After the purge ended, the Russian government devoted more energy to the negotiations, and the Prussian-Russian talks quickly entered a critical phase. The main points of contention between the two sides centered on territorial concessions and reparations. In comparison to reparations, ceding territory was actually easier to resolve. The most serious dispute between Prussia and Russia concerned the regions of East and West Prussia, which were the traditional strongholds of the Junker nobility, territories that the Prussian government was reluctant to relinquish lightly. However, these regions were now in Russian hands, and as the defeated party, Prussia simply lacked the power to reclaim them. There is a type of “territorial concession” that amounts to accepting a fait accompli. This issue could be temporarily set aside, and over time everyone would eventually get used to it. No matter how dissatisfied the Junker aristocrats were, they could not change the fact that the Kingdom of Prussia was too weak to reclaim these regions. However, the Prussian government is still pushing the issue. On one hand, it harbors hopes that the great powers might intervene internationally to force the Russians into making concessions. On the other hand, it is a move meant purely for political posturing. Compared to the territorial disputes, reparations are the real challenge. Both Prussia and Russia are short on money, and neither side is willing to make concessions. The Russian government wanted to extract as much in war reparations as possible to make up for its financial shortfall, while the Prussian government had the exact opposite view. Them being already financially strained, it was simply incapable of paying huge sums in reparations. A genuine, irreconcilable conflict emerged. No matter how great the Russians’ advantages, the Prussian government was reduced to two words—no money. The Prussian government truly had no money and it was not merely a facade. No matter what they did, they just couldn’t squeeze any funds out. Not only could they not afford the reparations demanded by Russia, but they had also halted payments on the debts owed to the British. It is said that the Prussian Minister of Finance has already set out for London, apparently to persuade the creditors to extend the debt maturities or to accept payment in kind. This lobbying effort was destined to be extremely challenging. The Kingdom of Prussia was resource-poor, its industrial and technological capabilities were limited, and the competitiveness of its manufactured goods in commerce was low. Even if goods paid in kind were sold at a discount, competing against high-quality British industrial and commercial products made selling them a formidable challenge. Relying solely on “cheapness” only provided limited competitiveness. Unless the price gap was extremely large, high-quality goods would still be preferred. In reality, the Kingdom of Prussia lacks sufficient natural resources and relies on importing industrial raw materials from overseas, which drives up the cost of industrial and commercial goods. Its only advantage lies in labor costs. Unfortunately, labor costs are low worldwide at this time, and except for certain labor-intensive industries, labor constitutes only a small portion of production costs in most sectors. In fact, the Prussian government proposed paying war reparations in kind, but this suggestion was flatly rejected by the Russian representatives. The Russian government is in desperate need of money, not industrial or commercial goods, especially given its severe shortage of foreign currency. The war has left the Russian Empire with a massive trade deficit, forcing it to rely on foreign loans to maintain balance. Now that the war is over, the Russian government urgently needs a large amount of foreign currency to repay its debts. Otherwise, it will have no choice but to fill the gap with its gold and silver reserves. The British face no such pressures. By acquiring cheap industrial and commercial goods, they can dump them into their colonies, ensuring that the creditors’ pockets remain full. For the Russian government, however, these goods can only be used domestically. Even if they are sold on the market, they would only fetch rubles, the currency they themselves print, and not the precious foreign exchange they desperately need. Russian representative Nikita Titov extended five fingers and said, “500 million guilders. This is our bottom line. We cannot go any lower. You must understand that for this war, the Russian Empire has spent at least 3 billion guilders in military expenditures and suffered economic losses exceeding 10 billion guilders. All of this was caused by you. The reparations we demand amount to merely 5% of these losses, a figure already exceedingly modest.” There was no flaw in his logic. Combined, the two Russo-Prussian Wars, including the costs of suppressing domestic unrest, had indeed cost the Russian government over 3 billion guilders in military spending. The economic devastation was even more staggering. The Polish and Lithuanian regions were nearly reduced to wasteland, Russian-controlled Western Ukraine lay in ruins, and the two wars had cost the Russian Empire over 10 million lives. When tallying these losses, 10 billion guilders would scarcely cover the total. From this perspective, the Russian government’s demand for reparations was indeed restrained. At the very least, they did not demand compensation for the families of the deceased. Had they done so, even selling off the entire Kingdom of Prussia would not suffice to cover the debt for tens of millions of casualties. Such is the ruthlessness of politics. Had Berlin emerged victorious, they could have framed the war as “a righteous struggle to liberate ethnic minorities enslaved by the Tsarist regime.” The international community would have labeled regions like Poland, Lithuania, and Russian-controlled Western Ukraine as “territories forcibly occupied by the Russian government.” But since they lost, there is no debate that these regions remain indisputably Russian territory. The destruction wrought upon them is thus deemed damage to the property of the Russian Empire. The Prussian representative, Gillian von McKeith, resolutely pleaded poverty, “Your Excellency, the disasters brought by this war are not borne by your country alone, we are also victims. Right now, the Kingdom of Prussia is in ruins, with misery everywhere. Ordinary citizens struggle to meet even their most basic needs, and the government’s finances are running a deficit. We truly have no money to offer.” Claiming to be “out of money” was a universal tactic, and Gillian von McKeith was not afraid that the Russians would further exploit Prussia. The territories currently under Russian control were already the maximum that Europe’s great powers could tolerate. If the Russian government grew too greedy and attempted to swallow the entire Kingdom of Prussia, Britain, France, and Austria would remind them who truly ruled Europe. The inability to annex Prussia did not mean that its destruction was impossible. If the Russians were willing to pay the price, marching all the way to Berlin to install a new government would not be difficult. However, doing so would require another massive increase in military expenditures. If Prussia were reduced to a wasteland after the war, then there would be no reparations to expect at all. No rational government would sacrifice national interests just for the sake of pride. Especially not a poor country like Russia, which was even less capable of resisting the allure of money. The Russian government’s desperate need for funds was evident in its choice of payment currency during the negotiations. Typically, when it came to war reparations, nations would pay in their own currency. But instead of using the ruble, the Russian government had no choice but to opt for guilders as payment. Due to financial pressures, the Russian government was compelled to issue more currency, leading to a continuous depreciation of the ruble. To safeguard its own interests, it was necessary to designate a stable currency, leaving only the British pound and the Austrian guilder as options. The Russian Empire’s largest creditor was Austria, which inevitably favored the guilder in its foreign exchange reserves. The financial model that pegged the ruble to the pound had long been abandoned during the war. Nikita Titov shook his head and sternly refused, “This is an issue your government needs to consider. Mistakes must be accounted for. If you cannot afford the reparations, find a way to borrow. I believe your country can certainly raise sufficient funds. If that truly isn’t possible, we will take what we need ourselves. In any case, the 500 million guilders cannot be reduced by a single cent.” In theory, if the 500 million guilders in war reparations were obtained, Russia’s financial crisis would be immediately resolved. Paying off debts early could save a substantial amount in interest expenses. If the entire sum were used to repay debts, foreign debt could be halved instantly. To force Prussia into compromise, Nikita Titov did not hesitate to issue threats. Could they obtain that much money by taking it themselves? The answer was negative! Prussia at that time was not the German Empire at its peak. Even if they dismantled all the machinery, down to the last screw, it wouldn’t amount to 500 million. … Unable to make concessions and confronted with a lack of funds, both sides found themselves evenly matched, causing the negotiations to quickly reach an impasse. At the Vienna Palace, Franz, who was closely monitoring the Prussian-Russian negotiations, began to feel troubled. If the Prussian-Russian negotiations dragged on, it would be highly unfavorable for Austria. Without concluding this war, how could a new Vienna System be established? Given the British disposition, if they didn’t seize the opportunity to cause trouble, they wouldn’t be the British. Otherwise, how would they have earned the nickname “shit stirrers”? As the saying goes, “the longer the night, the more dreams,” meaning that prolonged delays could lead to unforeseen complications. No one could guarantee that Austria’s current advantages would persist over time. Missing this opportunity would result in significant losses for Austria. The Vienna System would bring not only prestige but also substantial political benefits. Foreign Minister Wessenberg remarked, “Your Majesty, the Russians’ demands are excessive so Prussia simply cannot bear them. A war indemnity of 500 million guilders likely exceeds the total of all war indemnities in European history, and perhaps even surpasses the sum of all such indemnities worldwide.” How excessive is it? In this era, it is indeed an astronomical sum. In the original timeline, during the Franco-Prussian War, the final war indemnity was only 5 billion francs, which already shocked the entire world. Based on the current exchange rate, 5 billion francs equate to approximately 400 million guilders. Of course, considering the different eras, 400 million guilders from a decade ago is not much less than 500 million guilders to date. However, Prussia and France are entirely different entities. The French easily raised 5 billion francs, reportedly exceeding that amount by over a billion. It’s worth noting that the original timeline’s Franco-Prussian War devastated several eastern provinces, causing economic losses exceeding 20 billion francs. The French government itself had massive debts totaling tens of billions of francs, comparable to the current debts of the Prussian government. A strong foundation makes a significant difference. The French could afford such losses, whereas the Kingdom of Prussia simply cannot. Franz remained unfazed, having witnessed the reparations of the World Wars. His awareness made such sums seem insignificant. After pondering for a moment, Franz nodded and said, “For the Prussian government, this is indeed quite substantial. Could we persuade the Russians to make some concessions? For instance, by reducing a portion of the reparations or extending the payment period, thereby limiting the annual payment to an amount the Kingdom of Prussia can manage.” Wessenberg shook his head and replied, “Your Majesty, that would be difficult. The damage from the war is immense, and the Kingdom of Prussia currently has almost no capacity to pay. Moreover, the Russians owe us a substantial debt. Any suggestions of reduction or deferred payment are not appropriate for us to propose.” After hearing this explanation, Franz helplessly rubbed his forehead. When it comes to one’s own interests, there’s no room for negotiation. If the Austrian government suggests that the Russian government reduce or waive reparations, and the Russians in turn ask Austria to forgive debts, it would be quite awkward. A poor financial situation doesn’t justify not paying. How could Austria collect debts from the Russians under such logic? Franz inquired, “Given the current situation, how long can the Russian government’s finances hold out?” The Prussian-Russian ceasefire doesn’t mean the war has ended. Until a treaty is signed, the war isn’t truly over. Currently, both Prussia and Russia have over a million troops still facing off at the border. Even without active combat, the daily expenses of feeding and maintaining such a large force are substantial. For the financially strained Prussia and Russia, this undoubtedly adds pressure. Prime Minister Felix responded, “They can probably hold out for another two to three months. The Russian military threat hasn’t intimidated the Kingdom of Prussia, which is directly related to this. If the Russo-Prussian War continues, in just over a month, the Russian government will face another financial crisis. It’s not just the Russians who are short on funds, Prussia isn’t much better off. If not for the Prussian army being stationed domestically, reducing transportation costs, the Prussian government might have already gone bankrupt.” Two paupers testing each other’s patience… Franz was speechless. Given the current situation, it’s no longer about how much the Kingdom of Prussia should pay in reparations, but rather how much they can actually afford.
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