Holy Roman Empire

Time flew by, and the Austrian army soon withdrew from the Panama region. However, the territory was not handed back to the Colombian government, but instead transferred to the local Panamanian government.

To be precise, it was handed over to the Panama Independence Organization, as the original local government had long been replaced and was now led by the independence movement.

When the Colombian government forces attempted to re-enter the region, they were blocked halfway by local militias, who refused them entry.

The two sides entered into a standoff, with the Panama Independence Organization refraining from declaring independence outright. Their official reason for denying entry to government troops was poor military discipline.

Although Colombia is not a federal state like the United States, local governments still possess significant power and there have been precedents for denying entry to federal troops in the past.

Even though it was obvious that Panama was on the verge of declaring independence, President Rafael Núñez had no choice but to rely on political maneuvering at this stage.

Suppression was out of the question! Whoever fired the first shot would bear the blame for starting a civil war.

This was precisely what the Austrian government wanted to see. The Austrian army had just withdrawn, and an immediate outbreak of civil war would be quite awkward.

Moreover, the longer the delay, the better prepared the independence organization would become. Maintaining control over a territory takes time, and the independence movement had only been established for a few months. They were barely able to set up the framework of governance, let alone fully organize their internal affairs.

Foreign Minister Wessenberg reported, “Your Majesty, the Colombian government is once again urging us to pay the compensation. According to reports from our embassy, they have been surrounded by the families of fallen soldiers for three days.

Some people have even stormed the embassy district, demanding compensation payments. At this point, even leaving the embassy to purchase supplies has become nearly impossible, and they now rely on the Colombian government to deliver essential goods.”

Upon hearing this, Franz smiled faintly. Protests? Which great power hasn’t faced a few protests in this era? With enough experience, such situations become almost trivial.

“Tell the Colombian government to provide proof of identity for the families of the fallen soldiers. Once we have verified their identities, we will immediately release the compensation payments.

As for property damage, most of it was concentrated in Panama and the compensation is meant for the local population. To avoid the misappropriation of funds, we will directly transfer the money to the local government.”

Transfer the money to the local government? What for? To fund a civil war?

If given a choice, the Colombian government would probably prefer not to receive this compensation at all. This was no longer just a hot potato—it was a deadly trap.

This was true revenge. Compared to this, the earlier accidental conflict ‘misunderstanding’ was nothing more than child’s play.

Foreign Minister Wessenberg cautiously added, “Your Majesty, to demonstrate goodwill towards us, the Colombian government has already relaxed trade restrictions on the Peruvian border.

If we proceed in this manner, I’m afraid they might reimpose the border blockade. If smuggling routes are cut off again, Peru and Bolivia will…”

Franz waved his hand dismissively and then said, “This is a minor issue. Peru is essentially France’s little brother, and most of their imported goods come from French suppliers. Even if the border is sealed, what does that have to do with us?

As for Bolivia, haven’t we already opened a trade route through Argentina? While the smuggled goods aren’t abundant, if they ration carefully, it should barely suffice.”

The recent “Panama Incident” had served as a warning, not just to Colombia, but also to its neighboring countries like Argentina. Even Chile, which had been holding tightly onto Britain’s coattails, was terrified.

In South America these days, none of the countries are particularly strong. Each one is fragile in its own way. Not even the three so-called regional powers had managed to distinguish themselves significantly.

With just one “misunderstanding”, Colombia’s military losses matched over a year’s worth of casualties from the “Guano War”. It’s no wonder everyone was on edge.

Having witnessed Austria’s strength firsthand, Argentina, as a neighboring country, naturally had to adjust its foreign policy. Lifting the official trade blockade outright wasn’t an option as that would offend Britain.

However, the shrewd Argentine bureaucrats quickly found a workaround. If open trade was impossible, then smuggling would suffice.

This arrangement achieved multiple goals. Austria was satisfied, Britain had no reason to complain, and the officials involved could line their pockets in the process.

…

While Austria was taking action, the French weren’t sitting idle either. The current French Empire was far more formidable than in the original timeline. With its prestige unshaken and French Guiana as a strategic foothold, intimidating a few South American countries was hardly a challenge.

If the Austrian government could persuade Argentina to relax its blockade, the French could similarly convince Brazil to turn a blind eye.

In many ways, the “blockade” orchestrated by the British was riddled with loopholes from the start.

The so-called “blockade” only effectively targeted ordinary merchants. Its primary result was reducing the flow of goods and raising the costs of supplies for Peru and Bolivia.

However, wealthy and well-connected merchants never really cared about such blockades. If the profit margin was high enough, there wasn’t a blockade a capitalist couldn’t bypass.

Even with the Royal Navy personally overseeing the coastline, there were still merchant ships daring to breach the blockade. As long as their backers were powerful enough, they had little to fear.

If even the British couldn’t fully enforce a blockade, it was laughable to expect other nations to do so.

Beyond the domestic elites profiting from loopholes, there were also daring merchant groups backed by foreign powers.

If caught, the worst consequence was usually just being turned back. Punishments were rarely pursued since no one wanted to risk diplomatic incidents over trade violations.

The only country that managed to enforce a truly strict blockade was Chile. With their own vital interests at stake, they had no choice but to enforce it rigorously.

…

Perhaps it was because South America was too rich, or perhaps because the South American nations were too weak. Whatever the reason, South America had successfully caught the attention of Napoleon IV.

Seeing Austria set its sights on Panama, Napoleon IV also began contemplating expanding France’s South American colonies.

It had been many years since France engaged in territorial expansion, and for Napoleon IV, who aspired to surpass his predecessors, this situation was unacceptable.

Regarding the emperor’s grand vision, the upper echelons of the French government were both excited and resigned. Everyone wanted to achieve glory and secure their place in history, but the conditions simply weren’t favorable.

Foreign Minister Charles de Freycinet advised, “Your Majesty, the current international situation does not favor expansion. The Russo-Prussian War has reached a critical stage, and we cannot afford to divide our strength.

Based on the current outlook, once the Russo-Prussian War concludes, the European continent will undergo another major reshuffling. This will be our best opportunity to expand our influence in Europe.

If not for the impending changes in Europe, the Austrian government would never have given up Panama so easily. International public opinion alone would not be enough to force their hand.”

It made perfect sense. At this time, the dominant mindset was “Eurocentrism.” Under this principle, both France and Austria, as major continental powers, had to focus their resources on navigating the post-war European landscape.

Napoleon IV shook his head and said, “Sir Charles, this does not contradict my plan. Colonial expansion is a long-term national strategy, not something we must act on immediately.

Right now, all we need to do is lay the groundwork. Once the dust settles in Europe, it will not be too late to act.

This world has already been carved up. The most detestable British have seized the richest regions. Even those Southern European barbarians have managed to grab a large piece of the cake.

What’s left for France is nothing but scraps and leftovers. In name, we are the world’s third-largest colonial empire, but everyone knows the truth that what we have is just a large pile of worthless sand.

Falling behind in one step means falling behind at every step. At this point, our choices are limited. Other than East Asia, the only viable option is South America. Relatively speaking, South America is fragmented into smaller nations, making it easier to seize control.”

Expansion, expansion, and more expansion, this was not just the personal ambition of Napoleon IV, but a dire necessity for France’s domestic industrial and commercial sectors.

This was the price an industrial power had to pay. Without the crushing blow of the Franco-Prussian War, and after annexing the Italian territories, France’s industrial capacity had grown far beyond historical levels.

Increased industrial production capacity did not necessarily bring only benefits. It also came with an urgent need for raw materials and markets for manufactured goods.

Due to the large-scale importation of raw materials, French industrial goods had relatively high production costs, which limited their competitiveness in international markets.

To solve this problem, the best solution was expansion. No raw materials? Seize them. No market for goods? Seize one. In short, there was nothing that couldn’t be solved by using force.

Upon hearing this explanation, Charles hesitated, words on the tip of his tongue. He had intended to point out that the South American countries were not weak, but when the words reached his lips, he couldn’t bring himself to say them.

Strength and weakness are relative, and compared to France, the South American countries were undeniably far too weak. Even if all these nations united, they still couldn’t possibly match France’s strength.

The Emperor’s stance was firm, and the colonial expansion faction held considerable influence domestically. Seeing the situation turning unfavorable, Finance Minister Roy, who also opposed war, hurriedly changed the subject, “The South American issue isn’t urgent for now. The most pressing concern remains the Russo-Prussian War. Various signs suggest that Austria has plans to annex the German Federal Empire.

The British cannot be relied upon. If the Prussian-Polish Federation loses and Russia emerges with a pyrrhic victory, we will be the only power left capable of stopping an Austro-German unification.

If the Austrian government insists on pursuing this goal, and we are forced to intervene, war will be inevitable.

We’ve all seen the brutality of the Russo-Prussian War. If we go to war with Austria, it will likely be even more devastating.

To ensure victory, we must prepare in advance. This will require an enormous amount of funding, which our current finances cannot sustain.”

This wasn’t pure exaggeration. Austria had always harbored ambitions to unify the German Federal Empire, and those plans had evolved over time.

If the international situation shifted, these plans could very well become a reality. The Russo-Prussian War was precisely such an opportunity.

If the Prussian-Polish Federation wins, there’s no question about it, no matter how heavy the losses, the Prussian government will have no choice but to fight Austria to the end. This is a matter of principle, and there’s no room for compromise.

However, if the Russian government wins but suffers heavy losses, the situation changes.

While Russia certainly doesn’t want to see Austria annex the German Federal Empire, the Russian government wouldn’t expend all its resources to prevent it either.

It’s all about interests. Even if Austria unifies Central Europe, the Russian Empire will still be the Russian Empire. At worst, they’d lose their path for European expansion, but the threat wouldn’t be fatal to them.

The loans Austria has extended to Russia aren’t just empty gestures, they can influence the Russian government’s decisions at critical moments.

If Austria promises certain benefits, a compromise between the two nations is highly likely.

Against this backdrop, the Austrian government would have the ability to persuade most European nations to remain neutral. The final scenario would likely be a one-on-one confrontation between France and Austria, with possibly an unreliable British ally joining France.

Since Napoleon IV ascended the throne, he has largely continued his father’s economic policies. While the economic growth rate has slowed somewhat, France’s overall economic performance remains solid.

When the Finance Minister said that their current finances could not sustain it, it genuinely startled Napoleon IV. But he quickly recovered. The French government’s debt burden has always been heavy. This was an undeniable fact.

The most indebted nation in the world isn’t the boastful John Bull, nor the recently resurgent Austria, nor even the war-torn Prussia and Russia. It is, in fact, the dominant power of Western Europe: France.

It was inevitable. The renovation of Paris, construction of infrastructure, revival of military power, colonial expansion abroad, and the annexation of Italian territories all required vast sums of money.

The Orléans monarchy left behind a mess of towering debt. While Napoleon III revitalized the French economy, he failed to resolve the debt crisis, and instead, the debt continued to grow even larger.

It’s not that this economic model is inherently flawed. In fact, many countries in later eras would stimulate their economies through government investment, following a similar approach.

However, this method inevitably leads to rising government debt. During the credit-based monetary era, governments could issue more currency to fill the gap. But under the gold standard, they had no choice but to endure the pressure directly.

Under this model, France’s economic growth surged, but so did the government’s debt burden.

The total debt of the French government has surpassed 28 billion francs, a figure that exceeds the combined debts of Prussia and Russia, making France the most indebted nation in the world.

Of course, high debt doesn’t mean the French government is truly impoverished. Not all government investments were purely public welfare projects, many had been turned into assets capable of generating revenue. The problem was that these assets couldn’t be easily liquidated in the short term.

After pondering for a moment, Napoleon IV shook his head and said, “The situation in Europe isn’t as dire as you suggest. The Austrians haven’t even begun preparations for war, which means the Austrian government isn’t ready either.

Your assumptions are just that—assumptions. There are too many variables here. For your scenario to play out, Russia must win a pyrrhic victory.

In reality, with the way the Russo-Prussian War is unfolding, no one can predict its exact outcome.

While Russia does indeed have better odds of victory, it’s not guaranteed to be a costly one. Even if the Prussian-Polish Federation loses, they may not lose everything.

And yes, Britain is unreliable, but we’ve never truly relied on them anyway, have we?

Besides, why must we go to war with Austria? Dividing the German Federal Empire is also an attractive option.

Don’t tell me the Austrians are eager for an all-out war with us. If that happens, the only winner will be Britain.”

The tripartite balance of power was the most stable for one key reason: everyone feared the scenario where “the snipe and the clam fight, and the fisherman reaps the reward.”

Compared to the island-bound British, both Austria and France have far less favorable strategic positions.

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