History, as the familiar saying goes, does not repeat, but often rhymes. Do the crises in Gaza and Ukraine impose a “Suez Moment” on the United States – the events of 2022-24, a refrain to 1956-57?
October 1956 featured two major international crises. In that month, Israel launched an assault on Egypt to reopen the Suez Canal which had been nationalized. Coordinated with that action, France and the United Kingdom launched an attack to topple Egyptian President Gamal Abdel Nasser, a strong Arab nationalist. The same month, the Soviet Union sent tanks to suppress the “Hungarian Uprising” to maintain strong control over its sphere of interest.
Fast forward seven decades. In February 2022 Russia sent tanks into Ukraine, which borders Hungary, ostensibly to prevent Ukraine from becoming a member of NATO which Russia views as a threat to its national security. In October 2023, while the Russian-Ukrainian war raged on, Israel began a military operation on Gaza, from which Hamas had launched a terrorist attack.
The role of the United States in the two twin crises was, however, drastically different. In 1956 the Eisenhower administration condemned both “invasions,” and even threatened to sanction France and the UK. In 2022-24 the U.S. is the major weapons provider to one side in each current conflict. The U.S. imposed widespread economic sanctions against Russia. In both 1956 and 2024 cases, Western access to the Suez Canal was curtailed, by Egyptian control in the first instance and by Houthi rebels sympathetic to the Palestinians today.
The events of 1956-57 had a profound geopolitical impact. The withdrawal of France and the UK from Suez signified their decline from major power status and marked the end of their influence over the Levant which had derived from mandates held in the region under the League of Nations. The event also precipitated a financial crisis which resulted in the further diminution of the British Pound as a world currency. In addition, 1956 set the foundation for the U.S. as a major player in the Middle East.
As was the case seven decades ago, the twin crises of 2022-24 are shaking the foundations of the international order.
The United States’ unwavering support of Israel does not come without ramifications. Pictures of the U.S. casting the sole negative votes – vetoes – in the UN Security Council supporting Israel’s positions have not played well in the Global South as is also the case with American shipments of armaments used in the military action in Gaza. These concerns are also shared by many in the West. Since January 1st of this year five EU nations broke with the United States and have either joined South Africa’s case before the ICJ or recognized the State of Palestine. Saudi Arabia, which, with heavy diplomatic effort by the U.S., had been on the verge of establishing full diplomatic relations with Israel, now sets the creation of a Palestinian State as a precondition.
The war between Russia and Ukraine comes with far-reaching ramifications as well. Following World War II, the United States was granted the “exorbitant privilege” of having the U.S. dollar crowned as the global reserve currency. Over time, however, and in overdrive since the war in Ukraine began, the United States has been accused of “weaponizing” the dollar and dollar payments system through the extensive imposition of economic sanctions.
Although the U.S. dollar's share of international commerce has declined gradually over the past 25 years, most economists believe that the dollar’s position is secure for some time to come. But the signposts of change are clear. Just this past week Saudi Arabia terminated its fifty-year agreement to price oil in dollars. It would be complacent for U.S. leadership to take things for granted. Ernest Hemingway once wrote that a financial calamity occurs in two stages, “gradually, then suddenly.”
Consequently, the non-Western world has been grasping for an alternative framework for global governance, trade, and finance. BRICS is the most visible, but not exclusive, manifestation of this desire. The BRICS New Development Bank, the aspirational desire for a BRICS currency (backed by a basket of currencies or gold), and several incipient alternative payment systems are presented to challenge the Bretton Woods system, the U.S. dollar, and SWIFT. And, above all, China is waiting in the wings. It is not only the predominant economy in BRICS but is increasingly active in displacing the U.S., a power broker in the Middle East.
The question of the moment, reflecting on the lessons of history, is whether the United States has so overextended itself and so overplayed its hand that the parallels to France and the UK begin to emerge; in other words, is the United States facing a “Suez Moment” of its own.
