I havn't the faintest clue whats going on here.

I'm playing the germans and currently at war with persia, admittedly the largest civ in the game i'm playing. We recently met to discuss peace and I noticed he's suffering -5000 gold per turn and has 0 in his coffers. However, when I get a glimpse of the land on his mainland every single hex has a unit of some kind in it. Is this meant to be possible?