The Difficulties of Diplomacy: the case of the Corfu Channel and Albania’s gold

Much has been made recently of the inability for swift progress to be made with regards to Iran’s nuclear policy. Talks in Geneva are ongoing and yet recent discussions have stalled despite much goodwill between the Iranians and their Western counterparts. Equally, the process of destroying Syria’s vast chemical weapons arsenal has been described as inadequately slow by some observers and next year’s deadline for their complete destruction seems ambitious.

John Kerry appears desperate to rush through a resolution on Iran's nuclear programme
John Kerry appears desperate to rush through a resolution on Iran’s nuclear programme

Diplomacy is a notoriously complicated matter and the fact that Barack Obama’s recent conversation with Iranian President Hassan Rouhani was the first contact between men in their positions since the fall of the Shah should not surprise us. As the Corfu Channel case proves, diplomacy is both petty and vindictive, and endlessly complex.

In 1946, the UK broke off diplomatic relations with communist Albania after two of its ships were struck by mines in the Corfu Channel for the loss of 44 lives. “The mines could not have been laid in the recently swept Channel without at least the connivance of Albania” a British Foreign Office letter complained.

Mine damage on the HMS Volage in the Corfu Channel
Mine damage on the HMS Volage in the Corfu Channel


The International Court of Justice agreed and ordered Albania to pay £843,947 in compensation. A derisory counter-offer of £50,000 was quickly snubbed by the British and relations between the two countries ceased. One of the earliest diplomatic casualties of the Cold War had occurred.

By the early 1970s, however, the global picture had changed. Albania’s brutal dictator, Enver Hoxha, had irrevocably turned his back on the Soviet Union after the revisionism of Nikita Khrushchev and, following the Sino-Soviet split, the Albanians began to establish close relations with Mao.

Out of two evils, the Chinese were preferable to the West, particularly after Richard Nixon’s visit to meet Mao in 1972. Britain was suddenly keen to re-establish diplomatic relations with Albania.

Improved relations between Mao and Hoxha gave British diplomats an incentive for reconciliation
Improved relations between Mao and Hoxha gave British diplomats an incentive for reconciliation

Achieving this was problematic for a variety of reasons:

1) Albania had still not compensated Britain for the Corfu Channel Incident of 1946.

2) In response, Britain had withheld over 1,500kg of gold which had been looted from the National Bank of Albania (NBA) by the Nazis during WWII. Valued at £630,000, the gold had been recognised as belonging to Albania after WWII by the Tripartite Gold Commission, consisting of Britain, France and the USA.

After the Corfu Channel Incident, the British kept hold of the gold (which had been securely stored in London) and even recognised a counter-claim on the metal by the Italians who argued that they had established and staffed the NBA prior to the Nazi invasion and therefore should be compensated accordingly.

3) If this wasn’t enough, the Albanians resented what they saw as British attempts to overthrow the communist government during the 1940s and 1950s.

With the Albanians apparently not keen on re-establishing relations unless Britain made a gesture of good faith, London had a conundrum. Its diplomats acknowledged that it would be politically embarrassing to be seen trying to beg support from the Albanians by offering them concessions.

As such, it was agreed to send a non-governmental representative to the Italian Embassy in Tirana with instructions to convince the Italians to act as a go-between between Britain and Albania.

That the diplomatic correspondence ends here attests to its lack of success. Indeed, it was only after the fall of communism in 1991 that Britain and Albania re-established relations and the British got compensation for the Corfu Channel Incident and the Albanians received their gold.

For 45 years the impasse remained because of the difficulties of conducting diplomacy between two states ideologically, politically and culturally distinct from one another. Add to this petty notions of international reputation and one-upsmanship and it is no surprise that the resolution of the incident took a complete change of political system in Eastern Europe.

For those demanding instant results in the Middle East, they may want to consider the barriers to such an occurrence given what’s at stake.


Author: Stefan Lang

An interested observer of current affairs, researcher and writer

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