H. Gregson, Buffer states of the Balkans
CHAPTER I  Yugoslavia The fighting Serbs

4.

Five major Powers Britain, France, Germany, Italy, and Russia are interested in the political or economic sense, and sometimes in both respects, in Yugoslavia.

Six years ago France headed the countries with foreign investments with a participation of 1,056,153,000 dinars (£5,300,000) in Yugoslav mines and commerce. Britain followed with 873,636,000 dinars (£4,500,000), and Germany was very low on the list with investments and credits of 54,656,000 dinars (£273,000).

To-day the position is very different. French investments have remained at about 1,000,000,000 dinars, but German investments, thanks to the acquisition of Sudeten-German, Czech, and Austrian undertakings, have increased until they exceed the French, amounting in all to 1,262,000,000 dinars (£6,310,000).

Nazi capital is largely in banks, and from these banks comes the money for financing German minority newspapers and any other form of agitation which appeal to the Nazi powers that be.

The Germans also own the former Austrian 'S.A. pour l'Industrie Ghimique,' which manufactures fats for explosives and other chemical products, and a gold mine near Leskovaz in Central Serbia, which is financed by the Deutz Motorenfabrik of Cologne.

The Nazis have not acquired all the Czech capital invested in Yugoslavia. This the Government has not allowed. Nevertheless, owing to the fact that Germany controls the country of origin of the capital, it is a moot point how far Czech capital can be called independent.

Before her campaigns of aggression began, Germany had invested in
 
Dinars Dinars
Yugoslavia only      55,000,000
She 'acquired':
  Sudeten capital  300,000,000
  Austrian capital  366,000,000
  Czech capital not officially under German control
  (Kredit Bank of Prague and Zivno Stenska Bank)  441,000,000 ___________
1,107,000,000
Add : Nazi individual investments    100,000,000
___________
Total 
1,262,000,000

Of this total 1,107,000,000 dinars was more or less stolen. The largest British undertaking in Yugoslavia is represented by the Trepca mines, which produce lead, zinc, and pyrites. The mines are situated in south-central Yugoslavia and before war began two-fifths of their production was absorbed by Germany.

Silver is a by-product of these mines, and in 1930 the Yugoslav Government made a law whereby this silver was to remain in the country. Since that time a further law has been passed by the Government, giving it the right to dispose of mining products, no doubt in order to avoid difficulties with Germany, who, if she did not get her share of Yugoslav mineral products, even though the capital is owned by the Allies, might come in and take it. The Trepca and Bor mines (French owned) are the most important industrial undertakings in the country.

Britain also owns zinc and lead mines at Mezica and the Allatine chrome mines near Skoplje.

In Bor, eastern Serbia, is the largest copper plant in Europe, yielding two and a half per cent of world production. The plant belongs to the Bor Mines Compagnie of Paris, with an issued capital of sixty million francs.

The French also own :

Swiss capital is largely interested in aluminium production, notably the S.A. Gontinentale Miniere et Industrielle de la Bauxite in Dalmatia, which produces 52,000 tons of bauxite annually, and the Bauxite Trust, which is also registered in Zurich. There are two Yugoslav bauxite companies, the 'L'Aluminium ' and ' Dalmatia Bauxite,' producing 31,000 tons between them annually.

The charge is generally levelled at British and French companies that they export the whole of their profits, and leave nothing in the country. How well the charge is founded I am unable to say.

The figures given above, while not complete, demonstrate clearly enough the importance of the Yugoslav minerals to Germany and also the importance which the Allies attach to withholding them from Germany.

Fourteen per cent of the total foreign capital invested in Yugoslavia is British.

Yugoslavia's best customer is Germany, to whom she exports eggs, wheat, cattle, maize, swine, fresh meat, timber, bauxite, copper ore, and chrome. Germany takes nearly one-half of Yugoslavia's exports, while Yugoslav imports from Germany represent an equal proportion of Yugoslavia's total imports.

Britain's imports from and exports to Yugoslavia are about one-quarter those of Germany, and the inclusion of French trade does not materially affect this position.

The Yugoslavs buy from and sell to Germany not because they think German goods are better. On the contrary, it is very gratifying for the Briton in Yugoslavia to find everywhere the impression that British is best. British shoes, British cloth, British machinery, British armaments (especially Blenheim bombers and Hurricane fighters) are acknowledged to be the best in the world.

How many times is the British traveller shown an old suit-case or some other article bought in London years ago by the Yugoslav owner and still proudly exhibited, a little the worse for wear, but strong as ever, as proof that British is best.

The Yugoslavs would like to buy more from Britain. They are confronted, however, with the hard facts that Germans will sell on credit and in exchange for agricultural commodities which Yugoslavia can produce, while Britain demands cash, while not increasing her imports from Yugoslavia to enable that country to pay in cash. Secondly, there is the question of German economic pressure, coupled with more or less overt menaces.

Germany enforces her economic and military stranglehold on Yugoslavia by active propaganda.

Espionage is as rife in Yugoslavia as it is in Rumania. The manager of one of Belgrade's most cosmopolitan hotels is a German. As spies, the Germans have dropped the dashing blonde type, although a number of them are still functioning in the cabarets and other places of Belgrade night life. Instead, the Gestapo has gone in for the elderly, respectable type of woman, with a knowledge of several languages, who is always willing to while away the monotonous evenings of the lone traveller with pleasant sympathetic conversation, and, at the same time find out the purpose of his visit.

The Yugoslav porter at the hotel at which I stayed on my last visit warned me to be careful with my papers, as they were bound to be read by one of the chambermaids employed as a Nazi agent. These chambermaids make it a routine duty to go through the correspondence of travellers. I caught one of them in the very act. I had given up my room, but returned unexpectedly and asked permission to lie down upstairs for an hour or so until my train left.

In my room I found the German-speaking chambermaid with the contents of the wastepaper basket on the writing-desk. She was seated at the desk and carefully smoothing out and examining each piece of paper.

Many of these chambermaids come from the German-speaking parts of Yugoslavia and were formerly Austrian subjects.

One of the stories spread by the Nazis in Belgrade is that Indian and Egyptian troops were going to fight the Nazis in Yugoslavia because the Siegfried Line was too strong in the West. This is the sort of whispered 'inside information' which carries a lot of weight, for a time at any rate, with the man-in-the-street, who wonders why the Allies have an army in the Near East.

Nazi 'victories' are shouted all round the town. The good impression created in Yugoslavia by the Altmark affair was almost obliterated the next day by German boasts of the sinking of a British destroyer.

It would be a good thing if B.B.C. announcers, when admitting the loss of a destroyer, could tell the Yugoslavs how little it means to us and how many we have left.

The largest of the few Yugoslav naval units is a destroyer, and they are apt to think it is like the loss of a first-class battleship.

Fear distorts judgment, and I was surprised to find the extent to which Nazi propaganda had upset the judgment of one of Belgrade's most respected and influential editors. He believed it quite possible that, were Yugoslavia to throw in her lot with the Allies, the Allies might make a peace and leave Yugoslavia in the lurch a story assiduously spread by his Nazi acquaintances. Britain, he said, might, for instance, make a deal with Italy at the expense of Yugoslavia's Dalmatian provinces. When I pointed out how absurd this was in my opinion, he replied that it was an illogical war. Nazism had shaken hands with Bolshevism. Nobody had expected that.

He also believed it probable that the Germany after this War would be very different from Nazi Germany ... a nice peaceful democratic country with no aggressive aims in the Balkans or elsewhere ... which he again told me his German friends were saying.

At the same time this editor told me that the British propaganda was more accurate than the German, and no one believed the preposterous claims put about sometimes of German 'victories.'

The German Minister in Belgrade, Herr von Heeren, is a very capable man. Tall (he ranks head and shoulders above any other diplomat), he is a diplomat of the old school who became Nazi only after association with Herr von Papen. He gives Yugoslavs the feeling that theirs is the most important of all Balkan countries as it is in many respects and his wife goes to a lot of trouble scanning old manuscripts in Yugoslav libraries to find books proving the kinship of Yugoslavs and Germans in bygone centuries.

Von Heeren's Axis partner got rather jealous and gave an exhibition of Italian books on Yugoslavia, proving Italy's cultural affinities with the Yugoslavs.

Von Heeren is a tremendous worker and got a good standing early after his arrival by opening a German exhibition in Belgrade, on which money was not spared. One Yugoslav told me that when Von Heeren appeared to open the exhibition, immaculate in top hat and morning coat, with his charming manners, deep-set grey eyes, and tall figure, to most of those present he seemed to stand out above every other diplomat at the gathering.

About one-half of the Germans engaged in espionage in Yugoslavia spy on their own countrymen, it is commonly believed.

During my last visit to Belgrade fifteen Germans of Yugoslav nationality were arrested on suspicion of espionage, as the result of the discovery of a Gestapo 'cell' at Celje in Slovenia. Another nine Germans were arrested in Ljubljana, including two prominent leaders of the Deutsche Kulturbund, besides about a score in Belgrade and the provinces.

There is more than a suspicion that the Nazi espionage service maintains good relations with the girls at the central telephone exchange in Belgrade. The Belgrade telephone system was installed by the Germans, and the Germans are said to have a house somewhere in the suburbs where Nazi women meet regularly and can listen-in to conversations at the central telephone exchange. Nor is the amorous sphere neglected by the Germans. It is evident that liaison between Nazi girls and foreigners can yield most useful information for the Nazis.

There are about twenty German-language newspapers and periodicals in Yugoslavia. Most of them get free photographic blocks from Germany and Nazi news services, either free of charge or at a very reduced rate.

The largest German-language newspaper is the Zagreh Morgenblatt, which sells at two dinars.

On the whole, I was told in Belgrade, the Germans are behaving well. "All they think about," a British official said, "is filling their tummies and they look after themselves very well. They buy all sorts of small things such as cotton and soap, which they send to friends in Germany. They buy any damn thing they can lay their hands on," he burst out.

Typical of this was the behaviour of the staff of the German Legation in March this year. They are paid at the end of the month in Reichsmarks, and already, ten days beforehand, most members of the staff, I heard, had ordered dollars in advance against their salaries. Dollars kept their value better. It did not seem to show over-great confidence in Germany's future.

The same war-behind-the-scenes is being fought in Yugoslavia between Allied and German interests as in other Balkan countries. The British have not done badly. A lot more could have been done had the British shown greater interest in Yugoslavia before the War. The Ottawa Agreement hit agricultural countries like Yugoslavia very hard.

Armament supplies and trade preferences have been one of the best Nazi arguments (apart from the ever-present menace of aggression) in trade with Yugoslavia.

British trade officials are largely engaged in preventative measures to-day. They are controlling all imports and exports, especially raw materials, of which Germany is badly in need. German efforts to use Yugoslavia as a dumping-ground for re-exports have been effectually stopped.

Early this year the Germans were trying to get mining and other concessions in Yugoslavia to prevent the Allies getting them.

German interests in Yugoslavia are commercial rather than in the nature of capital investments. This is perfectly in accordance with Nazi policy, which does not wish to see an industrialized Yugoslavia, but an agricultural Balkan hinterland to feed the industries and industrial population of the Reich. Germany greeted with approval the results of the last Balkan Entente Conference in February this year, probably because nothing very important came out of it, and Germany finds in Balkan disunity her strength.

Should Yugoslavia not toe the line, Ribbentrop has always several cards up his sleeve. There is the Macedonian terrorist, Ivan Mihailoff, who can be trusted to stir up trouble among the Bulgarian Macedonians and possibly impair relations between Yugoslavia and Bulgaria. There are German minorities and Croats whose passions can be excited by money and propaganda, not to mention the intensely revisionist Hungarians. There is the threat of a deal with Italy at Yugoslavia's expense, Yugoslavia's frozen credits in Germany, and, most important of all, the presence of German armed forces near Yugoslavia's frontiers.

Nevertheless, as far as the man-in-the-street counts, he would be glad to substitute good British manufactures for German shoddy, and, up to a certain point, an energetic trade drive on Britain's part in Yugoslavia would do much to drive another nail in the coffin of Nazi Germany ... but only up to a point.

Germany's tie-up with Soviet Russia has been beneficial to her in giving her a certain amount of sympathy among the common people of Yugoslavia. The Yugoslavs are 'Southern Slavs,' and there exists, as in Bulgaria, but to a smaller degree, a sentimental affection for Russia among them. Russia's help was instrumental in freeing the Serbs from Turkish rule. Serbs and Russians use the Cyrillic alphabet and the Serb culture is, like the Bulgarian, largely Russian culture.

The average Serb, however, would much rather that we had come to an agreement with Russia. The Germans are respected for their military efficiency, but Britons are liked because of themselves.

The Yugoslav military men, on the other hand, are intensely opposed to Bolshevism, and their wishes which echo those of Prince Regent Paul would probably be decisive in time of foreign crisis, but agreement with Russia would be possible if Italy became obstreperous.

Russian influence is greatest among the students or semi-intellectuals, and significant of their views were the frequent interruptions which made it impossible for a French Admiral to give a lecture at the Belgrade University recently. These students, whose knowledge of worldly affairs is gained chiefly from pro-Soviet and anti-Capitalist literature, enjoy a reputation disproportionate to their numbers.

The students in Serbia have always taken a leading part in Serb struggles for liberation from Turkish oppression. Under the present semi-Dictatorship they are not allowed to voice their views in the Press that would be too dangerous but they are not afraid of suffering for their convictions however ill-founded their views.

The imprisonment and beatings-up they get from the police do not probably have the same effect on them as would be the case on more opulent citizens as their lives are one long struggle against hardship and penury. Of the eight thousand students at Belgrade University only five hundred are not Communists. Most of them study law because law can be studied at home, which enables the student to run a small business while studying to pay for his keep. Communism is also very rife among industrial workers.

It is the opinion of Dr. Tsvetkovitch, the Premier, that Yugoslavia is in no danger whatever from Communism or Nazism as the backbone of the country is the peasant, who has seldom been interested in political extremes of any kind.

It is worth while noting here that the objection of the Yugoslav military leaders to Bolshevism does not apply to Russians. There are some thousands of White Russians in Yugoslavia who have been fairly well treated, and presumably if Russia were to exchange her red beard for a white beard Yugoslav objections would cease at the same time.

Yugoslavia has never sent an Ambassador to Moscow, and while the U.S.S.R. Government is recognized de facto it has not at the time of writing been recognized de jure.

Yugoslavia's relations with Italy are not happy. The official explanation is that this is due to the Treaty of London of 1915, whereby the Allies, not envisaging the collapse of the Hapsburg Empire, promised Italy the Dalmatian coast, for which Italy has since never ceased to press.

The probability is, however, that if the Dalmatian question had not come into being through the Treaty of London Mussolini would have invented it, as he has invented Corsica, Savoy, and Tunis.

There are also grievances on the Yugoslav side. The Croats are upset because Italy's claims on Dalmatia were partly met by the tracing anew of the Yugoslav-Italian frontier, which put the Croat provinces of Gorica and Istria under Italian rule. Italy also got a foothold on the Dalmatian coast in the enclave of Zara and a number of islands which gave her undisputed naval control of the Adriatic. Yugoslavia's policy is ' The Balkans for the Balkan people.' Since Italy has seized Albania she also considers herself a Balkan Power, so the Yugoslav argument is capable of being twisted to suit her purposes.

Italy is accused of financing terrorist Croats, Slovenes, and even Communists on Yugoslav territory, and there is little doubt that the accusation is correct.

There is more than a suspicion that Georghiev, the Macedonian terrorist who killed King Alexander, had connections with Italy.

Italy comes second after Germany with 12 per cent of Yugoslavia's foreign trade. While engaged in war with Abyssinia and subsequently Spain, Italo-Yugoslav relations took a turn for the better. Italy was too busily engaged elsewhere, and signed a Treaty of Friendship with Yugoslavia.

What relations with Italy will be in the future depends on Signor Mussolini. His policy has been to make Italy the first Power in the Balkans, and Italy has stopped at nothing, even direct aggression as in Albania, to attain this end. Possibly if Mussolini were offered compensations elsewhere, say the Rock of Gibraltar or the Suez Canal, he would be willing to sacrifice ambitions in the Balkans to either Russia, Germany, or both, but in the meantime he has always in mind that the Yugoslavs and the Bulgarians are Slavs, and one of Italy's bogies is a Slav Dalmatian coastline opposite her Adriatic coast, tied up with a Bolshevik Slav Russia. Trieste as a Bolshevik port would be even worse than Trieste as a port of Gross-Deutschland.

Until the present Machiavellian policy of the Fascist hierarchy changes, there can be little hope of a permanent improvement in Yugoslav-Italian relations.

The significance of this for the Allies is that because Yugoslavia is not sure of what Italy's attitude might be in a crisis she is peculiarly susceptible to Axis threats, and this might apply even if Allied help were at hand for her northern frontiers.

Italy has another powerful method of blackmail on Yugoslavia because of Italo-Hungarian friendship. Hungary will press loudly or soft-pedal her demands on Yugoslavia and Rumania according to the tune called by Mussolini, and Yugoslavia's frontier with Hungary, as mentioned earlier, is the least easily defensible other lengthy frontiers.

Italy has it in her power to stop all Yugoslavia's communications in the Adriatic, and the knowledge of this, together with appreciation of the dangerous foothold Italy has secured for menacing Yugoslavia's narrow southern frontier with her outlet to Salonika, explains largely Yugoslavia's cautious neutral policy.

Britain's chief diplomatic representative in Yugoslavia is Mr. Ronald I. Campbell, the Minister. The Minister's residence is in keeping with Britain's dignity as the major European Power. It looks like a typical English country seat, is approached by a short drive, and is situated a short distance from the War Ministry, in a select quarter of Belgrade.

Mr. Campbell is a recent arrival in Belgrade. His predecessor was also a Campbell, Sir Ronald Hugh Campbell. The new Minister is less on his dignity than the former Minister and correspondingly popular.

A lowly reception clerk in the office of the Yugoslav Premier, M. Tsvetkovitch, discoursed eloquently to me on Mr. Campbell's democracy. "He offered me a cigarette and talked to me as though I was his equal all the time he was waiting to be received by the Premier," this clerk said.

I understand also in official Yugoslav circles that Mr. Gampbell is doing a good job of work. He is exceedingly energetic, and I myself was received by him at eight o'clock on a Sunday evening, when he was busy at his desk, as were most of the Legation staff. Mr. Campbell pleased the Croats when I was last in Yugoslavia by visiting Zagreb.

I was also very impressed with Mr. H. N. Sturrock, the Commercial Secretary. Mr. Sturrock is an Australian with all the outspokenness of his countrymen, who knows Germany and Yugoslavia thoroughly. He studied in Germany for four years, was in the diplomatic service in Berlin for six years, Budapest for seven years, and came to Belgrade several years ago. He speaks Serb, French, German, Hungarian, and Russian.

I had the feeling after receiving Mr. Sturrock's precise and accurate answers to the various questions I put to him that Britain was well represented in the commercial sphere in her fight against Nazi domination.

I could not say the same of another official attached to the Legation who is specially concerned with newspaper work. His knowledge of the Balkans struck me as rather limited. Worse still was the remark with which he excused himself when an English journalist, who had specially come out from London to make a study of the situation in Yugoslavia, pressed him for information. "I am sorry, I must get on with my routine," said this rather deep-in-the-rut official.

Energetic, capable men are needed to counteract the active Nazi propaganda in Yugoslavia. Cheaper or even free British newspapers to Anglo-Yugoslav cultural institutions, more of such institutions, more scholarships for Yugoslav students, more social contacts with important but not too pro-Allied Yugoslav editors could do much for the Allied cause in Yugoslavia.

One Yugoslav editor, whose opinion I respect, told me on my last visit to Belgrade that British news was tending to exaggerate like the Nazi news. He thought this a bad thing as nobody believed what the Nazis put out because of their bombast. How true his criticism is I do not pretend to judge. The reputation for accuracy of British news would seem, however, to far outweigh any temporary advantage which might be gained by 'hitting news up,' if there be a tendency to succumb to this trait in London.

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