Abstract
Laleh Khalili, Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula (London: Verso), 2021, 357 pp., $24.95 (Pb).
I
In 1857, Karl Marx wrote,
While capital must strive on the one hand to tear down every local barrier to traffic, i.e., to exchange, and to conquer the whole world as its market, it strives, on the other hand, to annihilate space by means of time, i.e., to reduce to a minimum the time required for the movement (of product) from one place to another.
1
It is only under industrial capitalism that freight and transport become the necessary conditions for its survival. In the pre-capitalist era, overseas trade generated immense profits that were secured by reducing the turnover time between distant marketplaces. 2 Trade consisted of luxuries and necessities that could not be produced in one’s own country. For instance, the early colonial expeditions in Asia aimed to procure pepper to make preserved meat palatable. During 1500–50, between 80% and 90% of the total trade volume carried by the Portuguese from Lisbon was made up of pepper, while the remainder comprised spices like ginger, cloves, and nutmegs. 3 It was in the course of the sixteenth century that the integration of circulation and production acquired a generalised capitalist character in the competitive accumulation of value, chiefly in North-West Europe. Commercial capitalist organisations, such as the English East India Company and the Dutch VOC, came inevitably to resort to violence, monopoly trade and, finally, colonial conquest, in effect creating new markets for capitalist reproduction. Under contemporary conditions, airfreight has tremendously increased import dependence on perishable commodities from tropical (ex-colonies) to temperate zones (ex-colonial empires and settler colonial states). 4
Khalili shows how between 1820 and 1913, before airfreighting, shipping freight rates plummeted by a factor of four and the volume of merchant shipping quintupled. The biggest beneficiaries of this were Britain and other Western European countries. 5 They imported foodstuffs and raw materials in very large volumes from their tropical colonies. The ships that carried such tropical exports backhauled manufactured goods, encouraging the expansion of markets for European goods. 6 The best example of this was the post-1813 invasion of Lancashire-made goods into India. During 1809–901, the industrial sector in the rich Gangetic plains fell from 18.6% in terms of the total product to 8.5%. 7 The disproportion between the employment creation in Britain and the destruction of employment in India is shown by the fact that in Bengal alone, as early as 1828, at least a million persons employed in cotton trades were thrown out of work, while the total number of cotton workers of every kind in Britain in 1851 stood at 527,000. 8 In the Madras Presidency, the number of handlooms fell from 400,000 in 1800 to 225,000 by 1857. 9 The charm of profit for imperial gain was such that in 1896, a 5% tariff was levied on all Indian mill-produced cloth to remove any local competition. 10
The need for capital’s spatial expansion is predicated upon three things: (a) realisation of the exchange values of products in markets outside one’s own state; (b) the capture of sources cheap labour and raw materials for local processing, which Wallerstein calls ‘the intrusion of force into the determination of price’ 11 and (c) reducing the time in the circulation of commodities. The first two predicates are axiomatic. The third implies the fact that since ‘capitalism is value in motion’, 12 the longer time spent in motion or circulation, the higher the chances of the commodity’s devaluation leading to a lower generation of surplus value. 13 In shipping, the steamships provided the first solution to capitalism’s spatial problem. It continues to be critical if we consider the fact that maritime trade now accounts for over 80% of the world’s volume of merchandise trade. 14
Laleh Khalili’s book aims at laying bare modern capitalism’s spatial expansion on the back of ships. She sees the emergence of steamships in the nineteenth century as the most important development in the process. Steamships were no longer bound by the fluctuations of seasons and winds. Steamships naturally became ‘an irresistible weapon in the strategic and commercial contestation between European empires’. 15 Between 1850 and 1869 alone, the net tonnage of British goods transported by steamships increased from 168,474 to 948,367. 16
After the steamship, the second biggest development in the history of shipping was the opening of the Suez Canal. Almost 100,000 Egyptian labourers died digging the canal with their bare hands.
17
The British used the loans given to Egypt to leverage its control of the canal. It allowed the British a much shorter access to India. The canal later made possible the use of petroleum tankers, turning oil into the most traded commodity on the globe.
18
After coal, oil became the chief chemical feedstock of capitalism in Europe and the United States. The supply of oil was crucial to the petrochemical industry in Europe, especially Germany, and the United States, to gain unprecedented momentum. By 1942, the United States was able to produce 2 million tonnes of synthetic rubber, and after the Second World War, it emerged as the world’s largest exporter of rubber.
19
Adam Hanieh writes:
This shift was deeply synergistic with oil’s rise as the world’s primary fuel and with the emergence of the US as the hegemon of the new oil-centred world order.
20
In the aftermath of the 1967 and 1973 wars, the Suez Canal was cleaned of debris, dredged and reopened in 1975. The increase in traffic and consequent surge in construction in the oil-producing nations of West Asia ‘saw a deluge of building goods and consumer products imported into their ports via the Canal’. 21 By the mid-1970s, West Asia’s oil production became equivalent to the combined totals of Europe and North America. 22 For this reason, the underlying basis of US power increasingly came to rest upon the domination of West Asia and the incorporation of the West Asian states into a US-led global order. 23 The shift away from British towards US power was reflected in the breakdown of ownership of these phenomenal supplies—between 1940 and 1967, British ownership of West Asian oil reserves dropped from 72% to 30% while American control grew from 10% to 60%. 24 It is only recently that the United States has started importing more oil from Canada. The latter accounts for 53% of the total oil imports in the United States, whereas the OPEC and Persian Gulf countries account for 15% and 12%, respectively. The diversification has barely changed the orientation of the West Asian states. Since production has gone up by 5 million barrels per day, West Asian states, especially Saudi Arabia, have intensified efforts to ‘hook poor countries to oil’.
A recent report published in the British newspaper The Guardian has revealed that instead of aligning with the global effort to reduce the use of fossil fuels and cap global warming, Saudi Arabia, through its Oil Demand Sustainability Plan (ODSP), is planning ‘to drive up the use of fossil fuel-powered cars, buses and planes in Africa and other poorer parts of the world’.
25
Despite Saudi Arabia’s commitment to the Paris climate change agreement to reduce global temperature by 2 °C,
the ODSP plans to accelerate the development of supersonic air travel, which it notes uses three times more jet fuel than conventional planes, and partner with a carmaker to mass produce a cheap combustion engine vehicle. Further plans promote power ships, which use polluting heavy fuel oil or gas to provide electricity to coastal communities.
26
Poor African countries, which are desperate for development, have fallen for the bait. Recently, Saudi Arabia has signed oil and gas agreements with Ethiopia, Senegal, Chad, Nigeria and Rwanda under the ironic auspices of the ‘Middle East Green Initiative’ and the ‘Empowering Africa Initiative’. 27
II
Another significant way in which capitalist imperialism has arm-twisted smaller and less powerful countries in the global South is through the mechanism(s) of international law. Khalili points out that the post-First World War era marked the high noon of Anglo-American expropriation in international jurisprudence. The expropriations of foreign property that followed the Bolshevik Revolution of 1917 and the Mexican nationalisation of foreign petroleum companies in 1938 provided the impetus to capitalist powers’ developing complex legal mechanism, and rules to protect their investors and firms. 28 As the decolonised states staked their claims on their natural assets, stabilisation clauses were brought in by the imperialist countries that ‘froze the provisions of a national system of law’. 29 Another important change was that of the ‘settling of disputes in the international forums instead of the decolonized countries’. When the secular-nationalist Iranian leader Mohammed Mossadegh nationalised the Anglo-Iranian Oil Company (AIOC) in 1951 and insisted that any further disputes would have to be settled in the Iranian courts on the ground that ‘international arbitration would be humiliating and incompatible with the concept of state sovereignty’, he was forced to face the AIOC in the Hague, 30 and later on, a CIA-organised coup in 1954.
Contrary to the lies then perpetrated by the fear of a communist takeover of Iran, Mossadegh, in 1945, rejected a Soviet proposal for an oil concession in the northern provinces even though the agreement gave Iran an equal share in profits, management and distribution. 31
In the second phase of imperialist reaction to post-colonial expropriations, Khalili points out that Euro-American investors in cahoots with jurists, industrialists and policymakers developed models for bilateral investment treaties, which were then adopted by the Organisation for Economic Co-operation and Development (OECD) countries. 32 These complex treaties writes Khalili, ‘stipulated international arbitration as a means of dispute resolution and almost always designated a choice-of-law clause with the legal system of another (usually European) state as the framework’. 33 The World Bank arbitration forum, the International Centre for Settlement and Investment Disputes, came into being in 1966. As capitalist accumulation gathered pace in the Global South, investors started suing states against their enactment of environmental and labour protection legislation. 34 However, not all states of the Global South were treated the same. For instance, the Dubai Ports World (DPW), an Emirati multinational behemoth currently handling 10% of global container traffic, acquired the Doraleh port in Djibouti through massive bribery. 35 After two negative rulings against the Djibouti state’s action, the London Court of International Arbitration levied a payment of $530 million on Djibouti. Under pressure, Djibouti was forced to seek diplomatic cover under the hood of the dragon—China. Western commentators have generally written about Chinese investments in Djibouti as a putative ‘debt trap’ measure without referring to this episode. 36
In 2006, DPW acquired six US ports. Influential senators like Hillary Clinton and Chuck Schumer raised objections to the acquisition. By December 2006, Abu Dhabi had commanded DPW to sell the shares. DPW then sold the ports to a financially sick AIG (which declared bankruptcy two years later) for a loss! And in July 2007, then President George W. Bush signed the Foreign Investment and National Security Act, which gave Congress the power to scrutinise corporate takeovers of US assets by foreign companies. 37 It goes without saying that a similar protectionist-legislative measure by a developing country would be decried as a sin against the creed of free trade. Khalili perceptively writes: ‘throughout the whole debacle, neither DPW nor the UAE officials ever considered using the investor-state dispute-settlement mechanism (because) the US was far too powerful a patron, far too significant, as the Mecca of capital, to be challenged’. 38
III
Another important facet of Khalili’s surgical analysis is to unsettle the cartographic rendition of the world as an exploitative Global North vis-à-vis an exploited Global South. The DPW’s acquisition of the British Peninsular and Oriental Steam Navigation Company (P&O) in 2006 was one such event. The unsettling should not be (mis)understood for a complete overhaul of world capitalism; instead, it should be seen as the constant, cooperative, and conscious cohabitation of capitalists from the Global South into the ‘sinews of empire’. In West Asia, the oil revolution created a new class of capitalists that was initially successful in gaining marginal profits from associating with Western firms. For instance, in the 1940s, Qatari merchant Abdullah Darwaish (whose company Darwaish Holdings is currently the 57th largest Arab company) started off as a labour contractor at oil fields and port projects. He got ₹11.5 for each labourer’s work. He paid them only ₹3.75 and pocketed the rest. 39 The thirst for more power was quenched when Gulf states became deeply intertwined with Western imperial states. Oil became a strategic commodity trumping all other sources of energy. Coal was deemed to be ‘politically unreliable’ as coal miners had been the backbone of powerful strike waves through the decades before the war. 40 Oil also became central to powering modern navies and armies. The US output of gasoline for military use at the end of the war was about 18 times greater than at the beginning, and that of aviation gasoline was about 80 times greater. 41 This deepened the integration of the Arab monarchies with the US-led world order.
Geopolitically speaking, in a speech to Congress in 1947, President Truman pledged the United States to intervene wherever necessary to shore up American interests and those of the ‘free world’. 42 Although his initial speech did not directly mention the Middle East, an earlier draft referred to the region’s ‘great natural resources of the Middle East which should not be under the exclusive control of any single nation’, and the need to ensure the perpetuation of ‘free enterprise … in the other nations of the world’, without which ‘the very existence of our own economy and our own democracy will be gravely threatened’. 43
One wonders how the world’s, so-called, ‘oldest democracy’ would be threatened or protected by some of the world’s most flashy, tyrannical and archaic monarchies. It is nothing but a (re)affirmation of the fact that it is the inherent nature of capitalism to develop in an uneven manner. And this leads to political and socio-cultural oddities on the international stage. Such as a democratic United States of America’s organic alliance with absolutist Islamic monarchies and the purchase of premier European football clubs by super-wealthy Sheikhs, while Islamophobia wreaks havoc in the lives of common Muslims on the streets of European cities.