Persian Empire 1845

Chapter 626 Ottoman Economic Reforms

In an effort to quickly foster public loyalty, the Ottoman government announced tax reductions for this year, ranging from 40% to 100%.

The drought-stricken areas of Anatolia received full relief, while the most severe relief was also provided to Bosnia and Bulgaria, regions severely affected by uprisings.

The severe separatist problem in the Balkans was also a matter for the government to address, as the local ethnic groups were intertwined. Orthodox Christianity, Sunni Islam, Shia Islam, Catholicism, and other religions clashed fiercely, and Russia used this situation to gradually expand its influence. Nasser al-Din decided to prioritize appeasement, aiming to use the Danube River as a defensive line to withstand any Russian attack before it could occur.

He was convinced that Russia would soon attack the Ottomans, forcing them to withdraw. Alexander II understood that if the Ottomans became further entangled with Iran, breaking through the Black Sea would become difficult.

He wasn't worried about Iran; with the Caucasus Mountains and the Syr Darya River, their defenses were relatively secure. His concern, however, lay with the Ottomans.

The new Ottoman army reached 25 men, but a significant portion suffered from the aforementioned shortcomings: inadequate training and corruption, necessitating large-scale reforms. Furthermore, the loyalty of officers needed to be considered; therefore, initially, the government needed to quickly formulate a conscription system and plans to improve the army's combat effectiveness.

All of these factors meant that Naser al-Din's work continued late into the night, a situation that persisted for a week. Even the black eunuchs in the palace felt that the Sultan was being a bit too diligent.

Russia published numerous articles calling on its Slavic brothers to seize this opportunity to gain independence. Indeed, protests increased in Bulgaria, with everyone believing the time was ripe to seize independence in one fell swoop.

Internationally, very few countries congratulated Nasser al-Din on his ascension to the Ottoman throne. Among the major powers, Austria and Germany offered only perfunctory congratulations, while France and the United Kingdom expressed concerns about the situation in the Eastern Mediterranean.

Spain, Portugal, Bavaria, and Sweden were quick to offer their congratulations, while Greece and Serbia were slow to respond. They were alarmed to discover that the previously impoverished and weak Ottoman Empire suddenly had a powerful nation as its backer, and Russia might not even be able to defeat it, making it difficult for them to expand their territory.

For Britain and France, a weakened Ottoman Empire was more in their interest. Their trade and revenues would be guaranteed. Britain also needed to ensure India's security, and with the opening of the Suez Canal, shorter voyages would facilitate future communication. However, the sudden unification of the Middle East by Iran was unacceptable to Britain.

France didn't have such deep ambitions; they simply wanted African colonies. But this very region could potentially clash with Iran. Whether it was Algeria, which France occupied, or Tunisia, which they coveted, both were nominally Ottoman territories. What if Iran came under the guise of reclaiming lost lands?
Britain and France increased their support for the opposition while demanding that the Ottomans abide by previous treaties, especially that the Ottomans not question them.

They wanted to keep the Ottoman Empire bound by the treaty and continue to be their source of raw materials and market, but they also didn't want the Ottoman Empire to continue declining so that the Russians could exploit loopholes. There was genuine fear on both sides. With the Shah's approval, loans to Iranian banking syndicates progressed smoothly. The Ottoman Empire used its limited revenue from tobacco and salt as collateral to borrow 2.4 million rials from Iranian banks at an interest rate of 6%.

This loan was provided by a consortium of six banks, including Crédit Agricole, Eurasian United Bank, and the Iranian Industrial Bank. To ensure repayment, Nasser al-Din telegraphed Baghdad, requesting the formation of a Finance and Debt Committee to take full control of Ottoman finances.

As for the tax farmers, the tax law promulgated in 1840 was to be implemented thoroughly. The outdated tax farming system, various forms of corvée labor, and poll taxes on other believers were abolished. This time, no conservative religious figures stepped forward; if the Grand Mufti and others wanted to protect their wealth and future, they had no choice but to follow Nasser al-Din's wishes.

First, those tax farmers living nearby also began to relinquish their businesses; 13 tax farmers in the four provinces of Izmir, Bursa, Ankara, and Syria handed over their tax collection rights. Then, tax farmers in the Palestinian and Cypriot provinces followed suit. The new tax collection agency dispatched personnel directly from Iran and redefined the tax system.

Meanwhile, the new Ottoman government promulgated its economic revitalization plan, the "National Economic Revitalization Plan." This plan required the Ottoman Empire to construct infrastructure such as roads, water systems, and healthcare facilities. Of paramount importance was the upgrading of transportation, necessitating the construction of a railway connecting the entire Ottoman Empire. In addition, several highways connecting other major cities were also planned.

The construction of irrigation facilities is of paramount importance to the Ottoman Empire at present. Because the Ottoman industrial sector is weak, and the majority of its population lives in rural areas, the need for irrigation infrastructure is most urgent. Furthermore, the Ottoman Empire's fiscal revenue has significantly decreased due to the previous economic crisis. Government funding has been insufficient, leaving the farmers to maintain the facilities themselves.

However, farmers were already struggling to cope, and the lack of government funding made maintaining irrigation facilities even more difficult. This had a devastating impact on agricultural production. Consequently, in recent years, the area under cultivation for crops requiring irrigation, such as wheat, rye, and oats, in the Ottoman Empire decreased by 20%. Meanwhile, drought-resistant crops like potatoes saw a slight increase, leading to lower farmer incomes and reduced incentives for cultivation. Overall, arable land in the Ottoman Empire was shrinking.

Of course, guaranteeing farmers' income wouldn't make the Ottoman Empire wealthy; prosperity depended on industry. The government already had a plan: to develop industries like tobacco and wool, tailored to the Ottoman Empire's specific circumstances.

Ottoman tobacco, fruit, and wool have always been major export products; processing them into other goods would increase profits. This also aims to better align with Iran, hence the signing of a free trade agreement with Iran alongside the Economic Revitalization Plan. This agreement, designed to better link the two economies, includes clear provisions regarding personnel exchanges, trade, tourism, and education.

Its main purpose is to reduce border checks between the two countries, eliminating future inspections of people traveling between them. Furthermore, no restrictions will be imposed on business, study, or work between the two countries, as long as they do not violate the law. In short, it aims to reduce mutual inspections between the two countries, up to and including the elimination of free border crossings.

(End of this chapter)