To better understand how the Italian economic connections with [the British Empire] affected those with [the Third Reich] and vice versa, the period analysed in this section is reduced to the months of Italian non-belligerency, from 1 September 1939 to 10 June 1940.

The events of these 9 months in fact show with greater clarity — actually, in some cases, they bring to light — many of the dynamics that were previously hidden. The [A]llied maritime blockade was certainly the element, that added new important and delicate issues to the general relations and particularly to the economic talks that Italy had with Great Britain — that was, de facto, the only manager of the block.

A few days after the beginning of the [Wehrmacht’s] attack on Poland, in fact, the Italian Foreign Minister had urged his London embassy to ask the competent authorities to allow the Italian ships that were in German ports on 1 September to return home without undergoing the controls of British patrols at sea.

The answer was not only a positive one, but Italian ships were even offered to be escorted by the British fleet across the North Sea. The political meaning of such an offer was not underestimated by Rome, so that Ciano ordered that “the issues of an economic nature that up to now have been dealt directly with the technical departments from today must be exclusively forwarded and managed by this Ministry”.⁶⁹

In early October, then, the Italian competent authorities started to meet the naval attaché at the British embassy in Rome on a weekly base, in order to smooth possible frictions in the controls of the maritime blockade. These meetings turned out to be the starting point for the creation at the end of the month of a permanent Anglo-Italian joint standing committee.⁷⁰

The purpose of the latter would have been not only to deal with all the issues of the blockade, but also to draft a possible commercial agreement, that, given the circumstances, was perceived immediately by both parts as a possible strategical step in the relations between the two countries. Perhaps to give more importance to this — after all — unexpected event, London decided to issue an order according to which the British would have provided assurances to their companies for the payments of Italian buyers.

[Fascist] Italy, in fact, was not only lacking foreign currency reserves to liquidate purchases abroad but had also a significative passive disbalance in the clearing with the United Kingdom.⁷¹ Showing such a trustful position, London hoped to get the negotiations off to a good start.

[…]

Coming to the British, it should be said that the already mentioned division about the position that had to be taken with [Fascist] Italy, together with the eventual unwillingness of Mussolini to send war material to London were ultimately the elements that influenced the negotiations for the commercial agreement, bringing them to a failure.

A memorandum drafted in February 1940 by the Italian Economic War Office outlined the main stages of Anglo-Italian economic relations since the outbreak of the war, and let us know that a preliminary agreement for commercial exchange was signed in November 1939 and that specific negotiations also started for the supply by [Fascist] Italy to Great Britain of other goods for military use.⁸¹

In early January Sir Wilfrid Greene, Master of The Rolls and president of the British delegation in the Joint Standing Committee, was sent to Rome as the person in charge of the negotiations, carrying tangible proposals for a radical solution to the issue of control over smuggling.⁸² Before leaving London, Greene attended a meeting at the MEW “to discuss plans for the Italian negotiations”,⁸³ but when he arrived in [Fascist] Italy he immediately understood that the problem of economic agreement with the Italians was to be treated as a political problem.

In a letter to the Foreign Secretary, in fact, he wrote clearly that the consequences of the [A]llied blockade of German coal exports departing from neutral ports (Rotterdam in primis), had gone far beyond the purely economic and commercial domain.

With this measure, the British had effectively forced the Italians to buy a much higher share of coal in Great Britain and this, while Rome’s deficit in clearing continued, inevitably implied a reduction in the amount of other commodities that the fascist government could at that point buy, as well as the danger of German reprisals.

(Emphasis added.)