Borvendég Zsuzsanna: Fabulous Spy Games. How international trade networks with the West developed after 1945 - A Magyarságkutató Intézet Kiadványai 24. (Budapest, 2021)
‘THE HUNGARIAN MAFIA’ - The key to success
'THE HUNGARIAN MAFIA' these goods and could therefore not be sold at a profit. As a consequence, the state provided aid to the company manufacturing them to compensate them for their loss. The government used the profits made from the sale of profitable products to cover the losses from providing aid to loss-making exports and from providing consumers with expensively purchased goods/materials at reduced prices. When such profits proved insufficient, the national budget had to step in to finance the losses. Price balancing was already common practice between the two world wars in certain areas of exporting. It was designed at the time to help the economy back onto its feet following the shock of Trianon. After the first global conflict, the dismembered country had access to crude oil only from the Grozny oil fields, exporting machinery to Russia in return. Production costs, however, exceeded the prices charged for the goods to the newly created communist empire.209 Purchasing oil was of strategic importance, so the government supported deliveries through price balancing. After World War Two, however, it was the need for foreign currency that called for price balancing. Selling goods manufactured at excessive cost and often to questionable quality standards to capitalist markets was unavoidable for the country to increase its hard currency reserves. Manufacturing companies were therefore given continuous state aid.210 Research by Pál Germuska shows that price balancing peaked in 1954, accounting for 21.7 percent of the entire budget.211 Most exports to Germany before 1956 were of agricultural produce and the amount of compensation spent on these exports was also staggering, accounting for 59 percent of the entire export value in the first three quarters in 1950.212 209 Gábor 2013, p. 241 210 In detail, cf. Germuska 2011 211 Germuska 2011, p. 393 212 Gábor 2013, p. 241 All this information leads to the logical conclusion that the overwhelming majority of Hungarian foreign trade was loss-making; only the intention to obtain hard currencies can explain why a presence in capitalist markets was pushed so hard, a requirement the countries in the Bloc were forced to meet 75
