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Hungary and Romania had a history of "bad blood" between them dating to the end of WWI. After the armistice and Hungary's disarming, Romania siezed additional Hungarian land, and Hungary was not even allowed to rearm to defend itself. When it became obvious in the mid-'30s that another war was becoming imminent, Hungary began a program to modernize its forces, including purchasing "training" tanks from Italy (the Ansaldo tankettes were about the equivalent of riding-mowers with armor-plate and machineguns, and just as useless), and began making arrangements to license-build a Swedish designed tank.

When hostilities arrived, Hungary was still badly lacking in basic infantry equipment, including rifles and machineguns. The engineering and scientific sectors were adequate to the task, but the lack of industry made it impossible to produce anywhere near enough equipment in such a short span of time. The tension between them and Romania only intensified, with Hungary demanding the return of its former lands (owned by Hungary since 1000 AD, until 1918, most of which is not granted "core" status in the game) and especially its ethnic Magyar population, until Hitler forced Romania to return a small wedge of formerly Hungarian land, much of it largely Slavic in ethnicity, which satisfied neither party. Throughout the war, more than 50% of the Hungarian army was stationed on the Romanian border, expecting trouble at any moment. German commanders quickly learned not to station Hungarian and Romanian units too close to each other, due to the frequent "friendly-fire accidents" and numerous other problems.

During the encirclement battles around Umann, Hungarian forces spearheaded the southern pincer, while the German Panzer units made the wide sweep around the North. When the Soviets launched their offensive to encircle the German army at Stalingrad, the attack fell mainly on the Romanian sector. The Hungarian forces, despite minimal anti-tank capability, held their own outflanked adjacent portion of the line until the German units beside them began withdrawing. As the German general Melenthin put it in his book about his experiences with germany's allies in WWII, the Hungarians were the "best of a sorry lot", limited mainly due to equipment shortages.

Germany sold a fair number of tanks to Hungary, including over 100 of the Czech-built PzKw.38(t), armed with a 37mm main gun. Its performance against the Soviet T-34 would have been abysmal, although they were rarely used in an anti-tank role. They were still better armed than Hungary's license-built Toldi (similar in armament and armor to a PzKw.II), with its 20mm gun, eventually up-armored slightly and upgunned to a 40mm weapon. The later Turan tank, also license-built from a Swedish design and "upgraded" by the Hungarians (along with the Nimrod, a Hungarian-designed "spinoff", as a 40mm dual-role AA/AT SPG similar in concept to the German "Ostwind"), began with a 40mm high-velocity gun and eventually was armed with a 75mm short-barrel weapon, similar to that on the early-war PzKw.IV, only suitable against tanks at short range by lobbing shaped-charge shells. Work on a long-barrel high-velocity 75mm version was started, and a prototype constructed, shortly before Germany occupied the country to prevent its defection to the Allies. The relative handful of Zrinyi SPGs with 100mm guns were about the only suitable domestically produced armored vehicles in Hungary's arsenal for use against the T-34. Germany also sold a number of early versions of the PzKw.III (37mm and a few 50mm medium-length barrel) and PzKw.IV (75mm short-barrel) to Hungary, but those were also badly undergunned by that stage of the war. A number of German-supplied Hetzer tank destroyers (75mm long-barrel), based on the chassis of the Czech-designed PzKw.38(t), served in the final defense of the country when the Soviets over-ran it. There are records indicating that 12 PzKw.VI "Tiger" tanks were purchased from Germany before the end of the war, but there is apparently no evidence that these were ever received.

Near the end of the war, Hungary depended heavily on the ring of the highly defensible Carpathian mountain range to hold the Soviets at bay for a while, but the rapid fall of Romania to the Soviets left that end of the mountain chain unprotected. The flood of Russian troops through Romania into the Carpathian basin could not be stopped on the open plains with the limited anti-tank capabilities of the Hungarian army, and Germany was too busy fighting for its own life to send more than token support. The country surrendered only after the Soviets had driven the remains of the Hungarian army completely off of Hungarian soil, after over 6 months of heavy fighting against a significant portion of the Soviet army.
 
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Hungary and Romania had a history of "bad blood" between them dating to the end of WWI. After the armistice and Hungary's disarming, Romania siezed additional Hungarian land, and Hungary was not even allowed to rearm to defend itself. When it became obvious in the mid-'30s that another war was becoming imminent, Hungary began a program to modernize its forces, including purchasing "training" tanks from Italy (the Ansaldo tankettes were about the equivalent of riding-mowers with armor-plate and machineguns, and just as useless), and began making arrangements to license-build a Swedish designed tank.

When hostilities arrived, Hungary was still badly lacking in basic infantry equipment, including rifles and machineguns. The engineering and scientific sectors were adequate to the task, but the lack of industry made it impossible to produce anywhere near enough equipment in such a short span of time. The tension between them and Romania only intensified, with Hungary demanding the return of its former lands (owned by Hungary since 1000 AD, until 1918, most of which is not granted "core" status in the game) and especially its ethnic Magyar population, until Hitler forced Romania to return a small wedge of formerly Hungarian land, much of it largely Slavic in ethnicity, which satisfied neither party. Throughout the war, more than 50% of the Hungarian army was stationed on the Romanian border, expecting trouble at any moment. German commanders quickly learned not to station Hungarian and Romanian units too close to each other, due to the frequent "friendly-fire accidents" and numerous other problems.

During the encirclement battles around Umann, Hungarian forces spearheaded the southern pincer, while the German Panzer units made the wide sweep around the North. When the Soviets launched their offensive to encircle the German army at Stalingrad, the attack fell mainly on the Romanian sector. The Hungarian forces, despite minimal anti-tank capability, held their own outflanked adjacent portion of the line until the German units beside them began withdrawing. As the German general Melenthin put it in his book about his experiences with germany's allies in WWII, the Hungarians were the "best of a sorry lot", limited mainly due to equipment shortages.

Germany sold a fair number of tanks to Hungary, including over 100 of the Czech-built PzKw.38(t), armed with a 37mm main gun. Its performance against the Soviet T-34 would have been abysmal, although they were rarely used in an anti-tank role. They were still better armed than Hungary's license-built Toldi (similar in armament and armor to a PzKw.II), with its 20mm gun, eventually up-armored slightly and upgunned to a 40mm weapon. The later Turan tank, also license-built from a Swedish design and "upgraded" by the Hungarians (along with the Nimrod, a Hungarian-designed "spinoff", as a 40mm dual-role AA/AT SPG similar in concept to the German "Ostwind"), began with a 40mm high-velocity gun and eventually was armed with a 75mm short-barrel weapon, similar to that on the early-war PzKw.IV, only suitable against tanks at short range by lobbing shaped-charge shells. Work on a long-barrel high-velocity 75mm version was started, and a prototype constructed, shortly before Germany occupied the country to prevent its defection to the Allies. The relative handful of Zrinyi SPGs with 100mm guns were about the only suitable domestically produced armored vehicles in Hungary's arsenal for use against the T-34. Germany also sold a number of early versions of the PzKw.III (37mm and a few 50mm medium-length barrel) and PzKw.IV (75mm short-barrel) to Hungary, but those were also badly undergunned by that stage of the war. A number of German-supplied Hetzer tank destroyers (75mm long-barrel), based on the chassis of the Czech-designed PzKw.38(t), served in the final defense of the country when the Soviets over-ran it. There are records indicating that 12 PzKw.VI "Tiger" tanks were purchased from Germany before the end of the war, but there is apparently no evidence that these were ever received.

Near the end of the war, Hungary depended heavily on the ring of the highly defensible Carpathian mountain range to hold the Soviets at bay for a while, but the rapid fall of Romania to the Soviets left that end of the mountain chain unprotected. The flood of Russian troops through Romania into the Carpathian basin could not be stopped on the open plains with the limited anti-tank capabilities of the Hungarian army, and Germany was too busy fighting for its own life to send more than token support. The country surrendered only after the Soviets had driven the remains of the Hungarian army completely off of Hungarian soil, after over 6 months of heavy fighting against a significant portion of the Soviet army.

No doubt Hungary put up a good fight
 
Back to the game.
Many tells that the AI cannot use licenses properly. An axis minor should concentrate its meager leadership onto industry techs (including agriculture) and doctrines. And it should buy the equipments it needs to use.
 
I've read a few really good books on the Romanian forces during WWII and for the most part they were on par with the Soviets up to late '42. The major things they were deficient in were:

AT weapons; they mostly had outdated rifle AT grenades and 37mm AT guns which were useless against everything but the lightest of Soviet armor. It wasn't until '43-'44 that they started getting a decent amount of 75mm AT guns and even then most divisions were under supplied on the guns themselves. And really by that point you had such heavy Soviet armor coming at you that even the 75mms had to wait till they got close. I don't find that the Romanians had any 88mms (outside of the ones used to protect the oilfields).
Tanks: most of the tanks were home designed tanks which were "ok" against non T-34s. They were also given cast off t-38s (old Czech armor) by the Germans but they were worn out and out classed for '42 and beyond. They had designed a fairly decent tank killer but could only produce a few dozen by '44.
Trucks: they had a huge lack of wheeled vehicles which meant everything went at horse pace and in the large expanses of Russia that was a huge detriment on being supplied
Training: except for about half a dozen German trained divisions most of the Romanian divisions were only so-so trained and not up on the latest techniques
Education/Leadership: Romania was still very agrarian in nature and not as educated as Western Europe, except for the officer class who, unfortunately for the armed forces, didn't feel they needed to interact with the "peasant class" so there was MUCH less cooperation and leadership in and between units.

The Romanians fought extremely well at the beginning of Barbarossa when they were recovering their lands taken by the Soviets in '40. They took more causalities than they really should have at Odessa but they accomplished the task without any major German help, which can't be said by any other Axis minor. After that their patriotic fervor waned and it showed though some of their better trained/led divisions did fine in the Crimea and Kubian campaigns.

Against the Soviet attacks in late '42 they were asked to hold too wide of a line with too few AT guns and artillery (and almost no armor) against a massive Soviet onslaught. The Germans themselves were overstretched but it's interesting to think of what kind of battle it would have been had the Romanians had the better AT guns, some more mobile reserves (their Cavalry divisions were in the process of changing to motorized divisions at the time) and had a few more non depleted German units nearby.

When the Romanians changed sides, they fought the Hungarians with high elan as they were their hated enemy anyway. They took a lot of causalities during this phase of the war too as the Soviets threw them at the Axis without mercy.

Overall the Romanian Cavalry, Mountain, Armor and German trained divisions fought very well which can be attributed to higher training, equipment and leadership. The rest of the Romanian infantry was on par with Russian infantry but totally outclassed by Mechanized and Tank forces.

The Romanian air force consisted of Polish, British & French designs, some home designed fighters and later on, German bought fighters. Despite the early request to be able to license and build German fighters, the Germans never let them. For what the Romanians used them for (defense of the homeland and air cover of the early campaigns (to late '42) they were adequate. After '42 they fighter groups stayed in Romania for the most part.

I think they game adequately reflects the state of the Romanian armed forces. Without German assistance with tech research they are not always front line troops but do well with mopping up operations and helping hold territory.
 
@ Kovax thanks for your input, I have not had good access to info on the Hungarian Armed Forces for WWII until more recently to what's on the Web. One thing though, I would suggest that the 'FAST CORPS' that Hungary sent to the front for Barbarossa in '41 was pretty much all motorised (or motorcycled!) and had most of the currently accumulated 'armour' in the Hungarian Army that wasn't being used for training AIUI at the time, so its performance should have been better than the bulk of average for minor countries units. It would only be comparable with the elite, more advanced and mobile formations of other minors such as the motorised & similarly 'obsolete' armoured elements of the Italian, Romanian, Slovakian formations and to the 369th Croatian Regiment, rather than being a foreshadowing of the quality and effectiveness of the general divisions of the entire Hungarian Army later in the war, or not exactly anyway. I don't think it was necessarily elite per se but just an unusually highly mobile formation from a minor Balkan country and did perform excellently at the front during '41 and sufficiently stood out like the better and motorised divisions from Romania and Italy in Russia.

During '42 the 2 Romanian Armies were probably slightly better than the Hungarian 2nd Army IMHO because they were much more experienced overall in relation and had more heavy Corps Artillery in support in ratio (not that it did them much good in the end) and had more 'motorised' Cavalry as well even if they generally lacked truck transportation, OTOH the 2nd Army was better itself slightly than the Italian 8th Army next to it but not to some of the more mobile elements of the Italian expedition down in the Caucasus Mtns. The Fast Corps had been comparable to them though. The 2nd Army built itself up defensively mostly behind the Don River barrier and remained largely undisturbed until the main event for it mid-winter which despite these differences it wasn't to survive through either.

Through '43 small contingents of Romanian Divisions continued to fight primarily in the extreme South, in the Taman bulkhead and Crimea peninsular while both countries and Slovakian forces only other activities were behind the lines security & garrison duties but getting into '44 they started to have to commit their Armies more fully to the front as best as they could get them. By this time Hungary had better divisions because of the bigger & better industrial capacity it hand than Romania so was able to have generally better performing divisions because of that and continued to do so until beyond all of Hungarian land being occupied. Romania was more heavily pressed earlier than Hungary in '44 and had committed its 'mobile' and armoured divisions more piecemeal in the disparate situation, for example the 1st Armoured Division split in two into an 'A' group & a 'B' group with only 20-30 T.4/Pz IVH each, similar to the number in the undertrained 2nd Armoured held in reserve and assigned to the last motorised Cavalry Div, the under-strength 8th CAV.

In game terms, I find it unrealistic that Hungarian divisions suck more supply demand than Romanian since they had a higher level of motorised transport but the way the AI doesn't sort out its HQ hierarchy and placement of Generals effectively kills having Axis Balkan minors in SP short or long term IME and a good player can do without their 50+ divisions even for a '41 Barbarossa.
 
Actually, the game seems to depict the difference between the Hungarian and Romanian forces well enough, although HU probably starts out with a bit too much IC (a lot of which was handed over to Czechoslovakia, Romania, and Yugoslavia after WWI) and not enough LDR. Historically, Hungary was nearly on par with the West in terms of education, electronics, mathematics, physics, and chemistry, but essentially couldn't produce enough of what it was capable of developing to matter.

Romania starts out with more and better infantry, plus a few cavalry and even armor divisions, but Hungary is better able to utilize its industry to catch up, and eventually surpass it by mid to late war.

The "Fast Corps" sent to Russia included both armor divisions (crews of the Italian-built Ansaldo tankettes were instructed to bail and escape on foot if Soviet armor was encountered), the first division (deployed toward the southern end of the Hungarian zone in Russia) consisting of the domestically built Toldi light tanks, and eventually Turan medium tanks (which at a glance somewhat resembled a late-war Panzer III with its broad armored "schurzen" suspended from the sides), while the second division (deployed toward the northern end) included the Czech-built PzKw.38(t) tanks and assorted purchased German armor. Together, these and the various infantry divisions (some motorized with Italian trucks, others on foot or bicycle) were referred to in Hungary as "the Dead Army", since they were hardly expected to return home alive.

After Hungary's clandestine inquiries into joining the Allies were rudely rebuffed by the UK (they were told to surrender to Stalin, not the Western Allies), and posted in the press for German agents to report, Hitler occupied Hungary directly to insure loyalty. Under intense German scrutiny and pressure, Hungary then fielded additional troops to the Eastern Front, most of which were better equipped than the first group in terms of infantry basics, but badly lacking in both armor and anti-tank capability.

Both Hungary and Romania offered one thing that Germany didn't have in appreciable quantity: traditional horse cavalry, which proved indispensible for anti-partisan duties in and around the Great Pripet Marshes of western Russia, where few roads existed and motorized transport was all but useless. In the game, the AI makes very poor use of the generals, Research, and industry of either Hungary or Romania, leaving them next to useless as German allies.