Russia’s Crisis Is Europe’s Crisis

On the 30th of October 1956, France and Great Britain in support of Israel invaded Egypt.
This military action was taken in response to Gamal Abdel Nasser’s decision to nationalize the Suez Canal. The military campaign was generally a success, however, soon after the Prime Minister of England, Anthony Eden, was forced to withdraw militarily and resign in utter humiliation.
The President of America at the time, Dwight D. Eisenhower, had not been informed by the belligerent nations of their intentions and was furious at their unilateral invasion. The American administration decided to force an about-turn. To achieve this objective Eisenhower did not use American troops, nuclear threat or conventional fire-power. No, he simply declared economic war.
Accordingly, no crisis financial support was granted to Britain. Within a week of the invasion 280 million dollars worth of sterling had been sold, an enormous amount of currency in those days. On the 6th of November Harold McMillan, the Chancellor of the Exchequer, informed Eden that there was a full scale run on the pound. He outlined to an emergency cabinet meeting that without American support the currency of the British Empire was going to collapse. Following frantic high level transatlantic phone calls between Washington and the City of London, a deal was struck. In return for saving the sterling, Eisenhower insisted upon an agreement for the complete withdrawal of all invasion forces. Eisenhower’s demand was met within hours. American economic hegemony was born. The rest is history.

This post was published at FinancialSense on 12/19/2014.