The world the Suez Canal made

Global capitalism took a surprise hit when the container ship Ever Given ran aground, bringing mass transportation to a standstill. An environmental protest could not have staged a more spectacular blockade: the incident points to a murky history of worker exploitation, intensified fossil fuel consumption and racist quarantining.

This article was first published in Public Seminar on the week of 8 April.

It took six days of excavation, dredging, and mounting international panic before the Ever Given finally came unstuck from where the massive container ship was wedged in the banks of the Suez Canal. As the number of vessels waiting at either end of the Canal rose and the costs of the disruption to supply chains continued to grow, sensational headlines described the Egyptian channel opened in 1869 as ‘the world’s jugular vein’.

To extend the metaphor: the grounding of the Ever Given had delivered a debilitating stroke to global commerce. In the midst of a pandemic that has disrupted commerce worldwide, a stubborn clot in one strategic locale threatened lasting damage to the health of economies everywhere.

While blood circulates evenly throughout a healthy body, delivering benefits and removing waste, the Suez Canal does not. Instead, it has functioned as a powerful technology for directing the benefits of global integration toward some places while offloading the dire costs onto others. And while its nineteenth-century creators boasted of its speed, that was not a universal benefit: the Canal has always worked to block some kinds of movement while accelerating the passage of others.Shipping delays of this magnitude wreak havoc on supply chains and commodity prices. The revelation that some of the stranded containers held urgently needed medical supplies for combatting COVID-19 only heightened the urgency for those struggling to free the ship. The drama that unfolded around the Ever Given, like the pandemic that preceded it, confirms the basic fact that distant regions of the globe are more intertwined than ever before.

Photo by International Maritime Organization via Flickr IMO on board
Suez Canal

But the proliferation of vascular metaphors by journalists reporting the disaster also revealed the ease with which we misunderstand how global capitalism works. As the Ever Given remained wedged in place, daily tabulations figured the costs of the disruption in gigantic global aggregates. Such figures, too, can be misleading. That a cargo ship running aground can be felt by consumers thousands of miles away from Suez does not mean that the economic effects of a disaster like this are the same everywhere. And the endless, naive rediscovery that our world is interconnected actually tells us very little about how those connections came about, why they are organized in the ways that they are, and what they might mean for people living in different parts of a profoundly unequal world.

Indeed, for some, the debacle in the Canal appeared more like a cause for celebration. When news of the Ever Given’s misfortune began to spread, Russia’s State Nuclear Energy Corporation, Rosatom, seized the opportunity to poke fun at shippers whose reliance on passage through the Suez Canal had landed them in such peril. For several years now, shipping concerns in Russia and several other countries around the Arctic Ocean have been boosting the use of thick-hulled, nuclear-powered icebreakers to chart new routes through the cracks and channels in polar ice sheets that continue to multiply as global temperatures rise. In touting the virtues of redirecting maritime traffic through these shorter northern routes, Rosatom was in fact continuing a very long tradition of international competition over the organization of global travel and the enormous profits that it confers.

Russian glee in this regard reminds us that the Suez Canal was always one of several choices for moving goods around the world. Unlike an actual human vein, there is nothing natural about the location of ‘the world’s jugular,’ or the crucial role it plays in global trade. The purpose of the Suez Canal, from the perspective of both the Egyptian state and its European investors, was not simply to render the world more interconnected and international transport more efficient but to extract transit fees from the ships passing through it. In this regard, the Canal’s completion marked a significant, if far from singular or decisive, moment in an ongoing struggle to direct shipping along some routes rather than others.

Icebreaker: 50 Years of Victory Photo by Christopher Michel from Flickr

By 1869 when the Canal first opened, Egypt’s rulers had been working for close to half a century to make their territory the prime thoroughfare for traffic between Europe and Asia. Following the Anglo-Ottoman campaign to expel Napoleon’s French forces in 1801, the valuable Ottoman province of Egypt came under the control of an ambitious military officer named Mehmet Ali Pasha. In his efforts to move Egypt out of the orbit of Istanbul and establish an autonomous dynasty for himself and his heirs, he actively forged new economic ties with Europe.

The centerpiece of Mehmet Ali’s dynastic project was a powerful new military, modelled – at least in part – on the East India Company’s conscript army. In waging a series of wars, first on behalf of the Ottoman Sultan and then against him, he was able to secure the political concessions he desired from Istanbul. But maintaining this war machine was expensive. To cover the costs of the military and his other state-building endeavours, Mehmet Ali made two crucial decisions, both of which would substantially intensify European interests in Egypt.

First, recognizing the growing demand for raw fibre to feed the industrial mills of Lancashire, Mehmet Ali used the coercive might of his new military to force peasant farmers into growing cotton instead of other crops. Over the coming decades, as cotton cultivation spread across the Nile Delta, that decision would bind the fate of Egypt’s state-building projects ever-more closely to the export of that single raw material, one that became increasingly unstable as American plantation owners simultaneously drove enslaved workers to produce larger and larger crops.

An Egyptian cotton field Matson Photo Service, photographer
Photo via Library of Congress and Picryl

Second, if Mehmet Ali saw the promise of higher revenue in new uses for Egypt’s rich farmland, he also sought to profit in new ways from the country’s age-old status as a geographic nexus between East and West. Toward that end, beginning in the 1820s, he sought to develop a new overland route from the Mediterranean to the Red Sea. The more ships that landed at Egyptian docks and the more traffic that passed through Egyptian territory, the more fees could be extracted from the movement of commercial goods, mail, travellers, and soldiers.

The goal was to render Egypt more attractive than either the old routes around the Cape of Good Hope or other contenders for an overland passage through Mesopotamia or Persia. In collaboration with a British entrepreneur named Thomas Waghorn, Mehmet Ali devoted considerable resources to building out the infrastructures necessary to shorten travel times between Alexandria and the Red Sea port of Suez.

That this overland route was eventually supplanted by a maritime canal was the result of an unlikely convergence of world-historical events on both sides of the Mediterranean. In 1848, having ruled Egypt for more than four decades, Mehmet Ali succumbed to illness and old age and transferred power to his son Ibrahim. That same year, a devastating economic crisis helped to galvanize support for the popular struggles that erupted across much of Europe. Though those revolutionary ambitions – famously captured by the Communist Manifesto of Marx and Engels – were swiftly and violently suppressed, the year’s events would utterly transform the workings of global finance and its relation to the elaboration of colossal infrastructure projects around the world.

As the dust from the thwarted revolutions settled, a new generation of bankers and entrepreneurs in Europe’s major financial centres imagined that political stability, as well as profits, could come from literally reshaping the world. The way to forestall the recurrence of such threats to the social order, they argued, was not only to design new urban spaces less vulnerable to the forces of popular insurgency but to look abroad for new opportunities to put idle capital and labour together back to work. The isthmus at Panama, part of the overland route to the California gold mines, offered one such opportunity; Egypt’s transportation franchise was another.

The inauguration of the Suez Canal on November 17, 1869 (via Institut du Monde Arabe, Paris) Oil painting by Édouard Riou (1833-1900) Photo by Jean-Pierre Dalbéra from Flickr

It was in this context that Ferdinand de Lesseps’s plans for a joint-stock company to excavate and manage a maritime canal through the isthmus of Suez came to fruition. In one sense, De Lesseps owed his career as an entrepreneur to the forces of counter-revolution that had massed against the 1848 insurgents. He had previously worked for the French Foreign Ministry, serving as vice-consul in Egypt from 1832-1837. During a later posting to Rome in 1849, he decided to defy orders from Louis Napoleon’s Foreign Ministry and recognize Mazzini’s new Italian Republic – even as French troops were marching to crush it. As a result, de Lesseps was recalled to Paris, tried, discharged from the diplomatic service and sent off to look for a new vocation.

As it turned out, de Lesseps’s prior experiences would serve him well as he built the case for a canal at Suez. He was by no means the first to float the idea, but those earlier proposals had met with stiff opposition both within Egypt and abroad. Having devoted considerable resources to the development of the overland route, Mehmet Ali had been dead set against the idea, since the possibility of a maritime channel built and administered by French investors potentially undermined Egypt’s remunerative role in the transit trade. His British partners shared those concerns. Lord Palmerston’s government in London also regarded the canal as the latest French scheme to menace the security of British interests in India.

De Lesseps, however, had been a diplomat, and remained one, this time on behalf of potential investors in the project. He had developed cordial relations with Mehmet Ali’s son Said Pasha while serving in Egypt in the 1830s. When Said succeeded his nephew Abbas as the new governor in 1854, de Lesseps prevailed upon him – against the advice of nearly all his ministers – to grant a concession for the excavation of a canal.

The terms of that agreement would prove decisive, not only for the project of Egyptian state building but also for the relationship between imperialism and high finance that would reshape much of the globe, and its commercial traffic, in the coming decades. In return for a claim upon 15% of the Canal’s future profits, Egypt granted to the Canal Company a 99-year lease upon the land through which the channel would run. And to entice investors across Europe to purchase shares in the Company and amass the pool of capital necessary to pay for the giant undertaking, Said committed to grant the use of Egyptian corvée labor for the backbreaking and deadly work of digging through so much sand and mud.

At a moment when the United States was beginning its slow turn to war over capitalism’s dependence on slavery, the corvée was a peculiar mix of free and unfree labour: it was a tax collected in labour time. Beyond what they paid in cash or produce for the right to cultivate their land, Egyptian peasants owed a portion of each year to toil on ‘public works’ of the government’s choosing.

To Sinai by car. The Suez Canal. Steamship passing through Photo by American Colony (Jerusalem), Photo Dept., photographer via Library of Congress and Picryl

This arrangement made the Suez Canal into something more than a channel for hastening global commerce: it became a small revolution in how labour in one place became money elsewhere. Through the terms of the concession, this massive infrastructural project also became a mechanism for turning taxes in one locale – often extracted at the point of a gun – into subsidized profits on financial instruments traded somewhere else. In the following decades, ‘credit enhancements’ of this kind would play an increasingly prominent role in the financing of colonial infrastructures, mostly notably the Indian railways.

If the project had once seemed to promise increased revenue to advance Egypt’s political autonomy and economic development, it backfired in spectacular fashion. Despite the extraordinarily generous terms of the concessionary agreement, de Lesseps ultimately struggled to find buyers for shares in his Compagnie Universelle du Canal Maritime de Suez. Having toured Europe promoting the Canal as a benefit to all mankind, de Lesseps had hoped to subscribe thousands of investors in his ‘universal company’. But this method of assembling capital through a mass subscription of small shares was as novel as the engineering feat itself, and most who heard the pitch deemed it too expensive and too risky. Others outside of France still considered it a distinctly French project serving narrowly French interests. Confident in de Lesseps’s talents as a salesman, Said had committed to purchase any unsubscribed shares. When de Lesseps came up short, he was forced to honour the agreement and purchase the remainder. That huge, unanticipated outlay on the Canal quickly outstripped what the Egyptian government could cover, draconian efforts to extract more revenue from the countryside notwithstanding.

This tipped the financial balance in Europe’s favour, an outcome that would have a disastrous political outcome for Egypt as well. To meet the ballooning budgetary shortfall, Said and his successor Ismail resorted to a series of loans from banks in the major financial centres of Europe. A short-lived boom in global cotton prices during the American Civil War allowed Egypt to borrow against the inflated revenues of its cotton crop, but once the war ended and prices fell, the burden became unsustainable. By the late 1860s, Ismail’s government was contracting new loans, on increasingly extortionate terms, to cover those earlier debts. Scrambling to keep up with the payments, in 1875 Ismail made a desperate gambit to buy time by selling Egypt’s shares in the Canal to the British Government.

It was too little too late. The following year, Egypt defaulted on its loans. Representatives of the foreign bondholders took control of the state’s finances and imposed what we would now call austerity measures. The cuts were wildly unpopular, and by the early 1880s, public outrage had coalesced into a broad-based movement for constitutional rule and a return to fiscal sovereignty. Fearing that if that movement succeeded, Egypt would halt payment on its debts, the British found pretext in 1882 to occupy the country. A new staff of British ‘advisers’ thereafter worked to ensure that roughly half of Egypt’s annual tax revenue was remitted promptly to the foreign bondholders. The British Treasury, meanwhile, had become the single largest shareholder in the Suez Canal Company and was thereby able to employ the growing profits on traffic through a waterway in Egypt to defray budgetary costs to taxpayers in Britain.

Beyond the obvious benefits of this peculiar fiscal arrangement, the British government had long since found other reasons to embrace the Canal. The Indian Mutiny of 1857 had driven home the strategic importance of being able to move information and troops alike as quickly as possible between colony and metropole. Yet because the Canal concentrated maritime travel at a single point, imperial administrators understood that it could just as easily serve as an impediment to forms of movement they deemed undesirable. Not only could Britain’s military presence along the Canal check the passage of rival forces into the Indian Ocean arena, but control over the waterway could facilitate regulations of other kinds.

Photograph showing Waldemar Mordecai Wolffe Haffkine (1860-1930), Bacteriologist with the Government of India, inoculating a community against cholera in Calcutta, March 1894 Photo by Wellcome Images via Wikimedia Commons Attribution 4.0 International (CC BY 4.0)

Most notably, the European states hoped to restrict the movement of microbes as well. Thanks to a series of cholera pandemics of successively greater scope and severity, imperial health officials were keenly aware, well before the Canal’s completion, of a dangerous affinity between global trade and global contagion. The Canal Zone, consequently, became the site of an elaborate international quarantine apparatus that – in its reliance on the prevailing racial and climatological theories of disease at the time – was designed in part to protect Europe’s white population from the perceived threat of brown bodies travelling from tropical territories to the East.

Finally, however warm those tropics may have been in 1869, the Canal’s completion also helped to consolidate a shift in the technology of global transport that has been making them warmer ever since. The same unpredictable winds and narrow breadth that ran the Ever Given into trouble meant that ships under sail could not safely pass through it either. The Suez Canal, in other words, was built for a new world powered by fossil fuels. In the latter half of the nineteenth century, there were still plenty of reasons to favour wind as the motive force for maritime travel. It didn’t cost anything. It didn’t take up cargo space. It didn’t explode. And it didn’t require regular stops for refuelling. But because the enormous advantages of bypassing the Cape route were only available to coal-powered steamships, the Suez Canal played a significant role in hastening the turn toward fleets that burned more and more coal.

The Ever Given’s plight reinvigorated an optimistic, if incorrect, narrative about global trade: it also produced internet memes, and redirected the world’s eyes to a canal that most people now take for granted. In seizing the opportunity to proclaim the merits of melting polar ice, then, the Russian shippers were, perhaps unwittingly, describing aspects – not of the passage itself, or even the country that now proudly owns and maintains it – but of the world the Suez Canal helped to make. If that was a world more interconnected, it was also a world becoming much hotter, more unequal in its distribution of profits, and, for many peoples around the globe, more tightly sutured to the hierarchies of global power that financial capitalism has made.

Published 20 April 2021
Original in English
First published by Public Seminar, 2 April 2021

Contributed by Public Seminar © Aaron Jakes / Public Seminar / Eurozine

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