Holy Roman Empire

Chapter 643 - 216: The Dissolution of the Russian-Austrian Alliance

Diplomatic alignments can sometimes be very straightforward, ever since the British decided to support Chile, Bolivia and Peru had no choice but to seek support from France and Austria.

International trade is a minor issue; with such small national scales in South America, if it weren’t for their rich resources and the promotion of currency hegemony, the great powers would not have taken notice of them.

One can tell by the population figures, approximately 2.2 million in Chile, about 2.75 million in Peru, and around 1.3 million in Bolivia.

With such small populations, and all being agricultural countries, expecting a large internal market is clearly implausible.

Chile is relatively wealthy, mainly due to its saltpeter exports, and its military is the strongest among the three nations.

Peru has silver, but unfortunately, the price of silver has been declining over the years, drying up the Peruvian government’s purse.

Bolivia can be said to be the most tragic; having just discovered saltpeter mines and enjoyed a few good years, war broke out.

Undoubtedly, all three countries were unable to fund the war efforts in one go, and loans were inevitable.

In the Vienna Palace, Franz was approving a special loan, with the debtor generously offering the mineral resources of the Atacama Desert as collateral.

"Considering the current situation, how likely are Peru and Bolivia to win the war?"

Chief of Staff Albrecht: "Purely analyzing military strength on paper, the General Staff conducted a quantitative analysis based on the number of troops, weapon equipment, training status, past war records, and logistical support capabilities of the three countries.

The military strengths of the three nations are: Bolivia 1, Peru 1.8, Chile 2.1.

Theoretically, Bolivia and Peru had an absolute advantage; however, most of the time on the battlefield, it’s the Chilean forces that are pressing Peru and Bolivia.

Bolivia and Peru, despite having a numerical advantage, have only united in name; there’s absolutely no coordination on the battlefield, and sometimes they even sabotage each other.

If the cooperation issue of the Peruvian and Bolivian armies isn’t resolved, their chances of winning the war will not exceed fifty percent."

This is a common problem in all joint operations, with Bolivia, Peru, and Chile all claiming sovereignty over the Atacama Desert.

The current alliance between Bolivia and Peru does not mean that their territorial disputes have disappeared; they are simply forced to unite because of their common enemy, Chile.

In such a context, backstabbing on the battlefield is more than normal.

Franz: "Tell the Bolivians that we are not interested in the saltpeter of the Atacama Desert and ask them to provide other collateral.

If there is no suitable collateral, they can mortgage their domestic mineral resources to us, including gold, silver, copper, iron, oil, or natural gas."

Not being optimistic about Bolivia’s chances of winning the war does not prevent Austria from supporting Bolivia in this war. Just the linkage of the "Boliviano" to the Divine Shield makes it worthwhile for Austria to support them from behind.

If it weren’t for the fact that the mineral resources of the Atacama Desert had already been promised to the British by the Chileans and Austria’s inability to compete with John Bull in South America, Franz might have already sent people to stake a claim.

Of course, the most crucial factor is the lack of sufficient interest. Although the Atacama Desert is the world’s largest source of saltpeter, it doesn’t mean there are no saltpeter mines elsewhere, and there’s also the possibility of synthetic saltpeter.

Initially, Franz was ready to bring Peru on board, but unfortunately, the French beat him to it. Austria’s reach into South America has been too brief, its influence too weak.

If it weren’t for the fact that Chile and Peru had already cozied up to England and France, Franz doubted that Bolivia would even consider Austria.

Finance Minister Carl reminded: "Your Majesty, Bolivia’s domestic precious metal mines have already been pledged away.

Copper, iron, and other common minerals, although discovered in abundance, lack developmental value. Oil and natural gas are new energy industries, whether Bolivia possesses them is an unknown factor.

If we were to take these as collateral, the risk of the loan would increase substantially, and domestic banks might not accept."

Franz came to his senses; Bolivia’s industrial capacity is limited, and heavy industry is virtually non-existent, practically zero.

Without the capacity for local smelting, mined ore has to be transported for sale; with the transportation conditions of the era, these mineral resources naturally lost their economic value.

Oil and natural gas needn’t be mentioned, just beginning to be utilized, their importance is unapparent, and naturally, nobody’s willing to explore at great cost.

After considering all angles, Franz realized these resources wouldn’t be needed for some time. They may not even be useful for a hundred years, and early planning is utterly nonsensical.

Austria had already declared neutrality in the war, and this loan to Bolivia would naturally proceed as a civil-commercial loan model, with the government simply brokering to collect a contract performance guarantee fee.

Considering the current situation, the likelihood of the Bolivian government winning the war is quite small; they are likely to follow in the footsteps of the original time-space and lose the war, naturally having no money to repay the debt.

If the collateral is worthless, private banks will not be convinced. If the government negotiates terms but no bank is willing to lend, wouldn’t it be embarrassing?

Coming to his senses, Franz did not feel embarrassed at all, and promptly corrected himself, "Since the precious metal mines are gone, these things can only be considered as add-ons. The Bolivian government must come up with something else for collateral."

Lacking collateral? That’s impossible. After all, it is a nation; how could it have nothing of value? If it really comes to it, they still have land, don’t they?

"Defaulting" on debts, there was no need to worry. It was still the 19th century, and it wasn’t just once that debt collection by force had occurred. Unless it was with a behemoth like Russia, where the cost of collecting debts was simply too high, and everyone had to concede defeat.

…

Foreign Minister Weisenberg, "Your Majesty, our alliance with the Russians expires in just three months. The Tsarist Government’s representatives for negotiations have already arrived in Vienna."

Whether to renew the Russian-Austrian Alliance, the opinions within the Vienna Government were divided, including Franz himself, whose position wavered several times in the process.

It wasn’t that everyone’s will was not firm; ultimately, it was the interests that tempted. Whether to continue the alliance or to abandon it, both contained a multitude of interests.

Over the years, the economies of Russia and Austria had essentially become tied together. Austria imported industrial raw materials from Russia and after processing, exported the finished products back to the Russian Empire.

Since 1854, the two countries had become each other’s most important economic partners. At the peak, trade with Russia once accounted for two-thirds of Austria’s total foreign trade.

With the rapid development of Austria’s economy and its industrial and commercial products continually opening new markets, this figure began to decline year by year.

Even now, trade with Russia remained the most important part of Austria’s foreign trade, occupying 29.7% of Austria’s total import and export trade volume.

If Russia’s economy had not failed to keep pace, meaning its domestic market growth was too slow, this proportion would have been even larger.

Without a doubt, the Russian-Austrian Alliance had made an important contribution to the economic exchange between the two countries and promoted bilateral trade.

There were advantages and certainly disadvantages too; the Russian-Austrian Alliance also limited Austria’s expansion. For instance, during the Prusso-Russian war period, the Vienna Government missed the opportunity to kick the Tsarist Government when it was down.

Limited further expansion could only be seen as a minor issue. The European Continent was not large enough to allow for much expansion, and too much trouble would ensue from it anyway.

The main issue was international image; the Russians were hugely unpopular. The existence of the Russian-Austrian Alliance meant Austria shared the burden of pressure.

This restrained the traditionally flexible diplomacy of the Vienna Government, often leaving it without room to maneuver.

Economic benefits were not without cost; Austria was Russia’s largest creditor.

It was bad enough that they lent money, but the Tsarist Government had a bad reputation when it came to credit. It often could not fulfill its obligations normally and even defaulted on a significant amount of Austrian debt.

Failure to repay debts is definitely the most unpopular behavior. The Austrian financial sector was a solidly anti-Russia faction, and consequently, the public’s impression of Russians was also negative.

In agriculture, the two countries were in competition. Austrian farmers bitterly detested the Russians for disrupting market prices, who were competitors that undermined the market.

Austrian farmers were not powerless rural peasants; a significant number were from the nobility. These individuals were victims of Alexander II’s large-scale land development policies and naturally despised the Tsarist Government.

Franz asked stoically, "Do you think there is a need to renew the alliance now?"

History seemed to repeat itself, as in the original time-space, the German Second Empire faced agricultural friction and subsequent conflict with the Russians, and now Austria was in a similar situation.

Of course, there were differences; apart from the nobility and farmers being anti-Russian in Austria, the financial sector also despised the Russians due to debt issues, with only the domestic industrial and commercial sectors supporting the renewal of the alliance.

Finding himself in a similar position, Franz somewhat understood Wilhelm II’s diplomacy of distancing Germany from Russia in the original time-space.

When it came to interests, it was not something personal power could compensate for, and even the Emperor had to consider the domestic public’s stance and not go against the majority.

Prime Minister Felix cut to the heart of the matter, "Continuing the alliance, it has some economic use, but is of no strategic value!"

Minister of Agriculture Hols, "The economic value is not significant either. We are now in an era of free trade, and the tariff advantages we once had no longer exist.

Even without the Russian-Austrian Alliance, at most we would lose part of the Tsarist Government’s procurement, which would have a negligible effect.

After many years of effort, numerous aspects of Russian industry rely on us and even if the Tsarist Government wants to cut us off, they must endure the losses that would result."

This was a major reason for the confidence of the Vienna Government. Austrian industry had its own system, and it followed a different standard than that used by England and France—it was completely incompatible.

Russian industry was heavily influenced by Austria from the beginning, as the capitalists, seeking cheaper options, directly adopted Austrian standards.

It wasn’t a big deal that they adopted Austrian standards, but the critical part was that Russian industry had not formed a complete industrial system and relied on machinery and equipment imported from Austria.

To back out now would mean that most of their industrial equipment would have to be scrapped, and the Tsarist Government simply could not afford such losses.