Signs from Allah: History, Science and Faith in Islam
84. The Suez Canal and the Colonization of Egypt, Part 2 of 3
By Professor Nazeer Ahmed
Concord, CA
In the year 1845, Egypt technically remained an Ottoman province although Mohammed Ali Pasha, through a series of diplomatic and military moves, had won increasing concessions from the Porte in Istanbul making the province autonomous. Notwithstanding the circumnavigation of Africa, and the diversion of Indian Ocean trade through the Cape of Good Hope, Egypt was still an important trading center between the Mediterranean region and South Asia. The Nile Delta produced a large amount of grain so that Egypt could feed its own population and generate a net surplus for the other regions of the Ottoman Empire. Mohammed Ali introduced the cultivation of cotton, sugar and tobacco, which brought cash into the treasury. Cairo was an important cultural center, as the former seat of the Abbasid Caliphate, and as a transit point for hajjis from North and Central Africa.
Things changed when Muhammed Ali Pasha died, and Abbas I became the Governor (1849). Alarmed at French ambitions in North Africa, Abbas I cultivated the British as a counterweight to French encroachments. Britain was only too willing to oblige. The British East India Company had, by 1845, consolidated its Indian Empire. The Sikhs in the Punjab were defeated, and British horizons had expanded beyond the Indus River to the Northwest Frontier and Afghan territories. Russian advances in Central Asia had caused an alarm in India, and the British wished to create a buffer state in Afghanistan. Preservation of the Indian Empire, and safeguarding the Indian Ocean trade, were the driving forces behind British diplomacy in the 19th century. To show their appreciation for the overtures of Abbas I, the British offered to build a railroad from Alexandria to Cairo, an offer that was gladly accepted. Construction of this railroad began in 1851 and was completed in 1854. By mutual agreement, it was then extended to Suez. Goods could now be transported by sea from the Indian Ocean up the Red Sea through the Gulf of Suez, unloaded at the port city of Suez, transported by train to Alexandria, reloaded on ships and transported to London and Liverpool. Britain had now won through diplomacy what it could not win through war, namely, the capability to transport merchandise to and from its Indian Empire, through the Egyptian railroads.
The French were upset at this advantage gained by Britain while it was they who had worked so hard since the time of Napoleon Bonaparte to cultivate influence in Egypt. Their opportunity came when Sait Pasha became the Viceroy of Egypt (1854). The French Engineer Ferdinand de Lesseps had cultivated the friendship of successive Egyptian governors, and in 1854 made a diplomatic coup when he won a concession from Ibrahim Pasha to construct the Suez Canal. It was to be a joint enterprise with shares in the Suez Canal Company held by the Egyptian governor and de Lesseps. The French were to supply machinery while the Pasha guaranteed an unlimited supply of conscripted Egyptian labor.
It is at this point that the story of the Suez Canal and the colonization of Egypt begin. Even while Sait Pasha and de Lesseps made their agreement, and celebrated it with tea parties in Cairo, international events were overtaking those in Egypt. Continued and uncompromising Russian pressure on the Ottomans had led to the Crimean War (1853-1856). The task of defending the Empire against relentless European encroachments had exhausted the Ottoman treasury. The Porte in Istanbul was forced to take its first public loan from European bankers in 1854 at an enormous discount. The debt continued to mount in succeeding years through accrued interest and additional loans. The noose was about to tighten on the Ottoman Empire. By 1875, Ottoman public debts were in excess of 200 million British pounds. At an interest of 6% per annum these debts required more than 12 million pounds per year to service them. This amount was almost 50% of all Ottoman revenues. The burden of debt made it more difficult to modernize the Empire through the Tanzeemat reforms. The inexorable process of economic centralization in favor of the European bankers had begun, leading to an equally inexorable process of political and economic contraction of the Ottomans.
The merchant-barons of Europe were now armed with a silent weapon, credit, whose power was far greater than that of the mightiest cannon in Napoleon’s armory. They could walk in, take over entire nations, and dismantle empires, sometimes without even firing a single shot.
Ottoman financial troubles spilled over to Egypt, since Egypt was as yet an Ottoman province. The Egyptian Pasha could not pay the expense for the continued excavation of the Suez Canal. Work that had started in 1857 proceeded intermittently with frequent work stoppages. In 1863, Ismail Pasha succeeded Sait Pasha as the governor of Egypt. Educated, but vain and foolish, Ismail was the man who pushed Egypt into the arms of the European bankers. The European banks offered a loan to Egypt for the completion of the canal against a collateral of Egyptian long fiber cotton. Demand for Egyptian cotton was high because the Civil War in America (1861-1865) had cut off the supply of American cotton to world markets. The loan was pushed through; the Canal was completed, and was opened in 1869 with much fanfare by Queen Eugenie of France. But as it turned out, the celebrations were premature.
The inauguration of the Canal was to become the opening gambit in the colonization of Egypt. The American Civil War ended in 1865, and the bottom fell out of the world cotton market. The price of Egyptian cotton dropped 400% between 1865 and 1869. Quite oblivious of the mounting financial crisis, Ismail Pasha accepted from Ottoman Sultan Abdel Aziz (1861-1875) the burden of guarding the Ottoman harbors in Eritrea on the Red Sea. In addition, to gain the hereditary title of Khedive, the Pasha agreed to pay additional tribute to the Sultan. In 1875, the Pasha even attempted an unsuccessful invasion of Ethiopia. These misadventures, together with Ismail’s extravagant life style and his attempts to accelerate the modernization of Egypt, made Egypt bankrupt. Ismail tried increased taxation and public borrowings but these proved insufficient to meet the expenditures. In desperation, in 1875, Ismail Pasha sold off his shares in the Suez Canal Company to the British in partial payment of his debts. Even this desperate measure proved insufficient, and the mounting financial crisis forced Ismail to suspend all payments on foreign debt. The European bankers brought the matter before the mixed courts in Alexandria for arbitration. The courts ruled in favor of the bankers, forced Ismail to give up some of his personal assets, and to accept a Commission on Egyptian Public Debt with the power to confiscate revenues from tobacco, railroads and excise taxes. Egyptian finances were put under two controllers appointed by Britain and France. The emasculation of Egypt was complete.
(The author is Director, World Organization for Resource Development and Education, Washington, DC; Director, American Institute of Islamic History and Culture, CA; Member, State Knowledge Commission, Bangalore; and Chairman, Delixus Group)
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