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With kind permission from J.W. Smith, a major part of Chapter 14 of The World's Wasted Wealth II (Institute for Economic Democracy1, 1994) has been reproduced here. (See the beginning of this chapter2 if you have not read it.) Also, please note that I do not make any proceeds from the sale of this book in any way.
Turkey was humbled by these military defeats and, just as dependent countries today must do, it turned to those with capital (France, England, Russia, Germany, and Austria) for loans to build modern infrastructure. "European interests were willing to supply the networks and systems which the Ottoman Empire lacked but of course wanted to own them, preferably on the basis of exclusive concessions." 43 The result, as told by Jaques Benoist-Mechin, is worth quoting at length:
Each loan was granted on condition of guarantees and security. Each country had its own banks, monopolies and controllers. Banks, railways, mining companies and forestry, gas and water works were all foreign built, run and owned. France had seen to it that the tobacco monopoly had been [turned] over to her in 1883 as well as the docks at Beirut and Constantinople (1890), Smyrna (1892), and Salonica (1896). In 1890 followed the rights to exploit natural resources at Herklion and Selenica as well as running the Jaffa-to-Jerusalem Railway; in 1891 the Damascus-Homs and Mudanya-Bursa railway rights; in 1892 the rights to the Salonica-Constantinople Railway and in 1893 to the Smyrna-Kasaba Railway. The English had a healthy share in the "Ottoman Bank." Through the mediation of an Armenian, Calouste Gulbenkian, they obtained sole oil rights in Mossul in 1905. The Russians enjoyed various privileges, had secured the rights to all customs duties in Constantinople and in Black Sea ports. The Germans had secured the rights to free port docks at Haider Pasha (1899), railway shares and a municipal transport monopoly, and the docks at Alexandrette (1905). Through the operations of diverse combines the foreign powers sucked the wealth out of the country. The share of the national income which did not flow directly into the Sultan's coffers went to London, Paris, Viennese or Berlin banks....European capitalism was at its zenith at the time and drank the blood of its victim. "With such perfect organization the people were deprived of the fruits of its labour. Nothing was left for the abandoned cities, the treeless forest which had been overfelled, for the fields parched by drought, for the people themselves, who had neither doctors nor teachers."54
Even the management of state finances was now handled by foreigners,
The impressive bank officials and foreign dignitaries in their elegant palaces on the Bosporus were mightier than the Sultan and the Grand Vizier....[But] the only thing they had in common was the conviction that "the empire and its millions of subjects had only one reason d'être: to throw up enough earnings to be able to pay interest every six months to the innumerable holders of Ottoman certificates of indebtedness, whose number was increasing at a giddy pace."65
Besides the wealth wasted internally on their outdated feudal form of government, foreign military might forced the signing of unequal trade contracts that consumed more wealth. "[E]verything in Turkey which [was] clean, sturdy and beautiful [was] from somewhere else."76 It only remained for the violent upheaval of World War I to dissolve the once mighty empire.
The provinces of Algeria and Tunisia were the first to break away (1830 and 1881). Though nominally still a Turkish province and coveted by France, Egypt was effectively taken over by Britain in 1881. In 1911, Italy invaded Libya and, pressured by attacks from the Balkan states (Bulgaria, Greece, Montenegro, and Serbia) attacking from the West, Turkey made peace with the eastern invaders and lost control in Africa as it rushed to defend its western provinces.
Italy now took an interest in Libya while the ostracized German nation saw its chance to gain power vis-à-vis France, England, and Russia by becoming an ally of Turkey. They built the Berlin-to-Baghdad Railway and trained the Turkish army. In 1912, the war in the Balkans cost the Ottoman Empire almost all territory west of the Bosporus. It regained much of it in 1913 when the Balkan nations could not agree on the division of the spoils and went to war amongst themselves.87
But it was English, French, and Russian covert efforts to destabilize Germany's trading partner - the Austro-Hungarian empire - that led to World War I. Turkey felt that "if the Allies won the war, they would cause or allow the Ottoman Empire to be partitioned, while if Germany won the war, no such partition would be allowed to occur."98 To quote Karl Polanyi again, it was the collapse of the balance of power that led to World War I. Before that alliance with the besieged Ottoman Empire Germany was
reinforcing her position by making a hard and fast alliance with Austria-Hungary and Italy....In 1904, Britain made a sweeping deal with France over Morocco and Egypt; a couple of years later she compromised with Russia over Persia, that loose federation of powers was finally replaced by two hostile power groupings; the balance of power as a system had now come to an end....About the same time the symptoms of the dissolution of the existing forms of world economy - colonial rivalry and competition for exotic markets - became acute.109
Just as British diplomats had long feared, "the scramble to pick up the pieces [of the Ottoman Empire] might lead to a major war between the European powers" and World War I erupted.1110 Christopher Layne's analysis is worth repeating,
Backed by Czarist Russia's pan-Slavic foreign policy, Serbia attempted to foment unrest among Austria-Hungary's restless South Slavs, with the aim of splitting them away from Austria-Hungary and uniting them with Serbia in a greater South Slav state - the eventual Yugoslavia. The Austro-Hungarians knew that this ambition, if realized, would cause the breakup of the Habsburg empire (and in fact, did so). In Vienna, Serbia came to be regarded as a threat to Austria-Hungary's very existence. On July 2, 1914, the Austro-Hungarian Foreign Minister, Count Berchtold, told Emperor Franz Josef that to remain a great power, Austria-Hungary had no alternative but to go to war against Serbia. In July 1914, Austria-Hungary believed it could survive only by defeating the external powers that were exploiting its internal difficulties....Austria-Hungary's rulers, having weighed the balance, decided that "the risks of peace were now greater than the risks of war."1211
Turkey joined on the side of the Triple Alliance (Germany, Austria-Hungary, Italy), and with the defeat of that alliance, as had been secretly agreed on years before, the Middle East was divided among the victorious powers with Britain "adding nearly a million square miles to the British Empire." See footnote 1
The promise of self-determination implicit in Lenin's diplomacy and President Wilson's "Fourteen Points" of January 1918, made it no longer possible for Britain and France to impose direct colonial rule over the Arab lands they had agreed to partition in 1916. They therefore came up with a proposal whereby these same areas would be ceded to them by the League of Nations as their "mandates" under the fiction that these territories were being prepared for future self rule. Iraq, Palestine, and Transjordan came under British mandate, Lebanon and Syria under that of France....[Egypt's monarchy] was set up only to facilitate British control; it was overthrown by the Egyptian army in 1952....[Since that time,] Syria, Jordan, Lebanon, and Iraq have had to struggle hard to establish their legitimacy. Meanwhile, the Arabic speaking states of North Africa continued as colonies: Algeria, Morocco, and Tunisia under the French, and Libya under the Italians. They became independent only after the Second World War. A small piece of land called Kuwait also continued to exist under colonial rule, as a British protectorate. 1312
After World War I the borders and the leaders of virtually all Arab states were decided upon by Britain and France. See footnote 2 Jordan's assigned monarch was not even a local; he was from Saudi Arabia.
On April 27, 1920, at the Conference of San Remo following the collapse of the Ottoman Empire,
Britain and France finally concluded a secret oil bargain agreeing in effect to monopolize the whole future output of Middle Eastern oil between them. [Two years later when under pressure from their own puppet (King Feisal) for Iraqi independence, Britain's Prime Minister, Lloyd George commented]..."If we leave we may find a year or two after we departed that we handed over to the French and Americans some of the richest oilfields in the world."1413
Massive amounts of the wealth of the old Ottoman Empire were now claimed by the victors. But one must remember that the Islamic empire had tried for centuries to conquer Christian Europe and the power brokers deciding the fate of those defeated people were naturally determined that these countries should never be able to organize and threaten Western interests again. With centuries of mercantilist experience, Britain and France created small, unstable states whose rulers needed their support to stay in power. The development and trade of these states were controlled and they were meant never again to be a threat to the West. These external powers then made contracts with their puppets to buy Arab resources cheaply, making the feudal elite enormously wealthy while leaving most citizens in poverty.1514
Once small weak countries are established, it is very difficult to persuade their rulers to give up power and form those many dependent states into one economically viable nation. Conversely, it is easy for outside power brokers to support an exploitative faction to maintain or regain power. None of this can ever be openly admitted to or the neo-mercantilist world would fall apart. The fiction of sovereign governments, equal rights, fair trade, etc., must continue. To be candid is to invite immediate widespread rebellion and loss of control.
During World War I, President Woodrow Wilson learned about the secret agreements to carve up the Middle East and was determined to thwart them; thus his proposal for the League of Nations under which colonialism would eventually be dismantled. He personally assumed the role of U.S. negotiator for that purpose. Being head of state gave President Wilson the right to chair the peace conference and set the agenda. This caused great anxiety among the colonial powers of Europe. But Lloyd George, the British negotiator and designer of the Middle East partition that President Wilson found so offensive, was able to thwart Wilson's every move to grant those territories independence. With a shift in elections at home, President Wilson could not even obtain the consent of the United States to join and lead the League of Nations and his great hopes for world peace were stillborn.1615 The suggestions for full rights for all the world's people described in this part are little more than an outline of President Wilson's dream of world peace.
When World War II consumed the wealth of the colonial governments of Europe, the disenfranchised world started to break free from those shackles. Some of the installed puppets became increasingly independent and others were overthrown. The last direct control in the Middle East was abandoned in the early 1970s when Britain "grant[ed] independence to Oman and the small sheikdoms that would become Bahrain, Qatar, and the United Arab Emirates."1716 But there was still indirect control; these small states did not have economic independence. That can only come with a viable nation that has the power to protect equality of trades with other nations.
The old Soviet empire had a long border with the Middle East. The desperation of the West to maintain control stems from the potential for those two regions to join. If that had happened, the Middle East would have had the weapons to protect their resources. The resources of the Soviet Union and the Middle East together would have been comparable to those of the West, and, by virtue of most of the world's reserves of oil being within the borders of those two empires, and thus the potential for high oil prices, a good part of the West's wealth could have been claimed by the East. Hence the West's large military expenditures to maintain control in that volatile region.
- Fromkin, A Peace to End All Peace, pp. 26, 401. Modern Turkey was the only piece of the old Ottoman Empire to nominally keep its freedom. In 1919, "two Greek divisions had landed at Smyrna on the Aegean coast of Turkey, and some Italian forces at Adalia, farther south, in an initial step toward the execution of the Allied plan for dismembering the Ottoman Empire." Mustapha Kemal renewed the battle and, in a bloody two-year war, drove the occupiers out of Turkey (Edmond Taylor, The Fall of the Dynasties [New York: Dorset Press, 1989], pp. 387-91). Except for the volatile loyalty of religion, that impoverished country, nominally allied with the West today, is all that remains of that once mighty Eastern empire. Back to text
- Italy had backed out and the new Soviet Union rejected all such violations of sovereignty - including control of the Dardenelles and Bosporus Straits, which would have given them the warm water ports we were later told they would go to war for. Back to text
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