SALONIKI is the port of all the valleys and highlands of central and southern Serbia, which find their shortest access to the outside world southward through the gorges of the Vardar; by the same token it is the raison d'être of that region's only through railway, the line running southward from Belgrade through Nish and Skoplje (the economic centre of Macedonia) until it reaches the Ægean at Saloniki. What Fiume used to be to the Danubian plains, what Cattaro and Scutari may sometime be to the valleys now cut off from the Adriatic by the untunnelled walls of the Dinaric Alps, the ancient Greek port of Saloniki must be to all the central Balkan peninsula.

There are two principal aspects of the concern which geography thus forces Jugoslavia to have in Saloniki. She is interested in the port facilities afforded her commerce by the Greek authorities; and she is interested in the administration and functioning of the forty-eight miles of railway lying between Saloniki and the Greek-Jugoslav frontier near Ghevgeli. The local traffic on that bit of railway is negligible. It is valuable to Greece only because over it passes the traffic which makes Saloniki one of the great ports of the Mediterranean basin.

The Ghevgeli-Saloniki railway was part of the Compagnie d'Exploitation des Chemins de Fer Orientaux, founded by Baron Hirsch, and later under Austrian and German control. The nucleus of this control was the Wiener Bank-Verein, which enjoyed the protection of, and was subject to, the Austrian Government. After the Balkan wars the question of the future control of the Ghevgeli-Saloniki and other Macedonian lines came under discussion, but no decision had been reached at the time the Great War broke out. It was one of the lines requisitioned by Greece in September, 1915, when it became apparent that the Allies would land at Saloniki, and eight months later it was taken over by the Allies and placed under military administration. After the war French speculative interests acquired a controlling interest, and recently have been trying to get bids from both Greece and Jugoslavia. The complex financial questions involved will probably long remain the subject of three-cornered negotiation between Athens, Vienna and Paris.

As long ago as 1906, when Serbia looked about for new outlets for the trade which was being strangled by the Austrian tariff war, the Turks granted her a lease on part of the harbor at Saloniki, and accorded her the right of free entry and export. Money was spent on warehouses, but Turkish mismanagement of the harbor and constant troubles on the railway more than overbalanced the usefulness of the concessions.

The First Balkan War at last banished the crescent from Macedonia. The Second Balkan War, following a dispute over the division of the territorial spoils and occasioned directly by the famous night attack of Bulgaria on her two former allies, Serbia and Greece, led to Macedonia's division between the two victorious states. An integral part of the arrangement was the treaty signed in the spring of 1913, between the Kingdom of Greece and the Kingdom of Serbia, containing the following paragraphs:

"His Majesty the King of the Hellenes covenants that his government shall grant all the necessary facilities and guarantees for a period of fifty years for the complete freedom of the export and import trade of Serbia through the port of Saloniki and the railway lines from Saloniki to Skoplje and Monastir. This freedom shall be as large as possible, provided only it is compatible with the full and entire exercise of Hellenic sovereignty.

"A special convention shall be concluded between the two high contracting parties within a year from this day in order to regulate in detail the carrying out of this article."

This much disgusted Austria-Hungary, who expressed herself in both Belgrade and Athens as determined to exact for herself privileges similar to any accorded Serbia. As neither capital cared to see Austria acquire the right to participate in discussions over Saloniki, they instructed their delegates in March, 1914, to wind the matter up quickly, and an agreement was initialed "ad referendum" on May 23. This agreement fell far short of Serbian expectations, for it did not assure entire liberty of transit to Serbian goods, Article 4 giving Greece the right to maintain state monopolies, to carry out veterinary and sanitary inspections, and to set up bars "in exceptional circumstances". That there were extraneous reasons dictating so wide a divergence from the generous phraseology used in the parent treaty a year before is shown by the addition of a secret protocol by which the Greek Government tried to set the matter right by promising in general terms that Serbian commerce should have full freedom. The Great War broke out without ratification having been extended to this agreement by either home government.

After the war, the new and enlarged Jugoslav state was as much interested as little Serbia formerly had been in arranging a trade outlet at Saloniki. But she made it plain that she asked consideration less as a favor than as a right. As the Jugoslav Minister at Athens, M. Baloudjitch, wrote somewhat later in Politika (Belgrade): "It is not a question of concessions, but of the execution of an obligation which is an essential part of our alliance with Greece and which constituted a condition for our recognition of Greek sovereignty over Saloniki. . . ."

To Greece, on the other hand, it seemed particularly necessary to conciliate Jugoslavia. Greek troops had met disaster in Asia Minor in 1922, and Greek statesmen saw also that Greece could not hope to stand alone against Italian nationalistic and commercial ambitions. The Greek Foreign Minister, Nicolas Politis, therefore visited Belgrade early in November, 1922, and on his return the Greek parliament ratified the pre-war agreement regarding Saloniki. Jugoslavia, however, having found in the course of the war that it was all too possible for Greece to differ with her regarding the interpretation of a treaty, said that the text was not sufficiently explicit and offered inadequate guarantees. From, the fresh negotiations which ensued there issued, on May 10, 1923, a new Saloniki convention.

This convention provided that for a period of fifty years there should be in Saloniki a "Jugoslav Free Zone" of about 94,000 square meters, under Jugoslav administration but subject to Greek law and Greek police supervision. It agreed to recognize goods coming from the frontier to the free zone, and vice versa, as "goods in transit", and freed them from tax. Accompanying protocols provided special rates for the carriage of passengers and cattle over the Saloniki-Ghevgeli line, stipulated that there should not be more than 12 hours delay at the border in the case of express and not more than 36 hours in the case of freight, exempted cattle and poultry destined for the Jugoslav zone from inspection and quarantine at the border, etc., etc. Ratifications of the convention were exchanged May 30, 1924, and the free zone actually came into Jugoslav control on March 5, 1925 (see accompanying map).

In operation the free zone has not fulfilled Jugoslav expectations. The dissatisfaction does not arise over the administration of the zone, but over its inadequate size and over railway delays and failures. As a matter of fact, though the zone is supposed to contain 94,000 square meters, about 40,000 of these lie under water. Exports such as lumber, cement and grain take a great deal of room, and Jugoslav merchants say they cannot develop their natural trade in these commodities because of insufficient transhipment and storage facilities. Cattle are difficult to handle in cramped quarters, also, and it is complained that no facilities can be provided for cleaning cars, etc. Much of the merchandise, to reach ship-side, must pass over turn-tables, worked by hand and designed for a solitary freight-car at a time. A few meters more territory, say the critics, would enable the Jugoslav Government to curve the railway line gently, eliminate the turn-tables, and save constant delay and expense.

A major drawback in Jugoslav eyes is that a "Greek Free Zone" has been established completely surrounding (by land) the Jugoslav zone; as this larger zone has been leased to a private company for exploitation the Jugoslav Government fears it may have to depend on a third party (and one not necessarily solely Greek) for the maintenance of its rights. The walls of the Greek zone were completed last autumn, and it was formally inaugurated on October 18. Most important of all, the operation of the railway, on which the success of the whole scheme hangs, was found inefficient and disastrously slow. It is easy enough to see that Greek shipping would benefit by the flow of Serbian trade to Saloniki, and that Greece in general might benefit politically from a friendly understanding and alliance with Jugoslavia. But these arguments were not likely to be perceived by local middlemen, who only saw privileged trade slipping by without their profiting and who did not realize that unless it were privileged it would not come at all; nor by local railway and frontier officials, who grumbled at working almost exclusively for foreigners.

As complaints about Saloniki multiplied (there were others, notably regarding Jugoslav minorities in Greek Macedonia), Belgrade made representations to Athens, but was informed that the Greek Government considered the Saloniki question closed. The Jugoslav Government thereupon took drastic action. The 1913 Graeco-Serb Treaty of Alliance was still ostensibly in force, though its formal term had come to an end and it was supposed to remain in vigor only at the pleasure of the two governments. As a matter of fact, Serbia in 1915 had notified Greece that she considered the treaty abrogated,[i].though she withheld public announcement of the fact throughout the war and during the period of Greek disaster in Asia Minor, -- a point of considerable importance, in the Serbian view, as showing that Serbia had scrupulously avoided embarrassing Greece or trying to exact favors from her under duress. Belgrade now publicly denounced the Treaty; and though proclaiming its desire to make a new defensive alliance with Greece, the Jugoslav Government let it be known that its price would include more satisfactory port arrangements in Saloniki and even the outright ownership of the Ghevgeli-Saloniki railway (so that it might be double-tracked), thus practically creating a "corridor" to the Ægean. Even recognizing that Athens is usually able to protect its interests when it comes to striking a bargain, and that Belgrade probably

After a strained interval, direct negotiations were resumed last September, and at the moment of writing technical representatives of the two countries are about to meet in Paris for a discussion of the best method to assure free and efficient transit from Ghevgeli to Saloniki. It is not likely that Belgrade will press its former request for ownership of the railway road-bed. The most promising solution seems for the creation of an international board of control for the railway, with Greek and Serb members, under a French chairman. If a plan for the ownership and operation of the railway can be devised, the problem of the free zone itself should not prove difficult.

There are several factors making settlement desirable in the eyes of both parties. Jugoslavia is anxious to do as well as possible by her new Macedonian territories, and will be glad to accept any opportunity justifying her in assuring them that free and rapid access to blue water has really been secured. In general, too, though the Greek alliance has on some occasions proven a weak reed, and on others more of a burden than a help, Jugoslavia is anxious to have no uncertain gap on her southern flank in case of trouble either with Hungary or Italy. It would be particularly important to have close coöperation with Greece in case Mussolini, feeling himself for some reason weak at home, chose to create a diversion in Albania. Jugoslavia's anxiety on this score may be presumed to have been in no degree lessened by reports recently in circulation in the Near East that Great Britain had recruited both Italy and Greece as partners in any warlike eventualities over Mosul, and that Greece in addition to being promised concessions by Italy in the Dodecanese and by Britain in Cyprus had been encouraged by Italy to resist Jugoslav pretensions in Saloniki. (Hence, perhaps, Jugoslavia's recent resumption of diplomatic relations with Turkey, and the signature in October of a treaty of amity between Bulgaria and Turkey.)

Similarly, Greece may be counted on as wishing a renewal of the Græco-Jugoslav alliance, and as being willing to make some sacrifices to bring it about. The Saloniki-Alexandria route seems destined to become the favored trade route, being the shortest, from central Europe to the Far East, and should eventually be able to attract much of the trade that formerly passed through Fiume or Constantinople. Greece's desire to keep firm hold of the port and to control its shipping is therefore quite understandable. It would seem a mistake, however, for her to antagonize the hinterland regions on which Saloniki must mainly depend. Her position along the northern coast of the Ægean is uncomfortable in any case. It would be precarious in the extreme should she antagonize both Jugoslavia and Bulgaria, and should those two countries unite forces against her.

[i]See statement of Dr. Nintchitch, Jugoslav Foreign Minister, July 30, 1925, in the Athenian paper Eleftheros Tipos. asked more than she expected, it is easy to see that these demands would sound in Greek ears dangerously similar to Bulgarian claims for a corridor to Kavala or Dedeagach. An outcry arose from Greece, in which were heard such words as "bully" and "hypocritical friend". Belgrade simply replied that if Jugoslavia were asked to be a guarantor of Greece's sovereignty over Greek Macedonia and Eastern Thrace, she was willing to assume the task, but if as a friend, would Greece show her friendship concretely in the Saloniki matter, and if as part of a business deal, her price was that same Saloniki readjustment.

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