SOVIET ECONOMIC ENTERPRISES IN HUNGARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00046R000500150009-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 27, 2016
• Document Release Date: June 5, 2013
• Sequence Number: 9
• Publication Date: June 21, 1955
• Content Type: REPORT

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INI-URMA I ION RE
4,16
PORT INFORMATION REPORT
CENTRAL- INTELLIGENCE AGENCY
This material contains information affecting the National Defense of the United States within the meaning of the Espionage Laws, Title
18, U.S.C. Secs. 793 and '794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
S-E-C-R-E-T
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COUNTRY
SUBJECT
DATE OF INFO.
PLACE ACQUIRED
DATE ACQUIRED
Hungary / USSR -
Soviet Economic Enterprises,
in Hungary
REPORT
DATE DISTR.
NO. OF PAGES
REQUIREMENT NO.
REFERENCES
21 June 1955
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SOURCE EVALUATIONS ARE DEFINITIVE. APPRAISAL OF CONTENT IS TENTATIVE.
SOURCE:
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INFORMATION REPORT INFORMATION REPORT
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w COUNTRY Hungary/USSR
lt,
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A SUBJECTSoviet Economic Enterprises in Hungary
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DATE OF INFORMATION
PLACE ACQUIRED
THIS IS UNEVALUATED INFORMATION
REPORT NO.
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DATE DISTR. 27 May, 1955
NO. OF PAGES 5
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. Prior to 1 October 1952, all former German industrial plants and
other economic enterprises in Hungary which were taken over by the
USSR after World War II were united under so-called stock companies
(aktsionernyye obshchestva A/0 s). These A/bs were fully control-
led 147 the Soviets and were directly subordinate to the Third
Directorate of GUSIMZ in Moscow. This organization in Hungary was
called ?the Directorate for Soviet Property in Hungary (USIV.)
*
2. Altogether there were perhaps 200 to 300 Soviets and several thousand
Hungarians employed in USIV. The head of this organization in Hungary
was Rusanov who was the plenipotentiary of GUSIMZ. Rusanov did not
have broad, directional authority over the various A/Os of USIV.
His principal responsibility was to serve as a coordinator on
important economic matters between the A/bs and GUSIMZ, between the
A/bs and the Hungarian State Planning Office, and between the A/bs
and individual Hungarian economic ministries. To assist him in his
work, Rusanov had a staff of about 10 Soviet employees including
Shgkin, an advisor for economic matters, two or three legal advisors,
several accountants, and two or three secretary-stenos. In addition
to this, there were several Hungarian employees on, his staff. There
was also a First Section in USIV which was a, classified documents
registry and repository. Only a few Soviets worked in this section.
Hungarians were not permitted access to the material in this section,
which consisted basically of directives and instructions from OUSIMZ.
on all matters pertaining to USIV and its subordinate enterprises.
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In USIV, there were altogether 10 A/Os which controlled various
types of industrial plants and other Soviet economic enterprises
in Hungary. These were:
a. A/O Kabel-1,:controlledeubcirdinatelplants:-.whichprOoduded:pab/e,
electric motors, generators, batteries, transformers, and
other electrical apparatus of all types.
b. A/O Podemnik - controlled a few small machine-building plants
and several iron foundries.
c. A/O Vkus - controlled food canning, alcohol, and liquor plants.
d. A/0 Textil - controlled plants which manufactured cloth and yarn.
e. A/b DunavOlgyi - controlled former German bauxite mines in
Hungary and plants producing alumina - A1203.
f. A/b Maszolaj - controlled petroleum extraction and refining
facilities which formerly belonged to the US Standard Oil Company.
A/b Maszovlet - controlled a joint civil air stock company in
Hungary together with planes, hangars, and workshops.
h. A/b Meszhart controlled property which formerly belonged to the
German Danube River Shipping Concern.
i. A/0 Tatabanya - controlled former German coal mines.
J. An unidentified A/O - controlled at least one former German plant
which produced river boats.
All genera1ildiredtorsand,,otherloyc,offlOials,In-these4/bs-were
Soviets. To all intents and purposes these A/bs were fully control-
led and owned by the Soviets though the Hungarian Government may
have owned a small percentage of the stock in some of the subord-
inate concerns. The A/O general directors worked quite independently
of AOsanov, the,. plenipotentiary of GUSIMZ, and dealt directly with
the Third Directorate of GUSIMZ on almost all matters. Most direc-
tives and instructions from GUSIMZ were distributed to the various
A/0 general directors through the First Section of GUSIMZ without
first going through Rusanov. Only those directives which pertained
to USIV as a whole first went through Rusanov before being routed
to the various A/b heads. However, Rusanov played a key role in
such matters as yearly capital investment and yearly production
plans for USIV enterprises. Such plans were first drawn up by
individual plants for the coming year and submitted to the A/0
under whose jurisdiction they happbned to be. Each A/O administr-
ative staff would then review these plans and work out a joint plan
for the A/O. One copy of this was sent to the Third Directorate
of GUSIMZ while another copy went to the plenipotentiary of GUSIMZ
in Hungary. The latter, with his staff, worked out a joint pro-
duction and capital investment plan for all of USIV. After review
by GUSIMZ in Moscow, these plans were returned to Rusanov in ,
Hungary and had to be integrated with the economic plans of Hungary.
This was necessary because most of the equipment and raw materials
needed by USIV plants for new construction, renovation, as well as
for production, had to be provided by the Hungarian government.
The majority of the goods prpduced by USIV plants 'was, also sold to
the Hungarian government. It was Rusanov's responsibility to see
that yearly USIV plans were approved by the individual Hungarian
economic ministry as well as by thb Hungarian State Planning Office.
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Though Rusanov frequently had to exert pressure, these plans were
invariably approved by the Hungarian State Planning Office and the
individual ministries. Thus, Soviet plants in Hungary had no problem
with regard to meeting production norms and disposing of finishedgoodsvhowever, because of this, many Hungarian plants Which produced
similar goods were frequently forced to curtail their production in
order to prevent a large excess of goods from acCumulating.
5. The administrative structure of the various A/bs under USIV was
similar so that A/0 Kabel may be noted as an example. The general
director of A/O Kabel was a .Zovieti by the name of Polyukhov. The
chief engineer was also a 18ovieti named Maksimov. In addition to
this, there were two 'Soviet' secretary-stenos in Polyukhov's office
and a subordinate administrative force whiph included five small
staff sections with a total of about 23 employees. These were:
a. The Production Section which employed, threeSbvits and about
three Hungarians.
b. The Planning Section which had one aavieti and two Hungarians.
c. The Legal Section which consisted of one TSoviet and two Hungarians.
a. The Commercial Section which had one 'Soviet and. two Hungarians.
e. The Accounting Section which employed two ]Soviet's 1 and about six
Hungarians.
The dilties of these staff sections were the same as the duties of
staff sections subordinate to A/0 Kabel of USIA. 1
5. Altogether there were the following eight electromechanical plants
subordinate to A/b Kabdi4all of which were located, in Budapest
except for the Ervert d arsal Plant which was located in
Komarom .(1\T 4(,45, li 18-o6),
a, Felten and quillaume Plant 4 the general director of this plant
was Degtyarbv, In addition torthe general directorithe only
Soviet. in this plant was Komlbv, the chief engineer. Production
included all types of cable and insulated electric wire. Value
of the planned output for 1952 was approximately 200,0000000
forints, The plant had a total work force of about 1,200 to
1,500 persons.
. Budapest Mechanical and Cable Plant
Production of
tne plant included, cable, insulated electric wire, electric
motors, generators, and various electrical apparatus. 2, The
value of the planned output for 1952 was approximately
4200000,000 forints. The plant had a tdtal work force of
about 4,200 to 4,300 persons.
Kabel Gyar Polushonkov, the general director of this plant,
and the chief accountant were the only ,.Soviets. Production
included light cable, insulated electric wire, and various
plastic articles, for automobile and household use. The value
of the planned output for 1952 was about 130,000,000 forints.
The plant had a total work force of about 900 to 1,000 persons.
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Tudor Plant - the unLySOviet, employee in this plant was Afonim,
the general director. Production included storage batteries of
all sizes, as well as dry cells for flashlights. The value of
the planned output for 1952 was approximately 1000000,000
forints. The plant had a total work force of about 600 persons.
e. Hoppeke ?(sic) Plant - the general director of this plant was also
Afonim. There were no other _Soviets; employed. Production in-
cluded storage batteries for trucks and automobiles, as well as
dry cells for flashlights. The value of the planned output for
1952 was about 10,000,000 forints. The plant had a total work
force of approximately 60 persons.
f. Robert Bosch Plant - the general director of this plant was the
only Soviet employee? Production included electrical apparatus
for trucks and automobiles such as ignition switches, direction
signals, etc. The value of the planned production for 1952 Was
approximately 50,000,000 to 60,000,000 forints. The plant had
a total work force of about 350 persons.
g. AEG Plant - the general director of this plant was a Sovieti who
died in the latter part of 1952 from cancer. All other employees
were Hungarian. Production included small and medium size
transformers up to 5,000 kva. The value of the planned produc-
tion for 1952 was about 80,000kom forints. The plant had a
total work force of about 500 persons.
. Ervert es Tarsal. Plant -
WL O UV V1.411MX .Lovy,imm,
employees, The value of the planned production for 1952 was
about 5,000,000 forints.and the foundry had a total work force
of about 50 persons,
Although each of the plants in A/0 Kabel had A Hungarian as well
as a Soviet general director.: prior to ?m,,16" "A liungar4an'?
head had no directional authority and Icould
make no decisions without first obtaining the Soviet director's
approval.- These Hungarian directors were invariably
active Communists and the majority were not technically qualified
men. Their main function was to act as liaison between the Hungarian
plant employees and the Soviet plant direction. In addition to
carrying out the latter's orders, they kept the Soviet plant
directors posted on all that transpired in the plant and at
Hungarian plant employees' Party and labor union meetings which
Soviet officials could not attend.
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The majority of products manufactured by USIV plants were.sold On
the Hungarian internal market. Only a relatively small proportion
of the goods was exported to the West or to the USSR.
From the time they were taken over by the Soviet iOvernment after
World War II until they were sold to the Hungarian government in
October 1952, a large amount of capital was invested,in,USIV.:plants.
On the average, the capacity of these plants was increased to double
that of the prewar capacity by the construction of new shops and
the addition of modern equipment and machinery. New living quarters
for workers, nurseries for children of plant workers, rest centers,,
etc.., were also constructed. In general these plants were more
modern and better in every way than the average Hungarian plant.
The condition of Soviet plants in Hungary was also far better than
that of Soviet plants in Austria where USIA plants had been almost
completely stripped of all useful equipment following World War II.
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This dismantled dismantled equipment had been shipped to the USSR and USIA
plants never regained their prewar capacity even though the USSR
did install some modern equipment and started a belated drive to
rebuild these plants in 1954.
0. In October 1952, an agreement was reached whereby the enterprises
in Hungary were turned over to the Hungarian government. Under
this agreement the USSR received a sum of money for those plants
and enterprises which were turned over but source did not know the
specific. terms of this exchange. At the same time the USSR formed
four lOnt stock companies with the Hungarian government with the
stock divided on a 50-50 basis. These four joint stock companies
were composed of all former Soviet holdings not sold outright to
the Hungarian government as well as Hungarian enterprises in the
same economic field. In addition, the USSR contri-
buted a portion of perhaps all of the money received from the sale
of their other holdings in Hungary?to this joint venture. These
joint Soviet Hungarian stock companies were known as:
a. Maszolaj - the joint stock company which controlled the petro-
leum industry in Hungary. Hungary produced 50X1
a relatively small quantity or petroleum which apparently was
not sufficient for their own needs since some POL was also
imported by Hungary from Austria.
b. Maszobal - the joint stook company which controlled the aluminum
industry in Hungary. 1 up to 1933 there was only 50X1,y,
One plant in Hungary which could produce aluminum from alumina
by electrolysis. As a result, most of the aluminum oxide pro-
duced. was shipped to the USSR,I,The:Jmain drawback was the lack
of sufficient electric power in Hungary for this process.'
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C . Maszoviet - the joint civil air stock company in Hungary.
Meezbart - the joint stock company which controlled Danube
shipping facilities in Hungary.
Except for Rusanov, the plenipotentiary of GUSIMZ, and his staff,
most Soviet officials who were eonnected with USIV were recalled
to the USSR. Former Soviet plant directors remained until January
1953 in the capacity of advisors to Hungarian plant directors at
the plants where they had formerly been directors.
the joint Soviet Hungarian stock companies continue to function
under Soviet direction and guidance as does all Hungarian industry,
through the influence of Soviet advisors in individual Hungarian
economic ministries and in the Hungarian State Planning Office,
2.
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