Confidential report from Michael MacWhite to Joseph P. Walshe (Dublin)
(It/149/38) (Copy)

I had a long conversation lasting over an hour with the Acting Minister for Foreign Affairs, Signor Bastianini¹, yesterday. Much of it was devoted to recent political developments, particularly from the Munich meeting when France and England yielded the sceptre of European supremacy to Italy and Germany and where Mussolini played the outstanding role as pacificator instead of that of rabid trouble-maker such as he has been labelled in the so-called Democratic countries.

During the conversation the name of England was not mentioned nor was any reference made to the steps now being taken by the British Premier towards bringing the Italo-British accord of last April into operation. The recognition of the Empire, however, by England will in all probability have a profound effect in Italy. It is likely in the first place, to heal the sore created by the Sanctions' policy initiated by Eden at Geneva and in the second place it will have a modifying effect on Italian policy in Mohammedan countries which are in a state of ferment because of the Palestine revolt. From the European angle it may even be more far reaching as observers here are of the opinion that the Duce is anxious to find some good excuse for neglecting the Rome-Berlin axis.

In the recent negotiations at Vienna where Count Ciano and von Ribbentrop² have been determining the Czechoslovak-Hungarian frontier, Italy's friends did not get anything like what they wished for. The idea of a common frontier between Poland and Hungary which had the support of the Italian press was rejected by Hitler as it would raise another barrier on the road of his Drang nach Osten. On the other hand, a common frontier, according to the views of the countries concerned, would strengthen the forces that stand against Bolshevik penetration from the East. Italy has another interest in cultivating the friendship of Poland and Hungary. At the opportune moment they may be used as a check on German ambitions and an embarrassment to Hitler.

Signor Bastianini said Italy took a particular pleasure in the recent move to the right in French politics. Premier Daladier is regarded sympathetically here but the Fascists, judging by past experience, ask how long he will be able to remain in office, or his majority going to last. They seem to think the French are incorrigibly shifty and unreliable politically. The refusal of the French Government to allow the train of wounded members of the Barcelona Foreign Volunteers to enter France was regarded as a step in the right direction. Had the French authorities been so energetic and closed the Spanish frontier twelve months ago the Civil war would have been ended by now.

In regard to the newly appointed Italian Minister to Dublin, Signor Berardis, the Acting Secretary said he was an exceptionally good man whom he could warmly recommend. He is cultured, serious and painstaking and was for three years secretary of the Italian Legation at Athens when Signor Bastianini was Minister to Greece.

Some time ago I called the attention of the Foreign Office to the fact that Irish shareholders of Italian companies could not enter into possession of the dividends allotted to them and invited an indication as to how they could get satisfaction. So far I had no reply. My colleagues here tell me not to expect any answer to an embarrassing question. I brought the matter to the attention of the Acting Minister, who appeared sympathetic. He asked me to send him an aide memoire covering all the questions at issue. He suggested also that under the present conditions the easiest way out would be by the negotiation of a trade agreement. I pointed out that for the first six months of 1938 Ireland had purchased about 9,000,000 lire worth of Italian goods while Italy's purchases from us were less than 10,000 lire. He considered the situation to be absurd and justly so. He thought, as we were the sufferers, that the initiative in a trade agreement rested with us. I pointed out that a draft agreement had been submitted a few years ago to his Government but we were unaware that it has ever been considered. He replied that consideration of any draft submitted before the currency control became effective would be only a waste of time, as the situation has completely changed.

It is my opinion that the time is now ripe to renew trade negotiations with Italy and to that effect I should like to be furnished in due course with a memorandum on the subject that would form the basis of discussion with the Italian Government.