The Third Reich and Yugoslavia: An Economy of Fear, 1933–1941

Abstract

In The Third Reich and Yugoslavia, Perica Hadži-Jovančić offers a sophisticated account of the evolving economic and political relationship between Germany and Yugoslavia during the late 1930s. Even at the time, contemporaries struggled to explain the nature of power wielded by a militarizing German economy over the smaller states of south-eastern Europe, and whether the Third Reich was mounting a ‘bloodless invasion’—to use the words of Paul Einzig—that exploited these agrarian states, or whether Yugoslavia, Romania, Hungary and Bulgaria retained economic agency. Since 1945, scholars of the Third Reich have continued this debate, deploying a range of concepts from informal empire to hegemony or soft power to explain how much economic influence, if any, Germany actually wielded in south-eastern Europe before it started military operations there in 1941, and to assess how much the Third Reich benefited from its trading and investment ties with this region. Few historians, however, have explored both sides of the story, and this is where Hadži-Jovančić provides a welcome improvement to the existing literature. Using a range of German and Yugoslav sources from archives in Belgrade as well as Berlin, Freiburg, Munich and London, he illustrates the profound agency that Yugoslav leaders exercised over their nation’s economy until a pro-Western coup toppled the government in March 1941, prompting Hitler to launch a ruthless invasion. Hadži-Jovančić argues that until this moment, or perhaps with the fall of France in 1940 at the earliest, the ‘phrase “German informal empire” could hardly be applied to Yugoslavia’ (p. 192). German experts and government officials wanted to transform Yugoslavia into an agricultural and mineral hinterland for their country’s industrial economy, but many Yugoslav leaders rejected this framework. Hadži-Jovančić shows that even though Germany contributed to the industrialization of Yugoslavia by exporting desperately needed machinery and by buying surplus agricultural goods, diplomats from Belgrade successfully defended their nation’s economic interests in trade negotiations and often extracted price concessions from Berlin. Some Yugoslav experts—mostly Croatians like Oto Frangeš or Rudolf Bićanić—believed deeper ties with Nazi Germany would be their nation’s best hope for development in the context of a global depression. But many others, above all Serbian elites like Jovan Mihailović, Vladimir Djordjević and Gjoko Grdjić, questioned German motives and wanted their nation to industrialize by immersing itself in the international economy and retaining close trading relations with Britain and France. Deep into the 1930s, Yugoslavia thus saw participation in a German Grossraumwirtschaft—or large area economy—as a temporary sidetrack on the path back to a liberal international economy. Yet certain events did eventually push Yugoslavia closer into Germany’s economic orbit, above all western sanctions against Italy in 1935—which damaged Yugoslavia’s relationship with its second-largest trading partner—and the Anschluss, which dramatically expanded Germany’s financial and commercial preponderance across south-eastern Europe.