V. Negotiations Stall

In late 1943, the Allies were on a roll. Italy no longer carried weight as Germany’s principal European partner, and the Allies built up Joseph Broz-Tito’s ragtag bands of communist outlaws to the point that they challenged German control over a sizeable chunk of prewar Yugoslavia. The Americans looked to Hungary as their next target in breaching the ramparts of Hitler’s vaunted Fortress Europe. Direct and businesslike, they demanded that the Hungarians start delivering intelligence data immediately and turn against Germany as soon as possible.

But negotiations to upgrade the enthusiastic “agreement in principle” of September 1943 into a pact outlining detailed commitments hit a snag. As emissaries shuttled back and forth and coded messages on wireless transmitters followed one another in staccato succession, Hungary’s political and military leaders became jittery and OSS-Istanbul officials got testy.

The two parties got themselves into such a tizzy that they did not even bother to check the spellings of names. US documents identified the chief of the Hungarian General Staff as “Sambothay,” a roughly phonetic rendering of his name. One document even called him “Sam Bothay.” But more symbolic of OSS-Istanbul’s appreciation for its Hungarian partners were the codenames. Hatz received the cover of the fragrant flower “Jasmine,” and his associate Lothar Kövess, an ex-Austro-Hungarian naval officer who had become a businessman in Turkey, acquired another exotic floral designation, “Jacaranda.”

But even before the details of the accord were negotiated with Szombathelyi and Kállay, the Hungarians began sending intelligence reports, and “Jasmine” and “Jacaranda” became part of “the Dogwood Chain,” known by the codename “Dogwood,” taken up by the Prague-born, Istanbul-based co-director of the OSS network in Central Europe. His real name was Alfred Schwarz, and he had studied psychology and philosophy in Prague and Vienna before becoming a successful businessman in Istanbul. The OSS hired him as its lead expert on Central Europe.

The next step, in late October, was the transfer of military attaché Hatz from Sofia to Ankara, which the Americans had requested in September “in the interest of a direct and continuous contact.” On 22 November OSS-Istanbul asked Kövess to accept the role of the liaison officer with the Hungarian General Staff, and during a trip to Budapest in December, Kövess obtained Szombathelyi’s consent. Characterized by Schwarz as “absolutely reliable and well-connected in the highest Hungarian military and government circles”, Kövess reassured the OSS that the Hungarians’ “sincerity and authorization” were “beyond doubt”.

On 18 December 1943 Hatz and Kövess were again in Istanbul. Whether prompted by a suspicious head office or driven by their own impatience, this time the Americans used sharper language in ruling out “a formal political instrument”. The new draft proposed an agreement that “will merely define the extent of a collaboration between military executives... agreed upon with the full knowledge and approval of the responsible political authorities on both sides”. The idea of a reward was not forgotten. In language more direct than the previous draft, the text stated that “the tangible positive results of the agreed collaboration will be recognized as deliberately willed contributions by Hungary to the cause of the United Nations”.

The section of the agreement critical for the Americans began with a flourish: “Until the time when Hungary will be in a position to give unequivocal evidence of her dissociation from the Axis by an open declaration of war, the projected collaboration will extend” to five fields: “unreserved information to be supplied” to the Americans concerning Hungary’s military resources that could be used against Nazi Germany; “preparation of safe landing places for Allied airborne troops and supplies”; “joint planning in preparation of concerted military operations”; “immediate unreserved cooperation” in ascertaining German operational plans, “especially the general battle order for the defense of the Balkans”; and “promotion of communications” to link the Allies and “the operational centers of the European movements of resistance by making available the diplomatic and communicational privileges and facilities” which Hungary as a formal member of the Axis had at its disposal. Perhaps with the intention of avoiding frightening the Hungarians with this most risky multilateral enterprise, a second sentence confined such networking as “strictly within the limits imposed by mutually recognized expediency and the fiction of Hungary’s unimpaired loyalty to Germany”.

Appended to the fields of cooperation was a call on both sides to commission their military and intelligence staffs to begin planning joint activities “without delay”. Two more paragraphs stressed the need for strict security and for the appointment of a Hungarian “delegate plenipotentiary” to conclude more agreements, as well as an intelligence officer to plan joint action.

VI. The Eleventh Hour Chance

For the Hungarian government, the paragraph hardest to swallow was the final one, the sixth: “The protocol which will formulate in detail the principles and terms outlined here will not constitute a political instrument, and will thus in no way and at no time serve to justify political demands or claims of any description.” The text echoed the first paragraph and then repeated the theme that “the tangible results” of the partnership may influence the postwar settlement. According to Schwarz’s analysis, which was on the mark, the Hungarians preferred dropping the paragraph and inserting “some assurances on their political and territorial status after the war”. In refusing concessions, the Americans cited two reasons. First, neither the OSS nor any United Nations member government was in a position to give such assurances. Second, “the purpose of the present negotiations is not to conclude a business deal, but to give Hungary an eleventh hour chance to prove her moral dissociation from the Axis by unsolicited cooperation with the Allies now in ways not jeopardizing her official relations with Germany”.

The Americans ended the document with a solemn pledge that they would give the Allied committee dealing with Hungary at the postwar peace conference “all evidence necessary to convey full information regarding the extent and the tangible results of Hungary’s participation in Europe’s and her own liberation”. (Nothing of the sort happened.)

Hatz submitted the draft to Szombathelyi and Kállay in late December 1943 and was supposed to return to Istanbul with “concrete and binding offers” on 7 January 1944. But the Hungarian leaders balked. On 7 January OSS-Istanbul radioed an impatient coded message to Kövess, ruling out changes in the contract and warning “that unless closure takes place these days we might be unable through condition of market known to you to use your deliveries for commencing season and place them at full prices”. Five days later, a curt OSS telegram pressed for “wired outlines of response before we are deprived of option rights”.

On 13 January 1944 the Hungarians replied, requesting “maintenance of option” and offering the explanation that “unexpected interference by competition is impeding immediate closure”. They asked the Americans to wait for a “personal interview” on 16 January. Kövess arrived in Istanbul that day and explained to OSS officials that contacts by Hungarian diplomats in Switzerland and Sweden “had met with a less uncompromising attitude with regard to political guarantees” than what OSS-Istanbul evinced. In other words, Hungary’s Foreign Ministry got a better deal than did its General Staff. (The experienced Allen Dulles of OSS-Bern was willing to take more risks than his novice colleagues in Istanbul. The wily Kállay probably guessed that and tried to play one OSS station off against another.)

The Hungarian government explained that in order for it to accept the conditions laid down in the most recent draft, the Americans must dispatch to Budapest “fully authorized Allied plenipotentiaries” to negotiate an agreement “containing definite assurances designed to allay Hungarian apprehensions” with regard to Soviet intentions. However, subsequent negotiations conducted by OSS-Istanbul chief Lanning Macfarland and his Central Europe co-director Schwarz on one side and the duo of Hatz and Kövess on the other led to what the OSS summary called “the final rejection of political guarantees in whatever shape” in the “final protocol” handed to the Hungarian team on 30 January. The first paragraph of the draft identified the OSS as “the American group” which is “under orders to conduct subversive activities in the Balkan countries with instructions to show preference among resistance groups or prospective successor governments, only on a basis of their willingness to cooperate, and without regard to their ideological differences or political programs”. (The businesslike pledge of non-interference in domestic political disputes was part of the OSS global mandate.)

The new draft laid out an “outline for collaboration”, starting with what was most important for the OSS: “The establishment of adequate means of providing the American group with military, political, and economic intelligence”. The next point envisaged “joint planning for concerted military operations for future contingencies” and the third called for developing plans for resistance to possible German occupation, “not excluding the adoption of a scorched-earth policy, in which the American side might provide assistance”. The fourth and final point urged setting up “adequate means of communications and direct contact which might include the exchange of competent army officers”.

The next paragraph used the strong word “allies” for the two governments engaged in the negotiations. It characterized “the form of collaboration desired” as “that which normally exists between allies, limited in this case to the exigencies of the circumstances”.

Then the draft once again stated bluntly what the Hungarians were loath to hear: that the OSS “has no authority, nor any desire to discuss or commit on political matters”. The OSS defined its objective as working out “a basis for collaboration and mutual assistance with sincere groups within enemy areas for the sole purpose of defeating the enemy and terminating the war”.

The penultimate paragraph dealt with German and Soviet occupation. First, the Americans expressed their expectation that the Hungarians would “resist to the utmost” the Germans and then declared that “Russia is our ally, a member of the United Nations, and as such committed to the policy of not imposing any form of government on conquered areas”. The final paragraph warned that if “this Hungarian group sincerely wishes to collaborate wholly or partly”, a prompt response from Budapest was necessary, “as other plans are under way which cannot be long delayed”.

On 2 February 1944, Hatz flew to Budapest with the proposal, which barely took up one typed page. The Hungarian government responded on 8 February, requesting the dispatch to Budapest of a “fully informed officer and a politician with written powers signed by the highest authority”. The following day the OSS rejected the reply and demanded “unconditional acceptance or rejection of known proposals” in three days. The rest of the brief wire struck an even harsher note, accentuated by the telegraphic style: “Dispatch of officer unaccompanied by politician can follow only upon binding acceptance. Political assurances are strictly excluded. Extent of anticipated contribution will be the sole measure of Hungary’s promotion of Allied cause as her own.” Added to the message was a note called “personal” – an old diplomatic ploy to deliver a message while absolving the government of responsibility for it – warning that “rejection will entail breaking off negotiations and will probably be followed immediately by active hostilities”.

The threat of “active hostilities” meant Anglo-American bombing raids, which had not occurred up to that point. (The Soviets did not bomb Hungary either, in exchange for the non-interference of Hungarian anti-aircraft batteries with Soviet planes flying over Hungary to deliver munitions to Tito’s partizani.) Kállay prided himself on keeping his country’s territory out of the fighting, which was one more manifestation of Hungarian independence that angered the Germans. On the other hand, OSS-Istanbul might well have reached the conclusion that the Hungarians, whose contacts with Britain had sputtered out because of their insistence on political conditions, were now, at the last minute, attempting to achieve the same political objectives with the United States, using as leverage the partnership agreement about to be concluded.

Just as Kállay had done repeatedly with the Germans on the subject of deporting Hungary’s Jews, he ignored the deadline, this time set by the OSS. He was not to be pushed around. The following day, 13 February, liaison officer Kövess responded to an OSS request and sent his personal explanation asserting that in the Hungarian assessment there was a disturbing connection between the Americans’ “stringent conditions” and “a threat to Hungary” broadcast by Radio Moscow at roughly the same time. According to Kövess, the Hungarians were seeking a guarantee that if they accepted the American proposal, “Russia (and Britain) would respect Hungary’s status as a virtual ally and adjust their attitudes and action accordingly”.

The next day the Americans responded with a stern note, stating that as long as Hungary remains an enemy of the United Nations, “no assurance can be given against acts of war” by any UN member state. The reply echoed British rejections of Hungarian initiatives prior to Hatz’s first encounter with OSS-Istanbul in September 1943.

On 14 February 1944 Budapest replied, calling the disagreement so serious that “we cannot advance without direct conversations” with an American “personage well-acquainted with Hungary’s situation”. At the very least, the message said, the Joint Chiefs of Staff should send the Hungarian government “a detailed statement in writing”. The Hungarians warned that Allied bombing of their country, which the Americans had threatened, “would drive the public into the German camp”.

The OSS interpreted the Hungarian message of 14 February as “rejection of proposals and definite break-off of negotiations”.

VII. Agreement at Last – Then Disaster

Nevertheless, on 22 February 1944 Hatz arrived in Istanbul to deliver Hungary’s final acceptance “in principle” of the American proposal. Along with that message, the Hungarians presented to the OSS a fifteen-hundred-word memorandum that began with an impassioned brief on the unfairness of the World War I peace treaties, then described Hungary’s help to Germany “in active battle” against Russia as “nil”, and minimized Hungary’s economic contribution to Germany. The memorandum argued against the wisdom of any rash Hungarian move against the Wehrmacht, such as a denial of the use of Hungary’s railroads, because it would only bring about occupation. German occupation must be avoided, the memorandum declared, because that would be “a catastrophe for Hungary”, especially for its anti-Nazi and Jewish populations, as well as “a considerable loss to the Allies” because as occupiers the Germans would promptly exploit the country’s full military and industrial potential. “It would be a capital mistake to demand something from Hungary which could lead to an instantaneous occupation”, the analyst from Budapest warned, citing the example of Italy where Marshal Badoglio’s “ill-prepared act” had harmed the Allied cause and inflicted losses among Italy’s people. The Gestapo roundups and executions of anti-Nazis in Italy, reported by radios controlled by Josef Göbbels’s Propaganda Ministry, spread the story far and wide in occupied Europe, and in this instance people lent credence to that infamous manufacturer of lies big and small. They knew that their fears of similar reprisals were justified.

The OSS top brass did not constitute an ideal audience for a cri de coeur expressing Hungarian despondency. The OSS tasked its officers out in the field to “woo, abduct, or remove by any other means Axis member states from the enemy camp” and designated Hungary’s switch to the Allies as a top priority. But regardless of any sympathy that might have developed in OSS-Istanbul for the “Hungarian cause”, a small country in Central Europe was only a minor factor in a world war that the United States was determined to win as soon as possible. From Washington’s vantage point, the cautious Hungarians needed a push, and they had to do more, a lot more than what they thought Hitler would tolerate without a reprisal. Above all, they had to stop thinking about the unchangeable past and its numerous tragedies and think positively of the bright future and its new possibilities.

Nevertheless, with Hungarian misgivings swept under the carpet, an OSS message noted that “it was decided to lose no time in starting immediate practical collaboration”. The Hungarians who had been furnishing the Americans with intelligence material delivered data that the Americans had requested: diagrams of landing fields and signals, the complete Hungarian battle order, details concerning Hungarian units on the eastern front, “structure and personnel” of the Abwehr, detailed Hungarian export statistics till the end of 1943 covering products important to war production and food economy, and “a complete list of plants of war importance”, including precise numbers of what was supplied to Germany and “the relation of actual output to maximum potential output”. Budapest promptly delivered two documents: one on Hungarian units in Russia, and the second on the non-interference by Hungarian air defenses with Russian air activity.

On 16 March 1944 OSS-Istanbul received a disturbing message from Kövess: “Was amazed to learn that your firm has already dispatched other representatives thus seriously prejudicing my work.” The text referred to the parachute drop in Hungary of three US officers dispatched for consultations with Hungary’s top leaders. They were sent by OSS-Switzerland, following discussions with Foreign Ministry representatives. Accompanied by a Kádár aide, the trio was conducted to safety in Budapest.

According to an angry 4 April report by OSS-Istanbul co-director Schwarz, OSS-Switzerland failed to give an explanation for the mix-up that “embarrassed” Hungarian officers in touch with OSS-Istanbul and “induced doubts” about “the authoritative character” of the negotiations by OSS-Istanbul. Documents so far declassified do not explain the mix-up, which was quickly overshadowed by a far more dramatic event.

In the predawn hours of 19 March 1944 a seemingly endless procession of German troops in tanks, armored cars, trucks, half-tracks, and motorcycles rolled into Hungary, and the people of Budapest woke to what sounded like a series of thunderbolts. When they looked out their windows, they recognized the silhouettes of German tanks rumbling over the cobblestone streets. Soon the twilight gave way to a sudden burst of unseasonable sunshine that sparkled on walls not yet riddled with bullet holes, as the war had spared Hungary so far. The day turned into the kind of brilliant Sunday that felt more like balmy May than raw March and would have normally sent lovers to the hills and families to parks and riverside promenades. It seemed to anti-Nazi Hungarians as if the long-abandoned pagan gods were mocking them on this day of national tragedy.

The steel-helmeted German soldiers in their heavy greatcoats looked grim, and the dust of the road covered their sweaty faces. They ignored even the few passers-by and far-right activists who shouted welcoming words in German, trying to make them heard over the clatter of the convoys. Gruesome news quickly spread through the capital, and it was unclear whether it was being propagated by anti-Nazis or pro-Nazis: German vehicles did not slow down when they came across a bicyclist or someone pushing a hand cart, but rather sped up and rolled right over them. For much of the day, the Wehrmacht put on a non-stop parade, a demonstration of its superior might and its readiness to apply that might without hesitation.

Speeding about the city in their black Opel automobiles, the Gestapo rounded up hundreds of anti-Nazis. The three American envoys who had been under the protection of military intelligence were among the first to be captured.

Horthy returned from his meeting with Hitler, stunned by the occupation that had taken place in his absence and without his knowledge. But he decided against resignation. “I cannot let a usurper sit in this place”, he said and pointed at his chair at the head of the table as he addressed the Crown Council. “I may not be able to defend everything, but I believe that I can still be of great, very great, help to our people. I can do more than anyone else could.”

For the next few days Kállay felt “completely shut out”. Then at six o’clock in the morning an SS officer called on Kállay at the Prime Minister’s residence on Castle Hill with an order to take him to a meeting with the new German ambassador Hitler had just appointed. Snubbed by the Germans for the past year, Kállay had no doubt that the invitation was a pretext for his arrest. He sent word that he needed a few minutes to shave and get dressed and asked the German to wait outside. Then the Prime Minister, his wife, and their three sons – one of them married, and with a baby – quickly dressed and descended through a secret door deep into a subterranean world, where cellars lie hidden underneath cellars. Tunnels, dug centuries ago, crisscross, and some of them led to the offices and residences of whoever was in power, seated atop this undisputed first among Buda’s many hills.

At the beginning of the war some three dozen offices and apartments were built and furnished for principal cabinet members and their aides in the event of air raids. The Kállays hurried through a tunnel known to one of their sons, a member of the Palace Guard. After climbing some three hundred steps, the Kállays emerged in the Royal Palace and roused Horthy who was mortified by the impropriety of the SS officer’s appearance at 6 in the morning at the Prime Minister’s doorstep. The gallant Horthy promptly offered shelter and protection. But Kállay calculated that the Germans would never allow him to stay on as a guest in the Royal Palace, not even if the arrangement were qualified as “a house arrest” and the head of state stood by him foursquare.

Kállay telephoned the Turkish chargé d’affaires, Sefket Faud Kececi, to ask if his offer of political asylum, made to Mrs Kállay a day earlier, still held. The answer, in elegant French, was in the affirmative, and Kállay asked the diplomat to send a car to the entrance of the palace garden. In a few minutes the car flying the Turkish flag arrived, and after saying goodbye to his family, who stayed with the Horthys, Kállay was driven to the Turkish Legation on Rose Hill, about a mile away.

Still ensconced in the safety of its neutrality, the Turkish government approved the arrangement, and Kállay became the third Hungarian leader in as many centuries to find a safe haven on the sovereign soil of Turkey, an invader in its imperial Ottoman heyday.

Though at first the Hungarian General Staff sent messages to the OSS asserting that it would continue the contacts with OSS-Istanbul, the conspiracy was uncovered, or betrayed from within, and the Germans seized its OSS-supplied radio transmitter. In early April, Szombathelyi and Kádár were arrested. According to a report sent by András György to OSS-Istanbul, Kádár was betrayed by his deputy, and was forced to wire to Hatz in Sofia that he must come home immediately and that it was safe. Hatz obeyed, and the Gestapo arrested both him and Kövess.

Before 19 March 1944, Horthy and Kállay had believed with equal confidence that Hitler would not go as far as ordering an invasion of Hungary, a sovereign kingdom. They were banking on hope. But the Germans had no compunctions about invading a formal ally. (According to former US intelligence official John Waller, Hitler might have restrained himself, influenced by Admiral Canaris, who spoke up for Horthy, but the restraint ended with Canaris’s dismissal in February.)# Hitler knew that he could blackmail Horthy to take actions he was averse to, such as replacing Premier Kállay with a man he disliked, pro-Nazi Döme Sztójay, Hungary’s former ambassador in Berlin, and, seven months later, in October, naming a homegrown Hungarian Nazi, Ferenc Szálasi of the Arrow Cross Party, as the new head of state. Kállay lacked such flexibility. Accordingly, by the end of 1944 the Germans placed Horthy under house arrest in a castle in Germany. The SS arrested Kállay in November, after Turkey broke diplomatic relations with Berlin and the Arrow-Cross regime threatened Turkey with Kállay’s forcible removal from its embassy. Imprisoned at first in Budapest, Kállay was taken to the Mauthausen concentration camp as the Red Army encircled the Hungarian capital.

“People say that hope and faith sustain the soul under conditions such as those which were then my fate,” Kállay later recalled his state of mind. “This was not so with me... Call it apathy, call it tranquility – in any case, I never felt heroic in prison, but neither did I ever feel fear... I knew and had faith that whatever happened to me, I would not – could not – ever deviate from my ideals, my traditions, my true self.”

With Kállay out of power, the deportation of Jews began in May, was stopped by Horthy in July, and resumed after Szálasi’s putsch in October. Hungarian manpower, industrial plants, airports, and other resources Kállay had held back from the Germans were now at their disposal.

“My soul had been broken on 19 March”, Kállay confessed in his memoir. “I had lost hope.”

(To be continued)