Pictured: Tripartite conference in Rome consisting of Engelbert Dollfuß (Federal State of Austria), Gyula Gömbös (Kingdom of Hungary) and Benito Mussolini (Kingdom of Italy) signing Protocols №№ 1, 2, & 3 among Austria, Hungary, and Italy.

Quoting Per Tiedtke’s Co‐operation or Rivalries at Times of Crisis? Germany, Italy and the International Economy 1929–1936, pages 223, 230–2:

Even clearer was the turn to bilateralism in the [Fascist] Brocchi contracts. Against the idea of an open and multilateral preferential system as discussed at the League — which would have the potential to be acknowledged by the U.S. — Rome granted a series of hidden preferences to Austria and Hungary only, which were supposed to be the most important allies of fascist Italy in the region.

[…]

While in Germany the Brocchi contracts served as a template for the [Third Reich’s] foreign economic policy devoted to the idea of an economic expansion into Southeastern Europe, in [Fascist] Italy exactly this scenario stimulated an extension of the Brocchi contracts.¹⁰³⁰ The extension culminated in the Rome Protocols, signed on 17 March 1934 between Italy, Austria and Hungary.¹⁰³¹

The multilateral contract broadened and intensified the Brocchi provisions with a series of open and hidden preferences granted to the contractual partners. Applying the Rome Protocols, Fascist Italy reached the closest approximation to [a Fascist] economic Mitteleuropa. Imports from Austria, for instance, started to rise again and grew from L. 175,253,000 in 1933 to L. 371,292,000 in 1936.

The growth rate exceeded that of imports from Germany, France and the Netherlands. At the same time imports from Belgium and Britain decreased. Italian exports to Austria only started to rise again in 1934, from L. 122,400,000 to L. 193,408,000 in 1936. However, at the same time exports to most other countries (except Germany) fell sharply.¹⁰³²

League of Nation statistics for Hungary reveal that [Fascist] Italy’s share in Hungary’s imports rose from an average for the years 1925–30 of 4.8 per cent to 8.5 per cent in the first half of 1935 and the share in Hungary’s exports from 6.2 per cent to 14.4 per cent.¹⁰³³

All in all, it can be concluded that the impact of [Fascist] Italy’s preferential systems was stronger on the import side, that it indeed shifted trade from Western Europe to Austria and Hungary and that it did not work as a countermeasure to balance the strongly increasing importance of [the Reich] as a sales market.

The question of whether the Rome Protocols can be seen as a success or as an expensive and ultimately failed experiment — with [Fascist] Italy’s increasing share in trade with the member countries seen as being due to other causes — already preoccupied contemporary theorists, and is still somewhat open in current historiography.

Whereas most commentators at the time, such as the [Fascist] minister of foreign trade and exchange, Felice Guarneri,¹⁰³⁴ or the Czechoslovakian professor of economics, Antonin Basch,¹⁰³⁵ proved to be rather sceptical about the impact, current scholarship, on the contrary, suggests that the Rome Protocols had a direct positive impact on [Fascist] Italy’s foreign commerce.¹⁰³⁶

For other perspectives than the Italian, an answer to the question of success or failure is more obvious. For instance, in the summer of 1935, Hungarian Minister for Agriculture Kálmán Darányi observed that, “our export of livestock both to Italy as well as Germany has reached the maximum numbers established in the quotas”. Therefore, he rejected the claim that “the tripartite Pact of Rome did not satisfy expectations”.¹⁰³⁷

The assessment as success or failure for [Fascist] Italy also depends on whether the outcome is compared with economic or more political visions about the expected performance. Of course, the prices [that the Fascists] paid for Austrian and especially Hungarian export goods were well above the current world market prices due to the granted preferences, and therefore degraded [Fascist] Italy’s terms of trade.¹⁰³⁸

Yet, already before signing the protocols the MAE spoke of “new sacrifices”,¹⁰³⁹ thereby implying that Rome deliberately chose this development to allow governments with fascist leanings to remain financially independent from other states.¹⁰⁴⁰ In this regard, it seems that a negative assessment solely on economic terms falls short of the mark.

Whatever the real impact of the Rome Protocols was, there is no doubt that [Berlin] perceived this development as an Italian success and a potential threat. “We have no friends left” complained a government official at the AA after the news of the Rome Protocols reached Berlin.¹⁰⁴¹

Officially, Berlin protested to Rome against a violation of [the Reich’s] economic interest in the region,¹⁰⁴² but there is little doubt that in fact the Rome Protocols were perceived primarily as an instrument to prevent the Anschluss of Austria. The man in the middle, Hungarian Prime Minister Gömbös — although not completely innocent with regard to the German–Italian frictions — argued strongly for a “reparation of the broken Axis Berlin-Rome”.¹⁰⁴³

Disappointment, of course, prevailed on both sides. After information about the secret proceedings between Berlin and Budapest leaked, Rome approached Budapest to get details on the concessions granted with the envisaged German–Hungarian commercial contract. After the [Reich] authorities in Hungary had halted this attempt, Rome deplored a breach of the common German–Italian practice that each government inform the other about any foreign economic policy initiative in Southeastern Europe.

[Berlin] was well aware of the hostile message it sent out. Nonetheless, it felt entitled to unilateral action because Rome had failed to inform Berlin about manoeuvres intending to make the Adriatic port of Trieste the exclusive hub of Austria.¹⁰⁴⁴ In the infrastructural connection of Southeastern Europe with its major markets, fierce rivalries between [the Reich] and Fascist Italy evolved, which were as in the case of preferential treatments stimulated by German–Italian transfers.

This negotiation had the unintentional effect of encouraging the Reich to trade more with the Kingdom of Yugoslavia as a compensation for Fascist Italy’s monopolization. Page 248:

However, it also reduced Rome’s leeway to offer preferential access to the Italian market to other countries. In fact, [Fascist] Italy, which had already imported more from [the Kingdom of] Yugoslavia than any other country in pre‐crisis times, now had to reduce its imports for the sake of the Rome Protocols. All that was left was to witness how the [Reich’s] bid prevailed.¹¹²⁴

What was more, the new contract not only stimulated Yugoslavian trade with [the Reich], the requirements of the clearing also made it impossible to pay for Yugoslavian exports if the goods were transported via Trieste, thus rendering the established transit trade of Trieste impossible.¹¹²⁵

Yet even though Berlin felt uneasy about the Protocols of Rome, the amusing coincidence underneath all this is that the trading between the Reich and Fascist Italy was probably necessary for sustaining said protocols! Page 257:

The very generous facilitation of Italian goods, which to a large extent fulfilled no essential need in [the Reich], but were rather prioritised to ensnare a potential political ally, provided [Fascist] Italy with the revenues needed to support its preferential bloc with Austria and Hungary. Without the indirect financing of Germany, it would have been very difficult to sustain the preferences of the Rome protocols.

Already in 1936, the German newspaper Rhein NSZ Front pointed out in looking at the Rome protocols that, “if Germany retreats because its rightful place was threatened, it would be the sudden and sweeping bankruptcy of this […] little natural friendship”.¹¹⁷⁵