Britain - British capital in the bloody trail of US imperialism

Jul/Aug 2003

Blair's kowtowing to Bush and his unconditional support for US warmongering, first against Afghanistan but mainly against Iraq, has left many Labour party members and supporters with a sense of deep betrayal. This sense of betrayal is not just due to the reactionary nature of Blair's warmongering - after all, Blair has already demonstrated time and again his tendency to steal policies from the Tories. It is also due to Blair's arrogant contempt for the majority's opposition to the war expressed in opinion polls and mass demonstrations, and, above all, due to his close association with a Bush administration which boasts about its close links with big business without any qualms and makes no bones about the US imperialist domination of the world.

However, it should be said that there is nothing very exceptional in the Bush administration compared with most US administrations since World War II. It may be more open (or less hypocritical) about its links with big business than the Clinton administration, for instance, but such links are part of a long-standing tradition for the two main American parties and it is normal practice for politicians to be hired by large companies at boardroom level during periods when they are not in office.

As to the imperialist arrogance of the Bush administration, it is first of all the expression of a relationship of forces which is nothing new. Bush may be more arrogant in expressing this domination than his predecessors - or at least some of his predecessors - but the US domination itself goes back a long way, to World War II and even before, in some respects. How this domination is forced on the populations of the Third World, through direct military intervention or through the use of pliable dictators, is not so much a matter of which party or clique runs the White House than a matter of circumstances. Among other things, it depends on what the US population is prepared to tolerate. And it was only as a result of the shock created by September 11th among US public opinion that Bush decided he could afford to embark on his present policy of imperialist aggression.

As to Blair's kowtowing to Bush, it is also part of a long-standing tradition whereby all British governments since World War II, whether Tory or Labour, have participated to various extents in the military ventures of US imperialism.

A new lease of life for the Empire

It should be recalled that during the first part of World War II, while the USA were still neutral, the US government used Britain as a proxy to contain Germany's military successes. The lend-lease agreement provided the British economy with the means to survive despite the war, by buying its supplies from the US industry on credit. Once the US government entered the war, this agreement was extended in exchange for Britain becoming its main outpost in the offensive against Hitler's forces in Europe.

At the end of World War II, the US army controlled a large part of the areas of the Third World which, before the war, had been under British influence. The US leaders made no secret of the fact that they wanted the end of the colonial empires of the old European powers. And the British capitalist class was in no position to resist US demands, neither militarily nor economically - even less so because the lend-lease agreement was terminated abruptly, leaving the postwar Labour government with no option but to go to Washington cap in hand in order to beg for additional financial help.

Paradoxically, it was the emergence of the nationalist movements in the poor countries and the inability of the US army to fight on all fronts simultaneously, which gave the British empire a new lease of life. In return, British troops became the auxiliaries of the US army. They were sent by the Attlee's postwar Labour government to crush nationalists uprisings in the Dutch colony of Indonesia and in the French colony of Indochina (today's Vietnam), which had been both occupied by Japanese troops. At the same time, in Europe, they turned a communist-led uprising in Greece into a bloodbath.

In return, the US leaders allowed British troops to remain in Egypt and to re-occupy Malaysia, where the Japanese had defeated the British colonial administration in 1942. However, in Malaysia, a communist-led resistance movement, which had previously received help from the US to fight the Japanese, launched a campaign to gain power-sharing, while organising powerful strikes in the rubber plantations and in the harbour-town of Singapore. In response, Attlee declared the so-called "Malaya emergency" in 1948, with Washington's support. In all but name, this was to be a protracted colonial war, which lasted 6 years, while the state of emergency itself remained in force until 1960. At its height, 380,000 British soldiers took part in this war, together with almost as many local auxiliaries, for a population of around six million! As to the main beneficiaries of this war, they were a handful of large American and British tyre companies which bought the bulk of the country's cheap rubber production, together with big trading companies such as P&O.

In the other parts of the British empire, the US government made no significant demand on Britain. But then, by cutting the usual sea routes between Europe and the southern Pacific, the war had allowed US companies to replace their British rivals as the main trading partners of Australia and New-Zealand. And there was nothing that London could do about it.

Partnership in crime during the Cold War

Mao's nationalist takeover of China was the next opportunity for the British state to demonstrate its willingness to side with US policy. When Washington requested a blockade against China, in 1949, Attlee's government was the first Western government to comply.

Then, in June 1950, came the Korean War. This was outright imperialist aggression organised (already) under the auspices of the United Nations, in order to stop the communist-led nationalist regime of North-Korea from ending the partition imposed on the country by the US leaders in 1945. This time again, Attlee's Labour government rushed to help the US, providing 50,000 troops - the second largest single contingent after the US own contingent.

Shortly afterwards, another joint venture between London and Washington began to develop in great secrecy. This time, the scene was Iran and the target was Musaddiq, the Iranian prime minister whose crime was to demand a larger share of the income from the country's oil, which was then totally controlled by the Anglo-Iranian Oil Corporation (AIOC), the forefather of today's BP. Musaddiq was a liberal anti-communist and a nationalist, whose main objective was to build up his country's economy. But this did not prevent the US leaders from portraying him as an agent of Moscow: in a country which was a buffer zone with the USSR, the US leaders wanted a regime entirely devoted to their world order. London, on the other hand, was determined to prevent Musaddiq from denting the AIOC's enormous profits.

Having failed to obtain any concession from the AIOC, Musaddiq nationalised its assets in May 1951, offering substantial compensation in return. His offer was turned down. Instead, the Attlee government began to lay down plans for "regime change". Various options were considered including that of a direct military intervention to take over the region surrounding the AIOC's Abadan refinery, the world's largest at the time. However, US president Truman opposed this in a telegram to Attlee. Finally it was decided to resort to covert means instead, while a complete boycott of Iranian oil was enforced by British and US giants. And, in September 1951, all British personnel were evacuated.

Churchill, who won the general election the following month, continued the course initiated by Attlee. The following year, general Zahidi, a pro-Nazi during World War II and a former chief of police in Tehran was chosen as a replacement for Musaddiq as prime minister. Once Zahidi had also been agreed upon by the CIA, joint plans were made by MI6 and the CIA. Large amounts of British cash were used to buy the support of low-level officials, officers, mullahs, while the US supplied trusted military units with additional heavy weaponry. Finally, in August 1953, large-scale provocations were mounted in the capital, which were dressed up as a "communist coup" to justify the army's intervention with the US support. Musaddiq was executed and Zahidi took over as had been planned in London and Washington.

In October the same year, British troops intervened in British Guyana to overthrow the government of Cheddi Jagan's People's Progressive Party (PPP), which had been in office for just 133 days, following the colony's first elections under universal suffrage. The PPP had been elected on a moderate reformist programme which pledged to improve housing and social conditions. But the mere fact that the PPP dared to criticize the looting of the colony's resources by Bookers (for its sugar plantations) and Aluminium of Canada (for its bauxite), was too much for Churchill and his masters in the City. However, to gain US support and make the British military intervention acceptable to US public opinion, the PPP's policy was presented in the Commons as "part of the deadly design to turn British Guiana into a totalitarian state dominated by communist ideas." From the opposition benches, Labour leader Clement Attlee went along with this blatant piece of anti- communist hysteria without so much as a wink. And the US State Department congratulated Churchill for his "firm action to meet the situation."

Britain's participation in the US "war on communism", went on until it ended, either directly or indirectly. In the case of the Vietnam war, for instance, the then Labour prime minister Harold Wilson refused officially to commit any troops. However, all British governments, Tory and Labour, gave the US their diplomatic support for the duration of the war. Moreover, even under Harold Wilson, army resources were used in all kinds of ways to help the US side. British SAS squads were sent to Vietnam as part of Australian and New-Zealand units. The British jungle warfare school in Malaysia was used to train US, Vietnamese and Thai units. MI6 assisted the Malaysian government in supplying military equipment to South Vietnam. And the British monitoring station in Hong Kong provided the US with intelligence right up until the end of the war, thereby helping the US Air Force to target moving military units during its bombing operations over North Vietnam.

Partners but rivals

This on-going US-British partnership during the Cold War did not mean, however, that US leaders forgot to take care of the specific interests of US capital. Whenever there was an opportunity to improve the position of US companies at the expense of their British rivals, they certainly made the best of it.

Such was the case in Iran, after the MI6-CIA-sponsored coup against Musaddiq. According to accounts published later by MI6 agents involved in the operation, the co-operation between London and Washington included an agreement on the restructuring of Iranian oil after Musaddiq's overthrow. The Iranian state retained the ownership of its oil fields and the Abadan refinery. However the oil itself was to be entirely bought by a joint company bringing together the old AIOC (now renamed BP) with 40% of the shares and the five American oil majors, with 8% each. To avoid giving the game away, the rest was split between the Anglo-Dutch group Shell (12%) and the French CFP (8%). In addition, BP was to receive payments from all participants spread out over a number of years. This was certainly not a bad deal for BP. Nevertheless, the US leaders had managed to break Britain's 46-year old monopoly over Iranian oil.

Anglo-US rivalries re-emerged again a few years later at the time of the Suez Canal crisis, in 1956. By that time Egypt was under the nationalist regime of colonel Nasser who had already been singled out as public enemy number one by the Foreign Office. As one of its memos pointed out: "He (Nasser) will not only seek to get help without strings from both the West and the Soviet Bloc, but to the extent that he succeeds he will also encourage other Arab countries to do the same... At the worst our traditional friends may start to wonder whether enmity or at least neutrality is not more profitable than friendship." So a number of assassination plots had already been planned against Nasser by MI6.

When, in July 1956, Nasser nationalised the Suez Canal - which had been run so far by an Anglo-French company - Eden's Tory government opted for a military intervention. A complicated plot was worked out involving first the invasion of the Sinai by Israel, followed by an ultimatum from France and Britain to Egypt to agree to a cease fire. If Nasser failed to agree - which was bound to happen since agreeing to it would have been agreeing to the loss of the Sinai - French and British forces were to take over the canal zone. This scenario was followed as planned and after five days of bombing, the French and British forces had occupied Port- Said, at the Mediterranean end of the canal. However, at this point, US president Eisenhower intervened, demanding an immediate cease fire and the withdrawal of the invading forces, and threatening Britain with financial sanctions.

If Eisenhower stopped the Anglo-French military intervention against Egypt, it was certainly not out of any sympathy for Nasser's nationalisation of the Suez Canal. It may well have been that he did not want a blatant imperialist operation to threaten the stability of the entire Arab world. Or that he did not want it to overshadow the drama which was unfolding at the same time in Budapest - where Moscow was preparing to crush a working class uprising, thereby providing Washington with an ideal weapon for its anti-communist crusade. Whatever the case, Eisenhower was probably not displeased at the idea that the old European powers might be deprived of their control over a waterway as vital as the Suez canal.

In any case, faced with the financial sanctions threatened by Washington at a time when the Treasury was in deep trouble, Eden had no choice but to back down. Thereafter the Suez canal remained out of the clutches of its former European owners and, over time, the US replaced Britain as Egypt's main trading and military partner.

The particular case of the Gulf

The policy of British imperialism in the Gulf has long been dictated by this same love-hate relationship with US capital. On the one hand, British capital has long-standing interests to defend in the region. On the other hand, it cannot protect these interests without the help of the US, losing out to US rival companies in the process.

Since the days following World War I, when the Gulf was almost entirely in the hands of the British Empire - with the exception of Saudi Arabia where foreigners were not tolerated - the influence of British capital has been slowly eroded in the region. The first dent was made when two US oil companies managed to win monopoly rights for oil prospecting and production in the whole of Saudi Arabia, in the 1930s. Then came the increasing presence of French (from the late 1930s) and US oil companies in the Gulf emirates. Finally, the biggest blow came in the early 1970s, with the loss of BP's and Shell's joint controlling share of the Iraqi Petroleum Company when it was nationalised by a regime (Saddam Hussein's) which, in addition, tended to indulge in strident anti-British demagogy.

This left British capital with "only" a controlling position over most of the Gulf emirates. But not only did British companies have, in most cases, a controlling position in their oil, gaz and financial resources, but in some cases, their state machineries were also largely managed by British "advisers." However, Britain's control was by no means guaranteed. The regimes of some of these emirates were just as artificial as these statelets themselves and could easily be overthrown by any nationalist wave sweeping the region - all the more so because, in addition, they were among the most backward and reactionary. Moreover, these regimes could always be bought by any rival power with enough capital at its disposal, much in the same way as they had been bought by Britain over decades.

But at the same time these tiny emirates represented (and still represent, although less so today) an enormous bounty for British capital. The case of Kuwait is particularly significant in this respect. In 1958, the British Foreign Secretary Selwyn Lloyd considered that British interests in the Gulf were three-fold: access to and availability of cheap oil; stopping the spread of communism and Arab nationalism; and ensuring that Kuwait's surplus revenue was invested in London. And indeed, this surplus revenue represented a considerable amount, which, by 1990, just before the first Gulf War, was estimated at about £60bn. This, in addition to the fact that Kuwait was then the world's third largest producer of oil, with BP controlling the largest part of its oil contracts.

So when Saddam Hussein invaded Kuwait in 1990 and Bush senior took the lead of the first coalition against Iraq, Thatcher immediately joined in. This was not particularly due to Thatcher's own political outlook or affinity with Bush senior. It was partly in order to defend the general interests of the imperialist order, which denies the poor countries any right to dent the profits of imperialist companies, but partly also to defend the specific interests of British capital in the region, by relying on the fact that Britain's loyalty to the US would limit the impact of the predatory tendencies of US capital on British capital's interests in the Gulf. And the policies carried out in the Gulf ever since by the successive British governments, from John Major to Tony Blair, have been shaped by the same preoccupations.

In a sense, therefore, sticking loyally to the US side - and following Washington in every one of its military ventures - is, in the main, a sort of insurance contracted by British capital against the greed of its much bigger rival. It is a very relative insurance, however, as was demonstrated time and again. So, for instance, after the first Gulf War, the Kuwaiti investment fund was shifted from the City to Wall Street, thereby depriving British financial institutions of a big profit earner. At the same time, BAE lost to a US rival part of a major long-term contract which had been arranged by Thatcher with Saudi Arabia.

It is too early to assess the balance sheet of the recent war for British capital. The only thing that can be said so far - judging from the bitter complaints made by a number of British companies - is that not much reconstruction sub-contracting (since the primary contracts are for US companies only) have gone to British companies, except for those which had the foresight to make an alliance with some US rival.

In any case, forget about all the speeches on "weapons of mass destruction", "terrorist threat", "international law", let alone "democracy" and "nation building." Forget also about the historical "friendship" between Britain and the USA. There are no such things in the world of political leaders.

Just like all past and future management teams in charge of the affairs of British capital - which is just what a government is under today's so-called "democracy" - Blair's reasons for sending 37,000 troops to the killing fields of Iraq and raining cluster bombs on Basra were merely to provide his masters in the City with a chance - a not very big chance, in fact - not to lose out to their US rivals and, if possible, to make some gains out of the spoils.

30 June 2003