Empire Rising: Spain

Chapter 163: Chapter 137: The Morocco Agreement (Double-Length)

Carlo didn’t pay much attention to the meeting with President Thiers of France, but he did take some time to meet Thiers briefly and had a friendly exchange.

Although the Spanish Royal Family only consists of Carlo and Queen Sophie, it is closely connected to the Italian Royal Family and the Austro-Hungarian Imperial Family.

Therefore, even though Carlo is young and yet to grasp real power, President Thiers must maintain sufficient respect for him.

However, because Carlo is not interested in interfering too much in diplomatic affairs, after a brief meeting and greeting with Carlo, President Thiers left the Imperial Palace to continue lengthy negotiations with the Spanish Government.

For the French Government, Spain is a country that must be won over. Even at a certain cost, it must ensure that Spain leans more towards France between Germany and France.

Because only in this way can it be ensured that France is not completely isolated, which concerns the future balance of power between Germany and France, the French Government will not make any concessions or compromises.

President Thiers had long anticipated the difficulty of negotiating with the Spanish Government. Diplomatic negotiations are never done overnight, especially when it involves the future national and strategic policies between France and Spain, which takes at least a few weeks to complete.

However, President Thiers does not intend to personally finalize the entire cooperation agreement. As the head of France, his role is to establish a framework of cooperation between the French Government and the Spanish Government. Subsequently, the two governments will formulate more detailed cooperation based on the framework agreed upon by high-level officials.

Once it was confirmed that the Spanish Government did not have a complete inclination towards the Germans, President Thiers finally felt relieved.

At least France will not face the worst-case scenario, which is what President Thiers truly wanted to know and ensure.

Although the land environment in Spain is the worst in Europe, there are still many scenic spots worth visiting when it comes to tourism resources.

This diplomatic negotiation persisted for a long time, with President Thiers staying in Madrid for nearly ten days.

The good news is that before President Thiers left Madrid, he and Prime Minister Prim finally signed a draft cooperation agreement between the two governments.

Some key aspects of the cooperation between the two sides were further discussed, such as the amount of funds Spain could borrow from the French financial sector.

According to the draft of the cooperation agreement, the French Government is willing to provide Spain with at least 500 million francs in low-interest loans.

If the Spanish Government borrows more than 500 million francs at once, the French Government will disburse all the loans to the Spanish Government over five years.

Due to the long loan disbursement period, the Spanish Government has a repayment term of 20 years. It only needs to repay the principal of 500 million francs plus 100 million francs in interest within the 20th year after borrowing.

Although the 100 million francs in interest seems high, spread over 20 years, the annual interest payment is only 5 million francs, which is 1% of the principal.

Of course, this low-interest rate comes with some conditions. Firstly, at least 300 million of the 500 million francs in the loan must be used to purchase goods from France, and the remaining 200 million francs can be freely allocated by the Spanish Government.

In other words, of the 500 million francs loan, the Spanish Government can actually access only 200 million francs. The remaining 300 million francs serve more like a virtual currency promised by the French, only usable to import goods from France, and not usable in other countries.

However, Spain can accept this arrangement. France is also a powerful industrial nation, and Spain can import a large amount of industrial equipment and technical materials from France.

Currently, the value of francs and pesetas is not significantly different. According to the latest exchange rate, the value of 500 million francs is equivalent to 516.25 million pesetas, which is comparable to Spain’s entire fiscal expenditure last year.

One cannot deny that, even while shouldering 5 billion francs in reparations, the French can still offer Spain a 500 million francs loan over five years, demonstrating a significant economic scale and capacity.

Last year’s total fiscal revenue for Spain was less than 500 million francs, proving the current gap between Spain and France. Spain is still far from being a major power, especially in terms of industry and economy.

Prime Minister Prim naturally accepts this low-interest loan offered by the French with ease. The French dare not impose any harsh conditions on this loan since they genuinely wish to win over Spain.

Even if it cannot establish an alliance treaty between Spain and France, it must at least ensure Spain is more inclined towards France and distanced from Germany.

Aside from financial assistance, the French will also provide their industrial technology to help Spain develop and build more effectively.

Excluding some high-importance industrial equipment and technology, other common industrial technologies can be sold to Spain.

This includes not only heavy industry and chemical industry but also military industry and mechanical design and manufacturing.

With the loans provided by the French, Spain need not worry about the lack of funds when purchasing equipment and technology. Although 500 million francs might not be an astronomical number for major powers, it allows Spain, a relatively small nation, to purchase a significant amount of industrial equipment and related production materials, aiding Spain in better building its heavy industry, chemical industry, military industry, and other industrial sectors.