African Entrepreneurship Record

Chapter 1178: Chapter 187: Collateral

The trade with East Africa and the United States is now a lifeline for Russia’s industry and commerce, especially the trade with East Africa, which sustains the current internal stability of Russian society.

For instance, the front-line Russian army requires a large amount of food and supplies, which must be provided by East Africa. Although theoretically, Russia’s grain production can be self-sufficient, the terrible transport and bloated, decaying logistics system prevent the food from the rear from ever reaching the front line to meet the needs of the armies and the industrial hubs in the west.

This has led to the unimaginable situation of the front-line Russian army consuming East African wheat bread; for a country like Russia, which is a major grain producer, this was once unthinkable. It’s known that before the war, Russia produced nearly one-fifth of the world’s wheat.

Meanwhile, the prices of industrial goods in Russia have skyrocketed with the advent of the war, such as the price of boots rising by more than two hundred percent, and matches by over three hundred percent. Now, in winter, these are essential basic goods, and that’s after a vast inflow of East African goods.

Agriculture and industry alike, Russia’s poor military industrial capabilities are even more glaring on the battlefield. Despite mobilizing a large number of troops, at least a quarter of the Russian army lacks rifles.

From ordinary ammunition to telephone lines, almost nothing is in sufficient supply. Heavy weaponry, which was scarce to begin with, dwindles as each piece is lost in combat. The front-line Russian army has even been in situations where they have fewer than three shells to fire per day.

This means that the export of goods from East Africa to Russia is mostly military supplies and semi-finished products, a situation not shared by other great powers. While exports to other countries mainly consist of raw materials and light industrial products.

As the war progresses, many of the warring countries abandon some non-essential civilian industrial production, yet heavy industry capacity is generally met. However, in Russia, neither light nor heavy industry is up to standard.

In summary, it was no injustice that Russia disintegrated in the previous wars; at least from East Africa’s perspective now, the internal situation in Russia is already dire, though most officials are unaware that Russia’s decline could further deepen.

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After the internal meeting of the East African Government, Ernst received Franz IV and his party at Rhine Palace and engaged in negotiations on the details surrounding the Basra Railway.

At this time, Germany and Austria-Hungary, due to the war, were unable to support the construction of the Basra Railway. The Ottoman Empire also lacked the independent capability to build railways, so the construction could only fall to East Africa, a ”neutral” nation.

”Funding and labor will be provided by the Ottoman Empire, while we, East Africa, will be responsible for providing the technology, materials, and engineers for crucial sections.”

”Of course, considering the Ottoman Empire’s economic capabilities, we could offer loans to the Ottoman Empire, but they must be secured with collateral.”

The conditions set by East Africa were reasonable, but the requirement for collateral posed a dilemma for the Ottoman Empire, as finances were already strained. The Ottoman Empire was preparing for war and could not contribute even a penny.

The Ottoman envoy Elled looked at Franz IV with a worried expression, hoping Franz IV would mediate.

Franz IV had to step in again and said to Ernst, ”Your Majesty, due to the ongoing war, it’s obvious the Ottoman Empire cannot come up with such a large amount, so could they repay gradually after the war?”

Ernst immediately refused, ”That is not possible, Your Highness. As you know, the Basra Railway is not merely a simple railway line; it involves the strategic maneuvers of various great powers.”

”Although this railway is endorsed by Germany, Austria-Hungary, and the Ottoman Empire, the United Kingdom, France, and Russia definitely won’t agree to its construction and opening.”

”Therefore, undertaking the construction of the Basra Railway comes with enormous political pressure. Although East Africa is a prominent power in the Indian Ocean region, we cannot overlook the strength of the United Kingdom in the Indian Ocean.”

”Particularly in the Persian Gulf region, where the United Kingdom has numerous military bases and colonies; every passage of an East African ship through the Persian Gulf carries the risk of attack.”

This was indeed a fact but also a pretext found by Ernst. After all, in a previous era, the Ottoman Empire was ultimately dismembered after the war. If the ultimate outcome for the Ottoman Empire remains unchanged, East Africa must secure tangible benefits in advance; otherwise, it would end up with nothing.

”Then what do you think the Ottoman Empire could offer as collateral that East Africa would value?” Franz IV could only ask in this manner.

There are indeed options, as the Ottoman Empire, being one of the world’s major powers with profound backgrounds, surely has something East Africa would find appealing.

Ernst pretended to ponder for a long time, making Franz IV and Elled very anxious.

Elled hoped that the East Africans’ demands would not be excessive. To be frank, the Ottoman Empire regarded this war as a battle for its national destiny, putting everything on the line.

Therefore, the construction of the Basra Railway was imperative. This would ensure smooth trade between East Africa and the Ottoman Empire, alleviating the latter’s concerns.

After a seemingly long deliberation of half an hour, Ernst finally said, ”How about using land as collateral?”

Although Ernst’s tone was very calm, Elled broke into a cold sweat; land is a sacred and untouchable subject for all nations.

Franz IV seemed somewhat indifferent, as this was an issue concerning the Ottoman Empire.

Elled could only brace himself and ask, ”Which piece of land does Your Majesty intend to use as collateral?”

Ernst, feigning casualness, remarked to the anxious Elled, ”No need to be tense. Naturally, we East Africans wouldn’t do anything excessive; concerning the collateral, I believe your nation’s small area in the northwest of the Persian Gulf would be quite suitable. What do you think?”

Pointing to the map, towards the area on the west coast of the Persian Gulf that was futurely the coastal area of Saudi Arabia, Ernst asked. At this time, the Saudi coast was still under Ottoman control and was not a particularly critical area.

The region Ernst wanted seemed more reasonable to Elled, because this area was quite close to East Africa’s Beibu Gulf territory, with only the force of Emir Rashid in-between, possibly indicating East Africa’s intent to expand its Beibu Gulf holdings.

The Emirate of Rashid was a family-ruled state under the Ottoman Empire, considered a vassal state. Later, it fell to Saudi Arabia, which seized vast territories from Rashid’s grasp, including a series of oil fields.

Of course, the Ottoman Empire still controlled most of the coastal areas today, whereas the Emirate of Rashid was primarily inland, with a small coastal area near Qatar and Bahrain.

Elled said, ”If it is just this small region, then there is indeed a foundation for negotiation. However, I need to consult national opinion on this matter.”

In the present Persian Gulf region, besides Basra, Kuwait, and other significant coastal outlets in the north for the Ottoman Empire, other areas are truly not highly valued by the Empire.

Moreover, the region East Africa seeks is not large and is mainly desert—a marginal piece of the Empire. Using it as collateral for the construction of the Basra Railway is not excessive, at least from Elled’s standpoint.

With his plot succeeding, Ernst cheerily said, ”If your country can cede this land to East Africa, we can fully account it as the payment for the Basra Railway. In this way, East Africa would expand its interests in the Persian Gulf area, while your country would complete the last section of the Baghdad Railway to the Persian Gulf—a mutually beneficial outcome for both parties.”

Building on the previous negotiations, Ernst chose to push further. Securing sovereignty over the Persian Gulf coastline outright was far more advantageous than constant wrangling later. For East Africa, merely financing the Ottoman Empire with a railway under 700 kilometers was an excellent deal as judged by Ernst.