Britain, Middle East oil, and the struggle to save Sterling, 1944--1971 (Iran, Egypt, Kuwait)

This dissertation examines how Britain's efforts to preserve London's role as one of the world's preeminent financial centers after World War II significantly influenced its relations with countries and companies involved in the production, transportation, and marketing of Middle East oil. British officials believed that London's standing in the global financial community depended on the international prestige of Britain's currency, the pound sterling, which had been tarnished by two world wars and a severe economic depression. But sterling would only fare as well as Britain's gold and international monetary reserves, the fortunes of which rose and fell with the nation's trade performance. Because one of the largest items in the current account of Britain's balance of payments was Middle East oil, policymakers at Whitehall linked British access to that oil---paid for in sterling at a very low cost---with the strength and stability of the pound. Therefore, British officials endeavored to control all of the ways that Britain's trade in Middle East oil could help or harm the country's balance of payments for roughly a generation after World War II.; Each of the four major chapters of this dissertation constitutes a kind of case study used to explore the diplomatic consequences of Britain's sterling-oil policy, collectively focusing on British relations with the United States, Iran, Egypt, and Kuwait. A major theme of the project is how the rise of nationalism in the postwar Middle East hindered the British government's efforts to reinvigorate sterling and how London tried to overcome the obstructions presented by nationalist upsurges. Conflict within the so-called "Anglo-American special relationship" is another theme explored here. U.S. officials frequently became disturbed with what they viewed as Britain's narrowly self-interested postwar economic agenda as well as with the anachronistic, neo-colonial policy in the Middle East they believed it drove. Likewise, British officials grew frustrated with Washington's apparent willingness to sacrifice Britain's vital economic interests on behalf of what they perceived as the U.S. government's over-zealous devotion to the principles of multilateralism, anticommunism, and anti-colonialism. In the end, this project demonstrates the critical role of economics in international relations.