Hungary is one of several nations in Steel Division and one of Germany's strategic allies Axis nation.
Magyar Királyság or the Kingdom of Hungary was incorporated in 1920, after the collapse of the Hungarian Soviet Republic proclaimed by Bela Kun in 1919. The Soviet Republic in turn replaced the Hungarian Democratic Republic that was formed in the wake of Austria-Hungary's collapse after World War I. Plagued by Red Terror and involved in an ill-advised war with Romania, Hungary lapsed into a civil war by 1920. A coalition of right-wing political parties led by monarchists and anti-communists forced Bela Kun to flee the country and led a purge of communists, leftists, and everyone they decided was an enemy, including the Jews. The White Terror paved the way for a kingdom without a king. As the Entente would not consent to return Charles IV to the throne, the kingdom was ruled by a Regent, former Austria-Hungary Navy admiral, Miklós Horthy. Under his autocratic rule, Hungary saw an increase in repression, social stratification, and wealth inequality.
Suffering from economic difficulties from the outset, Hungary enjoyed a brief reprieve in the late 1920s, lasting until the Great Depression. The global downturn hit Hungary hard, and the fortunes were reversed only after it forged closer ties with Germany, especially after the rise of Adolf Hitler. Drifting ever closer to the Axis, Hungary benefited from this relationship, gaining support in its repudiation of arms limitation treaties and regaining territories lost, especially after the destruction of Czechoslovakia in 1938.
Despite that, Hungary did not become a formal ally of Nazi Germany until 1940. When Poland fell in 1939, soldiers and politicians could generally escape through Hungary and evacuate to the West, with varying degrees of success. After Hungary joined the Axis, it participated in most of its military operations in the west, especially the invasions of Yugoslavia and the Soviet Union. The disastrous losses suffered by its military, especially in the battle of Stalingrad, prompted Horthy to open negotiations with the Allies regarding an armistice in 1944.
Anticipating this move, Hitler had Horthy's son abducted in order to force the Admiral to abdicate in favor of the Arrow Cross Party leader, Ferenc Szálasi. Operation Panzerfaust resulted in Hungary falling back in line within two days, and continued to participate in Axis military operations until March 1945, when the fascist government was driven out of the country. The monarchy was dissolved the following year, leading to the foundation of the Second Hungarian Republic and then the Hungarian People's Republic. It would prove a challenging subject nation for the Soviet Union, as despite the military presence, it would attempt consistently to follow its own path, with the bloody 1956 revolution a marked example of defiance - and the subsequent liberalization under János Kádár a sign of a possible third way within the bloc that never truly materialized.