The history of the Sephardim in Transylvania, a region that borders the countries of Hungary and Romania, is not very well known. The first serious attempt at a study of this community was made by Bernard Klein who in 1965 contributed an article entitled The Decline of a Sephardic Community in Transylvania to Studies in honor of M.J. Bernadette. The article (a condensed version of which follows) is a monographic sketch of the Sephardim in Karlsburg (not to be confused with ‘klausenburg’), dubbed the “Jewish Capital” of Transylvania.
The defeat of the Hungarians by the Ottoman Turks at Mohacz in 1526 precipitated the partition of Hungary into three sections: the Western section was controlled by the Hapsburgs; the Central section, including the cities of Buda and Pest, were under the direct domination of the Turks; the Eastern section of Transylvania was autonomous but under Turkish suzerainty. Within the latter two areas the Turkish conquest was responsible for considerable changes in Jewish community life, especially in bringing Ashkenazim and Sephardim together in the same town and frequently in one community. We know for example, that Ashkenazi Jews had emigrated to Turkey, where they eventually assimilated with the Sephardim. On the other hand Sephardic Jews frequently settled in Hungary. Thus a significant Sephardic community was established in Buda, which existed as a separate entity for close to 200 years. Similar communities developed elsewhere, and especially in Transylvania. All of the Sephardic communities were, however eventually absorbed by the Ashkenazim.
In Transylvania there were a number of communities which were organized and established by Sephardic Jews. The reasons why Sephardic Jews were attracted to Transylvania are many. Geographically, Transylvania was in proximity of the Balkans which had been settled primarily by Sephardic Jews. The Turkish conquest of the Balkans and Hungary facilitated communication and migration between these areas. Furthermore, the towns in which the Sephardim settled were important trade centers. Thus Karlsburg (also known as Alba Iulia), the most important Sephardic center in Transylvania was a frontier town through which Turkish trade was exchanged. It was only natural for Sephardic Jews, acquainted with the business matters and tastes of the Turks and their language, to exploit existing trade opportunities. They also acted as tax farmers. Finally the political condition in Transylvania was extremely favorable to Jews. There existed a general tolerant climate and an absence of the virulent anti-Semitism which characterized life in other parts of Europe. The Jewish population of that area in that period was considerably small. Around 1780, after a considerable influx of Ashkenazim, there were only 322 Jewish families in all of Transylvania. Karlsburg, its capital, had 31 Jewish families who paid taxes in 1764. How many of these were Sephardim and how many Ashkenazim is unknown. There is however no question that the early Jewish residents in Karlsburg were Sephardim. This is obvious from the fact that the minutes of the community were in the Hebrew script customary among the Sephardim and that the early contacts which the Karlsburg community maintained with other Jews were primarily with other Sephardic communities mainly Belgrade and neighboring Ungarish-Brod (also known as Temesvar). Their questions on law were addressed primarily to Sephardic Rabbis and one seldom comes across any reference to an Ashkenazi scholar.
In 1623 Prince Bethlen Gabor granted the Jews of Alba Iulia a liberal charter of residential and commercial privileges framed at the insistence of Abraham Szasza (his name is also given as Sasa and Shasha), a Jewish Physician from Constantinople who had been invited to settle there. The first known Chief Rabbi of the city was R. Abraham Isaac Russo (d. 1738).
In Porumbacul de Sus near Fagaras in southern Transylvania, Sephardic Jews are credited with introducing glass manufacture to the region. In Targu-Mures, Sephardim are mentioned from 1582; a permanent community was founded in 1601 in the nearby village Naznan-falva. The first known communal leader was Moshe Aizik Frenkel, heir to a converso family (Yivo 1689).
The Numerical predominance of the Sephardim seems to have been broken around the beginning of the 18th century. The influx of Ashkenazim from Hungary, Bohemia, Moravia, and Germany on the one hand, and from Poland on the other, not only undermined the numerical superiority of the Sephardim, but also challenged their authority in communal affairs by the 18th century, the Ashkenazim and Sephardim were considered two distinct communities. Unity of the two congregations was only a necessity in relation to the non-Jewish community and in the selection of a Chief Rabbi who served both Congregations. In the period between 1736 and 1823 Karlsburg had 7 Chief Rabbis, of these 4 were Sephardic. The fact that in 1742 an Ashkenazi Rabbi could be appointed to this former Sephardic stronghold indicates that by that time the Ashkenazim were already a dominant and influential factor in the community. On the other hand the election of a Sephardic Rabbi as late as 1818 seems to demonstrate that despite their decline the Sephardim were not without influence in the community. As the 18th century progressed, it became obvious that the Sephardim were losing ground and that the Ashkenazim were becoming the dominant factor in the community. This is also obvious from the fact that the Sephardim had to resort to a ban against any member deserting the Sephardic congregation in order to attend services at the Ashkenazic one. Many Sephardim disregarded the ban. In order to prevent any further decline, the Sephardim deemed it advisable to enlist the cooperation of the Ashkenazim. In 1793 both the Sephardim and Ashkenazim appeared before the Ashkenazi Chief Rabbi, Moses ben Samuel Halevi Margolioth. This momentous occasion was recorded in the community minutes and was also transmitted to Rabbi Moses Sofer of Pressburg (known as the Chatam Sofer) by a correspondent from Karlsburg who asked for a decision regarding the case. According to these sources, the statement from Rabbi Margolioth was as follows: “today the Ashkenazi and Sephardi communities presented the following case to me. The Sephardim had issued a ban on their members not to attend the Ashkenazi Synagogue. Several individuals have however disregarded the ban. The holy community of the Sephardim has therefore presented a complaint against them. It is therefore our decision that in accordance with the law of the holy Torah, the ban is to apply to these individuals until such time as they return to the Sephardic Synagogue. Moreover the Ashkenazim are not to accord any honor or holy functions to these individuals, as is prescribed by law for those in a state of excommunication. Should any influential man call these individuals to the Torah or accord them any honor, this individual will likewise be in excommunication and all Israel will be absolved of any guilt. In return the Sephardic community has obligated itself to subscribe to the ticket system and contribute half the expenses for the needs of wayfarers and itinerary speakers. Each individual is to receive half the expenses from the congregation of the Ashkenazim and half the expenses from the congregation of the Sephardim..”.
Soon however, most of the Sephardim themselves-because of their rapidly shrinking numbers- regretted issuing the ban and sought to extricate themselves from it. They therefore sought the advice of the two leading Halachic authorities of that time, namely Rabbi Ezekiel Landau of Prague and Rabbi Moses Sofer of Pressburg. Rabbi Landau  in his lengthy response paints a picture of a rapidly declining Sephardic community in Karlsburg that could barely complete a minyan for prayers. The children of the Sephardim had no choice but to attend the schools of the Ashkenazim and slowly forget their own customs and traditions. Both Rabbis Sofer and Landau answered that the ban might be lifted. However, both Rabbis also insisted that they were interested in the preservation of the Sephardic community as a distinct entity with its own customs and tradition and hoped that the dismal conditions of Sephardic life would prove to be temporary. Of course this did not prove to be the case; the community rapidly shrank to the point where only several years later they ceased to exist as a separate community. Their exit from the public scene was, however, accompanied by an uproar. In 1818, the Karlsburg community was engulfed in a bitter conflict over the selection of a Chief Rabbi. The community preferred the outstanding Ashkenazi candidate, Rabbi Ezekiel Paneth. The file electors, however, selected the Sephardic candidate, Rabbi Menachem, a descendant of an ancient and wealthy Transylvanian family. Many influential members of the community refused to accept the appointment of Rabbi Menachem. The latter’s detractors spread rumors that he achieved his position through bribery and that he was not sufficiently learned to hold such a position. The matter was sent to Rabbi Sofer in Pressburg to decide. The latter wrote a respectful but stern letter to Rabbi Menachem that he go have a “scholarly conversation” i.e. be tested by the local Rabbi of Sighet and. if he is unwilling or unable to do so, he should engage a Rabbi or a teacher until he is able to render Halakhic decisions on his own. We do not know if Rabbi Menahem acquiesced to these proposals but we do know that he stayed secure in his post until his death in 1823 when he was succeeded by the aforementioned Rabbi Ezekiel Paneth.
In retrospect, it is difficult to tell whether the struggle against Rabbi Menachem was purely a struggle of Ashkenazim vs. Sephardim. The names of his known opponents perhaps indicate that some of them were Sephardim (among these names are Solomon Mexiner, Moses Doman and Moses Rafael) thus ruling out a purely anti-Sephardic motive, though there were certainly opponents within the Ashkenazi camp with such a vendetta. Be it as it may, with the death of Rabbi Menachem, the once flourishing and prominent Sephardic community of Karlsburg exhaled its last breath. Thereafter one no longer hears of quarrels between Ashkenazim and Sephardim, as Rabbi Paneth at the helm became the unchallenged and dominant leader of the Jewish community of Karlsburg and its environs.
Temeshvar (Ungarish Brodt)
The Timisoara region received Sephardic immigration during the 16th and 17th centuries. Turkish armies occupied Timisoara in 1552, after which Sephardic Jews coming from Belgrade and Istanbul settled throughout the area. In Lugoj to the north, Caransebes to the East, and Faget to the South, Sephardic Jewish settlements were documented in 1733, 1746, and about 1750, respectively. At the time of the Hapsburg occupation in 1716, Sephardim in the city of Timisoara were given the option of remaining and living on the city’s outskirts; many chose to stay. Don Moses Pereira became a leading merchant and held the tobacco monopoly for the whole Habsbug Empire, while Diego Aguilar obtained the right in 1739 to found a community composed of both Sephardim and Ashkenazim. Two Synagogues, one of them Sephardic, were built in 1762. During the 19th century, two Sephardic communities, one Orthodox and one modern, were founded (along with three Ashkenazic ones), led by Rabbi Moshe Alkalay between 1831 and 1863 and Yosef Levi between 1815 and 1856, respectively. At the beginning of the 20th century, there were approximately 1,000 Sephardim in the city (Yivo 1690).
The oldest grave found in the Jewish cemetery of Timisoara/Temshvar belonged to Rabbi Azriel Asael of Salonica, who died in Temeşvar in 1636, but it had been in use long before then. In 1716, the Hapsburgs conquered much of the Banat, including Temeşvar. The city’s Jews could have left with the Turks, but chose to remain. In 1718, local Jews were accused of spying for the Ottomans. Vienna ordered them exiled, but the decree seems to have been cancelled, possibly through the intervention of Don Moses Pereira Diego Aguilar, the founder of the Sephardi community in Vienna, who held the monopoly on importing tobacco to the Austrian Empire. In 1739 a united Ashkenazi-Sephardi community was formed in Temeşvar. During the Austro-Ottoman War (1787–1791), the Ottomans recaptured Temeşvar in 1788 and pillaged it in 1789, but at war’s end it was returned to the Austrians.
The first Rabbi of the town was a Sephardic Jew by the name of Jacob Moises (1739-1741).Shortly after Moises’ reign, both communities shared the same Rabbi.
At the end of the fifteenth century and beginning of the sixteenth, Jewish merchants in Transylvania traded in domestic animals, financed ransoms to free Poles captured by Tatars, and supplied credit to traders in the three Romanian principalities. Jews migrated to Transylvania from Poland (mainly Lvov) and the Ottoman Empire. Under Ottoman suzerainty, Alba Iulia was the capital. The Hungarian Báthory family ruled Transylvania as Ottoman princes (hospodars) from 1571 to 1599, followed by a period of conflict and the succession of several princes. In 1618 Prince Gabriel (Gábor) Bethlen (r. 1613–1629) suppressed the Christian-Jewish Sabbatarian sect. Influenced by Abraham Sarsa, a Jewish physician in Istanbul, Bethlen encouraged Jews to settle in Transylvania to help restore its economy. In 1623 the Transylvanian diet granted special privileges to the Jewish settlers, but in 1650 it again imposed commercial restrictions on them.
When Ashkenazi refugees from Poland began to arrive after the Chmielnicki massacres in 1648, Jewish settlement was restricted to Alba Iulia. The Italian Street was renamed the Jewish Street in 1657, and from then until 1848 Alba Iulia had the first and only officially recognized Jewish community in Transylvania. In 1698, it numbered only fifteen families—perhaps seventy or eighty people—but between 1711 and 1735, the community was estimated at somewhere from six to seven hundred souls. In the second half of the seventeenth century, Jews from Moldavia who came to Transylvania to work for the nobility set up unofficial Jewish communities in Gheorghieni, Zlatna, Maramureş and other places in the Turkish areas of the principality.
In the second quarter of the nineteenth century, Temeşvar had three Ashkenazi and two Sephardi synagogues. In 1919 the city was incorporated into Romania. The 1930 census found that its Jewish population was 7,264.
In the Sephardic cemetery, there are still extant graves dating back to the Turkish occupation, the oldest of them belonging to the mentioned Azriel Asael, a Rabbi and surgeon who died in 1636 and on whose gravestone is inscribed “born in Salonica”. A century after his death, in 1736, Rabbi Meir Amigo and another four Sephardic Jews from Istanbul were permitted to settle in the city. Rabbi Amigo became the head of the city’s combined Ashkenazi-Sephardi community. Agent for Diego d’aguilar of Vienna, who held a Tobacco monopoly in Austria, he was known as “little king” (rey chico) because of his wealth and he was highly respected in the court of Maria Theresa. His descendants Yitzchak Amigo and Yosef Meir Amigo continued to be prominent in the Jewish community of Timisoara until the early 19th century.
The other “Sephardim” of Transylvania
The election of Rabbi Moses Glasner to the post of Chief Rabbi of Cluj, Transylvania (better known by its German name; Klausenberg) in 1878 precipitated the establishment of a newly formed “Sephardic” community in that city. The group consisted of about one hundred families (out of a total Jewish population in Klausenburg that exceeded 10,000) who decided that they could no longer remain subject to the authority of a Zionist Rabbi (Rabbi Glasner was an outspoken religious Zionist, a very unpopular ideology among Hungarian Chassidim). The term “Sephardic community” was a sort of legal fiction designed to gain the recognition of the secular authorities that would recognize only one Orthodox community within a given town or district. The only “Sephardic” aspect of the community was that they recited prayers in “nusah s’fard.” Largely made up of Sigheter Hasidim, the group chose as their spiritual leader Joel Teitelbaum, the future Satmar Rebbe, whose older brother, the Atzei Haim, was then the incumbent Rebbe in Sighet, original seat of the family dynasty. R. Teitelbaum never took up residence in Klausenburg, and after heading the Klausenburg Sephardic community for about five years, he vacated the position in favor of his nephew Rabbi Y. Y. Halberstam, who later became famous as the Klausenburger Rebbe. 
Information on the Sephardim in Temeshvar/Timisoara is based partly on the research of Dr. Yitchak Kerem. See Yitzchak Kerem. ” Romania (Ottoman).” Encyclopedia of Jews in the Islamic World.