That the city has retained such a strong and distinct character into the Nineties is largely because of past economic mismanagement; the former Communist regime was too incompetent to finance any rebuilding as the city decayed. Although battered by neglect and bullet-scarred by Russian artillery, departing Nazi occupiers and the street-fighting of the 1956 revolution, Budapest retains an air of faded but true grandeur.
Now that grandeur faces the threats that come with a new world. The question facing residents, planners and developers is how to balance the needs of a new free-market economy and satisfy Western investors while maintaining and rehabilitating the city's architectural heritage. It is a difficult task, juggling cultural and commercial needs, and one that local authorities are grappling with all over eastern Europe as developers and architects wake up to the opportunities on offer. In Budapest, the stresses are most acutely felt.
'These are the critical years for Budapest,' says Andras Torok, architectural expert and author of Budapest: A Critical Guide. 'There are many empty sites in the inner city, left over from the war that are treasure houses for property developers. But the style preferred by developers today seems to be Post-Modernist: it's a hotch-potch.'
'We have had to re-evaluate our whole planning strategy,' says Gyorgy Arato, deputy head of Budapest's planning department. 'Under the Communist system the city council was in charge of planning and developing. Now there are many more initiatives from local district councils dealing with a new wave of private developers. They must comply with our basic plans; we want to make Budapest a humane and liveable city.'
The last long-term city plan was accepted in 1989. Since revised by Budapest's mayor, Gabor Demszky, it now calls for greater use of the Danube and for the establishment of a green belt around the Hungarian capital. Its main plank, say officials, is preserving the city's architectural character, although the latest wave of developers' Post-Modernism suggests the opposite.
Some foreign builders appear to regard Hungary as a theme park for outlandish schemes that would not be permitted in western Europe. 'Character preservation is not a new concept, but we have to emphasise it to foreign developers,' says Mr Arato. 'One French architect wanted to put up an 140-metre high 'diamond needle' near the People's Stadium. We refused a permit because the highest building in Budapest is 80 metres. It doesn't mean there won't ever be skyscrapers, but not in the historic inner city.
'Green thinking should penetrate all departments of the city council,' he adds, a far cry from the heady days of Stalinist industrialisation that concentrated on production at the expense of the urban environment. Foreign developers now take up one third of the planning department's work and are concentrating on building offices and hotels in central Pest.
For Jozsef Finta, an architect with the Hungarian firm Lakoterv, life was sometimes easier under the Communists. He designed the Kempinski Hotel, which was approved by the Communist council five years ago and was opened last year. 'Then, you could find the decision maker and deal with him. Now you have to meet the opinions of a large planning committee. I don't think they would have accepted the Kempinski design now because it has more character than they could cope with. They think anything new will destroy the character of the city.'
But his fears are probably groundless. The 370-room Kempinski Hotel has character of a camp Post-Modern kind that is typical of the new wave of buildings being approved by the new liberal council. The hotel's principal facade, with its purple decorations, draws on both on traditional Hungarian influences and modern European trends, according to Finta. 'You could call it modern Hungarian secessionist. The front is designed like the entrance to a palace, with the other side open for people to walk through. I hope you can see traditional Budapest design in the building.'
Perhaps, but probably not. This is the quintessential challenge facing the city's planners and architects: to incorporate the city's heritage into its changing environment without turning Budapest into little more than a developers' milch cow.
Quite bizarrely, the challenge has been met by, of all things, a fast-food chain restaurant.
The Western Railway Station, designed by Gustave Eiffel's Paris studio in the 1890s, has been restored to its full glass and iron beauty and its cafe has been turned into a remarkably tasteful McDonald's, perhaps the only Art Nouveau hamburger restaurant in the world, advertised by a noticeably discreet sign in the doorway. 'It was a shabby old restaurant that was used by nobody,' says Andras Torok. 'McDonald's gave it new life. Now it is a pleasure to eat there. I'm very optimistic about the city's future.' Quarter-pounders with French fries and purple-fronted Post- Modern hotels. Welcome to the West, Budapest.
It is an invitation from which Hungary's most famous contemporary architect, Imre Makovecz, feels excluded or at least unready to accept. 'As Budapest becomes a developer's playground, the culture of the city is being eroded by a Post-Modern architecture that has nothing to do with Budapest or its citizens. We are the new negroes of Europe.'
'Hungarian architects,' he says, discussing new developments, 'are being reduced to a state of intellectual and artistic serfdom by Western finance and developers.'
Makovecz was designer of the Hungarian pavilion at last year's Seville Expo. He is an architect much admired by the Prince of Wales for his 'organic' approach to design and he is a highly influential figure on the nationalist wing of Hungarian cultural politics. But this marvellous talent is not being tapped to develop Budapest in the post-Communist era. Makovecz is a staunch opponent of the centre left-liberal Budapest city council and refuses to involve himself in the rash of speculative building that threatens to wreck his home city.
He believes the city's relative economic weakness and promising long-term prospects are being exploited irresponsibly by Western developers, architects and the council itself.
'They all know that Hungarian architects are hungry for work, so they set up joint ventures with them and get them, in effect, to act as wage slaves for their overblown designs exported from western Europe and the United States. I was approached by a foreign developer who wanted to give me pre-produced building elements he could not sell anywhere else. A peasant such as me would be able to knock them together cheaply so that he could make a fast buck out of Budapest. I showed him the door. Foreign developers view Budapest as a staging post to the huge markets in the one-time Soviet Union. Budapest is being sucked dry.'
Makovecz stresses that what happens to Budapest will also determine the fate of the other capital cities of the former eastern bloc. They look to Budapest, which is the most sophisticated and wealthiest city in eastern Europe, for inspiration as they too develop. And what they will see, he fears, is a vile rash of Post-Modern developers' tat, fast-buck architecture designed to pump money out of Budapest with little or no regard for the future of the city itself.
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