Austro-German Customs Union
The Austro-German customs union was a project designed by Germany and Austria in 1930 and 1931 and publicly presented on March 31, 1931, which envisaged the elimination of tariffs between the two countries. Ultimately unsuccessful, the plan was justified as part of European economic recovery efforts during the Great Depression, although for the countries that opposed this goal —especially France and Czechoslovakia— it was a first step towards the political union of the two countries, which they strongly opposed. Political and economic pressures —most effective since the bankruptcy of Creditanstalt, Austria's largest bank, in May, which increased Vienna's financial needs— derailed the project, even before the Permanent Court of International Justice ruled against it and declared it incompatible with Austria's international obligations in September.
Change in German foreign policy
Three events marked the change in German foreign policy in the late 1920s and early 1930s: the two conferences at The Hague —held in August 1929 and January 1930— which changed the system for paying war reparations to the victors of World War I and brought forward the French evacuation of the left bank of the Rhine by five years —five years earlier than the Treaty of Versailles— and the death of the influential German foreign minister, Gustav Stresemann, on October 4, 1929. For Stresemann, the union with Austria, although desirable, had not been a priority; more important had been the French withdrawal from the Rhine and the possibility of regaining territory in the east.In March 1931, with the direction of German foreign policy in the hands of less skilled officials than Stresemann, the world received with surprise the news of the Austro-German plan for a customs union. If Stresemann had concentrated on liquidating the system of war reparations and on achieving the French withdrawal from the Rhine, his successor at the head of the ministry, Julius Curtius —without great experience in foreign policy, less far-sighted than his predecessor and without the latter's skill— decided to accelerate the revision of the consequences of the peace treaties and to strengthen the Reich's relationship with the countries of central and southeastern Europe, especially with Austria.
Circumstances
Obstacles to the ''Anschluss''
The two peace treaties, the one imposed on Germany and the one initialed by Austria, prevented in principle the absorption of the latter by the former. Article 80 of the Treaty of Versailles obliged Germany to respect Austrian independence; Article 88 of the Treaty of Saint-Germain committed Austria to remain independent and not to take any action that would jeopardize this without the approval of the League of Nations. The opposition of France, Czechoslovakia and Italy to such a possibility made it impossible to obtain this permission and, with it, to consummate the union, desired at that time by the majority of the Austrian and probably also of the German population.The Geneva protocols signed on October 4, 1922, prevented Austria from entering into any economic or financial negotiations that threatened its independence and from granting privileges to any nation that posed such a threat.
Germany admitted that, according to these treaties, even a temporary customs union required the permission of the signatories to the protocols, and suspected that they would oppose the measure. Austria also understood that the project was forbidden in practice by both the peace treaties and the 1922 protocols. Annexation remained, however, a clear German foreign policy objective —along with the recovery of the Polish "corridor"—, especially after the French evacuation of the Rhine, which had hitherto taken priority over the absorption of Austria. For Austria, the two main reasons for favoring the union were both cultural and economic —it was widely believed that the small republic was not economically viable—.
The economic imbalance also led to differences in the degree of interest in the project: although Germany was Austria's largest trading partner, for the Reich the Alpine republic was only the twelfth destination for its exports and the twentieth in the list of imports. German producers were also not very willing to make sacrifices in favor of increased Austrian imports, nor did Germany have much surplus capital to invest in Austria.
Other factors hindered the Austro-German plan: the growth of the Heimwehr, whose attitude toward union with Germany was ambiguous; the possible Austrian rejection of annexation if Germany proved incapable of improving the Alpine republic's economic situation; and French plans —embodied in Aristide Briand's 1929 proposal for a European union— to maintain the postwar political and territorial order.
Circumstances that favored the plan
On the other hand, several circumstances favored the implementation of the customs union plan. The Austrian government at that time was headed by Johann Schober, who was considered by the German leadership to be in favor of annexation, unlike his predecessor and a key figure in Austrian politics during the decade, Ignaz Seipel. For Schober, Seipel's rival, union with Germany would have derailed Seipel's plans for a Danubian union. Moreover, the Austrian economic crisis was to the advantage of the supporters of the union, who saw in it a remedy or at least a possible relief of the country's straitened economic situation. The customs union was to enable the Austrians to gain access to the large German market on favorable terms by making it economically part of Germany and, at the same time, to avoid the claims of nations with which both Berlin and Vienna had signed preferential treaties. Union with Germany, both as a solution to national economic problems and as a natural evolution of Austria, was also supported by the socialist opposition.The German government's conviction that it needed a foreign policy victory to strengthen its prestige at home also spurred the implementation of the union. Brüning, who was facing increasingly strong opposition from the National Socialists, was keen to see the plan come to fruition.
Interpretations of the plan
The purpose of the plan was highly controversial. For some, it was a measure to alleviate the severe economic crisis, part of the "Briand plan" to form a European union; for others, it was a first step for the German takeover of Austria, presented by the German government with the aim of gaining political mileage from a possible foreign policy success. The customs union of the German states in the previous century had led to the formation of the empire. Despite German denials, the German Foreign Office regarded the plan as a temporary substitute for annexation and a first step in this direction. This eventual absorption of the Austrian republic, together with a series of bilateral agreements with the Balkan nations in which Germany offered reduced tariffs and which were then being discussed, could have led to Germanic domination of southeastern Europe. In the long term, economic pressure could force Czechoslovakia to join the customs union —Austria and Germany together accounted for 35% of Czechoslovak exports— and the latter, reinforced by new treaties with the Baltic republics, could in turn force Poland to give in and surrender the territories desired by Berlin.The economic consequences of the union were expected to be mixed: German industry hoped to expand into Austria —a situation that worried many Austrian industrialists— while farmers looked askance at Austrian competition. Although Austrian industry wanted to improve its access to the large German market, part of it would have preferred to regain the former Austro-Hungarian market rather than face German competition. It is thought likely that the customs union would have favored the German economy as a whole almost immediately, while it would only have benefited the Austrian economy in the long run, after considerable adjustments. Given the desire of the two countries to forge a political union, it is considered likely that the customs union would have facilitated the establishment of a single nation —in reality, the absorption of Austria by Germany, which would have strengthened its industrial and military might—.
Austro-German bilateral negotiations
First contacts and plan stalemate
Although the first moves toward closer Austro-German economic relations had taken place in 1927, they had been minimal. It was Austrian Foreign Minister Schober's various contacts with various countries —especially his visit to Mussolini in early 1930 to resolve the South Tyrol crisis— that alarmed both Austrian supporters of union with Germany and German leaders, who decided to take advantage of the minister's visit to Berlin in February 1930 to raise the possibility of a customs union between the two countries. It was to prevent Austria from opting for an alternative union —either with Italy or with the countries of the Danube basin— to try to solve its economic problems that would frustrate a future political union with Germany.The negotiations between Schober and Curtius began with Schober's visit to Berlin at the end of February 1930. Although the Austrian representatives raised the question of a customs union with little hope, foreseeing that the victorious countries of the world war would oppose it, Curtius successfully advocated beginning to study the feasibility of the project. In the following months, however, the plan made no progress, while German leaders were suspicious of the Austrian government's negotiations with France, Italy and the Eastern European countries, which they feared could lead to the disintegration of the union. Should Austria choose to ask France or other nations for help, even in exchange for accepting political conditions detrimental to German interests, the Reich, whose economic situation had worsened markedly since the beginning of 1930 - with the end of the granting of the credits on which it depended so heavily and even the early repayment of some of them - could not offer an alternative that would prevent it. In March the last German cabinet with a parliamentary majority in the history of the Weimar Republic, headed by the Social Democrat Hermann Müller, resigned. The new government of the Catholic centrist Heinrich Brüning adopted a deflationary policy to deal with the economic crisis, which enabled it to obtain a last international loan, but by the end of the summer the German political and economic situation had again deteriorated. The September elections confirmed popular discontent and the National Socialists greatly increased their number of seats.
In the late summer of 1930, at the initiative of the Austrians, negotiations were resumed. Curtius and Schober met in Geneva and progress was made in outlining the details of the plan, but the resignation of the Schober cabinet on September 25 due to a scandal was a setback. The new government, headed by Carl Vaugoin and with Seipel as Foreign Minister, was not in favor of continuing the negotiations, or so the German Executive believed. During the two months of this short-lived cabinet, the customs union plan came to a standstill.