Photo Credit: Ray_LAC
By Jiarui Wang
On March 24, 1954, Hungary and the U.K. held a bilateral talk to resume the countries’ economic relations that had ended after a trade embargo since December 1950. The British government imposed the embargo after the Hungarian government refused to release a British businessman, Edgar Sanders, who was sentenced to thirteen years for espionage. Given Sanders’ involvement with the British intelligence agency and similar cases emerging in Hungary, the Sanders trial drew substantial attention from the British media. The British government faced pressure to negotiate the release of Sanders. The breakdown of the release negotiation eventually led to a trade embargo. Another factor that triggered the strained bilateral economic relations was Hungary’s nationalization of industrial enterprises in the late 1940s. The nationalization resulted in confiscation of British-owned plants operating in Hungary.
Prior to the embargo, the U.K. kept its economic relations with Hungary despite the tense relations between the British and the Soviet governments during the Cold War. The annual British imports from Hungary stood at £6.8 million in 1949. Arguably, the embargo affected the Hungarian economy more than the British economy considering Hungary’s loss of the exports as an important source of national income compared to the relatively low impact to the U.K. for losing a trading partner of imported food.
In August 1953, the Hungarian government freed Sanders by an act of clemency after he was jailed for three years. Subsequently, Hungary expressed interest to resume economic and financial relations with the U.K. The trade talk that began in March 1954 concluded in the signing of a trade agreement in July 1956. The agreement stipulated that Hungary could export up to £12 million worth of agricultural and industrial products. In addition, 6.5% of the trade revenues were to be used to compensate the former British owners of the estates and plants confiscated by the Hungarian government during nationalization and to settle Hungary’s sovereign debts. Today, after 63 years of this bilateral trade talk, the U.K. remains one of the largest trading partners of Hungary.