1725 Constancian crisis

The 1725 Constancian crisis is an economic and political crisis that engulfed Constancia starting in the year 1725 AN. The crisis, primarily characterized by a national cost-of-living crisis and inflation, marked a significant period in Constancia's history. The situation was exacerbated by a series of government missteps, widespread corruption, and other external factors.

Background

Elections were held for the 14th Imperial Synkletos, which convened on 14.1.1724 AN. Brutus Antipatros was elected Speaker, while Ismail al-Osman was appointed Mesazon, having the support and confidence of the ruling Nationalist & Humanist Party, particularly those dikastis from Raspur.

The economic landscape of Constancia underwent significant changes leading up to the cost-of-living crisis that emerged at the start of 1725 AN. This crisis was primarily fueled by rampant inflation, which economists within Constancia initially dismissed as 'irrational exuberance'. However, external economic experts warned that the inflation was a classic case of an overheated economy, where excessive currency supply was chasing a limited pool of goods and services. This situation was further aggravated by widespread reports of corruption and bribery involving the purchase of political seats and loyalties, leading to a misallocation of resources and economic imbalances.

The tangible impact of this inflation was most acutely felt in the surge of prices, especially for essential commodities like food. The rapid increase in living costs led to widespread social unrest and deepened the cost-of-living crisis. Compounding these issues was the decline in the value of the Constancian stater in foreign exchange markets, signaling a loss of investor confidence. The situation was exacerbated by significant drops in the Constancian Commercial Exchange, reflecting a broader economic instability. This investor skepticism led to increased interest rates, further tightening credit availability and deepening the economic woes of both businesses and consumers.

Government response

Initial government response was to assuage public outrage by firing Zvonko Shani as Minister of Finance, Erast Meginfrid as Minister of International Trade and Industry, and Frederik Adonai as Minister for Budget and Management, with new appointments forthcoming. Hansjörg Monat, Minister for Labor and Employment resigned a few days after this, claiming personal health issues, which some journalists claimed was disgust at government mismanagement of the crisis.

The government likewise went on a public relations offensive, emphasizing the economic benefits to be reaped due to the effectivity of the Treaty of Northbloom on 11.XI.1726 AN, as well as the Treaty between Constancia and Çakaristan‎, and the effects of the Constancian Development Plan, 1724 AN-1729 AN.

General strike

The worsening economic conditions led to a general strike on 13.VI.1725 AN, initiated by the Road Hauliers Transport Association. They were severely impacted by rising transport and petroleum costs, which drastically reduced their earnings. The strike quickly gained momentum with the support of the Constancian Education Association and the National Nurses League, representing teachers and nurses respectively. The Democratic Alliance joined the movement, advocating for political reforms and local government elections.

The Committee of Euran Salvation labeled the general strike as a politically subversive act against the interests of the Euran Economic Union and the Raspur Pact. This led to the involvement of the Trans-Euran Command, which issued General Order 1 of 1726 AN, imposing military authority across the Imperial State and necessitating government and civil society cooperation with the Imperial Constancian Armed Forces.

General Order 2 of 1726 AN mandated the Euran Economic Union, the Grand Commissariat of Eura and Corum, and the Honourable Company to exercise dictatorial powers (in the words of the order) over the Constancian economy during the period of exception. Regulation 1 of the Tripartite Economic Committee, issued on 17.VI.1726, mandated the freezing of all commodity prices at their present level. 'Market manipulators', meanwhile, were meanwhile to be identified and taken into custody by the State Protection Authority, pending the organisation of public trials intended to assuage the anger of the public.

General Order 3 of 1726 AN meanwhile ordered the mobilisation of first and second reserve personnel in the Home Guard for the purpose of strike breaking actions and for the securing of food and fuel reserves in the Imperial State.

In more general terms, the Committee of Euran Salvation was intensely eager to bring the unexpected surge in inflation under control as swiftly as possible, lest mounting unrest were to imperil ongoing pacification campaigns in the Norasht and Zinjibar regions. In addition to price controls and political repression, the Committee also sought to obtain the speedy dumping of foodstuffs and fuels into the Euran market so as to collapse the inflationary pressures which had begun this crisis. Nouvelle Alexandrie, Natopia, and the Benacian Union, were all approached with proposals to export essential commodities to Euran Economic Union at a heavy discount in return for trade credits and yields from bonds purchased with the nominal value of the cumulative discount in purchases made by public authorities and economic actors under the ultimate control of the Committee of Euran Salvation.

Financial crisis

The general strike that commenced on 13.VI.1725 AN in Constancia, initially led by the Road Hauliers Transport Association, rapidly evolved into a nationwide movement with widespread economic implications. The government's response, spearheaded by the Committee of Euran Salvation, compounded the crisis. The imposition of General Order 1 by the Trans-Euran Command, which enforced military authority across the Imperial State, disrupted normal civic operations and heightened tensions. The subsequent enforcement of General Order 2, granting expansive control over the Constancian economy to the Euran Economic Union and its allied entities, led to further destabilization. The freezing of commodity prices, while aimed at controlling inflation, disrupted market equilibrium, leading to shortages and black market activities.

The crisis was further exacerbated by a severe drought that ravaged the Euran region, including Constancia and neighboring Nouvelle Alexandrie. This drought led to major crop failures, critically affecting the agricultural output, a key sector of the economy. The resulting food shortages drove prices to unprecedented levels, intensifying the cost-of-living crisis.

Amidst this backdrop, the financial sector of Constancia crumbled. The collapse of Banco Nacional Aguilar (BNA) and Euran Trust & Commerce Bank (ETCB), two of the largest banking institutions in the country, triggered a domino effect. These banks, heavily invested in the agricultural sector and consumer loans, were unable to withstand the economic shocks of the drought and the general strike. The failure of BNA and ETCB resulted in significant losses for investors and savers, eroding public trust in the financial system. The liquidity crunch that ensued made it challenging for businesses to secure loans, leading to layoffs and a dramatic contraction in consumer spending.

The combination of political unrest, economic mismanagement, environmental calamities, and banking sector collapse plunged Constancia into one of the most severe economic crises in its history. This series of events strained the government's ability to maintain public services, leading to a series of national power outages and severe disruptions in public transportation. The economic and social fabric of the nation was stretched thin, necessitating an urgent and substantial intervention by the Euran Economic Union and the Community of Goldfield. This intervention was seen as crucial not just for stabilizing the economy but also for preventing a complete societal breakdown.

The Defenestration of Petropolis

In a decisive move to address the rampant corruption exacerbating the 1725 economic crisis, the government of Constancia, under the leadership of Mesazon Ismail al-Osman, initiated a dramatic purge of corrupt officials, an event that came to be known as the "Defenestration of Petropolis." This term symbolically represented the abrupt and forceful removal of corrupt elements from the government. The action was widely publicized as part of the government's efforts to restore public trust and demonstrate a commitment to reform. Targeting various levels of the administration, including high-ranking officials and mid-level bureaucrats implicated in corrupt practices ranging from bribery to embezzlement of public funds, this initiative was a key part of Mesazon Ismail al-Osman's broader campaign to stabilize the political landscape and steer the nation through its tumultuous economic period. The government's transparency in publicizing the Defenestration of Petropolis was seen as an attempt to reassure both domestic and international observers of Constancia's commitment to rectifying systemic governance issues. The move was met with mixed reactions; while some lauded it as a necessary step towards accountability and good governance, others viewed it with skepticism, questioning the motivations behind the selections for the purge and the potential for political maneuvering.

By 1.IX.1726, somewhere in the region of 400 commodity traders and merchants had been taken into protective custody by the State Protection Authority for violations of orders received from the Committee of Euran Salvation. Detained along with them had been approximately 11,000 members of the road haulers association and other bodies involved in the initial strike action.

International response

The severity of the crisis in Constancia elicited a significant international response, particularly from neighboring countries and allies, who recognized the potential regional implications of a destabilized Constancia. Notably, Nouvelle Alexandrie, Natopia, and the Benacian Union, three of Constancia's closest allies, played pivotal roles in crafting a rescue package designed to stabilize the country economically and politically with assistance of the Euran Economic Union and the Community of Goldfield.

EEU-CoG Assistance Package

In response to the escalating economic and political crisis, the Euran Economic Union and the Community of Goldfield organized a comprehensive assistance package at the request of Nouvelle Alexandrie and the Benacian Union. The assembled package aimed to bolster Constancia's beleaguered economy while ensuring the Imperial State's stability and functionality. The EEU-CoG assistance package included the provision of emergency financial aid, which included substantial funds to stabilize the national currency and provide liquidity to the banking sector. This infusion of capital is expected to restore confidence in the Constancian stater, thereby stemming the tide of inflation and shoring up investor confidence. In addition to financial assistance, the EEU and CoG provided expertise in economic management. Teams of economists and policy advisors were dispatched to work alongside Constancian officials. The package also included large commitments from Natopia, Nouvelle Alexandrie, Anahuaco, and the Benacian Union to buy large quantities of Constancian imports, as a move intended to boost foreign exchange earnings, aid in the balance of payments, and improve the country's trade position. From a military standpoint, while not directly intervening, the assistance package included the Committee of Euran Salvation as the main vehicle to ensure that strategic resources, weaponry, supplies, and intelligence to aid Constancia in maintaining internal security, crucial for the implementation of economic reforms and maintaining public order.

See also

• Economy of Constancia
• Community of Goldfield
• Euran Economic Union
• Committee of Euran Salvation