Debt, Energy, and Sovereignty: Past and Present

Introduction

The financial and trade warfare launched by western allies on Russia after Putin’s invasion of Ukraine in 2022 was unquestionably unprecedented, yet the triangulation between external debt, energy infrastructure, and sovereignty is a recurring theme in geopolitics. I examine these issues across two contemporary theatres of conflict and consider their historical precedents. The first theatre is Ukraine, forced by war to jostle between its international creditors: the United States and the International Monetary Fund. The second, and the focus of this essay, is Egypt. Against the backdrop of the war on neighboring Gaza, Egyptian policymakers have been pushed to maneuver between the geopolitical ambitions of international financiers, including those of richer neighbors in the Gulf, and their own parlaying for foreign investment and greater regional prominence. Jockeying for external credit for energy infrastructure is a familiar trope in Egypt’s economic history, yet the country is far from anomalous in this regard. Questions of external indebtedness and energy insecurity were, in fact, central to the turbulent transition from British imperialism to Pax Americana. The entwinement between Britain’s balance sheets and its dependence on oil from the Middle East came to a head with the mid-twentieth century crisis in the Suez Canal Zone. While Britain’s financial and trade coercion embodied in Sterling Area policies safeguarded British balance sheets, its incursion into Suez to secure safe passage for British-controlled ‘sterling oil’ would backfire. (The battle to control Suez had complex roots, including politicking by President Gamal Nasser, playing off the Americans against the Soviets as he sought external financing for massive armament and infrastructure programs.) Following Britain’s occupation of Suez in 1956, the United States would show its Janus face, helping catalyze sterling’s fall from grace while also granting Britain financial support after its quick exit out of Egypt. Instantiating past and present conjunctures of the geopolitics of rearmament and reconstruction through the lens of external debt and energy insecurity provides a sharper appraisal of power and sovereignty in our global order—one presently dominated by the hydrocarbon dollar.

I. War

In response to Russia’s invasion of Ukraine in 2022, the United Kingdom, followed by the United States and other Group of Seven nations, placed thousands of sanctions on Russian individuals, corporations, and vessels.[1] Soon thereafter, the European Union and ten other countries—including Iceland, Australia, New Zealand, South Korea, Taiwan and Singapore[2]—joined the American-led campaign.[3] By 2024, the number of Russian-related sanctions imposed by the G7 and allies would reach close to twenty four thousand. US sanctions on Russia were double those imposed by Canada, the country with the next largest Russo sanctions program.[4] This front of the war was mostly waged out of sight, through legal interventions in the international payments system; its more visible elements were the superyachts of Russian oligarchs that had been impounded across major offshore financial centers, including London’s Canary Wharf.[5]

The financial warfare launched against Russia since 2022 has been novel in scale and scope. Notably, however, the US Department of the Treasury did not impose a countrywide sanctions program on Russia like it has on Iran, Cuba, or North Korea. While ten very large Russian banks were sanctioned and removed from SWIFT, the international financial messaging network, more than three hundred Russian banks were not.[6] This is because of Russia’s importance to the global energy system: before the war in Ukraine, Russia supplied almost half (forty six percent) of Europe’s natural gas.[7]

While careful not to shut Russian oil and gas out of global markets, the western axis did try to reduce the petro-rents flowing to Moscow. In the summer of 2022, the EU agreed to join the US and UK in embargoing sea-borne Russian crude oil—a decision that went into effect in February 2023. In September 2022, the US-UK-EU triad imposed a price cap on Russian oil exports amounting to $60 per barrel. US Treasury Secretary Janet Yellen initially sold the price ceiling as foreign policy with domestic benefits. Dampening the price of Russian oil would help fight inflation at home.[8] Yellen later reframed the policy in a more altruistic light: as a means for enabling the flow of cheaper Russian oil to low and middle-income economies.[9] Putin’s administration retaliated against the price cap by cutting natural gas deliveries to Europe, among other measures. After the explosive attacks on the Nord Stream 1 pipeline under the Baltic Sea—allegedly by Ukrainian saboteurs—in the fall of 2022, Russia’s gas flow to Europe plummeted.

Despite the sanctions exemptions granted to Russian energy exports, commodity markets reacted violently to the shock of war. The steepest US energy price shock since the 1970s ultimately resulted in the most rapid-fire round of interest-rate hikes by the Federal Reserve since those associated with the 1980s Volcker Shock. The dollar is the systemically significant price in the global financial system.[10] Its upward march, reaching a twenty-year peak, destabilized balance sheets across the world.[11] Reversing a decades-long trend, as of 2021, commodity prices (most of which are denominated in dollars) are now positively correlated with the currency.[12] Enhanced by the shale boom, American hydrocarbons currently generate more than a fifth of the world’s supply, making the US oil and gas sector, the world’s largest.[13] In a peculiar convergence—what I call the ‘hydrocarbon dollar’—the hegemonic world currency has taken on characteristics associated with the currencies of large commodity exporters such as Australia or Canada, even though the share of commodities in the US export basket is far less.[14]

For the United States, higher commodity prices in 2022 led to positive terms of trade effects (the ratio of export prices to import prices), slightly uplifting the US trade deficit otherwise weighed down by large deficits on merchandise exports.[15] While dollar appreciation hurt US manufacturing[16] and contributed to an unprecedented US current account deficit of more than a trillion dollars, the US oil and gas industry was the biggest beneficiary of the commodity-dollar price surge.[17]

As a volatile mix of inflation, interest-rate hikes, and dollar appreciation reverberated across the global economy, many developing countries who rely on commodity imports and dollar loans found themselves unable to cope with their external bills. From 2022 – 2023, higher interest rates and a stronger dollar drew forty one percent of global financial inflows to the US.[18] While US banks earned a cool trillion dollars from the Fed’s interest rate hikes,[19] low and middle-income countries (LMICs) spent a record $1.4 trillion servicing debts owed to foreign creditors.[20] Rich countries like Germany and the UK could afford to cushion households against the pain by offering energy subsidies. LMICS, however, found themselves priced out of international credit markets.[21] Seeking International Monetary Fund loans, they had little choice but to follow IMF diktat and cut fuel subsidies.[22] Cutting subsidies, after all, is the quickest way for a borrowing government to signal its commitment to reducing government budget deficits—certainly much easier than reforming tax systems.[23] Inasmuch as fiscal consolidation is a perennial conditionality on governments seeking IMF assistance, LMICs were stuck between Scylla and Charybdis.

As it played out, the triple (commodity-dollar-interest-rate) price-shock on top of the pandemic-related budgetary pressures led ninety-seven LIMCs to seek and secure IMF loans between 2022 and 2024. This number of borrowers is unprecedented in the history of the funding agency.[24] For many countries, Fund support came at a steep cost. Apart from policy conditionalities, more than eighty percent of IMF lending is non-concessionary. In many instances, IMF loans come with considerable fees and surcharges attached. Despite being under fire from Russian forces, even Ukraine’s $15.6 billion loan from the Fund was subjected to these extra charges.[25] (Ukraine had however secured a temporary pause in its international debt payments by August 2022.) It was only in late 2024, following campaigns against the IMF’s surcharge policy, that the Fund moved to reduce its interest-rate related charges, surcharges, and other fees. [26] As its largest debtors, countries such as Argentina and Ukraine—whose surcharges will be cut by about forty percent—as well as Egypt and Ecuador will benefit the most from this policy pivot.

The international community’s interventions went even further regarding Ukraine. In the Paris offices of Ukraine’s legal advisors, Rothschild & Co., with the Fund’s staff on call providing around-the-clock technical assistance, Ukraine secured a 37% percent principal haircut on about $20.5 billion worth of its international bonds held by, among others, large asset managers such as BlackRock and Amundi.[27] It was one of the fastest and largest sovereign debt restructurings in recent memory—smaller only than the haircuts provided to Greece and Argentina.[28] Having some of its debt wiped off the books enables Ukraine to continue receiving more IMF financing. However generous, IMF support paled in comparison to Washington’s financial assistance to Ukraine, which amounted to $35 billion between 2022 and 2023. Like IMF loans, which came with conditionalities, US assistance came with strings attached: some unknown share of the dollars received by Ukraine would be recycled back to US agencies and firms. These included American behemoths BlackRock and JP Morgan Chase who were contracted by the Ukrainian government to design its postwar reconstruction financial facility, the Ukraine Development Fund. [29] Hidden away from the front pages, American asset managers, bank-holding companies, and private wealth management advisors now determine the shape of Ukraine’s finances.

Facing its own set of dilemmas, Egypt, like Ukraine, secured emergency financing from varied sources. In Egypt’s case, the dollars arrived after the country’s financial situation—already in dire straits since the pandemic—took a swift turn for the worst after October 7, 2023. Bordering the Gaza Strip, Egypt’s economy would be exposed to Israel’s campaign in several ways, including disruptions in commercial shipping. [30] As Israel Defense Forces were carpet-bombing parts of Gaza, Houthi militants from Yemen (expressing solidarity with Palestinians) launched attacks on commercial vessels in the Red Sea. From 2015 to 2022, Yemen itself had endured more than twenty-five thousand air raids by a Saudi-UAE led coalition. Other members of the bombing campaign included Egypt, Jordan and Qatar, with the US and UK providing logistical and technical assistance.[31]

While the Houthi fighters were focused on inflicting economic damage on Israel by, for e.g., disrupting cargo shipments to the country, among the vessels they targeted were LNG tankers from Qatar enroute to Europe via the Suez Canal.[32] Consequently, as ships were rerouted away from Suez, the resulting seventy percent decline in commercial shipping traffic receipts led to a precipitous fall in Egypt’s foreign-exchange earnings.[33] Having taken on major debts to manage the price shock of 2022, the drying up of Suez cashflow left Egypt spending half of its public revenues on debt servicing.[34]

Amidst this febrile state-of-affairs, Egyptian authorities played a familiar card. Positioning itself as a key mediator between Israel and Hamas—and having already earned its stripes as Abu Dhabi’s ally during the Arab Spring—Cairo made the sell that it was too important a strategic partner to allow it to fail. Leveraging the prospect that Egypt might accept an influx of Palestinian refugees into Sinai, Cairo got the dollars flowing. First to arrive were billions in investment from ADQ, one of Abu Dhabi’s sovereign wealth funds. The terms and conditions of the arrangement handed ADQ the rights to develop Ras El-Hekma, a massive beachfront overlooking the Mediterranean.[35] In exchange for taking a less-than-majority ownership stake in the project, the Egyptian government received an immediate cash infusion of $24 billion. (The total size of the investment is around $35 billion).

It was this deal that enabled Egypt to secure a fresh credit line from the IMF. This was because the ADQ investment allowed the country to satisfy the Fund’s stipulations around “external financing assurances”: Per the IMF’s ‘debt sustainability’ requirements, borrowing governments need to demonstrate they can access other external creditors in order to secure an IMF loan. The cash infusion of $24 billion from Abu Dhabi led the IMF to quickly settle on an augmented loan agreement with Egypt in March 2024, amounting to $8 billion.[36] Shortly thereafter, the European Union president Ursula von der Leyen came calling with a grants and loan package worth €7.4 billion ($8.1 billion).[37] Von der Leyen would return to Cairo a month later for an investment conference where European companies pledged deals with Egyptian partners amounting to €40 billion.[38] The UK followed suit with its own smaller package.

Development in the Suez Canal Economic Zone was back on the agenda, as was energy. (Refined petroleum and petroleum gas are Egypt’s largest exports.[39]) Also on the agenda: more funding for Egyptian security intended for controlling emigration flows to Europe. Counting the ~$10 billion that the Saudi state had agreed to park in the Egyptian central bank in 2022 to stabilize its balance of payments accounts, the international bailout approximated $57 billion.[40] As major credit ratings agencies uplifted their forecasts for Egypt, investors lobbied for the country’s reinclusion in JPMorgan’s index for emerging market sovereign debt—which, in turn, would enable Egypt to attract investment from passive funds, which are often large, long-term holders of sovereign debt. (Egypt had been kicked out the index twice before.)

This time, too, emergency relief came with a price. First, there were interest rate hikes. As demanded by the IMF, the Central Bank of Egypt raised interest-rates, already 21%, by an astounding 600 basis points in late February 2024. The Egyptian central bank allowed the currency to depreciate, despite President Abdel Fattah El Sisi’s previous pledges—for ‘national security reasons’—on exchange rate preservation.[41] On March 6^th, the Egyptian pound crashed by 62% before clawing some gains back and closing 38% weaker against the dollar.[42] To demonstrate fiscal responsibility, Egyptian policymakers also agreed to reduce planned infrastructure spending.

Egypt and Ukraine’s examples speak to the enduring relevance of “extreme conditionalities.” A dynamic associated with the late nineteenth to early twentieth century and explicated by economic historian Didac Queralt, “extreme conditionalities” refers to the manner in which emerging market sovereigns in danger of defaulting on their foreign loans pawn state assets for new external indebtedness.[43] A stronger form of this very thesis was made more than a century ago by the political economist, Rosa Luxemburg. In her magnum opus, The Accumulation of Capital, Luxemburg wrote that the external borrowing involved in the construction of the Suez canal would entrap Egypt in servitude to its European creditors. Suez “formed the nucleus,” wrote Luxemburg, “for Egypt’s immense national debt which was to bring about her military occupation by Britain.” [44] She pointedly noted that Egypt’s state of insolvency did not prevent European financiers from dishing out more loan contracts. Not unlike present circumstances, back then, Egypt’s indebtedness to its foreign creditors furthered European capital’s entrenchment into Egyptian finances. Over time, this meant that Egyptian land would become collateral for public debt owed to foreign creditors or would simply be taken over by British authorities as the costs of occupation, paid as baksheesh (tribute).[45] Luxemburg commented that the nine percent nominal interest rate on Egyptian sovereign borrowing in 1874 was ‘exorbitant.’ Today, the benchmark interest rate in Egypt is more than twenty-seven percent.

II. Hegemonic Transition

Indeed, conditionalities attached to foreign assistance have long been a form of economic coercion employed by powerful states. The United States’ post World War II financial assistance to Europe colloquially known as the Marshall Plan was one in which US economic interests were thoroughly entwined with national security concerns. A consolidated communist bloc in Europe threatened US access to European markets.[46] Rebuilding overseas markets in Europe would prove useful in absorbing excess output (‘overcapacity’) in the US economy, where unequal income distribution—much like in China today—hindered domestic consumption.[47] More than just financing postwar reconstruction, the European Recovery Program was configured around Europe paying for US goods and services.[48] Ultimately, seventy percent of Marshall plan aid was used to purchase US goods: for instance, capital equipment to build Europe’s first commercial geothermal plant in Tuscany.[49]

Over a quarter of ERP aid—$13.3 billion at the time, equivalent to roughly $200 billion today—was allocated to the UK.[50] Marshall Plan dollars arrived in Europe only a few years after December 1945, when the US finally agreed to give the UK a desperately needed $3.75 billion loan. In addition to fresh capital injections, the December 1945 Anglo-American Financial Agreement involved the settlement of Britain’s Lend-Lease war debts (for which the US provided an additional $650 million). In Britain, the fact that US assistance was arriving in the form of an interest-bearing loans was regarded with some chagrin. While America had supplied the aid, including to the Soviets, that ensured the Allied victory—as the UK foreign secretary stated, the war was won on “a wave of [American-supplied] oil”—the US had been a late party to the theatre of operations, entering the fight only in December 1941.[51] Feeling that they had carried the Allied effort, UK parliamentarians were aggrieved that US policymakers treated the UK’s war debt on such transactional terms, as if it was equivalent to an interest-bearing commercial loan. (The British view was, of course, a distorted one: Allied forces would not have won the war were it not for the Soviets pushing back the Germans in the east.)

There were debates in Parliament about whether or not to accept the 1945 US loan at all, given its less than generous terms and conditions. That the loan contract urged Britain to dismantle its preferential trading regime (known as the Sterling Area) and reduce its external indebtedness was cause for even greater agita. Britain’s debts to the Sterling Area were about twelve billion (nominal) dollars in July 1944, far greater than what Britain owed the United States.[52] The American loan contract of 1945 clearly stipulated that the dollars borrowed could not be used by Britain to settle any other external obligations.[53] As had become clear at the Bretton Woods summit in 1944, both the UK and the US would rather that the issue of Sterling balances be swept aside. And as would become the pattern with US overseas financial assistance, the 1945 loan, too, specified that the financing provided by the US should facilitate Britain’s purchase of American goods and services.

Contentious as the negotiation process was, the American loan did not end up shoring up Britain’s finances. To the astonishment of policymakers on both sides of the Atlantic, the loan was used up after just two years. That the dollars were drawn down so quickly had to do with another of the loan’s terms: namely, that the sterling be made fully convertible.[54] This conditionality provoked the hemorrhaging of UK foreign reserves, with investors dumping pound sterling as soon as exchange controls on UK trade transactions were lifted in July 1947.[55] To prevent the pound from sliding further, Britain went back on exchange controls in August 1947, but only after securing permission from its creditors in Washington.[56]

The two world wars had ravaged British balance sheets. A net international lender before WWI, Britain would emerge from WWII as the largest of sovereign borrowers.[57] In a world where money was ultimately backed by gold, Britain’s indebtedness had dimmed the pound’s prospects. Britain’s century-long experiment with the gold-standard had, of course, ended in the interwar years. In 1919, sustained financial pressures led the UK Treasury to officially suspend sterling’s convertibility into gold. Attempts at reestablishing sterling-gold parity at the pre-war peg proved deflationary and ultimately gave way on the heels of the Wall Street crash of 1929. And yet, even though New York had overpowered London as the dominant global financial center by the 1920s—and the US manufacturing capacity was far greater than that of British by the dawn of the post-war era—it would still be some time before the dollar displaced sterling as the premium foreign reserve and trade vehicle currency. [58] Even in 1957, sterling still financed almost half of world trade.[59]

Safeguarding sterling from dollar encroachment required geopolitical maneuvering. London’s financial administrators were no stranger to monetary machinations, having honed them in the colonies. Early in the 20th century, colonial authorities transferred India’s Gold Standard reserves to London where they became a monetary buffer at the Bank of England. (Gradually converted into sterling debt securities, India’s gold was transformed into a cheap source of liquidity for the City of London.[60]) With the end of sterling-gold convertibility in 1919, countries that were part of the informal sterling zone—who tended to deposit their foreign-currency reserves in London—switched from pegging to gold to pegging against sterling.[61] By the 1930s, the loosely knitted sterling bloc had shrunk to just the Commonwealth countries (except for Canada) and a handful of others including Egypt, Palestine, Sudan, and Transjordan. [62] The second world war de facto led to experimenting with exchange controls in the sterling bloc. The Sterling Area was carved out into a legally defined unit in 1940.

The 1932 tariffs on manufactured imports, whereby Australia, Canada and other dominions negotiated for privileged access to the UK market in exchange for a reduction in their own tariffs, no doubt, proved instructive in designing Sterling Area policies. Weaponizing trade relations is an increasingly familiar feature of the contemporary world economy. Applying coercive pressure on trade partners is, of course, central to President Trump’s ambitions in his second-term in office. Trump has declared that he will negotiate reductions in tariffs with US trade partners if they set up production (inward foreign direct investment) in the United States. But even under the Biden administration, while US Treasury Secretary Yellen promoted ‘friendshoring’ —as in, increasing trade ties with geopolitical allies—US National Security Advisor Jake Sullivan strongarmed “small yard, high fence” trade tactics: prohibiting, for e.g., US imports of advanced semi-conductor chips from China. Along with export controls, the Biden administration increased US sanctions on Chinese entities—only escalating Trump’s economic aggression towards China during his first term.

With regard to Sterling Area policies, financial controls complemented coercive trade practices. Reinforcing the core of the Sterling Area demanded a reservoir of hard-currency reserves. Accordingly, Sterling Area members collectively pooled their foreign exchange revenues (including sterling earned from exporting to Britain) at the Bank of England.[63] UK authorities enacted strict controls on members’ access to their own foreign reserves.[64] While sterling transfers within the sterling zone were permitted, monetary flows between sterling and non-sterling areas were tightly regulated. If countries left the Sterling Area, they would lose access to a preferential trading zone (which would mean facing a greater tariff burden) as well as ease of financing from London’s deep and liquid capital markets.[65]

The gold and dollar deposits of Sterling Area members as well as the money owed to them by Britain (on its imports from the Sterling Area) were held in London. In rather obscure fashion, they came to be recorded in Britain’s financial accounts as ‘sterling balances.’ [66] By 1945, aggregate sterling balances were seven times larger than the UK’s gold and dollar reserves.[67] The eminent British economist Lord John Maynard Keynes reported to the House of Lords in 1951 that two thirds of Britain’s sterling balances were owed to India, Egypt, Palestine, and Ireland.[68]

The American position that Britain disband the Sterling Area predated the 1945 Anglo-American loan agreement. At the Bretton Woods meetings in July 1944, the Americans reiterated their disgruntlement with Britain’s trade protectionism. The Sterling Area stood against the ethos of the postwar multilateralism the United States sought to establish through negotiations at Bretton Woods—a new trade and monetary order underpinned by the dollar.[69] While the Bretton Woods conference cultivated an aura of multilateralism, deliberations regarding the future of the world economic order were mostly limited to those between the American and British delegates—led by the senior US Treasury official Harry Dexter White and, on the UK side, John Maynard Keynes.[70]

The parlous state of UK finances, in particular its massive external liabilities (sterling balances), conditioned Keynes’ ability to negotiate with White. In 1941, Keynes argued that sterling balances should either be funded—presumably with American assistance—or frozen, as they had been during the war. [71] Mindful of this, White intended to enlist British support for a new dollar-based world monetary regime by delivering a partial write-off of Britain’s outstanding debt to the Sterling Area. The greatest portion of Britain’s frozen or ‘blocked’ ‘sterling balances’—more than a third of approximately twelve billion (nominal) dollars in July 1944—were owed to India. [72] Second only to India, Egypt’s frozen balances amounted to a billion dollars.

At Bretton Woods, demands by India’s delegates that some of India’s blocked sterling balances be converted into dollars for food imports were brushed aside.[73] The Bengal famine—the result of demand compression enforced to help finance Allied war spending—led to drastic declines in Indian food-consumption.[74] 1.5 million deaths had been recorded in 1943-1944 alone.[75] Amidst Anglo-American wrangling over the contours of a new international monetary arrangement, Keynes rejected India and Egypt’s proposals for a trilateral resolution (involving the US) of their approximately five billion dollars in blocked sterling balances. He insisted on a bilateral resolution between the UK and each of its creditors. [76] Keynes was well aware that fiscal incapacity would make for further pound sterling devaluation, thereby reducing the size of Britain’s outstanding sterling balances.[77]

On August 14, 1947, a London settlement determined the sterling balances of the freshly partitioned Indian Subcontinent. The money was returned to India and Pakistan in piecemeal installments. England’s creditors, its former colonial possessions, were not made whole. London had the upper hand in related contestations concerning Lend-Lease aid to India (for which, Keynes had argued, India should pay Britain), interest accumulated on sterling balances, and the capitalization of pensions owed to colonial officers.[78] Exchange-rate movements inflicted further damage: Lacking a protective currency devaluation clause, the Subcontinent’s sterling balances would be further eroded when the sharp devaluation of the pound in 1949.

III. Empire’s Ends

Less than a decade after its rushed withdrawal from India, Britain’s adventurism in the Middle East would be thwarted by the Suez Crisis. The 1956 crisis would quickly embroil ‘virtually every element of world politics.’[79] Postwar reconstruction and rearmament had made for a fast-growing oil market and a dollar shortage in Europe.[80] In 1947, Britain insisted that Cairo repudiate at least some of the sterling balances that London owed it. (In Parliament, in March 1951, Winston Churchill revealed that as Prime Minister he, too, had supported repudiating Egypt’s financial claims.[81]) When Cairo pressed for the expedited return of its frozen sterling balances, London presented it with an ultimatum: either leave the Sterling Area with some of its sterling balances or have its sterling balances fully blocked.[82] Having essentially forced Egypt’s withdrawal from the Sterling Area in July 1947—all the while constructing a narrative that Egypt left of its own volition—the Bank of England reduced the amount of Egypt’s sterling balances that it had promised to release.[83] As was the case with India’s sterling balances that remained in London, Egypt’s, too, would diminish with the 1949 devaluation.

Oil was the largest commodity in mid twentieth century global trade. Two thirds of oil destined to Europe flowed through the Suez;[84] an entire three fourths of UK oil imports were from the Middle East.[85] British troops had long been stationed in the Suez Canal Zone where the Anglo-French Suez Canal Company extracted tolls and fees from ships using the strait. Crude oil reserves (outside the United States and Eastern Europe) were more or less split between American and British firms.[86] In 1949, the British government projected that half of the Sterling Area dollar deficit came from oil imports. A quarter of this was from Sterling Area expenditures on American-owned oil, for example, that produced by Arabian American Oil Company i.e., Aramco.[87] In 1950, the UK ordered Sterling Area members to reduce their purchases of much more expensive ‘dollar oil’ and purchase ‘sterling oil’ instead. In effect, this mandated that Area members purchase oil from the majority-British controlled Anglo-Iranian Oil Company (a firm that would later be rebranded as British Petroleum, i.e. BP).[88]

Sterling Area dollar reserves provided a financial shield for Britain’s external balance sheets. The dollars could be deployed (sold) to defend (buy) the pound in the event of future sterling devaluations. Furthermore, a projected expansion in British controlled Iranian oil would require absorption by friendly markets. Despite having left the Sterling Area, Egypt, too, continued purchasing sterling oil: its policymakers recognized that continuing trade relations with Britain would enhance its chances of receiving its remaining Sterling balances.[89]

To say that the years leading up to the Suez crisis were eventful is an understatement. Israel’s statehood and the ensuing displacement of Palestine’s population (al Nakba) in 1948 had led to regional tumult. In protest, the Saudis refused the passage of Israeli ships across the Suez. In 1949, after Israel tried to establish a port at the Gulf of Aqaba to secure sea access to Asian markets, Egypt imposed a blockade (with Saudi cooperation) on Israeli ships across the Gulf. This prevented the delivery of oil from a British-owned refinery in Haifa, forcing the plant to operate at a fourth of its full lower capacity.[90]

The Egyptian blockade signaled the capability of Arab states to thwart western and Israeli oil interests.[91] Its successes encouraged bolder actions in the domain of energy. In 1951, Iran’s Prime Minister, Mohammad Mosaddegh, nationalized the assets of the Anglo-Iranian Oil Company. In retaliation, the British government imposed an embargo on Iranian oil exports.[92] By 1953, a covert operation supported by the US and UK intelligence agencies had ousted Mossadegh from office, setting the stage for his eventual replacement by the Shah. The US thereafter established a forty-plus percent stake in the western consortium controlling Iranian oil.[93]

In 1954, Egypt’s President Gamal Nasser signed the Anglo-Egyptian Agreement, securing the withdrawal of British troops from the Suez Canal Zone. The next year, Nasser proposed that Washington sell Cairo $27 million worth of weapons. The US demanded a cash payment knowing full well that the cash-strapped nation would be unable to honor the transaction.[94] Nasser’s previous position of neutrality vis a vis Israel had changed; the Eisenhower keenly felt that Nasser was playing both the Americans and the Soviets. (As recently as 2022, Egyptian armament purchases from Russia exceeded those from the United States.[95]) The Eisenhower administration was concerned about the balance of power in the region. Then, in July 1956, the US and UK backtracked on their joint agreement with the World Bank to provide Egypt $70 million in hard currency grants to facilitate the first stages of the construction of the Aswan High Dam—like Suez, a decade-long billion dollar plus project, the largest of its kind in the world.[96]

By then, Nasser’s massive ($83-$200 million) arms deal with the Soviets in Czeschoslovakia

as well as the Soviet offer to help finance the new Aswan dam had come to light.[97] According to the World Bank, the Egyptian-Czechoslovak arms agreement would make it very difficult for Egypt (whose foreign exchange reserves were in question) to pay back Aswan-related debt.[98] In a fiery exchange in Washington that July, the US Secretary of State, John Foster Dulles reneged US assistance to Egypt. Less than a week after the Anglo-American betrayal and with the Soviets still hemming and hawing (Soviet assistance for Aswan would materialize, but only later), Nassar opted to nationalize the Suez Canal. He declared that the fees raised in Suez would help finance the mega hydro-electrification and irrigation project.[99]

While Nasser’s takeover had not stopped the flow of traffic through the Canal, on the pretext of guaranteeing safe passage for ships crossing the Suez, British and French troops occupied the canal after sending out Israeli forces to occupy the Sinai. [100] Kinetic warfare—most prominently, the Royal Air Force’s bombing of Port Said at the northern end of the Canal—was accompanied by financial strikes: Egypt’s sterling balances were, once again, blocked.[101] The latter action gave pause to other sovereigns, such as Kuwait, about the safety of holding reserves in London. To protect the former Anglo-French owners, the Suez Canal Company’s overseas cash balances were frozen by the United States and Switzerland, and despite filing writs of attachment, the Egyptian government couldn’t access them.

Britain’s incursion into the Suez had been a bid to safeguard its own financial and energy security. Set in this context, the operation’s failure is rather spectacular. In the aftermath of the invasion, speculation in world currency markets drove repeated sell-offs of sterling assets. UK foreign reserves fell below the Bank of England’s preferred buffer. Aware of Britain’s financial squeeze, US President General Dwight D. Eisenhower refused to support Britain’s request for money from the IMF or the US EX-IM bank[102]: As he stipulated, the US would not help Britain pay for oil imports unless there was a ceasefire. The threat of financial reprisal and market chaos led the UK to capitulate by withdrawing its troops from the Suez. Ironically, it was an act of financial weaponization by its closest ally that halted Britain’s expansionist ambitions. (Securing Israel’s withdrawal from Sinai took longer. It was only after Eisenhower applied consistent pressure in the face of pro-Israel Congressional resistance—including by threatening to suspend US investment in Israeli sovereign debt—and after he signaled that the US would support UN proposals to sanction Israel that the latter withdrew from the Sinai Peninsula and Gaza Strip.[103]).

It was the US, then, that helped end Britain’s long occupation of Egypt. Motivating Washington was Eisenhower’s fear that the oil-exporting countries in the Middle East would turn against the West if it continued to meddle in the Suez. In the face of Soviet encroachment, western access to Middle Eastern energy resources was at stake. As had been the pattern with US foreign policy, the United States’ own interests motivated its defense of Egypt’s sovereignty.

The Suez debacle set the stage for the full-spectrum dominance of the US dollar—and for the reworking of the Anglo-American financial relationship.[104] The sterling crisis had prompted the Bank of England to restrict UK banks from lending internationally in pounds. Dollar lending, however, was exempt from this stricture.[105] Ironically, it was this contingency (among others) that paved the way for London becoming the center of the offshore dollar system.

With the United States’ assent, Britain became the IMF’s largest borrower for the next couple of decades.[106] Echoing the IMF’s move to lend to war-torn Ukraine despite the country’s inability to meet the Fund’s pre-lending requirement that borrowers exhibit sustainable levels of debt, IMF loans to Britain also meant relaxing Article VI which prohibited the IMF from lending to countries facing a ‘large or sustained’ capital outflow.’[107] It was only decades later, during the Thatcher era, thanks to North Sea oil revenues, that Britain’s balance of payments were no longer a pressing concern. Post Suez, Egypt, too, would go on to experience balance of payments crises. Then too, because of Egypt’s geopolitical importance as an Arab power, it was deemed too ‘strategic to fail.’[108] In the decades to follow, Egypt would become a top IMF borrower, second only to Argentina.[109]

IV. Extreme Conditionality

The war in Ukraine has had many unintended consequences. It has certainly boosted US hydrocarbon and defense exports. The price shock of 2022 made crude oil the world’s most expensive traded product (worth $1.45 trillion). While Saudi Aramco was the largest oil exporter and China the biggest importer, US oil and gas profits (earned from domestic and foreign sales) were unmatched—amounting to more than three hundred billion dollars in 2022.[110]

The export boom in United States’ liquified natural gas (LNG) is directly attributable to the Russo-Ukraine war. On the one hand, war-induced reductions in Russian energy flows to Europe prompted most of western Europe, including Germany, to secure supplies from Qatar, Abu Dhabi and the United States. Having previously shunned US LNG for its heavy carbon footprint, in 2023 close to half of Europe’s LNG imports were from the US. The surge in European demand made the US the world’s top LNG exporter.[111] War-induced price effects proved hugely beneficial for American firms, too. While prices for LNG increased three-fold in the US between December 2021 and September 2022, they increased eight-fold in Europe.[112] By virtue of most US LNG contracts having ‘destination flexibility’—a legal provision which allows traders to deliver product to any non-sanctioned destination—American firms could take full advantage of the price increases in Europe.[113]

In effect the LNG bonanza was a coup for hydrocarbon dollar. Despite the ambitions of the Biden administration when it came to climate policy, materially, the LNG boom buttressed the US fossil fuel industry. The consequences for the planet were clear as the United States recorded their highest greenhouse gas emissions levels ever.[114] With Trump’s second term in office, the Biden administration’s ‘friendshoring’ policy has been replaced by a more brutish law of the jungle: Trump has threatened Europe with tariffs unless it scales up its US hydrocarbon purchases.[115] He has also reversed Biden’s pause on new LNG export licenses from countries without free trade agreements and begun approving new LNG export licenses.[116]

Demand for natural gas represents a quarter of total global energy demand. About a quarter of global demand comes from within the US.[117] Europe’s demand for natural gas has consistently declined since the 2022 price shock and is expected to fall by twenty five percent by 2030.[118] While nearly seventy percent of Russian LNG went to Europe in 2024—a record high—Russian supply comprised just seventeen percent of Europe’s LNG imports.[119] Russian piped gas continues to flow to Europe, but at a much more diminished scale. The future of sanctions continues to drive uncertainty.[120]

In terms of supply, projections hold that LNG gas production will increase by five percent in 2025, with American production responsible for the majority of the expansion.[121] (Three quarters of the global liquefaction capacity approved between 2022 and 2023 was in the US.) The bulk of future demand for US LNG does not lie in Europe but in Asia. China is today the world’s largest LNG importer, and Indian demand is growing rapidly, too. Asia is expected to drive about forty five percent of LNG demand in 2025.[122] Rising Asian LNG demand has coalesced with rising American supply, begging interesting questions of the Trump White House. As early as 2021-2022, US LNG contracts with China already exceeded contracts with Europe.[123] A transactional presidency would press for new deals pushing US LNG exports to China for the latter’s continued investment in US Treasuries. In the fevered dreams of hydrocarbon traders and those seeking continued US Treasury dominance, this could be what détente looks like. But when transactionalism shades into bullying, the outcomes can become chaotic. One need look no further than the ongoing trade war for evidence. Already, China has retaliated against Trump’s ten percent tariffs on all US imports from China by imposing fifteen percent tariffs on US LNG imports.[124] China has not imported any US LNG for more than a month. Presently, US LNG buyers in China holding long-term contracts are diverting their LNG shipments to Europe.[125] China’s penchant for holding US Treasuries has also diminished.

In his call for American “energy dominance”, it is clear that Trump understands reducing inflation while hiking tariffs (which are inflationary) will hinge on reducing energy prices. Consequently, on day one in office, Trump signed off on a declaration of national energy emergency to ‘unleash American energy’.[126] Sustainable development requires decarbonization, but tariffs and trade battles herald inflation, which may, at some point, require the Fed to raise interest rates. Given that the bulk of green projects are debt-financed, (i.e. dependent on interest rates) spending on clean infrastructure in the Global South is bound to decline over the next four years.

President Trump’s inaugural address promised to end wars. In fact, Trump’s return to the White House was instrumental in Biden’s ability to secure a ceasefire agreement between Israel and Hamas. Gazans have begun to return to a moonscape rubble or, as Trump has put it, a ‘massive demolition site’, with more tonnage of bombs dropped than on any other modern urban landscape. Financing the rebuilding and prerequisite removal of the rubble—fifty million tons of twisted concrete and steel, chemical spills, ground water leached with metals, such as lead from solar panels, as well as human remains—remains in question.[127] Seeking to reduce government spending, Trump’s first moves in office included slashing the US foreign assistance program known as USAID.

In his February meeting with Netanyahu, Trump announced that that the US will take over the Gaza strip; he asserted that, given its ‘phenomenal location’ overlooking the Mediterranean, “some fantastic things could be done with Gaza.” In response to Trump’s Riveria plan for Gaza, which involves the forced removal of Palestinians from their land, the Arab League has proposed an alternate $53 billion reconstruction plan—using World Bank estimates—in which Palestinians remain on their land. This alternative, the outcome of a League summit in Cairo, has been supported by the major European powers.[128]

Egypt’s proposal, coined the Gaza Recovery, Reconstruction, and Development plan (henceforth Gaza Recovery), was prepared under El Sisi’s directive. In many spaces, it has been called technocratic. It is, in fact, fantastical. Drawing on past ‘experiments’ in catastrophe in Hiroshima, Berlin, and Beirut, Gaza Recovery calls for an ‘integrated economic and social renaissance’ made possible through ‘international and regional investment funds’. As can be seen with Egypt’s own experience with international funding, these credit contracts tend to carry expectations of ‘extreme conditionalities.’ Even more troubling is the fact that this alternative plan for Gaza is one which hasn’t been written by Palestinians themselves. It is, instead, an Egyptian effort, written in a context in which the heavily indebted nation can scarcely afford to displease its creditors in Washington and elsewhere.

Each map of the new Gaza strip, built along a green tree-lined spine, prominently demarcates designated crossings into Israel and Sinai. The security cordon separating Gaza from the rest of Israel will continue. (The Egyptian president has revealed that Cairo has been training Palestinians to serve as security forces during the transitional international governance of Gaza overseen by UN peacekeepers.) While Gaza Recovery promises a long-term architectural Mecca with domed minarets for rooftops and fifteen shopping malls, in the interim, shipping containers will be repurposed as 200,000 housing units for 1.6 million. This, despite the fact that the numbers of displaced Palestinians is around 2 million. Development-related proposals are equally off the mark. The population in Gaza has very high literacy rate—98%, far greater than Egypt’s 71%. The Gaza plan nevertheless skews heavily towards generating employment opportunities in agriculture and fishing.[129] Neglecting Israel’s control of entry, the plan projects 60,000 jobs for the tourism sector, just ten thousand less than estimated jobs for industry (and twenty thousand less than that expected in fishing).[130] While seeking to honor the victims of the war on Gaza, the proposal also seeks to turn part of Gaza’s rubble into a land reclaimation project by the coast—with a Belgian company allegedly prepared to take the lead.[131]

At the end of February, Trump attempted to extort a favorable deal from Ukraine—demanding that the US take half of the share of all of Ukraine’s mineral resources as compensation for some measure of US protection short of a security guarantee. The plan was temporarily thwarted with farcical scenes at the White House where Trump and Vice President Vance publicly chided Ukraine’s President Zelenskyy. Ukraine remains over the barrel, though, and hemmed in by extreme conditionalities. An agreement along the lines of Washington’s designs seems inevitable. Recent negotiations between Trump and Putin have led to a temporary limited ceasefire. Both Kremlin and Kiev have declared that they will pause targeting each others energy infrastructure. (It turns out that Ukraine’s strikes on Russian oil and gas infrastructure have hurt Russian state revenues.[132])

What awaits Gaza is as yet unknown. What is for certain, though, is that Gaza’s Mediterranean coastline—for which Egypt’s blueprint has a Corniche road in mind, and quite possibly its offshore gas marine reserves, which contain a modest 32 BCM of natural gas[133]—will come into play, at least symbolically, in this new era of ‘extreme conditionality.’[134]

On March 15, Trump authorized US Central Command to bomb targets in Yemen’s capital Sana’a. For their part, the Houthis had paused attacks on the Red Sea, respecting the Gaza ceasefire. Nevertheless, the US opted to engage with the intent of strengthening its regional dominance—already, late last year, over forty thousand US troops were stationed in the Middle Eastern arena.[135] The same day, Centcom’s Twitter feed showed images of a missile launch from a US Navy vessel as well as mushroom clouds following the bombardment of the targeted location. Given the context, it is worth noting, that on an institutional basis, the US Department of Defense is the planet’s single-largest emitter of hydrocarbons.[136]

Two days later, in flagrant violation of the January 19 ceasefire between Israel and Hamas, Israel Defense Forces launched the largest airstrikes witnessed in the Gaza strip in more than two months. Israeli commentators noted that this copycat action, coming days after the US strikes on Yemen, was a desperate attempt by Netanhayu to prevent his governing coalition from collapsing as he faces domestic backlash.[137] That single night of aerial bombardment killed more than four hundred in Gaza.[138] Local reports, meanwhile, indicate that security forces contracted by Qatar, the United States, and Egypt—countries that had promised to guarantee the ceasefire—had withdrawn from Gaza’s Netzarim corridor.[139] During this time in which violence rules in unadulterated form—an age of extreme conditionalities—human lives are seen simply as collateral damage; the worst can now be expected.

This publication has been supported by the Rosa-Luxemburg-Stiftung. The positions expressed herein do not necessarily reflect the views of Rosa-Luxemburg-Stiftung.

[1] Chad Bown, “Russia’s war on Ukraine: A sanctions timeline,” Peterson Institute for International Economics, December 21, 2023, https://www.piie.com/blogs/realtime-economics/2022/russias-war-ukraine-sanctions-timeline.

See: Kimberly Donovan and Maia Nikoladze, “Russia Sanctions Database,” Atlantic Council,2023, https://www.atlanticcouncil.org/blogs/econographics/russia-sanctions-database.

[2] Other countries included Norway, Switzerland, Lichtenstein and Singapore. Ukraine also imposed sanctions. See: Donovan and Nikoladze.

[3] Philip Gordon, “Europe Has No Choice but to Seize Frozen Russian Assets,” Financial Times, March 5, 2025. https://www.ft.com/content/f012f511-1bde-4e99-90fe-f81a393ed6ad.

[4] “Consolidated Russia Sanctions Data Dashboard.” Castellum.AI. Accessed March 20, 2025. https://www.castellum.ai/russia-sanctions-dashboard.

[5] Miles Johnson, “What happened to Russia’s seized superyachts?,” Financial Times, July 20, 24, https://www.ft.com/content/db20e533-7cf6-4cb9-bfd6-a6b6c8b36985.

[6] Donovan and Nikoladze.

[7] Guy Chazan, “The Competing Theories of the Nord Stream Explosions.” Financial Times, September 6, 2024. https://www.ft.com/content/120d3b78-68b4-4b42-9e65-c55e8fd77fd0.

Max Seddon and David Sheppard, “Russia Indefinitely Suspends Nord Stream Gas Pipeline to Europe,” Financial Times, September 2, 2022. https://www.ft.com/content/5867c175-df16-4c8b-9b7a-a868a19d0138.

[8] Su-Lin Tan, “Yellen Says Price Cap on Russian Oil Is ‘One of Our Most Powerful Tools’ to Address Inflation,” CNBC, July 14, 2022, https://www.cnbc.com/2022/07/14/yellen-says-price-cap-on-russian-oil-can-help-address-inflation.html.

[9] Andrea Shalal, “Yellen Says Russian Oil Price Cap Could Save African Countries $6 BLN Annually,” Reuters, January 20, 2023, https://www.reuters.com/world/yellen-says-russian-oil-price-cap-could-save-african-countries-6-bln-annually-2023-01-20/#:~:text=Yellen%20said%20ending%20the%20war,African%20countries%20%246%20billion%20annually.

[10] For the notion of systemically significant prices, see: Robert C. Hockett and Saule T. Omarova, “Systemically Significant Prices,“ Journal of Financial Regulation 2, no. 1 (2016): 1-20, https://doi.org/10.1093/jfr/fjw007.; Isabella M. Weber et al., “Inflation in times of overlapping emergencies: Systemically significant prices from an input–output perspective,” Industrial and Corporate Change 33, no. 2 (2024): 297–341. https://doi.org/10.1093/icc/dtad080.

[11] “Real Broad Effective Exchange Rate for United States [RBUSBIS],” Federal Reserve Bank of St. Louis, February 20, 2025, https://fred.stlouisfed.org/series/RBUSBIS.

[12] Boris Hofmann, Deniz Igan and Daniel Rees, “The changing nexus between commodity prices and the dollar: causes and implications,” Bank for International Settlements, April 13, 2023, https://www.bis.org/publ/bisbull74.pdf.; See also Daniel M. Rees, “Commodity prices and the US Dollar,” BIS Working Papers No 1083. Basel: Bank for International Settlements, March 11, 2023. https://ideas.repec.org/p/bis/biswps/1083.html.

[13] Mona Ali, “Militarized Adaptation,” Phenomenal World, January 25, 2023,
https://www.phenomenalworld.org/analysis/militarized-adaptation/.

[14] Hofmann, Igan, and Rees

[15] Hofmann, Igan, and Rees.

[16]Ana Swanson, “America’s Trade Deficit Surged in 2022, Nearing $1 Trillion,” The New York Times, February 7, 2023, https://www.nytimes.com/2023/02/07/business/economy/us-trade-deficit.html?searchResultPosition=1.

[17] Gregor Semieniuk et al., “Distributional implications and share ownership of record oil and gas profits,” (University of Massachusetts at Amherst: 2024), doi: 10.7275/55083.

[18] Cian Allen and Rudolfs Bems, “Emerging Markets Show Resilience Despite Global Monetary Tightening,” IMF Blog, July 12, 2024, “https://www.imf.org/en/Blogs/Articles/2024/07/12/emerging-markets-show-resilience-despite-global-monetary-tightening?utm_medium=email&utm_source=govdelivery”https://www.imf.org/en/Blogs/Articles/2024/07/12/emerging-markets-show-resilience-despite-global-monetary-tightening?utm_medium=email&utm_source=govdelivery.

[19] Franklin, Joshua, and Stephen Gandel. “Fed’s High-Rates Era Handed $1TN Windfall to US Banks.” Financial Times, September 22, 2024. https://www.ft.com/content/4c013d3b-796b-47a3-a964-02f753d39846.

[20] “Developing Countries Paid Record $1.4 Trillion on Foreign Debt in 2023,” World Bank, December 3, 2024, https://www.worldbank.org/en/news/press-release/2024/12/03/developing-countries-paid-record-1-4-trillion-on-foreign-debt-in-2023.

[21] World Bank, IDS, 2023. International Debt Report 2023. Washington, DC: World Bank. doi:10.1596/978-1-4648-2032-8. License: Creative Commons Attribution CC BY 3.0 IGO

[22] Millard, Rachel, “UK Household Energy Bills to Fall as Ofgem Reduces Price Cap by 12%,” Financial Times, February 23, 2024. https://www.ft.com/content/ee6c7d3f-bc49-4f02-90a5-5012938a648d.

[23] Note that Energy subsidies (scaled by GDP) are much higher in the developing world compared to advanced western economies. “Climate Change: Fossil Fuel Subsidies” International Monetary Fund (IMF), https://www.imf.org/en/Topics/climate-change/energy-subsidies#Energy%20Subsidies.

[24] “Active IMF Lending Commitments as of April 30, 2024,” International Monetary Fund (IMF), https://www.imf.org/external/np/fin/tad/extarr11.aspx?memberKey1=ZZZZ&date1key=2025-12-31.

[25] Mona Ali, “Reforming the IMF,” May 13, 2023, Phenomenal World, https://www.phenomenalworld.org/analysis/reforming-the-imf/.; “IMF Executive Board Completes the Sixth Review of the Extended Arrangement under the Extended Fund Facility for Ukraine,” International Monetary Fund (IMF), December 20, 2024, https://www.imf.org/en/News/Articles/2024/12/20/pr-24493-ukraine-imf-completes-6th-rev-of-extended-arrangement-under-eff.; “IMF Executive Board Approves US$15.6 Billion under a New Extended Fund Facility (EFF) Arrangement for Ukraine as part of a US$115 Billion Overall Support Package,” International Monetary Fund (IMF), March 31, 2023, https://www.imf.org/en/News/Articles/2023/03/31/pr23101-ukraine-imf-executive-board-approves-usd-billion-new-eff-part-of-overall-support-package.

[26] With this policy change, the number of countries that pay IMF surcharges will decline from twenty to about thirteen. Ukraine’s surcharges on its 2023 IMF loan agreement will be cut by about forty percent. See:

“Ukraine’s Interest Payments on IMF Loans to Decrease: IMF Revises Its Charges and Surcharge Policy,” National Bank of Ukraine, October 14, 2024, https://bank.gov.ua/en/news/all/protsentni-plateji-ukrayini-za-kreditami-mvf-znizyatsya–fond-pereglyanuv-politiku-dodatkovih-styagnen.; “IMF Executive Board Concludes the Review of Charges and the Surcharge Policy, and Approves Reforms,” International Monetary Fund (IMF), October 21, 2024, https://www.imf.org/en/News/Articles/2024/10/21/pr-24385-imf-concludes-the-review-of-charges-and-surcharge-policy-and-approves-reforms/.; “Frequently Asked Questions on the Fund’s Charges and the Surcharge Policy,” International Monetary Fund (IMF), October 11, 2024, https://www.imf.org/en/About/FAQ/charges-and-surcharge-policy.

[27] Ian Clark, Olga Fedosova, Dimitrios Lyratzakis. “Ukraine Concludes Historic Restructuring of US$20.5 Billion of International Bonds.” White & Case LLP, September 10, 2024. https://www.whitecase.com/insight-alert/ukraine-concludes-historic-restructuring-us205-billion-international-bonds?utm_source=chatgpt.com.

[28] Conflict, creditors and a car crash: How Ukraine clinched a wartime debt restructuring | Reuters. Accessed March 22, 2025. https://www.reuters.com/markets/europe/conflict-creditors-car-crash-how-ukraine-clinched-wartime-debt-restructuring-2024-09-03/.

[29] Brooke Masters, “Blackrock and JPMorgan Help Set up Ukraine Reconstruction Bank,” Financial Times, June 19, 2023, https://www.ft.com/content/3d6041fb-5747-4564-9874-691742aa52a2.

[30] Dan Sabbagh, “Civilian Casualties of Explosive Weapons at Highest Level in More than a Decade,” The Guardian, January 14, 2025, https://www.theguardian.com/world/2025/jan/14/civilian-casualties-of-explosive-weapons-at-highest-level-in-more-than-a-decade?utm_source=chatgpt.com.

[31] “Saudi Air War 2015-2022.” Yemen Data Project. Accessed March 19, 2025. https://yemendataproject.org/data/saudi-air-war-2015-2022.

[32] US Department of Energy 2024. (LNG shipping through the Suez has dried up completely.)

[33] “IMF Mission Concludes Visit to Egypt for the Fourth Review under the Extended Fund Facility ,” International Monetary Fund (IMF), November 20, 2024, https://www.imf.org/en/News/Articles/2024/11/20/pr-24429-egypt-imf-mission-concludes-visit-to-egypt-for-the-4th-review-under-the-eff

“Frequently Asked Questions on Egypt and the IMF,” International Monetary Fund (IMF), August 26, 2024, https://www.imf.org/en/Countries/EGY/Egypt-qandas.

[34] Lazard, 2024. “The 2020-2025 Sovereign Debt Crisis: What Have We Learnt and What Lies Ahead?” https://www.lazard.com. Accessed March 7, 2025. https://www.lazard.com/research-insights/the-2020-2025-sovereign-debt-crisis-what-have-we-learnt-and-what-lies-ahead/.

[35] Patrick Werr and Karin Strohecker, “Egypt Announces $35 Billion UAE Investment on Mediterranean Coast,” Reuters, February 23, 2024,https://www.reuters.com/business/egypt-announces-multi-billion-uae-investment-boost-forex-2024-02-23/.

[36] “IMF Staff and the Egyptian Authorities Reach Staff Level Agreement on the First and Second Reviews under the EFF Arrangement.” IMF, March 6, 2024. https://www.imf.org/en/News/Articles/2024/03/06/pr-2459-egypt-staff-and-authorities-reach-agreement-on-reviews-under-the-eff-arrangement.; Nafisa Eltahir, “Egyptian pound steadies after devaluation, IMF deal,” Reuters, March 7, 2024, https://www.reuters.com/world/africa/egyptian-pound-stable-after-devaluation-imf-deal-2024-03-07/.; Tarek El-Tablawy and Abdel Latif Wahba, “Egypt Holds Key Rate Even as Inflation Shows Signs of Easing,” Bloomberg, December 26, 2024, https://www.bloomberg.com/news/articles/2024-12-26/egypt-holds-key-rate-even-as-inflation-shows-signs-of-easing.

[37] “EU pledges €7.4 billion aid and investment package for Egypt” Ahramonline, Accessed March 19, 2025. https://english.ahram.org.eg/NewsContent/3/12/519550/Business/Economy/EU-pledges-€-billion-aid-and-investment-package-fo.aspx.

[38] “Speech by President von Der Leyen with Egyptian President El-Sisi at the EU-Egypt Investment Conference.” Enlargement and Eastern Neighbourhood, June 29, 2024. https://enlargement.ec.europa.eu/news/speech-president-von-der-leyen-egyptian-president-el-sisi-eu-egypt-investment-conference-2024-06-29_en.

[39] “Egypt (EGY) Exports, Imports, and Trade Partners.” The Observatory of Economic Complexity. Accessed March 19, 2025. https://oec.world/en/profile/country/egy.

[40] “Egypt says Saudi Arabia’s wealth fund set to invest $5 billion.” Bloomberg.com. Accessed March 19, 2025. https://www.bloomberg.com/news/articles/2024-09-16/egypt-says-saudi-arabia-s-wealth-fund-set-to-invest-5-billion.

[41] “Significant Influx of Hard Currency Made Adopting Flexible Exchange Rate Possible: Sisi,” Ahram Online, March 9, 2024, https://english.ahram.org.eg/NewsContent/1/64/519133/Egypt/Politics-/Sisi-says-significant-influx-of-hard-currency-made.aspx.

[42] “Egyptian Pound Drops 62% Against US Dollar after Flotation Decision,” Ahram Online, March 6, 2024, https://english.ahram.org.eg/News/518946.aspx.

[43] Didac Queralt, Pawned States: State Building in the Era of International Finance (Princeton: Princeton University Press, 2022)

[44] Rosa Luxemburg, The Accumulation of Capital (New York: Monthly Review Press, 1964). Mona Ali, “The Crisis Canal,” Phenomenal World, June 8, 2021, https://www.phenomenalworld.org/analysis/ever-given

[45] Luxemburg.

[46] C.C.S. Newton, “The Sterling Crisis of 1947 and the British Response to the Marshall Plan” Economic History Review 37, no. 3 (1984): 391-408.

[47] Newton; See also Joan Robinson cited in Prue Kerr, “Joan Robinson on Postwar Britain’s Prospects,” Contributions to Political Economy 23 (2004): 1-8.

[48] Alan S. Milward, The Reconstruction of Western Europe, 1945–1951 (Berkeley: University of California Press, 1984).

[49] Brian Deese, “The Case for a Clean Energy Marshall Plan,” Foreign Affairs, August 20, 2024, https://www.foreignaffairs.com/united-states/case-clean-energy-marshall-plan-deese.

[50] See Deese.

[51] Helen Thompson, Disorder: Hard Times in the 21st Century (Oxford: Oxford University Press, 2022).

[52] John H. Crider, “US and Britain Agree on New Bank Plan, Delegates to Get Draft for Amendments,” The New York Times, July 8, 1944, https://timesmachine.nytimes.com/timesmachine/1944/07/08/85159285.html?pageNumber=20.

[53] This is similar to ‘comparability of treatment’ policies today in which restructuring a defaulting country’s debt so that one creditor cannot be favored over others.

[54] Steven G. Galpern, Money, Oil and Empire in the Middle East: Sterling and Postwar Imperialism: 1944-1971, (Cambridge: Cambridge University Press, 2009).

[55] ‘The Sterling Area’, S.W.P. memorandum, 29 July 1966, BoE Archives, OV44/33 cited in Maylis Avaro, “Zombie International Currency: The Pound Sterling 1945–1971,” The Journal of Economic History 84, no. 3 (2024): 917–52. https://doi.org/10.1017/S0022050724000329.; H.A. Shannon, “Evolution of the Colonial Sterling Exchange Standard,” IMF Staff Papers 1, no. 3 (1951), https://www.elibrary.imf.org/view/journals/024/1951/001/article-A002-en.xml.

Debt, Energy, and Sovereignty: Past and Present

Middle East & North Africa

Introduction

I. War

II. Hegemonic Transition

III. Empire’s Ends

IV. Extreme Conditionality

Middle East & North Africa

Middle East & North Africa

Middle East & North Africa