CENTRAL EUROPE
The Price of Peace.—There may be some argument against the view of Winston Churchill and other opponents of Chamberlain’s policy that a strong stand on the part of Britain and France, with full utilization of support from Russia and the small states of Central Europe, would have prevented the dismemberment of Czechoslovakia at Munich and the incalculable sacrifice of prestige thus incurred by the democratic powers. It may be argued that any peace is better than none, that British trade and other interests in Central Europe were small and their loss already discounted, that British Tories were justified in preferring a strong Germany to the threat of bolshevism.
The immediate sequence of events after Munich, however, suggested that the sacrifices were greater than anticipated. For one thing, the Munich settlement brought no assurance of peace but rather an intensified effort for rearmament in Britain, France, and even beyond the Atlantic. For England, problems multiplied in all parts of the world. The Palestine disturbances expanded into large-scale warfare. The Japanese move into South China was attributable in no small part to increased assurance against British or French interference. Italy took a stiffer attitude in the Mediterranean, Germany came forward with claims for the restoration of her entire colonial empire in Africa amounting to a million square miles, or the cession of other territory of equal value; and also suggested that England accept a 35 per cent inferiority in aircraft, in compensation for her naval superiority. As minor difficulties, there was agitation for a plebiscite in Southwest Africa on the question of return to the Reich, and renewed proposals for the union of Ulster with Eire. It was perhaps significant of a changed temper in England that in a popular vote polled by the British Institute recently 85 per cent declared against the surrender of any British colonial possessions and 78 per cent voted that they “would rather fight than give them back.”
German Drive Eastward.—In the conclusion of an article on “The Nazi Drive to the East” (Foreign Policy Reports, October 15), the author remarks:
. . . serious resistance is hardly possible against the creation of a German-ruled empire in southeastern Europe. The small countries of this region, no longer able to count on the support of the western powers for an alliance against Germany, could lean only on the U.S.S.R. Such a course, it is feared, would only give a pretext for more violent German aggression in order to “save Europe from Bolshevism.”
The indications are that the new trend of countries in Eastern Europe will be peaceful submission to Berlin.
No doubt, for the present at least, Germany will seek economic rather than Political control, building up her Balkan Market and drawing on Balkan resources as an effective guarantee against defeat by Sea blockade. At present the five chief Balkan states—Yugoslavia, Rumania, Hungary, Bulgaria, and Greece—send almost 37 per cent of their exports to Germany, and draw from Germany 42 per Cent of their imports. All of this trade is built on the Reich barter system which compels the Balkan nations to take German munitions and manufactured goods ^ exchange for their raw materials. Typical of German trade progress eastward ^’as Economic Minister Funk’s October mission in the Balkans, during which he Negotiated a new barter pact with Yugoslavia and arranged for immense German construction work on Turkish docks, steamer lines, and factories in payment for Turkish products. While there are strong dements in the Balkans which cherish independence and fear German overlordship, and while what the French used to describe as a cordon sanitaire of small states on Germany’s eastern frontiers is still possible, in trade at least these nations are almost forced to meet Germany on her own terms. The German campaign for trade expansion is now in full swing.
Czechs in German Orbit.—After the loss of 15,000 square miles of territory and some 5,000,000 population, the Czechs in their courageous efforts to preserve their remnant of independence were forced to abandon their Soviet connections and accept economic and even political subservience to the great German state on three sides. President Benes resigned and left the country early in October, to lecture in the University of Chicago. The Soviet government was informed that the Czechs had no further interest in their pact of neutral assistance. Free trade was established between Czech and Sudeten German territory. A new federal state was organized in which the Czechs, Slovaks, and Ruthenians were to be represented equally in the Senate and in the Lower House by 140, 50, and 10 votes, respectively. Germany, dominating the smaller nation, could now test Bismarck’s dictum that “Whoever is master of Bohemia is master of Europe.” British loans to the new Czech government would pass to a state which had virtually accepted German control.
Threats to Lithuania.—In the reduction of Czechoslovakia, Poland gained about 310 square miles, inhabited by a Polish minority of some 240,000. Possibilities of further joint action with Germany were suggested by reports in October that a deal was contemplated by which Poland would be given a free hand in Memel and possibly in other territory controlled by Lithuania, in return for surrender of the “Polish Corridor” to the Reich. Though this remained merely a report, the Lithuanian government took immediate steps to grant increased rights to its Polish minority and restore certain privileges in the autonomous Memel district, where partial military rule had been enforced for the past 12 years.
Hungarian Claims Decided.—After rupture of direct negotiations at Komarom on October 13, the Czech and Hungarian governments agreed to submit the Hungarian territorial claims to an arbitration tribunal headed by the German and Italian Foreign Ministers. The omission of French and British representatives from this body, despite the provisions of the Munich accord, was sufficient evidence that ascendancy in Central Europe was now definitely conceded to the totalitarian powers. In fact the Czechs trusted solely to Germany for protection of their interests, and relied on the statement from high Nazi sources that the Hungarian claims, like those of the Germans in the Sudeten area, should be based solely on racial majorities. The final award, though it failed to give Hungary all she demanded or permit a common Hungarian-Polish frontier, was considerably more favorable to the Budapest government than the Czechs had been led to expect. It transferred 4,000 square miles of Czech territory with a population of 860,000, the occupation to be carried out between November 5 and November 9.
SPAIN AND THE MEDITERRANEAN
Anglo-Italian Pact Approved.—The Anglo-Italian agreement was approved in the House of Commons on November 2 by a vote of 345 to 133, after Prime Minister Chamberlain’s assurance that the Spanish civil war was “no longer a menace to the peace of Europe.” The Commons vote was unaffected by the fact that on that same day an Insurgent motor vessel sank a Spanish Loyalist ship under British charter within 10 miles of the Norfolk coast of England.
It was stated that the Anglo-Italian pact would go into full force about the middle of November. England expected to secure cessation of anti-British propaganda in the Levant and Italian adherence to the London naval treaty. The Italian side of the bargain was not made entirely clear, but it was well understood that Italian demands stiffened after the Munich settlement, on the theory that Germany had drawn her dividends on German-Italian co-operation and that the next diplomatic victory should come at the Roman end of the axis. Italian terms were assumed to include (1) retention in Spain of large numbers of Italian and German military technicians, (2) assurance against further British or French support for the Leftists, and (3) retention of Italian naval and air base facilities in the Balearic Islands. This last would be a bitter pill for both France and England, and hard to reconcile with Italy’s repeated pledges that she had no designs on Spanish continental or insular possessions.
Foreign Troops Quit Spain.—The extensive withdrawal of Italian troops from Spain during October was interpreted partly as a conciliatory response to British pressure, and partly as a countermove to the Barcelona government’s evacuation of all foreign volunteers. Of the latter about 8,000 left Barcelona, the withdrawal taking place under the operation of a League commission of 19 members, as requested by Premier Negrin at Geneva. Of the 10,000 or more Italian troops who left Cadiz in mid-October, it was reported that the great majority had served over 18 months in Spain. Aviators, artillery experts, and military technicians in other fields were not included in the evacuation.
In the field, neither the Franco nor the Leftist forces made appreciable gains during October, and with the approach of winter there was renewed talk of a compromise settlement under pressure from the major powers. Speaking for the Loyalists, however, Premier Negrin declared on October 15 that Spain would never accept a peace involving a division of territory or imposed on Spain from abroad.
French Policy Reoriented.—French acceptance of a less ambitious part in European politics was signified by shifts of policy during October. Her Soviet and Central European alliances, though not actually canceled, were practically wiped off the slate. Full diplomatic relations with Italy were renewed and Ambassador Francois-Poncet was transferred from Berlin to Rome as “Ambassador to the King of Italy and Emperor of Ethiopia.’ It was assumed that negotiation of Franco-Italian difficulties would follow immediately upon the putting into effect of the Anglo-Italian agreement. Moves were also made in October for an accord between France and Germany. Although the French Cabinet authorized an increase of 2,307,000,000 francs for national defense, in addition to the 6,000,000,000 francs provided in the 1938 budget, it was indicated that France would now withdraw from her former role of “banker and gendarme of Europe” in order to develop her own internal resources and those of her colonial empire.
In internal politics the Daladier Ministry found it no longer necessary to court the support of the extreme left wing Communists. In a speech at the congress of his Radical Socialist party on October 26, hi. Daladier declared that his government would now attempt a “steered economy,” approaching in some degree the state- directed system of the totalitarian nations. The 40-hour week would be lengthened in essential industries in an effort to meet military requirements and also increase exports as a remedy for France’s unfavorable balance of trade.
Palestine Warfare.—The surrender 1o threats of force at Munich was, as stated elsewhere, the signal for redoubled activity in Palestine on the part of Arab radical leaders, whose aim is to destroy the Possibility of partition or compromise settlement, and the British protection for a Jewish homeland pledged in the Balfour declaration, and pave the way for an independent Arab state with relations to England similar to those of Iraq. All these aims were embodied in the resolutions adopted at the Moslem Congress in Cairo on October 10.
The first purpose of the British government, on the other hand, is to re-establish order in Palestine, as a preliminary to any future dispositions. For this purpose British forces in the region were increased during October to over 20,000, and a vigorous campaign was prosecuted against guerrilla bands, the operations including the occupation of Bethlehem, a clean-up of the Did City in Jerusalem, and a sweep of the
Galilee district. Casualties on both sides during the three months ending November 1 were estimated at over 2,000. In some quarters it is believed that the British will have to choose ultimately between large-scale military occupation of Palestine or abandonment of the Balfour obligations. Although pressure against the latter course is strong from both British and American sources, England’s only real interest in the region is strategic, arising from the fact that it lies across British lines of sea and air communication with the East. In October the immigration quota of Jews to Palestine for the next six months was cut to 4,827, a reduction of 1,230 from the figures for the six months before.
UNITED STATES AND LATIN AMERICA
President Stresses Armament.—The almost universally accepted need of increased armament for the democratic nations, in the present state of world affairs, was emphasized by President Roosevelt in a radio speech on October 25 in which he declared that the nation must be ready “to meet with success any application of force against us,” and to ensure that “the Western Hemisphere may work out its own interrelated salvation in the light of its own interrelated experience.” He continued:
There can be no peace if national policy adopts as a deliberate instrument the threat of war . . . if national policy adopts as a deliberate instrument the dispersion all over the world of millions of helpless and persecuted wanderers ... if men and women are not free to think their own thoughts, to express their own feelings, to worship God ... if economic resources that ought to be devoted to social and economic reconstruction are to be devoted to an intensified competition in armaments.
In this movement for defense, directed, as the President’s words implied, against the influence of the totalitarian states in the American Continents, it is quite evident that other American nations are now ready to join, and that the coming Pan-American Conference at Lima will consider more definitely concerted measures for united action. In this connection, Brazil in October definitely broke off diplomatic relations with Germany by objecting to the return of the German Ambassador to Rio, and Berlin at once reciprocated by requesting the recall of the Brazilian Envoy. The break was the culmination of trade disputes, as well as alleged German complicity in the Brazilian Integralista revolt of last May.
Constitutional Rule Restored.—In Paraguay the Congress, meeting in October for the first time in two years, elected Dr. Felix Paiva constitutional President for an undetermined period until Congress calls a general election. Dr. Paiva had been provisional President since August, 1937, when Colonel Franco’s dictatorship was overthrown. In Uruguay also the government is headed back toward constitutional processes under the new President, Alfredo Baldimir, who is pledged to the restoration of free participation in elections by all political parties. In the Chilean presidential elections on October 25 the Popular Front candidate, Aguirre Cerra, won by a small margin over the Rightist candidate.
Mexican Expropriation Problems.— At the close of October President Cardenas of Mexico finally agreed to cease further seizures of American-owned land during the current negotiations and also to increase payments on claims from $500,000 to about $750,000 annually. These limited concessions came only after further land expropriations, in which about 80 square miles of American property were taken over. In Washington negotiations between Under Secretary Welles and the Mexican envoy on the land seizures question were reported as nearing a satisfactory solution.
In October also there was definite announcement of extensive Mexican oil sales to the Italian Fascist government, payment for which would be accepted in Italian rayon, yarn, machinery, and other products. In pushing oil sales, the Mexican government has necessarily assumed an increased control over exports and imports, and employed the German barter system, to the injury of trade with those nations who do not purchase Mexican oil.
Boundary Disputes.—The end of the Chaco frontier controversy was reached on October 10 with the acceptance of the final arbitral award—by the Presidents of Argentina, Brazil, Chile, Peru, United States, and Uruguay—fixing the Paraguay-Bolivia frontier. Bolivia loses over 90,000 square miles of claimed territory, but protects her oil fields and gets 30 miles frontage on the Paraguay River, together with port facilities in the Paraguayan town of Puerta Cassada.
After the Chaco settlement, Ecuador proposed that the same arbitration methods be applied to the territorial dispute between that nation and Peru, negotiations over which had recently broken up in Washington after over two years’ efforts to agree on a basis for final arbitration. In this instance, it was anticipated that Peru would not join in the request, but that some progress might be made at the Pan-American Conference in Lima during December.
Solution of a third boundary dispute, between Panama and Costa Rica, went awry in October when the latter nation failed to ratify a proposed treaty settlement. Both nations thereupon voted increased expenditures for defenses on their common frontier.
FAR EAST
The Closed Door in China.—U. S. Ambassador Grew’s protest to Japan on October 6, first published October 27, put into clear terms the long manifest fact of the closed door in Manchuria and the permanent injury to American trade and business interests in the occupied regions of China. Equally clear is the fact that the protests of this and other nations will remain an empty gesture, and Japan’s course will remain unaltered, unless some form of effective pressure lies behind the notes. Against the use of such pressure, whether in the form of trade restrictions or otherwise, and whether or not in concert with other nations, Japan counts on the deterrent influence of American isolationist and neutrality sentiment, as well as the obstacles involved in our present neutrality legislation. Japan holds that the Nine-Power Treaty and the Open Door are outmoded by events. Her purpose, as officially stated on November 2, is to coordinate Manchukuo and China in the Japanese scheme of things, and she advises other nations to “adapt their attitudes” accordingly.
In detail, the American protest to Japan declared that the Open Door had virtually ceased to exist in Manchuria and that in the occupied regions of China American rights and interests had been persistently violated. These violations took the form of control of exchange to favor Japanese trade, restriction of exports except through Japanese agencies, control of customs, formation of monopolies to control the exploitation of Chinese resources, restrictions on the movements of American nationals, and censorship of mail and other communications. The note pointed out that no such restrictions were placed on Japanese trade in American territory.
Japan Disclaims Liability.—A statement from official sources after the fall of Hankow asserted that Japan would not admit the inviolability of property of third powers in China or responsibility for injury incurred during actual fighting. This was declared to have been the consistent Japanese policy since the outbreak of the war, although it was acknowledged that the Panay claims had been paid promptly and reparation had been made in special cases for injury to neutral property.
The extension of the war to South China constituted a major threat to British, French, and other national interests in that area. Foreign powers were warned by Japan to observe strict neutrality, prevent the use of their property by Chinese forces, and give 10 days’ notice of any movement of neutral naval vessels, troops, or aircraft. Neutral naval vessels were also warned to leave Hankow on October 22 before the final attack, but these warnings were disregarded by the American gunboats Guam and Luzon at Hankow and the Mindanao at Canton. On October 24 the British gunboat Sandpiper was attacked by 6 Japanese bombing planes in the Siang River near Chingsha, but there were no injuries to personnel. After the fall of Hankow Japan issued a sharp warning to France against further traffic in munitions from French IndoChina, as the last open source of munitions supply for the Chinese armies. The implication was that Japan might, if this demand were not complied with, occupy the island of Hainan off the French China coast.