foundation. This event provided an opportunity for delegates to appraise the operations of the COMECON MISC and make recommendations regarding improving the organization’s efficiency, though the details surrounding these assessments and proposals are unknown. Coding, standardization and production of the T-72 tank and the PASUV automated field-command system continued to represent the main items on MISC’s agenda for cooperation at the session.39 Delegates attending the session of the COMECON MISC in Sofia from May 27–29, 1982 discussed details connected to these four themes.40 On March 18, 1982, the Defense Committee heard a report on 1981 turnover and 1982 obligations with regard to foreign trade in military equipment. According to this report, Hungary had been compelled to curb ruble-denominated exports in order to retain stipulated foreign-trade balances with partner countries, while the latter had also failed to meet import targets. The report stated that Hungary had exported 233.5 million rubles worth of military equipment and imported 282.5 million rubles worth of military equipment in 1981, or 94 percent and 92 percent, respectively, of that targeted for the year. The report noted that representatives from Warsaw Pact member states had concluded an agreement in Moscow on December 5, 1981, stipulating that the Soviet Union would provide the socialist

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countries of Central and Eastern Europe with 430 million rubles in credit at an interest rate of four percent for the purchase of military equipment until the year 1985 and on February 11, 1982, had signed bilateral governmentprotocols specifying deliveries to be made that year.41 The COMECON MISC held its second session of 1982 from November 22–26 in Bucharest. Delegates attending the meeting discussed preparations for the coordination of 1986–1990 plans, the PASUV system, cooperative production and standardization of the T-72 tank and modernization of the T-55/A tank. (With sufficient revamping, the latter tank was expected to be serviceable throughout the rest of the 1980s and, perhaps, 1990s, thus significantly reducing the required import of tanks among smaller member states over these decades.) Based on resolutions adopted at the 36th session of the COMECON Council, MISC delegates also examined possible specialized and cooperative production of automated manufacturing-systems, special equipment, and technological production-lines utilized in the military industry, establishing a work group to conduct a concrete analysis of this topic.42 On March 31, 1983, the Defense Committee discussed a Foreign Trade Ministry report on 1982 foreign-trade turnover in military equipment and the conclusion of protocols for the year 1983. The report stated that Hungary had exported 257.5 million rubles worth of military equipment to fellow COMECON member states in 1982, or 97 percent of that targeted for the year, and imported 301.6 million rubles worth of military equipment from these countries in 1982, or 92 percent of that targeted for the year. The Foreign Trade Ministry report noted that delivery discipline had improved somewhat among Hungary’s trade partners.43 At its session in Bucharest from April 26–28, 1983, the Military Council of the Warsaw Pact Unified Armed Forces Command considered the issue of modernizing the basic types of weaponry used in member-state armies based on a report from Technical Corps leader Soviet Army Engineer Major General I. A. Fabrikov. Members of the council approved Major General Fabrikov’s proposed modernization of T-55/A-class tanks, certain artillery mechanisms, some types of aircraft and helicopter as well as the Neva and Volkhov surface-to-air missile systems. The Military Council asked Major General Fabrikov to submit a proposal to the COMECON MISC regarding the distribution of tasks and specialization among member states necessary for modernization of this military technics. Unified Armed Forces Supreme Commander Marshal Viktor Kulikov cautioned member-state representatives, however, that the introduction of new, more up-to-date weaponry should continue to constitute the primary form of technical development within Warsaw Pact armies.44

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COMECON MISC delegates dealt with the following issues, some of which were based on the Military Council resolutions cited above, at its session in Erfurt, German Democratic Republic, from June 1–3, 1983: coordination of production and delivery for the years 1986–1990; production-development forecasts; development and production of the PASUV automated fieldcommand system; production of the T-72 tank; modernization of the T-55/A tank; military standardization; and introduction of the unified material code.45 The evolution of COMECON cooperation in the development, production and trade of military equipment after the middle of 1983 cannot be analyzed due to the lack of available sources for this period. Therefore this book will hereafter focus on events that provide some fragmentary information regarding the development of Hungary’s military-industrial relations within COMECON in the second half of the 1980s. On October 8, 1985, the HSWP Political Committee approved the seventh five-year plan of the Hungarian People’s Army for the years 1986–1990. Hungary’s military leadership determined that the army’s combat readiness, armament, discipline, and morale were adequate. The government apparatus (the Defense Ministry, the Industrial Ministry, the National Planning Office, etc.) had formulated the mid-range military-development plan, while talks had been held with the leaders of the Warsaw Pact Unified Armed Forces Command and the bilateral “Protocol” regarding development of the Hungarian People’s Army for the years 1986–1990 had been prepared. The MoD requested permission to increase the total value of military-technology procurements by over 23 percent to 1.6 billion rubles during the period of the seventh five-year plan as compared to the sixth five-year plan and to increase total military expenditures by 16 percent during the period. The militarydevelopment plan called for the acquisition of the following weaponry: supplementary weaponry and equipment for the air-defense missile-system and radar system; missiles for ground forces amounting to a 40 percent increase in such weapons; modern tanks and armored combat-vehicles; and self-propelled guns. Moreover, the plan advocated “the establishment of a fighter-aircraft regiment in order to provide direct air support for ground troops and an increase in the number of combat, transport and service helicopters in order to compensate for a lag of several years.” the Political Committee not only approved this program, but issued a separate acknowledgment commending the Defense Ministry for its “realistic” planning.46 Soviet officials did not recognize the increasing economic difficulties that were weighing upon member states. The thinking of the Soviet Union’s military leadership and planning apparatus had changed very little over the decades, though they may have become slightly more polite in expressing

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their wishes. In January 1987, officials from Warsaw Pact member states received a Soviet proposal regarding the establishment of an Economic Council to oversee the operation of their economies and ensure the provision of sufficient material-technical supplies at times of war, since existing COMECON organs were incapable of performing these functions. As previously shown, the Soviet Union was unwilling to conduct multilateral debate regarding mobilization issues, which leaders from that country conceived according to a different model than those from fellow member states. The Bulletin that the National Planning Office received from Moscow indicated in somewhat ambiguous terms that the Economic Council would exercise supranational rights, suggesting under certain interpretations of the document that the council would have the authority to make compulsory decisions bearing upon the economies of individual member states. In addition, the Soviet proposal would have appointed high-level government officials responsible for economic planning in member states to serve on the council, thus removing them from the administration of national military economies. The office of the Economic Council would have been built upon the COMECON apparatus, though the Soviet proposal did not provide for the establishment of a preparatory organ to operate during peacetime. In a report to Defense Minister Ferenc Kárpáti, National Planning Office Deputy Chairman Lieutenant General György Doró therefore maintained that it was necessary to harmonize the notion of establishing such a council with the Warsaw Pact’s bylaws and to include existing COMECON military-industrial organs in an elaboration of the plan.47 As a result of its deepening economic crisis, Hungary wanted to decrease the procurements the country had undertaken in the Warsaw Pact’s developmental protocol. During Hungarian-initiated talks in Moscow on September 20, 1987, Hungarian People’s Army Lieutenant General József Pacsek therefore informed Soviet Armed Forces Chief of the General Staff Marshal Sergey Akhromeyev, Warsaw Pact Unified Armed Forces Supreme Commander Marshal Viktor Kulikov, and Field Marshal Anatoly Gribkov that Hungary had made a firm decision not to purchase aircraft for the proposed Suhoi-25 fighter-jet squadron and to delay procurement of other new military technics. According to Lieutenant General Pacsek, “Our Soviet partners inquired emphatically about the so-called ‘balanced delivery of military-equipment,’ because if we renounce our already indicated acquisition of weaponry and equipment, it would obviously upset the mutually established balance in this sphere.” Marshal Kulikov and Field Marshal Gribkov opposed any unilateral decrease of stipulated imports of military equipment. Pacsek reported that “Both of them referred to the frequently expressed opinion of Hungarian party and state leaders, specifically comrade Kádár, that we would do every-

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thing possible to ensure the adequate level of development of the people’s army and that the Hungarian people would be willing to go barefoot if the situation calls for it, but that we will not compromise in this area.” Kulikov and Gribkov emphasized that military leaders should deal with defense issues, not the capacities of the people’s economy. Lieutenant General Pacsek stated that the Soviet military officials rejected the notion of invoking economic crisis and declining living standards to justify reductions in planned imports of military equipment: The Soviet military leadership always presents the party and the government with realistic conclusions stemming from the international situation and requests formulated with the greatest possible degree of responsibility. Naturally there are differences of opinion and disagreements in this regard, though in spite of the difficult economic circumstances, the military leadership can also say that it does not plan to reduce the targets stipulated in the Soviet Army’s current five-year development plan by even a single tank or a single soldier. . . . For their part, they consider the standard of living and the living circumstances of the population in the Hungarian People’s Republic—mindful of all existing difficulties—to significantly exceed those in the Soviet Union and a series of other socialist countries. At the same time, the Soviet Union bears significantly greater defense burdens in proportion to Hungary. Comrade Akhromeyev expressed concern and incomprehension with regard to the fact that if our projected reductions lead to a loss in the already underutilized capacities of the Hungarian military industry, this would exercise an exceptionally unfavorable impact on the interests of both the Hungarian People’s Republic and the alliance in the future.

Lieutenant General Pacsek outlined Hungary’s arguments for delaying procurement of the Su-25 fighter jets as well as the following request to substitute some planned imports of military equipment with imports of civilian commodities: We do not want to decrease, but to increase military-industrial production—we have articulated our proposals in this regard at the highest levels on several occasions. Giving up a portion of the weaponry and equipment that they purchase from the Hungarian military industry does not contradict this; however, we believe that the further maintenance of balanced military-industrial trade would hinder such efforts; we again recommend examining the possibility of permitting us to purchase civilian products that are of great necessity to the Hungarian people’s economy, not just military products, in exchange for our exported military-industrial products. I asked for the understanding and support of the Soviet comrades in this regard.

On September 23, 1987, Defense Minister General Ferenc Kárpáti of Hungary held talks with his Soviet counterpart, Field Marshal Dmitry Yazov, who

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expressed his profound disapproval of Hungary’s intention to reduce military expenditures. Yazov likewise asserted that it was unacceptable for Hungary to base such reductions on economic grounds, warning that “the course of action that the Hungarians have taken could trigger a chain reaction in several fraternal countries, which they believe to be inadmissible.”48 On October 20, 1987, the HSWP Political Committee examined a proposal regarding the 1988 expenditures of armed forces and bodies. According to the proposal, Soviet Defense Minister Yazov had assented to Hungary’s unilateral decision to eliminate procurements for the proposed Su-25 fighter-jet squadron and the Oka operational-tactical missile battalion from those to be made in the course of the seventh five-year plan. Hungary’s Defense Ministry was therefore compelled to approve an 8 percent reduction in expenditures for the year 1988. Based on established trade practice within COMECON, this reduction in special imports could exercise an immediate impact on Hungary’s export opportunities as well. The National Planning Office predicted that the reduction in imports could induce partner countries to reduce their orders from Hungary by up to 10–15 percent, thus producing an 8.5-billionforint shortfall in targeted production of military equipment in the country. According to the National Planning Office, the latter drop in production would jeopardize 5,000 jobs in Hungary’s military-industrial sector and hinder the repayment of up to 1 billion forints in state developmental loans. The Political Committee asked officials to begin immediate talks aimed at ensuring that fellow COMECON member states would not reduce their imports of Hungarian military equipment. The committee also directed companies to prepare to utilize any surplus military-industrial capacities stemming from the potential decline in orders through an expansion of convertible-currency exports of Hungarian-developed military technics and development of modern civilian products under license.49 On November 26–27, 1987, deputy ministers from the Soviet Union and Hungary held negotiations regarding deliveries of military equipment for the years 1988–1990. The Hungarian delegation, which was led by National Planning Office Deputy Chairman Lieutenant General György Doró, declared during the talks that as a result of economic difficulties Hungary wished to reduce the targeted value of imports of military equipment from the Soviet Union over the following three years by 200 million rubles to 907 million rubles. Delegates from the Soviet Union received this announcement sympathetically, though maintained demand for 1.06 billion rubles in imports of military equipment from Hungary, of course taking into account the impact this would exercise on the balance of trade. Although these terms would result in a projected Hungarian surplus of 153 million rubles in the trade of military equipment with the Soviet Union, the National Planning

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Office calculated that companies in Hungary could sustain a 10 percent drop in production in the years 1988–1990 in the event of a decrease in “special” Soviet demand during the period.50 A report submitted to the HSWP Political Committee on June 15, 1988 reveals that most COMECON member states accepted Hungary’s reduced demand for imports of military equipment and did not drastically decrease their own orders for Hungarian military equipment. Hungary’s Defense Ministry was, however, obliged to formulate another austerity package stipulating a 30 percent cut in the targeted imports of military equipment for the years 1989–1990. The Industrial Ministry estimated that trade partners had by this time elected to reciprocally cancel 14 billion forints worth of militarytechnics imports from Hungary.51 During talks with CPSU General Secretary Mikhail Gorbachev on July 5, 1988, newly appointed HSWP General Secretary Károly Grósz reaffirmed that Hungary intended to reduce military expenditures as a result of the country’s heavy debt-servicing burdens and economic stagnation. Grósz recognized that this entailed several complications, informing Gorbachev that Hungary would have to reduce military-industrial production capacities as a result of declining trade in military equipment: If we move in the direction of contracting the military sector, then You [the Soviet Union] will naturally be unable to purchase our products. . . . There is only one possibility: we must implement a change in profile with regard to our military industrial capacities. The problem is that we must dismiss a great number of good specialists (some 5,000 people) whom it will not be possible to reassemble later. But we are compelled to reduce military production by 500 million rubles.

Gorbachev promised to examine the issue, though there is no information available regarding the CPSU general secretary’s subsequent actions and their impact.52 Grósz’s concerns regarding Soviet intentions were not groundless, since the Soviet Union imported more than 40 percent of Hungary’s militaryindustrial production in 1988. As seen in Table 5.1 below, exports sustained Hungary’s military-industrial sector during the second half of the 1980s, while Soviet orders constituted an increasing proportion of total demand for Hungarian military equipment during this period. At its session on October 18, 1988, the Hungarian Socialist Workers’ Party Political Committee further reduced 1989 expenditure targets for the Hungarian People’s Army and law-enforcement organizations, though did not consider the impact that this decrease would exercise on goods-exchange turnover.53 On December 13, 1988, the Political Committee acknowledged a statement from newly appointed Council of Ministers Chairman Miklós

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Table 5.1. The Share of Exports and Deliveries to the Soviet Union within Hungary’s Total Revenue from the Sale of Military Technics, 1985–1989

Percentage of Total Revenue from the Sale of Military Technics Stemming from Exports Percentage of Total Revenue from Sale of Military Technics Stemming from Exports to the Soviet Union

1985

1986

1987

1988

1989

77.6

75.5

75.6

80.2

77.5

32.8

32.1

38.0

42.4

46.9

Source: Author’s calculations based on A hadiipari tevékenység 1985-ben, Budapest: KSH, 1986; A hadiipari tevékenység 1986-ban, Budapest: KSH, 1987; A hadiipari tevékenység 1987-ben, Budapest: KSH, 1988; A hadiipari tevékenység 1988-ban, Budapest: KSH, 1989; A hadiipari tevékenység 1989-ben, Budapest: KSH, 1990.

Németh declaring that Hungary could not maintain budgetary balance without further reducing defense allocations.54 The cuts in defense expenditures in Hungary and, presumably, other Warsaw Pact member states, placed military industrial companies in a difficult situation. A December 1988 memorandum to Council of Ministers Deputy Chairman Péter Medgyessy forecasted the following year-on-year declines in 1989 production at major military industrial producers in Hungary: 54 percent at the Diógyőri Machine Factory; 44 percent at the Precision Mechanics Company; 39 percent at the Laboratory Precision Engineering Works; and 38 percent at the Gödöllő Machine Factory. Among Hungary’s main exporters of military equipment, only the Videoton electronics company managed to avoid a critical short-term decline in demand from the Soviet Union. However, the memorandum estimated that the value of Soviet orders from Videoton would undergo a significant decrease over the longer term, falling from 225 million rubles in 1988 to only 100 million rubles after the year 1991. The memorandum concluded that all of the Hungarian companies cited above would have to have to conduct changes to their production profiles and structures as a result of expected liquidity and capacity-utilization difficulties.55 On February 28, 1989, the HSWP Political Committee surveyed the long-term development prospects of the Hungarian People’s Army. Defense Minister General Ferenc Kárpáti speculated in a report to the committee that the easing of international tension would make it possible to reduce the size of Hungary’s military forces by 25–30 percent. General Kárpáti stated in the report that the Defense Ministry would require 180 billion forints during the years 1991–1995 to modernize the army’s weaponry and equipment in order to prevent the latter from becoming obsolete and to reduce the rising cost of maintenance and repair. However, National Planning Office Chairman János Hoós estimated in a separate memorandum that the significant amount of state funding needed for servicing the national debt, financing major invest-

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ments and maintaining the standard of living would limit allocations for the above purpose to 126 billion forints during the period. The National Planning Office noted that the amount of state support designated for the modernization of the Hungarian People’s Army would influence import demand for Hungarian-made military technics: Based on the work plan of the COMECON Military Industrial Standing Commission, preliminary 1991–1995 import demand for military equipment required for the multilateral planning coordination of mutual deliveries should have been submitted in January 1989. Our military-industrial delivery possibilities are connected to this issue as a result of the balanced-trade requirement in the sector.

The Political Committee adopted a resolution at its February 28 session advocating a reduction of 30–35 percent in the “personal and technical strength” of the Hungarian People’s Army by the year 1995.56 In the spring of 1989, COMECON initiated the process of coordinating mutual deliveries for the years 1991–1995 in spite of the radical plans for political reform taking shape in the countries of Central and Eastern Europe. Preliminary import demands formulated at this time revealed a 700-millionruble disparity between Hungary’s shrinking import needs and known export possibilities for these years. The Industrial Ministry therefore informed military-industrial producers in Hungary that they should expect export orders to fall by at least 30 percent over the five-year period. On May 15, 1989, the ministry’s Economic Board issued the following recommendations related to the transformation of the conditions surrounding the production and trade of military equipment: • In the future companies must treat their military-industrial operations as independent ventures conducted at their own liability. Normative regulations must be applied to military-industrial activity as well. The government will not undertake responsibility for the delivery of military equipment without the knowledge and approval of its economic organizations. The National Planning Office should initiate changes to the practices employed until this time in the trade of military equipment among WP member states. • Government measures must also serve to promote the use of idle militaryindustrial capacities and workforce and material capacities (sic) for civilian purposes. An itemized inventory must be taken of unneeded stocks in order to begin the process of selling them. Thus, according to the Economic Board’s proposals, military-industrial production should no longer represent an obligatory, government-prescribed duty or enjoy advantages in terms of regulation and output. Companies were

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instructed to prepare programs regarding conversion to the new system of production and to submit bids aimed at expansion of their convertiblecurrency export (with bank financing) to the Industrial Ministry. On May 24, 1989, Minister of Industry Ferenc Horváth and Deputy Minister of Industry Gyula Sós met with the directors of companies producing military equipment in order to notify them of the Economic Board’s recommendations as well as details surrounding the decline in orders from Hungary’s various trade partners, the military-industrial sector’s debts, etc. Company directors raised several problematic issues during the talks, from data protection and the maintenance of mobilization capacities to the confidentiality of Soviet licensing documentation and the methods of ensuring production conducted with capitalist partners.57 Military-industrial orders among the member states of the disintegrating COMECON organization were declining drastically. Talks regarding military industrial cooperation at a meeting of the Warsaw Pact’s Committee of Defense Ministers held in Budapest from November 27–29, 1989, revealed that as a result of declining orders for weaponry, an average of 45–50 percent of the capacities within member-state military industries had been engaged, while the utilization of such capacities had fallen to just 15–20 percent in some countries. Officials attending the meeting of the Committee of Defense Ministers also dealt with pricing problems and the drawbacks of maintaining balanced trade in military equipment. Hungary’s delegation at the meeting again proposed that Warsaw Pact member states abandon the objective of retaining such balance and that accounts for the delivery of military equipment be settled under the category of general goods-trade. The WP Unified Armed Forces Command advocated taking a measured approach to the reduction and transformation of military-industrial production. Following discussion of the issues, the Committee of Defense Ministers issued the following resolution: In the interest of making a qualitative improvement to the technical supply levels and ensuring the complex material-technical provision of weaponry and battle technology of the Unified Armed Forces and eliminating the unwarranted parallel production of identical technology, the production of the weaponry listed below should not be discontinued during the period of the next five-year plan and a proposal should be submitted to the COMECON Military Industrial Cooperative Standing Commission regarding an elaboration of the appropriate specialization of production.

The list of weaponry cited in the resolution contained around three dozen items and included numerous procurement possibilities for supplementary

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products. The Committee of Defense Ministers also recommended the preservation of production capacities for military equipment: [The committee] considers it expedient for the countries to maintain their military industrial production capacities for extraordinary periods even in the event that production of the given item is suspended or significantly reduced during peacetime. The preservation of mobilization capacity for military equipment whose production is continued must also be borne in mind.

The Committee of Defense Ministers resolution furthermore called for the formulation of a development program for military equipment: The Unified Armed Forces Command should complete in the year 1990 a development program pertaining to weaponry and equipment necessary for the armies of WP member states until the year 2000 in harmony with the modernization Concept for this period. The Unified Armed Forces Technical Corps should make a proposal at the 59th session of the COMECON MISC regarding the specification of deadlines for preparation of the development program for weapons and equipment and notify the relevant armies of the deadlines coordinated with the Committee.

The resolution contained the following additional stipulation: In the interest of improving military industrial cooperation among WP armies and countries, the COMECON MISC should accelerate the process of preparing normative documents that determine the order of cooperation conducted in the course of design and subsequent production of new weaponry. This order is to encompass direct economic relations between the relevant countries, including organizational issues at the company . . . level and obligations undertaken with regard to the mutual deliveries of the countries. Elaboration of the order of cooperation between the Unified Command and the COMECON MISC should, furthermore, be expedited.58

According to January 1990 data from Hungary’s Central Statistical Office based on orders recorded at the Industrial Ministry, production within the domestic military industry had declined 29 percent, while ruble-based exports had fallen between 40–50 percent. As a result of the reduction in the size of Hungary’s armed forces, Interior Ministry orders declined 47 percent and Defense Ministry orders dropped nearly 80 percent in comparison to the year 1989. The data showed that only a rise in dollar-based exports had served to temporarily counterbalance these declines.59 Along with the above, worldwide arms reductions, the dissolution of the Warsaw Pact and the collapse of the Soviet bloc served to seal the fate of Hungary’s military industry.

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NOTES 1. Report on Talks Held with Comrade V.G. Kulikov. November 17, 1978. HL KI, 3/33/162. The cited passage appears on p. 12. 2. Resolution of Warsaw Pact Member States at the Political Consultative Committee’s November 1978 Session regarding the Report of the Unified Armed Forces Supreme Command. No date. HL KI, 3/33/162. The cited passage appears on p. 3. 3. For detailed information regarding Cold War tension in the 1980s see Olav Njølstad, The Last Decade of the Cold War: From Conflict Escalation to Conflict Transformation (London: Frank Cass, 2004). About the Soviet invasion and occupation of Afghanistan see: Odd Arne Westad, The Global Cold War: Third World Interventions and the Making of Our Times (Cambridge, U.K.: Cambridge University Press, 2005) pp. 299–326. For information regarding Hungary’s view of the Soviet intervention in Afghanistan and the related conflict within the Hungarian Socialist Workers’ Party leadership see Csaba Békés, “Why was there no ‘Second Cold War’ in Europe? Hungary and the East-West Crisis following the Soviet Invasion of Afghanistan,” in Mary Ann Heiss ed., NATO and the Warsaw Pact: Intrabloc Conflicts (Kent, Ohio: Kent State University Press, 2008) pp. 219–232. 4. The plan’s main targets and the HSWP Political Committee’s decision to approve the proposal see in the following source: MNL OL, M-KS 288. f. 5. cs. 811. ő. e., pp. 4–5, 83–98. The cost of parts imported from fellow COMECON member states for military equipment manufactured in Hungary under Soviet license accounts for the 250-million-ruble disparity between the value of imports stipulated in the military-industrial plans and the Defense Ministry’s special imports. 5. Report on the Resolutions Adopted at the 318th Session of the Defense Committee Held on November 27, 1980. December 2, 1980. MNL OL, XIX-A-83-a. Film 53029. 803–806. folio. The cited passage appears in folio 806. 6. Report to the [HSWP] Political Committee regarding the Hungarian Position to Be Represented at the 34th Session of COMECON. May 9, 1980. MNL OL, M-KS 288. f. 5. cs. 801. ő. e., pp. 53–55. 7. Honvári, XX. századi magyar gazdaságtörténet, p. 445. 8. The June 9, 1981, Resolution of the [HSWP] Political Committee regarding the Hungarian Position to Be Represented at the 35th Session of COMECON. MNL OL, M-KS 288. f. 5. cs. 828. ő. e., pp. 63–67. 9. The [HSWP] Political Committee’s July 21, 1981, Resolution regarding PlanCoordination Talks Conducted with COMECON Countries and the Talks Stemming from Them. MNL OL, M-KS 288. f. 5. cs. 831. ő. e., pp. 20–27. 10. Report to the [HSWP] Political Committee on Preparations for the High-Level Meeting regarding COMECON. September 24, 1982. MNL OL, M-KS 288. f. 5. cs. 863. ő. e., pp. 94–96. 11. Report to the [HSWP] Political Committee on Preparations for the High-Level Economic Meeting of COMECON and the Draft Resolution for the Meeting. January 25, 1983. MNL OL, M-KS 288. f. 5. cs. 873. ő. e., pp. 12–28. The cited passage appears on p. 11.

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12. Report to the [HSWP] Political Committee on the Moscow Consultations regarding Preparations for the High-Level Economic Meeting of COMECON. February 10, 1983. MNL OL, M-KS 288. f. 5. cs. 874. ő. e., pp. 143–147. 13. Report to the [HSWP] Political Committee on Further Central Committee Secretarial Consultations in Preparation for the High-Level Economic Meeting of COMECON. May 4, 1983. MNL OL, M-KS 288. f. 5. cs. 882. ő. e., pp. 16–20. The cited passage appears on p. 18. 14. Proposal to the [HSWP] Political Committee regarding the High-Level Economic Meeting of COMECON and the Hungarian Position to Be Represented. May 9, 1984. MNL OL, M-KS 288. f. 5. cs. 911. ő. e. 16–30. The cited passage appears on pp. 28–29. 15. See the following works in detail: Katalin Botos, Pénzügyek a KGST-ben (Budapest: Közgazdasági és Jogi Könyvkiadó, 1978); and Csaba, Kelet-Európa a világgazdaságban. 16. Report to the [HSWP] Political Committee and the Council of Ministers on the High-Level COMECON Economic Meeting in Moscow. June 15, 1984. MNL OL, M-KS 288. f. 5. cs. 913–914. ő. e, pp. 31–44. For the remarks that Kádár János and Ferenc Havasi made to the HSWP PC with regard to the meeting, see Ibid., pp. 141–143 and 134–139, respectively. 17. Report to the [HSWP] Political Committee regarding Issues on the Agenda of COMECON’s 40th Session; Proposal regarding Hungary’s Position. June 19, 1985. MNL OL, M-KS 288. f. 5. cs. 942. ő. e., pp. 25–35. The cited passage appears on p. 33. 18. Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel. The cited passage appears on pp. 64–65. 19. Report to the [HSWP] Political Committee and the Council of Ministers regarding the Sofia Session of the Political Consultative Committee of WP Member States October 22–23, 1985. MNL OL, M-KS 288. f. 5. cs. 953. ő. e. 35., p. 7. 20. Report to the [HSWP] Political Committee on the Complex Program regarding the Technical-Scientific Progress of Member States until the Year 2000 Appearing on the Agenda of the Extraordinary Session of COMECON; Proposal regarding Hungary’s Position. November 26, 1985. MNL OL, M-KS 288. f. 5. cs. 957. ő. e., pp. 18–24. 21. Report to the [HSWP] Political Committee on the Domestic Planning and Direction of Implementation of the Complex Program regarding the TechnicalScientific Development of COMECON Countries until the Year 2000. April 1, 1986. MNL OL, M-KS 288. f. 5. cs. 966. ő. e., pp. 125–126. 22. For the report on the meeting of the WP Political Consultative Committee see: MNL OL, M-KS 288. f. 5. cs. 971. ő. e., pp. 36–46. For an account of Gorbachev’s talks in Budapest on June 8–9 see Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, pp. 91–105. 23. János Kádár’s Verbal Report regarding the High-Level Moscow Consultations. MNL OL, L M-KS 288. f. 5. cs. 983. ő. e., pp. 108–125. The cited passages appear on pp. 111 and 114–115. The part of the report dealing with the bilateral

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Soviet–Hungarian talks appears in Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, pp. 106–110. 24. Report to the [HSWP] Political Committee on Preparations for the 43rd (Extraordinary) Session of COMECON; Proposal regarding the Composition of the Hungarian Government Delegation, October 6, 1987. MNL OL, M-KS 288. f. 5. cs. 1009. ő. e., pp. 19–21. The cited passage appears on p. 21. 25. Report to the [HSWP] Political Committee on Preparations for the 44th Session of COMECON; Proposal regarding the Hungarian Position. June 7, 1988. MNL OL, M-KS 288. f. 5. cs. 1028. ő. e., pp. 193—194. 26. Békés, Európából Európába, p. 326. 27. Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, pp. 250–252. 28. Békés, Európából Európába, p. 326. 29. Proposal to the HSWP Political Committee. February 1989; and HSWP Political Committee Resolution. MNL OL, M-KS 288. f. 5. cs. 1057. ő. e., pp. 4–5, 60–77. The cited passages appear on pp. 61–62 and 63. 30. Report to the [HSWP] Political Committee on the Consultations Held in Prague on March 6–7, 1989 Involving Communist and Workers’ Party Central Committee Secretaries from COMECON Member States Responsible for Economic Policy Issues, Proposal regarding the Hungarian Position to Be Represented at Future Talks. March 14, 1989; and the HSWP Political Committee Resolution. MNL OL, M-KS 288. f. 5. cs. 1058–1059. ő. e. pp. 157–158 and 207–208. The cited passages appear on pp. 157–158 and p. 211. 31. Report to the [HSWP] Political Committee regarding Issues on the Agenda at the 45th Session of COMECON. May 30, 1989. MNL OL, M-KS 288. f. 5. cs. 1068. ő. e., pp. 161–166. The cited passage appears on p. 163. 32. Report to the HSWP Presidium regarding the Further Course of Preparations for the Planned Meeting of Communist and Workers’ Party Leaders from COMECON Member States, September 6, 1989. MNL OL, M-KS 288. f. 59. cs. 9. ő. e., pp. 52–59. 33. Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, pp. 297–303. The cited passage appears on p. 303. 34. Ibid. pp. 304–312. The cited passage appears on p. 311. 35. Turina and Seres, “A KGST iratanyagának összetétele és tartalma.” For the resolution declaring the dissolution of the COMECON see: Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, pp. 324–325. 36. Report on Resolutions Adopted at the 315th Session of the Defense Committee Held on August 7, 1980. August 8, 1980. MNL OL, XIX-A-83-a 53028. film. 207–208. folio. 37. Report on Resolutions Adopted at the 320th Session of the Defense Committee. January 31, 1981. MNL OL, XIX-A-83-a 53030. film. 140. folio. The report does not indicate the precise date of the session. 38. Report on Resolutions Adopted at the 326th Session of the Defense Committee Held on September 17, 1981. MNL OL, XIX-A-83-a 53032. film. 195–197. folio. 39. Report on Resolutions Adopted at the 330th Session of the Defense Committee Held on February 18, 1982. MNL OL, XIX-A-83-a 53034. film. 188–189. folio.

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40. Report on Resolutions Adopted at the 334th Session of the Defense Committee Held on June 24, 1982. June 28, 1982. MNL OL, XIX-A-83-a 53036. film. 286–287. folio. 41. Report on Resolutions Adopted at the 331st Session of the Defense Committee Held on March 18, 1982. March 23, 1982. MNL OL, XIX-A-83-a 53034. film. 358–361. folio. 42. Report on Resolutions Adopted at the 339th Session of the Defense Committee Held on January 20, 1983. January 24, 1983. MNL OL, XIX-A-83-a 53038. film. 219–221. folio. 43. Report on Resolutions Adopted at the 341st Session of the Defense Committee Held on March 31, 1983. April 6, 1983. MNL OL, XIX-A-83-a 53039. film. 617–619. folio. 44. Report on the 27th Session of the Unified Armed Forces Military Council. May 3, 1983. HL KI, 3/33/165. 45. Report on Resolutions Adopted at the 344th Session of the Defense Committee. August 22, 1983. MNL OL, XIX-A-83-a 53040. film. 269–271. folio. 46. For the report and the Hungarian Socialist Workers’ Party resolution see the following source: MNL OL, M-KS 288. f. 5 cs. 951. ő. e., pp. 5–6 and 111–118. 47. Report on the Soviet Proposal to Establish an Economic Council to Harmonize the Wartime People’s Economies of Countries Participating in the Warsaw Pact. January 22, 1987. HL KI, 181/04/14. 48. Report on the Hungarian Military Delegation’s Talks in Moscow (September 20, 1987). September 21, 1987; and Letter from Defense Minister Ferenc Kárpáti to János Kádár and Károly Grósz. September 24, 1987. HL KI, 181/124/4. The cited passage appears on pp. 2–3, 5 and 6–7 of the report. 49. Proposal to the [HSWP] Political Committee regarding the 1988 Expenditures of Armed Forces. October 14, 1987; and October 20, 1987 Resolution of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 1010. ő. e., pp. 2–3, 22–26. 50. Report on Talks regarding Soviet-Hungarian Trade in Military Technics for the Years 1988–1990. HL KI, 39/011/4. 51. Proposal to the [HSWP] Political Committee regarding the Targeted 1989– 1990 Expenditures of the Armed Forces. June 15, 1989. MNL OL, M-KS 288. f. 5. cs. 1030. ő. e., pp. 40–44. 52. Baráth and Rainer, Gorbacsov tárgyalásai magyar vezetőkkel, p. 141. 53. Proposal to the [HSWP] Political Committee regarding 1989 Expenditure Targets for the Armed Forces. October 11, 1988; and October 18, 1988 Resolution of the HSWP PC. MNL OL, M-KS 288. f. 5. cs. 1040. ő. e., pp. 3–4, 90–94. 54. Resolutions Adopted at the December 13, 1988 Session of the HSWP Political Committee. MNL OL, M-KS 288. f. 5. cs. 1046. ő. e., pp. 18–19. 55. Memorandum to Comrade Deputy Prime Minister Péter Medgyessy. December 14, 1988. MNL OL, XXIX-F-209-d 94. d. 56. Report on the Situation of the Hungarian People’s Army, Proposal regarding Long-Term Development Tasks. 8 February 1989; and Defense Expenditures for the Years 1990–1995. February 23, 1989. MNL OL, M-KS 288. f. 5. cs.1054. ő. e., pp. 37–58, 59–64 and 80–81. The cited passage appears on pp. 63–64.

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57. Memorandum regarding Talks at the Industrial Ministry on May 24, 1989. May 25, 1989. Budapest Főváros Levéltára [Budapest City Archives], XXIX. 220/a TÜK 15. d. 58. Memorandum regarding the Reception at the Council of Ministers Chairman, November 1989; and Minutes No. 0024 of the Committee of Defense Ministers of Warsaw Pact Member States. November 1989. HL KI, 3/33/151. The cited passage appears in the minutes of the Committee of Defense Ministers, pp.10–12. 59. A hadiipari tevékenység 1989-ben, pp. 10–11.

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Integrated Military Industries

The path of Socialist economic-cooperation covered an enormous distance from 1949 until 1991, ranging from its inception as a mere concept to a moreor-less functioning system of consultation and trade to the unrealized notion of a common socialist market. As demonstrated in this book, cooperation in the area of military industry played a prominent role in the operations of COMECON, perhaps constituting the most effective facet of the organization’s activity. In the present chapter, the author will attempt to draw some general conclusions based on the themes and events examined earlier in this book, to highlight significant junctures in the course of cooperation within COMECON and clarify the correlations between the two. COMECON adhered to its original scope of duties defined in January 1949 until the organization’s dissolution (see subchapter 1.1), though did not always manage to carry out these tasks. COMECON’s founding declaration stipulated the following organizational objectives: coordination of economic plans; specialization and cooperation; harmonization of import-export plans; scientific and technical cooperation; and settlement of the issue of multilateral clearing and currency. COMECON initially focused on implementation of mid-range people’s-economic plans, specializing an increasing number of products by 1960 (see subchapter 2.3), though very little cooperative production was taking place. Though COMECON launched several multinational scientific-research projects, the organization initiated substantially fewer product-development programs, such as that for the PASUV automated field-command system.1 Deficiencies and underdevelopment in the domain of research and development were precisely what motivated Gorbachev and the Soviet apparatus to formulate the complex program for the years 1985–2000 (see subchapter 5.1). Although COMECON had formally established a multilateral clearing system, it was used to conduct only an extremely 269

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small proportion of goods-exchange trade. Beginning around 1970, Hungarian officials took every available opportunity to emphasize the necessity of reforming COMECON’s monetary system (see subchapter 4.1), generating two decades of contention regarding this issue with certain member states, primarily the Soviet Union. Although official Soviet statements made during the initial months following the foundation of COMECON and the themes discussed at the organization’s first two sessions do not reveal any military or military-industrial motives, the operations of the COMECON Bureau were already aimed at establishing bloc-level integration. The Bureau attempted to establish supranational planning when it began coordinating individual people’s-economic plans for various sectors beginning around the year 1950. This phase entailed the arrival of the second wave of Soviet advisors to the satellite states, first in a military capacity then, beginning in 1950, within the military-industrial sphere as well. In January 1951, Stalin outlined the military-economic division of labor to member-state leaders (see subchapter 1.2), establishing a coordination commission for this purpose as well (though there is no information regarding any activity of this commission). Soviet advisors subsequently appeared en masse in nearly all areas of economic life within every country of the bloc. Contact between the bloc’s smaller countries during this period was very minimal, consisting principally of relations surrounding the import of Soviet weapons and equipment. Until Stalin’s death, the Soviet Union provided the satellite states with second-rate military equipment—primarily used weaponry from the Second World War and production technology and know-how from the early 1940s. The Soviet proposal regarding mutual deliveries of military equipment among the satellite states was formulated only a year and a half later, in July 1952. There are no Soviet sources available to indicate the reason for which this notion emerged at this time and in this way, though it was totally compatible with objectives pursued since 1949. Fragmentary documentation stemming from talks between COMECON member states reveals that at this stage they focused on addressing the immediate need of acquiring goods in short supply from one another, not long-term cooperation. In April 1953, Hungarian officials stated, though only for domestic consumption, that deliveries of military equipment must be planned two to three years in advance and that member-state profiles must be clarified as soon as possible (see subchapter 1.3). The political relaxation that took place following Stalin’s death enabled the Soviet military-planning apparatus to finally conduct a realistic appraisal of the burdens that the Soviet Union had thrust upon the satellite states and how many of these had actually produced useful results. The key word used in Soviet analyses conducted in the course

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of COMECON’s revival in the years 1953–1954 was “parallelism”—that is, the problem of superfluous parallel production-capacity. In Hungary, officials regarded elimination of such parallelisms as a means of avoiding new investments by implementing cooperation with fellow member states and concluding long-term commercial agreements. By the fall of 1954, the Soviet Union’s State Planning Committee (Gosplan) had begun to explicitly assert that optimal development of the bloc’s military forces could be achieved through the establishment of a unified system of weaponry and the formulation of an integrated military-industrial plan to coordinate the tasks of all member states (see subchapter 1.5). Thus, not only had the concept of supranational planning emerged with regard to military and military-industrial planning, but Soviet officials had by this time actually undertaken efforts to implement such planning. Hereafter, officials from the Soviet Union thought in terms of bloc-level autarky rather than country-level autarky. With the establishment of the Warsaw Pact and the operating procedures of the Unified Armed Forces Supreme Command, the Soviet Ministry of Defense, presumably in cooperation with Gosplan, completed the program for member-state military-industrial cooperation in the fall of 1955. Based on an assessment of Hungary’s own interests, Hungarian officials concluded that member states should facilitate the supply of their armies through mutual deliveries of specialized product groups based on coordinated programs. As a small country in which production of weapons and military equipment was centered on a few segments containing significant surplus capacities, Hungary did not truly have any other choice. This therefore represented the point at which the quest for empire and national interests intersected. At the summit meeting held from January 6–9, 1956, CPSU First Secretary Nikita Khrushchev stated clearly that mid-range development programs should be based on assessments of the capacity of the various people’s economies to produce military equipment either just for themselves or for other member states as well. An analysis from the Chief Directorate for Economic Relations with People’s Democratic Countries contained numerous proposals regarding the profile and product structure of national industries, particularly military industries (see subchapter 2.1). Following the summit meeting, COMECON established four (or by some accounts six) ad hoc specialist-committees, which devised preparatory materials of various types between February and April of 1956. Following the May resolution of the Soviet Council of Ministers, COMECON founded standing sector-based cooperative commissions at its session in East Berlin in order to devise the socialist division of labor (specialization, cooperation) within the organization. The specialization of production first took place in the militaryindustrial sector in July 1956, when representatives from member-state com-

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munist and workers’ parties concluded an agreement regarding the manufacture of seventy types of military technics and stipulated mutual deliveries until the year 1960. The Military Industrial Cooperative Standing Commission held its founding session simultaneously to that of five other standing commissions at the end of September 1956, establishing its fundamental organizational framework—sections, bylaws, etc.—at this time as well. Hungary’s military industry encountered critical difficulties as a result of the drastic decrease in the size of the Hungarian People’s Army following the 1956 Hungarian Revolution and the subsequent Soviet occupation (the army reorganized 38 percent of its effective strength during this period). By the first half of 1957 it had become evident that member states did not know how much of the plans formulated the previous summer was still feasible (see subchapter 2.2). Therefore in September 1957 the Soviet leadership “recommended” that all member states prepare plans seven years in advance and that mutual deliveries among them essentially be frozen until such plans were completed. The MISC did not even hold another session until Gosplan, the State Committee for Foreign Economic Relations (GKES) and the Soviet Defense Ministry clarified what they hoped to achieve through the intrabloc division of labor. The willingness of the Soviet Union to transfer production of more modern military technics to fellow member states can be interpreted as an indication of increased Soviet confidence in these countries and represents progress in comparison to the practices prevalent in at the beginning of the 1950s. The Soviet Military Industrial Complex (VPK) stipulated in its general principles governing cooperation finalized at the beginning of December 1957 the specific information that the Soviet Union still did not wish to share with its satellite states—that concerning production of the newest airplanes, missiles, radar, atomic technology, etc. At a summit meeting in May 1958, party leaders determined the fundamental principles regarding the international division of labor and production specialization for both the military-industrial and civilian sectors (see subchapter 2.3). With regard to the former sector, party leaders adopted a Soviet proposal restricting the division of labor to conventional weapons, which smaller member states were obliged to provide for themselves and one another in order to relieve the Soviet Union’s production burdens. Four months later, at the beginning of September 1958, COMECON MISC representatives came to an agreement regarding the basic course of specialization based on memberstate interests, assigning the most prominent tasks (production of aircraft and tanks) to Poland—the most populous and strongest COMECON country besides the Soviet Union—and Czechoslovakia, which possessed the most diverse military industry within the organization, while Hungary received production of military telecommunications. The German Democratic Repub-

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lic, Romania, and Bulgaria undertook only modest obligations with regard to mutual provision. Over the following year and a half, sector-based sections (armored vehicles, ammunition, etc.) and various work groups held dozens of consultations aimed at coordinating standards, technical requirements, development objectives, etc. Soviet officials were not, however, satisfied with the effectiveness of these consultations; moreover the Engineering Departments of the State Committee for Foreign Economic Relations (GIU GKES) believed that member states were providing too little information, while the Soviet Union was furnishing member states with too much expertise. The COMECON MISC consequently dissolved the established sections and work groups at its session in October 1960, stipulating for information-protection purposes that issues related to research and technical development be considered in the course of bilateral talks. Following several high-level meetings involving general-staff and planning-office leaders, Soviet officials declined to engage in multilateral coordination of mobilization plans based on similar considerations. (Not even the fact that the other delegations wanted to discuss primarily conceptual problems “moved” Soviet officials in this regard. No vital Soviet data was ever mentioned at organizational meetings.) A new large-scale armaments program was initiated within the Soviet bloc at the beginning of 1961 (see subchapter 2.4). The manner in which Soviet officials imposed their will at the meeting held regarding this program in January 1961 reflects the refinement of the Soviet Union’s exercise of imperial power: Khrushchev did not present party leaders with a briefing, as had been done during the Stalinist era, but proposed in a letter that allied armies initiate the process of modernizing their weaponry and organizational structures. Following talks among COMECON MISC delegation leaders and Warsaw Pact general-staff representatives, the WP’s Political Consultative Committee adopted a resolution launching the program, while the WP Unified Armed Forced Supreme Command coordinated tasks designed for each individual member-state. During the spring of 1961, Soviet officials distributed itemized military-industrial development plans to member states, while the COMECON MISC finalized specialization in new production areas. The Berlin Crisis of 1961 impelled Soviet leaders to radically accelerate implementation of the March program, instructing member states to take immediate steps in order to achieve full combat readiness. The countries initiated the required military measures, such as reorganizing divisions and bringing units up to full strength, though they were reluctant to fulfill recommendations regarding production of necessary matériel because, contrary to Soviet assertions, these (would have) required new investments. However, Unified Armed Forces Supreme Commander Andrei Grechko withdrew the stipulated extraordinary measures in early December 1961 following an alleviation of the Berlin Cri-

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sis, permitting member states to return to the timetable established in March and averting further intrabloc tension over this issue. The volume of militaryindustrial production rose sharply, though still did not meet the expectations of the Unified Armed Forces Supreme Command, while the introduction of new, up-to-date military technics suffered significant delays. Certain member states were dissatisfied not only with the quality of military industrial cooperation within COMECON, but also with the organization’s overall activity as well (see subchapter 2.5). In the spring of 1962, both Poland and Hungary submitted proposals aimed at improving the efficiency of COMECON’s operations, calling for coordination of plans, establishment of joint ventures and research-institutions, multilateral payment turnover, etc. As a result of this sudden enthusiasm for organizational reform, delegates attending the 16th session of COMECON in June 1962 established the organization’s operative consultative organ, the Executive Committee, and defined the fundamental principles governing specialization within the machine industry, though these measures seemed to be insufficient as means of resolving the issues that had been raised. At a meeting of Military Industrial Standing Commission delegation leaders in October 1962, officials informed the body’s Soviet chairman, General Vasiliy Ryabikov (who also served as the first deputy chairman of Gosplan) that there were numerous unresolved issues in this domain, from coordination of research and development to possible joint investments. At the session of the Military Industrial Standing Commission in January 1963, officials from member states in Central and Eastern Europe harshly criticized the weaknesses in the commission’s operations, while delegates from Czechoslovakia even refused to approve the appointment of Soviet officers to serve in the COMECON Secretariat’s Military Industrial Department on the grounds that it was incompatible with the organization’s international character. A similarly critical tone prevailed at consultations of Warsaw Pact defense ministers and chiefs of the general staff and at the February and April sessions of the COMECON Executive Committee as well. While other member states sought to resolve organizational difficulties through other means, the Soviet Union continued to adhere to the principle of supranational planning, proposing the establishment of a COMECON Planning Office. However, this proposal elicited an unexpected reaction from Romania, which presented vigorous and coherent arguments criticizing this attempt to heighten integration. Although Romania’s disapproval of the proposed Planning Office was based on the legitimate conclusion that establishment of such a body would violate national sovereignty, it was based primarily on the effort of Romanian Communist Party General Secretary Nicolae Ceauşescu to exploit the Sino-Soviet split in order to increase his own power

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and room for maneuver within the bloc. From this time on, Romania firmly opposed all steps aimed at achieving the higher-level integration of either the Warsaw Pact or COMECON. Hungary had prepared a detailed proposal by April 1963 stipulating measures intended to improve coordination of the operations of the COMECON MISC and the Warsaw Pact Unified Armed Forces Supreme Command and to strengthen institutional connections between the bloc’s economic and military organizations (see subchapter 3.1). However, delegates attending the April session of the MISC rebuffed the majority of these proposals, claiming that they lacked the authority to deal with them. The MISC did, nevertheless, approve the most important fundamental principles regarding specialization and cooperation, which specified that specialization of individual products (or product groups) must be assigned to single countries in order to ensure the volume of production necessary to conduct economically efficient serial production. Soviet personnel working at the COMECON Secretariat’s Military Industrial Department meanwhile impeded the initiation of debate concerning issues that annoyed officials in Moscow: member states were unable, for example, to coordinate military investments for the years 1964–1965, because the department had failed to prepare the necessary proposals. In accordance with Soviet wishes, the COMECON Executive Committee decided at its July 1963 meeting not to support the proposed expansion of the MISC’s authority, thus coordination of research and development and mobilization remained strictly bilateral. In addition to the obstacles that had emerged to the expansion of cooperation, problems connected to the more-or-less functional system of specialization multiplied as well. For example, member states considered their goods-exchange balances to be more important than specialization recommendations, on more than one occasion prompting them to order certain military equipment from the Soviet Union rather than from the country of specialization. Moreover, no means of sanctioning such actions existed at this time. These incidents as well as the previous unsuccessful initiative induced Hungary’s COMECON MISC delegation to submit in April 1965 another detailed list of tasks designed to improve the efficiency of the committee’s operations. Only the meeting of planning-office and general-staff representatives, however, generated genuinely sharp dispute. During the latter consultations, delegates from Hungary, Poland and Czechoslovakia voiced similar criticisms of the MISC’s activity, while those from the latter country proposed that an economic and scientific-technical commission be established in place of the MISC in order to provide “effective and complex solutions” to military-related questions. At around this same time, Hungary’s Defense Ministry submitted recommendations to both the Warsaw Pact Uni-

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fied Armed Forces Supreme Command and the CPSU Central Committee regarding, among other things, the establishment of a military council to deal with weapons-technology issues. At the COMECON MISC’s November 1965 meeting in Prague, the organization’s first session held outside the Soviet Union, delegates approved crucial measures regarding the multilateral coordination of research and development, though these initiatives did not pertain to work taking place in the Soviet Union. (The USSR thus conceded on the one hand, while on the other hand withdrawing from such multilateral coordination in order to prevent the leak of information regarding its research and development activities.) Consensus also emerged among member states that the MISC and the Unified Armed Forces Command must take joint measures in order to improve the efficiency of operations. The Warsaw Pact was veering toward schism at the beginning of 1966 as a result of the failure to resolve several crucial issues, such as the peacetime and wartime authority of the Unified Armed Forces Supreme Command, and the dissatisfaction of Poland, Czechoslovakia, and Hungary with the effectiveness of the alliance in the same way they were with that of COMECON (see subchapter 3.2). National reform-plans and proposals for the transformation of Gosplan were ready by the first half of 1966, though a lack of political accord among member states prevented them from coming to an agreement on these issues. Romania’s attempts to achieve greater autonomy and the Soviet Union’s reluctance to clarify ambiguities surrounding several issues played a significant role in prolonging debate of these matters. The Soviet Union exploited the vague terminology and phrasing used in various international agreements, protocols and organizational and operational regulations to its diplomatic advantage, interpreting these documents and prescripts pursuant to its own interests and aspirations. (This condition applied to the treaties of friendship and cooperation concluded with the countries of Central and Eastern Europe at the end of the 1940s, numerous fundamental Warsaw Pact documents and even the provisional regulations of the Economic Commission initiated in 1987.) The occasionally profound disparity between the types of cooperation that individual member states advocated contributed to these circumstances. The results of the session of the Warsaw Pact Political Consultative Committee that took place in Bucharest in the summer of 1966 and of the 20th session of COMECON that took place in Sofia at the end of the latter year provided a clear demonstration both of the paralysis that could emerge from consensus-seeking decision-making and of the potential effectiveness of greater cooperation among smaller groups of member states. The program of economic reform launched in Hungary (see subchapter 3.3) served to increase the difficulty of intrabloc coordination, forcing the

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traditional plan-command system to operate alongside an indirect management-model incorporating some market elements. Hungary’s program also provided encouragement to other countries flirting with economic reform, prompting delegates from smaller member-states to initiate measures within the Military Industrial Standing Commission aimed at achieving such reform. Several small, though important steps taken in 1967 helped to improve the effectiveness of operations. Among these were the introduction of specialization treaties, which finally made it possible to impose sanctions on countries that failed to comply with recommendations, and the division of license-documentation procedures into several phases, which facilitated the process of risk-assessment at the national level and abbreviated the period required for adapting licenses (see subchapter 3.4). However, as the result of Soviet intransigence, no significant progress was made in the coordination of technical developments or mobilization plans. From Hungary’s perspective, the overall results of intrabloc cooperation were unequivocally positive in spite of these flaws: the specialization of production brought stability to the domestic military-industry, while exports increased as far as balanced-trade requirements would allow. The Soviet bloc countries reached a compromise at a March 1969 session of the Warsaw Pact’s Political Consultative Committee in Budapest, electing to establish the Committee of Defense Ministers, the Military Council and the Unified Armed Forces Technical Corps and regulating the peacetime organizational and legal status of the Unified Armed Forces Supreme Command. Shortly after the WP Political Consultative Committee’s resolution of organizational issues related to integration, COMECON also took steps to improve the effectiveness of the organization’s operations, launching the complex program in April 1969. (Revealingly, the Soviet Union again attempted in the course of preparatory talks to slip the principle of joint planning into the program, though without success.) This created many new potential avenues for expanding cooperation, which had theretofore been based on the bilateral exchange of goods. These possibilities included the sector-based association of interested countries, joint projects, mutual research, the establishment of a common investment-bank, etc. (see subchapter 4.1). The results of talks regarding deliveries of military equipment over the following five-year planning period (1971–1975) served to hinder implementation of these ambitious plans. The size of Hungary’s military industry expanded by two and a half times during this period, though could have achieved even greater growth in production and exports if not for price disagreements and the need to maintain the delicate balance in bilateral current-accounts. These limitations clearly played a role in the cautious opening of Hungary’s military and economic leadership toward the Third World.

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At the May 1970 meeting of the MISC, member-state delegations advocated strengthening integration within COMECON, advancing proposals regarding the coordination of development, sales and repair, the establishment of direct connections between ministries and companies, etc. However, the Soviet delegation attending the consultations instead focused on issues related to standardization, such as the introduction of unified international material coding. In November 1970, the MISC established regulations governing the modes and conditions surrounding the commission’s cooperation with the Warsaw Pact Unified Armed Forces Technical Corps and made the decision to prepare production and development forecasts. The former measure ensured the organizational framework for cooperation between the Warsaw Pact and COMECON, while the latter provided the people’s economies and national industries with guidelines regarding the types of military technics that should be developed and produced over the subsequent ten to fifteen years based on Warsaw Pact military doctrine and NATO’s degree of combat readiness. In May 1971, the MISC adopted further regulations aimed at promoting the multilateral coordination of research and development for military industry, thus expanding the commission’s operations to include all the most important common affairs with the exception of mobilization. The complex integration-program approved at the 25th session of COMECON held in Bucharest in July 1971 again reverted back in the direction of cooperation in planning and production, containing no stipulations designed to establish the conditions necessary for integration of economic and monetary policy or currency. Subsequent programs and complex plans largely continued to neglect the latter forms of integration until the year 1989. In May 1972, following approval from the COMECON Executive Committee, the MISC adopted unified and detailed regulations pertaining to the order of cooperation in areas connected to military industry (forecasts, coordination of production, joint MISC-Unified Armed Forces Supreme Command operations, technical development, etc.) based on the resolutions adopted at the commission’s 25th session. At the same time, the development of military and military-industrial connections with developing countries upset relations between the Warsaw Pact allies. The Soviet Union utilized the delivery of arms and assistance as a means of exporting communist ideology and world revolution, while smaller member states also viewed arms exports as a promising source of dollar-based revenue. At the April 1972 session of the COMECON Executive Committee, Hungary proposed for the first time that member states coordinate their burgeoning presence in the Third World, though such preliminary coordination proved not to be in the interest of the Soviet Union (see subchapter 4.2). The fraternal socialist states therefore became competitors for deliveries to countries in the Middle East, Africa, and

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Asia—only the fact that specialization had limited production of certain types of military equipment to individual countries (such as the specialization of military-telecommunications production in Hungary) served to mitigate this rivalry to some degree. It was not until April 1980 that Warsaw Pact member states managed to approve a resolution specifying the order of militarytechnical cooperation with developing countries.2 The Soviet Union tightened the conditions surrounding the production and trade of military equipment within the alliance as well, ceasing to provide credit for exports of military equipment to fellow member states beginning in 1971 (a practice that continued until the 1980s) and demanding fees for military technics that these countries produced under Soviet license and exported to non-Warsaw Pact trade partners beginning in 1973. Member states were permitted to temporarily postpone payment of this license fee, though the Soviet Union refused to revoke the charge. The COMECON MISC officially approved the license fee at its May 1975 session, stipulating a maximum rate of 5 percent. Member states also began to compete with one another—going so far as to contravene civilian specialization-recommendations—in the field of computer-technology development, which Soviet military research did not dominate to nearly the same degree as it did other spheres of development. The computer revolution and the expanding use of electronics presented member states with a breakthrough opportunity: they made better use of their civilian scientific and developmental capacities, their military industries also supported the import of dual-purpose technologies and they were able to profit from their more extensive relations with the West beginning in the 1970s. Although the COMECON MISC delayed the specialization of military computer-technology in 1973, the commission did allocate the right to manufacture of around a dozen types of modern radio-reconnaissance and radio counteraction equipment in the course of determining production specialization for the years 1976–1980. There is no information available to indicate that member states conducted joint research and development projects or multilateral military-scientific research—national industries preferred to replicate Western products and utilize Western parts and components in order to reach their desired developmental objectives. Orders from within COMECON represented a secure market that made long-term planning possible, though difficulties and disadvantages stemming from the contrasting economic mechanism began to manifest themselves with increasing force. The inefficiency of manufacturing relatively small quantities of Soviet-licensed military technics that had been designed for large-scale serial production continued to represent a problem for COMECON member states other than the Soviet Union. Moreover, the price of military equipment

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varied significantly according to the type of management mechanism utilized in the member state in which it was produced: the gap in the producer price of military equipment manufactured in Hungary and the Soviet Union, for example, grew ever wider as a result of differences in taxation, support and expenses in the two countries, frequently reaching 40–70 percent. At the same time, the Soviet Union did not want to purchase military equipment from fellow COMECON member states that could be produced cheaper domestically (see subchapter 4.3). Expected financial losses prompted Hungarian officials to take the unprecedented step in the second half of 1974 of renouncing planned specialized production of the Strela-1M surface-to-air missile system and the BTR-70 armored personnel-carrier, though they indicated that Hungary might be willing to participate in cooperative deliveries of these products. The importance of this decision is reflected in the November 1968 decision of the Hungarian Socialist Workers’ Party Political Committee to limit military expenditures to a maximum of 4.5 percent of national income.3 These same factors motivated Hungary’s leadership in 1974 to give priority to maintaining the balance of the national economy over undertaking and implementing member-state obligations. In order to demonstrate their willingness to compromise, Hungarian officials did accept production of the Vasilek gun-mortar for delivery to the Soviet Union even though it was expected to produce financial losses, hoping that subsequent price negotiations would minimize the latter. The price of military equipment became increasingly important amid the deteriorating global-market and external-economic circumstances (see subchapter 4.4). At its January 1975 session, the COMECON Executive Committee reconsidered the pricing policy previously endorsed in Bucharest, adopting in its place a sliding average-price scale, which chiefly benefited the Soviet Union, COMECON’s largest exporter of energy and raw materials. (This endeavor was understandable, since the dramatic rise in world-market prices provided the Soviet Union with enormous surplus revenue, presuming that pricing within COMECON took this into account.4) The Soviet Union likewise dictated the prices for military-industrial products: at the October 1975 session of the COMECON MISC, the Soviet delegation pushed through a resolution stipulating the introduction of the sliding price-scale on January 1, 1976, despite objections on the part of delegates from the German Democratic Republic, Hungary, Romania, and Bulgaria. Member states began difficult and prolonged talks aimed at slowing the rise in the price of imported military equipment and accelerating that of exported military equipment. Specialization created a kind of monopoly over the production of certain military equipment, thus making it easier for producers to raise prices. Countries manufacturing material-intensive military technics, such as tanks

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and airplanes, initially sought to raise the price of these products by 40–50 percent, though after much negotiation halved this demand to 20–25 percent. Producers were able to raise the prices of less material-intensive military technics, such as telecommunications and optics, by 10–15 percent. Hungary sustained financial losses of at least ten percentage-points as a result of unfavorable margins between the cost of foreign imports and domestic exports stipulated in the 1976 price agreement that member states concluded in the first quarter of 1977. This naturally resulted in a deterioration of Hungary’s foreign-trade balance. The fact that Hungary had begun to export an ever greater amount of military equipment to the Soviet Union exacerbated the pricing problem in the former country. Soviet officials were reluctant to accept the premise that prices could be increased as a result of rising production costs or to endorse Hungary’s stipulated profit margin of 5–15 percent in proportion to revenue. In January 1976, Hungary’s Finance Ministry concluded on the bases of company analyses that the production of military equipment was at least as much a matter of profitability as it was of defense. The Military Industrial Government Committee consequently prescribed that the cost-efficiency of military-industrial production be reviewed annually. Resolution of price issues remained one of the most important items on the agenda of subsequent specialization talks as well. The issue of profitability not incidentally represented one of the main themes of remarks that delegates from Hungary made at the session of the COMECON MISC held in October 1976 to commemorate the twentieth anniversary of the organization’s foundation. Representatives from Hungary and other member states asserted that the processes of specialization and license-transfer required too much time, that the supply and development of parts were insufficient, that the MISC was overburdened, etc. As a result of the disadvantages within COMECON and the increasing amount of hard-currency needed to finance imports from the West, both financial and industrial officials began to advocate increasing exports of military equipment to developing countries. The newest Soviet armaments program, which the Warsaw Pact’s Political Consultative Committee had approved just more than a year following the conclusion of the Helsinki Accords, again presented member-state military industries with exceptional duties.5 In November 1976, the committee approved a large-scale military-modernization program, shortly thereafter providing all Warsaw Pact member states with itemized recommendations regarding necessary investments. The Soviet ambition to enhance militaryindustrial cooperation among member states permeated the activities of the COMECON MISC in 1977 and 1978. The regulation of military standards, the initiation of the process of formulating various military norms, and the

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improvement of the unified material-code system were intended to serve this purpose. Pursuant to the modernization program, the production of T-72 tanks was organized in Czechoslovakia and Poland with the supply of parts from several other member states and the joint development of the automated field-command system was initiated under the direction of the Soviet Union. The inability of member states to manufacture an adequate supply of parts and unfinished products impeded the effort to modernize production, particularly with regard to electronics, an increasing amount of which these countries had to import from the West. The modernization of obsolete factories producing weapons, munitions, and explosives represented a further serious difficulty for smaller member states. These countries had built much of their military industries in the 1950s using machinery and equipment imported from the Soviet Union, which declined to deliver updated technology as a result of production burdens stemming from the new armaments-program, thus compelling Warsaw Pact countries to purchase necessary manufacturing technology on the world market.6 At its November 1978 session in Moscow, the WP Political Consultative Committee reconfirmed the need to modernize and rearm Unified Armed Forces troops. The tempo of military development taking place within member states is reflected in the 50 percent rise in the projected volume of mutual deliveries of military equipment in the years 1981–1985 in comparison to the previous five-year planning period, an increase that was, nevertheless, only between 50–70 percent of that prescribed in individual national protocols (see subchapter 4.5). However, the Soviet Union lacked sufficient military-industrial capacity to reach stipulated development targets, compelling the USSR to submit a sixfold increase in orders for matériel from Hungary for the 1981– 1985 planning period in comparison to the years 1975–1980 (though Hungary was only able to accommodate half of these orders). Transformations were made to the Soviet governmental structure in order to promote the objective of improving the supply of parts and supplementary products. However, the Soviet Union rejected all proposals made within the COMECON MISC aimed at expanding consultations to new domains, such as economic policy, basic research, technical development, etc. Hungary nevertheless continued to advocate the establishment of a more complex international planning-system as stipulated in the country’s long-range military-industrial development concept completed in the fall of 1979. Hungary’s leadership was no longer willing to renounce the fundamental principles aimed at improving economic efficiency, the balance of trade and achieving industrial-development objectives in both the military and civilian sectors. East-West relations deteriorated significantly following the Soviet Union’s intervention in Afghanistan, accelerating the arms race and reducing trade

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and the legal transfer of technology. The Soviet Union wanted to force the socialist countries of Central and Eastern Europe into a type of COMECON autarky even as the USSR itself sold increasingly expensive energy on the world market and acquired (smuggled, stole) the most up-to-date technology from the West. The concept of supranational centralized planning reemerged in cyclical fashion under the catchphrase “economic-policy coordination” at COMECON consultations held in 1982 and 1983 (see subchapter 5.1). Bloc-level self-sufficiency in the production of commodities ranging from food to oil represented the central idea of documents approved at the summit meeting of member-state party leaders in June 1984. In reality, however, it became clear during talks held to coordinate the 1986–1990 planning period that member-state economies had come to rely on their Western connections to alleviate growing shortages. After becoming the general secretary of the CPSU in March 1985, Mikhail Gorbachev attempted to increase the dynamism of intrabloc relations, emphasizing the role that development of modern technology would play in this endeavor. The COMECON program until the year 2000 approved in December 1985 nevertheless furnished Soviet ministries and other organizations with the authority to supervise joint research-projects, thereby inflicting further injury upon the dignity and interests of fellow member states. Although Gorbachev repeatedly advocated strengthening integration within the bloc at meetings of the Warsaw Pact Political Consultative Committee and COMECON held in June and November 1986 and October 1987, Soviet proposals submitted at these consultations failed to establish new means of achieving this objective. In 1989, the Soviet leadership introduced the novel concept of the “COMECON common market.” Soviet bureaucracies quickly devised action plans and programs aimed at preserving the cohesion of the organization. After it became evident that the Central and Eastern European member states were preparing to leave COMECON, Soviet officials began to focus on identifying the means by which it would be possible to force these countries to provide the Soviet Union with necessary products and technology (through coordination of the military-industrial conversion, withholding energy deliveries, etc.). At the beginning of the 1980s, cooperation in the development and production of military equipment consisted of a few joint projects (the T-72 tank, the PASUV automated field-command system), while the implementation of ambitious mutual-delivery plans stalled (see subchapter 5.2). Hungary therefore resorted to previously unutilized restrictive measures in order to maintain balanced trade, discontinuing exports of completed military-technics for which commensurate imports were unlikely to be found. Hungary had to reduce military expenditures and investments as a result of the deepening economic

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crisis that beset the country after 1985. In response to cancelled Hungarian imports in the years 1987–1988, the Soviet Union threatened to reduce orders on several occasions, though in the end barely decreased purchases as a result of the priority that had been placed on defense. (The prolonged war in Afghanistan likely played a role in this: according to some reports, Soviet troops used mortars manufactured in the city of Miskolc in northwestern Hungary, by DIGÉP company during this conflict). Military imports among Warsaw Pact and COMECON member states declined only in 1989, falling between 30–50 percent that year. However, the WP Unified Armed Forces Command, ignoring the collapse of communist systems throughout Central and Eastern Europe, wanted in November 1989 to coordinate the program for development of weapons and equipment until the year 2000 and to strengthen inter-company connections. Thus in spite of Gorbachev’s public pronouncements, the Soviet Union was unwilling to quietly emancipate the countries that constituted the country’s security zone and served as crucial suppliers of civilian and military products. An exhaustive chronological analysis of military-industrial cooperation within the entire Eastern bloc from its formation until its dissolution is, unfortunately, impossible for reasons previously cited in this book. Both Gosplan and the COMECON Secretariat’s Military Industrial Department had access to a comprehensive database offering them an overview of the peacetime and mobilization-period capacities of member-state military industries. However, due to the Soviet Union’s imperial approach to exercising authority over fellow member states, Soviet officials did not even consider sharing this data with its allies, forcing Hungary’s defense minister, for example, to obtain information regarding the size of the armed forces in fellow member states from publications issued by the International Institute for Strategic Studies in London (see subchapter 4.4). Among the little concrete data available regarding the Warsaw Pact’s distribution of military-industrial production are figures showing the proportion of the total stipulated deliveries of military equipment within the alliance undertaken by Soviet Union and other member states. (Naturally this data does not include information pertaining to the production of military equipment in the Soviet Union for the country’s own use.) Hungarian data suggests that smaller member states manufactured only a small fraction of the total amount of military equipment produced in Warsaw Pact countries until the conclusion of specialization agreements in the first half of the 1960s boosted such production. The redistribution of militaryindustrial production achieved its intended objective of relieving the Soviet Union of the obligation to manufacture relatively simple products, thus reducing the country’s share of total mutual deliveries of military equipment among Warsaw Pact member states from 62 percent in the years 1966–1970

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to 54 percent in the years 1971–1975 and a targeted 52 percent for the years 1976–1980. The total value of cooperative production of military equipment expanded slowly as a result of its greater complexity, though still rose from a few million rubles in the second half of the 1950s to 1.5 billion rubles in the second half of the 1970s. (This figure increases significantly if one takes into account the change to the ruble’s exchange rate that took place in 1960.) The specialization of production proved to be advantageous for both the Soviet Union and the smaller member states. Military equipment manufactured on the basis of specialization accounted for around 70 percent of all mutual deliveries of military equipment conducted in the 1960s and between 80–85 percent of that conducted in the1970s. Military equipment produced according to specialization agreements constituted more than three-quarters of Hungary’s total exports of military equipment by the middle of the 1970s. An analysis of specialization recommendations from 1958 to 1979 reveals that the amount of military equipment manufactured pursuant to these recommendations underwent a multifold increase during the period to include products of growing technical complexity such as tanks, supersonic aircraft, missiles, radar, etc. However, the Soviet Union never did abandon the precept formulated in December 1957 dictating that specialized production of the newest military technics, including nuclear and ballistic-missile technology, would not be accorded to other member states. Partially at the request of these countries, specialization was extended to maintenance and production of parts and components for military equipment. Although smaller memberstates successfully performed some independent research and development with regard to specialized military-technology (Poland, Czechoslovakia, and Hungary for armored vehicles, Hungary for radio-reconnaissance equipment, Bulgaria and other countries for computer technology), this always consisted fundamentally of the Soviet Union’s distribution of specific duties to member states. Hardly any military technology developed in member states outside the Soviet Union was included among the 114 products included in 1979 specialization recommendations (transmission technology developed in Hungary was one such item), largely as a result of Warsaw Pact Unified Armed Forces Supreme Command standardization practices that served to stifle development efforts in Central and Eastern Europe. Therefore the Soviet Union basically profited from COMECON cooperation in the production of military equipment—Soviet and, later, Russian claims that the smaller states had displayed a “parasitic attitude” in this regard are unequivocally refutable. On the basis of the facts presented above, the author considers the previously cited February 1989 conclusion of the CPSU CC’s International Department that the strongest integration within COMECON came about in the

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military-industrial sector to be well-founded. The lack of corresponding data with regard to other sectors does, however, give reason for caution in this regard. The main forms of COMECON cooperation had emerged by the 1960s; member-state armies had been provided with modern weaponry within the framework of the MISC, while national military-industries were linked on several levels and had become strongly interdependent. In the author’s opinion, the collapse of military industries in the countries of Central and Eastern Europe following the dissolution of COMECON as a result of an extensive surplus of production capacity serves to support the latter conclusion.7 External impulses and concepts emanating from the imperial center exercised a fundamental influence on the developmental path of Hungary’s national economy and military industry. The Soviet Union compelled Eastern bloc states to participate in three massive armaments-programs (in 1951, 1961 and 1976), “generously” providing them with credit for the purchase of arms if necessary. Development of the military industries in these countries was essential not only in order to supply their own armies, but also to provide a means of compensation for their substantial imports of military equipment from the Soviet Union. (The latter country was reluctant to accept civilian products in return for military equipment, presumably as a result of the emphasis placed on commodity-based exchange within the plan-command system.) Table 6.1 below shows the degree to which Hungary’s dynamically expanding military-industrial exports counterbalanced imports between the years 1950 and 1975. (The table covers only this twenty-five-year period due to a lack of sufficient import data for the years after 1975.) As the table shows, COMECON failed to achieve its frequently cited objective of balanced trade in military equipment during the first two and a half decades of its existence. It must be noted, however, that inevitable imports from the Soviet Union were the primary source of deficits and that the trade in military equipment between other Warsaw Pact member states was Table 6.1. Value of Hungary’s Trade in Military Technics with COMECON Member States between 1950 and 1975 (in Millions of New Rubles) Years 1950–1955 1956–1960 1961–1965 1966–1970 1971–1975

Exports

Imports

Balance

Percentage of Exports to Imports

33.0 21.6 100.0 164.2 350.5

177.4 49.0 383.6 272.6 579.9

–144.4 –27.4 –283.6 –108.4 –229.4

18.6 44.1 26.1 60.2 60.4

Source: 1950–1960: Analysis of Economic Activity Connected to Internal Security and National Defense during the Period 1950–1970. MNL OL, XIX-L-1-qqq 9. d.; 1961–1975: Report for the Defense Committee on Fulfillment of 1971–1975 Military Technics Exchange Government Agreements regarding Warsaw Pact Countries. April 1976. MNL OL, XIX-A-16-aa 127. d., p. 2.

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essentially balanced. In another general trend prevalent during this period, parts and components that Hungarian companies needed to assemble and manufacture specialized products for export constituted an increasingly large proportion of Hungary’s imports of military equipment. Hungary’s specialty apparatus dealing with the military-industrial trade and COMECON relations was established in several stages between 1952 and 1964, growing gradually more proficient over time. Maintaining relations with developing countries and the expansion of activity to markets outside of COMECON represented new and completely different challenges beginning in the 1970s. The National Planning Office’s coordination of international military-industrial cooperation beginning in 1953 ensured that the interests of the civilian economy and industry would be taken into account in the course of implementing military developments. Beginning in 1957–1958, all of the obligations that Hungary undertook within the COMECON MISC were in complete harmony with the country’s general industrial-development objectives. Hungary’s telecommunications, computer-technology, and microelectronic industries, among others, underwent rapid development beginning in the 1960s precisely as a result of military-industrial cooperation. Hungary’s specialty apparatus did everything possible to increase the effectiveness of the cumbersome and complicated cooperation taking place between COMECON member states in order to promote domestic interests. The rather non-confrontational, though persistent negotiating technique that Hungary adopted at both political talks of the highest order and routine meetings of the standing commissions served to promote the initiation of the Warsaw Pact’s 1969 reform, the establishment of the Technical Corps to provide an organizational link between the Warsaw Pact and COMECON, etc. The assertion of market and financial conditions was one domain in which Hungary remained isolated and failed to achieve its objectives, though Council of Ministers Chairman Miklós Németh asserted in 1989 that the notion of introducing such foreign elements into the rigid plan-command system had been an illusion. Hungary therefore attempted to utilize all the room for maneuver at its disposal, opening toward the West and developing countries and taking other explicit political and economic steps aimed at taking advantage of any available opportunity for breakthrough. The Soviet Union sometimes tolerated these efforts, occasionally even exploiting them to its own benefit, and sometimes called a halt to them (IMF membership, etc.). An analysis of the four decades of Soviet authority over the countries of Central and Eastern Europe reveals that although signs of hegemonic cooperation based on mutual interests appeared beginning around 1960, the imperial outlook remained predominant all the way until 1989–1990.

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NOTES 1. One of the most successful of these multinational scientific-research projects was the Joint Institute for Nuclear Research founded in the city of Dubna, about eighty miles north of Moscow, in 1956. This institute has continued to function until the present day. 2. See Resolution Regarding Coordination of the Activity of Warsaw Pact Member States in the Course of Military-Technical Cooperation with Developing Countries. April 11, 1980. HL KI, 394/062/1–6. Government representatives signed this resolution nearly a year after its completion. 3. For information regarding military and defense expenditures see: Pál Germuska, “A katonai és védelmi kiadások alakulása és hatása a nemzetgazdaságra 1949 és 1979 között,” Társadalom és Honvédelem, 11:3–4 (2007): pp. 29–68. 4. Between 1972 and 1974, the price of energy increased fourfold, the price of raw materials increased 2.4 times and the price of finished industrial-products increased 1.4 times. See Honvári, XX. Századi magyar gazdaságtörténet, p. 459. 5. For information regarding the Helsinki process and European security see the following work: Andreas Wegner, Vojtech Mastny and Christian Neunlist, Origins of the European Security System: The Helsinki Process Revisited, 1965–1975 (London: Routledge, 2008). 6. It was for this reason, for example, that Hungary purchased machinery and equipment for the production of TNT from the Swedish Bofors-Chematur company in 1979 at a cost of four million U.S. dollars. Specialists from the company installed this technology at the Northern Hungary Chemical Works near the village Sajóbábony from 1980–1982. See details Pál Germuska, “Conflicts of Eastern and Western Technology Transfer: Licenses, Espionage, and R&D in the Hungarian Defense Industry during the 1970s and 1980s,” Comparative Technology Transfer and Society, 7:1 (2009): pp. 43–65. 7. For information regarding the transformation of Hungary’s military industry after 1989/1990 see Judit Kiss, The Transformation of the Defense Industry in Hungary (Bonn: Bonn International Center for Conversion, 1999). For information regarding the conversion of the military industries in the countries of Central and Eastern Europe see Judit Kiss: Arms Industry Transformation and Integration: The Choices of East Central Europe (Oxford: Oxford University Press, 2014).

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Unpublished archival sources Budapest Főváros Levéltára [Budapest City Archives] XXIX. 220/a TÜK [Confidential Document Handling]—Mechanikai Laboratórium Híradástechnikai Kísérleti Vállalat iratai [Mechanical Laboratories Experimental Enterprise documents]

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M-KS 276. f. 66. cs.—Gerő Ernő titkári iratai [secretary papers of Ernő Gerő] M-KS 276. f. 67. cs.—Farkas Mihály titkári iratai [secretary papers of Mihály Farkas] M-KS 276. f. 84. cs.—MDP Államvédelmi Bizottsága iratai [HWP State Defense Committee documents] M-KS 276. f. 95. cs.—MDP KV Ipari és Közlekedési Osztályának iratai [HWP Central Committee Department of Industry and Transportation documents] M-KS 288. f. 4. cs.—MSZMP Központi Bizottság iratai [HSWP Central Committee documents] M-KS 288. f. 5. cs.—MSZMP Politikai Bizottság iratai [HSWP Political Committee documents] M-KS 288. f. 15. cs.—MSZMP KB Államgazdasági, majd Gazdaságpolitikai Bizottsága iratai [HSWP CC State Economic, later Economic Policy Committee documents] M-KS 288. f. 59. cs.—MSZMP Elnökség iratai [HSWP Presidency documents]

Documents of Different State Organs XIX-A-2-p—Hegedüs András miniszterelnök iratai [András Hegedüs chairman of the Council of Ministers documents] XIX-A-2-gg—Apró Antal miniszterelnök-helyettes iratai [Antal Apró deputy chairman of the Council of Ministers documents] XIX-A-2-ma—Minisztertanács Titkársága Ipari Csoport TÜK iratai [Industrial Section of the Council of Ministers Secretary Confidential Document Handling documents] XIX-A-16-i—Kiss Árpád Országos Tervhivatal elnök iratai [Árpád Kiss president of the National Planning Office documents] XIX-A-16-aa—Országos Tervhivatal Általános Szervezési Főosztálya iratai [General Organizational Department of the National Planning Office documents] XIX-A-83-a—a Minisztertanács jegyzőkönyvei [minutes of the Council of Ministers] XIX-A-83-b—Minisztertanácsi előterjesztések és határozatok [proposals and resolutions of the Council of Ministers] XIX-A-98—Honvédelmi Tanács, Honvédelmi Bizottság Titkársága iratai [Defense Council, Defense Committee Secretary documents] XIX-B-1-ai—a Belügyminisztérium Miniszteri Titkárság iratai [Ministerial Secretary of Ministry of Interior Affairs documents] XIX-F-6-a—Kohó- és Gépipari Minisztérium (KGM) Titkárság iratai [Secretary of Ministry of Metallurgy and Machine Industry documents] XIX-F-6-ae—KGM Központi TÜK iratai [Ministry of Metallurgy and Machine Industry Central Confidential Document Handling documents] XIX-F-6-cc—Bíró Ferenc miniszterhelyettes iratai [papers of Ferenc Bíró deputy minister] XIX-F-6-dd—Kolos Richárd miniszterhelyettes iratai [papers of Richárd Kolos deputy minister] XIX-F-6-ee—Hidasi Ferenc miniszterhelyettes iratai [papers of Ferenc Hidasi deputy minister]

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XIX-F-6-kb—KGM minisztériumi kiadványok [Ministry of Metallurgy and Machine Industry ministerial documents] XIX-F-6-na—KGM Nemzetközi Együttműködési Főosztálya iratai [International Cooperation Department of the Ministry of Metallurgy and Machine Industry documents] XIX-F-6-ra—KGM Terv- és Munkaügyi Főosztály TÜK iratai [Planning and Labor Affairs Department of the Ministry of Metallurgy and Machine Industry Confidential Document Handling documents] XIX-F-17-s—Nehézipari Minisztérium Iparszervezési Főosztálya iratai [Industry Organization Department of the Ministry of Heavy Industry documents] XIX-G-3-ae—Külkereskedelmi Minisztérium Műszaki Főosztály iratai [Ministry of Foreign Trade Technical Department documents] XIX-G-3-p—Külkereskedelmi Minisztérium TÜK iratok [Ministry of Foreign Trade Confidential Document Handling documents] XIX-J-1-u—Külügyminisztérium miniszteri és miniszterhelyettesi iratok, Erdélyi Károly miniszterhelyettes iratai [Ministry of Foreign Affairs, papers of Károly Erdélyi deputy minister] XIX-L-1-qqq—Pénzügyminisztérium katonai vonatkozású iratai [military documents of Ministry of Finance] XXIX-F-209-d—Videoton Elektronikai Vállalat TÜK iratok [Videoton Electronics Enterprise Confidential Document Handling documents]

Publications of Archival and Other Private Sources A hadiipari tevékenység 1985-ben [Military Industrial Activity in 1985] Budapest: Központi Statisztikai Hivatal [Central Statistical Office] (KSH) 1986. A hadiipari tevékenység 1986-ban [Military Industrial Activity in 1986] Budapest: KSH, 1987. A hadiipari tevékenység 1987-ben [Military Industrial Activity in 1987] Budapest: KSH, 1988. A hadiipari tevékenység 1988-ban [Military Industrial Activity in 1988] Budapest: KSH, 1989. A hadiipari tevékenység 1989-ben [Military Industrial Activity in 1989] Budapest: KSH, 1990. Ehrenberger, Róbert. ed., “A dolgozó népet szolgálom!” Forráskiadvány a Magyar Néphadsereg Hadtörténelmi Levéltárban őrzött irataiból 1957–1972 [“I Serve the Working People!” Source Publication from Hungarian People’s Army Documents Deposited at the Military History Archives] (Budapest: Tonyo-Gráf Nyomdai és Grafikai Stúdió, 2006). Selected and prepared for publication by Róbert Ehrenberger, Erika Laczovics and József Solymosi. Introduction by Imre Okváth. Rákosi, Mátyás. Visszaemlékezések. 1940–1956. [Memoirs. 1940–1956], vols. I–II, edited by István Feitl, Mrs. Márta Gelléri Lázár and Levente Sipos. Budapest: Napvilág Kiadó, 1997. Magyarország népessége és gazdasága. Múlt és jelen [Hungary’s Population and Economy. Past and Present] Budapest: KSH, 1996.

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Uhl, Matthias. Nuclear Warhead Delivery Systems for the Warsaw Pact, 1961–65: Documents from the Russian State Archives of Economics and the German Federal Military Archives on the Reorganization and Modernization of the Armed Forces of the Soviet Bloc. June, 2002. Accessed September 5, 2014. ftp://budgie3.ethz.ch/ php/collections/coll_8.htm

Academic and Other Works Almquist, Peter. Red Forge: Soviet Military Industry since 1965. New York: Columbia University Press, 2002. Ausch, Sándor. Theory and practice of CMEA cooperation. Budapest: Közgazdasági és Jogi Könyvkiadó, 1972. Baev, Jordan. “The Organizational and Doctrinal Evolution of the Warsaw Pact (1955–1969)” in 125 godini ot osvobojdavaneto na Bulgaria i vuzstanoviavaneto na bulgarska armiia [125 Years since the Liberation of Bulgaria and Reestablishment of Bulgarian Armed Forces] Sofia, 2003. pp. 62–75. Accessed September 5, 2014. http://www.coldwar.hu/html/en/publications/organizational.html Baráth, Magdolna. A Kreml árnyékában. Tanulmányok Magyarország és a Szovjetunió kapcsolatainak történetéhez, 1944–1990 [In the Shadow of the Kremlin: Studies on Relations of Hungary and the Soviet Union, 1944–1990] Budapest: Gondolat Kiadó, 2014. Baráth, Magdolna, and János M. Rainer, eds., Gorbacsov tárgyalásai magyar vezetőkkel. Dokumentumok az egykori SZKP és MSZMP archívumaiból 1985–1991 [Gorbachev’s Talks with Hungarian Leaders. Documents from the Former CPSU and HSWP Archives 1985–1991] Budapest: 1956-os Intézet, 2000. Barber, John and Mark Harrison, eds. The Soviet Defence-Industry from Stalin to Krushchev. London: Macmillan, 2000. Békés, Csaba. “Titkos válságkezeléstől a politikai koordinációig. Politikai egyeztetési mechanizmus a Varsói Szerződésben, 1954–1967” [From Secret Crisis Management to Political Coordination. The Mechanism of Political Reconciliation in the Warsaw Pact, 1954–1967] in János M. Rainer, ed., Múlt századi hétköznapok. Tanulmányok a Kádár-rendszer kialakulásának időszakáról [Everyday Life in the Past Century. Studies on the Period of the Establishment of the Kádár Régime] Budapest: 1956-os Intézet, 2003, pp. 9–54. ———. Európából Európába. Magyarország konfliktusok kereszttüzében, 1945–1990 [From Europe to Europe. Hungary in the Crossfire of Conflict, 1945–1990] Budapest: Gondolat Kiadó, 2004. ———. “Hungary and the making of the CSCE Process, 1965–1970,” in Carla Meneguzzi Rostagni, ed., The Helsinki Process: A Historical Reappraisal. Padova: CEDAM, 2005. pp. 29–44. ———. “Magyarország és a nemzetközi politika az ötvenes évek közepén” [Hungary and International Politics in the Middle of the 1950s] in Csaba Békés, ed., Evolúció és revolúció. Magyarország és a nemzetközi politika 1956-ban [Evolution and Revolution. Hungary and International Politics in 1956] Budapest: 1956-os Intézet—Gondolat Kiadó, 2007, pp. 9–27.

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Index

Arab–Israeli wars, 162, 192 Akhromeyev, Sergey, 256–257 AKM assault rifles, 75 ammunition, xii, 12, 16, 28, 47, 53–54, 59, 63, 67, 70, 74–75, 78, 80, 93, 113, 139, 153, 161, 163, 165–166, 169, 171, 182–183, 187, 190, 202–203, 207, 212–213, 216, 273, 282 An-2 aircraft, 75 Apró, Antal, 83, 87–88, 122–123, 134, 137, 158 ARSOM-2 radar station, 75 atomic weapons, 58, 65, 71, 93, 272 autarky, 1-2, 237, 248-249, 271, 283 B-10 82 mm recoilless gun, 75 Baki, Ferenc, 24, 125 Bata, István, 28, 31, 42, 51 Bereczki, Imre, 140 Bíró, Ferenc, 16–18, 21, 23, 25 Bíró, József, 132 BM-14 multiple rocket launcher, 75 Bodnăraș, Emil, 14 bombers, 14, 66 Borbándi, János, 185, 209 BRDM armored vehicle, 86 Brusnika (R-155P) radio receiver, 182, 192, 210, 220, 223

BTR armored personnel carriers, 85–86, 179–181, 280 Bulganin, Nikolai A., 14, 57 Ceauşescu, Nicolae, 274 chemical-defense materials/devices, 53–54, 59, 63, 67, 72, 93, 151, 161, 215, 216 COMECON complex program, 148, 150, 157–160, 169, 172, 187, 195, 242–244, 250, 269, 277–278 COMECON sessions 1st Moscow, April 26–28, 1949, 7 2nd Sofia, August 25–27, 1949, 8–9 3rd Moscow, November 24–25, 1950, 8, 26 4th Moscow, March 26–27, 1954, 29 5th Moscow, June 24–25, 1954, 30 6th Budapest, December 7–11, 1955, 43 7th East Berlin, May 18–25, 1956, 50, 53, 271 12th Sofia, December 10–14, 1959, 69 13th Budapest, July 26–29, 1960, 70 16th Moscow, June 7, 1962, 81, 83, 274 18th Bucharest, December 14–20, 1962, 83

299

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300

Index

20th Sofia, December 8–13, 1966, 122–123, 276 21st Budapest, December 12–19, 1967, 137, 147 23rd Moscow, April 23, 1969, 149–150 25th Bucharest, July 27–28, 1971, 159–160, 278 32nd Bucharest, June 27–29, 1978, 217–218 34th Prague, June 17–19, 1980, 238 37th East Berlin, October 18–20, 1983, 240 38th Moscow, June 12–14, 1984, 241 42nd, Moscow, December 17–18, 1985, 243 43rd, Moscow, October 13–14, 1987, 244–245 44th, Prague July 5–7, 1988, 245 45th, Sofia, June 27–29, 1989, 250 46th Budapest, June 28, 1991, xii, 252 COMECON Executive Committee sessions 3rd Bucharest, December 14–20, 1962, 83 4th Moscow, February 15–21, 1963, 88 5th Moscow, April 17–25, 1963, 88 26th Moscow, November 1–2, 1966, 122 32nd Budapest, December 12–19, 1967, 137 52nd Moscow, April 27–29, 1971, 158 57th Moscow, April 19–20, 1972, 166–167, 278 70th Moscow, January 21–23, 1975, 186, 280 82nd Bucharest, June 27–29, 1978, 217–218 COMECON Military Industrial Standing Commission meetings Moscow, September 23–28, 1956, 53–54, 272

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Moscow, December 10–14, 1957, 60 Moscow, August 25 – September 5, 1958, 65–68 Moscow, July 7–11, 1959, 68 Moscow, October 4–6, 1960, 70, 273 Moscow, May 8–11, 1962, 79 Moscow, January 23–30, 1963, 84–86, 274 Moscow, April 20–25, 1963, 90–91, 275 Moscow, November 28–December 3, 1963, 93–95 Moscow, May 12–14, 1964, 106–109 Moscow, April 9–13, 1965, 110–111 Prague, November 19–23, 1965, 115–117, 276 Moscow, June 8–10, 1966, 120–122 Moscow, November 29–December 11, 1966, 123–124 Moscow, June 6–9, 1967, 133 Sofia, November 21–25, 1967, 134–135 Moscow, May 28–30, 1968, 139 Budapest, May 13–16, 1969, 150 Moscow, November 11–14, 1969, 150–151 East Berlin, May 26–29, 1970, 153–154 Moscow, November 17–19, 1970, 154–156 Mangalia, May 25–28, 1971, 156– 157 Moscow, November 16–19, 1971, 160 Kołobrzeg, May 30–June 2, 1972, 167–168, 278 Moscow, November 21–24, 1972, 172–173 Moscow, May 29–June 1, 1973, 173–174 Špindlerův Mlýn, November 20–23, 1973, 174–176 Moscow, May 28–31, 1974, 178 Varna, October 14–18, 1974, 181– 182, 185

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Index

Leningrad, May 27–30, 1975, 183– 184, 279 Balatonkenese, October 13–17, 1975, 185–187, 280 Leipzig, June 1–4, 1976, 193–194 Wrocław, October 19–22, 1976, 196, 281 Braşov, May 24–27, 1977, 200–201 Vranov nad Dyjí, November 22–25, 1977, 203–206 Minsk from May 15–19, 1978, 207–208 Sofia from November 14–17, 1978, 218–219 Debrecen, May 29–June 1, 1979, 219–221 East Berlin, November 19–22, 1979, 225 Poznań, May 27–29, 1980, 252 Bucharest, November, 1980, 252– 253 Poprad, May 26–28, 1981, 253 Kiev, November 24–26, 1981, 253 Sofia, May 27–29, 1982, 253 Bucharest, November 22–26, 1982, 254 Erfurt, June 1–3, 1983, 255 Communist and socialist party leaders summits Moscow, January 9–12, 1951, 14–15, 270 Moscow, January 6–11, 1956, 43–48, 271 Moscow, May 20–23, 1958, 62–64, 272 Moscow, June 12–14, 1984, 241– 242, 283 Moscow, November 10–11, 1986, 243–244 conventional weapons, xii, 46, 64, 72, 113, 272 Csémi, Károly, 140, 185, 235 Csergő, János 31, 51, 72 Czinege, Lajos, 73, 76, 78, 87, 95, 114, 138, 140, 177, 198, 221

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301

Dagayev, Nikolai P., 94 developing countries, xii, xv, 80, 123, 149, 162–167, 169–171, 183–184, 188, 192–193, 212–213, 223, 238, 277–279, 281, 287 Doró, György, 179, 184–185, 193, 196, 201, 214, 220, 256, 258 E-2 director, 67 economic reform, 124–126, 128, 248, 276–277 European Union, xvii exchange-rate, xvii–xviii, 224 Fabrikov, Ivan A., ix, 197, 219–220, 254 Faddeev, Nikolai V., 196 Farkas, Mihály, 3, 6, 11, 15–17, 23 fighters, 17, 27, 47, 59–60, 65–66, 72, 75, 77, 105, 196, 198, 255–258 Fock, Jenő, 138, 159 foreign-exchange forint, xvii–xviii, 22 Friss, István, 6–8, 10–11, Gerő, Ernő, 3, 6, 8, 15, 17, 19, 49 Gorbachev, Mikhail S., 242–245, 251, 259, 269, 283, 284 GOST standards, 12–13 Grechko, Andrei A., 72, 74, 76–78, 93, 115, 118, 273 Gribkov, Anatoliy I., 256–257 Grósz, Károly, 259 Gvozdika 122-mm self-propelled howitzer, 176–178, 181–182, 215, 220, 223–224 Havasi, Ferenc, 241 Háy, László, 6, 21, 23 Hegedüs, András, 43 hegemonic power, xvi–xvii, 287 helicopters, 65, 66, 75, 173, 216, 254–255 Helsinki Process/Accords, 139, 281 Herczeg, Ferenc, 18 Hoós, János, 260

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302

Index

Horváth, Ferenc, 262 Horváth, Mihály, 16, 19, 21, 23, 56–58, 65 Hrunichev, Mikhail, 59 Huszár, István 214, 224–225 IL-14P cargo-transport aircraft, 27 imperial power, xvi, 273, 284, 286–287 Jávor, Ervin, xiii, 81–82, 84–88, 91–92, 94, 106, 110–111, 116–117, 124, 134–137, 174, 175 Kádár, János, 55, 57, 64, 74, 123, 241– 242, 244, 256 Kárpáti, Ferenc, 256–257, 260 Kazakov, Mikhail I., 133 Kiss, Árpád, 72 Khrushchev, Nikita S., 29, 45–46, 51, 59, 61, 72, 271, 273 Kolos, Richárd, 23 Korean War, 14–15 Kosyachenko, Grigory P., 7 Kosygin, Alexei N., 69, 218 KS-18 anti-aircraft gun, 27, 30 Kulikov, Viktor G., 235, 254, 256–257 Lakatos, Béla, 125 Larishchev, 7 László, Aladár, 8, 9, 25–27 Lázár, György, 179, 217–218 Leykov, G. N., 94 main battle tank T-34, 17, 27, 74 T-54, 65 T-55, 254–255 T-72, 200, 207, 212–213, 219, 221, 253–255, 282–283 Mácsay, Tivadar, 131–132 Malenkov, Georgy M., 7, 29 Malinovsky, Rodion J., 59, 80 Medgyessy, Péter, 260 MiG jet fighters, 27, 65, 66, 75, 77, 105, 196, 198 Mikoyan, Anastas I., 7, 25, 26

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missiles/missile technology, 58, 60, 65, 71–72, 75, 79, 93, 160, 172–173, 176, 179–181, 190, 212, 216, 254, 258, 272, 280, 285 mobilization (M), 11, 13, 16, 41, 45, 48, 62, 63, 67–68, 71, 73–75, 78, 84, 86–87, 90–91, 93, 109, 111–114, 116–117, 125, 133, 163, 167, 204, 212, 235, 256, 262–263, 273, 275, 277–278, 284 Molotov, Vyacheslav M., 7 MT-LB multi-purpose amphibious armored personnel-carrier, 178 multilateral clearing, 4, 8, 26, 50, 52, 151, 269 Münnich, Ferenc, 55, 61 New Economic Mechanism (in Hungary), xvii, 128, 130, 136 Németh, Miklós, 247, 249, 287 Nikiforenko, A. M., 203 North Atlantic Treaty Organization, 5, 71–72, 197, 278 Novikov, Vladimir N., 77 NSP-3 night sight, 160 Nyers, Rezső, 148, 157, 159, 160 oil crisis, 185–186 Oka operational-tactical missile, 258 OT-64 SKOT armored personnelcarrier, 106 Pacsek, József, 256–257 Parus radio transmitter, 105 PASUV automated field-command system for ground forces, 200, 205, 207, 212, 218, 221, 253–255, 269, 283 Pleshakov, Pyotr S., 221 Polosana-N radio transmitter, 110, 137 PSzH armored scout-car, 181 PUAZO director, 52, 66 radars, 14, 17, 47, 52, 55–57, 59–63, 66–67, 71, 74–75, 78, 80, 111,

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Index

124, 137, 161, 172, 173, 216, 255, 272, 285 radio-lokators. See radars radio-reconnaissance devices, 109, 117, 151, 172, 177, 193–194, 212, 214, 217, 219, 279, 285 Rákosi, Mátyás, 3, 8, 15, 17–18, 28, 44, 46 Reményi, Gyula, 140–141 Révész, Géza, 23, 51–52, 55–56, 61 RPD light machine-gun, 67 Ryabikov, Vasiliy M., 80, 82, 92 S-60 anti-aircraft gun, 52, 57, 74, 181, 224 Shakhurin, Alexey I., 59 small arms, 182 Soltész, István, 224 Sólyom, László, 10–12 SNAR-2 radar stations, 75 SON-9A fire-control radar, 52, 55, 57, 75 Sós, Gyula, 262 Su-25 fighter jet, 257–258 SU-100 tank destroyer, 27 Szekér, Gyula, 214 Sergeychik, Mikhail A., 221 Sidorovich, Georgy S., 28, 87, 184 Shilka 23 mm lightly armored, selfpropelled, radar-guided antiaircraft weapon-system, 124, 133 Soviet advisors, 1, 10, 42, 202, 270 Szilágyi, László, 140 Stalin, Joseph, xvi, 1–3, 6–7, 10, 14–15, 25, 270 Stepanyuk, Illarion V., 140–141, 156 Strela surface-to-air missile systems, 160, 173, 179, 180–181, 212, 280 Szkladán, Ágoston, 23 Szuszki, Károly, 21, 23 Technical Corps. See Warsaw Pact Unified Armed Forces Command Technical Corps

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303

Third World Countries. See developing countries Timár, Mátyás, 177 Tikhonov, Mikhail, 42, 51 Titov, Georgy A., 182, 193, 196, 201 Tordai, Jenő, 131–132 Ustinov, Dmitriy F., 197, 241 Vas, Zoltán, 17 Vasilek 82 mm gun-mortar, 177, 179, 181, 183, 185, 190, 210, 220, 223–225, 280 Vasilevsky, Aleksandr M., 14 Vályi, Péter, 167 Vozdukh automated aircraft groundcontrol system, 105, 174, 178 Warsaw Pact’s Committee of Defense Ministers meetings Moscow, December 22–23, 1969, 140–141 Sofia, December 10–11, 1976, 197 Warsaw Pact Political Consultative Committee meetings Prague, January 27–28, 1956, 49 Moscow, March 28–29, 1961, 73, 273 Moscow, July 26, 1963, 93 Bucharest, July 4–6, 1966, 119–121, 276 Budapest, March 17, 1969, 139–140, 277 Bucharest, November 25–26, 1976, 196–197, 220, 235, 281 Moscow, November 22–23, 1978, 236, 282 Sofia, October 22–23, 1985, 242–243 Budapest, June 10–11, 1986, 243, 283 Warsaw Pact Unified Armed Forces Command Technical Corps, 118–119, 121, 137, 139, 140, 141, 153–156, 168, 172–173, 176, 181,

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304

Index

197–198, 202, 204–205, 212, 219, 220, 254, 263, 277–278, 287 Warsaw Pact Unified Armed Forces Supreme Command, 41, 49, 55, 62–63, 70, 72–73, 76, 82, 84, 86–89, 92–94, 105, 107, 110–119, 121, 129, 133, 140–141, 150, 154, 156, 160–161, 172, 175, 198, 201, 212, 220, 236, 271, 273–278, 285 World War II, ix, xii, xv, 1, 2, 270 World War III (potential), 14

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Yak-12 aircraft, 75 Yakovlev, Alexander N., 246 Yakubovsky, Ivan I., 140, 221 Yalta Conference, 1 Yazov, Dmitry T., 257–258 Yugov, Anton Tenev, 5 Zagladin, Vadim V., 251 Zakharov, Matvei V., 77 ZSU-57-2 self-propelled anti-aircraft gun, 65–66

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About the Author

Pál Germuska received his PhD in social history from the Eötvös Loránd University, Budapest. He worked fifteen years in the Institute for the History of the 1956 Revolution; since 2011 he has been researcher of contemporary military history at MoD Military History Institute and Museum, Budapest. He teaches economic history at Eötvös Loránd University Faculty of Social Sciences. He is a historian with interests in the history of urban development, military industry, the COMECON, and industrial and economic policy of the Socialist period. He was contributor of edited volumes (conference proceedings, as well as with MIT Press and Palgrave Macmillan). He has published several articles outside Hungary, too, in Czech Republic, France, Germany, Italy, Poland, Slovakia, Slovenia, the United Kingdom, and the United States. He is finalizing a monograph on postwar Hungarian military industry, to be published in Hungarian. His future research focuses on Hungarian–Third World relations and the arms exports of Hungary to the developing world.

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