Memorandum by the Ambassador in Italy (Phillips)92

During my conversation with Ciano this afternoon, I asked him whether he could tell me anything more with regard to the significance of the Italian-Yugoslav agreement. I was again impressed by his satisfaction with the new relations with Yugoslavia. He said that the French influence in the Balkans and especially in the Little Entente had greatly diminished and that the Little Entente as such was no longer a unit—he used the word “broken”. I asked him whether he foresaw the possibilities of a Balkan economic bloc with preferential tariffs. He said that this was not in the making and pointed out that there already was a preferential economic bloc between Italy, Austria, Hungary, Yugoslavia and Albania. I asked him what the attitude of Germany was towards this bloc. He said that during his negotiations with Belgrade, Germany had been of immense help to him and that the new status with Yugoslavia was in full accord with Germany’s wishes. I asked him whether Italy had any plans with regard to Czechoslovakia. He replied in the negative, saying that Czechoslovakia, Poland, the Baltic States, were of more interest to Germany than to Italy. My deductions from these remarks are to the effect that the Little Entente at least is now dismembered and Yugoslavia, has thrown in her lot with Italy, while Germany regards Czechoslovakia as within her sphere of influence. Several times Ciano repeated that Czechoslovakia was of no special concern to Italy.

William Phillips
  1. Transmitted to the Department by the Ambassador in Italy in his despatch No. 322, April 16; received April 27.