Lessons from the Suez Crisis for dealing with modern Egypt

Britain's disastrous colonial attitude to Nasser should warn of the dangers of a lack of engagement.

The nationalization of the Suez Canal on 26 July 1956 represents the epitome of failure in Western diplomacy, the consequences of which still resonate in the Middle East. As the 56th anniversary of the crisis looms and new turbulence afflicts the region, it is worth revisiting the event to draw some of its more important lessons.

Western powers failed to understand Nasser after his Free Officers took power in 1952. Nasser was never averse to Western partnership, but his position was clear; according to his Charter of National Action, he wanted to remove the British military presence in Egypt, strengthen her military capability and rejuvenate the weak economy. This genuine need was not recognized by the Western powers who expected her to be a bulwark against the Soviet Union without considering Egypt’s strategic needs. Britain treated Nasser as a former colonial master, while the US cared only about its tussle with the Soviet Union. Nasser could not take any overtures made by the West seriously because any reduction of British troop numbers only came about due to Egyptian harassment. With the US 6th fleet still anchored at Naples, it was clearly ready to support Israel should another war should break out between the two. It did not make sense for Nasser to view the Soviets as the enemy. The West failed to engage, build trust and above all provide a convincing argument for Nasser to side with them.

The Western powers failed to appreciate Egypt’s security and economic needs. Nasser needed to replenish his defenses due to the humiliating defeat suffered against Israel in 1948-49. Nasser had approached the US to sell him arms. The US missed the opportunity of buying the good will of Nasser and refused. Consequently, Egypt turned to the Soviet Union; in 1956 Egypt concluded the Czech arms deal worth $90m. Similarly, Nasser wanted Western loans to build the Aswan dam as a solution to Egypt’s economic woes; it would increase arable land by 33 per cent and generate 600 million kilowatts of electricity annually. The joint Anglo-American venture withdrew its loans. Consequently, on 26 July 1956, to the astonishment of the Western powers and the applause of the Arab world, Nasser nationalized the Canal.

Western powers also squandered any goodwill or trust that could have been fostered by making Nasser into a mythical archenemy. Before the Suez Crisis, Whitehall was already treating Nasser like a fascist dictator. Western intelligence agencies made several attempts to assassinate him. There were British diplomatic efforts at isolating him in the region through the Baghdad pact. In short, Nasser had become the 1950s version of an Ahmedinejad, the arch villain. Thus when Nasser nationalized the Canal, the response was also like the way one deals with an arch villain; unforgiving and disproportionate. Eden overloaded the water way with oil tankers to demonstrate Egyptian dependency on British expertise. Nasser kept it open. With pie on his face, Eden, resorted to darker methods; whilst UN mediation continued in New York, British, French and Israeli ministers colluded to invade the Sinai Peninsula. Following an Israeli invasion, Anglo-French forces bombed and landed troops in Egypt on the pretext of stopping the two belligerents. This unilateral action was disastrous.

President Eisenhower, livid at not being consulted and US shipping being stuck because Nasser had blocked the canal, withheld vital financial aid to the British economy. Khrushchev, the Russian premier, threatened nuclear war whilst the Arab world turned off the tap on oil supplies. The rest of the international community condemned the action as brazen imperialism. Nasser however, emerged victorious gaining the admiration of Ché Guevara and many non-aligned countries. He gave birth to many emulators in the region like Colonel Gaddafi and solidified the militarization of Egyptian society.

The Suez Crisis should serve as a stark reminder of the failures of engagement. With the Muslim Brotherhood in power, the West must not deal with them the way they dealt with Nasser. Nathan J Brown, professor of political science and international affairs and an expert on the Brotherhood, is surely correct when he advised congress on 13 April 2011 that the Brotherhood must be treated as normal political actors. Whilst not all of their aims are in line with those of the West, as we have learnt from the Suez Crisis, misunderstanding and underestimating them could have serious consequences for Western interests as well as stoking up further instability in these turbulent times.

 

The way Britain dealt with Nasser should be a cautionary tale for the West's relationship with the Muslim Brotherhood. Photograph: Getty Images

Tam Hussein is an award winning writer and journalist specialising in the Middle East. He spent several years in the Middle East and North Africa working as a translator and consultant. Tam also writes for the Huffington Post.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.