ECONOMIC SANCTIONS

Waipa Post, Volume 51, Issue 3694, 6 December 1935, Page 8

ECONOMIC SANCTIONS

EFFECT ON SHfIALL STATES. EMBARRASSING position. i - —— Now that the League of Nations Council has defined the aggressor and some sanctions are already in force? it is of interest to analyse the attitude of some of Italy’s nearest neighbours, writes the Vienna correspondent of the Manchester Guardian recently. Among the small States of Central and South-eastern Europe only two are opposed in principle to the use of sanctions against Italy, though circumstances may change the attitude even, of them. These two are Austria and Hungary. Albania, too, cannot be counted on. The other States—including Czechoslovakia, Rumania, Yugoslavia, Greece and Turkey —are, of course, standing faithfully by the Covenant, and will certainly follow the lead if not of Britain at least of France on the sanctions issue. Nevertheless, nearly all these States are in a highly embarrassing position. Italy is an important customer of nearly all of them, and a rigid enforcement of economic sanctions would cause serious dislocation in their trade balance. Italy buys more from them than she sells to them.

• Undoubtedly Italy is one of Austria’s best customers. Austria exported 485,000 tons to Italy in 1934, to a value of nearly 100,000,000 Austrian schillings (about £4,000,000), while her imports»from Italy were worth only 50,000,000 schillings. Italy last year was Austria's second best customer. This year -the Austrian export quota to Italy rose from 10 per cent to 16 per cent, and Italy is now actually the best customer of Austria.

Hungary.

Hungary also is an important supplier of Italy. Under the Rome protocols of last year Hungary indeed succeeded in increasing her trade with Italy. There had been a fall in that trade after 1928. In 1933 her exports to Italy reached only 34,000,000 pengoes, and would have declined still further had it not been, for the Rome protocols. Thanks to them the fall was arrested in 1934, andi in the first half of 1935 Hungarian exports to Italy actually reached 30,200,000 pengoes, while imports from Italy to Hungary declined to 17,000,000 pengoes. Under the Rome agreements Italy accepted the obligation to buy from Hungary, at a specified high price, 150,000 tons of wheat, with an option over 100,000 tons. The whole quantity was taken last year and the equivalent portion this year. Besides wheat, Hungary exports to Italy cattle, rye, poultry, and other agricultural products, together with a small quantity of electrical machinery.

Czechoslovakia.

Czechoslovakia’s attitude is clear. Dr. Benes has always been a great champion of collective security and the League. Nevertheless, Czechoslovakia is also embarrassed. Her economic relations with Italy have been exceedingly good. Her exports to Italy amounted to 212,000,000 Czech crowns (rather less than £2,000,000) in 1934, and in the first six months of" 1935 to 112,000,000 crowns, or £1,000,000. The "key” industries of Czechoslovakia have just received important orders from Italy; the Bata shoe works, for example, obtained an order for 300,000 pairs of shoes for the Italian army. There are of course some fears over future Italian payments. It. was proposed to Italy that payments, in and out of the clearinghouse, should be effected at a fixed exchange value for a long period, say for half a year, and that the present parity of the lire should be taken as a basis for the Italian payments during this period." Later on payments should be regulated on the basis of an equalisation fund.

Yugoslavia.

Yugoslavia, a member of the Little Entente, is following a policy identical with that of Czechoslovakia. Yugoslavia is exceedingly interested in the Abyssinian conflict, because, though her relations with Italy have improved, they were extremely strained for many years. If Italy should succeed in defying the League it would increase Italia'n prestige and Italian influence in the Mediterranean —a development . which Yugoslavia wishes to avoid under any circumstances. On the other hand Italy is bne of Yugoslavia’s best customers. In 1934 Yugoslavia exported to Italy 1,072,000 tons of goods, to a value of 797,577,000 dinars (almost £4,000,000). Yugoslav exports in the first half of 1935 amounted to 479,000 tons, to a value of 364,000,000 dinars Exports have increased rapidly during the last few months, Italy having bought large quantities of pigs for her troops in Africa. Italian purchases in Yugoslavia amounted to 20 per cent, of Yugoslavia’s total exports. Difficulties in payment exist. Though Yugoslavia has a special clearing arrangement with Italy, over sixty to seventy days are required before payments are made from Italy into the common fund. The Yugoslav National Bank, however, discounts 80 per cent, of the payments outstanding from Italy to the exporters, because the trade treaty between Yugoslavia and Italy contains a clause assuring the

risk. All these,recent orders to Czechoslovakia and Yugoslavia constitute of course a kind of bribe. Italy believes that they will make the countries concerned hesitate when sanctions are discussed.

Rumania is an important supplier of petrol—a material which Italy lacks and yet badly needs for war purposes. Italy bought from Rumania in 1934 crude oil to the value of 54,000,000 lei, petrol to the value of 135,000,000 lei, mazut worth .361,000,000 lei, motor oil worth 105,000,000 lei, and lamp-oil worth £95,000,000 lei. Rumania’s exports to Italy in the first six months of 1935 came to 1,025,000,00 Olei (£1,600,000), compared with 624,000,000 lei (£1,000,000) in the corresponding period last year. Greece naturally views with some distrust Italian ambitions in the Mediterranean; A serious conflict in the Mediterranean would naturally cripple the greatest part of Greek trade, as her exports go mostly by sea. Her trade with Italy is considerable. Her total exports to Italy in 1934 were worth 227,000,000 drachmas (£440,000), made up of such things as tobacco, olive oil, hides and turpentine.