Hitler’s Shadow Empire: Nazi Economics and the Spanish Civil War 
by Pierpaolo Barbieri.
Harvard, 349 pp., £22.95, April 2015, 978 0 674 72885 1
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On 25 July​ 1936, Hitler spent the evening at Bayreuth, attending a performance of Wagner’s Siegfried. On his way back to his guest quarters at Villa Wahnfried, the Wagner family residence, he was introduced to a curious delegation that had arrived from Spanish Morocco. It was led by Johannes Bernhardt, a Nazi businessman who lived in the colony, and included another Nazi businessman and a Spanish air force officer. They had managed to get to Bayreuth with the assistance of the Nazi Party’s foreign policy organisation (the German foreign office had refused to receive them). The three men gave Hitler a short letter from General Franco, who had led a military coup in Morocco – timed to coincide with military uprisings across Spain – but was now stuck in North Africa and unable to get his army across to the mainland. Would Hitler provide transport planes, they asked, along with rifles and anti-aircraft guns?

After criticising Franco for his funding problem (‘That’s no way to start a war!’), the Nazi leader launched into one of his characteristic rants, a full two hours long. The influence of the communists on left-wing governments in France and Spain had to be countered, he proclaimed. ‘If Spain really goes communist, France in her present situation will also be Bolshevised in due course, and then Germany is finished. Wedged between the powerful Soviet bloc in the East and a strong communist Franco-Spanish bloc in the West, we could do hardly anything if Moscow chose to attack us.’ Hitler naturally thought in conspiratorial terms, and he told the Nuremberg party rally a few weeks later, on 9 September, that the right-wing rebels in Spain had to be helped to prevent the ‘revolutionising of the continent’ by ‘Bolshevik wire-pullers’ controlled by ‘an international Jewish revolutionary headquarters in Moscow’. He had stopped this happening in Germany in 1933, he boasted; now it had to be stopped in Spain too. In another monologue, this one three hours long and addressed to his cabinet in December 1936, he declared that Europe was now divided into two hostile camps. Spain was the theatre in which communism had to be defeated. ‘If there had not been the danger of the Red Peril overwhelming Europe,’ he said in one of his private ‘table talk’ monologues in 1942, ‘I would not have intervened in the revolution in Spain.’ On another occasion he noted that German intervention would ‘distract the attention of the Western powers to Spain and so enable German rearmament to continue unobserved’.

Against the advice of his entourage, Hitler ordered twenty planes to be sent to Franco’s aid – twice as many as requested. Ten of the Junkers bombers flew directly to Morocco disguised as civilian transports and equipped with spare parts and technicians, while the other ten were sent by sea from Hamburg to Cádiz with more equipment. By 11 August they had all arrived apart from one that had been blown off course and landed in Republican territory. They were joined by six fighter pilots and 95 volunteer airmen and technicians from the Luftwaffe, all wearing civilian clothes and unaware of their destination when they enlisted for the operation. A few planes had already flown to mainland Spain, but the pace of the airlift now increased dramatically, and by October 1936 almost 14,000 men, 44 pieces of artillery and 500 tons of equipment had been carried across on 868 flights to the Nationalist rebels. Still under the influence of Bayreuth, Hitler called the airlift Operation Magic Fire. Another 8000 troops made the hazardous journey by sea, but the airlift was crucial.

Soon Hitler was sending bombs, rifles, grenades, tanks and yet more aircraft to the Nationalist side in the civil war that had broken out when the military coup stalled. Twenty shiploads from Germany had arrived in Spain by mid-November 1936. Between January 1937 and August 1938 the Germans also supplied the Nationalists with 320,000 rifles and 550,000 revolvers. German armed forces also ended up in Spain; they were eventually named the Condor Legion, and consisted of three squadrons of bombers and three of fighters, backed by anti-aircraft, signals and reconnaissance groups, and on the ground by two armoured units. Two German ‘pocket battleships’ and several U-boats patrolled the coast to intercept Republican supplies. The German forces saw the war as a proving ground for aircraft, tanks and equipment, and as a way of gaining combat experience. Hermann Göring, head of the Luftwaffe, testified at the Nuremberg war crimes tribunal that once Hitler had convinced him of the need to intervene in Spain, ‘I urged him to give support under all circumstances, firstly, in order to prevent the further spread of communism in that theatre and, secondly, to test my young Luftwaffe at this opportunity in this or that technical respect.’

German armed forces personnel trained around 56,000 Nationalist troops, and at any one time there were around 10,000 Germans engaged in the war in some capacity on the ground; the total number of troops deployed reached 16,000. Altogether 732 combat aircraft and 110 training planes were sent to Spain. Hitler was wary of committing himself to the Nationalists in case the war spread, and tried to limit the scale of German intervention by encouraging the Italians to come in as well, but there’s no doubt that the Nazi intervention was crucial: ‘Franco,’ Hitler crowed, ‘ought to erect a monument to the glory of the Junkers Ju-52. It is this aircraft that the Spanish revolution has to thank for its victory.’

Over the course of the war the Condor Legion claimed to have shot down 320 Republican aircraft and sunk 60 ships. German anti-aircraft batteries destroyed another 52 Republican planes. The Condor Legion played a key role in many Nationalist victories, but its most notorious action was the bombing, carried out with the Italians, of the Basque town of Guernica on 26 April 1937. Twenty-two tons of incendiaries and explosives were dropped on the town, killing several hundred people. The Nationalist forces, still some distance away, were able to move in without resistance a short while later. The raid, commemorated in Picasso’s painting, which was exhibited in the Republic’s pavilion at the 1937 World’s Fair in Paris, terrified people across Europe, convincing them that there was no defence against aerial bombardment.

The Nazi leadership saw its contribution to Franco’s crusade as part of the wider campaign against communism. ‘Franco, our man completely,’ Goebbels wrote in his diary on 6 November 1936. ‘Very political and completely oriented towards Germany. Our military assistance is most gratefully acknowledged by him and by the whole people. They honestly desire a strong, social Spain. No danger of reactionary backsliding.’ ‘In the struggle between Bolshevism and nationalism,’ he added on 15 December, ‘there’s no negotiation.’ But the struggle also had economic repercussions: ‘If Spain goes red, then Portugal and a large part of South America can hardly be rescued. With this, we would lose our raw materials basis. That must not happen at any price. Therefore: further support.’

The problem was that the intervention was extremely expensive. Germany, which was desperately short of foreign currency, was spending huge sums of money supporting the Nationalists. The Nazi regime was trying to make Germany as self-sufficient as possible through its policy of ‘autarky’, in preparation for the coming war in Europe. But it was short of important raw materials, many of which could be found in Spain. Franco and the Nationalists didn’t have enough hard cash to pay the Germans – Spain’s gold reserves had been moved out of Madrid in September 1936, mostly to the Soviet Union – so they had no choice but to pay with raw materials. Under cover of the Sociedad Hispano-Marroquí de Transportes (Hisma), a company set up by Bernhardt, iron ore, copper and other vital minerals were shipped to Germany as well as wool, skins and hides for army uniforms and boots.

Since 90 per cent of these mines were British-owned, Bernhardt persuaded Franco to force British companies like Rio Tinto to grant credits to Hisma so that it could buy their ores. Another company, the Rohstoffe-und-Waren-Einkaufsgesellschaft (Rowak) was formed to handle the importation of raw materials into Germany. Bernhardt made a good deal of money out of these transactions, but it was Göring who took the lead in the exploitation of the Spanish economy. He was already commissioner for raw materials and foreign exchange, and on 18 October 1936 he became Reich Plenipotentiary for the Four-Year Plan, a new economic strategy designed to prepare the country for war within four years and bypass the economics minister, Hjalmar Schacht, whose cautious funding of the military threatened to undermine the rapid rearmament desired by Hitler and the Nazi leadership.

By January 1939, nearly 50 per cent of Spain’s foreign trade was with Germany. The amount of pyrite exported by Spain increased from 563,000 tons in 1935 to 896,000 tons in 1938. But Franco’s debts to Germany continued to accumulate and the Nazis’ economic ambitions in Spain expanded. Their aim was clearly put in a memorandum from Göring’s Reich Air Ministry in 1937: ‘Not to industrialise Spain, a land purely complementary to Germany, but to exploit it as a basis of raw materials on the one hand, and to maintain and strengthen it as a recipient of German industrial exports on the other.’ Spain was to become an informal German economic colony.

Nazi Germany’s economic hold over Nationalist Spain has been investigated by a number of historians over the years. Glenn Harper’s German Economic Policy in Spain during the Spanish Civil War, 1936-39 (1967) employed diplomatic documents and newspaper stories to construct a careful account of the subject; Hans-Henning Abendroth made exhaustive use of German archival sources in Hitler in der spanischen Arena (1973); Robert Whealey devoted a well-informed chapter to the matter in Hitler and Spain (1989); and there are two monographs based on German and Spanish archival material, Economic Relations between Nazi Germanyand Franco’s Spain (1996) by Christian Leitz and Franquismo y Tercer Reich (1994) by Rafael García Pérez, though the latter focuses on the period of the Second World War. The topic is also covered in nearly all of the major histories of the Spanish Civil War. It is simply wrong to claim, as Pierpaolo Barbieri does, that the historiography of the war has ignored German economic policy.

All the historians mentioned above are agreed that, as Leitz puts it, Nazi Germany tried to turn Nationalist Spain into an economic colony but failed: Franco did not surrender control of the economy, nor did he accept that Spain should deindustrialise. British, French and American investment continued to be important in Spain. And in any case the country was cut off from Germany in 1939 by the outbreak of the Second World War. Barbieri exaggerates considerably when he argues for Franco’s ‘utter dependence’ on Germany. All serious historians have agreed with Harper’s conclusion in 1967 that ‘Franco largely succeeded in preserving his own freedom of action’ despite pressure from Berlin.

Hitler didn’t manage to persuade Franco to enter into an alliance against Britain. At a meeting with Hitler at a train station near the Franco-Spanish border on 23 October 1940, Franco made vague promises but offered nothing concrete; he also demanded the cession of Gibraltar and the French possessions of Morocco, Algeria and Cameroon, as well as further supplies of arms and other material. Hitler was unwilling to agree to the deal since he did not want to offend the newly established Vichy regime in France, a far more important ally than Spain could ever be. ‘These people are intolerable,’ Franco grumbled, ‘They want us to come into the war in exchange for nothing.’ The German foreign minister, Ribbentrop, denounced Franco as an ‘ungrateful coward’. Hitler told Mussolini at their next meeting that he would rather ‘have three teeth taken out’ than endure another nine hours of fruitless negotiations with Franco. Spain did send a number of workers and soldiers to help Germany, but as the war went on the power dynamics changed: the Germans became increasingly desperate for Spanish support, and Franco reopened Spain’s economy to other investors, above all to the British. The attempt to turn Spain into an informal economic colony of Germany had failed.

Most historians agree, too, that though economic matters became more important to Hitler and the Third Reich as the civil war went on, they were never the predominant concern. As Abendroth put it, ‘in the night from 25 to 26 July 1936, when Hitler decided to support Franco, he was concerned not with testing German war material but mainly with the prevention of a Spanish-French bloc steered by communists; this would inevitably have constituted a decisive negative factor in Hitler’s plans for a war of aggression in the East … The intention of pulling Spain towards Germany in political, economic, cultural and military terms was certainly an important motive, but only in the end a supplementary one.’

Barbieri, executive director of Niall Ferguson’s ‘macroeconomic and geopolitical advisory’ company, Greenmantle, will have none of this. ‘Fascist intervention,’ he says, ‘was not driven by ideology,’ it was ‘driven by economic considerations’: ‘Economic motives eclipsed all others.’ His argument was foreshadowed by an East German monograph published by Marion Einhorn in 1962, Die ökonomischen Hintergründe der faschistischen deutschen Intervention in Spanien, 1936-39, a book compromised by the spirit of dogmatic economic determinism in which it was written. But Barbieri’s economic determinism is of a different sort from Einhorn’s rigid Marxist-Leninism. The intervention, in Barbieri’s view, represented a sober, traditional form of foreign policy towards underdeveloped nations, rather than being an example of the racist ideology and aggressive expansionism that characterised Nazi foreign policy after the radicalisation of the leadership in the winter of 1937-38.

In this view, German policy towards Spain was driven, at least in the first year of the civil war, by Hjalmar Schacht, who was ousted as economics minister in 1937, and not by Göring. But readers expecting revelations that overturn the accepted view, advanced as long ago as 1976 by Wolfgang Schieder in Der spanische Bürgerkrieg in der internationalen Politik, will be disappointed. Instead of exploring the German archives, whose holdings are rarely cited in his book, Barbieri relies mostly on printed material and secondary work. More important, he does not include any of the well-known statements by Göring, Goebbels and Hitler himself that demonstrate the primacy of ideological and geopolitical motives in Hitler’s backing for Franco. All he is prepared to concede is that ‘there were elements of anti-communism, a desire to test new German weapons (as Göring would later boast), and at least some limited sense of “fascist solidarity” in the face of a communist threat in Spain.’ But this downplaying of Hitler’s main motives is decisively contradicted by what Hitler and his paladins actually said.

Barbieri is unable to demonstrate convincingly that Schacht was in control of German economic policy towards Spain. The economics minister may have been able to cling on to his job for a year or so after the Nazi intervention there began, but his position was being undermined by Göring even before the Four-Year Plan came into operation. As Leitz observed, in what is still the most thorough investigation of Spanish-German economic relations during the civil war, Hitler was ‘perfectly content to leave economic matters regarding Spain in Göring’s welcoming hands’. Göring reduced Schacht to a bystander. From the outset, Leitz concluded, Göring ‘managed to eliminate the interference of potential critics. In early 1937, for example, Hjalmar Schacht was forced to acquiesce and to accept the Hisma-Rowak system despite his outspoken opposition to the organisation and his demand for a normalisation of the economic relationship between Germany and Spain.’ In fact, Germany’s policy in Spain belonged more to the ideological world brought in by the personnel changes at the top in 1937-38 than to traditional German foreign policy.

Barbieri tries to counter this point by arguing that the informal imperialism practised by the Nazis in Spain was a long-established feature of German foreign policy, and can be contrasted with the ideologically driven policy of formal annexations practised in Eastern Europe from 1938 onwards. But he says nothing new when he claims that Nazi Germany aimed at reducing Nationalist Spain to the status and function of an informal economic colony. It was Leitz who pointed out that ‘Hitler’s, and especially Göring’s plans and policies after July 1936 suggest an intention to turn the country into an informal or economic colony of Nazi Germany.’ Barbieri bolsters his exposition of this familiar argument with references to the idea of ‘informal empire’ as developed by the British historians John Gallagher and Ronald Robinson in the early 1950s, but their famous article was actually about what they called ‘the imperialism of free trade’: free trade guaranteed the British world economic dominance because they had exclusive control of the high seas. Nazi Germany’s policy towards underdeveloped European countries, in Spain or the Balkans, was based on very different principles, summed up correctly by Barbieri as an ‘imperial, mercantilistic strategy’ according to which economic relations were founded on a series of bilateral contracts rather than on laissez-faire principles.

Barbieri places particular emphasis on Schacht’s belief that Germany needed colonies. He cites an article by Schacht published in Foreign Affairs in 1937; a few months earlier Schacht delivered a lecture entitled ‘Why Germany Requires Colonies’ that put forward similar views. He began by arguing that Germany was too densely populated and lacking in agricultural resources to survive on its own. Before the First World War, with free trade and open borders, Germany’s surplus population could emigrate and the country could obtain raw materials to import without problems. Advocates of free trade still argued that Germany could sell its industrial products cheaply abroad to buy raw materials, Schacht continued, but this was no longer possible in reality since an era of aggressive protectionism had begun after the First World War. ‘The allotment of colonial space is the proper solution for existing difficulties,’ he declared.

By ‘colonial space’ he meant the colonies of Germany’s prewar overseas empire, such as Tanganyika, Namibia, north-eastern New Guinea and Cameroon, which had been taken away by the Treaty of Versailles. ‘Before the World War,’ he argued, ‘Germany had taken precautions for the future of its foodstuff and raw material supplies through the acquisition of her African and Oceanic colonies, a territory five times as large as the German Reich, with a population of approximately 13 million inhabitants.’ These arguments weren’t intended, as Barbieri claims, to support informal empire over countries such as Spain but to justify the ongoing campaign for Germany’s formal colonies to be returned in a wholesale revision of the Treaty of Versailles. In any case, Spain was hardly an appropriate destination for German settlers who, the colonial lobby assumed, would retain their allegiance to the Fatherland. Nowhere in the lecture or the Foreign Affairs article does Schacht talk about anything other than formal colonies – this in itself was a sign of his increasing marginality, since the Nazis had no interest in countries like Namibia or Tanganyika. Schacht was quite explicit that he was making ‘observations on the surrendered territories’, and nothing else.

It was no accident that the Spanish Civil War was regarded across the world as a struggle between greater forces than the country’s Republicans and Nationalists, over issues that were much broader than merely economic. Germany intervened alongside Italy, which provided 75,000 troops, 660 aircraft, 150 tanks, 800 artillery pieces, 250,000 rifles, 10,000 machine guns, 8000 motor vehicles of various kinds and much more besides, in a bid by Mussolini to win Franco’s support for his new Roman Empire in the Mediterranean. On the opposing side, the Soviet Union supplied up to 1000 aircraft – which the Republican government had to purchase, as they did all the other equipment – 900 tanks, maintained by Soviet advisers, 1500 artillery pieces, 500,000 rifles, oil and other supplies. The Soviets also provided around 2000 agents and advisers, technicians, tank crew, aviators and other specialists, who increasingly devoted their attention to suppressing the Trotskyites on their own side rather than to fighting the Nationalists.

A small number of foreign volunteers joined the Nationalists, but it was the International Brigade formed to fight alongside the Republicans which made the headlines. A total of 35,000 men from all over the world served in it, together with some 10,000 medical and other civilian volunteers. Those who regarded the Spanish Civil War as the great European ideological struggle of its time were right to do so. It would soon be eclipsed, however, by a far greater struggle, in which Nationalist Spain, and the unequal partnership it had entered into with Nazi Germany, would be pushed to the sidelines.

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