ABSTRACT
Transforming commercial relations with its Council for Mutual Economic Assistance (CMEA) partners is an important part of the Hungarian reform process. Liberalization and the transition to a market economy would have little chance of success if in this highly foreign-trade-dependent country almost half of the exports and imports continued to be administered using non-market methods according to the traditional system of CMEA trade that follows the logic of the economic system based on mandatory plans and the central allocation of resources. The costs and risks of transition for Hungary arise from the one-sided CMEA orientation of a large part of the Hungarian economy. While numerous other risk and uncertainty factors could be mentioned, there is a single circumstance of fundamental importance that must drive Hungary's economic policy choice: there is no alternative that would render the elimination of the tensions accumulated in intra-CMEA trade without grave costs to Hungary in the short run.
