Hungary for Change

Is this the ugliest building in the world? I stand, slack jawed, before the new Hungarian National Theatre. It squats on the banks of the Danube near the Pest end of the Lagymanyosi Bridge, a bloated toad of civic ambition gone horribly wrong.

A tinted glass awning juts over the main entrance. Though quite ugly enough, it has been ruched into scallops for maximum vulgarity. Statues of nine golden haired "muses" are stranded halfway up the mock pillars of the front – they seem to be writhing with embarrassment. Enough, already. For no discernible reason the piazza outside is shaped like the prow of a ship. Please God, make it stop. The ship rides on to a pool in which a mock-up of the old National Theatre's neo-classical façade has been laid on its side and drowned. Nightmare. This is what happens, I imagine, when architects mess with mescaline.

This is also what happens when immature institutions are groping in the dark. A project of this size and prestige simply can't be the work of a single bombed-out mind. There must have been committees and meetings, presentations and planning laws, hurdles to leap and hoops to jump. Yet there it is: one sign of Hungary's times.

Next door also in the area known as Millennium City, the Palace of the Arts is an altogether happier experience. It opened three years ago and the design, while not of Frank Gehry's status, is functional and seems comfortable in its concrete and glass skin. Under a common roof, it provides 18 acres of space dedicated to the arts, including two concert halls and a gallery.

The Ludwig Museum of contemporary art occupies the end nearest the Danube. The collection is dotted with Picasso, Rauschenberg, Warhol and Keith Haring – but the real fun for me is in the modern Hungarian art that shares the gallery with the stellar names. One work by Sandor Pinczehelyi is titled The Cobblestone Is the Weapon of the Proletariat – a pile of basalt cobblestones lies scattered on the floor, each one stamped with the words "Weapon of the Proletariat". Not so long ago this would have been truly subversive. Now it draws a wry smile. Another sign of Hungary's times.

I have a privileged relationship with Budapest. It is my mother's home town and I have been a regular semi-insider since childhood. Each visit brings new transitions, new jolts to my understanding of the city. Some changes were inevitable. The acrid smell of cheap communist tobacco has given way to smooth American lites; the blue fug of Russian petrol no longer pollutes the boulevards and the old Wartburgs, Dacias, Skodas, Ladas have all but disappeared. Even the once ubiquitous Trabant is only ever seen in public as an ironic toy – as, for instance, a piece of bar furniture or an amusement ride.

English has long replaced Russian as the second language, and most Hungarians speak enough to take the edge off asking for directions or doing basic shopping. But perhaps most tellingly it is the sound of native English and American voices that now wafts around Budapest as a constant reminder of how the geopolitics of eastern Europe have shifted.

The mystery and menace of spy thriller, Cold War Budapest has largely vanished – it is facing resolutely west now. The city seems eager to please, to be accepted by its new peers. Vaci Utca, the shopping hub of Pest, is a pedestrianised row of designer emporia that would be at home in Milan. The legendary Gerbeaud Café now looks out on to the smart (also pedestrianised) Vorosmarty Square – here the beau monde of Budapest congregated, even during the most austere years of communist rule, to luxuriate in the best coffee and cakes east of Vienna, but even they might blanch at today's Western prices. (Two small beers came to £10.)

The parliament building (modelled on Westminster) has been cleaned up, white and fresh instead of the blackened brooding presence it once was. But all is not bright and beautiful. Terrible things happened on the banks of the Danube within living memory. In 1944 the Arrow Cross commando (the Hungarian fascists) went on the rampage here, lining up and shooting Jews into the river. About 300 yards from the brightened parliament a new memorial, a poignant row of shoes cast in bronze, recalls the atrocity.

The headquarters of the Arrow Cross in Andrassy Ut is now a museum. After the war it gained added notoriety as the base of the Stalinist-era secret police. The House of Terror, as it is named, is indeed a terrifying building. Its windows are blanked out; the stone is painted grey and just to avoid any ambiguity, huge letters spelling TERROR are cut stencil-like into an overhanging board. The insignia of the Arrow Cross and the Soviet star are also cut through: the implication seems to be that fascism and communism occupy the same tier in the hierarchy of terror. Already I feel uncomfortable.

The permanent exhibition is slick – a bit too slick. It is artful, using music, mood lighting and the whole gamut of hi-tech production techniques to engage visitors. I have to remind myself that people were tortured and executed within these walls.

The Arrow Cross story occupies just two rooms while the rest of the four-storey museum is a relentless exposition of the evils of the communist era. The Holocaust and the part the Arrow Cross played in deporting 438,000 Jews to Auschwitz (the single biggest nationality was sent from Hungary) is brushed aside with indecent haste while the commentary draws attention to such banal minutiae of communist oppression as "the forced production of cotton and rice, originally not indigenous to Hungary". I half-wonder if I am developing the east European tendency to see plots and hidden agendas everywhere, but the "museum" seems to me to be redrawing history in a very deliberate, tendentious way.

In the evening I meet some friends and the conversation comes round to the House of Terror. Daniel, an IT professional who is Jewish, is quick to weigh in. "It's political," he says firmly. The museum, I learn, opened under the last (right-wing) government and its director, Maria Schmidt, was an adviser to the then prime minister. Hardly a surprise then, as Daniel explains, that the museum is a propaganda weapon against the current (socialist) government, seeking to link them to the horrors of the (socialist) past. His friends nod in agreement and seem a bit charmed by my naivety.

We are on the roof of a building in Blaha Lujza square. I have been brought here to experience what my friend Antonia calls a "ruin pub". The phrase is not her coinage but refers to the Budapest phenomenon of turning derelict buildings into funky "underground" party venues, except in this case we are distinctly over ground. Corvinteto (it means "Corvin roof") is a multi-storey, multi-dancefloor venue in what was once a state owned-department store. It has a huge roof terrace and bar with 360-degree views of local building sites, hotels and office blocks.

Nothing about the "ruin" is designed. It is an adapted stripped-down space where Budapest's bohemian and media posse chats, dances and gets dirty. Cockroaches scuttle into dark corners fleeing the booming bass of the Irie Maffia Soundsystem in one room, while in another room the DJ spins Eighties chart hits. Apparently, when it rains the dance floors have a tendency to flood. It feels wonderfully cobbled together and I am pretty sure it would fail health and safety requirements in the UK. Up on the roof, people indulge in the lost art of conversation – doing the Hungarian thing of setting the world to rights.

Eventually we move on to Margit Sziget (Margaret Island), a mile-and-a-half-long island in the Danube, where a profusion of open-air summer-only clubs stays open until dawn. The evening is balmy, and the terraces of club Holdudvar, a former casino, are crowded. There are no queues to get in, no admission charge, no door policy and if there is security, it is kept at a discreet distance. Everyone is welcome, it seems – I spot a mum and her two kids saying their goodbyes as we arrive at about 2.30am. The atmosphere is wholly good natured. It feels a long way from the pressured, lightly buttered aggression that passes for nightlife back in England's green and scarred land.

But I am transported to Stevenage and Solihull in an instant – the easyJet stag lads are here in numbers. I have a strange sense of dislocation, which gets even stranger when I venture inside to the dancefloor. A middle-aged man, his face contorted in mock paroxysms of rage, is pushing his dance partner around in, what I take to be, a play fight. At one point the man produces a wig (yes, a hair piece) which he waves around menacingly before hurling it at her. It is Keith Allen, sometime actor, famous dad of even more famous Lily and professional hellraiser. He is utterly bollocksed.

After leaving the club I try to make sense of the new Budapest, but it's nearly four in the morning, my brain is fogged and the view from the Margaret Bridge is offering no clues. The Danube is rippling like sheet metal, reflecting the embankment lights on both the Pest and Buda sides. The domed silhouette of the parliament hovers on the skyline and in the distance the lights of the Citadella on the Buda hills glimmer in the heat haze. I recognise this. It is the beautiful city of my childhood.

COMPACT FACTS

How to get there

Inghams Short Breaks (020-8780 7710; inghams.co.uk) offers eight hotels in Budapest, ranging from three to five star. Sankha Guha stayed at the four-star Mercure Budapest Museum. Prices start at £279 per person, including three nights' B&B and flights from London Gatwick to Budapest. Inghams can also pre-book a minibus transfer from the airport for £10 per person, one way and a Budapest City Tour costs £19 for a half-day excursion.

Further information

Hungarian National Tourist Office (00800 36 000 000; gotohungary.co.uk).