Holy Roman Empire

After leaving the Palace of Versailles, Alexandrovich no longer had any interest in sightseeing. Clearly, his visit to Paris was not going well.

Napoleon III extended goodwill to Russia purely out of political necessity, as a show of strength to the other European nations, rather than a genuine intention to ally with Russia.

Without the humiliation of the Treaty of Frankfurt, the proud French had little regard for what they saw as the backward and barbaric Russians.

Especially after the alliance between Britain, France, and Austria, France no longer felt any diplomatic pressure and could find no adversary serious enough to concern them, at least on the surface.

Before Alexandrovich’s visit to Paris, the Russian government had high hopes, attempting to use France’s willingness to engage with Russia to secure financial aid.

The reality was harsh. Obtaining money from the empire of usury was not easy. Bankers, particularly wary of the creditworthiness of the Russian government, were shrewd.

Even the previously promised loan of five hundred million francs had encountered obstacles, with the French demanding gold and silver as collateral.

It’s not surprising. Alexander II was also attempting currency reform, albeit in small steps, and now the French were eyeing their reserves.

Since Alexander II’s reforms, developing industry, building railways, and agricultural reform have become the government’s three main strategies.

The plans were sound, but they all required financial support. Due to the war, large amounts of gold and silver flowed out of the Russian Empire, causing a severe shortage of domestic capital.

The Russian government’s solution was to attract foreign capital, but unfortunately, European banks refused to lend to them, and even investment was approached with great caution.

Alexander II’s reforms were somewhat better than in history, as there was a nearby example to learn from. Other issues could be addressed, but raising funds was not one of them.

Austria has reached its current stage of development partly by issuing bonds several times, raising funds amounting to hundreds of millions of guilders. Even now, the Austrian government has to repay tens of millions of guilders in debt annually.

Due to a lack of credibility, the Russian government cannot borrow money at all. Even when offering collateral such as toll rights and tax revenues, it makes no difference because the Russian government has a reputation for defaulting on its debts.

Faced with a debt crisis years ago, Alexander II had no choice but to declare debt default. Now, the repercussions of that decision are surfacing.

This is not to say that Alexander II’s decision was wrong. If they hadn’t defaulted, the foreign debt would have crushed the country’s finances, and the situation would have been even worse.

Simply put, even if they hadn’t defaulted, they wouldn’t have been able to borrow much. The bankers were too shrewd and wouldn’t lend money to those without the ability to repay.

In the original timeline, the French lending money to the Russians was out of desperation. The pressure on national defense was too great, and they had to court allies to share the burden.

Entering the late 19th century, France’s comprehensive national strength suddenly lagged behind partly for this reason. The government lent a lot of money, leaving less capital for domestic development.

Now, there’s no need to consider it. The French certainly won’t overextend themselves to support the Russians. Even in offering high-interest loans, they would only lend to parties with the ability to repay them.

For instance, Austria currently owes a significant debt to the French. Whether developing domestically or expanding colonies, the financial revenue of the Austrian government alone is certainly insufficient.

Austria’s private capital accumulation is also not particularly rich, so naturally, Franz turned to foreign loans. Of course, these are not merely international loans. Most of the debt exists in the form of bonds.

Most of these bonds are issued in the name of specific projects, meaning the debt is not entirely the responsibility of the Austrian government.

It’s similar to how Americans borrowed money to build railways, mortgaging the railway to British banks and using the borrowed money for construction.

If an economic crisis occurred and the railway company went bankrupt, the British banks would be trapped.

Many of Austria’s projects operate similarly, with a large amount of debt owed to banks and a bunch of bonds issued to the public, while the government’s contribution is merely the startup capital.

Since these projects follow a standard commercial operation model, if anything goes wrong, the worst-case scenario is just a business bankruptcy.

The economic alignment is also a key factor in the alliance between Britain, France, and Austria. From a globalization perspective, as long as Britain or France experiences an economic crisis, Austria would be affected, and vice versa.

Escaping this situation is actually quite simple, and it involves just one word: wait. Once domestic private capital has accumulated sufficiently, there will no longer be a need to borrow money from abroad.

It’s a mutually beneficial relationship, with one side having excess capital needing to be invested, and the other side requiring funds for development, making cooperation a win-win situation.

In the original timeline, this is how the Americans developed. If it weren’t for the World Wars, they wouldn’t have quickly transformed from a debtor nation to a creditor nation.

Of course, being a debtor or creditor nation isn’t absolute. Domestic companies borrow from foreign banks, while domestic banks also expand overseas, offering loans abroad.

Even the Russian Empire, with its lack of capital, still has banks exporting capital overseas. These are normal economic activities, primarily driven by profit.

Understanding the French stance, Alexandrovich did not pursue it further. After visiting France’s industrial sites, he sailed directly to London.

This time, he was more relaxed, as the Russian government had no illusions about obtaining loans from the British. Unless British bankers had lost their minds, such a scenario was impossible.

They couldn’t rely on the British government to guarantee loans, could they? The two sides were enemies. Even though the Russian Empire had fallen behind in the ranks of Britain’s competitors, the accumulated animosity from before wasn’t easy to dissolve.

Moreover, Prussia and Poland were under British influence, so even for the sake of not discouraging their allies, Britain wouldn’t act against their interests.

...

The diplomatic actions of the Russians have drawn the attention of the Kingdom of Prussia. Even without Bismarck, William I still managed to maintain control over the country.

After a series of political struggles, the Junker nobles, who had temporarily united due to the war, were now fragmented.

For example, there are now industrial Junkers, financial Junkers, military Junkers, court Junkers, parliamentary Junkers, and rural Junkers.

With his subordinates no longer united, the king’s power has naturally been consolidated. Prussia’s politics are beginning to normalize, and while the military still holds significant influence, it no longer has a monopoly.

A new balance of power has been established internally, and William I has turned his attention to the European continent. As an adversary, he is keenly aware of the Russians’ every move.

The Russians are trying to use diplomatic activities to break free from their isolation, and William I certainly cannot allow this.

In the Berlin Palace, Prussia’s military and political leaders gathered to discuss how to disrupt the Russians’ diplomatic efforts.

“The Russian crown prince’s trip to Europe is at the invitation of the French, and there must be some exchange of interests between France and Russia. Although an alliance between the two countries is unlikely.

Britain, France, and Austria have already formed an alliance, so there is no basis for the French to ally with the Russians at this time. The French are probably trying to bolster their position and gain more influence within the Tripartite Alliance by cozying up to the Russians.

What the Russians lack most right now is money, and the French have plenty of capital. The main purpose of Alexandrovich’s visit to France is likely to secure a loan.

From an economic perspective, the Russian government has completely lost credibility now. No banker would be foolish enough to lend them money. The Russians’ only hope lies in the exchange of political interests…”

Listening to the Foreign Minister Mackeit’s rambling, William I furrowed his brow. It wasn’t just the Russians who were short on money, Prussia was also facing financial difficulties.

The financial situation of the Prussian government was even worse than that of the Russian government. At least the Russians had defaulted and were no longer paying off debts, whereas Prussia had to bear a heavy debt burden.

In recent years, more and more people from the Kingdom of Prussia have gone to Austria to make a living, largely due to the excessive tax burden.

To repay the debts, the Prussian government had no choice but to increase the burden on its citizens. Those who couldn’t bear it simply ran away.

William I dared not stop them. Most of those leaving were destitute, having lost their livelihoods in the country, and staying behind would only pose a risk.

If it weren’t for the nearby migration option, there would have been widespread unrest in Prussia. Winning against the Russian Empire brought only glory. The newly expanded territories couldn’t be converted into wealth in the short term and were still in the investment phase.

The citizens had not received any tangible benefits, and a great power status alone couldn’t fill their stomachs. Of course, the psychological boost was still useful. Even though people were struggling, public support for the government remained high.

Even if they couldn’t make ends meet, people only migrated away rather than starting a revolution.

In this regard, it’s somewhat similar to Japan, except that Japan doesn’t have an outlet for it, such as migration. When hunger strikes, they still resort to unrest, such as rioting for rice.

William I interrupted, “What plans does the Foreign Ministry have? Whatever the Russians’ intentions, our task now is simply to disrupt them.”

No justification was needed. If the enemy wanted to do something, preventing them from succeeding was the right approach.

They couldn’t interfere with the Russian government’s internal reforms, but Prussia could disrupt their international diplomatic activities.

William I had no confidence in comparing diplomatic means with other countries, but when it came to dealing with the Russians, he still had some assurance.

After pausing for a few seconds, Foreign Minister Mackeit replied, “Your Majesty, the possibility of the Russians obtaining funds from external sources is unlikely. Their main political objective should be to improve diplomatic relations with various countries.

Now that France and Russia are drawing closer, it has also provoked the Austrian government. To this day, the Russo-Austrian alliance no longer brings political benefits to Austria. On the contrary, it is a diplomatic burden.

There are only a few years left before the end of the Russo-Austrian alliance. The Ministry of Foreign Affairs plans to magnify the rift between them and prevent Russia and Austria from renewing their alliance.”

Disrupting the Russo-Austrian alliance is very significant for the Kingdom of Prussia, as it directly relates to the outcome of the next Russo-Prussian War.

Prime Minister Moltke shook his head and said, “This is not enough. The Russo-Austrian alliance is not only about political interests but also involves substantial economic significance.

The current Russian Empire is almost a dumping ground for Austrian goods. Austria alone occupies 63% of Russia’s total import and export trade. Austria will not easily let go of such a large amount of interests.”

Interests are always the best bond. In the face of interests, there is nothing that cannot be compromised. Even though there are considerable conflicts between Russia and Austria, they still maintain their alliance for the sake of benefits.

Foreign Minister Mackeit explained, “Yes, Prime Minister. However, we also need to look at some data. In recent years, the total trade volume between Russia and Austria has been continuously declining.

The Russian government is working hard to shake off its economic dependence on Austria. To develop domestic industry, the Russians have repeatedly raised tariffs.

If it weren’t for the fact that Russian industry is too backward and its products lack market competitiveness, the Austrians wouldn’t be able to maintain their current market share.

The land reclamation movement promoted by Alexander II has already borne fruit. This year, the surplus of Russian agricultural products has become a foregone conclusion.

After the Russian Crown Prince’s tour of Europe, it is very likely that they will open up the domestic market to Britain and France in exchange for the ability to sell their agricultural products in the international market.

Once Austria loses its monopoly on the Russian market, it will also face the impact of Russian agricultural products in the international grain export market, and relations between the two countries will definitely be greatly affected.

The more agreements the Russians reach with Britain and France now, the greater Austria’s loss of benefits. It may not be obvious in the short term, but in three to five years, this change will be very significant.

As long as we can make the Austrians see greater benefits, abandoning the Russo-Austrian alliance is not impossible.

For example: Let them believe that as long as we win the next Russo-Prussian War, they can gain Ukraine and the Russian-controlled Balkan Peninsula, cutting off the Russians’ grain export routes.”

Everyone’s faces changed dramatically, and they were obviously shocked by Mackeit’s astonishing remarks.

The room suddenly fell silent, with only the sound of breathing and faint heartbeats remaining.

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