Five months after the assassination of
Croatian Peasant Party leader Stjepan Radic, King Alexander of Yugoslavia declared his personal dictatorship and liquidated all opposition political parties.
Ante Pavelic, an obscure politician with the extreme right-wing "Frankist" faction of the Croat Party of Right, left Yugoslavia for exile in Vienna shortly thereafter. He first established contacts with the leadership of the
Internal Macedonian Revolutionary Organization (IMRO) in Bulgaria, then accepted the invitation of
Duce Benito Mussolini to house his new organization in
Italy. Several of the Ustase's most prominent leaders, including Slavko and Eugen-Dido Kvaternik and Branimir Jelic, were recruited during this period.
The Ustase began to organize terrorist raids into Yugoslav territory from abroad, chiefly from Hungarian, Austrian and Italian territory. Following a failed attempt on the life of Alexander by an Ustase assassin in Zagreb, Pavelic and Dido Kvaternik recruited an experienced killer from IMRO, who murdered King Alexander and France's Foreign Minister, Louis Barthou, in Marseilles, France in 1934. Pavelic, Kvaternik and Jelic are placed under arrest by Mussolini, but he rejects French requests for their extradition. Pavelic and Kvaternik are found guilty in a trial in absentia in France and sentenced to death.
The Ustase were in official disfavour in Rome following a rapprochement between Yugoslavia and Italy in 1937, and a plot to assassinate Yugoslav Prime Minister Milan Stojadinovic during a state visit was foiled by the Italian police. The Yugoslav government signs the Sporazum (Understanding), an agreement with Vladko Macek of the Croatian Peasant Party which provides Croatia with a wide degree of autonomy within the Yugoslav state. Increasingly alarmed by German moves to push their borders south after the Anschluss with Austria and the dismemberment of Czechoslovakia, Italy resumes consultations with Pavelic on a plan to provoke an uprising and declare an independent Croatia, united with Italy under the monarchy.
