The basic reason for the formation of a neutral league was that during the War for American Independence Britain used its naval power to intercept merchant ships bound for its enemy France. Britain defined contraband of war in such a way that it also included naval materiel, which of course greatly harmed the trade of the neutral powers, especially Russia and its ally Denmark. Russia was also rather dependent on the British merchant marine for its foreign trade, and it was therefore eager for the Dutch to join in a neutral league so their ships could be utilized and trade pursued with Britain’s enemies. On the other hand the British policy harmed France’s attempts to re-arm its navy so it could match British sea power in the case of hostilities, and France, too, wished to be able to trade freely with neutral countries (Dull, 1985: 129; Pares, 1960: 278; Madariaga, 1981: 281-282).
Catherine II was not the first one to suggest the formation of a neutral league. In 1778, under French pressure, the Danish foreign minister, Count A.P. Bernstorff came up with a plan which endorsed the principle of “free ships free goods”. Even Russia’s long-time enemy Sweden was eager to co-operate with Russia and Denmark in the protection of neutral trade, but at this point Catherine II was unwilling to endorse the Danish proposition. Catherine II did not want to ruin Russian-British relations, and co-operation with Sweden, which was France’s friend, and thus indirectly opposed Catherine’s expansionist policies against Turkey, did not seem worthwhile (Madariaga, 1981: 382).
Catherine’s chance to maintain Russian neutrality, but protect and expand both her commerce and prestige came after Spain had joined the War for American Independence in 1780. Russia had by now complained several times to Britain about their detention of Russian cargoes, but now Spain intercepted and detained a Russian ship. Now Catherine II could form the League of Armed Neutrality without it seeming to be aimed solely against British interests, as Russia’s neutral trade had been violated by Britain’s enemy (Madariaga, 1981: 383).
In 1780 Catherine II formulated the principles of neutral trade, of which the most important ones were the idea of “free ships free trade” and that naval supplies would not be considered contraband of war, and could therefore be shipped to nations at war. Catherine proposed that Denmark, Sweden and the United Netherlands join the Neutral League (Madariaga, 1981: 383-384).
The formation of the League was a diplomatic success for Russia. Denmark joined in July 1780, Sweden in August in the same year. The most important victory for Russia came in January 1781, as the Dutch representatives in St. Petersburg signed a treaty with Russia making the United Netherlands part of the Neutral League. However, unbeknownst to the representatives, the Dutch were not neutrals any more at this point, as Britain had broken diplomatic relations with the Netherlands before she joined the League, and war had already broken out between the two sea powers (Madariaga, 1981: 383-384).
Neither Frederick II of Prussia nor Joseph II of Austria took Catherine II’s League very seriously, but both were in need of friendship with Russia. Prussia, still nominally Russia’s ally, was fearing that Russia’s favour would turn to Austria, thus putting Prussia in a precarious position. This is indeed what was happening - Catherine II was about to ally Austria to be able to pursue further expansion at the Ottomans’ expense. In any case, Prussia tried to cling onto the Russian alliance, and therefore entered the League in 1781. Austria, which was about to be allied to Russia in order to strengthen its position in relation to the Ottoman Empire was also eager to secure closer relations with Russia, so it accepted to join in the same year. This proved to be of great importance as Dutch ships could now change to the Austrian or Prussian flag, thus enabling them to ship Russian naval supplies and other goods to France and Spain. Catherine’s policy met with further successes in 1782 when even Portugal and the kingdom of the Two Sicilies joined the League (Madariaga, 1981: 386, 633 note 32).
After the formation of the League Catherine II wished to extend Russian influence even further, and she concluded several commercial treaties with European nations. In all of these treaties, which were signed by Denmark (in 1782), the Ottoman Empire (1783), Austria (1785), France (1786/87), the Two Sicilies (1787) and Portugal (1787), the principles of neutral trade were endorsed. Russia also extended her diplomatic links in Europe by sending new consuls. Perhaps the most visible change in Russian policy after the formation of the League was that Catherine II sent a sizeable fleet to the Mediterranean on the pretext of protecting neutral trade as defined in the principles of the League. Thus, the League had enabled this unprecedented show of Russian strength (Madariaga, 1981: 386, 633 note 32).
The League was also an indication of Russia’s new position as a European great power. One historian (Young, I. in Goodwin, 1965: 326) argues convincingly that the formation of the League was to an important extent an assertion of Russia’s equality with the other great powers. Before this, the great powers of Europe, especially Britain with whom Russia was otherwise generally on friendly terms, had treated Russia with condescension, and as a nation whose policies could be influenced from abroad (before Catherine the Great, bribery had been rampant in the Russian court, like at the court of any second-rate power (Scott, H.M., 26-27). A good example of British arrogance towards Russia was their attempt to recruit 20 000 Russian troops in 1775 to fight the rebel colonists in America. Britain did not even consider the possibility that Catherine might refuse, as they had been able to recruit Russian troops with relative ease before. Catherine, however, did refuse the offer flatly, resenting the British attitude (Madariaga, 1981: 378; Scott, 1990: 26 - 27; Dull, 1985: 46-47).
The Armed Neutrality was a way for Catherine the Great to say that Russia should be respected in the same way as other great powers, and that Britain or any other nation should not take relations with Russia for granted. The League extended Russian diplomatic influence as far as Italy and Portugal, thus taking Russian diplomacy closer to being on a par with that of other European nations.
Dull, Jonathan R., 1985. A Diplomatic History of the American Revolution (New Haven, New York, Yale University Press)
Goodwin, A. (ed.), 1965. The New Cambridge Modern History Volume VIII: The American and French Revolutions 1763-93 (Cambridge, Cambridge University Press)
Madariaga, Isabel de, 1981. Russia in the Age of Catherine the Great (London, Phoenix Press)
Pares, Bernand, 1960. A History of Russia (New York, N.Y., Alfred A. Knopf)
Scott, H.M., 1990. 'Russia as a European Great Power' in Bartlett, Roger & Hartley, Janet M. Russia in the Age of the Enlightenment: Essays for Isabel de Madariaga (London, The Macmillian Press)
This is taken from a much longer essay I wrote at school. If you think this is taken out of context, and needs more explanation, please let me know.