This long-read piece comprises a chapter in my book, East vs West: The Struggle for the Future. With the 2020 US presidential election upon us, the history of Washington’s rise and its role in shaping and disfiguring the world since has never been more vital to understand.
America rides to the rescue in WWI and afterwards makes it move
It was in the aftermath of the First World War — the ‘war to end all wars’ — that Washington emerged as a global hegemon.
The country had entered the war in late 1917 at the point at which the European warring powers had fought themselves to a standstill, their economies exhausted after four years of unremitting conflict. Washington’s entry on the side of the Allies ensured that the Central Powers of Germany, Austria-Hungary, Bulgaria and the Ottoman Empire could not conceivably continue what by then was a war of attrition. Moreover, by this point the enemy within — in the form of a rising tide of working class militancy and communism — now posed a greater threat to the survival of the major central power Germany’s ruling class than its enemies without. As such, whatever resources and strength remained after the ravages of four years of attritional slaughter on the Eastern and Western Fronts had to be, as a matter of necessity, redirected to meet it.
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 possessions in the Middle East, which had already divided up between France and Britain according to the Sykes-Picot agreement of 1916. 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 Mosul in northern Iraq. It had originally been granted to the French, but with it coming to light that significant and deposits of oil were located there, the British became determined to take Mosul under their control, and dispatched troops to the province in 1918 in order to create that very fact on the ground. At the San Remo Conference of 1920, called to formally settle the fate of the former Ottoman territories, Mosul’s status as a British possession was finally agreed.
It was now Washington saw the opportunity to further its own economic and geo-strategic ambitions and stepped into the breach to help arbitrate the compromise deal that would leave all parties involved satisfied. One of the conditions of US entry into the war in 1917 war had been that its economic interests be taken into account in any postwar settlement. Just two years later, however, prominent members of the British establishment were already starting to grow worried about the extent of US designs on what they viewed as their possessions in the Middle East. Sir Arthur Hirtzel, a leading official in the British Colonial Office, felt minded in 1919 to issue a warning in this regard to his colleagues, telling them that “It should be borne in mind that the Standard Oil Company is very anxious to take over Iraq.”
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, an open door policy 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. The solution to the impasse over Mosul with France was an equal division of the oil that was located there between the relevant parties, with the British adding the province to Baghdad and Basra to form the newly created state of Iraq.
Iraq’s oil was split five ways — 23.75 percent each to Britain, France, Holland (Shell) and the US, with the remaining 5 percent going to the man who played the key role in the negotiations: Calouste Gulbenkian (pictured left), an Armenian oil trader. Next to nothing of the revenues from this oil bonanza would find its way to the Iraqi people, which precisely how it remained until the revolution of 1958.
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 established. During the same period the tribal sheikh Ibn Saud (full name Abdul-Aziz ibn Abdul-Rahman al Feisal al Saud) managed with British support, and his Ikhwan tribal warriors, to assert control over much of the Arabian Peninsula at the expense of the rival Hashemite tribe, which was also supported and bankrolled by the British. In due course — 1932 to be precise — the state of Saudi Arabia was officially established. As historian Mark Curtis explains, it was a state born in an orgy of blood and slaughter:
The conquest of Arabia [by Ibn Saud] cost the lives of around 400,000 people, since Saud’s forces did not take prisoners; over a million people fled to neighbouring countries…By the mid 1920s most of Arabia had been subdued, 40,000 had been publicly executed and some 350,000 had had limbs amputated.
Though Britain was the Saudi Arabia’s original imperial ally and sponsor, Washington was also hovering in the background, vying for influence. The US was in a strong position to establish a special relationship with Riyadh, having bestowed diplomatic recognition of the House of Saud’s control of the Hejaz and Najd in 1931. When oil was discovered in sizeable quantities on the Peninsula in 1932, it sparked a bid for the concession from the new state’s absolutist monarchy 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 the special relationship between Washington and Riyadh was born.
The US-Saudi alliance was further cemented in 1945 when President Roosevelt met Ibn Saud on the US navy battleship USS Quincy in the Suez Canal just after the Yalta Conference at the close of the war. It was a meeting which brought together two contrasting worlds — the Saudi monarch, dressed in his tribal robes, representative of a feudal and primitive worldview and culture, next to the leader of the most powerful and advanced economy on the planet. It prompted US journalist and author, Thomas W Lippmann, to describe it as a “majestic” and “bizarre” spectacle.
US economy moves into overdrive after WWII
By this point, in order to feed an economy that was in overdrive, Washington desired control of the region’s oil, an objective that would by necessity entail displacing the British as the dominant power.
The opportunity to do so arrived at the close of World War II. Fought on a scale and with a destructive capacity that dwarfed its 1914–18 predecessor, it left the economies of each of the belligerent nations involved, apart from the US, decimated. The US economy emerged from the war not just unscathed but considerably stronger, spawning a war economy that has continued since as a key driver of research and development, technological innovation, and exports.
In contradistinction to the huge impetus the Second World War gave to the US economy, it left Britain’s economy on its knees. The loss of key colonies such as India in 1948 occurred more as a result of London’s inability to maintain them than 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 not certain if Britain could survive. Indeed without the Soviet Union’s entry into the war in June 1941, after Hitler turned his Nazi war machine east, followed by the entry of the US into the war after the Japanese attack on Pearl Harbor on December 7 the same year — bringing with it a massive injection of resources and desperately needed war materiel — there was no reason to believe it would.
During the war, under the terms of the Lend-Lease Agreement, Britain received military equipment, materiel, aircraft, ships (Liberty Ships), food and oil from the United States in exchange for leasing British-controlled military bases in Newfoundland, Bermuda, and the British West Indies. The agreement was abruptly ended after Roosevelt’s death by the Truman administration in September 1945. Truman’s decison left Washington’s wartime ally in a vulnerable state economically, with Hugh Dalton, then Chancellor of the Exchequer in the Labour postwar British government, warning of a looming “financial Dunkirk” as a consequence.
A solution to Britain postwar “financial Dunkirk” 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 its 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 the import of food, oil, and the raw materials necessary to support its own armaments production.
John Maynard Keynes was appointed head of the British delegation in the crucial negotiations over the terms of the US loan. He estimated Britain would need £1.5 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. Slow to cotton on to the stark new reality presented by Roosevelt’s death and Truman’s accession as president, Keynes believed that the Americans would provide Britain with the initial £1.5 billion “without strings or interest, as a free gift,” on the basis of Britain’s contribution to the war. But as Giles Radice pointed out, the British economist was in for a rude awakening.
The American negotiating team was not impressed by British references to their outstanding contribution during the war or by witty lectures from Keynes. They were intent on ensuring British involvement in the Bretton Woods free trade system and on supplanting the UK in world markets.
Keynes’ attempt to negotiate an interest-free grant of $5 billion was also rejected by the Americans, whose other priority was 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 the UK. Washington was determined to gain access to these markets on behalf of US banks and manufacturers, and here now was the opportunity. There was also the added motivation of making life difficult for a newly elected Labour government that evinced dangerous socialist leanings with the establishment of a welfare state and its close links to a trade union movement some of whose leaders and many of its key activists were sympathetic to the Soviet Union.
Ultimately the British delegation had little choice other than to accept Washington’s terms. Those amounted to a $5 billion loan with interest payable at two percent after five years. Though the terms were more generous than what could have been found at commercial rates, combined with Washington’s insistence on the convertibility of sterling (introduced in 1947), the deal damaged the British economy over the longer term.
In hindsight, no one within the British political establishment should have been surprised at the harsh terms demanded by its US counterpart - not when “the chances of London being kept at the centre of the post-war international design by Washington were always slim.” In his fine book, The Global Minotaur, Yanis Varoufakis continues: “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.”
In the latter stages of the war both Roosevelt and Truman 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 at Bretton Woods, and the dollar established as the dominant international reserve currency. It also required control of the world’s natural resources — in particular oil. Indeed, even with the war still raging, the tussle for economic dominance in the postwar world between Washington and London had been underway.
Its extent was revealed in a message sent to Roosevelt by Churchill just a few months before D-Day in 1944:
Thank you very much for your assurances about no sheep’s eyes on our oilfields in Iran and Iraq,” Churchill wrote to his American counterpart. “Let me reciprocate by giving you the fullest assurance that we have no thought of trying to horn in upon your interests or property in Saudi Arabia. My position in this as in all matters is that Great Britain seeks no advantage, territorial or otherwise, as a result of this war. On the other hand she will not be deprived of anything which rightly belongs to her after having given her best services to the good cause — at least not so long as your humble servant is entrusted with the conduct of her affairs.
But neither Churchill nor the British establishment were able to deny the reality of Washington’s mammoth economic power relative to London’s, and inevitably were had no choice but to accept that their economic interests in the postwar world would best be served by maintaining close relations with its wartime ally. Thus it was Churchill who coined the term ‘special relationship’ during his famous Iron Curtain speech of March 1946 in Fulton, Missouri, making clear his view that British and American interests were one and the same in a world which by then was rapidly dividing into two hostile camps — capitalism and communism.
Neither the sure prevention of war, nor the continuous rise of world organisation will be gained without what I have called the fraternal association of the English-speaking peoples. This means a special relationship between the British Commonwealth and Empire and the United States.
The Marshall Plan (European Recovery Program) was rolled out in the wake of the formulation of the Truman Doctrine, articulated by Roosevelt’s successor in a speech to the US Congress in 1947. In effect Truman pledged that the United States would resist the advance of communism with the policy of containment devised by State Department mandarin, George Kennan. In concrete terms containment set in place a belligerent and confrontational stance towards Moscow, with Truman’s speech marking the end of the wartime Grand Alliance between the Allies and the Soviet Union and the start of the Cold War.
The Marshall Plan funneled $13 billion in economic aid over four years between 1948 and 1952 to seventeen European countries. It was a huge commitment on the part of Washington, without which said European nations would not have been able to rebuild their infrastructures and reconstitute economies that had been destroyed by the war. On a geostrategic 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 war destitute. It was also implemented with the objective of creating markets for US exports.
The aid was administered as a political weapon as much it was as a means of solidifying the peace through prosperity in the war’s aftermath. This was reflected 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 what the status quo Washington was so committed to preserving involved, Kennan spelled it out in an internal State Department memo:
We have 50 percent of the world’s wealth but only 6.3 percent of its population. In this situation, our real job in the coming period…is to maintain this position of disparity. To do so, we have to dispense with all sentimentality …we should cease thinking about human rights, the raising of living standards and democratisation.
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, one explicated by Cold War historian Melvyn Leffler, who revealed that it was in truth motivated by the need “to integrate Western Europe and England (the UK) into an orbit amenable to American leadership.”
Leffler went 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.” This assertion was confirmed by the aforementioned George Kennan, who 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.”
While this was taking place, Britain was going through one of most seismic social and political transformations in its history. Winston Churchill and the Tories had suffered a humiliating defeat in the 1945 general election just a few months after the Allied victory, a victory that involved Churchill’s role becoming mythologised as having been indispensable both in rallying the country in the early days after the disaster of Dunkirk, when fear of invasion gripped the country, and in cultivating a close relationship with Roosevelt to the point of currying American support and aid prior to Pearl Harbor.
Yet, 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 effective election slogan. It tapped into the mood of British troops returning home to poverty-stricken working class communities, determined that things would not be allowed to return to the way they had been prior to 1939. However if such a sesimic shift to the left in the country had some within the US political and security establishment worried, there was little reason to fear. The newly installed Attlee government was every bit as committed to the Atlantic Alliance as Churchill had been.
This was no surprise given the reliance of the British economy on US support. Moreover the introduction 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 in Britain the effect of nullifying any potential threat of communism taking serious root. 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 establishment had been forced to accept the new postwar reality of Washington’s usurpation of its position as the dominant capitalist-imperialist power (the Bretton Woods Conference in 1944, you will recall, had put in place a global economic system which reflected US domination over markets, international currency, and industrial output), in strategic terms there still remained a section of it which refused to acknowledge or accept its status as a diminishing power.
Evidence in this regard came in the form of 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 the country’s leader, Gamal Abdel Nasser, and installing 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. With Soviet influence growing in the region, Britain, France, Israel and the United States had reason to worry.
By exerting control of the Canal, Egypt would gain de facto control over 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 the Egyptian president’s speech to his people announcing the nationalisation of the Canal, during which he identified the measure as a “battle against imperialism and the methods and tactics of imperialism, and a battle against Israel, the vanguard of imperialism.”
Prior to the operation to take back control of the Canal, 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, the pact was established to counter the growing influence of the Soviet Union in partnership with Nasser and the pan-Arab nationalism he espoused. In response to the creation of the Baghdad Pact, Moscow issued a statement through its Ministry of Foreign Affairs:
Military blocs in the Near and Middle East are needed, not by the countries of that area, but by those aggressive American circles which are trying to establish domination there. They are also needed by those British circles which, by means of these blocs, are trying to retain and restore their shaken positions, in spite of the vital interests of the peoples of the Near and Middle East who have taken the road of independent national development.
The military operation to wrest back control of Suez from Nasser involved an Israeli invasion of the Sinai, beginning with a paratrooper assault on its eastern approaches. This was followed by a joint French and British ultimatum demanding that both sides withdraw to a distance of 16 km on either side of the Canal Zone. If the Egyptians had acceded to the French and British ultimatum, it would have meant the reoccupation of Suez in all but name. Such a turn of events would likely have had serious ramifications with respect to Nasser’s credibility within Egypt and throughout the region. If Nasser refused to accede to the French and British ultimatum, on the other hand, the military forces of both countries would invade and try to force the issue.
Cairo resisted what from the outset was a naked act of aggression, rejecting the ultimatum to pull their forces back. In response the British dispatched bombers to attack Egyptian defensive positions preparatory to an invasion of Suez by French and British troops. The assault was named Operation Musketeer, upon which would follow the main Israeli assault against Egyptian forces across the Sinai under the name Operation Kadesh. Though the military operation was a success, the British and French were forced to withdraw when US President Dwight D. Eisenhower threatened to implement, through Washington’s Saudi proxy, an oil embargo against both countries. He also threatened to dump 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?” Eisenhower declared rhetorically to his advisors.
In 1823 US President James Monroe proclaimed to the world, particularly Europe, that Central and South America was under Washington’s suzerainty. Eisenhower did as much with regard to the Middle East in the wake of Suez in 1956.
Pax Americana was born.
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