“It is my belief that history is a wheel. ‘Inconstancy is my very essence,’ says the wheel. Rise up on my spokes if you like but do not complain when you are cast back down into the depths. Good time pass away, but then so do the bad. Mutability is our tragedy, but it’s also our hope. The worst of time, like the best, are always passing away.”
– Anicius Manlius Severinus Boethius (circa 522 CE)
INTRODUCTION – POLICY AND THE HISTORY OF PHILOSOPHY
The first option is out of the question even before the question can be asked. The philosophy of history unequivocally rules out the practice of holding particular variables constant to test predictions among others. What economists call the condition of ceteris paribus is a theoretical impossibility for students of ever-exceptional situations. From the crossing of the Bering Straight to the crossing of the Rubicon, to claim that an event is historic is also to assert its uniqueness. The complexity of the variables in collective life and the myriad of ways in which they can interact can create the perception that history is an impersonal, almost supernatural juggernaut, akin to the notion of fate and equally beyond human control. It is this perception which justifies truisms like the one above, penned by Severinus Boethius, as well as the international mantra of policy makers in error; that “hindsight is twenty/twenty.” The empirical approach to history, the second option, is one which both of the above quotes suggest is seriously defective as well. It creates a kind of historical relativism when assessing the policy decisions of ones predecessors. We can learn little from their mistakes and have only the limited comfort that, within this paradigm, the next generation can hardly fault us for that, much less anything else. The third option, virtuous in it’s of lack catastrophic defect, is to treat episodes in history as case studies on the kinds of reoccurring ideas and behaviors which warrant investigation, those which are desirable to emulate and those which are desirable to avoid at great cost. When examining modern Europe, attempted economic hegemony through sanctions appears to belong to the latter category. This is the case of a foolish but short-lived policy by the Dual Monarchy of Austria-Hungary and of the conflict that policy created, called the Austro-Serbian Pig War. It is would be easy to show in hindsight that this policy was a blunder. Virtually all of the literature which makes mention of it comes to that conclusion. Instead, this paper will show that there was enough political and economic evidence available to Austrian policy makers at the time that, assuming they were minimally competent and informed, they should have recognized that the policy would fail, perhaps with dangerous consequences.
THE NARRATIVE OF THE PIG WAR (1903-1909)
In 1903 regicide struck in the Serbian capital of Belgrade. On the 10th of June, King Alexander Obrenovich and Queen Draga were murdered violently at 2 o’clock in the morning. King Peter of the Karageorgevich Dynasty took the thrown of Serbia almost immediately. Karageorgevich monarchs were historically hardliners on relations with the Dual Monarchy and no one expected King Peter to be the exception (The Balkan Crisis). Though Peter governed as a constitutional monarch, leaving much to his ministers in a bid to avoid King Alexander’s unfortunate end, his preference for an alliance with Russia instead of Austria-Hungary was well known. There was even speculation that Russian spies had a hand in the murder of King Peter, to the obvious advantage of both Russia and the House Karageorgevich, while an egregious violation of Serbian sovereignty (Dickinson 159).
Within six months of King Peter’s ascension, the Serbian government, headed by the Radical Party and party founder, Prime Minster Nikola Pasic, placed a large artillery order with a French firm, Schnedier. This order went to France instead of Serbia’s usual suppliers, the Skoda factories in Bohemia, a source that could not be considered reliable if tensions with Austria ran high (Schmitt 6). To secure the arms, Pasic needed a French loan in 1904 (Sowards 1). In his memoirs on the war, French Minister of State, Yves Guyot, wrote of a deal that explains in part why exported swine became so odious to Austria when Vienna grew tired of Serbian activity elsewhere in Europe. “I have told elsewhere,” he wrote, “how a Frenchman from Bordeaux, M. Bigeon, by guaranteeing the purchase of 150,000 pigs a year, enabled Serbia to negotiate a loan and thus procure arms” (Guyot 19). While the Pig War had not yet begun, this shows that Serbia had already found secondary export markets. Furthermore, if the details of this deal were widely known, pigs might have been a symbolic target for the tariff on Serbia since these pigs were they means by which Serbia was acquiring foreign arms. The Dual Monarchy did attempt to dissuade Serbia from the France purchase with diplomatic pressure, but to no avail.
Three months later on April 12th of 1904 Serbia began secret military negotiations with Bulgaria (Stavrianos 153). This would soon prove a fateful overture. Vienna, while displeased with the prospect of warmer relations between the Serbia and Bulgaria, could do little to prevent it (The Balkan Crisis). By late June of 1905, only one year into the reign of King Peter, Serbia and Bulgaria signed a secret treaty scheduled to go into effect in March of 1906, creating a Serbian-Bulgarian customs union. It was understood by both signatories that the customs union would be a step toward a complete economic union by 1917 (The Balkan Crisis). Serbia kept the terms of the treaty in secret, since the Radicals knew that Austria would fiercely object (Stavrianos 155). Their plan called for the completion of the upcoming round of periodic trade negotiations with Austria and only then the release of the treaty with Bulgaria. If the timing happened properly Austria would only find out once it could not, in the foreseeable future, attempt to use trade policy changes in an effort to control Serbian foreign policy. On January 2nd of 1906 while Austro-Serbian negotiates were under way, the government in Sofia presented the treaty of the Sobranje, the Bulgarian Legislature, with overwhelming approval by the legislators themselves and considerable anger by any observers from Austria-Hungary that might have been present (Stavrianos 155).
Nine days later, Foreign Minister Aehrenthal of Austria-Hungary demanded that the customs union be struck from the treaty with Bulgaria if Serbia desired a renewed trade agreement. Pasic’s government stalled and Aehrenthal issued a new demand instead. For negotiations to resume, Aehrenthal would have to be permitted to basically rewrite the Bulgaria treaty entirely. Serbia countered with an offer that it would amend the Bulgaria treaty in any way pursuant to the terms of the treaty with Austria. Aehrenthal rejected that offer and pressed for more. No further progress could be made and the negotiations were cancelled entirely (Stavrianos 155).
Citing a fictitious disease among Serbian pigs, which could infect Austrian livestock, Vienna closed the border to Serbia from bovine exports (Sowards 1). Fabrications like this one are the reason that today’s sanitary and phytosanitary standards for trade are carefully regulated by the World Trade Organization. However, there was no such body to come to the defense of healthy Serbian pigs in 1906. The initial shock to the Serbian economy was extensive. This helped the Serbian government rally otherwise elusive domestic support against the “bullies” across the border who smeared the good name of Serbian pork, a point of national pride, for their own political gain (The Washington Post, February 25, 1906). Prime Minister Pasic framed the issue in terms of nationalism and Balkan independence. In a famous speech he called for the restoration of “The Balkans to the Balkan peoples” (Stavrianos 155).
Amid the political rhetoric, negotiations resumed. Serbia agreed to drop the customs union and make several other changes to the Bulgarian treaty. The Dual Monarchy had a new request as well. In addition to the other concessions, Austria wanted preferential treatment for its firms whenever the Serbia government needed to contract out services. The idea of the Serbian government hiring Austrian firms instead of Serbian ones for domestic activity was political suicide and the Serbian government knew that they could never under any circumstances support it. At that point, negotiations stalled out again (Stavrianos 156).
Accounts differ on exactly how Serbia found substitute export markets, but the literature is unanimous that they did so with impressive speed and effectiveness. According to Stavrianos, they returned to the Bulgarian treaty and signed others with Romania, France, Russia, Switzerland, Sweden, Italy and Belgium (Stavrianos 156). Lafore lists Egypt, Greece, Turkey and Germany as the markets Serbia developed and go goes on to say that after one year, foreign trade had surpassed what it had been when 90% of Serbian exports went to Austria (Lafore 148). Both Sowards and Schmitt cite an arrangement with Turkey allowing Serbia to export live stock from Salonica and the construction of processing plants, modern slaughter houses and canning facilities for livestock (Sowards 1). Schmitt goes on to report three more significant findings. The first is that the construction projects were financed with capital borrowed from abroad; the second is that Serbia purchased munitions from Germany and the third is that Aehrenthal, in a desperate move to reign in the situation, proposed a new treaty even more favorable for Serbia than the first one Vienna rejected upon hearing about Bulgaria (Schmitt 6).
Even this effort was stifled when the parliaments of Austria and Hungary both rejected the treaty as entirely too beneficial for Serbia. This unwillingness to reconcile with Serbia on the part of the legislatures, Schmitt believes, may have driven Aehrenthal to the opposite extreme, a policy of consolidating the Kingdom of Serbia into the Dual Monarchy (Schmitt 7). Outside of Vienna’s high office the Pig War produced the opposite of the desired domestic affect. Instead of keeping the cleavages in line, it stressed existing divisions in the polyglot Monarchy. The Magyars resented the Germans for coming up with the fatuous idea and the Slavs of Austria-Hungary naturally condemned their state’s economic warfare on their kin (Lafore 148).
In June of 1909, six years into the reign of King Peter and in the wake of the Bosnian Crisis, Austria and Serbia normalized trade after Germany threatened Russia with war if it supported Serbia against Austria. Later in the year, Aehrenthal compelled the Emperor to suspend military espionage in the Balkans in an effort to de-escalate tensions. This left Austria badly equipped to handle the secret societies that emerge to promote pan-Slavism. Also in 1909 Russia dispatched Ambassador Hartwig to Belgrade where he nurtured the Serbian desire to be a thorn in Austria’s side. The stage was duly set for the powder keg of Europe to blow (The Balkan Crisis).
THE POLITICAL EVIDENCE FOR FAILURE
There are two political considerations which should have been evidence to the Dual Monarchy when they considered the policy of restricting Serbian agriculture. First, exploiting Serbia’s vulnerability as a landlocked country, and one of two in all of Europe at the time, would highlight the need for a Serbian port and thereby fuel Serbian ambition for expansion and complicate other regional activities. Serbia became outspoken critic of programs like “an Austrian railroad to be built to the Aegean in the Austrian-occupied Turkish territory of the province of Novibazar to their west; such a railroad would bypass Serbia, hurting it economically and would also form a sort of commercial barrier between Serbia, Montenegro, and the Adriatic; by contrast, they much wanted a railroad from Serbia to the Adriatic, which would give them a direct commercial outlet to the sea” (Lafore 149). So ardent was there desire for a port that in December of 1912, three years after the end of the Pig War, they were the first to threaten a boycott of all Austrian imports to Serbia if a port could not be procured. Senior Austrian diplomat Dr. Josef Redlich wrote in his diaries of the plan:
“[A Serbian friend close to Prime Minister Pasic reported that] we are willing to make all possible economic concessions, to give Austria first consideration in all loans, to abolish the tariff discriminations, and to give favored treatment to Austria in deliveries. If matters cannot be adjusted along these lines we shall nevertheless maintain a correct attitude, wage no war to get the harbor, but create an outlet by way of Saloniki [the port they had used during the Pig War], attach ourselves economically to the Balkan Confederation, and buy nothing from Austria” (Redlich 651).
Second, the closure of the border effectively created an economic power vacuum in the Balkans, an area with no shortage of players who would be most pleased to fill it. Had Russia not been otherwise occupied in a conflict with Japan, it certainly would have been the most likely player to do so and with profound and lasting consequences for the balance of power (Stavrianos 155). It could have pushed Serbia into a larger alliance with Bulgaria, which had ample coast on the Black Sea to offer its landlocked neighbor. Romania also would have had to be included as a wildcard in the situation. Dr. Redlich wrote “that Rumania was going forward proudly and energetically. She has already, since the close of the Balkan confusion, concluded a commercial treaty with Greece, in order to supply that country with bread-stuffs (Redlich 655). With all of these viable possibilities, it seems as though the most unlikely option in fact took place. Serbia managed to fill the void itself, by distributing the ceded power among many players, so many that their complete ranks are still a matter of speculation. Serbia found itself able to do so thanks to the new economic environment which the Austrians failed to consider.
THE ECONOMIC EVIDENCE FOR FAILURE
While Austria was still in vaguely mercantilist paradigm, Serbia tapped into the world circuit of industrial capital to finance projects replacing the services that Austria used to provide. This is why Schmitt’s finding of borrowed capital is significant. It shows that Serbia was not only utilizing an international market to sell its good, but used this make market to acquire less expensive factors of production with which to make those good, pocketing the savings. The global expansion in the trades of goods and capital alike can be attributed to relatively recent innovations at the time, like railways, telegraphs, steamships, state bureaucracies, land surveys and more (Ludden, A Quick Guide to the World History of Globalization). This suggests that Austria’s policy might have successfully isolated Serbia as few as perhaps one hundred years previously and also that Austrian policy makers had not stayed current on the possibilities of the nascent global market. Austrian policy proved a boorish boon for Serbia, prompting them to discover that their agricultural industry possessed powerful economies of scope, meaning that there were efficiency gains, and therefore, new profits, associated with the vertical integration of pig farming, processing, and canning into a single national operation. In short, cash that had once gone to Austria processors instead stayed completely within the Serbian economy. None of the theoretical or technological advances above were alien to Austrian entrepreneurs, even if the policy makers apparently lacked the good sense to consult them. American “robber barons” had effectively demonstrated to the world the lucrative potential of these practices some decades before.
CONCLUSION – THE SHORTCOMINGS OF WAR BY OTHER MEANS
The preeminent military strategist Carl Von Clauswitz famously stated that “war is an extension of policy by other means.” When the policy is one of sanctions, boycotts or blockades, the juxtaposition of his terms may be said. Rather, policy is an extension of war by other, perhaps more palatable, means. Austria’s attempt to control Serbia through economic hegemony resulted from little more than the mire recognition that the other Great Powers, especially Russia, with its own Slav population, would not permit rule by military hegemony. In pursuit of what Austria believed to be a second best policy against a second class state, Vienna underestimated both its own importance to the Serbian economy and the business acumen of Serbian farmers working with a corporatist government eager to support them. Targeting Serbian livestock as a means of economic warfare, while perhaps symbolic as a means of arming Serbia with French weapons of traditional warfare, evoked a far larger backlash from the Serbian population than pressuring France to call off the sale or Serbia to cease from such purchases in the future. If the livestock had to be targeted, Vienna would have done well to remember Napoleon’s design for the Continental System to isolation Britain. Bilateral economic warfare inflicts proportional damage on both sides. Napoleon made certain that his was not the only nation to sever trade, thereby increasing the economic pressure on Britain. Austria made no such attempt to cut off Serbian secondary export markets. Austria’s allies like Germany even traded with Serbia, as did Serbia’s former enemies, the Turks. Faced with increasing interconnectivity throughout Europe and seeing little chance of obtaining the original objectives of the barrier policy, Austria endeavored to end the Pig War as rapidly as possible.
The world today is many orders of magnitude more interconnected than it at the start of the previous century. The U.N. enforced sanctions against Iraq failed to achieve their objective, caused a negative externality in the form of a humanitarian crisis, since in this case the selected government had no interest in working with domestic population to blunt impact of the sanctions, as the Serbian government did. Most frustratingly of all, this failed policy of war by other means ultimately resulted in the resumption of the hostilities it had been designed to cease. Certainly the situations are not perfectly analogous. No two situations in history ever are. However, when the differences, like an increase global interdependency or an increase in the regional instability caused by a power vacuum, serve to make the conclusion even more likely, history, it can be said, has rendered a verdict. It therefore becomes the task of the historian to remind the policy maker that while hindsight is twenty/twenty, it is still the poorest substitute in the world for even a glimpse of the foresight which only history can provide.
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