Operation Panzerfaust (German: Unternehmen Panzerfaust, lit. 'Operation Armored Fist') was a military operation undertaken in October 1944 by the German Wehrmacht to ensure the Kingdom of Hungary would remain a German ally in World War II. When German leader Adolf Hitler received word that Hungary's Regent, Admiral Miklós Horthy, was secretly negotiating his country's surrender to the advancing Red Army, he sent commando leader Otto Skorzeny of the Waffen-SS and former special forces commander Adrian von Fölkersam to Hungary. Hitler feared that Hungary's surrender would expose his southern flank, where Romania had just joined with the Soviets, and cut off a million German troops still fighting the Soviet advance in the Balkans. The operation was preceded by Operation Margarethe in March 1944, which was the occupation of Hungary by German forces, which Hitler had hoped would secure Hungary's place in the Axis powers. This had also enabled the deportation of the majority of Hungarian Jews, previously beyond the reach of the Nazis, through uneasy cooperation with Hungarian authorities. This policy was, however, terminated as Soviet forces drew closer and the USAAF, based in Italy, began bombing Hungary, including Budapest.
Prelude
On 23 August 1944, King Michael of Romania dismissed Marshal Ion Antonescu as prime minister, signed an armistice with the all the "Big Three" Allied powers and declared war on Germany and Hungary. King Michael's coup and Romania's defection from the Axis to the Allied camps had a decisive impact on Hungary as it undermined Germany's entire position in the Balkans and cut the Reich off from its principle source of oil. Romania's defection also ensured that the Allies would support returning northern Transylvania to Romania, which Soviet and Romanian forces promptly invaded. Horthy, following the advice of his closest adviser, the former prime minister István Bethlen, had long considered appointing General Géza Lakatos as the prime minister in order to sign an armistice with the Allies. With the crisis caused by Romania's defection, Horthy and Bethlen decided that now was the time to dismiss General Döme Sztójay as prime minister. On 29 August 1944, Horthy sacked Sztójay and appointed Lakatos as the new prime minister. Lakatos decided to keep most of Sztójay's cabinet, including the Agricultural Minister Béla Jurcsek and the Finance Minister Lajos Reményi-Schneller. Both Jurcsek and Reményi-Schneller worked as spies for Germany, selling the minutes of cabinet discussions, a role that they had played during the government of Döme Sztójay and in the case of Reményi-Schneller in the government of Miklós Kállay as well. Jurcsek and Reményi-Schneller continued to work as spies during Lakatos's government.
On 6 September 1944, Lakatos told Horthy that the Soviets had broken through the German-Hungarians lines in Transylvania and would soon be on the Great Hungarian Plain. On 7 September 1944, Horthy called a meeting of the Crown Council that was attended by the entire Council of Ministers as well. Horthy announced that he was going to sign an armistice with the Allies as the war was clearly lost for the Axis powers. Most of Lakatos's cabinet led by Jurcsek and Reményi-Schneller objected, saying it was better to fight on and see all of Hungary destroyed than sign an armistice with the Soviet Union. To resolve the deadlock, the Defense Minister Lajos Csatay put forward a compromise, namely to make an impossible demand on Adolf Hitler, demanding send four panzer divisions to Transylvania or else Hungary would sign an armistice. Lakatos accepted Csatay's idea. Lakatos stated that was a major blunder, writing: "With this we delayed the step for an armistice. At the same time we drew the Germans' attention to our preparations. This decided our fate. Militarily we did not get serious assistance, while more and more German troops were brought into the capital and surroundings...they armed the Arrow Cross and prepared them so that with the first possible instance power would be given to Szálasi and comrades. At the time I did not see this clearly...Now of course I know, that in that moment the scales were tipped". Both Jurcsek and Reményi-Schneller afterwards told Edmund Veesenmayer, the German minister plenipotentiary, that Horthy and Lakatos were going to sign an armistice.
On 10 September 1944, Horthy called a meeting at the Royal Castle that consisted of his closest friends and advisers. The meeting was attended prime minister Geza Lakatos, István Bethlen, the Defense Minister Lajos Csatay, the Foreign Minister Gusztáv Hennyey, Count Móric Esterházy, General János Vörös, the former prime minister Count Gyula Károlyi, General Vilmos Rőder, Kálmán Kánya, Baron Zsigmond Perényi, General István Náday, Baron Dániel Bánffy, Bela Teleki, and General Hugó Sónyi. The three most important speakers were Lakatos, the chief of the general staff Vörös, and Bethlen. Bethlen stated that the war was lost and the best that could be hoped to be achieved was an armistice. The Honved {Royal Hungarian Army) generals at the meeting objected strenuously objected, saying it was better to fight on as an ally of Nazi Germany and see of all of Hungary "burn" than sign an armistice with the Soviet Union, they predicted would lead to a Communist regime. Furthermore, the generals noted that it would dishonorable to sign an armistice without informing Hitler first, even though everyone knew what Hitler's most probable reaction would be. The meeting ended with the plan that Horthy would sign an armistice, but also inform Hitler in advance.
Lakatos insisted on informing the cabinet as well of the decision to sign an armistice. At the meeting of the Council of Ministers of 11 September 1944, Lakatos told the cabinet what had been decided and was faced with a cabinet revolt as the entire cabinet rejected the idea of signing an armistice. Later the same day, Horthy called a meeting attended by his close friends and family to decide what to to. The regent decided to sign an armistice without informing Lakatos, Vörös and Hennyey, saying as the Supreme Warlord he had the right to decide issues of war and peace. Horthy still held to the hope that he might be able to sign an armistice with Britain and the United States only. On 20 September 1944, Horthy asked Náday to go to Italy to sign an armistice with the Americans and the British. On the same day, a SS commando team led by SS-Obersturmbannführer Otto Skorzeny arrived in Budapest with orders to kidnap Horthy. On the night of 22 September 1944, Náday flew to Foggia along with a British POW, Colonel Charles Howie. Náday met with Field Marshal Henry Maitland Wilson, the Supreme Allied Commander for the Mediterranean theater of operations, who bluntly told him that the Hungarians were not allowed to pick and chose which of the Allies to sign an armistice with. Wilson told Náday that Hungary could either sign an armistice with all of the Big Three Allied powers or none at all. Náday returned to Budapest to tell Horthy he was going to sign an armistice with the Soviet Union. The same day, the Red Army broke through the German-Hungarian lines in the Carpathian mountains and entered the Great Hungarian Plain, which finally convinced Horthy that he would have to sign an armistice with the Soviet Union. Skorzeny had initially planned to kidnap Horthy, but discovered that the Royal Castle was too well guarded, which led him to instead decide to kidnap Horthy's son, Miklós Horthy Jr., as a way to force his father to abdicate.
On 28 September 1944, a three-man delegation led by General Gabor Faragho, the former military attaché to the Soviet Union who spoke fluent Russian, left for Moscow via Slovakia. The mission had been set up by Count Ladomėr Zichy, a Hungarian aristocrat of strongly left-wing views who owned an estate in Slovakia. During the Slovak Uprising, Zichy had been in contact with a Soviet partisan unit led by a Colonel Makarov sent to assist the Slovaks who told him that he could arrange for the Hungarians to send an delegation to Moscow to sign an armistice. The three men delegation broke up and travelled across the countryside via separate cars and then crossed by foot into Slovakia. From there, they met Zichy at a prearranged point who in turn took them to a secret airfield where a plane flew them to Moscow. Faragho arrived in Moscow on 1 October 1944.. The armistice talks in Moscow were pointlessly dragged out for 11 days by the Hungarian demand that Faragho only sign a "preliminary armistice" that would halt the advance to the Red Army into Hungary with the actual armistice to end the fighting to be signed at some later, undetermined point. Horthy still held to the hope that the Anglo-American armies in Italy might reach Hungary, and he saw the "preliminary armistice" as a way to stall the Red Army's advance. The Soviet delegation led by Colonel-General Vasily Kuznetsov insisted on an actual armistice on the principle of unconditional surrender along with Hungary declaring war on Germany and offering the Red Army full assistance in advancing across Hungary to reach the Reich. The talks were broken off for several days and only resumed on 5 October 1944. The Hungarians were helped in the armistice talks by the summit that was occurring in Moscow at the same time as the British prime minister Winston Churchill and Foreign Secretary Anthony Eden were engaged in talks with Joseph Stalin and the Foreign Commissar Vyacheslav Molotov about the post-war future of Eastern Europe. To impress their British guests, the Soviets wanted to be perceived as magnanimous victors. The armistice that was signed n Moscow on 11 October 1944 was primarily military and did not touch upon the political structure of Hungary. The armistice called for fighting to stop on 20 October, for Hungary to return to the borders created by the Treaty of Trianon in 1920, for Allied Supervisory Commission to be on the ground to monitor that Hungary was complying with the armistice, and for Hungary to declare war on Germany.
Through his spies in the Hungarian government, Veesenmayer was aware that there were armistice talks going on in Moscow in early October 1944, which led to recommend to Berlin that it was time to depose Horthy. On 11 October 1944, Veesenmayer met with Ferenc Szálasi to tell him to prepare the Arrow Cross to take power soon. Emil Kovarcz, a former Honved general who commanded the Arrow Cross's paramilitary wing, started planning for a coup, making preparations for the Arrow Cross militia to seize radio stations, government offices, police stations and the offices of the Royal Hungarian Gendarmerie. On 11 October 1944, Horthy agreed to meet two members of the opposition Hungarian Front, Zoltán Tildy of the Smallholders and Árpád Szakasits of the Social Democrats. Horthy declined to meet László Rajk, the Communist revolutionary who wanted to arm the working class of Budapest.. Szakasits claimed it was agreed that a general strike would be called on 17 October 1944 against the war, which would shut down the entire transportation system and on that day the armistice would come into effect. Horthy started to pull back Honved troops to Budapest as he anticipated the German reaction to the news of the armistice, but the withdrawal proceeded slowly, in large part because he did not trust the chief of the general staff, Vörös. On October 14, 1944, Horthy decided to bring the armistice into effect the next day, apparently because he did not want to wait until the 20th. Both Vörös and Lakatos protested that this was a highly rash decision, saying that they did not have time to prepare and it was not certain if all of the Honved generals would accept the armistice. Lakatos made a number of changes to the speech Horthy planned to give on Sunday, October 15, announcing the armistice, which garbed the message while deleting the line "from this day Hungary considers herself to be at war with Germany".
The Kidnapping of Miklos Horthy Jr.
Having anticipated Horthy's move, Skorzeny had been instructed to remove Horthy from power. Horthy's son Miklós Horthy Jr. was meeting with Soviet representatives. Miklós Jr. was informed by the German Security Service through intermediaries that envoys of Marshal Tito of Yugoslavia wanted to meet with him. Horthy Jr., like his father, rarely left the well guarded Royal Castle, and Skorzeny needed a ruse to lure him out. Admiral Horthy had given his son permission to meet the supposed Yugoslav representatives out of the mistaken belief that the meeting would take place in the Royal Castle.