A brief history of US imperialism from the end of WWI to Suez

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It was in the aftermath of the First World War — the ‘war to end all wars’ — that the United States emerged as a global hegemon.

The country had entered the war in late 1917 at the point at which the European powers had fought themselves to a standstill, their economies exhausted after four years of unremitting attritional conflict. Washington’s entry on the side of the Allies broke the deadlock and ensured that victory for the Central Powers, led by Germany, was no longer possible to achieve. Moreover, by this point the enemy within — in the form of a rising tide of working class militancy and communism — posed at this stage a greater threat to the survival of the German ruling class than any of its enemies without. As such, whatever resources and strength remained after the ravages of four years of slaughter on the Eastern and Western Fronts was redirected to meet it.[i]

The signing of the Armistice in 1918, bringing hostilities to an end, was followed in 1919 by the infamous Treaty of Versailles, which set the terms of the peace. The glittering prize of the Allied victory was the former Ottoman Empire in the Middle East, already divided up between France and Britain according to the Sykes-Picot agreement of 1916 in anticipation of this very eventuality.[ii] Under its terms what would become Lebanon and Syria were to be incorporated into the French Empire, while what would become Transjordan (later Jordan), Palestine, and the two southern provinces of Iraq — Baghdad and Basra — were to be granted to the British.

What could not be agreed was the status of Mosul in northern Iraq. It had originally been parcelled out to the French, but with the huge and as yet undeveloped oil deposits that were known to be located there, London became determined to take Misul under its control, going so far as to dispatch troops to the province in 1918 in order to create that very fact on the ground. At the San Remo Conference of 1920, established to formally settle the fate of the former Ottoman territories, Mosul’s status as a Britain possession was formalised and agreed.[iii]

It was now that Washington saw the opportunity to further its own economic and strategic ambitions, stepping into the breach to help arbitrate the compromise deal that would leave the parties involved satisfied.

One of the conditions of US entry into the war in 1917 war was that its economic interests be taken into account in any postwar settlement. It was not long before prominent members of the British establishment had reason to grow worried about the extent of US designs on what they viewed as their possessions in the region. Sir Arthur Hirtzel, leading official in the British Colonial Office, was minded to issue a warning to his colleagues in 1919: “It should be borne in mind that the Standard Oil Company is very anxious to take over Iraq.”[iv]

US President Woodrow Wilson was committed to an interventionist foreign policy post-WWI, viewing America as divinely ordained moral crusade more than a nation, thus uniquely placed to shape the contours of a new world order from the ashes of the old. His Wilsonian doctrine, enshrined in his famous Fourteen Points statement of principles outlining the contours of a new world order after the war, gave birth to the liberal interventionist strain that would come to dominate US geopolitics.

Consider:

The lofty ideals embraced by Wilsonianism proved premature in the post-WWI era, when despite being the driver behind the formation of the League of Nations, the forerunner of the United Nations established with the objective of maintaining world peace via the institutional arbitration of disputes, were stymied by the much more persuasive strain of isolationism which predominated in Washington and in the country at large at the time.

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Indeed scepticism towards the philosophical foundations of the League of Nations was rife within the US political establishment after the war, herewith articulated by Wilson’s predecessor Theodore Roosevelt:

Staying with Roosevelt for the moment, if Wilson was the president who first dressed up US imperialism in the clothes of democracy and human rights, depicting America as a light unto the world, his Republican predecessor fathered the notion of US imperialism as a cudgel, wielded on the basis of might is right. A century later this strand of US imperialism would come to be known as neoconservatism.

Thus:

In return for helping to smooth relations between London and Paris over Mosul, Washington demanded an extension of the open door policy it had first formulated in relation to China in the late 19th century. Applied to the Middle East after the First World War, it would allow US oil companies to freely negotiate contracts with the new Iraqi government headed by King Feisal, whom the British had installed as a puppet monarch over their newly acquired colonial possession.[v]Thus the solution to the impasse over Mosul with France was an equal division of its considerable oil reserves among the relevant parties, even as London grafted the province onto the newly created state of Iraq under its control.[vi]

The oil was split five ways — 23.75% each to Britain, France, Holland (Shell) and the US, with the remaining 5% going to the man who played a key role in the negotiations — Calouste Gulbenkian, an Armenian oil trader.[vii] Next to nothing of the revenues from this oil bonanza, meanwhile, would find its way to the Iraqi people, which is precisely how it remained until the revolution of 1958.

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Standard Oil pipeline in Iraq c1920

In 1927 oil production got underway and two years later the Iraqi Petroleum Company — made up of Anglo-Iranian (BP), Shell, Mobil and Standard Oil of New Jersey (Exxon) — was set up. During the same period the tribal sheikh Ibn Saud (full name Abdul-Aziz ibn Abdul-Rahman al Feisal al Saud) managed to assert control over much of the Arabian Peninsula at the expense of the rival Hashemite tribe, with the state of Saudi Arabia subsequently coming into being in 1932. By the time it did the US was in a perfect position to establish a special relationship with the new state at the expense of its British imperial rival, having already bestowed diplomatic recognition of the House of Saud’s control of the Hejaz and Najd in 1931.

When oil was discovered in sizeable quantities in the Arabian Peninsula soon thereafter, it sparked a bid for the concession between Britain’s Anglo-Persian Oil Company (APOC) and America’s Standard Oil of California (SOCAL). Ibn Saud accepted the much higher offer of £50,000 from Standard Oil and thus the special relationship between Riyadh and Washington was consecrated.[viii]

The close relationship between Saudi Arabia and Washington was further cemented in 1945, when President Roosevelt met Ibn Saud on the US navy battleship the USS Quincy in the Suez Canal, just after the Yalta Conference between the Allied Powers at the close of the Second World War. It was an unlikely meeting that brought together two contrasting worlds — the Saudi monarch, in his tribal robes, representative of a feudal and primitive worldview and culture, and the leader of the most powerful and advanced economy on the planet. US journalist and author, Thomas W Lippmann, was moved to describe it as a “majestic” and “bizarre” spectacle.[ix]

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Roosevelt and Ibn Saud aboard USS Quincy

In order to feed an economy that was now in hyperdrive, Washington desired control of the region’s oil, an objective that by necessity would entail displacing London as the dominant power. The opportunity to do precisely that arrived with the end of WWII. Fought on a scale and with a destructive capacity that dwarfed its 1914–18 predecessor, the Second World War exhausted the economies of every one of the belligerent nations apart from the United States. The US, in fact, emerged from the war considerably stronger than it had ever been, spawning a war economy that has continued since as a key driver of US government-funded research and development, technological innovation, and exports.

In contradistinction to the huge impetus the Second World War gave to the US economy, it marked the end of the British Empire. The loss of key colonies such as India in 1948 occurred more as a result of London’s inability to maintain them than it did any moral imperative to return said states and lands to their rightful owners. This comes as no surprise when we consider that in the early stages of the war, it was touch and go whether Britain would prevail. In fact without the entry of the Soviet Union into the war in June 1941, when Hitler turned his Nazi war machine to the East, followed by the entry of the US into the war on the back of the Japanese attack on Pearl Harbor on 7 December of the same year, bringing with it a massive input of resources and desperately needed materiel, there is no reason to believe she would have.

Yet even though the tide turned in Britain’s favour in 1941, and despite the fact that by 1944 Allied victory was certain, it was clear that London would not be able to maintain her prewar dominance at war’s end.

The Lend-Lease Agreement,[x] under which Britain received vital supplies and equipment from the United States — loaned for the duration of hostilities — in exchange for the leasing of military bases to the US in Newfoundland, Bermuda, and the British West Indies, was abruptly ended by the Truman administration. This left Washington’s wartime ally in a vulnerable state, as in order to protect her strategic and economic interests around the globe in the postwar period, she needed to retain the military equipment supplied under its terms.

A solution to the crisis came in the shape of an Anglo-American loan. Britain’s dire need in this regard was self-evident. The country had been forced to run up huge debts to support the war effort, borrowing heavily from the United States and also from commonwealth and imperial holders of sterling. Additionally, vital reserves of gold and foreign currency had been run down to finance imports of food, oil, and the raw materials necessary to support its own production of armaments.

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John Maynard Keynes

John Maynard Keynes was appointed to head the British delegation in the crucial negotiations over the terms of the US loan. He estimated Britain would need £1 billion (approx $4 billion) to finance her external payments in the first year of peace, and a further $8 billion over the next three to five years. At the time British gold and dollar reserves stood at less than $500 million.

However, Keynes’ attempt to negotiate an interest-free grant of $5 billion was rejected by the Americans, who were determined to force the British to dismantle the so-called ‘sterling area’ of countries holding substantial reserves of sterling in their foreign exchange accounts to facilitate trade with Britain. Washington was determined to gain access to these markets on behalf of US banks and manufacturers, and here now had arrived their opportunity. There was also the added motivation of making life difficult for a newly elected Labour government with dangerous socialist leanings towards a welfare state and the trade union movement.[xi]

Ultimately the British delegation had little choice other than to accept the American terms of a $5 billion loan with interest payable at two percent after five years. Though the terms were more generous than could have been found at commercial rates, combined with Washington’s insistence on the convertibility of sterling (introduced in 1947), it was a deal that damaged the British economy over the long term.

In hindsight, no one within the British establishment should have been surprised at the harsh terms demanded by its US counterpart, for as Yanis Varoufakis explains, “the chances of London being kept at the centre of the post-war international design by Washington were always slim.” He goes on to add, “It can be argued that the United States, having extracted large payments from Britain during the war, manoeuvred immediately after the end of the war to ensure that London was deprived of a dominant position in relation to Middle East oil.”[xii]

In the latter stages of the war both the Roosevelt (FDR) and Truman administrations were determined to restructure the postwar world to ensure the dominant position of the United States. The key elements in their strategy were military superiority in nuclear and conventional weaponry; economic hegemony under the auspices of the newly created International Monetary Fund and World Bank, with the dollar established as the dominant international reserve currency; and control of the planet’s natural resources — in particular oil.

Indeed with the war still raging a struggle for economic dominance in the postwar world was already underway between the Allies. The extent of this rivalry is revealed in a message sent to President Roosevelt by Churchill just a few months before D-Day in 1944:

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Churchill delivering his ‘Iron Curtain speech’ in Fulton, Missouri

But neither Churchill nor the British establishment were able to deny the reality of Washington’s economic power, deciding in the last analysis that their own economic interests would be best served by maintaining close relations with its wartime ally going forward. In this regard, it was Churchill who coined the term ‘special relationship’ during his famous Iron Curtain speech of March 1946 in Fulton, Missouri, arguing that British and American interests were one and the same as the world divided into two antagonistic ideological blocs: capitalist and communist.

Churchill:

The Marshall Plan (or European Recovery Program, to give it its official name) was rolled out in the wake of the formulation of the Truman Doctrine, announced by the US President in a speech to the US Congress in 1947. In effect it pledged that the United States would resist the advance of communism with a policy of containment devised by State Department mandarin, George Kennan. In concrete terms containment set in place a belligerent and confrontational stance against the West’s former ally, with Truman’s speech marking the official end of the wartime Grand Alliance between the Allies and the Soviet Union, and the beginning of the Cold War.

The Plan funnelled $13 billion in economic aid over four years between 1948 and 1952 to seventeen European countries.[xv]It was a huge commitment on the part of Washington, without which said European nations would not have been able to rebuild infrastructures and reconstitute economies that had been destroyed in the war.

On a geopolitical level, it was a financial commitment undertaken with the objective of forestalling the influence and appeal of communism in Western Europe among peoples who’d emerged from the cataclysm of the Second World War poverty-stricken and destitute. It was also implemented with the objective of creating markets for US exports. The aid was administered as a political weapon as much as it was a way to ensure peace through prosperity in the war’s aftermath, evidenced in the priority given to those nations - France, Greece, and Italy - in which strong and popular communist movements posed a genuine threat to the status quo.

As to the question of the status quo that Washington was so committed to preserving, Kennan spelled it out in an internal State Department memo:

NATO was formed in 1949 with the stated purpose of countering the threat of Soviet expansionism. It ensured a US military presence in Europe that continues to this day. However the stated purpose behind NATO’s formation was at odds with the reality, explicated by Cold War historian Melvyn Leffler, who reveals that it was motivated by the need “to integrate Western Europe and England (the UK) into an orbit amenable to American leadership.”[xvii]

Leffler goes on to explain how in the run-up to the key meeting at which NATO would be formally established, US officials “became convinced that the Soviets might really be interested in coming to a negotiated settlement that would involve unifying Germany and ending the division of Europe.”[xviii]

This assertion was confirmed by the the aforementioned Kennan, when he revealed that “the trend of our thinking means that we do not want to see Germany reunified at this time, and that there are no conditions on which we would really find such a solution satisfactory.”[xix]

While this was taking place, Britain was going through one of the biggest transformations in its political and social history. Winston Churchill and the Tories had suffered a humiliating defeat in the 1945 general election just a few months after the Allied victory, in which Churchill had played a dominant role. Despite this, Labour romped home with a 173-seat majority, having fought the election on a manifesto inspired by the 1942 Beveridge Report into poverty and the extent of the social and economic injustice that had long bedevilled British society. ‘Freedom from Want’ was Labour’s short but very effective election slogan, tapping into the mood of the troops returning home to poverty-stricken working class communities the length and breadth of the country, determined that things would not be allowed to return to the way they had been prior to 1939.

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1945 Labour Party election poster

Such a sesimic shift to the left in the country had the US establishment worried. Indeed some within the US government feared that it presaged Britain turning communist altogether.

There was little reason to fear, however, as the newly installed Attlee government was every bit as committed to the Atlantic Alliance as the Tories under Churchill had been – unsurprisingly so given the reliance of the British economy on US support.

In actual fact, the rolling out of the welfare state, combined with the nationalisation of key industries, full employment, and a mass house-building program to alleviate the chronic housing shortage and overcrowding that had long been a feature of working class life, had the effect of nullifying the threat of communism. Here, the dictum of ‘take away man’s need for bread and you take away his need for revolution’ proved salutary.

Though the British ruling class had been forced to accept the new postwar reality of Washington’s usurpation of its position as the dominant capitalist power (the Bretton Woods Conference in 1944, you will recall, had put in place a global economic system which reflected US domination over markets, currency, and industrial output), in strategic terms there still remained a significant section of the British ruling and political class that refused to acknowledge or accept its status as a diminishing power.

This was evidenced in the Suez Crisis of 1956 when Britain, led by Anthony Eden’s Conservative government, entered a covert military alliance with France and Israel to seize back control of the newly nationalised Suez Canal from Egypt with the ultimate objective of toppling popular Egyptian President, Gamal Abdel Nasser, in favour of a pliant alternative. Nasser was the inspiration and driving force behind the growth and traction of Arab nationalism, which swept through the Middle East in the fifties and sixties and succeeded in uniting a significant and growing portion of the Arab world.[xx]

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British Prime Minister Anthony Eden addressing the nation on Suez

With Soviet influence becoming more of a factor in the region, Britain, France, Israel, and the United States had reason to worry. By exerting control of the Canal, Egypt would have de facto control of the shipping passing through it, thus threatening a major oil transportation route into the Mediterranean.

Britain’s access to what remained of its empire was placed under pressure by this development, while the French were increasingly concerned over Nasser’s support for the Algerian national liberation struggle that was gathering steam and threatening its ability to maintain its status as a colonial power, having just been forced out of Indochina by the Vietnamese. As for the Israelis, their goal was the removal of the gathering threat Nasser posed to their southern border, given his commitment to the Palestinian liberation struggle.

An idea of the potency of the threat to the West presented by Nasser and Arab nationalism during this period can be garnered from his speech to the Egyptian people announcing the nationalisation of the Canal, during which he identified it as a “battle against imperialism and the methods and tactics of imperialism, and a battle against Israel, the vanguard of imperialism.” [xxi]

Prior to the operation to take back control of Suez, and in response to Nasser’s growing influence, the Americans were the inspiration and driving force behind the formation of the Baghdad Pact – or Central Treaty Organisation (CENTO) – in 1955. Drawn up between the US, Britain, Turkey, Pakistan, and Iraq, CENTO was created to counter the growing influence of the Soviet Union in the region, along with that of Nasser and the pan-Arab nationalism which he espoused.[xxii]

The pact was considered a threat by the Soviets, who issued a statement through its Ministry of Foreign Affairs:

The military operation to wrest back control of the Canal from Nasser involved an Israeli invasion of the Sinai, designed to push the Egyptians as far back as possible, followed by a French and British military intervention presented as necessary measure to end hostilities — at which point they would demand that both sides withdraw to a distance of 16 km on either side of the Canal Zone. This in effect meant the reoccupation of Suez, bringing with it anticipated negative consequences when it came to Nasser’s credibility within Egypt and throughout the Arab world. The plan was devised and implemented without any prior consultation with Washington, however, thus guaranteeing its undoing.

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Nasser in Cairo proclaiming victory over Suez

The Egyptians resisted what from the outset was a naked act of colonial and imperialist aggression, refusing the Anglo-French ultimatum to pull their forces back from the Canal Zone.

In response Britain dispatched RAF bombers to attack Egyptian defensive positions preparatory to an invasion of the Zone by French and British troops a few days later, under the rubric of Operation Musketeer. Along with Israel’s prior invasion of the Sinai, Operation Kadesh, the military operation was a success. However the British and French were forced to withdraw when President Eisenhower responded by threatening to implement, through Washington’s Saudi proxy, an oil embargo against both countries. He also threatened to sell off substantial amounts of sterling held by the US Treasury in order to damage the British economy.

“How could we possibly support Britain and France, if in doing so we lose the whole Arab world?” the US president declared rhetorically to his advisors at the White House in the midst of the crisis.[xxiv]

The outcome left no doubt that so far as the Middle East was concerned, Washington was now the dominant force.

References:

[i]For more on the rising tide of revolutionary unrest in Germany in 1918 see David Stevenson, The History of the First World War, (Allen Lane, 2004), pp. 491-500.

[ii]See http://www.history.com/this-day-in-history/britain-and-france-conclude-sykes-picot-agreement.

[iii]See https://www.britannica.com/event/Conference-of-San-Remo.

[iv]Peter Sluglett, Britain in Iraq: Contriving King and Country, (I.B. Taurus, 2007), p. 26.

[v]For more background on the US Open Door policy in the Middle East see http://www.americanforeignrelations.com/O-W/Oil-The-origins-of-u-s-foreign-oil-policy.html.

[vi]James A Paul, Great Power Conflict over Iraqi Oil: The World War I Era, https://www.globalpolicy.org/component/content/article/185-general/40479-great-power-conflict-over-iraqi-oil-the-world-war-i-era.html. See also, John Wight, ‘The Special Relationship’, http://socialistunity.com/the-special-relationship/.

[vii]See http://100years100facts.com/facts/calouste-gulbenkian-nicknamed-mr-five-percent/.

[viii]Peter Mansfield provides a good history of the activities of Western oil companies in the region in the post-WW1 period. Peter Mansfield, A History of the Middle East, (Penguin, 2013), pp. 241-246.

[ix]Thomas W Lippman, The Day FDR Met Saudi Arabia’s Ibn Saud, http://susris.com/wp-content/uploads//2014/02/100222-fdr-abdulaziz-lippman.pdf.

[x]Antony Beevor provides useful background on Lend-Lease and its crucial role in allowing Britain to survive the Nazi onslaught in 1940 a full year before the US entered the war. See Antony Beevor, The Second World War, (Weidenfeld & Nicolson, 2012), pp. 179-182.

[xi]Perry Anderson, American Foreign Policy and its Thinkers, (Verso, 2015), pp. 56-62.

[xii]Yanis Varoufakis, The Global Minotaur, (Zed, 2015), Chapter Three, The Global Plan, p. 69.

[xiii]http://www.newyorker.com/magazine/2003/07/14/beneath-the-sand.

[xiv]Winston S. Churchil, The Second World War, (Bloomsbury, abridged, 2013) p. 959.

[xv]Oliver Stone & Peter Kuznick, The Untold History of the United States, (Ebury, 2012) p. 209.

[xvi]John Pilger, The New Rulers of the World, (Verso, new edition, 2016), p. 101.

[xvii]Noam Chomsky, Year 501: The Conquest Continues, (Pluto, 2015), ‘The Rich Men’s Club, P62.

[xviii]Noam Chomsky, Year 501: The Conquest Continues, (Pluto, 2015), ‘The Rich Men’s Club, P63.

[xix]Noam Chomsky, Year 501: The Conquest Continues, (Pluto, 2015), ‘The Rich Men’s Club, P64.

[xx]Tariq Ali provides an insightful history of Nasser’s emergence and, with it, the emergence of Arab nationalism as a counter-hegemonic current across the Arab world. See Tariq Ali, The Clash of Fundamentalisms, (Verso, 2002), pp. 86-113.

[xxi]Henry Kissinger, Diplomacy, (Simon & Schuster 1994), p. 530.

[xxii]CENTO, background, http://news.bbc.co.uk/1/hi/world/middle_east/2801487.stm.

[xxiii]Soviet Reaction to the Baghdad Pact, See https://legacy.fordham.edu/halsall/mod/1955Soviet-baghdad1.asp.

[xxiv]US Department of State: Office of the Historian https://history.state.gov/historicaldocuments/frus1955-57v16/d455.

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