Fist Of History

Posts Tagged ‘Egypt’

Operation Nickle Grass and the modern Middle East

Friday, May 8th, 2015

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One of the nice moments in historical work is when you find a mundane picture, like the one above, and discover that it marks a profound shift in history.  In this case the image above is from 1973, during the Yom Kippur War, when Israel faced off against a simultaneous invasion by Syria and Egypt.  This was particularly unique in Israel’s history as it featured an initial few days of defeats inflicted upon the Israeli military and what the Israeli leadership considered an existential threat to Israel itself.  The war also represented a minor proxy war in the Cold War period, both Syria and Egypt had been equipped, and economically supported by, the Soviet Union while Israel was seen as a demi-client of the United States at the time.  The events of this war permanently shifted the position of the United States in the Middle East, tied the American government more closely to that of Israel, and exposed the vulnerability of the United States to external oil pressures.

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Israel at the greatest point of danger during the war, under the overall leadership of its Prime Minister Golda Meir (pictured above), ordered the raising of short-range ballistic missiles to be prepared.  This was done in a very public and slow manner, to ensure the United States was aware of the fact that Israel was preparing its Jericho missile systems for possible launch.  This is particularly critical because these were the missiles that Israel was expected to use to launch nuclear weapons and, without nuclear tips, were kind of useless as weapons in the ongoing war.  Furthermore it was to send a signal to the United States government that Israel’s government considered the situation gravely dangerous to the nation and would use any means to prevent the collapse of Israel.

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Richard Nixon, the United States president at the time, under the advise of the United States Secretary of State Henry Kissinger, ordered that United States military equipment be transferred to Israel to replenish its diminished stockpiles and ensure Israel could continue fighting and go on the offensive.  The threat of nuclear escalation was only part of Nixon/Kissinger’s decision to intervene – the Soviet Union had declared its intention to resupply Syria and Egypt at roughly the same time, the need to stave off Soviet influence expansion in the Middle East, and Kissinger arguing that by supplying Israel the United States would have a stronger hand in the post-war settlement, all sparked the push for the United States to intervene.  But in doing so, although the war ended in an Israeli victory, a few other complications set in.

Country’s fuel shortage led to problems for motorists in findi

The Arab members of OPEC declared an oil embargo on the United States, the first of two such “oil shocks” to the United States economy.  Limitations in long range United States air power were exposed, sparking a stronger interest in the United States for establishing air bases around the world to extend the range, and decrease the response time, of its air forces.  But most critically it paved the way for the closer connection between Israel and the United States, which in turn led to the modern shape of the Middle East, including the successful efforts of the Camp David accords to broker peace between Egypt and Israel, regular United States military aid to Israel and Egypt, and the current close connection between these two states.

Sources:  Wikipedia articles on the Yom Kippur War and Operation Nickle Grass, working paper on Israel’s probable nuclear weapons, New York Times editorial on Israel’s nuclear weapons potential and the Yom Kippur War.

Egypt 1876 – Sovereign Debt Default and Foreign Interventions

Friday, October 25th, 2013

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This entry could also be titled “What happens when a country borrows too much money, can’t raise more, and lacks a particularly powerful military.”  The gentleman pictured above is Ismail the Magnificent, ruler of Egypt from 1863 to 1879, was a 19th century progressive dream ruler – he strove to take Egypt from its traditionally dominated government and society and rapidly thrust his nation into the modern age.  As he took the throne of Egypt the nation was undergoing an economic boom, the price of cotton was elevated globally due to the United States Civil War and the coffers of the Egyptian state were swollen with increased tax revenue.  Ismail however pursued his aggressive modernization schemes far too rapidly for his state to absorb the costs – during his reign he funded a major railway expansion in Egypt, a heavily reformed post office and customs system, commercial stimulation, a government sponsored sugar industry, major urban renewal and expansion programs, a state supported theater and opera house, and a series of expensive and nasty wars in Ethiopia.  He also oversaw the completion of the Egyptian portion of the Suez Canal and engaged in a nasty legal battle with the Suez Canal Company, a case he lost when Napoleon III arbitrated a concessions dispute and awarded damages to the Suez Canal Company.  Ismail needed huge influxes of capital to fund all of these ambitious goals so he borrowed and expanded Egypt’s sovereign debt.  He expanded it a great deal.  When he came to the throne Egypt owed three million pounds sterling in debt, at the end of his independent reign Egypt owed one hundred million pounds sterling in debt.

At that point Egypt was funding its debt with more borrowing, Ismail had hocked the valuable government held shares in a the Suez Canal Company for a pittance, and Egypt had reached a point that by 1876 it was no longer able to “service its debt” – i.e. pay the interest owed on the borrowed money.  A commission was sent, headed by two British government officials, to investigate the problem and seek a solution.

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Above is one of them, Stephen Cave, the finding of the British Commission was that the only way Egypt could hope to resume service on its massive debt was to accept foreign intervention into its financial affairs.  In a move many today would recognize Egypt was put on an austerity budget and revenue from the Suez Canal, customs and import duties, and other government income sources passed through a foreign holding company which ensured that the debt holders got payments first and the Egyptian state got a fixed remainder of the budget.  (The holding company was known as Caisse de la Dette – the Public Debt Commission.)  These reforms lead to a sizable reduction in the available budget for Egypt’s other government projects, which in turn provoked a major uprising by the Egyptian people against their government’s acceptance of these actions and the power of the Public Debt Commission.

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This story doesn’t have a happy ending for popular sovereignty, by 1881 popular unrest, discontent in the Egyptian military, and other factors lead to a rebellion, this concerned the British who in 1882 began military operations against Egypt.  The ensuing Anglo-Egyptian war lasted for about a year and ended with Britain crushing the locally raised armies and imposing British control over Egypt.  Britain, along with France, also continued to control the revenues of the Egyptian government and enforced the servicing of Egypt’s debt until the end of the British occupation in 1954.

Sources:  Wikipedia entry on Isma’il Pasha, on Egyptian History in the 19th century, on the Caisse de la Dette, and on the British rule of Egypt