African Entrepreneurship Records 2

Chapter 1727 Trade Cooperation Agreement
Rhine Palace.

Crown Prince Frederick and others were leisurely waiting for the arrival of the Soviet guests in the reception room. Crown Prince Frederick was looking at the latest newspaper. He was in a good mood because the outbreak of war in Europe had revitalized the economy of East Africa.

Now, due to pressure from Germany, the Soviet Union had to personally send a delegation to East Africa to discuss cooperation, which gave East Africa the initiative.

After an unknown amount of time, Soviet Foreign Minister Livinov and others finally arrived. Livinov solemnly greeted Crown Prince Friedrich and other high-ranking East African officials.

"Hello, Your Highness the Crown Prince of East Africa."

Crown Prince Frederick also stood up, shook hands with him in a friendly manner, and said, "Your Excellency Livinov, I have been waiting for you for a long time, and I welcome you to East Africa. May I ask what your country's purpose is in sending envoys to East Africa this time?"

Livinov said with a smile, "I am here in East Africa on behalf of the Soviet Union, naturally hoping to further improve and promote relations between our two countries."

"East Africa and the Soviet Union were both major powers of great importance in the world, and cooperation between the two countries would greatly benefit the peace and development of the entire world."

Crown Prince Frederick did not respond, but instead ordered, "Serve tea to the Soviet guests."

Then he turned to Livinov and said, "Please have a seat, sir. We can discuss the matter of the Empire and the Soviet Union at our leisure."

After both sides were seated, Crown Prince Frederick slowly asked, "I wonder what the Soviet Union's specific thoughts are this time?"

Livinov sat up straight and replied, "Your Highness, this cooperation between the Soviet Union and East Africa is completely free of any self-interest; we genuinely want to establish normal cooperative relations with East Africa."

"Especially in the economic field, East Africa is the world's most powerful industrial country, while our Soviet Union is vast and rich in resources, with abundant energy and minerals, and is also a good market. The two countries are quite complementary."

Crown Prince Frederick listened to him and nodded, which was largely true.

However, he still spoke up, saying, "Although we are pleased and welcome your visit, how can the Soviet Union guarantee the security of our interests in East Africa? In particular, the issues of 1928 caused considerable damage to our interests."

1928 was a significant year, as the Soviet Union fully transitioned to a planned economy.

Prior to this, during the New Economic Policy era, the Soviet Union implemented a "concession system," which allowed certain foreign companies to obtain concessions for mines, oil fields, and factories.

After 1928, the Soviet government gradually abolished almost all concession contracts on the grounds of "failure to fulfill contracts" or "political reasons," and foreign-held assets were nationalized, usually without compensation.
There may be a very small number of East African companies involved, but the situation is definitely not as exaggerated as Crown Prince Frederick described.

After all, since the overthrow of Tsarist Russia, the Soviet Union (Russia) has been very wary of foreign investment. Even during the New Economic Policy era, when restrictions were slightly relaxed, the amount was not particularly large.

The market was already small, and with the participation of European and American countries, even if some skeptical East African private enterprises participated, it was like a pebble thrown into the ocean, making no sound at all.

Even so, this still damaged the Soviet Union's international reputation to some extent, especially for capital. Of course, not just anyone dared to do business with the Soviet Union.

They were clearly aware of the risks, but they participated for personal gain, so they deserved their punishment.

But this did not prevent Crown Prince Frederick from using the situation to his advantage.

Livinov and his colleagues were rather embarrassed by this. He forced himself to say, "Regarding this, I think your country doesn't need to worry. The Soviet Union has come with sincerity this time."

"The two countries can fully safeguard your country's interests in the economic cooperation matters that we have clearly defined in the future through an agreement at the government level."

"This also concerns the national reputation of our Soviet Union, so we will never do anything that would destroy our own walls and damage the friendship between our two countries for petty gains."

Livinov's meaning was simple: the Soviet government would directly endorse the cooperation that followed, and the so-called agreement would essentially be evidence in the hands of both sides.

If the Soviet Union went back on its word, it would directly damage the Soviet Union's national credibility.

This is different from 1928. After all, the foreign capital attracted by the Soviet Union's New Economic Policy before that clearly did not represent the countries behind them. It was an act between private individuals and the Soviet government, and could not be elevated to the level of an international relationship.

Just like those East African companies that suffered losses, didn't the official East African governments warn them of the risks at the time?

However, they insisted on going their own way and did not act according to the government's will. The fact that the East African government was willing to speak up for them afterward was already considered extremely kind and righteous.

Now, the Soviet Union's promise to guarantee East Africa's future interests at the governmental level and its concrete agreements with East African governments do demonstrate a certain degree of sincerity.

Friedrich then nodded and relented, saying, "I hope your country can keep its promise. With that as a premise, we can continue to discuss the next steps. I wonder how the Soviet Union intends to cooperate with us this time, in which areas, and what the specific procedures will be?"

As Crown Prince Frederick asked the question, Livinov breathed a sigh of relief and answered methodically.

"Your Highness the Crown Prince of East Africa, regarding specific matters of cooperation between our two countries, our country believes that it should focus on the complementarity of our two industries."

"The Soviet Union was a cold-climate country, while East Africa was a tropical power. Our two countries already had a good foundation and tradition of cooperation in agriculture."

The agricultural trade between East Africa and the Soviet Union was indeed the most stable, with the Soviet Union importing most of its tropical agricultural products from East Africa.

Correspondingly, East Africa has also imported high-quality wheat, dairy and meat products from the Soviet Union in the past.

Moreover, East Africa had long held a dominant position in agricultural exports to the Soviet Union, given its advantageous geographical location.

East Africa did not have a strong demand for Soviet agricultural products and could find alternatives from Europe, South America, North America, and the Far East.

The Soviet Union was relatively more dependent on East African agricultural products, such as cotton and rubber.

In theory, the Soviet Union could also acquire resources from countries like the United States and Britain through trade, but these countries were more hostile to the Soviet Union than East Africa.

It was precisely because of this reality that Livinov used agricultural trade as a breakthrough point in an attempt to open up the situation and persuade East Africa to cooperate with the Soviet Union.

"At the same time, the mining trade between the two countries is also a good example. Every year, a large amount of mineral resources from the Soviet Union are transported to East Africa via the Black Sea and the Red Sea." "Therefore, Your Highness, there is actually a clear line of economic cooperation between the Soviet Union and East Africa."

"Now we can use this as a basis to further expand the scope of economic cooperation between the two countries. The Soviet Union can open up more energy and mineral mining rights to East Africa, as well as more agricultural consumer markets."

Undoubtedly, the Soviet Union's promises were very tempting to East Africa, but not enough to sway Tsar Frederick.

Because the Soviet Union also said that it would open up more authority and more markets, which means it would not be completely liberalized. The Soviet government would definitely impose a lot of restrictions, and there is another problem that cannot be avoided.

Crown Prince Frederick asked, "Although the Soviet Union's promises are very attractive to the Empire, I'm afraid economic and trade cooperation between the two countries won't be so easy to achieve!"

"For example, with the war now breaking out in Europe, the Baltic and Black Sea shipping routes have become high-risk areas. Can the Soviet Union provide security guarantees for trade between the two sides?"

The answer is obviously no! After all, these two most important trade routes for the Soviet Union were right under the noses of the Germans.

Since the Soviet Union couldn't defeat Germany, it naturally couldn't guarantee the safety of its shipping routes.

Livinov had anticipated this, and he said to Crown Prince Frederick, "Your Highness, have you forgotten about the Central Asian Highway, a cooperative project between our two countries?"

Crown Prince Frederick said, "Of course not! What! You want to make trouble on the Central Asian highway?"

Livinov said, "That is indeed the idea. Our country believes that the Central Asian Highway can become a safe and stable strategic trade route between us and your country."

"Therefore, we hope to reach a consensus with East Africa on the Central Asian Highway and the development of the area along it, and further expand the scale of trade between the two countries based on the Central Asian Highway."

Crown Prince Frederick shook his head and said, "Your Excellency Livinov, you must be aware of the situation of the Central Asian Highway. It is difficult for this highway to support large-scale trade, after all, the road conditions and transportation costs are not ideal."

“The distance from Gwadar Port to the Soviet Union is more than 1,600 kilometers, and that’s just to your country’s border.”

Livinov said, "This is not a problem at all. Our two countries can further upgrade the Central Asian Highway."

"We could even build a new railway, which would be sufficient to support the new trade route between us and your country. Moreover, our country can vouch for the Central Asian Railway, guaranteeing that it will not cause any losses to East Africa in the future, and the railway can be built entirely according to East African standards."

Livinov's last sentence was the key point: it essentially handed over the lead in railway construction to East Africa.

Conversely, if the Soviet Union led the construction of railways and adopted Soviet railway standards, it would be tantamount to the Soviet Union's sphere of influence expanding southward.

Livinov went on to add, "In addition, on the issue of Afghanistan, we can also make complete compromises with East Africa to ensure the security of the route."

"Besides prioritizing your country's economic interests in Afghanistan, our country may allow East Africa to deploy a certain number of troops and construct military facilities, after consultation, to safeguard your country's legitimate interests."

"Furthermore, the Soviet Union could open the Central Asian market to East Africa, allowing your country to engage in normal commercial activities in Central Asia, including commodity trade, mineral development, industrial and agricultural investment, and so on."

Having said all that, Crown Prince Frederick no longer hesitated. After discussing it with East African officials, he decided that it was acceptable to agree.

Even if the Soviet Union breaches the agreement later, it will not have a significant impact on East Africa. Moreover, in the short term, the Soviet Union is unlikely to offend East Africa.

Therefore, Crown Prince Frederick said, "We have seen your country's sincerity this time. Upgrading the Central Asian highway and even the construction of the railway are not out of the question."

Tsarevich Friedrich's words completely put Livinov at ease, and the Soviet Union made huge concessions in this negotiation.

If even this couldn't sway East Africa, then the Soviet Union would be truly worried. After all, such a huge benefit was offered, yet East Africa didn't take it. That could only mean one thing: East Africa's attitude towards the Soviet Union was extremely hostile, showing complete distrust, or perhaps they had even bigger ambitions.

At this point, the Soviet Union was already facing enough headaches with the Axis powers. If it couldn't manage its relations with East Africa, it could be said that the Soviet Union's geopolitical environment would essentially collapse completely.

At this point, Crown Prince Frederick added: "Of course, regarding the issue of cooperation with your country, there is one more point we hope your country will make, which is to completely stop some illegal ideologizing activities in East Africa."

Livinov readily agreed to this request. Since they had come all the way to East Africa to discuss cooperation with this imperialist country, their ideological export to East Africa naturally had to stop.

It's impossible to fight against them while simultaneously talking about cooperating with East African governments!

In return, the Soviet Union also made some demands, such as the sensitive issue of the Tsarist Russian government-in-exile in East Africa.

Crown Prince Friedrich said, "Your Excellency Livinov, both our countries are well aware that the Russian government-in-exile poses absolutely no threat to your country."

"We can't even cause trouble for your country, since the foundation for Soviet support of the monarchy no longer exists. We can promise not to use the Tsarist Russian government-in-exile to operate in the Soviet Union."

Crown Prince Frederick could only promise so much, and Livinov was not too disappointed with the result.

Next, after setting aside political and economic issues and obstacles, negotiations between East Africa and the Soviet Union also entered a fast track.

While negotiating the details of cooperation with the East African government in Rhine, Livinov and his colleagues consulted Moscow's position. In this way, the details of the cooperation between East Africa and the Soviet Union, including the upgrading and transformation of trade routes to Central Asia and the expansion of trade between the two countries, were finalized one by one.

Some of the conflicts between the two countries were resolved immediately as a result of these negotiations. For example, the intensity of the Soviet Cheka’s activities in East Africa was significantly reduced, which greatly reduced the workload of East African intelligence agencies.

Ultimately, this agreement between East Africa and the Soviet Union was compiled and named the "Trade Cooperation Agreement between the Rhine Empire and the Soviet Union".

According to the agreement, the Soviet Union would open up the Central Asian market and some domestic markets to East Africa, while expanding the scale of Soviet agricultural and mineral trade. The two countries would jointly upgrade the Central Asian highways and build a Central Asian railway, with East Africa taking the lead in the construction of the Central Asian railway.

Regarding the funding for the Central Asian Railway, East Africa provided capital, technology, and personnel. Although the Soviet Union was also responsible for providing some financial support for the railway, it was facing financial difficulties. Therefore, the Soviet Union used some mining rights in Central Asia to offset the debt.

After all, the Soviet Union was under immense pressure to defend itself in response to the threats from Germany and the Axis powers, and its industrial development had also consumed a large amount of funds and foreign exchange.

(End of this chapter)