African Business Chronicles

Chapter 78: The Austro-Hungarian Empire

May 29, 1867.

Emperor Franz Joseph of Austria and Deák finally reached an agreement, and on May 29, 1867, they signed the Austro-Hungarian Compromise, restoring the Hungarian Parliament.

From this day forward, the Austrian Empire officially came to an end, and its power center was split in two.

Citizens were now required to choose between Austrian or Hungarian nationality—they could no longer hold passports from both.

The only thing maintaining the unity of the state was the Habsburg Emperor, who would simultaneously serve as king of both Austria and Hungary. This highlighted just how absurd and fragile the political structure of the new Austro-Hungarian Empire was.

From now on, all major decisions had to be negotiated between the Austrian and Hungarian governments—marking the beginning of serious administrative inefficiency.

At present, the empire held no grand ceremonies; everything was handled quietly among the aristocracy of the two nations.

Ernst once again visited the territory of the Austro-Hungarian Empire, this time compelled by duty—after all, the matter of European immigration was too important to be handled carelessly.

As the Hungarian government prepared to part ways with Austria, Ernst's dealings shifted from the Austrian authorities to their Hungarian counterparts.

Now that Hungary had gained autonomy, Ernst wanted to test whether this new government would obstruct his activities.

After several days of interaction, Ernst found that the newly-formed Austro-Hungarian Empire was actually easier to deal with than the former Austrian Empire.

As a proud Prussian, Ernst was treated with great courtesy by the Hungarian government, especially when it came to immigration matters.

These officials showed no resistance—in fact, they were eager to cooperate with Ernst.

And it made sense. Hungarian nobles' push for independence was rooted in their desire for greater benefits. If Austria were truly cast out, Hungary would have nowhere to cry when trouble came.

On its own, Hungary was nothing more than a tasty morsel for the Russian Empire. Despite its defeat in the Crimean War, Russia remained a behemoth in Central and Eastern Europe.

Its desire to expand westward was constant, and this was the very reason Britain and France allowed Austria-Hungary to continue existing.

Hungarians feared the Russians because of the large Slavic population within Hungary.

Among the many ethnic groups in the empire, the South Slavs were both numerous and socially marginalized—especially the Serbs.

Hungary had a large population of Serbs, and even when combining the German and Hungarian peoples, they still didn't form a demographic majority.

So the challenges facing the new Austro-Hungarian Empire were severe. Now that Austria and Hungary had compromised, the other sizeable ethnic groups naturally grew more ambitious.

And it wasn't just Austria they were targeting—Hungary was in just as much danger. Ethnic separatism was rampant within its own borders.

This created the foundation for Ernst's cooperation with the Hungarian nobility: to reduce the number of non-Magyar ethnic groups within Hungary.

The Hungarian elites allowed Ernst to continually extract non-Magyar populations from their territory and relocate them to the East African colony.

This made Ernst's immigration efforts within the empire far smoother.

From the Austrian side, Ernst could relocate people from Slovenia, Croatia, Galicia, Czechia, and Slovakia in large numbers.

On the Hungarian side, he could target other ethnic minorities without restriction.

This ran counter to Ernst's earlier concern that the formation of Austria-Hungary would stabilize the region and restrict population outflow.

But the high-ranking officials of both Austria and Hungary were no fools. The Hungarian government, born from nationalism, clearly understood that others might follow the same path. Better to act preemptively.

Now, Ernst had to persuade Franz Joseph not to hinder Hungary's own unraveling.

This brings us to the emperor's strategy: in an effort to counterbalance Hungary, Franz Joseph tried to win over the lower classes.

He demanded that the Hungarian government protect the rights of non-Hungarian ethnic groups.

Ernst, however, could not allow Franz Joseph to act this way, not like in history. If the Hungarians didn't oppress their minorities, Ernst wouldn't have the opportunity to exploit them.

...

Schönbrunn Palace

"Ernst, you're really tireless, running to Austria every few days. What is it this time?" Franz Joseph asked.

Ernst replied confidently, "Your Majesty, Austria feels like home to me—I naturally come often."

"What do you take Austria for?" Franz Joseph chuckled, amused by Ernst's shamelessness.

He knew Ernst never did anything without benefit. He even regretted approving the engagement between Ernst and his niece Karina.

Still, Franz Joseph respected him. Like the English—sly and devious in diplomacy—they always ended up on the winning side.

Though Franz Joseph himself was conservative and rigid, he still admired those who were smooth and adaptable—like Princess Sisi, whose free-spirited personality had captivated him.

"No need for formalities. Tell me, what tricks are you up to this time?"

Ernst got straight to the point: "Your Majesty, now that Hungary has equal status with Austria, how do you plan to handle the minorities within Hungary?"

At the mention of Hungary, Franz Joseph's mood soured. "All the peoples of Hungary are my subjects. Of course I must treat them equally."

Ernst responded immediately, "Your Majesty, please reconsider. Do not casually make any real promises to Hungary's lower classes."

"What do you mean by that?" Franz Joseph asked.

Ernst explained, "Your Majesty, your care for your people is admirable. But Austria is no longer what it once was. I understand your anger at Hungary for weakening imperial power—but anger leads to poor decisions."

"You are emperor of the whole empire, but what holds it together are the nobles and officials. Now Hungary has created its own government—you can't act on emotion. You now face two governments, not one, and must be cautious."

"Hungary may have weakened the central authority, but that's done. Don't pour fuel on the fire. Hungary is still under the Habsburgs. Instead of creating problems for Hungary, let them create their own."

"If you intervene directly, Hungarian nobles will see you as biased. They'll cause even more trouble. And in public opinion, local nobility always have the advantage. As long as they lie and manipulate, the angry crowds will turn on central authority..."

In short, Ernst was advising: Franz, don't go out of your way to protect minorities in Hungary. Just express concern. If you actively oppose the Hungarian elites, you'll only invite disaster.

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