Chapter 213: Massive War Dividends

After finalizing the details regarding his new noble title and his nominal stint at the military academy, Duke Rupprecht struck while the iron was hot, holding Lelouch's baronial investiture ceremony that very day during the victory banquet.

Everything was kept simple during wartime, with as much red tape and formality omitted as possible.

When the other attending generals of the 6th Army heard the good news, they came over one after another to congratulate Lelouch.

"We'll have to call you Baron Lelouch from now on. Congratulations."

Lelouch responded with appropriate humility. "Regardless of rank, it is all in service to the Empire."

Needless to say, the rest of the evening was filled with toasts and celebrations.

...

The next morning, Lelouch slept in, not heading to headquarters to handle official business until 9:00 a.m.

The Duke had cleared his schedule in advance to specifically discuss the subsequent occupation plans, industrial development, and the handling of the spoils of war in the Kievan Rus region with Lelouch.

Aside from a few railway facilities used for transporting iron ore within the mining area that had yet to be repaired, the excavation equipment and the like had already been fixed. The large iron mines had recovered a production capacity of over one million tons of ore per month, but most of what was excavated simply piled up, unable to be transported out for the time being.

Moreover, even if transport capacity were restored, this iron ore currently had nowhere to go because the Nikopol steel plant, located several dozen kilometers to the southeast, had not yet been repaired.

The Nikopol steel plant was a massive facility with an annual output of 3 million tons, accounting for nearly sixty percent of Lusha's total national production of 4.2 million tons in 1913. (For comparison, Demania's pre-war steel production capacity was 20 million tons, and Chouguo's was 32 million tons; these two were the top two in the world at the time.)

When the Lushans retreated, they had thoroughly blown up the steel plant. After the Demanian Army occupied the area, they immediately brought in Krupp experts to assess the damage, who concluded that fully repairing the facility would take nearly a year.

If they wanted to build a new large-scale steel plant instead, it would take even longer—possibly two to three years.

This timeline was fairly reasonable. On Earth, after Lusha's demise, the USSR spent four years building the Zaporozhye coal and steel complex within a single Five-Year Plan (although the Dnieper Hydroelectric Station was severely delayed, the other supporting projects were completed). Meanwhile, the first three major steel projects of the great eastern nation were built and fired up in just two years during its own Five-Year Plan, relying on external technical support.

For Demania in this timeline to build a new coal and steel industry in the Kievan Rus region, they could certainly do it in two years if resources were abundant and they weren't dragged down by the war. The technology was their own; they just needed Krupp's people to replicate it internally, saving them from many of the pitfalls the Lushans would have faced.

However, because they were at war, there would inevitably be a shortage of supporting resources, so making a conservative estimate of three years was perfectly reasonable.

To put it bluntly, this was like playing Hearts of Iron IV. Everyone else built civilian factories before the war started and switched to military factories when war was imminent. The current Demania, however, was effectively trying to build civilian factories a year and a half into the war, which meant the return cycle for that production capacity would be dragged out considerably.

If they poured so many resources into new steel plants and the war ended within two years, the resources spent building the plants wouldn't even have paid for themselves by the time the war was over.

Therefore, when faced with the decision of whether to bring in Krupp's experts to go all out on expanding new steel production capacity or merely ship the iron ore and coal back to the homeland, Duke Rupprecht found himself hesitating.

He wanted to hear Lelouch's opinion.

After his own evaluation, Lelouch believed it was absolutely necessary to expand capacity.

"Your Highness, I stand by my previous statement: seeking peace through struggle ensures peace survives. If we decide that, since the war will end within two years, we don't need to make prolonged war preparations that only pay off after two years, the enemy will exploit that fatal weakness. They will drag the war out indefinitely, ensuring it won't be over even after two years.

"If we make the relevant preparations and the war ends within two years anyway, we still can't say the decision was wrong. On the contrary, it would be exactly because we took these steps, showing the enemy that they couldn't outlast us, that they were forced to end the war within two years. We absolutely cannot confuse cause and effect here.

"As for your concerns about the construction costs and whether this will occupy military resources in the short term, I don't think you need to worry too much. Although in monetary terms it takes two to three years for a large steel plant to produce steel and four to five years to recoup the investment, the actual proportion of raw material and equipment costs in the construction budget is quite low. The bulk of it is labor costs.

"Right now, we have one million Lusha prisoners of war, as well as 200,000 Allied Forces prisoners of war. These 1.2 million people are just sitting idle during the winter agricultural off-season anyway. Since we have to feed them, we might as well put them to work.

"We can cooperate closely with Minister Baden of the Ministry of Prisoner of War and Occupied Territories Affairs to put these million-plus strong laborers to use, pushing hard on coal and steel infrastructure. When the busy farming season arrives, we can send them to do agricultural work. Next summer, after harvesting the winter wheat planted this year, we can have them plant summer corn, which has a shorter growth cycle, and harvest another batch in late autumn.

"The black soil of the Great Plain of Kievan Rus is incredibly fertile and can withstand a double-cropping rotation of winter wheat and summer corn in the short term. Later on, if the soil fertility declines or if there is a shortage of labor, we can adjust it as appropriate to three crops every two years.

"That means winter wheat in the first year, summer corn in the second, spring corn in the third, followed by winter wheat again in the third year. This way, from the winter of the first year to the winter of the third year, over a two-year cycle, we would plant one crop of wheat and two crops of corn, totaling three harvests of grain.

"Then, during the agricultural off-season, we can reassign these prisoners to work heavily on coal and steel infrastructure and railway construction. In short, we can't let them eat for free. We can also consider screening them based on their willingness to cooperate. As for the extreme fanatics who fiercely defend the national interests of Lusha, we'll let them remain prisoners for the rest of their lives, working them to the bone on the most dangerous and grueling tasks until they drop.

"As for those who have little attachment to Lusha's national interests—such as the Cossacks or others who follow the tradition of 'taking the Tsar's pay and dying for the Tsar'—we can gradually re-educate them. In the future, they can either be assimilated by the Empire or become citizens of a future buffer state."

"A buffer state? Do you believe it will be necessary for the Empire to establish a buffer state in the Kievan Rus region?" The Duke's spirits lifted at the notion, eager for the answer.

In his heart, he naturally harbored an ambition for direct rule—even if it wouldn't be him ruling directly, but rather the Empire.

However, the Duke was also well aware that civil resistance in Lusha had been gradually strengthening recently. This was especially true after the conclusion of the Battle of Kyiv; as their forces continued pushing east and north, the resistance had become increasingly palpable.

When they reached Belgorod, the situation was still manageable, with few resisters.

But by the time they advanced on Kursk and Voronezh, spontaneous acts by ordinary Lushan civilians—such as secretly blowing up railways, derailing trains, and ambushing sentries—became increasingly frequent. During the battles to capture the city of Voronezh, the casualties and losses inflicted by Lushan civilian resistance actually exceeded those caused by the regular Lushan army. All these incidents had taken place between late December and early January.

The Duke had to admit that the fighting will and resilient spirit of the Lushan people were quite troublesome. When they fought for themselves rather than for the tyrant Tsar, the situation was completely different, and this was not something to be underestimated.

Seizing the moment, Lelouch laid out his reasoning frankly to the Duke. "That is precisely why I initially advised the Empire to employ a dual-wing advance along the coastlines, rather than attempting to envelop the enemy in a massive pocket between Poland and Belarus, as Field Marshal Hindenburg desired.

"On the one hand, by advancing along the coastline, we avoid relying too heavily on railway logistics and can utilize water transport once we seize naval supremacy. On the other hand, the coastal regions of the Lusha Empire actually contain a large number of territories inhabited by non-core ethnic groups.

"The Demanians of the Baltic Sea go without saying; in those areas, there is essentially no popular resistance against us. Down south, here in Kievan Rus, even though Kievan Rus and Lusha have been unified for nearly two hundred years, if you look back two hundred years before that, they were originally autonomous vassals of the Polish.

"The Cossacks of Kievan Rus, in particular, hold a transcendent status; they essentially fight for whoever pays them. When Lusha and Poland signed their last partition treaty in the Kievan Rus region two hundred years ago, they conventionally drew the border at the Dnieper River. West of the Dnieper River were the pro-Polish people of Kievan Rus, while east of the Dnieper were the pro-Lushan people of Kievan Rus.

"Therefore, I believe that if the Empire wants to rule stably and ensure no unrest erupts in the east, the best approach is to use the Dnieper River as a boundary. The Empire would directly rule everything west of the Dnieper, while allowing ethnicities east of the river who are friendly to Demania to migrate over. Simultaneously, we would disperse the various ethnic groups that oppose the Empire toward the east.

"Of course, the coal mines in the Donbas are crucial. The Empire can demand that any autonomous state established east of the Dnieper grant the Empire a fifty- or one-hundred-year lease on the mining rights in the Donbas region. It would be sufficient for the Empire to give them a 25% share of the profits and taxes.

"The water conservancy projects on the Dnieper River must also be built, operated, and profited from by the Empire. They could receive free navigation rights, and in the future, once the large hydroelectric dams are completed, we could allow their ships to use the locks for free.

"Finally, to make this new state profoundly grateful to the Empire and to accommodate their national sentiments, we could make an exception and completely allocate the city of Kyiv from the lands west of the Dnieper to this newly established state. (Kyiv spans the Dnieper River, with urban areas on both the eastern and western banks.)

"By doing this, once the war ends, having such a new state as a buffer will ensure that the Empire can securely hold onto the vast territories it swallowed up in the east, preventing constant rebellions and uprisings.

"Based on this long-term plan, I believe that the Empire's future industrial construction in the Kievan Rus region should be built entirely on the western bank, apart from projects like the hydroelectric stations and dams on the Dnieper River that must span both banks. Whether it's steel plants, thermal power plants, chemical industries, machinery, or shipbuilding, they should all be located on the western bank. Moreover, this won't significantly increase costs.

"Since the large iron mines are on the west bank and the large coal mines are on the east bank, both sides have a major resource. Locating the industries on either side makes logical sense. The future center for coal and steel can simply remain in Kryvyi Rih and Nikopol, at most extending some benefits down to Kherson and Nikolaev near the downstream estuary."

In the Earth timeline, when the USSR later carried out heavy industrial construction in the Kievan Rus region, most of it was placed east of the Dnieper River, primarily between Zaporozhye and Kharkiv.

However, having observed the region's natural mineral endowments, Lelouch knew that placing the industries on either the east or west bank was scientifically sound.

The USSR had placed them on the east bank for military considerations, hoping to give its core heavy industrial zone greater strategic depth by placing it as close to the nation's heartland as possible. Having the Dnieper River as an additional defensive line made the industrial zone that much safer.

Since it was now the Demanians' turn to build, they naturally had to do the exact opposite and place it on the west bank.

The reason Lelouch had just spent so much time explaining to the Duke that they "might need to release some puppets in the future for the sake of stability" was precisely to justify this choice of regional layout between the east and west banks.

Anyone who had played Hearts of Iron knew that blindly establishing direct rule over newly conquered territories resulted in a very low utilization rate of the resources and factories in those occupied provinces. The resistance and non-cooperation of the locals would cause immense attrition. It was far better to release entities like puppet states, dominions, colonies, or Reichskommissariats to lower resistance, which would simultaneously provide an outlet to vent the pressure of resistance from neighboring provinces, guiding it to one's advantage.

...

With Lelouch having laid out these grand principles, the Duke now had a solid conceptual grasp of the Empire's general governance strategy for the Kievan Rus region going forward, and he knew how to advocate for this layout.

Of course, the Duke didn't have the final say on this matter, and Lelouch certainly didn't either. It would rely on Minister Baden of the Ministry of Prisoner of War and Occupied Territories Affairs to pull the strings and persuade both the Federal Council and the Emperor. All they could do was begin rebuilding the local industrial and military sectors according to this preliminary plan.

Because this plan involved drafting over a million prisoners of war into forced, heavy manual labor, the Duke also had to give extra consideration to the issue of retaining enough food provisions.

He was not currently short on grain. When Kyiv and Kharkiv surrendered, their storehouses had held massive quantities of food that couldn't be shipped north in time. All of it had been ruthlessly and aggressively requisitioned from the locals by the Tsar's administrative forces during the autumn and early winter.

It was just a pity for them that before the grain could be transported north, the Demanians had attacked. From this perspective, the Tsar's grain requisition officers had essentially played the villains on Duke Rupprecht's behalf.

Their brutal and tyrannical forced collection of the grain tax from all over the region had ultimately ended up lining the Duke's pockets.

Naturally, the Duke wouldn't hide this from Lelouch, so he spoke frankly, without treating him as an outsider. "There is another piece of good news. When the city of Kyiv surrendered, our forces seized a total of 7.5 million tons of new wheat from the granaries in Kyiv and its surrounding areas. All of it is surplus grain tax requisitioned from the black soil plains on the west bank of the Dnieper this year.

"Earlier, when Kharkiv surrendered, we also captured 2.2 million tons of new grain in their warehouses under similar circumstances. How much of this grain do you think we should report to the Empire? You don't need to worry about one thing: even if we report all of it, the Empire won't just take the spoils for nothing; they will exchange it for other military resources. At most, they just won't allocate any more military rations to our armies next year."

Lelouch didn't even have to think about it. "I think we should pocket the lion's share, at the very least! It's war loot anyway, which makes it hard to verify. We can just say that by the time we captured Kyiv, the majority of this year's tax grain had already been shipped to northern Lusha by Nicholas II. No one will be able to prove otherwise."

The Duke asked, "Why? Don't you want to exchange the grain for other resources?"

Lelouch replied, "We need to prevent the Empire's ambitions from inflating even further, which would make them want to expand the war upon learning about the bumper harvest on the Eastern Front this year. More importantly, we must prevent the warmongers in the Armaments Ministry—who want to divert all chemical resources strictly toward military production—from completely stripping the domestic fertilizer industry of its synthetic ammonia production capacity on this pretext.

"The famine problem back home isn't too severe this year. We must reserve a sufficient portion and hide it away in secret. Bringing it out at the most critical juncture might just save the Empire. Taking it out too early will only result in it being squandered by those warmongers."

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