Shuffle in Hungary shows intention to reform economy. But party shows little desire for ideological loosening

Recent changes in the Hungarian Communist Party leadership reflect a commitment to economic reform bolder than anything attempted since the first changes initiated 20 years ago. But they also seem to point to a firm intention to maintain present ideological controls rather than to move toward the further political liberalization that most Hungarians had hoped would accompany the new reform measures.

Karoly Grosz, a Politburo member who has long been seen as the front-runner among a number of candidates to succeed veteran leader Janos Kadar, was named prime minister on Wednesday.

Janos Berecz, chief of the party's ideological department and longtime member of the Central Committee, was promoted to the Politburo.

And President Pal Losonczi will retire, to be replaced by Karoly Nemeth, the deputy to Mr. Kadar, it was announced yesterday. The presidency is regarded as a titular post.

Both Mr. Grosz and Mr. Berecz are men of Soviet leader Mikhail Gorbachev's generation - Grosz is 56 and Berecz is 54. They are the most recent in a series of appointments to rejuvenate the leadership.

Liberal unease over Berecz's hard-line record on the relationship of ideology to the arts will, if anything, be increased by his elevation to the party's top ruling body. He is presumably, as he has been in the past, in the running for the top party post when the time comes.

Grosz is widely seen as just the strong and decisive politician needed at a time when living standards have further deteriorated and when Hungarians face the prospect next year of further austerity measures. With his appointment to the government's hot seat, Grosz will still be seen as the likely ``favorite son.'' He takes over as prime minister from Gyorgy Lazar, who was seen as lacking sufficient toughness in promoting the latest reform program, which is fraught with sensitive political problems because of the new demands it will make on the Hungarian people.

In the forefront of the reform program is a new taxation system designed to ease the burden on industry and to encourage efficient, market-minded management. But it will also bring personal income tax to Hungary (and the Soviet bloc) for the first time. Another unpopular feature will be a Western-style ``value-added tax.''

There are extremely hazardous political problems implicit in such changes.

For several months now, Hungarian newspapers have been setting out examples of the income tax in prolific detail. The aim is to assure the lower-income majority of extensive tax exemptions and to show that the main burden will be on the better-off minority - those with two jobs or profitably engaged in the private sector.

Grosz differs from doctrinaire party members in that he wants to see the private sector greatly enlarged. And, in a Monitor interview earlier in the year, he called for tough action in the economic sphere - such as shutting down nonviable enterprises, even at the risk of temporary unemployment, and establishing income differentials that reward talent and effort.

Politically, both Grosz and Berecz are very much in line with Mr. Gorbachev's view that, however widereaching economic reforms may be and however much glasnost (openness) there is in public affairs, these must carried out within the party's ``leading role'' in society. To what extent this philosophy may put a brake on Hungary's own moves in recent years toward political pluralism remains to be seen.

There was a lively response to a ``reform of the reform'' movement under the aegis of the People's Patriotic Front, a conglomerate of all Hungarian political and social organizations.

The group's grave report, which was prepared by some of Hungary's leading economists and experts, has yet to be published, probably because its central point was that the economic reform cannot be truly consolidated without increased powers for government - indeed, its virtual separation from the party - and a genuine opportunity for greater public participation.

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