Chapter 110: War Reparations

Vienna International Hotel

Palmeston argued, "Mr. Metternich, your asking price is too high. It has already surpassed Sardinia's capacity to bear!"

Metternich replied calmly, "Mr. Palmeston, let's run the numbers. In this Austro-Sardinian war, Austria spent 100 million ducats on war expenses and lost 12,000 soldiers. Even if we compensate each casualty with 1,000 ducats, that's 12 million ducats.

The number of civilian deaths reached 586,000, with 26,000 nobles, including marquises, among the deceased. Over a million people are now homeless.

If we calculate by providing 500 ducats as compensation for each civilian and 3,000 ducats for each noble, the total will be 371 million ducats. For the homeless civilians, even a conservative estimate would be at least 150 million ducats for resettlement.

Nearly half of the cities in Lombardy and Venice were destroyed in the war. The local economy has completely collapsed, and the cost of post-war reconstruction will not be less than 300 million ducats.

Furthermore, the Sardinian army recklessly plundered a significant amount of wealth from the civilians, amounting to at least 180 million ducats, and that must also be returned...."

According to the Austrians' calculations, Sardinia would probably be in debt until the next century. Before Metternich could finish, Palmeston interjected:

"Mr. Metternich, the account can't be calculated this way. Most of the casualties and economic losses were caused by the revolutionaries. The damage caused by the Sardinian army to your country is just a small part of it."

Indeed, these losses were a collective result of the actions of the rebels, the Austrian army, and the Sardinian army. However, all the damages were expected to be borne by Sardinia.

With a straight face, Metternich replied, "Mr. Palmeston, we have sufficient evidence to show that the rebellions in Lombardy and Venice were orchestrated by the Sardinian government.

The damages caused by the rebels naturally need to be borne by Sardinia. We are only asking for a compensation of 1.66 billion ducats, which is actually quite minimal."

Palmeston naturally wasn't buying it and began to negotiate each point with Metternich.

For instance, regarding civilian casualties: The Sardinian army did not commit large-scale massacres. How could they have killed so many civilians in such a short time?

Attributing natural disasters, misfortunes, and natural deaths to the Sardinian government might be a stretch but somewhat justifiable. But compensating for displaced populations, who are still alive, as if they were deceased? Isn't that ridiculous?

And what's this about compensating for the casualties among the rebels? Isn't that nonsensical? They were criminals. Does the Austrian government need to compensate their families?

No, there must be a discount here.

Another point: As for the looting by the Sardinian troops, they were all in POW camps. The goods were your war trophies. Maybe some compensation for wear and tear, but surely not the full amount claimed?

...

After half a month of hard bargaining, Palmeston finally reached an agreement with Metternich: the Kingdom of Sardinia would pay Austria 338 million ducats as war indemnity and 62 million ducats for prisoner ransoms, concluding the war. (This amounts to approximately 93.52 million taels of silver.)

This was already the limit. The Kingdom of Sardinia hadn't undergone the Cavour reform, and their current financial income was equivalent to just over ten million taels of silver.

Facing such a massive indemnity, they undoubtedly couldn't afford it. The existence of the secret Franco-Austrian agreement cut off their possibility of seeking financial aid from the French banking sector. Apart from borrowing from the British, they had no other choice.

Given the British's opportunistic nature, how could they miss this chance to take advantage?

It can be said that after taking on this huge debt, the political and economic future of the Kingdom of Sardinia would be entirely dependent on the British.

The opinion of the exiled Sardinian government no longer mattered. They had lost their say and had to accept the hand fate dealt them.

If they didn't comply, replacing the government was an option. The British had invested heavily in supporting a compliant player in the Italian region to increase their influence there.

Of course, another reason was that the British banking consortium was trapped by loans. The Sardinian government still owed the British a significant debt. If they didn't find a way to protect them, these loans would be washed away.

This massive indemnity, rather than being the limit of what the Kingdom of Sardinia could bear, was more about the extent to which the British were willing to invest further.

...

On July 7, 1848, the Austrian ambassador to London and the exiled Sardinian government in England signed a ceasefire treaty. The content was strikingly similar to this secret Vienna talk between England and Austria, only phrased differently.

The British banking consortium provided a loan to the Sardinian government, making a one-time payment of 200 million ducats for the Austrian war indemnity. The remainder would be paid off over twenty years with an annual interest rate of 5%.

...

The decision to seek money instead of territory was made by Franz. If France, this unreliable ally, hadn't had its issues, then everyone would have collaborated to carve up the Kingdom of Sardinia. Austria could have acquired the affluent regions of Genoa and Turin, which would have indeed been worth the effort.

However, now with France preoccupied, Austria would have to take on the task alone. Unfortunately, Austria couldn't swallow the Kingdom of Sardinia whole.

If Austria couldn't annihilate the Kingdom of Sardinia and merely occupied parts of its territory, then it would face the threat of national uprisings for a long time, making it hard to convert these regions into national strength.

Moreover, Austria already had many Italian nationals within its borders. Franz didn't wish to continue increasing this number, as it would hamper his national integration policies.

In conceding on the Sardinian issue, Austria naturally received compensation.

For instance: The British would support Austrian expansion in the Balkans and acknowledge Austria's foray into overseas colonial expansion.

Compared to the complex situation in Italy, with British backing, Austrian expansion in the Balkans only needed coordination with the Russians.

Overseas colonial expansion was even simpler. As long as Austria's colonization direction did not conflict with British and French core interests, all other matters were trivial.

It's undeniable, Palmerston's judgment was precise. Austria's strategic focus had long shifted away from Italy.

Now, the dominant faction was the German group led by Prime Minister Felix, advocating for expansion in the German regions.

Following closely was the Near East faction, led by Army Minister Prince Windisch-Grätz, advocating for expansion in the Balkans.

And there was also the colonial faction led by Grand Duke Louis, advocating for overseas colonies.

The butterfly effect's influence is substantial. Historically, at this point, the Austrian government was busy suppressing rebellions and definitely didn't have so many people thinking about external expansion.

Behind these strategies, there were one or multiple interest groups pushing. On the surface, everyone had valid reasons, but in practice, they all had a series of issues.

Franz didn't rush to declare his stance. In politics, decisions often aren't just about right or wrong but must also consider the involved interest groups and potential shifts in the situation.

...

Palmerston's visit this time wasn't solely about the Italian issue but also included mediating the Prusso-Danish War. On this issue, Austria equally held significant influence.

"Mr. Metternich, I believe that on the issue of the Prusso-Danish War, it's necessary for our two countries to communicate more deeply. The act of the Kingdom of Prussia initiating this war should be condemned by the international community. As peace-loving nations, we need to take more proactive measures," said Palmerston.

"Of course, Mr. Palmerston. The Austrian government has already stated its position: Schleswig and Holstein are traditional German states, and Austria hopes they will return to the federation. However, they must return as independent states, not become a part of the Kingdom of Prussia," Metternich cautiously replied.

Palmerston said seriously, "Mr. Metternich, Schleswig and Holstein already belong to the Kingdom of Denmark; this is a historical fact. The German region is just a geographical term, not a nation. The German Federation is just a union; there's no such thing as its sovereignty!"

Undoubtedly, the British opposed the unification of the German regions. If a unified empire emerged in Central Europe, then the hegemony of the British Empire would be challenged.

By stating his stance directly, Palmerston aimed to quash any illusions Austria might have of unifying the German regions.

Metternich opposed the establishment of a Greater Germany. He believed that unifying the German regions was impossible. After gauging the British stance, he wouldn't react too strongly.

"Mr. Palmerston, this issue isn't about our perspective, but the public opinion guided by the Prussians. Now, the Austrian government is held hostage by public sentiment. Having just gone through a domestic rebellion, we have to consider the feelings of our people. In this war, we have no choice but to diplomatically support the Prussians."

Metternich emphasized the word "diplomatically", which Palmerston naturally discerned, implying Austria did not wish for Prussia to continue growing stronger. Their support was only on a diplomatic level, with no real actions intended.

This reply didn't fully satisfy him, but it wasn't unacceptable either. It just meant that Austria intended to be a mere observer in this Prusso-Danish War.

After failing to get the Austrian government to join in pressuring Prussia, Palmerston didn't linger in Vienna and headed straight for Berlin.