Amid the calamities that crashed over them in 1942, it was hardly surprising that British leaders, including Churchill, should have thought mainly in terms of survival. In the course of that year, they faced the prospect of defeat in the Middle East and the loss of Egypt and the Canal, a disaster which would have meant far greater losses than those incurred at Singapore. Without their main fighting force, their hope of keeping control over India – let alone of exploiting its resources and manpower – would have been fatally weakened. The Viceroy's ability to suppress the Quit India movement would not have been helped by the sight of the Germans in Cairo. At much the same time, they could only watch helplessly as the German advance into Russia threatened the collapse of the Soviet regime. A huge reordering of Eurasia seemed on the cards with the ‘world-island’ divided between the Nazi and Japanese empires. Preserving a maritime ‘rimland’ without the Middle East, India and Southeast Asia, and keeping Britain's connection with Australia and New Zealand, would have been all but impossible. The British world-system would have been a funeral pyre.

Of course, it was true that America's entry in December 1941 had brought massive relief and the assurance, perhaps, of survival in some form. In June 1942, the battle of Midway destroyed Japan's hopes of naval control of the Western Pacific. By the end of the year, victory at Alamein and the grim Russian defence of Stalingrad seemed to promise that the relentless expansion of Germany's power had at last been contained. But neither was remotely a guarantee of ultimate victory in Europe, which depended on the Red Army and the Anglo-Americans fighting their way into the European ‘fortress’ heavily defended by the Germans and their allies. The risk of defeat, or stalemate, was high, especially in the case of an amphibious attack, the Anglo-American route. If either were to happen, then Britain's ‘survival’ would resemble that of a patient on a life-support machine: dependent indefinitely on American aid to fend off invasion; incapable of defending, supplying, financing or controlling the component parts of the pre-war imperial system. Neither Churchill nor his advisers regarded such a fate as remotely acceptable. ‘Our history and geography demand’, said Anthony Eden, ‘that we should remain a world power with world-wide interests.’1 They imagined survival in imperial terms, as the full recovery of the British world-system. Deprived of its ‘system’, Britain would be desperately vulnerable to the will of whatever great powers had outlasted the conflict. Real survival meant the freedom to restore London's global network of trade and resuming Britain's function as a banker and investor. It meant regaining the footholds (in the Mediterranean especially) that underpinned Britain's status as a great European power. It meant reaffirming Britain's leadership over the white dominions on whose loyalty, manpower and resources British influence and interests already depended in part. It meant recovering sufficient power and prestige to negotiate authoritatively over the future of India, and resist the demand (largely from American voices) that Britain's colonial territories should be administered internationally and opened to American business. It meant – above all – recreating the geopolitical conditions that secured the European mainland from a single power's domination. British leaders suspected that the failure to achieve all – or almost all – of these war aims (most of them tacit) would unravel the links and connections on which Britain's place in the world was actually (if rather mysteriously) based. In the second half of the war, much of their energy was spent in the struggle to make a military victory that would meet this demanding wish-list.

Strategy and Empire, 1943–1945

1943 was the year in which the tide of battle turned. It was also the year in which the shape of a post-war world could begin to be glimpsed, if only in outline. For the British, the signs were not reassuring. Their victories in North Africa and the successful invasion of Italy did not strengthen their hand. At the level of strategy, 1943 was to be dominated by the furious Anglo-American arguments over the priority to be given to the Mediterranean attack on Germany and the planned cross-Channel invasion already named ‘Overlord’. The British resented the scale of America's commitment to the war on Japan and suspected the motive behind American support for Kuomintang China in whose military potential they had little confidence. They were also deeply uneasy at what they regarded as the dangerous ignorance of the American planners about the risks and demands of an amphibious invasion against the full weight of German military power in the West. A premature onslaught quickly bogged down in a war of attrition (with a huge cost in life for every advance) or, worse still, a catastrophic defeat and a second Dunkirk, were bound to inflict disproportionate (and perhaps irrecoverable) damage on British resources and British prestige. On the American side, British devotion to a Mediterranean strategy, at the expense of postponing the decisive attack through Northern France to the Rhine, was cynically regarded as a means of shoring up British imperial interests and as evidence that the British lacked the stomach to fight in the theatre that mattered. Too great a delay in the onslaught on Germany would weaken the case of those in the Roosevelt administration who favoured the ‘Europe first’ strategy, against those who demanded priority for the war on Japan. In Washington's view, it would also worsen the friction with their Soviet ally and increase the danger that Stalin would make a separate peace (of which there were signs). Indeed, the British themselves were all too aware of how much their recovery depended upon Soviet success on the Eastern Front. A Soviet collapse would have released huge German reinforcements to regain the ground lost in the Mediterranean, and open the door into the Caucasus and Iran, hurling the British back into the terrible crisis of July 1942. Yet, by the same token, the Red Army's advance (it had driven the Wehrmacht out of the Caucasus and most of the Ukraine by the end of 1943) reinforced Stalin's claim to a very large voice in any eventual peace, and in the strategic decisions required to achieve it.

By late 1943, as planning began in earnest for the invasion of France the following summer, the growing reliance of the Anglo-American armies upon American manpower as well as materiel,2 and the enormous scale of the Soviet military effort, drove home the lesson that the post-war world-order would be shaped to the wishes of these emerging ‘superpowers’ more than to Britain's. At the Teheran conference in November 1943, Stalin and Roosevelt, as Churchill later lamented, negotiated over his head. At almost the same time, a speech by Jan Smuts on ‘Thoughts on the New World’ (to the Empire Parliamentary Association in London) spelt out the dangers of the new balance of power that would follow German defeat. ‘We have moved into a strange new world…such as has not been seen for hundreds of years, perhaps not for a thousand years. Europe is completely changing…the map is being rolled up and a new map is unrolling before us.’ Three of the continent's five great powers would have vanished. ‘Germany will disappear…France has gone…Italy may never be a great power again.’ Instead, Russia would be ‘the new Colossus of Europe’, all the stronger once the threat from Japan in the rear had been vanquished. Britain would have great prestige, but ‘she will be a poor country…there is nothing left in the till’. The best hope for peace in the world, Smuts insisted, lay in a new world organisation, but one in which the ‘trinity’ of great powers exercised real leadership. But for the British to play their proper part in this required them not only to reorganise their overseas system, but also to strengthen their hand in Europe. That meant closer relations with the small democracies of Western Europe, who knew that ‘their future is with Great Britain and the next world-wide British system’. Closer union with Britain would create a ‘great European state…an equal partner with the other Colossi in the leadership of nations’.3

Smuts called for ‘fundamental thinking’ and admitted that his ideas were ‘explosive stuff’. But his speech was a remarkable summary of the challenges facing the Churchill government in the last two years of the war. Indeed, his speculations about a British ‘closer union’ with Europe have a more than passing resemblance to the ‘European union’ for which Churchill himself was to call. Amid the press of day-to-day business before and after the landings in Normandy in June 1944, entailing the conduct of campaigns in France, Italy, Greece and Southeast Asia, and in the air over Germany, the looming shape of a Soviet-dominated Europe, from which the American armies would have quickly withdrawn at the end of the war, exerted more and more influence over British military planning. Its conclusions were deeply unwelcome. The defeat of Germany would result in a much heavier strategic burden on Britain than she had had to carry before the descent towards war after 1937. In June 1945, the Post Hostilities Planning Staff told the Chiefs of Staff Committee that even a united British Empire would be no match for Soviet aggression, and would need the help of the United States. To keep the Red Army at bay, Britain would have to be ready to give early help to her European allies, and hold a deep air defence belt in Northern Europe. To keep India safe and guard communications through the Indian Ocean would require new naval and air bases and a main base in Ceylon (Sri Lanka). To deter a Soviet advance in the Middle East, Britain's defence system there would have to be pushed further north, but with no guarantee that either the oilfields or the Suez Canal could be saved in a war. Even in peacetime, maintaining internal security in the Middle East ‘will involve a formidable military commitment’.4 It is not hard to see why close cooperation between the Great Power ‘trinity’, in the new ‘world organisation’, appeared so urgently necessary to the makers of policy in London. It was the best guarantee that the British could limit the liabilities that otherwise threatened to over-tax their strength.

For, as Smuts had said candidly, there was nothing left in the till. Strictly speaking, of course, this was an exaggeration. The British had sold off their assets in dollars and acquired a great burden of overseas debt. They had retained investments in the sterling area countries, but had also assumed huge sterling obligations by their purchases from them. Egypt and certain Middle East states, the colonial territories that supplied British needs, and above all India with its army of two million men and its industrial base, built up credits in London, the so-called ‘sterling balances’. Britain's war effort was sustained in large measure by American aid, especially ‘lend-lease’. When peace came, Britain's post-war economy would carry a mass of overseas debt considerably greater than in 1919 even though the vast bulk of lend-lease (perhaps $20 billions’ worth) would be forgiven. This was one side of the ledger. But the sources of overseas income had also been damaged. This was partly a matter of the assets sold off in the war to the tune of £1.5 billion, more than one-third of the total. It was also a consequence of huge physical losses, including a large share of Britain's mercantile fleet, the largest in the world before 1939, and a valuable earner of invisible income. As part of the terms of lend-lease, the British were required to cut down their exports and withdraw from many overseas markets. By the middle of the war, their exports had fallen to well under one-third of their pre-war level.5 All the main sources of overseas earnings – from exports, investments, shipping and services – had been drastically shrunk. The destruction of industrial plant at home, the conversion of much of the rest to the production of war goods, and the huge diversion of manpower into military service meant that rebuilding the civilian economy and Britain's export capacity would need a major investment as well as a period of grace. Yet the conditions laid down in return for America's wartime aid demanded the rapid return to peacetime ‘normality’ making sterling convertible (so that sterling countries could buy dollar goods freely) and ending imperial preference (to remove the tariffs imposed on dollar goods in British Empire countries since the early 1930s). On this scenario, before the British could catch their breath, or begin to scale down the vast military load of the war and its aftermath, their foreign markets would vanish and they would be bankrupt.

To avert this disaster, the British set out in the autumn of 1944 to persuade their American allies to help them revive much of their pre-war role in the world economy as soon as Germany was defeated. ‘Stage II’ – as the period between the defeat of Germany and the surrender of Japan was termed – was expected to last for a year or longer. During Stage II, the British were anxious to begin the process of civilianising their economy. More manpower would be moved into civilian production and much more effort put into the manufacture of exports. Britain would begin to start paying its way. With a nod from Roosevelt, agreements were framed to prolong wartime support and permit its application to the task of post-war recovery.6 Had Stage II taken the time that the planners expected, the economic transition to peace might have been much less painful. In fact, it barely lasted three months. As soon as Japan was defeated, Roosevelt's successor, Harry S. Truman, abruptly halted lend-lease. To bail out their economy and keep it afloat, the British were forced to apply for an American loan, but without the leverage that their war effort had given them. In the graphic language of John Maynard Keynes, who had master-minded the management of Britain's external finances, the British were faced at the end of the war with a ‘financial Dunkirk’.7 Without a drastic reduction of their foreign commitments, and perhaps even with one, they would have to accept years of even greater austerity than they had already endured. The financial and commercial power on which they had always relied as the ‘fourth arm’ in warfare would have vanished completely.

The full extent of their economic fragility was thus partially hidden from British leaders until the very end of the conflict. But they were already aware of the enormous importance of close cooperation with the white dominions if they were to make good their claim to be one of the ‘Big Three’. In the traumatic twelve months after June 1940, before Hitler's onslaught on Russia gave Britain a reluctant, suspicious and (as it seemed for some time) ill-fated ally, dominion support had been important materially and perhaps vital psychologically. The dominions’ contribution to Britain's fighting strength, unlike that of India, cost London nothing. Canadian, South African, Australian and New Zealand troops fought in the Mediterranean and Northern European theatres, as well as closer to home (in the Australian case). Canadian enlistment exceeded the levels of 1914–18.8 Dominion supplies could be purchased on tick. Canada's dollars and its industrial base (much larger than that of the other dominions) were mobilised for the war effort. The Royal Canadian Navy gradually took over the anti-submarine war in the Northwest Atlantic.9 South Africa's value as the great redoubt guarding the only safe route to Egypt and India was greater than ever by 1941–2. The main base from which the British intended to launch their part in the defeat of Japan after 1944 was expected to be in Australia and to use Australian resources.

Perhaps as a consequence, British leaders began to talk enthusiastically about the need for imperial unity and a common foreign policy to which Britain, the dominions and the rest of the Empire, including India, would be tied. They may have been encouraged by the speech made by John Curtin, the Australian Prime Minister in August 1943. Curtin had enraged Churchill by his notorious statement (at the end of December 1941) that Australia ‘looks to America, free of any pangs as to our links or kinship with the United Kingdom’.10 Now, like the prodigal son, he had returned to the fold. His Adelaide speech (amplified some three weeks later) roundly declared that ‘some imperial authority had to be evolved’, and called for an ‘Empire Council’ and a permanent secretariat to give it effect.11 His ideas were welcomed in The Times. The Empire, it said, could only keep peace in the future as one of the four great powers of the United Nations. But the dominions ‘would fail in these duties if they accepted individual membership of the United Nations as a substitute for the Imperial bond’.12 In July 1943, Sir Edward Grigg, a leading Round Tabler and soon to be Resident Minister in the Middle East, had published a manifesto calling for a ‘Commonwealth, coherent, united and strong’, able to stand beside the United States, Russia and China. Its disintegration, he claimed, ‘would expose many parts of Asia, the Pacific, the Atlantic and Africa to open international rivalry’.13 The book was reissued in December to catch the following wind that now seemed to be blowing. Then, in January 1944, Lord Halifax, the British Ambassador in Washington, and former Foreign Secretary, delivered a widely reported speech in Toronto (where the flame of Empire loyalty usually burned brightest). ‘Not Great Britain only’, he declared, ‘but the British Commonwealth and Empire must be the fourth power in that group on which…the peace of the world will henceforth depend.’14 When the dominion prime ministers met in London in May 1944, it was left to Mackenzie King, the Canadian premier, to challenge the formula that the British ministers present proposed to insert in the final communiqué. It would refer, said Eden, to the Empire's foreign policy. ‘All agreed’, said Attlee. There would be an ‘Imperial Joint Board for Defence’, said Cranborne, the Secretary of State for the Dominions. But King refused to agree. ‘The more I think of the high pressure methods that have been used the more indignant I feel’, he wrote in his diary that evening.15

The reality was that there was little agreement among the dominions or between them and the London government on what Commonwealth unity should actually mean. Curtin had emphasised Australia's British identity. His election campaign in 1943 had wrapped itself in the Union Jack: Australia should be a ‘second Britannia in the Antipodes’.16 When he came to London in May 1944, he told his Guildhall audience: ‘Australia is a British people, Australia is a British land.’17 But Curtin (and Fraser, the New Zealand Prime Minister, who supported Curtin’s call for an Empire Council) did not intend the subordination of the Pacific dominions to the wishes of London. Far from it. In the long tradition of Australian statecraft, his aim was to commit more imperial resources to the South Pacific and to assert Australia's claim to manage all ‘British’ interests in the region. ‘We are in the south what the motherland is in the north’, he told a Sydney audience in May 1942.18 His ‘Empire Council’ was meant to rotate between the dominion capitals and London because the Empire could not be run by a government sitting in Britain. In case there should be any doubt in the matter, the Australia–New Zealand Agreement in January 1944 had bluntly insisted that any settlement in their region would require the active assent of Canberra and Wellington – an assertion that was even more badly received in Roosevelt's Washington than in Churchill's London. Curtin and Fraser's ‘imperial regionalism’ was implicitly shared by Smuts in South Africa. The northward extension of South African influence and the gradual inclusion of Central and East Africa in the South African sphere were long-cherished ambitions. They duly emerged in Smuts’ ‘explosive’ speech in November 1943. The British system needed ‘tightening up’ but also decentralising if it were to match the ‘Colossi’. That meant consolidating the colonial territories into larger units and tying them more closely to the neighbouring dominion – a delicate euphemism.19 Smuts may also have hoped that this sub-imperial vision would strengthen his United party's appeal against its National party opponents. The ‘old narrow little-Afrikanerdom had been defeated for good’, he told Leo Amery in October 1943.20 But Smuts (with an Afrikaner majority on the electoral roll) knew better than to call for new imperial machinery. The government-inspired Cape Times had rubbished Curtin's ideas.21 Talk of imperial unity, Smuts confided to King, was just ‘damn nonsense’;22 it ‘was a thing of the past’.23 And, for Smuts perhaps, as for Curtin and Fraser, the prospect of Britain's huge wartime commitments in the Mediterranean and Europe continuing on into the peace made it all the more urgent to wrest the direction of British power in their regions into dominion hands.

All this made less sense in the senior dominion. Mackenzie King was keenly aware of the strength of pan-British patriotism in Canada. One of his closest allies, the Montrealer Brooke Claxton, echoed Curtin's ‘Britannic’ sentiments in a speech made at much the same time. ‘Canada’, he said, ‘is a British Nation in North America’.24 King himself was irritated by the ‘isolationist and autonomist position in intra-Imperial relations’ adopted by his own officials in the External Affairs department. ‘Of all countries’, he noted, ‘we are really the most vulnerable because of our extensive territory, resources and the like.’ Canada ‘will greatly need strength alike of British Commonwealth as a whole and of US in protecting her position’ (he was thinking of the threat that the Soviet Union would pose).25 But, since the conscription election in 1918, King had been obsessed by the danger of an irreconcilable rift between Quebec and ‘English Canada’ that would tear his party, as well as the country, in half. English Canada's loyalty to Britain, and to Canada's identity as a ‘British nation’, were facts of political life. They had forced King into the 1942 referendum that authorised the government to apply conscription ‘if necessary’. Quebec's low rate of enlistment was observed with resentment. ‘Quebec is hated in the rest of Canada’, noted ‘Chubby’ Power, one of King's ministers, an English-speaking, Catholic Quebecker and a much decorated veteran of the First World War.26 Power opposed conscription, arguing that it would turn Quebec into ‘Ireland all over again’,27 but several of King's cabinet colleagues were determined to enforce conscription for overseas service once the losses from ‘Overlord’ began to be felt. To King these cross-pressures made it all the more critical that Ottawa should be visibly free from any last vestige of imperial control, most of all when it came to external commitments. At the prime ministers’ meeting in May 1944, he threw his weight against any change in the way that dominion governments were consulted. When the premiers discussed the proposed ‘World Organisation’, King insisted that Canada would want its own representation ‘as one of the medium powers’, a position soon followed by Curtin, Fraser and Smuts.28 For all four dominions, a separate voice at the United Nations offered better protection of their ‘national’ interest than collective membership of a Commonwealth bloc in which London would enjoy an inevitable lead.

The main imperial legacy of the second half of the War was the scale of the British commitment in the Mediterranean and Middle East. This was an echo (with certain key differences) of the ‘Eastern’ war in 1914–18. Then, as later, the British responded to a double imperative. They had to guard the road to India through Iraq and Iran, and defend Egypt, the ‘Clapham Junction’ (as the cliché had it) of their imperial communications and the northern gateway to the Indian Ocean. But the Middle East was also a huge bastion that was meant to make up for Britain's weakness in Europe. In 1918, it had been the grim prospect of outright defeat on the continent that drove the British forward in Palestine and Iraq and towards the Caucasus. The fall of France in June 1940 and the German advance into Russia the following year recreated the nightmare of 1918. For the British once again, the Middle East was the theatre where their fate would be settled. If they were to lose the Middle East war, their world-system would be cut in half, and Britain's dependence on American aid would become absolute. But, if they could hold on and secure their position, the Middle East was a springboard from which they might hope to reassert their position as a Mediterranean power and as a great power in Europe. The equation was not new. Britain's claim to be a great power in Europe had rested in part on her Mediterranean presence since the seventeenth century.

Of course, the pattern of conflict after June 1940 had followed a different trajectory. In 1914–18, the British had fought the Ottoman Empire at Gallipoli, in Palestine and in modern Iraq. After June 1940, they fought the Italians and Germans in a war that was as much Mediterranean as Middle Eastern and became steadily more so with the invasion of Italy and the British intervention in Greece. The invasion of Normandy in June 1944 reduced the strategic importance of the Mediterranean theatre and also signalled the moment when the United States army became the indisputably dominant force in the Anglo-American alliance. The final struggle for Europe would be fought for the most part between German, Russian and American armies: two-thirds of the eighty-five divisions assembled for Eisenhower's advance into Germany in the spring of 1945 were American. In the Mediterranean, however, the British remained the senior partner, and a British general was the Supreme Commander. In the Italian campaign, there were as many British and Commonwealth troops as American.29 ‘Italy is a country which we can get at and in which we rather than Russia should naturally expect to exert predominant influence’, remarked a senior British official.30 The British were eager to ‘reconstruct’ Italy as a parliamentary state that would look towards Britain. They were just as determined that the liberation of Greece would produce a regime that was friendly to Britain, if not dependent upon her. Intervention in Greece, Eden told his War Cabinet colleagues in August 1944, was indispensable to Britain's strategy in the Balkans and the Eastern Mediterranean.31 Churchill's notorious ‘percentages’ deal with Stalin in Moscow in October 1944 (Greece was to be ‘90 per cent’ British) was designed to exclude Soviet influence from the Mediterranean. Whatever was to happen elsewhere in Europe, Churchill and Eden were determined to use Britain's large share in the Mediterranean victory to contain Soviet expansion and reinforce Britain's claims as one of the ‘trinity’ – what Smuts had seen as the post-war executive of the United Nations.

It was this grand ambition that made the Middle East so important. Historians have often been scornful of the British failure to rethink their Middle East interests at the end of the war. In fact, the course of the war had reinforced their belief in the region's exceptional value. Egypt was the base from which the British had fought their Mediterranean campaign. It was from Cairo, after all, that their war and diplomacy in the Eastern Mediterranean had been organised and directed. At the British Embassy there, in the elegant house of the British Resident Minister in the Garden City nearby, and at the Mena Palace Hotel beneath the Great Pyramid, diplomats, soldiers and politicians in transit had pondered British policy for the entire vast region from Greece to Iran. The Arab Middle East as a whole, but especially Egypt, had become a supply zone, partly filling the role that India had played in the First World War. By 1945, the British owed Egypt some £400 million for goods and services rendered.32 With its barracks and bases, repair shops and storage, Egypt was the arsenal of British military power as well as the way-station through which it was shuttled en route to the East or back ‘home’ to Europe. The practical closure of the Mediterranean to shipping for much of the war had diminished the value of the Suez Canal, but its importance in peacetime was expected to rise sharply. Finally, the strategic importance of the Middle East region had been emphasised still further by technological change. Without the Abadan oil refinery at the head of the Gulf, the British war effort across a huge swathe of Eurasia would have ground to a halt: fear of its loss was so great that a separate command had been created to guard it. Middle East oil had supplied nearly one-quarter of Western Europe's needs in 1938, a figure expected to rise sharply at the end of the war.33 No one could doubt the enormous advantage conferred by control of it. The same could be said of Egypt's importance as a hub of air transport. The gruelling air journeys undertaken in wartime by British civilians and soldiers to Moscow, Yalta, Teheran or New Delhi, or to confer with the men on the spot, invariably took them through Cairo. The need for air bases to link the scattered components of the British world-system, and for an overland ‘trunk route’ between Europe and India, had long been recognised. The colossal expansion of air power and air travel during the Second World War (and the general assumption that a new air age was dawning) only hammered it home.

The instinct to build on their established position was sharpened by opportunity and also by fear. There were numerous signs before the end of the war that Stalin would demand more control over the Straits, an old Russian ambition. It also seemed likely that Russia's military presence in Northern Iran (part of the Anglo-Russian occupation imposed in 1941) would be used as a lever to enlarge Russian influence. At the same time, the British were determined that Libya should not be restored to Italy, and that Russian claims to a share in its post-war control should be firmly resisted. Instead, it should form part of Britain's great arc of influence extending all round the Eastern Mediterranean, and stretching away to the Gulf and Iran. In the three-way division of global power that was widely predicted (China's great power capacity was somewhat discounted), the share of the British was bound to be large, indeed had to be large. But the readiness to contemplate a burden on this scale really depended on two unspoken assumptions. The first was that Britain would be able to bear the costs that would follow. As we have seen, an illusion persisted until the defeat of Japan in August 1945 that American aid would fund Britain's revival as a great trading economy. The second assumption proved even more fragile. It was that the British would be able to ‘manage’ the nationalisms of their Middle East client-states, and ‘rally the moderates’ by artful concessions. It was easy to think – especially while the war lasted – that uncooperative locals would be brought to their senses by the threat of coercion.34 In so divided a region with such deep social differences, it was hard to imagine a common nationalist front strong enough to evict them.

There was one other assumption that should not be forgotten. Since their first invasion of Egypt in 1801, the British had counted on India for part of the military means to exert their power in the region. They had often been tempted to attribute their presence to the need to defend India or uphold the prestige of its (British) government. ‘Why’, asked Lord Curzon in 1918 (in one of those questions that only he answered), ‘should Great Britain push herself out in these directions? Of course the answer is obvious – India.’35 It was a short step from this to insist that what was in India's interests should be paid for by India, and guarded by its army. After the First World War, there had been imperative reasons to reduce the military burden on India, then in the throes of political upheaval and constitutional change. But, in the Second World War, India had become once again a huge reservoir of military manpower, and an army of two million men had been raised. Indian divisions fought in the Middle East, North Africa and Italy as well as in the Southeast Asia campaigns and the bloody defence of Imphal. India was the main base from which the reconquest of Burma, Malaya and the Dutch East Indies was launched. Yet its political future was deeply uncertain. The Cripps Mission had failed to win Congress support for the war. The Quit India movement that Gandhi unleashed as a mass insurrection was crushed by the British, and large numbers of Congress activists gaoled. Gandhi's prison fast was a ‘flop’ without the activists’ backing.36 The British ruled by decree or with Muslim support. ‘Politically the position is very easy here at the moment’, reported the Viceroy in mid-1943 to Leo Amery, the Secretary of State.37 Only one thing was clear. The British had committed themselves irrevocably (in the Cripps Mission ‘offer’) to full Indian self-government at the end of the war. What that would mean for India's role in Britain's world-system was shrouded in mystery.

For Amery in London, this was the key issue. ‘To keep India within the Commonwealth during the next ten years is much the biggest thing before us’, he told Churchill in April 1943. ‘If we can keep her for ten years I am convinced we can keep her for good.’38Amery was anxious to reform Indian politics while the Congress was banned. He was eager to give the Viceroy's Indian ministers more political influence and to make them more credible as the voice of Indian opinion. But his real objective was a drastic revision of India's constitutional future. Parliamentary-style government was completely unsuitable for the Indian centre, he told the House of Commons in March 1943, because it meant party government. The federal government should ‘emanate’ from the states and provinces. Like the Swiss executive, it should be non-party and enjoy independence from the federal assembly. Amery's scheme was transparently obvious: a non-party executive chosen by the units of a ‘looser’ federation much at odds with each other would have little will to sever the British connection completely. It would be much more likely to acknowledge India's need for British assistance, and much more willing to sign an Anglo-Indian treaty of the kind London wanted. The new Viceroy Lord Wavell (1943–47) shared Amery's zeal for a political move and his geostrategic perspective. ‘The future of the Commonwealth, from the defence point of view, and also perhaps economically, will depend to a great extent on what happens in India in the next ten years or so’, he pronounced in July 1944.39 But he and his advisers thought Amery's scheme futile. The answer instead lay in drawing the Congress and the Muslim League into a coalition government for the phase of transition. But, as Wavell complained, the will was lacking in London to push matters forward: ‘Winston had no intention of helping it on.’40 Churchill's own view was characteristically blunt: ‘Victory is the best foundation for great constitutional departures’.41 So India's politics waited on victory: how triumphant a victory remained to be seen.

Imperial Labour

Of course, it was not to be Churchill or his Conservative colleagues who wrestled with the fate of the British world-system, or the independence of India, when the war finally ended in August 1945. In July 1945, a vast electoral wave swept the Labour party to power, giving it (for the first time) an absolute majority in the House of Commons. This political earthquake was widely understood to mean that British opinion was impatient for social reform. As a ‘patriotic’ party whose leaders had been central to the war effort at home, Labour was trusted to implement the wartime promises on social insurance, education and employment, as well as reorganising under public control the services and industries whose performance was vital to economic and social recovery: the mines, the railways and the provision of healthcare. The scale of the task and the need to preserve the apparatus of central control were visible in the damage suffered by almost every major city. The popular hope that the sacrifices of the war would bring a fairer, more equal and more secure society was combined with the fear that without a strong centralised system reconstruction would be slow, inefficient and unfair, destroying in the process (as after 1918) the promise of change.

Yet it was certainly not true that the new Labour leadership was preoccupied with domestic over external priorities, or indifferent to the requirements of British world power. The Prime Minister, Clement Attlee, had served on the Simon Commission in 1927–30, and was keenly concerned with the Anglo-Indian relationship. He had wanted the Cripps Mission in 1942 to save India as ‘[Lord] Durham had saved Canada.’42 He was keen to enlist the dominions’ post-war help especially in defence. Ernest Bevin, the new Foreign Secretary, had been a leading pre-war trade unionist and a stout defender of the need to protect British overseas markets. He quickly embodied an all-but-Churchillian view of Britain's place in the world and of the need to defend its claims and prerogatives. This did not mean a passive endorsement of the colonial status quo. Labour's leaders had sympathised with the vigorous attack on British colonial practice that had burst out in the open after the fall of Singapore in February 1942. The fierce critique launched by Margery Perham, the African expert and protégé of Lord Lugard, and published in The Times, lambasted the failure to meet the aspirations of colonial peoples, to develop their economies or to democratise their politics. Economically and socially, colonial rule had created ‘tropical East Ends’ and promoted the colour bar, ‘an attitude of mind that, at its worst, regards other races of men almost as if they were other species’.43 Perham's strictures chimed with the dislike of Labour's colonial experts – whose ties were closest with missionary and humanitarian interests – for white settler communities and the reactionary ethos (as they saw it) of indirect rule, which aligned the colonial power with chiefly authority against educated commoners.44 A ‘progressive’ policy of social advancement and political partnership was as much a necessity in the colonies as at home. But this reformism coexisted with a reaffirmation of faith in the ‘British system’. There was ‘no fixed line between Dominions and dependencies’, declared Herbert Morrison in his Newcastle speech of January 1943. India ‘can have full self-government for the taking’ at the end of the war. ‘We are no greedy exploiters.’ The real burden of his speech was to warn against the ‘myth of a self-sufficient empire’, and to insist on the need for international cooperation between all the great powers. The strongest claim of the ‘British system’ on other nations, he concluded, was that its long-term interests were the same as those of international society as a whole.45 No Victorian could have phrased it better.

Indeed, at the end of the war, there was no obvious conflict between the needs of domestic reform and the task of upholding the substance of British world power. It was axiomatic that Britain's global trading economy should be restored as quickly as possible to its pre-war position (at least), and that domestic prosperity depended on overseas markets more acutely in Britain than anywhere else in the industrial world. The immediate need for food and raw materials could only be met by keeping in place the wartime version of the imperial economy with its bulk purchases from the dominions and official control over the price and supply of colonial produce. The demands of war and the stringent restrictions imposed under lend-lease had largely confined British trade to Empire and sterling area countries after 1940. The most practical reasons dictated the need to preserve these imperial connections as the platform on which economic recovery could be built. From that point of view, reforming the Empire (along the lines that Perham had urged) – to make it more dynamic, efficient and productive – seemed a perfect combination of profit and virtue. In an era of shortage, economic growth in the colonies would supply Britain's needs and fund their own modernisation. Secondly, it was quite easy to believe in the first months of peace that the costs of remaining a great power in the world would not be prohibitive. If the United Nations were to function (as British leaders intended) primarily as the instrument of Great Power cooperation between the United States, the Soviet Union and themselves, with tacit spheres of influence and sanctions against territorial aggression, the crippling burden of imperial defence would become far more bearable. It was precisely in this spirit that Attlee was to urge (in September 1945) Britain's military withdrawal from the Middle East.

In fact, the uncertainties soon began to pile up, and with them the costs. The British had harboured deep suspicion of Stalin well before the war ended. It quickly became clear that friendly recognition of Britain's spheres of influence was not on Moscow's agenda. Stalin demanded a role at the Straits (as the counterpart to British control of the Suez Canal); his army remained in northern Iran; and Moscow laid claim to a share in the trusteeship of the Italian colonies in Libya (the prize the British had reserved for themselves). The Soviet Union had all the old Tsarist ambitions in the Middle East, warned the British ambassador.46 There was hardly any doubt, recorded another senior diplomat in February 1946, ‘that Russia is intent on the destruction of the British Empire’.47 Britain was being dragged willy-nilly into confrontation with a power of awesome military strength and possibly limitless ambitions. At the same time, it was also deeply uncertain (or so it seemed in London) what part the United States might play in resisting Soviet aggression. The rapid demobilisation of American forces, America's interest in exploiting erstwhile British markets and the security conferred by its nuclear weapons, might make its leaders indifferent at best to the survival of the British world-system, content perhaps to carry off the spoils if it collapsed under the strain of a confrontation with Russia. Thirdly, the failure to agree upon a peace treaty with Germany, and the strength of communist movements in both France and Italy (in part a reflection of economic distress), wrecked any hope that Europe's old powers would balance Soviet strength. On the contrary, it seemed that their divisions and weakness had opened the way for the Soviet penetration of the south and west of Europe as much as its east and centre.

These were worrying signs that the favourable geopolitical position that the British might have hoped would be theirs at the end of the war would turn into the nightmare envisaged by Smuts in 1943. A British world-system, poised between two continental ‘superpowers’ (the term was coined in 1943), might have hoped to exploit their rivalry and exact favourable terms, economically at least, from the United States. Instead, it was the British themselves who felt the pressure of Soviet expansion. Worse still, they did so at a time when they lacked the means to pay for the essential dollar goods needed to sustain their domestic economy and their overseas burdens, not to mention the programme of industrial and commercial recovery. With the lapse of lend-lease, this became in fact the most urgent priority. Nor could British leaders assume that the ‘internal’ politics of their imperial system would remain passive while they grappled with its economic and geostrategic crises. In India, the Middle East, and in the reoccupied colonies in Southeast Asia, British authority was soon under strain. Among the white dominions, as the wartime prime ministers meeting had signalled, their ties with Britain were bound to be mediated by the logic of self-interest in a world of such geopolitical uncertainty and when Britain was no longer their ultimate geostrategic protector. The solid British Commonwealth ‘bloc’ assumed in some visions of a three-power world was no more than a pipe-dream.

Within a matter of weeks, then, the new Labour government was confronted by a mass of problems so grave as to amount to a general crisis – economic, geostrategic, political – of the British world-system. The struggle for survival in war was succeeded by a struggle for survival in peace. In the autumn of 1945, the immediate pressure was eased by a dollar loan from the United States of $3.75 billion (some £750 million). But the terms were arduous, and much more severe than Keynes who had hoped for a gift of $5 billion (£1.2 billion) had expected.48 The British were required to dismantle the barriers that favoured the trade between sterling area countries and to allow holders of sterling to exchange it for dollars by mid-1947. Indeed, the United States government saw the main purpose of the loan as being to allow those countries who had built up large sterling credits in London to exchange them for dollars if they wished to do so. The sterling economy was to be blasted open to American exports. When the terms became public, there was widespread unease (there had been much private unease in the Bank of England and Treasury). The loan agreement was an ‘economic Munich’, declared Robert Boothby, a Conservative MP. However unpalatable, it could not be rejected. It was not just a matter of averting an imminent crisis: rejecting the loan, said Dalton, the Chancellor, ‘would mean less food of every kind except bread and potatoes’.49 British hopes of reviving their pre-war commercial and financial position also depended upon the breathing space that the loan would give them. ‘The way to remain an international banker’, Keynes told the House of Lords, ‘is to allow cheques to be drawn upon you; the way to destroy the sterling area is to prey on it and try to live on it. The way to retain it is to restore its privileges and opportunities as soon as possible to what they were before the war.’50 Indeed, the early signs were hopeful: as millions of servicemen and women were demobilised, the task of reconverting the war economy got under way. 1946 was an annus mirabilis. Exports went up, the stock exchange rose. At the Lord Mayor's banquet in October, the traditional venue for an authoritative statement of the economic outlook, the Chancellor of the Exchequer, Hugh Dalton, gave a sunny account of Britain's progress and prospects. The fly in the ointment was the burden of overseas costs, the very delicate balance between dollar income and spending, and the huge size of the ‘sterling balances’, whose owners were impatient to release them for current consumption: including India (with some £1.3 billion) and Egypt (with £400 million).

Meanwhile, the Labour cabinet struggled on with the task of easing the pressures on Britain's world-system. There was little scope for reducing their commitments in Europe while Germany's fate remained unresolved. No agreement was reached between the Soviet Union and the Western Powers. That meant the continuing occupation of Germany and meeting the desperate shortage of food in the British zone: a ‘colony’ that was costing £100 million a year.51 For similar reasons – the need to contain Soviet influence until a peace treaty was signed – aid had to be sent to Greece and Turkey who barred the way against a Soviet advance to the Mediterranean. In India, they hoped to forestall serious unrest by taking the political initiative. In January 1946, Attlee pressed the case for sending a Cabinet Mission (whose real leader was Cripps) to settle the terms on which independence would be given. It was already apparent that a constitution acceptable to both the Congress and the Muslim League would be very hard to contrive, and that the leaders of the Congress were deeply suspicious that the British would favour Muslim demands for a balkanised India. In London, by contrast, there was still a white hope that, by promising swift independence, a new Indian ‘dominion’ would emerge, willing if not eager to uphold its old British connection. Once hot heads had cooled, so the argument ran, the Indian leaders would see that their economic self-interest, strategic exposure (to Soviet aggression) and political ethos made alignment with Britain the inevitable choice. With British encouragement, India might even assume the role of a regional power, sharing with Britain diplomatic supervision of Southeast Asia. Hence it was the primary aim of the Cabinet Mission to find a constitutional formula that preserved Indian unity by hook or by crook. But their Heath Robinson scheme for a three-tier federation (combining Hindu and Muslim ‘sub-federations’) was also inspired by the fear that the division of India would suck Britain into a vortex of chaos. By mid-1946, it was accepted in London that there were no longer the means to crush an Indian mass movement: the arm of coercion on which British rule had relied as its last resort had withered at last.52

The British were also at pains to pre-empt the local resentment that was expected to boil up in Egypt, where their wartime occupation had grossly exceeded the limits permitted by the 1936 treaty. Here, too, they were hoping that a ‘generous’ offer would pave the way for an Anglo-Egyptian agreement that would tie Cairo in to a system of regional defence under British command. The key issue here was the right to reactivate the bases in the Suez Canal Zone if an external threat was detected. In May 1946, after much internal debate between the soldiers and diplomats, the British declared themselves willing to evacuate Egypt completely over the course of five years. There were further disputes over how much consultation should take place between London and Cairo before a ‘threat’ was acknowledged and the bases reopened, and over what undertakings should be formalised in a treaty. Then, towards the end of the year, Egypt's old claim to its Sudanese ‘colony’ (in theory an Anglo-Egyptian condominium, in practice ruled solely by Britain) became a fresh bone of contention. The minister, Sidky, with whom the British were dealing, was pushed out of office and the negotiations collapsed.

By the end of the year, the British had little to show for their efforts to adjust their world-system and reduce the costs it imposed – financial, strategic and political. It may have been this that fuelled the persistent critique directed by Attlee towards the retention of Britain's large Middle Eastern imperium. Attlee had expressed misgivings about the original plan to seek British trusteeship over Cyrenaica and Tripolitania, Italy's Libyan ex-colonies. He had warned (in February 1946) against the cost of defence, running at twice the level expected at the end of the war. He challenged the claim of the Foreign Office and the Chiefs of Staff that the Middle East was vital to Britain's world interests. He remained deeply committed to the idea of a ‘world organisation’, and opposed to ‘old-fashioned’ manoeuvres and policies that might prevent its fruition. Britain's entrenchment in the post-war Middle East, he repeatedly argued, would be regarded by Russia as a threatening move. It would discourage Moscow's commitment to a new international order centred upon the United Nations and might even provoke Soviet aggression in Europe. Nor had Britain the means to build up the weak Middle East states against a Soviet advance. Agreement with Russia, not confrontation, was the only safe course.

Attlee's ideas were those of an ardent internationalist who hoped that victory in the Second World War marked the end of the age of predatory imperialisms, the vale of tears through which the world had struggled since the early 1930s.53 But they were not a rejection of British world power. Attlee acknowledged that the great new fact of world politics was American power, and that the independence of India would limit Britain's ability to exert influence in Asia. But he was far from writing off Britain's claims on the loyal partnership of the dominions or its colonial rights elsewhere in the world, especially in Africa. At the dominion prime ministers meeting in April 1946, he had hoped to commit them to a unified system of Commonwealth defence but had to accept a much more decentralised formula whereby each dominion took responsibility in its region ‘to maintain conditions favourable to the British Commonwealth and to accept joint responsibility for their defence in war’.54 Britain's vulnerability to external attack made it wise, so he thought, to relocate certain vital industries to the safety of Australia. And Britain's links with the two Pacific dominions could be maintained by a line that ran across Africa, not through the Mediterranean and Middle East. Embedded in Attlee's approach was an old not a new view of empire. Like Bonar Law, or Balfour or many Gladstonians, Attlee regarded the Middle East as a dangerous outpost, made even more dangerous in the era of air power. It would be far better to make it into a neutral zone – a ‘wide glacis of desert and Arabs’ was the phrase Dalton remembered – separating the spheres of British and Russian predominance, than to run the risks and bear the costs of an imperium still more extensive than that Britain had seized after 1918.55

Attlee was Prime Minister, and his comments were trenchant. But he never came close to winning the argument, and by February 1947 had abandoned the effort. He faced the combined opposition of the Foreign Office and Chiefs of Staff: indeed, it may have been the threat of the latter to resign en masse that forced him into retreat. The central weakness of Attlee's position was its optimistic view of Russian intentions, justified by faith, it had to be said, rather than by works. His proposal that the Middle East become a ‘neutral zone’ assumed

Map 11 The Middle East in 1945

that Stalin would not revive the designs on the Straits and North Persia, that he had already revealed, once British power was withdrawn. The Chiefs of Staff were incredulous at Attlee's ‘naivety’; Bevin's answer was lapidary, almost Curzonian. He dismissed Attlee's suggestion that withdrawal from the Middle East would assuage Russian aggression: ‘It would be Munich over again, only on a world scale, with Greece, Turkey and Persia as the victims in place of Czechoslovakia…Russia would certainly fill the gap we leave empty, whatever her promises.’ It would wreck Britain's relations with the United States, on whose aid Britain depended, and whose leaders had just been persuaded that American interests, like those of Britain, required the Middle East to be held. ‘If we now withdraw at this moment, I should expect them to write us off entirely.’ Nor was the Middle East economically valueless: it was worth £100 million to Britain ‘and possibly a great difference in our future dollar earnings’. Indeed, the Middle East might take India's place as an economic partner for Britain. If, instead, Britain left, hard on the heels of its departure from India, it ‘would appear to the world as the abdication of our position as a world power’. India would move towards Russia; ‘the effect on the Dominions would be incalculable.’56 Here was the case, cast in oracular terms, that Britain's survival as a power in the world now hinged – in the geopolitical conditions that Soviet advance had created – on this dangerous salient in Middle Eurasia.

Ironically, Attlee's reluctant endorsement of the Middle East policy occurred on the eve of the annus horribilis, the year in which British world power seemed less real than the threat of financial and political bankruptcy. A terrible winter brought on a fuel crisis and damaged the export drive (to raise British earnings by 50 per cent above the pre-war level) on which hopes of recovery were pinned. The American loan was being quickly used up. In March 1947, Stafford Cripps, the avenging angel of socialism, forecast a long period of austerity. In July 1947, under the terms of the Anglo-American loan, holders of sterling could convert their pounds into dollars. The result was disastrous. Britain's dollar reserves, already depleted by the cost of American imports, sank like a stone. Faced with sterling's collapse, London abruptly suspended convertibility on 20 August. Rations of petrol and food were reduced, and potatoes joined the list of rationed supplies. The Cabinet agonised over how many men could be spared from the civilian economy, how large the army should be and how long those ‘called up’ should serve in the armed forces. At Dalton's insistence, the provision of aid to Turkey and Greece had already been scrapped: this was the burden that the United States now assumed under the ‘Truman Doctrine’ promising help to those states fearful of Soviet aggression. Against this background of deepening economic gloom, the government faced an impasse in its effort to ease India into an agreed independence. With no sign of a compromise between the Congress and the League, growing communal friction and rising anxiety that the British in India would be caught up in a storm of political violence, panic in London began to set in. The Cabinet Mission had failed. Attlee and his colleagues rejected the Viceroy, Lord Wavell's, ‘breakdown plan’ (a staged withdrawal to the Indian ports, handing power over province by province) as a recipe for turmoil, but had no plan of their own. The sacking of Wavell and the choice of Mountbatten were acts of inspired desperation. But Attlee was forced to give Mountbatten a virtual free hand to decide on the timing and settle the manner of Britain's departure. Mountbatten was lucky. His arrival in India in March 1947 coincided with the grudging recognition in the Congress that, without an early transfer of power, and agreement on partition, the spiral of communal violence would destroy their authority over the Indian masses as much as that of the British. This was the chink through which Mountbatten would drive with ruthless diplomacy to impose partitioned independence in August 1947.57

The late summer of 1947 erased any lingering hope that Britain would quickly regain the substance of its world position before the catastrophe of 1940. A further turn of the screw was the rapid deterioration of the situation in Palestine. Here the British had struggled to find a settlement acceptable to both Arabs and Jews whilst also reserving an enclave of their own – in the event of withdrawal from their Canal Zone bases. There was no question of stopping further Jewish immigration or preserving Palestine as an Arab-majority state – the ‘solution’ envisaged in 1939. That was ruled out by American disapproval, and the growing intensity of Zionist terrorism, against which the large British garrison seemed poorly equipped. Even after the bombing of the King David Hotel in July 1946 – aimed at the heart of the British mandate administration – the Cabinet rejected the repression of Jewish organisations for fear of American anger.58 Instead, the British found themselves drifting into the worst of all worlds: as the unwilling executants of a territorial partition fashioned in New York by the United Nations, but whose real sponsor was the United States. The likely costs of this role for Britain's relations with the Arab states, at precisely the moment when the terms of their post-war alliances were being redefined, were regarded in London with horror. The only solution, it came to appear, was an ignominious departure, without even the fig leaf of an ordered transition, leaving the field to the local contestants and the war that followed.59

For an imperial system that laid so much stress on the prestige of its rule, and which depended so much on its claim to embody public order and justice, the events of 1947 were especially damaging. London's authority – among its ‘subordinate’ allies (like Egypt or Jordan), its dominion ‘partners’, as well as its colonial subjects (who enjoyed very varying degrees of local self-rule) – was a function in part of local opinion. The appearance of strength, the assertion of will, and the promise of rewards to bestow, were the often invisible strings with which the British had tied their ramshackle system together. The ‘illusion of permanence’ – that, in any future world order, British power would loom large – was a vital constraint on the colonial temptation to flout London's wishes too rudely. It did not require a Cassandra to wonder in late 1947 whether the spell had been broken. It seemed after all that the disasters that the British had suffered between 1940 and 1942 could not be repaired. They might have hoped that victory would restore the European balance, with the Soviet Union as the great guarantor against a new Hitler. But, without a European peace, their domestic security looked increasingly fraught. Their commercial empire was crippled by weakness and what seemed like hopeless mismanagement. India as an asset was finally gone. Their Middle East clients were in open revolt. The dominions resisted commitment to ‘imperial defence’, doubted London's dire warnings about Soviet intentions, and declined London's anxious request to write down their sterling claims by up to 50 per cent.60 What remained of the Empire might yield windfall gains, but it was a patchwork of colonies, some undeveloped, some under-governed, and some (like Malaya) barely recovered from foreign occupation.

This was a gloomy prospectus, but, as it turned out, unrealistically gloomy. The British world-system did not implode. The politicians in London may have resented its costs but they could not imagine a post-imperial future. They were spared the need for a drastic rethink. Grim as they looked, the pressures they faced were not unremitting. The geopolitical position did not become critical. In Europe and the Middle East, the Soviet Union was cautious. The British were not driven back – in the way that Attlee had feared – to the strategic periphery. Their uncertain defences were not seriously tested. Crucially, too, their default on the loan agreement was accepted without too much rancour in Washington.61 The Truman administration acknowledged the need to keep Britain solvent, and ideally strong, as the best ally it had against Soviet expansion. The offer of help had already been mooted in the famous speech of George Marshall, the Secretary of State, on 5 June 1947 which sketched out what became the European Recovery Programme. So the British were allowed to seal off the sterling economy from American competition, to discriminate heavily against dollar goods, to keep ‘imperial preference’ and put off the day when the pound was exchanged freely for dollars – precisely those things that American leaders had been so determined to crush eighteen months earlier. Their departure from India had been swift and involuntary but not catastrophic. Both Nehru and Jinnah had been pragmatically willing to accept independence as dominions and not to demand a republic. The transfer of power was thus a constitutional pageant, performed in London through an Act of Parliament, the Indian Independence Act, as well as in India. It allowed Attlee to claim that the end of the Raj was the triumphant completion of a long-matured plan to give the Indians self-government, a pleasing if transparent fiction. It also held out some hope that the two new dominions would be Britain's partners across Southern Asia, balancing the new international weight that China (under Kuomintang rule) was expected to have. In the Middle East, for all the difficulties faced by the British in securing fresh treaties with their key Arab allies (a proposed treaty with Iraq collapsed in the face of a popular outburst, the so-called Wathbah), there was as yet little sign that nationalism was a strong enough glue to unify Britain's opponents and break down the suspicions that divided parties and factions. Among the dominions, Britain's staunchest allies in the Second World War, impatience with British imperial attitudes and the desire to assert their own regional claims modulated gradually into a growing unease at the scale of American power, and a stark realisation (among the sterling dominions) that their economic survival was closely tied up with Britain's recovery and the fate of the pound.

Much of the flexibility that British leaders had hoped to enjoy in the war's aftermath had faded away. But the crucial fact was that the scope for an empire had not disappeared. The seismic shift in American policy meant that Britain's importance as an imperialally had been grasped in Washington, as well as the need to support its imperial claims, for the time being at least. In a war-shattered world, the sterling economies also accounted for around half of world trade. For all the irritation that London's breach of faith had caused on the other side of the Atlantic, this was too large an egg to think of killing the goose. The sterling area had to be given a last-minute reprieve. Nor so far had there been any great revulsion of sentiment in Britain itself against the burden of empire, felt most directly in the prolonging of conscription, abandoned precipitately after the First World War. ‘One should not overlook the resurgence of nationalism which is characteristic of this country in its post-war mood’, remarked one thoughtful observer.62 It reflected not only the confidence that victory had brought but also acceptance that, for both better (social reform) and worse (austerity), there would be no return to a pre-war ‘normality’. No major voice had called for a general withdrawal from overseas commitments – perhaps a measure of how far the Churchillian idea of Britain's place in the world (if not Churchill himself) ruled the political realm (a strong case could be made that it shaped public attitudes to Britain in the white dominions as well). Finally, the British had also begun to equip themselves for the next age of warfare. By early 1947, the decision had been taken to build an atomic weapon that would deter the most powerful assailant. When that was in place – a ten-year wait was envisaged – Britain's scientific prowess, hugely developed by the stress of war, could be mobilised fully behind her claim to world power.

In this brave new world of unforeseen fears, the Labour government shuffled uneasily, with American and dominion help, towards a new version of empire, with a new ideology, a new geostrategy, and an all-but-new economic system. This we might call the fourth (and last) British Empire.

The fourth British Empire

There was, of course, nothing that resembled an imperial programme, still less an announcement that Britain had embarked upon a new phase of empire-building. This was partly because, as in earlier times, no single department or source of authority ruled over all Britain's multiple external connections, or could grasp their full meaning. Labour's new empire emerged instead from piecemeal decisions, made in pursuit of a wide range of objectives. The result was an untidy, even ramshackle, system like all previous versions of British world power. It was shaped inevitably by the impress of forces largely outside the control of any government in London. Indeed, it was mainly the product of an economic and geopolitical crisis that was far more severe (from the British point of view) than that which they had faced after 1918. Its prospects were decided not only by the means that the British themselves could commit, but by the help they enlisted inside and outside their imperial system. Indeed, the scale of its dependence upon foreign assistance became one of its hallmarks, and perhaps the principal cause of its systemic instability. Indeed, as a ‘solution’ to the problem of restoring Britain's world position (as an independent great power co-equal with the United States and the Soviet Union), its shortcomings were obvious – or had become so by 1952 at the latest.

Labour's embrace of an imperial destiny may have derived in part from the innate conservatism of its leaders’ world-view or their reluctance to challenge the passions and prejudices ascribed to public opinion – the loathing for ‘scuttle’ which the Cabinet had feared would discredit their Indian policy.63 But, from mid-1947, their imperial thinking was driven by two more urgent concerns. The first was the danger that Stalin would repeat Hitler's success in uniting Europe against them, if by more indirect means, before American help could be brought to bear. In geopolitical terms, Britain's weakness in Europe was bound to make them lean more heavily on their extra-European resources. The second was the need, felt no less acutely, to secure their achievements at home, and safeguard Labour's position as the party of government. The priority here was economic recovery, or, as it seemed in the wake of the convertibility crisis, economic survival. But, for Attlee and his colleagues, there was little real choice in the road to recovery. The central plank in Labour's electoral platform, the glue that held the government, the party and its trade union supporters (the main source of its funds) together, was the promise of full employment, originally laid down in the wartime white paper in 1944. Full employment was the key guarantee that the sacrifices of wartime had not been in vain, and that victory had made possible a better, fairer, Britain. It could not be repudiated. It was also the essential condition without which Labour's whole social programme would quickly unravel. Extending social insurance, increasing state benefits for the jobless or sick, and funding a national health service, assumed a very high level of productive employment: mass unemployment on the scale of the 1930s would wreck their finances. The savage deflation through which governments in the 1920s had sought to rebalance Britain's trade deficit was no longer an option. Nor was the mechanism through which that deflation was imposed, the use of high interest rates to restrict the money supply. Instead, Labour was committed to a ‘cheap money’ policy (interest rates were kept at 2 per cent) partly to keep employment levels high, partly because the cost of nationalising Britain's mines and transport drove up government borrowing. Cheap money was as vital to Labour's public finances as to its social policy and electoral hopes.

These considerations ruled out defending Britain's solvency in the open international economy that the Bretton Woods agreements had envisaged. Cheap money at home required a closed sterling economy abroad, to guard sterling's value and protect the overseas (sterling area) markets to which much of her exports were sent. Nor was it just a matter of weathering the immediate threat of a sterling collapse. The convertibility disaster brought home to ministers and their advisers that the fundamental imbalance of the British economy required both immediate action and a longer-term remedy. They had to secure fresh supplies of food and fuel to improve living standards, ease the huge burden of food subsidies and improve distribution and output at home. But they had to obtain them from dollar-free sources. They were anxious if possible not just to save dollars by buying in sterling, but to earn dollars as well by re-exporting sterling imports to the voracious American economy. Foodstuffs (especially grain and fats), oil, gold (from South Africa) and high-value minerals like copper and tin, were among their key targets. The shortage of oil and the otherwise heavy dependence on American imports made Middle Eastern supplies from British-owned concessions there a glittering but vulnerable prize. ‘Should Russia overrun this area’, worried Hugh Gaitskell, then Minister of Fuel and Power, in January 1948,

[t]here would not merely be insufficient oil for Britain but for a large part of the rest of the world…God knows when we shall really get our expansion programme going there, and how precarious it will be even when the output is doubled.64

‘It is hoped that by 1951 82 per cent of our oil supplies will be drawn from the Middle East (as compared with 23 per cent in 1938)’, Bevin told his Cabinet colleagues in October 1949. ‘This will present the largest single factor in balancing our overseas payments. If we failed to maintain our position in the Middle East, our plans for economic recovery…would fail.’65 This was a game that other ministers could play. Malaya ‘is by far the most important source of dollars in the Colonial Empire’, warned the Colonial Secretary in July 1948. ‘It would gravely worsen the whole dollar balance of the Sterling Area if there were serious interference with Malayan exports.’66 Malayan security was not just a matter of local importance, or even a primarily strategic matter. It had become one of the crutches of a convalescent British economy.

For the foreseeable future, then, the Labour government pinned its hopes of economic revival to closer integration with the sterling Commonwealth countries (mainly Australia, New Zealand and South Africa), the rapid development of their most valuable dependencies (including Malaya, the Gold Coast and Northern Rhodesia) and the drastic expansion of output from Britain's oil concessions in the Middle East. Only in this way could they restore some equilibrium between Britain's dollar income and outgoings, build up the reserves required for sterling's eventual return to convertible status, and (above all) protect the British economy from a drastic slump in employment and living standards. Pressing arguments of geostrategy pushed them in the same outward direction. By the end of 1947, the failure of the Council of Foreign Ministers meeting in London in November–December, had convinced British leaders that a negotiated settlement with Stalin was more remote than ever. Deterring a Soviet advance into, or its subversion of, the Western European states meant a military build-up, and a firmer commitment by London to the defence of the half-continent. In the Western European Union in January 1948 and the Brussels Treaty a few months later, the British pledged themselves more deeply to their European partners than in any previous peacetime. But they were all too aware that the military means to make good this commitment were scanty at best. Without adequate means to defeat the Soviet Union on land, a ‘Middle East’ strategy to bomb Southern Russia (despite its manifold shortcomings67) remained the best option. The argument went wider. On 5 January 1948, Attlee had broadcast an attack on Soviet imperialism in Europe. A week later, he appealed for Australian and New Zealand support. Britain, he told prime ministers Chifley and Fraser, had proposed a ‘Western European Regional Economic and Security Group’. Britain would provide the ‘political and moral leadership’, but would depend upon the material support of the United States and the Commonwealth.68 Eager as they were to elicit American help, both Attlee and Bevin were determined to avoid mere dependence on Washington. ‘If it is our aim’, remarked the Cabinet Secretary, Sir Norman Brook, ‘to achieve the leadership of a Western Union sufficiently powerful to be independent of both the Soviet and the American blocs, we must be at the heart of a Commonwealth of nations which is as large as and powerful as we can make it.’69 Bevin was blunter. ‘More stress should be laid’, he told his ministerial colleagues, ‘on the need to build up a Commonwealth defence system which together with Western Union, would result in a bloc equivalent in strength to the United States or the Soviet Union.’70 Defending Britain-in-Europe and preserving British world power were imperial tasks.

At first sight, it seems strange that, at a time of such acute economic hardship, domestic opposition to the burdens of empire was not more vociferous. By late 1947, even potatoes were rationed (bread had been rationed since mid-1946) and the ration of petrol suspended altogether. Quite apart from Britain's overseas debts, there was also a mountain of borrowing at home increasing in size from some £13 billion at the end of the war to more than £15 billion by 1951.71 Partly in consequence, the level of income tax remained at a far higher level than after the First World War. By 1951, six years into the peace, it had fallen only marginally from 10 shillings (50 per cent) in the pound to 9 shillings (45 per cent), twice the rate current in 1925. Nor was it simply a question of feeling the pinch. There was also the matter of public attitudes to empire. Britain's impoverishment had coincided with an ideological conversion to social democracy. After 1918, the blueprint for social reconstruction had been largely torn up when the government abandoned most of the levers of economic control at the onset of depression. This pattern was not repeated after 1945. Instead, the Labour government embarked upon a huge social programme to extend educational opportunity, widen access to healthcare and (most fundamental of all) secure full employment. It also took charge of two basic industries whose renovation was vital to economic recovery: transport (including railways, harbours and road haulage) and the mines. The result was high levels of public expenditure for domestic recovery and social reform. Yet, at exactly the same time, spending on defence remained obstinately high. In the late 1940s it stood at more than double the proportion of GDP spent in 1931–7, and at the end of the decade was to rise even higher. The fourth British empire was not a cheap option. It seems not a little surprising that opinion in Britain, having voted decisively for domestic reform, and facing a blizzard of taxation and rationing, failed to revolt against the deadweight of empire.

Perhaps a key part of the answer was that there was no obvious conflict between empire and social reform, between social democracy at home and imperialism abroad. The hostility to Britain's imperial commitments voiced after 1920 was largely directed against London's new empire in the Middle East, and the danger that this would provoke a Near Eastern war. Much of its force derived, however, from the angry belief that heavy spending abroad was preventing a return to economic normality and prolonging the post-war depression – a cry that appealed to the Left as well as the Right. Little of this applied in late 1947. Far from unemployment, the problem if anything was an acute shortage of manpower. The scale of Labour's domestic programme disposed of the argument that empire had delayed the renovation of British society. By mid-1948, the largest and most controversial of overseas military burdens – the garrisons in India and Palestine – had been given up. Dislike of conscription and military service abroad may have been widespread, but public resentment was probably muted by the fact that the ‘call-up’ was no longer a novelty. It had begun in peacetime on the eve of the war and had been part and parcel of the mobilisation of Britain's resources whose fairness and thoroughness were regarded as the talismans of survival and victory. Trade union antipathy to ‘national service’ and foreign military spending – a notable feature of the political climate in 1918–22 – was restrained by Bevin's massive prestige, as the principal champion of ‘imperial’ duty, and by the extent to which they could be seen as necessary for Britain's own protection against Soviet aggression. Indeed, the conflation of ‘containment’ (to safeguard Britain at home) and ‘imperial defence’ (to secure its overseas spheres) was one of the ways in which any residual opposition to imperial burdens could be readily neutralised. Finally, although there was room for doubt as to its application in practice, Labour – and particularly Bevin – had been at pains to promote a new social democratic ideology of empire. Pre-war anxiety about social crisis in the colonies (where depression had bitten deep), and growing belief in the urgency of ‘colonial development’ from above, fused with the wartime need to remake the image of empire, in the United States above all, and the chastened atmosphere of colonial failure brilliantly evoked by Margery Perham in 1942. The result was the rise of a new ideology of ‘partnership’, in which empire was the instrument of social, economic and political uplift, the imperial counterpart to the welfare state at home. Reassuring and flexible, it could easily cover a multitude of colonial sins and offered firm reassurance that what was good for Britain (the rapid expansion of colonial production) was also an act of imperial benevolence.

For these kinds of reasons, British leaders were largely able to discount the risk of opposition at home to their Churchillian ambitions. They also disposed of some vital resources to uphold Britain's influence. Despite the shortage of manpower in the civilian economy, they kept over 800,000 men in the armed services in 1948 (more than double the figure for 1938).72 With a large navy and air force, and a great network of bases, the British were far from being a negligible military power. Meanwhile, Britain's connection with the white dominions was refreshed by the flow of post-war migration. Nearly 600,000 people left Britain between 1946 and 1949, mostly to settle there. A further 700,000 followed in 1950–4.73 The commercial apparatus for investing abroad had survived the war, and enthusiasm for doing so remained deeply rooted in British economic behaviour. The hunger for capital in the sterling dominions still drew them to London. And, as the Cold War grew fiercer, Britain's great power position could be leveraged for the assistance that mattered. From 1948, Britain began to receive the Marshall Aid dollars. London had already obtained Washington's de facto approval for Britain's Middle East presence. In April 1949, with the North Atlantic alliance, it secured the guarantee of American support in the event of Soviet aggression in Europe. The threat of a second Dunkirk now looked less likely. If empires depend upon the exchange of reciprocal benefits, the British had something to offer their imperial partners.

The engine-room of Labour's fourth British empire was the sterling area economy. Its performance was critical to the reconstruction and modernisation of the domestic economy, and to the wider revival of British world influence. Between 1947 and 1950, the results were mixed, but far from discouraging. 1948 was a year of recovery from the convertibility crisis. The other sterling area countries may have disliked London's determination to manage their non-sterling purchases through a centrally administered ‘dollar-pool’, but they had little real choice but to comply. They dared not risk a collapse in sterling's value, which would wipe out their holdings in London. For Australia and New Zealand especially, Britain remained their most important customer: its economic devastation would ruin them too. Indeed, for the overseas sterling area as a whole, for some four-fifths of their total exports the British market was 50 per cent greater than the American (the main exceptions were cocoa, rubber and wool).74 There was also the issue of borrowing in London. Despite the huge growth of American foreign investment, it still remained difficult for the sterling dominions to borrow much there – partly because there was little demand for their produce from the American consumer. Access to London's capital market was a valuable lever. The South African government was reluctant to accept the ‘dollar-pool’ rules, even more so when Smuts was displaced as prime minister by D. F. Malan in 1948. But Malan had to eat humble pie. Fear that his government would declare a republic led to capital flight, just at the moment when new investment was needed to expand gold production. Pretoria caved in and agreed to the exchange of its gold for sterling.75 In the colonial economies, London could set the price that was paid for their commodity exports, and restrict the manufactures they were sent in return. This was a way of exporting Britain's austerity, and reducing colonial consumption to hoard ‘British’ dollars. In the Treasury's view, selling on colonial produce was a far more promising way of increasing London's dollar income than closer relations with the Western European countries.76 Meanwhile, in a world starved of industrial goods, and with most of their pre-war competitors in disarray, the British could sell abroad all they could make. There were also promising signs that London was resuming its classical role as a supplier of capital. Some £1,500 million was sent to sterling area borrowers in 1947–9.77 To a suspicious American expert, it seemed that the British were still doing surprisingly well from their investment in empire.78

Yet Britain's position remained fundamentally fragile and with it the hope of restoring the pound sterling to equal status with the dollar in international transactions. Equality mattered because only then would London be able to recover the profitable business in banking, insurance and services that had made it so rich before 1914, and which depended upon the confidence of its overseas clients. Buoyed up by the injection of Marshall Aid dollars (some $1.2 billion), 1948 turned out well. But, in 1949, sterling was once more on the ropes. An American slowdown, the cessation of stockpiling, and (so some observers suggested) the high cost of British exports, slashed dollar earnings. The dollar deficit soared. With encouragement from Washington (where there was growing anxiety that the dollar famine in Europe would create a permanent division between the two halves of the West's trading world), London devalued the pound from $4.03 to $2.80, followed by the other sterling area countries. The following year saw a striking recovery in the British balance of payments, and a new burst of optimism. But, as we shall see, disillusion soon followed.

‘The Commonwealth nations are our closest friends’, Attlee proclaimed in the Commons foreign affairs debate in May 1948.79 Even more perhaps than before 1939, British ministers saw the white dominions as the indispensable elements of British world power. It was they that would serve as the ‘Main Support Areas’ in the event of another world war, or so the defence planners hoped. But of course Anglo-dominion relations were not so straightforward. Britain's crushing defeat in Europe and Asia in 1940–2 had broken the spell. Never again could dominion leaders blithely confide their strategic defence to the imperial centre. As we have seen, Canadian, Australian and New Zealand reactions had passed through two phases. They recognised the necessity of American aid against a great power aggressor. But they were anxious as well that the new ‘World Organisation’ would protect their ‘middle power’ status and limit the scope of American predominance. Both in Wellington and in Canberra, there had been a marked reluctance to accept London's dire warnings about Soviet intentions, and the need to form a solid anti-Soviet bloc. ‘I find myself equally opposed to the extremes of both sides’, wrote the New Zealand prime minister, Peter Fraser.80 Both in New Zealand and in Australia, mistrust of the United States was mixed with resentment at what was seen as its ungenerous treatment of Britain, and the desire to see London adopt a more independent line. As so often before, Australian leaders were irritated by London's obtuseness: its refusal to see that Australia was doing its British and imperial duty. ‘Australia today’, said the prime minister, Ben Chifley, ‘has become the great bastion of the British-speaking race south of the Equator. Strategically and economically this country has assumed a position in the Pacific on behalf of the British Commonwealth.’81 British calls for help in Europe and the Middle East would confuse and distract Australian public opinion. So Chifley bluntly rejected Attlee's urgent appeal in January 1948. ‘The Australian people…are not convinced of the desirability of…a Western alliance directed against the Soviet’, he wrote.82 Anyway, Australia would have its hands full in the Pacific if another war broke out: there would be nothing to spare. There was less consultation from the Labour government, complained his foreign minister Evatt, than there had been from Churchill – an indictment indeed!83 The view from New Zealand (as in previous times) was not so assertive. Fraser acknowledged the Soviet threat, sought London's advice on how New Zealand could help, and agreed that New Zealand should have a division to send to the Middle East on the outbreak of war.84 The following year, he pressed ahead with a scheme for compulsory military training, on which a successful referendum was held in August 1949.85

1949 was a year of political change in both Australia and New Zealand. The new New Zealand prime minister, Sidney Holland, was an ardent imperial patriot. ‘I love the British Empire with all my heart’, had been his response to the great sterling crisis of August 1947.86 The Australian election restored Robert Menzies to power after a gap of eight years. Menzies, like Holland, was a vocal exponent of the British connection and (in his case) of a British Australia. As a wealthy lawyer from Melbourne (Australia's financial capital with close ties to the City), he was deeply attached to the strength and stability of British institutions (‘the quietness, the tolerance, the sense of values, the ordered justice, the security of England’).87 But Menzies was far from being Downing Street's doormat. There was too little awareness of empire in Britain, he thought on a visit in 1948.88 Yet Menzies saw Australia's future as more reliant than ever on its closeness to Britain. The Australian economy would be a ‘food arsenal’ for Europe: its growth was tied up with Britain's recovery and the survival of sterling.89 He was also keenly aware of Australia's deep isolation and clutched at the hope that it could be a member of NATO. He seized the great chance given by London's nuclear ambitions to offer Australia as Britain's partner and test-ground.90 He was not in a hurry to promise Australian troops to the Middle East theatre. But, after the outbreak of war in Korea in June 1950 (which intensified fears of an imminent world war), he reversed Chifley's stance and (some eighteen months later) committed Australia to a Middle East role.91 The timing was not accidental. By that time, the Australia–New Zealand–United States security pact (ANZUS) was settled, the ‘Near North’ was now guarded by American sea-power and the British were committed to the defence of Malaya. With the back door now bolted, Menzies was ready to do his imperial duty.92

Economic and strategic self-interest fused with their sense of a British identity to make the Southern dominions the most reliable partners in the fourth British empire. With the senior dominion (the term itself was slipping out of use), Britain's post-war relations were somewhat more complex. There were plenty of voices still raised to assert that Canada was, in Brooke Claxton's phrase, ‘a British nation in North America’, or to argue, like George Grant, that ‘if we have no link with the British Commonwealth we shall soon cease to be a nation.’93 ‘Newfoundland’ (whose adhesion to Canada was then under discussion) ‘is ultra-loyal to the British Crown’, remarked an Ontario newspaper. ‘We can stand some of that too.’94 Canada's Britishness was regarded by most English Canadians as an uncontroversial fact.95 Mackenzie King, then the outgoing prime minister, warned his successor, St Laurent, that the Conservative opposition would exploit ‘British’ sentiment to press for a stronger commitment to imperial defence – a call bound to inflame French Canadian feeling and threaten the cohesion of the Liberal party. ‘You will probably have to fight all Sir Wilfrid's [Laurier's] battles over again.’96 Yet King himself was deeply uneasy about showing too much preference for Canada's ties with America over those with Britain.

The Canadian problem lay in striking the balance. It was perfectly clear, a senior military officer had remarked in August 1945, that Canada was ‘not going to participate in a war…over the frontiers of Iraq or to preserve the Indian Ocean as a British lake’. But, as two great wars had shown, ‘the Canadian people have, on the occasion of a great emergency arising, quickly realised that the security of the United Kingdom is a vital interest’.97 Mackenzie King's instinct (a habitual reflex) was to avoid any forward commitment, but a greater theoretical risk was that Canada's integration into America's continental defence system would constrain its ability to lend Britain its aid. NATO averted this danger. From the Canadian angle, the North Atlantic Treaty signed in April 1949 was the perfect solution: Canada would contribute to North Atlantic defence alongside its two great partners: pragmatism, sentiment and self-interest were reconciled. But, in commercial relations, such compromise was elusive. This was not for want of Canadian efforts. The British market was hugely important to Canada, taking 40 per cent of Canadian exports before the war.98The sterling they earned helped to offset Canada's large deficit with the United States. During the war, Britain's shortage of dollars had been met by allowing American aid to be spent in Canada. After the war, Canadian eagerness to restore the old pattern had been part of the motive for the large dollar loan they advanced to Britain. But nothing went right. The Canadians had banked on a swift British revival. The convertibility crisis was a shattering blow. As Britain's dollar purchases were cut to the bone, Canada's balance of payments also lurched into crisis. Marshall Aid dollars eased things for a while, and allowed London to pay for Canadian wheat. But the second sterling crisis in 1949 marked a parting of ways. The British tried to persuade the Canadians to accept inconvertible sterling, and to help British exports by restricting their purchase of American goods. To the Canadians it seemed like a transparent manoeuvre, to suck them willy-nilly into the sterling area99 and give a great boost to its dollar reserve. It was also bound to infuriate Washington.100 Ottawa drew back. But its export dilemma was not fully resolved until the Korean war boom widened the American market for Canadian manufactures and foodstuffs. By the early 1950s, 54 per cent of Canadian exports (40 per cent in 1937) were sent there, and 17 per cent to Britain. A mere 9 per cent of Canadian imports (half the pre-war percentage) were now drawn from Britain. Canada's economic and strategic integration into the imperial system of its great southern neighbour looked almost irreversible.

With the fourth dominion, relations had never been easy and seemed likely to worsen. In South African politics, the dominant fact was that Afrikaners formed a majority of the white population who alone (except for a handful of ‘coloured’ or mixed-race voters) had the franchise. The extent of republican or nationalist feeling among the Afrikaner electorate was thus a critical issue and a vociferous minority of Afrikaner politicians had long demanded a republic and secession from the Empire (one was assumed to lead to the other). Yet South Africa had entered the Second World War freely and its soldiers and airmen – including many Afrikaners – fought beside British and other Empire troops. This seemed to suggest that for a significant fraction of Afrikaner opinion the republican path was divisive and dangerous, alienating the ‘English’ minority and isolating South Africa. General Smuts was regarded – in Britain especially – as the indispensable leader. His global prestige, local charisma and political skill (‘Slim Jannie’ was a nickname with somewhat mixed connotations) made him the ideal (Afrikaner) champion of Anglo-Afrikaner amity and South Africa's Commonwealth membership. It was his intervention that had tipped the balance in the vote to enter the war. As the wartime prime minister, he had faced down the furious outcry of the anti-war faction and the paramilitary violence of the Ossewa Brandwag (the name was meant to invoke the Voortrekker tradition), while the Allied victory in Africa had helped his supporters to electoral victory in 1943. After the war, despite the strains of economic transition, and the fiasco of Smuts’ attempt to get United Nations approval to incorporate South West Africa (still a League mandate) into the Union, defeat by the Nationalists seemed highly unlikely so long as Smuts was leader of the United party.101 But, at the general election in 1948, Smuts was defeated – despite winning a majority of the popular vote – and the Nationalists came to power under D. F. Malan.

This was bound to set the alarm bells ringing in London. On any view of Britain's post-war system, South Africa was a large and important component. In the Second World War, as a semi-industrial economy, a supplier of gold, and a great naval and air base in the South Atlantic and Indian Ocean, its cooperation had been vital to the imperial war effort. In a future war against the Soviet Union, it was expected to become perhaps even more valuable. Declaring a republic and leaving the Commonwealth would create a huge crisis in Anglo-South African relations at a critical moment. There was already the danger that a Nationalist government would demand the return of the Simonstown base and renew the old pressure for the ‘High Commission Territories’ (Basutoland, Bechuanaland and Swaziland – today's Lesotho, Botswana and Swaziland) to be incorporated as part of the Union. Nor was it likely that a government so explicitly committed to baaskap (white supremacy) and apartheid (racial separation) would fit very willingly into a Commonwealth group that had just been enlarged by three Asian dominions. But, as it turned out, Malan was pragmatic and his hand was weak. The capital flight that greeted his victory threatened economic disaster. Malan was forced to place his dollar income in the sterling area pool in return for access to the London capital market – a major concession that Smuts had escaped, with considerable benefit to the white standard of living.102 The referendum on a republic was put off sine die. And, since fear of communism was even more of a bogey in the National than in the United party, a retreat into the laager away from European complications (that had had great appeal in the inter-war years) now looked less wise.

Malan's dilemma was neatly exposed in the wider debate set off over the Commonwealth's future in 1948–9. It was triggered by the question of India's status. Nehru and the Congress had accepted ‘dominion status’ in 1947 as an expedient to quicken the transfer of power before a new Indian constitution was framed. It soon became obvious that the new constitution would take a republican form. Within the Congress there were also those who disliked any formal connection, whether material or symbolic, with the imperial past and who were deeply suspicious that the British intended to drag India back into their imperialist toils. A Congress party resolution in December 1948 proclaimed its commitment to the ‘ending of Imperialism and Colonialism’ and declared that Indian foreign policy should ‘avoid entanglement in military or similar alliances which tend to divide up the world in rival groups’. India's ‘complete independence’ meant that ‘her present association with the United Kingdom and the Commonwealth of Nations will necessarily have to change’.103 The difficulty lay in the strong supposition that allegiance to the Crown was the essential element in Commonwealth membership: a dominion that rejected the king as its head of state automatically left the Commonwealth. In 1948, this had led to the departure of both Burma and Eire (the former Irish Free State). ‘There can be no doubt’, reported a British official committee, ‘that the king has been the symbol and expression of that community of feeling which has been the mainspring of cooperation particularly at times of crisis…Some South African politicians…recommend the severance of allegiance to the Crown on the very ground that some South Africans are influenced…by the emotional pull of the Commonwealth connection and that South Africa's decision to declare war in 1939 would not have been taken but for this sense of “obligation”.’104 The dilemma was whether to loosen the monarchical bond, risk the erosion of the Crown's ‘emotional pull’ and weaken the solidarity of the Commonwealth's ‘central countries’ (defined as Britain, Canada, Australia and New Zealand)105 or to maintain the old ‘rule’ and exclude a republican India.

It was India's geostrategic importance that weighed most with London. If India's request for a new kind of membership was rejected, what would the consequences be? In the climate of 1948–9, it was hard to be insouciant. For all their eagerness to win American backing, Attlee and Bevin saw themselves at that moment as the heroic builders of a grand coalition against the Soviet threat, now being extended – with the advance of Mao's armies in China – into Asia as well. Western European Union and Commonwealth backing were its vital components. Whether India contributed to ‘Commonwealth defence’ or not, ‘her exclusion from the Commonwealth against her own wishes would encourage her to concentrate her attention on the creation of an Asiatic bloc, isolated from and possibly hostile to the Western Powers.’106 If India left, it might be followed by Pakistan and Ceylon (Sri Lanka), and by Britain's other Asian colonies as they became independent. It was ‘a matter of major importance’, the Cabinet were told, ‘that the leading power in South East Asia should remain a member of the Commonwealth’.107 In the Chiefs of Staff’s view, keeping India in offered the best chance for the common defence of South Asia, and for Britain's getting access in wartime to India's manpower and industry. But a formula acceptable to the ‘old dominions’ was not easy to find. New Zealand did not want a ‘flabby Commonwealth with no guiding principle’: it might be better if India stayed out.108 Even at this late stage, Attlee himself tried rather desperately to dissuade Nehru. ‘Does a republic really appeal to the masses in India?…[R]epublicanism is an alien import from Europe’, he urged.109 But, in the end, all the dominion governments accepted that keeping India in was of vital importance, and in this ‘can-do’ atmosphere a compromise formula was hammered out at the Commonwealth prime ministers meeting in April 1949. India accepted the king ‘as the symbol of free association’ of the Commonwealth's independent member nations and ‘as such the Head of the Commonwealth’. The remaining dominions declared their position unchanged. The real surprise of the meeting was what Malan had to say. Malan had been worried by the phrase ‘head of the Commonwealth’, fearing its ‘super-state’ overtones – an old phobia in South Africa and of the Liberals in Canada. But he affirmed South African loyalty to the Commonwealth. ‘South Africa cannot stand isolated, but must have friends and must find them generally among the like-minded nations…but more especially…in the inner circle of the free and independent nations of the Commonwealth.’110 It was a remarkable u-turn, and opinion in South Africa was divided on Malan's real intentions. But Baring (the British representative there) was convinced that Malan actually meant what he said.111

The successful inclusion of republican India and Malan's public confession of Commonwealth faith were promising signs that the will was there to preserve the British connection and to acknowledge the Commonwealth as an informal alliance against the communist threat. Even Nehru agreed that ‘Commonwealth countries must be prepared to resist military and political aggression by the Soviet government’.112 It vindicated Attlee's willingness to reinvent the Commonwealth, recognising that ‘dominion’ was no longer favoured as a title (it was being discarded even in New Zealand113), and that the name ‘British Commonwealth’ should sometimes give way to ‘Commonwealth of Nations’ as the best designation.114 The modified Commonwealth had become a key part of Labour's new world-system. But even more striking was the extent to which Britain's own role as its head and centre had come to depend upon an ever deeper commitment in two large spheres, in each of which British influence and authority suffered from potentially crippling sources of weakness.

The first of these was the Middle East. As we have seen, in post-war conditions the Middle East's value had risen sharply for Britain. As the base from which to attack Russian oilfields and industry in the event of world war, and as the source for ‘dollar-free’ oil extracted from British ‘concessions’, the Middle East had become much more than a bastion of the old Anglo-Indian nexus. It was no longer an adjunct to the British world-system but an integral part of it. This was the meaning of Bevin's victory over Attlee in 1946–7. Britain's ability to promote Western Union, to hold the Commonwealth together, to stage an economic recovery, or to deter Soviet aggression required a regional presence that was at least as commanding as before 1939, and much more intrusive. It was really made up of a four-cornered connection: with Iraq and Jordan, where the British relied on the local ‘strong men’, Nuri al-Said and the ageing King Abdullah; with Iran and the special position enjoyed by the Anglo-Iranian Oil Company; and above all with Egypt and the Suez Canal Zone. Indeed, for the British, Egypt remained the irreplaceable centrepiece of their Middle East imperium. It was not just a matter of their huge complex of bases in the Suez Canal Zone. There was also the vast depot at Tel el-Kebir (the Plassey of Egypt). Egyptian labour and Egypt's ports and railways were equally vital if the Canal Zone bases were to serve their purpose efficiently. This meant, in effect, that the British must enlist the cooperation, however grudging or reluctant, of the government in Cairo and its local officials. It was this realisation that had pushed Bevin and the Foreign Office into offering a large-scale withdrawal of the British military presence in return for the right to return in a Middle Eastern ‘emergency’. Those talks had failed (largely over Cairo's demand for a much larger say in the affairs of the Sudan). Meanwhile, their abrupt departure from Palestine had deprived the British of the alternative base where their troops could be kept and hardened their view about the value of Egypt. With the onset of the Berlin crisis in mid-1948, and the increased possibility of a war with Russia, the idea of any real withdrawal from Egypt disappeared almost completely. It was now essential, declared the Chiefs of Staff in September 1948, to keep at least 20,000 troops in Egypt, and to go on using the Tel el-Kebir depot.115

The reality was, as the British admitted to themselves, that not only was evacuation now inconceivable but that ‘our military requirements go beyond those of the present [1936] treaty’.116 There was no chance of finding any Egyptian regime that would agree to such terms.117 The embassy in Cairo was left, as so often before, to square the circle. Its tactics were well tried: every proconsul from Cromer to Lampson had played much the same hand. The aim was to tempt King Farouk with the promise of a treaty, or to bully him into allowing a government of the main popular party, the Wafd, who might also be tempted (as in 1936). The difficulty was that London had little or nothing to give. Worse still, there were growing signs of upheaval as the Arab defeat in Palestine, the effects of inflation and the Islamist influence of the Muslim Brotherhood undermined ‘pashadom’ and the king's prestige. They were facing 1919 all over again, thought some British observers. If violence broke out, it would be necessary to send three major military units ‘and dominate the European quarter of Cairo’.118 Nor could the British allow Egypt to fall into political chaos. But how could they stop it, or prevent a populist government from disrupting overtly or covertly the transport links and labour supply on which they depended? It might happen at a moment of great international tension, and ‘Egypt is the only country in the Middle East’, so the Chiefs of Staff declared, ‘possessing the facilities and resources for the conduct of a major war’.119 ‘All interpretations of Middle East strategy require the location of a Middle East base in Egypt in war.’120 By hook or by crook some agreement must be made. 1950 was a year of desultory talks with the new Wafd government and the prime minister, Nahas Pasha, ‘an old, stubborn and enfeebled man’ in The Times' dismissive phrase.121 At the end of the year, Nahas raised the stakes. Egypt would end its treaty with Britain unilaterally if necessary. In October 1951, he made good his threat, and the real confrontation began.

By that time the British had suffered a highly damaging blow to their pride and pocket from Iranian nationalism. They had placed heavy reliance upon the British-owned Anglo-Iranian Oil Company (later British Petroleum) and its refinery at Abadan (then the largest in the world) to produce ‘sterling oil’, and reduce the dollar deficit (to which the cost of oil imported from the United States, much the world's largest producer, made the biggest contribution).122 To palliate Iranian discontent with its oil royalties, a ‘supplemental’ agreement had been negotiated. But, from Teheran's point of view, this did little to redress the growing imbalance between its share of oil revenues and those accruing to London. In 1950, the company made net profits of £33 million, paid more than £50 million in taxes to the British government (five times as much as in 1946) but barely £16 million in royalties to Teheran. New dividend rules applicable in London also depressed the income that the Iranians received.123 To make matters worse, at the end of 1950 it became known that, in Saudi Arabia, the region's second-largest producer, the Arab-American Oil Company (Aramco) had agreed on a fifty–fifty sharing of profits with the government in Riyadh. It was hardly surprising that the Iranians cavilled at a much less generous deal. Too late in the day, the British proposed the ‘Aramco’ terms. But, by early 1951, Iranian politics were being convulsed by the fierce nationalist rhetoric of Mohamed Mussadiq and the struggle for power between the youthful shah and his opponents, including the Tudeh, a mass radical party suspected of communist leanings.124 In this stormy climate, British interference and Anglo-Iranian's greed became irresistible targets. At the end of April 1951, the Iranian Parliament nationalised the company, and on 10 June the Iranian flag was raised over its main office in Abadan.

The British were nonplussed. They considered and rejected a familiar strategy: the occupation of Southwest Iran where Teheran's authority had always been weak. Without the Indian army, said the Chiefs of Staff sorrowfully, Britain lacked the military means to carry this out.125 They thought about occupying Abadan Island, where the refinery stood. But this Attlee vetoed, knowing that Washington was fiercely opposed to military action against which the Soviet Union might riposte in the north of Iran. ‘We could not afford a break with the United States on an issue of this kind’, recorded the Cabinet minutes.126 So the grand British concession closed down with a whimper. On 4 October 1951, the remaining British staff embarked on a cruiser and sailed away.

In Egypt and Iran, the British were thus caught in a vice. The logic of their economic and geopolitical position had deepened their dependence upon their Middle East ‘assets’. Far from slackening their ties with this turbulent region, they were determined to integrate its strategic and commercial resources much more closely into their post-war world-system, even while they acknowledged that Britain's own strength was, at least temporarily, in relative decline. The British largely hid from themselves the inconvenient truth that the burden they imposed upon Middle East polities was actually growing at a time when those polities were under intense social and political strain. Hence the unpredictable force of local nationalist feeling, as well as the growing American presence and the looming shadow of Soviet military power, heightened the risks and anxieties of this half-concealed ‘forward movement’. By October 1951, visibly in Iran, not much less so in Egypt, it had been stopped in its tracks.

The second great sphere was in Britain's tropical empire, for long the poor relation of the imperial system. Shoe-string budgets and skeletal government had been the lot of most tropical colonies, especially during the depression years when their economies shrank. The war and its aftermath transformed their place in the imperial structure. Their potential value to the imperial centre now began to be recognised. And the war had driven home the lesson (robustly pointed out by Margery Perham in 1942) that, without a more pro-active approach by their rulers, many colonial territories would become tropical ‘East Ends’ with impoverished, disaffected populations, troublesome to govern and an economic liability. An energetic expansion of the colonial state was thus on the cards.127 What made it more urgent was the dawning realisation that tropical produce (cocoa, groundnuts, coffee, rubber) and minerals (tin and copper especially) from the ‘crown colony’ empire could provide a large dollar income and contribute significantly to the urgent recovery of the sterling economy. By 1948, it was estimated that the colonies were earning $600 million a year, with a net surplus of $200 million for the sterling area dollar-pool. Since this was enough to cover the dollar deficit of the self-governing countries of the overseas sterling area (i.e. excluding Britain), its contribution to the smoothness and cohesion of the sterling area's working relations was highly significant. But there were bound to be costs. To raise local production, the colonial state had to become (compared with its past) almost hyperactive. It would need to discard the allies that had served it in the age of immobility and seek new friends who would grasp the advantage of rapid development, not least to themselves. Local administration would need reforming to give them a voice. Advisers and experts would descend on the countryside: imposing new rules (against overstocking or deforestation); attacking diseases (like cocoa ‘swollen shoot’ where the trees were cut down); or commandeering labour (for anti-erosion activity). And, because colonial incomes could not be allowed to grow quickly (to prevent inflation and conserve the dollars), the colonial state would become an economic leviathan, setting prices and wages wherever it could. The tropical colonies were to be integrated forcibly into the sterling economy on terms not of their choosing, but, it was claimed, to their considerable benefit. What has aptly been called the ‘second colonial occupation’ was the most self-confident face of the fourth British empire.

But, almost immediately, there were signs that the colonial governments were badly under-engined for their demanding new role. They lacked the intelligence, the financial incentives and above all the manpower to assert their power over what had hitherto been very lightly ruled hinterlands. In the Gold Coast (modern Ghana), this opened the space for a mass movement of protest, when a breakaway group of coast politicians, led by Kwame Nkrumah, began to mobilise growing discontent against the government's rural reforms. In February 1951, under the slogan of ‘Self-Government Now’, Nkrumah's Convention People's Party made ‘practically a clean sweep’ in the elections to the new local legislature created to conciliate ‘moderate opinion’.128 In Kenya, where the colonial government relied on its old chiefly allies to force through a programme for better land husbandry, the result was a spiral of increasingly violent social conflict among the Kikuyu, the main ethnic group in the central highlands. What became known as Mau Mau – the spread of ‘oathing’, urban militancy and agrarian terror – was already well established long before London agreed to a state of emergency in October 1952.129 The crisis came earlier in Malaya, where British rule had been demolished by the Japanese conquest. Here the colonial state had to be rebuilt, so London insisted, on more robust lines. Singapore would remain the great centre of British power in the East, Malaya its outwork and economic annexe. A Malayan Union giving more power to the colonial centre would unite the ramshackle ‘Federated’ and ‘Unfederated’ states of the pre-war era with the old ‘Straits Settlements’, the four crown colony enclaves of which Singapore was the largest. The revived colonial state would extend its control into the forested hinterland, and over the labour force of the mines and plantations whose ‘discipline’ had broken down in the occupation period. In fact, ‘Union’ was abandoned in the face of the angry reaction of the Malay elite, who feared that including Singapore would give the Chinese a predominant voice in the new Malaya. Singapore stayed separate and Malay feelings were soothed. But, in the Chinese community (in both Singapore and Malaya), the effects of occupation and of civil war in China deepened social divisions, and the appeal of communism. When the colonial government entered the fray to check rural squatting and labour militancy, violence soon spread.130 In June 1948, the British declared a state of emergency, to protect the white planters and safeguard the dollar earnings from rubber and tin which London valued so highly. It was to take more than five years before they broke the back of the communist-led insurrection. In Malaya, the British were willing to make a huge effort to protect what they saw as an economic resource and a prime strategic asset. But, here, as in the Gold Coast and Kenya, it soon became clear that the colonial state had become much more dependent on the local indigenous elite. The imperial initiative had run out of steam.

Test of Empire, 1951–1952

In its six years of office from July 1945 until October 1951, the Labour government had followed a remarkably consistent external policy. Its aim had been to protect British independence in Europe, where it seemed to be threatened by Soviet expansion, as well as British power in the world. It was no less committed to regaining Britain's old place in world trade as the best guarantee of domestic prosperity and restored living standards. It pursued these objectives by what seemed the logical means. It sought to engage the United States as fully as possible in the defence of Western Europe, recognising that Britain, even with its Empire and Commonwealth behind it, could not hope to hold out against a Soviet onslaught in another world war. It hoped to deter a further Soviet advance partly by alliance diplomacy in Europe (‘Western European Union’) and partly by digging in on the Soviet flank in the Middle East. After the dramatic upset of the convertibility crisis in July–August 1947, it vowed to defend the sterling economy by exchange control and commercial restriction until London's reserves of dollars and gold were sufficient to meet the pound's post-war liabilities and restore the City to its premier place in global finance. It was committed, in short, to building a new British world-system, not as grand perhaps as its pre-war model, but more dirigiste, more development-minded and, up to a point, more democratic.

In retrospect, this might be seen as a quixotic endeavour to turn back a tide that had set irrevocably against European empires in general and Britain's in particular. In fact, the Labour leaders behaved with what they clearly regarded as tough-minded pragmatism. They accepted the need to let India go quickly lest it drag them into a vast communal conflict. They abandoned Burma as ungovernable and made almost no effort to dissuade its new rulers from leaving the Commonwealth. They acknowledged the claim of Ceylon's Sinhalese elite to swift independence and endorsed the claim of the Commonwealth Secretary that ‘if we treat them strictly as a[n] [independent] dominion, they will behave very like a loyal colony.’131 They made little fuss when the Irish Free State became the Irish Republic, preferring a bilateral agreement to the tattered remains of the crown connection to protect British interests. They threw up the Palestine mandate and simply withdrew rather than enforce a partition that would further damage their relations with the Arab states. On the other hand, they were also determined to hold the Commonwealth together and get the help of the self-governing dominions in the defence of sterling – by forceful methods if necessary. They were ready to modify what was widely regarded as its main source of cohesion to mitigate the effects of the end of the Raj and retain the friendship of India. After their initial attempt to win Egyptian agreement to a new defence treaty by the drastic reduction of their military presence, they showed a stubborn refusal to give up British rights to use Egypt as a vast military base in the event of a new war. And, across the wide expanse of their tropical empire, they demanded economic and political change on a scale and at a speed that seemed likely to test the colonial state to the point of destruction.

After April 1949 and the signing of the North Atlantic treaty, with its promise of American help in the defence of Western Europe, Attlee and Bevin could have been forgiven for thinking that they had turned the main corner. Their aim, after all, was to preserve British power as a ‘third force’ in world affairs, in alliance with America to contain Soviet aggression, but not subordinate to it. Just as they hoped to restore sterling to something like parity with the dollar as a trading currency, they thought that a modified British world-system, with its treaty relations, Commonwealth links, informal connections and far-flung network of bases, would secure Britain's status as America's all but co-equal in the Western alliance. They looked forward to the easing of Cold War tensions and the demands they had made on the British economy. What remained of these hopes was largely demolished in the course of 1951–2 by the seismic consequences of the Korean War and the delayed after-shocks of the Palestine conflict.

1950 had been a good year for the British economy and the sterling area. With the balance of payments back in surplus and the easing of the dollar deficit, Marshall Aid was suspended. The sterling area, the Chancellor of the Exchequer told his Australian counterpart, was stronger than at any time since the war.132 But, he warned, it was a ‘darkening picture’. The darkest cloud was the huge increase in Britain's defence spending, the price Britain must pay, so the Attlee government argued, to maintain the American commitment to Europe's defence at a time when East Asia had become Washington's most urgent priority. The defence budget was raised to the enormous figure of £4.7 billion over three years, doubling the level of 1948–9, and threatening to consume more than 10 per cent – perhaps even 14 per cent – of output. Almost at once a vicious circle set in. The price of dollar goods rose just as rearmament made them more necessary. British production was diverted from overseas exports and dollar-earning activity. Britain's dollar reserves, the key to sterling's revival as a convertible currency, began to dwindle rapidly. Even in March 1951, before the crisis really set in, they stood at only one-third of the 1938 figure.133 Between June 1951 and March 1952, they fell by half. By October, the incoming Conservative government was engulfed in a full-blown sterling crisis, the third in six years. At an emergency meeting of Commonwealth finance ministers in January 1952, an urgent programme of dollar-saving was agreed.

Sterling recovered and staggered on to achieve convertible status in the (briefly) easier conditions of 1958. But the 1951 crisis was a real turning point. It offered stark evidence that the closed sterling economy could not be the springboard to the pound's full recovery as a world ‘master-currency’ or London's revival in global finance. The pound's credibility was badly damaged in Europe. Nor was it possible to prevent the leakage of sterling as dollars were bought by indirect methods. We have reached a ‘dead end’, concluded a secret report in the Bank of England.134 The draft communiqué of the Commonwealth finance ministers in January 1952 acknowledged the core of the problem.135 Sterling could only rebuild its old status and be safely convertible if London's reserves were restored to pre-war levels. That would require an enormous effort to increase trade and earn more dollars. But this could only be done if more investment was raised and if the sterling countries gained better access to the goods and capital of the dollar economies. Britain alone could not provide the development capital that was needed to improve the productiveness of its sterling area partners. Indeed, much of what it did send abroad was not the result of domestic saving but capital brought back from non-sterling countries (like Argentina).136 As a result, investment (in Australia) was ‘incredibly and worryingly low’.137 The finance ministers agreed that capital had to be sought from outside the sterling area, but, as the Australian ministers gloomily noted, it was hard to attract while sterling remained a ‘soft’ currency. And so the circle was closed. It was hard to escape the conclusion that its long convalescence had prepared Britain's commercial empire – the central pillar of British strength in the world – not for rejuvenation but for premature senility.

At almost exactly the same moment, the same wasting disease became painfully visible at the heart of Britain's Middle Eastern imperium. As we have seen, quite apart from the value of the Suez Canal Zone as the main base from which Britain's regional presence could be supplied and reinforced in time of war, and the need to use Egyptian resources and assets outside the Canal Zone, the Anglo-Egyptian relationship remained the centrepiece of Britain's Middle East influence. It was hard to imagine how that could survive the defection of Egypt from the British connection. That was why the British were so anxious to reconcile Cairo to their military claims. But they remained surprisingly confident that they could sit out the storm in the short term at least. In the last resort, or so they assumed, they could seal off the Canal Zone and send troops into Cairo and Alexandria to protect their citizens and enforce a change of government. But, between October 1951 and January 1952, a revolution took place in Anglo-Egyptian relations.

It was triggered by the treaty abrogation that Nahas had announced. At first, the British were tempted to dismiss it as simply ‘hot air’. But it soon became clear that something much more than an empty gesture had happened. Egyptian labour disappeared from the Canal Zone. The police became hostile.138 British soldiers began to be murdered. The Canal Zone, remarked the Middle East Office in Cairo, ‘can no longer be considered a base for the defence of the Middle East, having lost its wider operational potential’.139 The British cast around for remedial measures. Reinforcements were sent out to Cyprus, but, since the strategic reserve in Britain was already exhausted, flooding the Canal Zone with troops was not a viable option. Financial sanctions against Egypt were considered and rejected.140 Sealing off the Canal Zone under a military government would impose administrative complications that were ‘almost intolerable’, said the Chiefs of Staff.141 Instead, the local commander-in-chief was empowered to disarm the troublesome Egyptian police. Then came disaster. At Ismailia on the Canal, on 25 January 1952, the British stormed the police station, killing more than forty Egyptians. The next day, in Cairo, there were violent anti-British disturbances in which British civilians were killed and British property wrecked including the famous Shepheard's Hotel. The British had long had a plan in case of such an event. Operation ‘Rodeo’ would bring British troops from the Canal Zone to the city. But now the generals held back. They could not be sure to keep the Canal Zone secure and have an adequate force to make ‘Rodeo’ work. For two things had changed. The first was the rise of a popular nationalism, a form of mass opposition that the British had not faced since 1919. The second was the risk of a clash with the Egyptian army, on whose tacit acquiescence the British had always previously counted. The immediate crisis blew over; Nahas was dismissed by Farouk; the desultory talks were resumed. But, almost unnoticed, the armed strength that had underlain British influence in Egypt since 1882, and which had given the Residency its ‘whisper behind the throne’, was melting away. The decolonisation of Egypt that Nasser completed was now under way.

‘Thinking over our difficulties in Egypt’, remarked a senior Foreign Office official, ‘it seems to me that the essential difficulty arises from the very obvious fact that we lack power. The Egyptians know this, and that accounts for their intransigence.’142 The ‘basic and fundamental aim of British policy’, he went on, ‘is to build up our lost power. Once we despair of doing so, we shall never attain this aim.’ It was a lapidary comment on the British dilemma: ‘We are not strong enough to carry out the policies needed if we are to retain our position in the world; if we show weakness, our position in the world diminishes.’143 Until the double crisis over Egypt and sterling, it had been possible to think that, by subtle diplomacy, Spartan economics, and the vigorous deployment of Britain's imperial ‘assets’, Britain would regain its old position as an independent centre of world power. But the crippling weakness at the core of their post-war system had now been revealed, with little hope of relief. Without a strong sterling economy or the great power leverage conferred by their Middle Eastern imperium, the British claim to world power would look threadbare indeed. The huge expansion of the Cold War conflict that Korea had signalled sealed their geopolitical fate. It marked the final arrival of the bipolar world that had advanced in stages since 1943. It meant that British dependence on American power would not lessen but grow. It forced British policy into a stance both defensive and brittle, and driven more and more by the search for prestige. After 1951, the best they could hope for was to be the third world power: within a few years, they had become something different – a power in the third world.

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