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By Marton Dunai

BUDAPEST (Reuters) - Steps away from Budapest's ornate Parliament building, hidden in a basement studio on a leafy street, art dealer Peter Pinter was holding the third of his hugely successful auctions, entitled 'Going once, going twice... gone for good.'

What Pinter is offering - communist-era art, paintings, sculptures and posters - has gone beyond tourist kitsch and become popular with serious collectors, including locals. Price tags in the thousands of dollars are not uncommon.

"It's retro, it's fashionable," Pinter told Reuters before the auction. "Some people have an urge to do away with this part of their past. Others harbor strong nostalgia toward these objects... You can see people are very intrigued by them."

Hungarians are reexamining their communist past with an intensity not seen since the transition to democracy in the early 1990s, and not just in art.

One of the main players in this reassessment has been the ruling centre-right Fidesz party of Prime Minister Viktor Orban, whose anti-communist DNA has been the primary motivation of his career.

Orban, who famously demanded as a fiery youngster in 1989 that Soviet troops leave the country, says the policies that have provoked harsh criticism in his current term are aimed at closing the book on the post-communist period.

"The many conflicts were not random bush fires, but the result of very clear government work to end the post-communist era," Orban told the Hungarian Diaspora Council, an umbrella organization of ethnic Hungarians, late last year.

Critics claim the government is trying to disguise its failures; during its tenure, Hungary's sovereign debt has been downgraded, economic growth has faltered, the forint currency has weakened and the country's image abroad has been tarnished by a string of diplomatic confrontations.

Orban insists he is taking the long view, however - his position is that transformation in the early 1990s was incomplete and it is now up to him to make the tough decisions, however painful.

"'I can't get no satisfaction,' in political terms, has haunted Hungarian politics for 20 years...," Orban told correspondents recently. "I have been frustrated about when at last we would complete it (the transition)."

A NEW VIEW OF THE PAST

He got his once-in-a-lifetime chance in 2010, when voters gave Fidesz a two-thirds majority in Parliament, enough to change any legislation on its own.

Orban had campaigned with the slogan "big victory - big change," and quickly made clear he planned to rock Hungary all the way to its foundations.

One of his first moves was ending loan negotiations with the International Monetary Fund and the European Union, eliminating their tight policy oversight, on the grounds Brussels and Washington were "not Moscow."

Although the country was forced back to international lenders in late 2011, its laws and institutions had already been dramatically transformed.

Among the changes was the introduction of new wording in the Constitution, which took effect on January 1, that billed the communist era illegitimate.

"The sovereignty of our nation, lost on March 19, 1944 (when German troops invaded the country during World War Two), was restored on May 2, 1990, with the setup of the first freely elected Parliament," the Constitution stated.

Another amendment specifically blamed the historical and present-day leftists for past abuses.

"The Hungarian Socialist Workers' party and its forebears... were criminal organizations, whose leaders hold unlimited responsibility for maintaining and directing the oppressive regime," it said.

"The Hungarian Socialist Party, as the heir of illegally amassed wealth... (and) by the personal continuity that binds the old and the new party together even in the highest ranks, shares all the responsibility of the (Communist) state party."

The Socialists dismissed the clauses as aimed at diverting attention from Fidesz's mistakes.

"Fidesz keeps declaring war against someone," party chairman Attila Mesterhazy told a news conference. "This is their latest war, with conspicuous timing, now that their economic policies have utterly failed."

Under Fidesz, parliament also abolished the statute of limitations on crimes against humanity, a move aimed at leaders who executed hundreds after the 1956 anti-communist revolution failed, and has ruled that streets still named after communist heroes or ideals must be renamed by July 2012.

A NEW PLAN FOR THE FUTURE

Insiders say Fidesz's obsession with ending all trace of Hungary's communist past helps explain nearly every controversial policy of the current government.

Close adviser Maria Schmidt said Orban believed Hungary made a mistake in trying to follow a Western model it could not afford -- capitalism combined with government welfare spending -- which he considered a kind of hidden socialism.

"A duality has prevailed in this region for 20 years - the coexistence of a market economy and socialism," said Schmidt, a historian who directs the Terror House, a museum on totalitarian crimes of the 20th century,

"Orban's thinking is that this duality is not sustainable and we must switch to a new system."

As the economic crisis exposed flaws in the capitalist welfare state, Orban dismissed capitalist orthodoxies as well as socialist values. He renationalized private pension funds, taxed banks and other big firms, while also shrinking the country's social services and cutting early retirement and disability benefits.

Meanwhile, his government embraced work and family, rolling out a much-criticized flat tax regime and huge tax rebates after children. Small business taxes were cut nearly in half.

Historian Andras Gero said Orban's anti-communism is not blindly ideological but driven by cold political calculation, noting it has not stopped him pursuing state ownership in key industries, like big stakes in oil company MOL or truck parts maker Raba.

For many, the question is not why Orban is so passionately anti-communist but why it took so long for someone to address these issues from the past.

The lack of immediacy may be partly because the communist regime in Budapest was far milder than those in Poland, Romania or East Germany in its later years, Gero said.

"There was a dictatorship, but not a bloody one, from the 1960's on," he said. "Almost two generations grew up without getting a taste of blood."

But rejecting the communist past flat out was misguided, as Hungarians had to deal with it dispassionately at some point, Gero said.

"The fact that we have not faced our past has led to a kind of social schizophrenia," art historian Balazs Feledy said as he looked around the communist-era art auction.

"We still don't know what is value in our history and what isn't. We are 20 years late with this."

(Additional reporting by Krisztina Than and Krisztina Fenyo; Editing by Sonya Hepinstall)

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