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Part 14: Mexica Standoff
The Triple Alliance's first reaction to Blasco Núñez Vela's actions in Cuba was, tellingly enough, one of bewilderment, not outrage. Twelve years had passed since the signing of the Treaty of Tlatelolco, and the state of affairs it generated created an idea among the Mexica upper class (one backed by more than a decade of economic development) that their Spanish partners could be trusted to bring the products they needed (especially modern weapons and sugar) for the right price indefinitely, while any difficulties caused by "troublesome elements" (missionaries) could be smoothed over with huge bribes of precious metals and other things the Europeans wanted. The slow speed with which information traveled at the time didn't help either - distortion, and with it wild rumors, were common. Thus, Cuauhtémoc saw no reason take the situation seriously from the outset, doing nothing except dispatch a group of envoys to Santiago to assess the situation in an accurate way and figure out what was the Cuban governor's price, in case the situation was as bad as the stories said.
It was worse.
The atmosphere the diplomats were greeted with upon entering the Cuban capital, from ordinary and prominent people alike, was one that could be best described as polite hostility, a hostility that was much more overt to Santiago's small (but until then prosperous) Nahua community: many had their shops and houses trashed by furious Spaniards in the riots that followed Núñez Vela's accession, and more still were packing up what they had, in the hopes of returning to Mesoamerica before things became even worse. When the envoys complained of this state of affairs to the governor, he and his men replied that they were under direct orders from Madrid to protect Spanish merchants from any competition; when they tried to bribe them, as was so common during Narváez's tenure, Núñez Vela flew into a rage (1). In the end, the team was forced to leave Cuba within a day, under threat of arrest, while Vela sent a report detailing what they attempted to do to king Charles I (and V). The envoys did the same, as is to be expected, and their words reached their overlord first - the distance from Cuba to Tenochtitlan was considerably smaller than that of the former to Madrid, after all.
Cuauhtémoc was, predictably, furious. By 1536 he was master of nearly all of Mesoamerica, from the distant forests of Guatemala in the south to the arid borderlands of the Chichimecas and the Purépecha Empire to the north and west - and he intended to conquer the latter for good, a feat that, if successful, would seal Tenochtitlan's dominance over what is now central Anahuac and rid it of its last remaining rival. To accomplish this, he and the rest of the Mexica government spent most of the winter laboriously mustering an army that may have numbered as many as 120.000 men, a terrifying force made up mostly of battle-hardened veterans from the tlatoani's previous campaigns. But the events in Cuba derailed everything: Núñez Vela's treatment of his diplomats, to say nothing of what was happening to the Mesoamericans who lived in Cuba, was an unforgivable slight. And so, the mighty army was sent not against Michoacán, but Veracruz, reaching its outskirts in the middle of spring, sometime in April. Siege trenches were dug, artillery put in strategic positions, and all roads leading to the city blocked. No direct assault was made, however.
Instead, the tlatoani sought to punish the Spaniards in a way that (hopefully) wouldn't alienate them permanently - though the Triple Alliance's craftsmen knew how to make crossbows and pikes by this point, their grasp on steelmaking still left much to be desired, as did their attempts to replicate gunpowder, since its ingredients were a closely guarded state secret. Thus, he ordered the arrest of thousands of Spanish merchants and missionaries on various charges, from lesser crimes to outright sedition and spying, an obvious imitation of what was happening in Cuba. He also forbade all trade between the Triple Alliance and the Spanish colonies until Madrid issued an apology for Núñez Vela's actions, hoping to strangle them economically without the human, financial and diplomatic costs of an open war, while the army on Veracruz's doorstep would serve as a sword of Damocles.
But economic warfare was a double edged sword, as those who lived under Mexica authority soon found out. The twin blows that were the cessation of commerce and blockade of Veracruz were felt in cities such as Cholula, Xallapan and Tenochtitlan itself almost immediately, the feverish activity which characterized them since long before the Nepantla Period grinding to a near halt. All these places had sizable numbers of Spanish traders at this point, and their absence was sorely felt - as were their products. While the prices of critical foodstuffs stayed in a normal level (lessening the burden on the poor), the value of imported goods, sugar especially, skyrocketed, much to the elite's dismay. The export sector also suffered, since Cuba and other Spanish colonies in the Caribbean had become an important market for cotton, precious metals, fabrics and spices grown or manufactured in Mesoamerica.
It didn't take long for smuggling to spread. The border between Spain and the Triple Alliance was much longer than it had been when the Treaty of Tlatelolco first came into effect, with both empires expanding into Central America and creating a new route through which trade could flow, even if at much smaller volumes than the main artery (Tenochtitlan to Veracruz and vice versa). Local notables and rulers in the south, Zaachila's Cocijopij chief among them, disobeyed the blockade in various degrees, and even those who were until then stalwart allies of the central government had no choice but to disregard its command as well, lest the communities they ruled turn on them. The Spanish mercenary captains were another group deeply affected by the confrontation, since many of them had families on the other side and were thus seen with suspicious eyes by their superiors. Even those who were fully settled and spoke more Nahuatl than Spanish in their daily lives were distrusted to a certain degree, in no small part due to friction between them and their equals among the Mexica, since they, among other things, had no qualms about killing their enemies in battle - a great offense in a military who sought to capture live prisoners for sacrifice, and even shaped its promotions around it (2).
A codex depicting various ranks in the old Mexica military, each depending on how many prisoners the warrior captured during his career.
As time went by and the crisis continued, the empire fell under a growing amount of stress. Prominent aristocrats were displeased by the disruption in the flow of European luxury goods, governors reported discontent among various social classes as those who made fortunes trading with the Caribbean floundered one by one and took other sectors of the economy along with them. Some in the army, tired of the standoff, called for an all out-attack against Veracruz, arguing that holding the port hostage would be better than merely threatening it, but their requests were denied: not only would it cost a great deal of gunpowder (always in short supply) to reduce its formidable fortifications, but the Triple Alliance's lack of an oceangoing navy allowed the Spanish to reinforce the city's garrison by sea without any difficulty.
But they weren't the only ones suffering, far from it. Cuba's position as an entrepot, carefully sponsored and improved during Narváez's long administration, was the bedrock of its prosperity, with goods from both Europe and the Americas traveling through its ports. Though Magellan's contact with the Tawantinsuyu in 1526 gave the island and its fellow colonies in the Antilles an alternate market for their products, their economy was still joined at the hip to Mesoamerica's, since its shores (and thus its markets) were much more accessible than those of the Andes, whose denizens and rulers in general were still skeptical of the Europeans and their motives. Núñez Vela, whose actions had caused the crisis in the first place, was pressured by people from within and outside Cuba, such as the governors of Santo Domingo and Jamaica, to open negotiations before Madrid got involved. He finally relented in June, sending an embassy to Tenochtitlan that, after weeks of talks, reopened commercial and diplomatic relations without the embarrassment that an official apology would be, since the Mexica were willing to drop that demand by this point.
It seemed as if Cuauhtémoc had won yet again, and this time without firing a single shot - at least officially. But the (mostly) friendly cooperation that existed between Spain and the Triple Alliance during the early phase of the Nepantla Period ceased to exist, never to return, and he would learn that the hard way after he redirected his attention back to the Purépecha.
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Notes:
(1) IOTL Núñez Vela straight up murdered a conquistador after a discussion (kickstarting the crisis that led to his death), so this I'd say this behavior is in character for him.
(2) This is OTL, here's a video about it.