In Hungarian with English subtitles.

There was some grumbling within Hungarian film circles after the government instituted tax incentives to entice foreign productions almost a decade ago then followed that with funding cuts for domestic projects.

The tax breaks were a big success, and Budapest film crews shared in the international largesse, but if the neglected small production companies and Hungarian television can still team up to create superior features like The Exam, that country’s official entry for the European Union Film Festival, somebody is still doing something right (especially taking into account its ridiculously low budget of 400,000 euros).

There’s little wrong with this stylish, claustrophobic, and dark period drama set amid the paranoia of the Soviet-controlled post-Second World War satellite state.

It’s Christmas 1957, a year after the brave but failed Hungarian revolution against the brutal Russian oppressor, and the secret police are starting to look within their own ranks for those who may harbour “counter-revolutionary” sympathies.

A Ministry of Interior decree that a “full appraisal” of all staff be undertaken within a few months sets the stage for a spy-versus-spy caper that is never quite what it seems.

Hungarian hero Lieut.-Col. Pal Marko (Janos Kulka), a favourite of the Soviets, is conducting the official loyalty “test” of his protégé, Andras (Zsolt Nagy). This is unbeknownst to the young, and formerly directionless, up-and-comer, who was taken in by Marko while he was scouting the country for “talent” that could be useful in domestic intelligence.

The bond between the two is strong enough that Andras refers to Marko as “Dad”, and the youthful spy has been set up in a Budapest cover apartment where he debriefs coerced civilian informers under the guise of giving German lessons.

Andras has just met a beautiful musician (Gabriella Hamori), without the knowledge of his mentor, and her entrance onto the scene during the surveillance phase of the “test” throws a spanner into the works as far as Marko is concerned. It seems there might be some question of her loyalty, and that uncertainty may be a lot more significant than most of them realize.

In only his second feature, director Peter Bergendy has fashioned a minor noir masterpiece out of Norbert Kobli’s screenplay, which could easily be repurposed into a sinister four-act play. Exteriors are uniformly dark, damp-looking, and as oppressive as the totalitarian bully smothering the life out of the capital city. It might be Christmas, but you would never know it once you step outside the looming blocks of ancient flats.

Period detail is as impeccable as it is fascinating, and the strong acting well serves the brooding, suspicious atmosphere. Kulka, in particular, impresses in a role that demands ruthlessness, efficiency, and human frailty in almost equal doses.

There are old-school spy-yarn twists in The Exam, and the fact that the threats come from within rather than from foreign infiltrators only makes them more unsettling. Recommended.