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Racial theories
In a 1921 speech in Bologna, Mussolini stated that "Fascism was born... out of a profound, perennial need of this our Aryan and Mediterranean race". In this speech Mussolini was referring to Italians as being the Mediterranean branch of the Aryan Race, Aryan in the meaning of people of an Indo-European language and culture. Italian Fascism emphasized that race was bound by spiritual and cultural foundations, and identified a racial hierarchy based on spiritual and cultural factors. While Italian Fascism based its conception of race on spiritual and cultural factors, Mussolini explicitly rejected notions that biologically "pure" races were still considered a relevant factor in racial classification. He claimed that Italianità had assimilatory capacity. It used spiritual and cultural conceptions of race to make land claims on Dalmatia and to justify an Italian sphere of influence in the Balkans based on then-present and historical Italian cultural influence in the Balkans. the Fascist regime imposed mandatory Italianization upon the German and South Slav populations living within Italy's borders. The Fascist regime abolished the teaching of minority German and Slavic languages in schools, German and Slavic language newspapers were shut down, and geographical and family names in areas of German or Slavic languages were to be Italianized. This resulted in significant violence against South Slavs deemed to be resisting Italianization. The Fascist regime justified colonialism in Africa by claiming that the spiritual and cultural superiority of Italians as part of the white race, justified the right for Italy and other powers of the white race to rule over the black race, while asserting that racial segregation of whites and blacks in its colonies. It claimed that Fascism's colonial goals were to civilize the inferior races and defend the purity of Western civilization from racial miscegenation that it claimed would harm the intellectual qualities of the white race. It claimed that the white race needed to increase its natality in order to avoid being overtaken by the black and yellow races that were multiplying at a faster rate than whites.

Within Italy, the Italian Empire, and territory identified as spazio vitale for Italy, a cultural-racial hierarchy that ranked the peoples in terms of value who lived there, was clearly defined by 1940 during which plans for Italy's spazio vitale were being formalized by the regime. The Fascist regime considered Italians to be superior to other Mediterranean peoples - including Latin, Slavic and Hellenic peoples - because only Italians had achieved racial unity and full political consciousness via the Fascist regime. Latin, Slavic, and Hellenic peoples were regarded as superior to Turkic, Semitic, and Hamitic peoples. Amongst indigenous peoples of Africa, the racial hierarchy regarded indigenous North Africans as superior to indigenous people in Italian East Africa.

Though believing in the racial superiority of Europeans over non-Europeans, the Fascist regime displayed diplomatic courtesy to non-Europeans. The regime held an alliance with Japan within the Tripartite Pact between Germany, Italy, and Japan. Indian independence movement leader Mahatma Gandhi visited Italy in 1931 and was invited by Mussolini for a personal visit, providing Gandhi full diplomatic courtesy, including having Gandhi meet a Fascist youth honour guard; and was accommodating to Gandhi in permitting Gandhi's pet goat to accompany Gandhi everywhere, including the Mussolini family residence. Though Mussolini and Gandhi differed greatly in their attitudes towards war, Mussolini praised Gandhi as "a genius and a saint", admiring Gandhi's ability to challenge the British Empire. Gandhi in turn praised Mussolini for his "care of the poor, his opposition to super-urbanization, his efforts to bring about coordination between capital and labour" and his "passionate love for his people". Fascist official Italo Balbo during his transatlantic flight from Italy to the United States in 1933 visited with leaders of the Sioux tribe and accepted the Sioux's honorary bestowing of his incorporation into the Sioux with the Sioux position and name Chief Flying Eagle.

Italian Fascism strongly rejected the common Nordicist conception of the Aryan Race that idealized "pure" Aryans as having certain physical traits that were defined as Nordic such as blond hair and blue eyes. Nordicism was divisive because Italians - and especially southern Italians had faced discrimination from Nordicist proponents in countries like the United States out of the view that non-Nordic southern Europeans were inferior to Nordics. In Italy, the influence of Nordicism had a divisive effect in which the influence resulted in Northern Italians who regarded themselves to have Nordic racial heritage considered themselves a civilized people while negatively regarding southern Italians as biologically inferior. Mussolini and other Fascists held antipathy to Nordicism because of what they viewed as an inferiority complex of people of Mediterranean racial heritage that they claimed had been instilled into Mediterraneans by the propagation of such theories by German and Anglo-Saxon Nordicists who viewed Mediterranean peoples as racially degenerate and thus in their view inferior. However traditional Nordicist claims of Mediterraneans being degenerate due to having a darker colour of skin than Nordics had long been rebuked in anthropology through the depigmentation theory that claimed that lighter skinned peoples had been dipigmented from a darker skin, this theory has since become a widely accepted view in anthropology. Anthropologist Carleton S. Coon in his work The races of Europe (1939) subscribed to depigmentation theory that claimed that Nordic race's light-coloured skin was the result of depigmentation from their ancestors of the Mediterranean race. Mussolini refused to allow Italy to return again to this inferiority complex, initially rejecting Nordicism.

In the early 1930s, with the rise to power of the Nazi Party in Germany with Führer Adolf Hitler's staunch emphasis on a Nordicist conception of the Aryan Race, strong tensions arose between the Fascists and the Nazis over racial issues. Hitler regarded northern Italians to be strongly Aryan but not southern Italians. The Nazis regarded the ancient Romans to have been largely a people of the Mediterranean race however they claimed that the Roman ruling classes were Nordic, descended from Aryan conquerors from the North; and that this Nordic Aryan minority was responsible for the rise of Roman civilization. The Nazis viewed the downfall of the Roman Empire as being the result of the deterioration of the purity of the Nordic Aryan ruling class through its intermixing with the inferior Mediterranean types that led to the empire's decay. In addition racial intermixing in the population in general was also blamed for Rome's downfall, claiming that Italians as a whole were a hybrid of races, including black African races. Due to the darker complexion of Mediterranean peoples, Hitler regarded them as having traces of Negroid blood and therefore were not pure Aryans and inferior to those without such heritage. Hitler praised post-Roman era achievements of northern Italians such as Sandro Botticelli, Michelangelo, Dante Alighieri, and Benito Mussolini. The Nazis ascribed the great achievements of post-Roman era northern Italians to the presence of Nordic racial heritage in such people who via their Nordic heritage had Germanic ancestors, such as Nazi ideologist Alfred Rosenberg recognizing Michelangelo and Leonardo da Vinci as exemplary Nordic men of history. However the Nazis did claim that aside from biologically Nordic people that a Nordic soul could inhabit a non-Nordic body. Hitler emphasized the role of Germanic influence in Northern Italy, such as stating that the art of Northern Italy was "nothing but pure German",

In 1934, in the aftermath of Austrian Nazis killing Austrian Chancellor Engelbert Dollfuss, an ally of Italy, Mussolini became enraged and responded by angrily denouncing Nazism. Mussolini rebuked Nazism's Nordicism, claiming that the Nazis' emphasizing of a common Nordic "Germanic race" was absurd, saying "a Germanic race does not exist. ... We repeat. Does not exist. Scientists say so. Hitler says so." The fact that Germans were not purely Nordic was indeed acknowledged by prominent Nazi racial theorist Hans F. K. Günther in his book Rassenkunde des deutschen Volkes (1922) ("Racial Science of the German People"), where Günther recognized Germans as being composed of five Aryan subtype races: Nordic, Mediterranean, Dinaric, Alpine, and East Baltic while asserting that the Nordics were the highest in a racial hierarchy of the five subtypes.

By 1936, the tensions between Fascist Italy and Nazi Germany reduced and relations became more amicable. In 1936, Mussolini decided to launch a racial program in Italy, and was interested in the racial studies being conducted by Giulio Cogni. Cogni was a Nordicist but did not equate Nordic identity with Germanic identity as was commonly done by German Nordicists. Cogni had travelled to Germany where he had become impressed by Nazi racial theory and sought to create his own version of racial theory. On 11 September 1936, Cogni sent Mussolini a copy of his newly published book Il Razzismo (1936). Cogni declared the racial affinity of the Mediterranean and Nordic racial subtypes of the Aryan race and claimed that the intermixing of Nordic Aryans and Mediterranean Aryans in Italy produced a superior synthesis of Aryan Italians. Cogni addressed the issue of racial differences between northern and southern Italians, declaring southern Italians were mixed between Aryan and non-Aryan races, that he claimed was most likely due to infiltration by Asiatic peoples in Roman times and later Arab invasions. As such, Cogni viewed Southern Italian Mediterraneans as being polluted with orientalizing tendencies. Initially Mussolini was not impressed with Cogni's work, however Cogni's ideas later entered into the official Fascist racial policy several years later.

In 1938 Mussolini was concerned that if Italian Fascism did not recognize Nordic heritage within Italians, that the Mediterranean inferiority complex would return to Italian society. Therefore in summer 1938, the Fascist government officially recognized Italians as having Nordic heritage and being of Nordic-Mediterranean descent and in a meeting with PNF members, and in June 1938 in a meeting with PNF members, Mussolini identified himself as Nordic and declared that previous policy of focus on Mediterraneanism was to be replaced by a focus on Aryanism.

The Fascist regime began publication of the racialist magazine La Difesa della Raza in 1938. The Nordicist racial theorist Guido Landra took a major role in the early work of La Difesa, and published the Manifesto of Racial Scientists in the magazine in 1938.

The Manifesto directly addressed its conception of racism, and emphasized its autonomy from German racial theories, stating: "The question of racism in Italy must be treated from a purely biological point of view, without any philosophical or religious implications. The conception of racism in Italy must be essentially Italian and along Aryan-Nordic lines. This does not mean however that German racial theories are being accepted word for word in Italy and that Italians and Scandinavians are the same. It merely wishes to indicate to the Italian people a physical model and even more importantly a psychological model of human race that on account of its purely European characteristics is completely distinct from all extra-European races. This means to elevate the Italian to an ideal of superior consciousness of himself and to a greater sense of responsibility."

- Manifesto of Racial Scientists, Article 7

The emphasis in the Manifesto on a psychological model of a superior human being was in reference to the Italian antisemitic racial theorists Giovanni Papini and Paolo Orano that stated that those Jews who had associated themselves as being Italian were examples of inferior psychological types that were characterized by moral abjection, falseness, and cowardice, that could not be associated with the Italian community. After Article 7 of the Manifesto, the remainder claimed that peoples of the Oriental race, African races, and Jews, as not belonging to the Italian race; and in Article 10 declared that the physical and psychological characteristics of the Italian people must not be altered by crossbreeding with non-European races.

The Manifesto received substantial criticism, including its assertion of Italians being a "pure race", as critics viewed the notion as absurd. La Difesa published other theories that described long-term Nordic Aryan amongst Italians, such as the theory that in the Eneolithic age Nordic Aryans arrived to Italy. Many of the writers of La Difesa della Raza took up the traditional Nordicist claim that the decline and fall of the Roman Empire was due to the arrival of Semitic immigrants. La Difesa's writers were divided on their claims that described how Italians extricated themselves from Semitic influence.

The Nordicist direction of Fascist racial policy was challenged in 1938 by a resurgence of the Mediterraneanist faction in the PNF. By 1939, the Mediterraneanists advocated a nativist racial theory which rejected ascribing the achievements of the Italian people to Nordic peoples. This nativist racial policy was prominently promoted by Ugo Rellini. Rellini rejected the notion of large scale invasions of Italy by Nordic Aryans in the Eneolithic age, and claimed that Italians were an indigenous people descended from the Cro-Magnons. Rellini claimed that Mediterranean and later Nordic peoples arrived and peacefully intermixed in small numbers with the indigenous Italian population.

In 1941 the PNF's Mediterraneanists through the influence of Giacomo Acerbo put forward a comprehensive definition of the Italian race. However these efforts were challenged by Mussolini's endorsement of Nordicist figures with the appointment of staunch spiritual Nordicist Alberto Luchini as head of Italy's Racial Office in May 1941, as well as with Mussolini becoming interested with Julius Evola's spiritual Nordicism in late 1941. Acerbo and the Mediterraneanists in his High Council on Demography and Race sought to bring the regime back to supporting Mediterraneanism by thoroughly denouncing the pro-Nordicist Manifesto of the Racial Scientists. The Council recognized Aryans as being a linguistic-based group, and condemned the Manifesto for denying the influence of pre-Aryan civilization on modern Italy, saying that the Manifesto "constitutes an unjustifiable and undemonstrable negation of the anthropological, ethnological, and archaeological discoveries that have occurred and are occurring in our country". Furthermore the Council denounced the Manifesto for "implicitly" crediting Germanic invaders of Italy in the guise of the Lombards for having a "a formative influence on the Italian race in a disproportional degree to the number of invaders and to their biological predominance". The Council claimed that the obvious superiority of the ancient Greeks and Romans in comparison with the ancient Germanic tribes made it inconceivable that Italian culture owed a debt to ancient Aryan Germans. The Council denounced the Manifesto's Nordicist supremacist attitude towards Mediterraneans that it claimed was "considering them as slaves" and was "a repudiation of the entire Italian civilization".

In his early years as Fascist leader, while Mussolini harboured negative stereotypes of Jews he did not hold a firm stance on Jews, and his official stances oscillated and shifted to meet the political demands of the various factions of the Fascist movement, rather than having any concrete stance. Mussolini had held antisemitic beliefs prior to becoming a Fascist, such as in a 1908 essay on the topic of Nietzsche's Übermensch, in which Mussolini condemned "pallid Judeans" for "wrecking" the Roman Empire; and in 1913 as editor of the Italian Socialist Party's (PSI) Avanti! newspaper again wrote about the Jews having caused havoc in ancient Rome. Although Mussolini held these negative attitudes, he was aware that Italian Jews were a deeply integrated and small community in Italy whom were by in large perceived favourably in Italy for fighting valiantly for Italy in World War I. Of the 117 original members of the Fasci Italiani di Combattimento, founded on 23 March 1919, five were Jewish. Since the movement's early years, there were a small number of prominent openly antisemitic Fascists such as Roberto Farinacci. There were also prominent Fascists who completely rejected antisemitism, such as Italo Balbo who lived in Ferrara that had a substantial Jewish community that was accepted and antisemitic incidents were rare in the city.

In response to his observation of large numbers of Jews amongst the Bolsheviks, and claims (that were later confirmed to be true) that the Bolsheviks and Germany (that Italy was fighting in World War I) were politically connected, Mussolini said antisemitic statements involving the Bolshevik-German connection as being an "unholy alliance between Hindenburg and the synagogue". Mussolini came to believe rumours that Bolshevik leader Vladimir Lenin was of Jewish descent. In an article in Il Popolo d'Italia in June 1919, Mussolini wrote a highly antisemitic analysis on the situation in Europe involving Bolshevism following the October Revolution, the Russian Civil War, and war in Hungary involving the Hungarian Soviet Republic.

"If Petrograd (Pietrograd) does not yet fall, if [General] Denikin is not moving forward, then this is what the great Jewish bankers of London and New York have decreed. These bankers are bound by ties of blood to those Jews who in Moscow as in Budapest are taking their revenge on the Aryan race that has condemned them to dispersion for so many centuries. In Russia, 80 percent of the managers of the Soviets are Jews, in Budapest 17 out of 22 people's commissars are Jews. Might it not be that bolshevism is the vendetta of Judaism against Christianity?? It is certainly worth pondering. It is entirely possible that bolshevism will drown in the blood of a pogrom of catastrophic proportions. World finance is in the hands of the Jews. Whoever owns the strongboxes of the peoples is in control of their political systems. Behind the puppets (making peace) in Paris, there are the Rothschilds, the Warburgs, the Schiffs, the Guggenheims who are of the same blood who are conquering Petrograd and Budapest. Race does not betray race....Bolshevism is a defense of the international plutocracy. This is the basic truth of the matter. The international plutocracy dominated and controlled by Jews has a supreme interest in all of Russian life accelerating its process of disintegration to the point of paroxysm. A Russia that is paralyzed, disorganized, starved, will be a place where tomorrow the bourgeoisie, yes the bourgeoisie, o proletarians will celebrate its spectacular feast of plenty."

- Benito Mussolini, Il Popolo d'Italia, June 1919.

This statement by Mussolini on a Jewish-Bolshevik-plutocratic connection and conspiracy was met with opposition in the Fascist movement, resulting in Mussolini responding to this opposition amongst his supporters by abandoning this stance shortly afterwards in 1919. Upon abandoning this stance due to opposition to it, Mussolini no longer said his previous assertion that Bolshevism was Jewish, but warned that due to the large numbers of Jews in the Bolshevik movement, the rise of Bolshevism in Russia would result in a ferocious wave of antisemitism in Russia. He then claimed that "antisemitism is foreign to the Italian people" but warned Zionists that they should be careful not to stir up antisemitism in "the only country where it has not existed".

Early on there were prominent Jewish Italian Fascists such as Aldo Finzi Finzi was born of a mixed marriage of a Jewish and Christian Italian, he was baptized as a Catholic. Margherita Sarfatti was an influential Jewish member of the PNF whom Mussolini had known since he and her had been members of the Italian Socialist Party (PSI) and she had been his mistress, she helped write Dux (1926), a biography of Mussolini. One of the Jewish financial supporters of the Fascist movement, was Toeplitz, whom Mussolini had earlier accused of being a traitor during World War I. Another prominent Jewish Italian Fascist was Ettore Ovazza who was a staunch Italian nationalist and an opponent of Zionism in Italy. 230 Italian Jews took part in the Fascists' March on Rome in 1922. Mussolini in the early 1920s was cautious on topics of Italian Jewish financiers, that arose from time to time from antisemitic elements in the Fascist movement; while he regarded them as untrustworthy he believed that he could draw them to his side. In 1932, Mussolini made his private attitude about Jews known to the Austrian ambassador when discussing the issue, saying: "I have no love for the Jews, but they have great influence everywhere. It is better to leave them alone. Hitler's antisemitism has already brought him more enemies than is necessary".

The Fascist regime publicly maintained an ambivalent relationship towards Jews especially related to the issues of Zionism and the Catholic Church from the 1920s to the 1930s. On the eve of the March on Rome, the leadership of the PNF declared "a Jewish question does not exist in our country and let us hope that there never shall be one, at least not until Zionism poses Italian Jews with the dilemma of choosing between their Italian homeland and another homeland". The relations between the regime and Jews as in those practicing the religion of Judaism was affected by the Fascists' accommodation of the Catholic Church beginning in the early 1920s in which it sought to remove previous provisions of equality of faiths and impose state support of the supremacy of Catholicism. In 1929 Catholicism was made "the sole religion of the State", and by 1930, religions other than Catholicism were allowed to exist in diminished status on the judgement of the state regarding them to be "permissible in the Kingdom". In 1928 frustration arose in the regime over Zionism, in which Mussolini responded to the Italian Zionist Congress by publicly declaring a question to Italy's Jews on their self-identity, "Are you a religion or are you a nation?", Zionist and anti-Zionist Jews responded, the anti-Zionist Jews professed they were religious Jews as part of the Italian nation while Zionist Jews declared that there was no dispute between Zionism and said that all Italian Jews held patriotic respect for Italy. Upon these responses arriving, Mussolini declared that these revealed that a Jewish problem existed in terms of Jewish identity in Italy as a result of conflicting national loyalties amongst Zionist Jews, saying: "My intention was to seek a clarification among Italian Jews and to open the eyes of Christian Italians. [...] This goal has been achieved. The problem exists, and it is no longer confined to that “shadowy sphere” where it had been constituted astutely by the former, ingeniously by the latter."

- Benito Mussolini, 1928.

The Fascists at this time were not wholly opposed to Zionism, but took an instrumental approach to it, they were hostile to it when it caused conflict in Italy with the country's Catholic community and when such Zionists were seen as associated with British interests; they were favourable to Zionists who opposed the British and sought Italy's support as their protector. In the early 1930s, Mussolini held discussions with Zionist leadership figures over proposals to encourage the emigration of Italian Jews to the mandate of Palestine, as Mussolini hoped that the presence of pro-Italian Jews in the region would weaken pro-British sentiment and potentially overturn the British mandate.

At the 1934 Montreux Fascist conference chaired by the Italian-led Comitati d'Azione per l'Universalita di Roma (CAUR), that sought to found a Fascist International, the issue of antisemitism was debated amongst various fascist parties, with some more favourable to it, and others less favourable. Two final compromises were adopted, creating the official stance of the Fascist International:

"''[T]he Jewish question cannot be converted into a universal campaign of hatred against the Jews [...] Considering that in many places certain groups of Jews are installed in conquered countries, exercising in an open and occult manner an influence injurious to the material and moral interests of the country which harbors them, constituting a sort of state within a state, profiting by all benefits and refusing all duties, considering that they have furnished and are inclined to furnish, elements conducive to international revolution which would be destructive to the idea of patriotism and Christian civilization, the Conference denounces the nefarious action of these elements and is ready to combat them.""

- CAUR, 1934. ''

In a discussion with President of the World Zionist Organization Chaim Weizmann over requests for Italy to provide refuge for Jews fleeing Nazi Germany, Mussolini agreed that he would accept Jewish refugees but warned Weizmann about consequences if such Jews harmed Italy, saying:

"... I don’t hide from you that the collusion of the Jewish world with the plutocracy and international left is ever more evident, and our politico-military situation doesn’t permit us to keep in our bosom eventual saboteurs of the effort that the Italian people are making."

- Benito Mussolini, mid-1930s in conversation with Chaim Weizmann

Italian Fascism's attitudes towards Zionism and Jews in general underwent a shift in response to the Second Italo-Ethiopian War. At the outset of the war, Mussolini sought to gain favourable support for Italy's intervention in Ethiopia, and appealed to Zionists by offering them a solution to the Jewish question, in which Italy would set aside a certain amount of territory from conquered Ethiopia to be a homeland for Jews. Mussolini claimed that territory from conquered Ethiopia would make an ideal homeland for the Jews, noting that there were large numbers of Falasha already living there who identified as Jews. However Zionist leaders rejected this proposal, saying that they would only live in the Holy Land in the Levant. Mussolini viewed this as an offensive snub, and responded in frustration saying "If Ethiopia is good enough for my Italians why isn't it good enough for you Jews?". Afterwards Mussolini's relations with the Zionist movement cooled. Mussolini became aggravated with his observation that many Jews opposed the Italo-Ethiopian War, to which he responded:

"World Jewry is doing a bad business in aligning itself with the anti-Fascist sanctions campaign against the one European country which, at least until now, has neither practiced nor preached anti-Semitism."

- Benito Mussolini, 1936

In 1936, the Fascist regime began to promote racial antisemitism, Mussolini claimed that international Jewry had sided with Britain against Italy during Italy's war with Ethiopia. Historian Renzo De Felice believed that the Fascist regime's pursuit of alliance with Nazi Germany that began in 1936, explains the adoption of antisemitism as a pragmatic component of pursuit of that alliance. De Felice's interpretation has been challenged by H. Stuart Hughes who has claimed that direct Nazi pressure to adopt antisemitic policy had little or no impact on Mussolini's decision. Hughes notes that the Fascist version of antisemitism was based on spiritualist considerations while eschewing anthropological or biological arguments unlike the Nazi version of antisemitism. Italian Fascism adopted antisemitism in the late 1930s, and Mussolini personally returned to invoke antisemitic statements as he had done earlier. The Fascist regime used antisemitic propaganda for the Spanish Civil War from 1937 to 1938 that emphasized that Italy was supporting Spain's Nationalist forces against a "Jewish International". The Fascist regime's adoption of official antisemitic racial doctrine in 1938 met opposition from Fascist members including Balbo, who regarded antisemitism as having nothing to do with Fascism and staunchly opposed the antisemitic laws.