Holy Roman Empire

Once the seed of doubt is planted, it’s impossible to shake off. After carefully studying the actions of the Austrian government in recent years, Dumbledore became increasingly puzzled.

If Austria truly intended to target France, why would they allow France to annex Italy?

To the public, this could be explained by France’s supposed strength. However, as a senior government official, Dumbledore wasn’t convinced.

No matter how strong France might be, it couldn’t withstand a united Europe. If all the European countries joined forces to apply pressure, France would inevitably have to retreat in humiliation.

Expanding territory on the European continent was never an easy feat, and Italy was far from an impoverished backwater. Dumbledore couldn’t believe Austria lacked ambition in this regard.

This issue had been studied by the French government for years, and in the end, they reached an almost unbelievable conclusion: the Austrian government adhered to the principle of honoring agreements.

At this point, the truth hardly mattered. After all, the territory had already been secured. Regardless of suspicions, the French government would never relinquish the Italian region.

If it didn’t make sense, so be it, just look at Austria’s military strength. Any so-called “threat” is built upon actual power.

After reviewing the recent military data on Austria, Dumbledore breathed a sigh of relief. While a threat did exist, it was something France could still withstand.

Apologies, but as a competent bureaucrat, the first priority is to weigh the pros and cons, not to take action blindly.

Austria’s threat is merely potential. Without sufficient benefit, France and Austria have no reason to engage in conflict for no apparent reason.

In this era, the defender holds a clear advantage in war. If nothing else, the deployment of forces alone determines this.

By comparison, as a member of the cabinet government, Dumbledore was more concerned about the growing power of the military. From the very start, Geoffrey Friedman had chosen the wrong person to approach.

France and Prussia are fundamentally different. One is a country with an army, the other is an army with a country. What might seem natural to the Prussian government is viewed entirely differently by other nations’ governments.

Taking countermeasures simply because of a potential threat is a military mindset. Politicians, however, always prioritize benefits above all else.

Knowing full well that someone is trying to sow discord, blindly jumping in to serve as a pawn would be the behavior of a reckless fool.

Geoffrey Friedman may have succeeded in driving a wedge between France and Austria, but it did not change the outcome of these negotiations. If France is to contain Austria, then it must be in exchange for benefits.

When it comes to interests, the French government remains uncompromising. Supporting the Prussian-Polish Federation just because of Austria’s threat? That is out of the question.

Both Austria and Prussia are continental powers, and to France, they are both potential threats. The only difference lies in the degree of threat.

…

At the critical moment of the Franco-Prussian negotiations, the Russo-Austrian talks were also nearing their conclusion.

Foreign Minister Wessenberg said, “Sir, I see no sincerity from your country. The collateral your country is offering is too meager and fundamentally unequal in value.

If this is all the collateral you can provide, I seriously doubt your government’s commitment to these regions, which would leave us at a great loss.”

Russian Ambassador Nikolaevich replied, “No, we are very sincere. Sir, do not forget that we have even pledged our gold reserves, leaving no room for default.”

Wessenberg remained unmoved. If it weren’t for the opportunity to acquire Russia’s gold reserves and promote monetary hegemony, he wouldn’t even bother negotiating with the Russians here.

The so-called territorial collateral showed a clear lack of sincerity from the Russian government. Perhaps intending to block Austria’s access to the Black Sea, the territories Russia offered as collateral were all landlocked.

The pledged regions of Bulgaria and the lands west of the Dnieper River (central and western Ukraine, along with Moldova) lacked the crucial coastal areas.

In the age of maritime dominance, territories without ports were entirely landlocked, significantly reducing their value.

From Russia’s perspective, they had compelling reasons for this approach. Allowing Austria into the Black Sea would be easy, but driving them out would be extremely difficult.

With the Black Sea Fleet consisting of only a few dilapidated ships, if the Austrian Navy entered the Black Sea, Russia’s interests in the region would face severe threats.

When it came to interests, the Russian government dared not test Austria’s integrity. If the stakes were high enough, perhaps the Austrian government might deliberately orchestrate a defeat to claim the collateral.

Even the current territorial collateral was a decision the Russian government made after careful consideration and weighing of pros and cons repeatedly.

“If your government were to offer its entire gold reserves as collateral, we would naturally have no concerns about default. However, your country has only offered half of its reserves.

Russia has always been a major producer of gold, mining tens to hundreds of tons annually, so replenishing these reserves would not be difficult.

Ambassador, you must understand that we have no particular interest in your country’s land. Not all territories are inherently valuable, especially when stripped of access to the sea which significantly devalues them.”

Ambassador Nikolaevich frowned. Replenishing gold reserves might be easy for countries like Britain and Austria, but for most other nations, it was a considerable challenge.

Russia was indeed one of the world’s primary gold producers, but it couldn’t stop the constant outflow of gold every year. This was especially true with an impending war, which would inevitably lead to a massive outflow of gold and silver.

If Russia were to pledge its entire gold reserves, it would effectively hand over its economic lifeline to Austria. To avoid rendering the ruble worthless, Russia would have no choice but to become a subordinate power.

Ambassador Nikolaevich argued, “Sir, that is impossible. Pledging half of our gold reserves is already our bottom line.

As for territorial collateral, we are open to negotiations. We can include some ports. In return, your country must guarantee our loans with the Nordic Federation and ensure that your navy will never enter the Black Sea.”

To raise funds, the Russian government repeatedly lowered its bottom line. Especially after receiving unfavorable news from London, it conceded even further.

By now, Alexander II had no way out. If war wasn’t initiated early and the enemies were allowed to prepare fully, it would be too late.

The word “compromise” was never part of the Russian vocabulary. The Russo-Prussian War had essentially become the Russian government’s means of diverting internal conflicts. Once it stopped, the consequences would be disastrous.

Even knowing that starting a war now could lead to heavy losses, the Russian government had no choice but to forge ahead.

Wessenberg replied, “That’s acceptable, but your country must provide collateral of equal value. Should your government default, we will have to repay the debt on your behalf, so security must be guaranteed.

As for our navy staying out of the Black Sea, I cannot make such assurances. However, we can agree that as long as your government does not default, the Austrian navy will not enter the Black Sea.”

“Collateral” had almost become a nightmare for Nikolaevich. The mere thought of the term sent shivers down his spine. This round of Russo-Austrian negotiations had drained him of energy.

In contrast, the issue of the Austrian navy entering the Black Sea seemed minor. Any guarantees were meaningless when interests were at stake and nothing could stop them.

Nikolaevich hurriedly replied, “Sir, this is merely a standard commercial loan guarantee. We can pay a security deposit. There’s absolutely no risk so your country can rest assured.”

Wessenberg shook his head and said, “Apologies, Ambassador. With war about to break out, if your country wins the war, I trust there won’t be an issue.

But if your country loses the war or it ends in a stalemate, will your government really be able to fulfill its obligations when it is unable to repay the debt?”

He came close to outright questioning the Russian government’s credibility. In his view, a defeated Russian government would certainly fulfill its obligations, while a victorious one might not.

A defeated Russian Empire would have no choice but to comply. The Nordic Federation could even send troops to claim their share if necessary. Everyone was skilled at kicking someone when they were down.

By comparison, Austria’s collateral presented more complications. Portions of western Ukraine might fall into the hands of the Prussian-Polish Federation after the war, and the Austrian government would face another round of turmoil trying to secure these regions.

…

After rounds of heated negotiations, on October 10, 1879, Russia and Austria signed the Russo-Austrian Trade Agreement in Vienna. The treaty stipulated the following:

The Russian Empire would pledge the region west of the Dnieper River and the Russian-controlled Balkans as collateral to raise 480 million guilders from Austria, consisting of 180 million guilders in loans and 300 million guilders in bonds. (Author’s Note: Excluding Odessa and Constantinople.)

Loan interest rate: 3.5% per month.

Bond interest rate: 8.4% per year.

Processing fees: 3%.

…

A week later, representatives from Russia, Austria, and the Nordic Federation signed the Debt Guarantee Contract in St. Petersburg. Under this agreement, the Austrian government provided security guarantees for the loans involving Russia and the Nordic Federation.