经济论文代写 Economic Sabotage as a Prologue

Economic Sabotage as a Prologue of British Imperialism in Egypt: A Case for the Suez Canal

经济论文代写 In only fifteen years, the Egyptian debt had risen 23 times, rising from 3 million pounds in 1863 to 68 million pounds at the beginning

Introduction  经济论文代写

For centuries, Egypt has been an embodiment of the feats of engineering and architecture. Its array of pyramids and giant sculptures that have stood the test of time as well as innovations in science, medicine, and agriculture that have shaped modern existence. The country has firmly established itself as one of the oldest and most advanced civilizations. Indeed, its position has been buoyed by a monarchial political economy, a well-educated population, and a suitable geographical location that allows for interaction with and movement of people to all parts of the world.  经济论文代写

At the height of the Industrial Revolution in the 19^th century.  Egypt’s unique position as a link between Europe and the Far East encouraged Sudan and Egypt’s Khedive, Said Pasha, to engage Ferdinand de Lesseps with a request for the construction of the Suez Canal that would be open to all states. Unfortunately, Egypt would not reap the benefits of this momentous project and was forced to sell its share to an aggressive British empire that was keen on implementing its imperialistic agenda. An in-depth analysis of the project.  However, reveals that economic sabotage in the form of unsustainable debt.  And not British imperial ambition, was largely responsible for Egypt's loss of the Suez Canal.

Background

In order to understand how Egypt became insolvent, thereby necessitating the sale of its shares of the canal.  It is crucial to understand the fundamental events that drove Ismail Pasha’s government to yield its shares. During the exploratory era of the 1700s, both Britain and France had had a key interest in Egypt and viewed it as a gateway to the faraway land of India. In his article titled The Conflict of the East and West in Egypt, John Eliot Bowen notes that for decades. British merchants had braved storms in the southern seas while attempting to reach the lucrative El Dorado (Bowen 295). However, the voyage around what is now the Horn of Africa was not only arduous but also dangerous.

As commerce grew, both France and Britain appreciated the importance of Egypt.  Recognizing that the most direct route to India was through Egypt. While Britain was in favor of an overland approach, the French preferred a canal that would link the Red and Mediterranean Seas (Bowen 295). During this period, Egypt was under Ottoman rule. Under the Ottoman system of governance.  Every state was under a governor that was answerable to the Sultan. In Egypt, that figure was Mehemet Ali.  经济论文代写

After suppressing a series of Mamluk revolutions backed by the British, albeit covertly.  Ali instituted a series of reforms aimed at modernizing Egypt. The governor revamped the naval equipment, introduced forward-looking military strategies.  Founded educational and medical institutions, and made cotton a major cash crop. He also developed a close relationship with the French, therefore.  Establishing diplomatic ties that would see France win the concession to build the Suez Canal. Unfortunately, the huge financial obligations incurred by the Egyptian government to fund the project ultimately bankrupted it.

A Case for Economic Sabotage  经济论文代写

Abandonment of Self-Development

During his years in power, Mehemet Ali leveraged the absolute power bestowed upon him by the state to mastermind a modernization and industrialization campaign. In his book titled Between Development and Underdevelopment. The Precocious Attempts at Industrialization of the Periphery 1800-1870, Jean Batou notes that after defeating the Mamluks, who were regional overlords keen to establish control over small territories, Ali helped transform Egypt’s economy by establishing state-run enterprises (Batou 55).

In doing so, he created a blueprint of state capitalism that has been successfully implemented by economic superpowers such as Japan and India. Interestingly, this endeavor was advanced using internal resources, with the leader shunning external debt. However, military action by Britain, France, and Austria in the late 1830s and early 1940s destabilized Ali, forcing him to give up Palestinian and Syrian control. With this, a significant part of Ali’s sources of raw materials was take away, thereby weakening Egypt. During the second half of the 19^th century, his successors were influenced by now-leveraged Britain to give up state capitalism for free trade. This shift to open markets opened up Egypt to financial manipulation by unscrupulous bankers, entrepreneurs, and diplomats in Europe.

The Pumping of Funds by European Banks into Egypt 经济论文代写

The Industrial Revolution in Europe enhanced liquidity and banks were keen to invest the excess cash in growing markets. Notably, they turned to Latin America, China, the Russian Empire, and the Ottoman Empire, of which Egypt was part of. The interest in Egypt was so much that banks even formed subsidiaries to enhance capital mobility between European financial centers, such as London and Paris, and Egypt. Examples included the Austro-Egyptian bank, Franco-Egyptian Bank, and Anglo-Egyptian Bank (Mikesova 63). 经济论文代写

The first two were subsidiaries of Creditanstalt, a bank where the Rothschilds had ownership. While the Franco-Egyptian and Anglo-Egyptian banks dealt in both short-term and long-term instruments, the former were more attractive due to their positive impacts on the banks’ bottom line as well as their relative security considering that there was a biting banking crisis. Initially, the new economic approach imposed on Egypt.  Which was based on free trade and debt finance appeared to be fruitful.

For example, the expansion of the acreage under cotton helped increase the country’s export of the commodity, benefitting a lot from the high prices.

However, this economic success was not rooted in the fundamental underpinnings of debt-financed growth but was a result of external variables in America. At the time, the North and the South were in a civil war, which naturally affected the production of cotton leading to a global shortage and high prices. Under the ill advice of European diplomats, Ismail Pasha entered into arrangements with European banks for more infrastructure debt, a large portion of which was allocated to the construction of the Suez Canal.  经济论文代写

Under the prevailing conditions, foreign exchange realized from exporting cotton would meet the maturing obligations. However, Egypt made an inaccurate assumption that the cotton prices would remain the same. Unfortunately, this was not the case as the end of the Civil War in the US led to resumed exports of cotton in the South, which lowered the global prices. Naturally, Egypt experienced reduced export revenue and was, therefore, in a precarious situation in regards to making the interest payments.

However, Egypt’s inability to pay interest on its hefty loans did not deter bankers from advancing more loans. In his paper titled Les Intérêts Financiers et la Question D’égypte (1875-1876), Jean Bouvier notes that French banks such as Credit Foncier, Comptoir d’escompte de Paris, and the Bank of Paris and the Netherlands became increasingly predatory, hunting for opportunities to advance short-term loans for the Suez Canal project at towering interest rates (Bouvier 75).

Unsustainable Debt Levels and the Subsequent Colonization of Egypt  经济论文代写

In only fifteen years, the Egyptian debt had risen 23 times, rising from 3 million pounds in 1863 to 68 million pounds at the beginning of 1876. In the same period, revenues had only risen fivefold. The resulting dynamic left the country in a situation where 50 percent of export earnings and 66 percent of state revenues went into paying interest rates. The situation was worsened by the terms of the loans. Take the case of a loan advanced by a French bank in 1873 in form of nominal shares with an aggregate value of 32 million pounds, but with a 30 percent discount (Karabell 65).

The discount meant that Egypt only received 20 million pounds. With interest rates averaging 11 percent and after accounting for principal depreciation, at the end of 30 years, Egypt was supposed to pay 77 million pounds. This reality was reflected in all the loan agreements that the country was contracted to, meaning that it has to borrow to pay its maturing obligations. With tax hikes yielding insignificant results, Pasha was forced to auction the country’s assets, culminating in the sale of its shares of the Suez Canal to the British in 1875.  经济论文代写

In doing so, Britain became Egypt’s direct creditor and was quick to leverage its advantage to advance its imperialist agenda in Africa. Egypt’s subsequent suspension of interest rates in 1876 and resulting formation of a Public Debt Fund helped the British Empire impose itself in the day-to-day operations of the Egyptian state.  Such as effecting severe austerity measures. Indeed, these measures sparked rebellions that Britain leveraged to justify sending a force to the city of Alexandria in 1882. It then proceeded to establish a military occupation.  Transforming a once economically vibrant state into a protectorate.

Conclusion

Britain’s emergence as a superpower during the Victorian Era was not only a result of a strong navy and strong political leadership. At the core of its control was a network of banks that were keen to use debt to trap countries of interest and later force them to submit to European control. Egypt is a case example of an independent state that fell to British rule after economic sabotage propagated by predatory banks keen to take advantage of infrastructural projects of national importance such as the Suez Canal.

Works Cited  经济论文代写

Batou, Jean. Between Development and Underdevelopment: The Precocious Attempts at  

Industrialization of the Periphery, 1800-1870. Vol. 6. Librairie Droz, 1991.

Bouvier, Jean. "Les Intérêts Financiers et la Question d'Egypte (1875-1876)." Revue  

Historique 224.Fasc. 1 (1960): 75-104. 经济论文代写

Bowen, John Eliot. The Conflict of East and West in Egypt. Putnam, 1887.

Karabell, Zachary. Parting the Desert: the Creation of the Suez Canal. Knopf, 2003.

Mikešová, Michaela. "AustriaHungary and Egypt (1882–1914)." Prague Papers on the  

History of International Relations, Vol. 1, 2014, pp. 63-78.

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