History Content for the Future

The Pig War – Trade War Gone Wrong

The Pig War was a trade conflict between the Austro-Hungarian empire and the Kingdom of Serbia from March 1906 to June 1909. The Pig War aggravated the growing conflict between the two powers and lay one of the cornerstones for the outbreak of WWI. In the first years of the 20th century, Serbia was being squeezed by heavy economic dependency to Austria-Hungary.

At the time the European powers in general were prone to protectionism, and Serbia was stuck with Austria-Hungary as their main, almost only trade partner. The Empire was taking 80-90% of Serbian exports and Serbia’s imports were 50-60% imperial. Although lower than tariffs would have been to the rest of Europe, the Austro-Hungarian tariffs were crippling Serbia. Trade negotiations to reduce the pressure were not proceeding well.

At this point Serbia decided to go rogue. They struck a deal to import munitions from a French company without tariffs. Then they signed a free trade agreement with Bulgaria. This pissed off the Austro-Hungarians mightily and they walked away from negotiations. They quickly struck back by blocking trade on the main Serbian export to the empire; pork and imposing forbidding tariffs on exports to Serbia. Now you’d think that would do the trick, break the Serbian’s backs, right? After all they depended heavily on their great neighbour, well…

It didn’t work. Serbia responded by lowering tariffs in imports for other powers dramatically. The French seized the opportunity, lowered their tariffs as well, and started investing heavily in Serbian industry. German manufacturers started exporting the goods that were not coming in to Serbia from Austria-Hungary. Instead of Serbian exports going down… they started rising. Through the increased trade with Germany they won a powerful ally that was also the big brother of the Austro-Hungarians. The Germans soon demanded a free trade port in the Adriatic to be able to continue their profitable business with the Serbians. Russia stepped in with aid too and this led to closer ties between Russia and Serbia. In June 1909 the Austro-Hungarians gave up the blockade.

But the damage was already done. Angry at Russian support for Serbia, the Austro-Hungarians demanded that the Russians step back and war threatened. Germany intervened and the conflict was only averted by an angel’s hair when Germany sided with Austria-Hungary and forced Russia to stop Serbian aid. In the next years the situation just wouldn’t stop deteriorating as the trade war continued at lesser, but still damaging levels. In 1914 the situation exploded when Archduke Franz Ferdinand was assassinated in Sarajevo by Serbian activist, but Bosnian national Gavrilo Princip. How things proceeded from there you can find out on The Great War channel.