The Empire Project: The Rise and Fall of the British World-System, 1830–1970 (93 page)

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.
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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.
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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.
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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.
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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
imperial
ally 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.
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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.
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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.
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‘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.’
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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.’
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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.