"gam. noun—a social meeting of two (or more) whaleships, generally on a cruising-ground; when, after exchanging hails, they exchange visits by boats’ crews; the two captains remaining, for the time, on board of one ship, and the two chief mates on the other." Herman Melville, Moby Dick
Okay, so the big boat is no longer blocking the Suez Canal. But that doesn’t mean we can go back to ignoring the global networks of capitalism and colonialism that make our world run. Laleh Khalili – author of the brilliant new book, Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula – joins us for a wide-ranging discussion of her rich, historical analysis of global shipping, imperialist infrastructure, and technological fantasy.
Laleh Khalili looks into the murky business of global shipping, an industry much in the headlines because of the stuck ship, but whose structure largely went unexplored. And LaDonna Pavetti talks about subsidized employment for low-wage workers.
30. A Marine History of Capitalism: An Interview with Laleh Khalili
Before the container ship crisis in the Suez Canal, Grace spoke with Laleh Khalili, Professor of International Politics at Queen Mary University of London, and author of Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula.
They discussed the fascinating architecture and infrastructure that underpins the backbone of capitalism—global shipping—and what it tells us about state power, corporate sovereignty, and imperialism – as well as how those networks are adapting to China’s increasingly assertive economic expansion.
The Suez Canal blockage inspired a thousand memes, but its consequences for the world economy were deadly serious. The canal has always performed a vital function for capitalist trade, and there’s no reason to think its economic and geopolitical importance is going to decline.
Interview by Daniel Finn
The blockage of the Suez Canal by the giant container ship Ever Given created a traffic jam with hundreds of ships carrying goods worth billions of dollars. German insurance company Allianz estimated that a week’s closure of the canal would cost the world economy between $6 and $10 billion.
Since its opening in 1869, the canal has been a vital channel for world commerce. Major developments in global capitalism, from the rise of the Middle East as an oil producer to the shift of manufacturing to the Far East, have only increased its importance. The canal has experienced periods of closure before as a result of political disputes in the region, and analysts have worried about its potential vulnerability to terrorist attacks. But this shutdown was the result of plain incompetence.
DF – How did the Suez Canal come to be built? What was the economic and geopolitical context that made the project viable?
LK – The construction of the Suez Canal in the latter half of the nineteenth century speaks directly to both intra-European rivalries — especially between Britain and France — but even more importantly to the intensification of colonization and empire in Asia and Africa. It is significant that both the canal and the laying of submarine telegraph cables were intended to facilitate communication between the metropoles and the colonies. Pressed labor built the canal, and untold thousands died in the course of its construction (not unlike the US construction of the Panama Canal a few decades later).
Technologically, one major development was crucial to the development of the canal, and it also benefited from the canal’s construction: the placing of steam engines aboard ships. Since a sailing ship cannot sail down the canal when transversal winds are blowing, its opening consolidated the hegemony of coal-powered ships over sailing ships. It is no accident that the British colonized Aden, at the bottom of the Red Sea and straddling Bab al-Mandab, a few decades before the construction of the canal and turned it into an important coaling station, first for the vessels of the East India Company and later for those of the Admiralty and other British ships.
But the canal wasn’t only about the European connection to Asia and Africa. The US Civil War, the blockade of Confederate ports by the North, and the general strike — as W. E. B. Du Bois called it — by enslaved African Americans that precipitated the end of the war and continued after it all led to greater emphasis being placed on Egyptian cotton.
As Roger Owen has written in his book Cotton and the Egyptian Economy, by the end of the nineteenth century, cotton had become the primary export commodity of Egypt. Control over cotton and the inability of the Egyptian Khedive to pay back its canal construction debt were both factors in the British military takeover of Egypt in 1882 and its de facto control of the canal.
DF – What ownership structure was adopted for the canal?
LK – The canal construction company was a joint stock company with the French holding the most shares, but the British had effective control over Suez. The Universal Company of the Maritime Canal of Suez (or La Compagnie Universelle du Canal Maritime de Suez) operated the canal until 1956, when Gamal Abdel Nasser nationalized it in one of the most significant moments of post–Second World War decolonization.
In part, the nationalization of the canal by Nasser’s government was to enable Egypt to take over the canal fees in order to fund the construction of the Aswan Dam. But it was also an acknowledgment of how important control over transportation infrastructures is. Only a few years before, when Iran’s prime minister Muhammad Musaddiq dared to nationalize the holdings of the Anglo-Iranian Oil Company — now BP — in his country, one of the most effective measures used to bring him to heel was to prevent any tankers from carrying Iranian oil. Nasser foresaw that control over the canal would also give him a degree of control over the destiny of Egypt which no other measure would do.
DF – What was the outcome of the Suez Crisis and the Anglo-French-Israeli attack on Egypt in 1956 for the canal in particular?
LK – The Suez Crisis happened in the same year as the Soviet invasion of Hungary with its quashing of the democratic movement there, and the two events are deeply connected. It was in part for fear of “losing” Egypt to Soviet control that President Eisenhower rebuked the tripartite belligerents — France, Britain, and Israel — into withdrawing from Egypt. In some ways, the 1953 restoration of the Shah in Iran and the 1956 war laid the groundwork for the imperial handover in the Middle East from Britain to the US, which was completed at last in the early 1970s.
DF – What impact did the rise of the Middle East as the world’s leading source of oil have on the canal?
LK – Obviously, the discovery of oil in the Persian/Arabian Gulf basin — Iran, Iraq, and on the Arabian Peninsula — meant that one of the primary products steaming through the canal was going to be oil. In fact, by 1970, some 60-70 percent of all seaborne cargo consisted of crude oil and petroleum products. And so much of that oil, of course, was carried to Europe, where reconstruction and industrial production were taking off in the postwar decades of recovery.
The question can be asked the other way around as well. The closure of the canal in 1958 led to a rerouting of these oil tankers around the Cape of Good Hope and thus encouraged the shift to the use of much larger crude carriers to take advantage of economies of scale.
DF – How did the 1967 war and its aftermath affect usage of the canal?
LK – Although the closure of the Suez Canal as a result of the 1967 war lasted much longer, until 1975, it did not have the same kind of effects as the much shorter 1958 closure. One of the more interesting side stories of the 1967 closure, however, was that of the “Yellow Fleet”: ships trapped in the Great Bitter Lake in the canal for years on end, so-called because they were covered by the yellow Saharan sand. I have written elsewhere about the other, global effects of this period of closure.
DF – How has the shift of economic power — and especially manufacturing — from West to East in recent decades affected the canal?
LK – In some ways, this has made the canal even more significant. The closures of 1958 and 1967–1975 led to prospecting for oil by European powers in West and North Africa, and Kazakh and Azeri oil have readily flowed to Europe since the end of the Cold War. As a result, Middle Eastern oil, though still important, was no longer the most significant cargo steaming through Suez. Container ships carrying goods manufactured in China and the rest of East and Southeast Asia are now — at least in terms of economic value — the most important and valuable cargoes going through the canal.
DF – Has China’s construction of a land route from its coastal regions to Europe via Central Asia brought the canal’s future into question?
LK – I really don’t think it has. High-speed rails traverse the land route across the Eurasian mass. These fast trains take approximately three weeks to go from the east coast of China to Budapest and onward to Hamburg and Rotterdam. They are expensive to run, which is why they often carry high-value and time-sensitive goods, like computers and other electronic items. In addition, China’s Belt and Road Initiative land routes go through several areas where the country’s rulers have violently suppressed local populations, most significantly among them the Uighur people of Xinjiang.
Sea routes are by contrast slower, but they can serve cargo that is bulkier and less time-sensitive. The fact that China so completely dominates the top ten list of container ports in the world says something about the importance of maritime transport in the country’s economic strategy.
DF – What does the current fiasco tell us about the canal’s significance for the world economy?
LK – We know that currently, about 12 percent of all globally traded goods go through the canal and that the canal is one of the most significant trade routes — along with the trans-Atlantic and trans-Pacific routes — in the world. But its closure also shows how brittle this trade can be: just-in-time auto manufacturers in Europe were among those most affected by the nearly weeklong closure of the canal. We know that efficiency — which is the holy grail of capital accumulation — is also the antithesis of robustness, and the closure has made this very obvious.
ABOUT THE AUTHOR
Laleh Khalili is a professor of international politics at Queen Mary University of London. She is the author of Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula, Heroes and Martyrs of Palestine: The Politics of National Commemoration, and Time in the Shadows: Confinement in Counterinsurgencies.
ABOUT THE INTERVIEWER
Daniel Finn is the features editor at Jacobin. He is the author of One Man’s Terrorist: A Political History of the IRA.
It was immediately clear that the bulbous nose at the prow of the ship had lodged in the canal’s bank, and the 1,300-foot body of the ship lay diagonally across the waterway, blocking traffic. Ironically, as my new book explains, the most dramatic leaps in ship sizes were precipitated by Suez Canal politics in the 1950s and 1960s. Decades later, it’s the vast size of the ship that makes refloating it so difficult.
By Friday, more than 160 ships were anchored in the Mediterranean and the Red seas. Egyptian officials appeared confident the canal could reopen within days, while salvage engineers cautioned that freeing the stuck ship might take weeks. Oil prices jumped up by a few dollars on Wednesday; and insurance claims on freight delays have begun to trickle in.ADhttps://e832bcdfeda1fbe4e1ab8c9ea1be776b.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
Why ships became so large
At a quarter-mile, the ship is almost as long as the Empire State Building is tall. When fully laden, Ever Given can carry 20,000 20-foot freight containers, stacked in 10 or 11 rows, both on the deck and in the ship’s hold. Because of its size and its deep draft, only the largest ports with deep harbors and the largest gantry cranes can receive the ship.
Since its inauguration in 1869, the Suez Canal has been one of the most significant arteries of global trade. Its construction by rival European powers — Britain and France — consolidated their empires in Asia and Africa. When Egypt nationalized the canal in 1956, Britain, France and Israel attacked the country through Sinai. In the war that ensued, the canal was closed, filled with war debris and sunken ships.
The eight-month closure of the canal in 1956 and the eight-year closure after the 1967 war led to significant changes in global shipping. Here’s why: If oil tankers from the Middle East now had to round the Cape of Good Hope to reach Europe, their journey would take at least three weeks longer.AD
To ensure profitability of this longer route, many freight carriers opted to take advantage of economies of scale by ordering massive new ships. In the space of a few years, oil tankers mushroomed in size, with the ultra large crude carriers reaching 1,300 feet, the same length as Ever Given.
Container ships account for much of global trade
About 30 percent of the world’s seaborne trade today is in oil and petroleum products. Container ships like Ever Given primarily carry manufactured goods, and now account for one-third of the volume of global trade and an astonishing 60 percent of seaborne trade by value.
Nearly 12 percent of the world’s cargo travels through the Suez Canal. That this vast flow of cargo could come to a halt because a gust of wind blew a ship off course makes the simultaneous immensity and brittleness of global trade apparent.AD
And the grounding of Ever Given also has exposed how the complex ownership structures in global shipping might make it difficult to hold anyone accountable. The Ever Given is operated by Taiwan-based shipping company Evergreen Maritime. Evergreen charters the ship from a Japanese firm; a Dubai-based company acts as the agent for the ship in ports; and the ship flies the flag of Panama.
Who might foot the bill?
A ship follows the laws of the flag it flies, not that of the ship’s owners or operators. The Panamanian flag is a “flag of convenience.” Flags of convenience, or open registries, have more lax labor and environmental regulations, and lower thresholds for safety and insurance provisions.
Last summer, the Wakashio, another ship owned by a Japanese firm but flagged to Panama, ran aground in Mauritius, spilling oil into the island’s sensitive marine ecosystem. The fracturing of ownership and operation across different legal jurisdictions and national boundaries also makes it much harder to assign responsibility for accidents such as the grounding of Wakashio and Ever Given.AD
It is as yet unclear how long it will take for the Ever Given to be towed out of the flow of the canal traffic. As the clock ticks, Egypt is not collecting tolls on ships’ passage. And ships, including those operated by Evergreen, have begun to reroute around the Cape of Good Hope.
For now, the knock-on effect of the stoppage is the accumulation of insurance claims and late fees, and delays in the delivery of cargo. But in the longer term, much as it did in the mid-20th century, the 2021 blockage of the Suez Canal, combined with the effects of the pandemic, may precipitate a reckoning in how maritime transport operates.
I just wrote a little something on Infrastructures for Noema Magazine.
It starts by discussing the Rishiganga dam:
Early on the morning of Feb. 7, in the foothills of the Indian Himalayas, a massive flash flood crashed through the Rishiganga hydroelectric dam, sending a tremendous flood of water and debris down the Dhauliganga River. Villages, roads and bridges were washed away. A month later, more than 70 bodies have been recovered, but at least 100 people are still missing.
Scientists from the Wadia Institute of Himalayan Geology later flew a helicopter over the scene. A glacier on a remote mountain peak had apparently broken apart, fallen down a steep hillside and blocked the flow of the river. The water in the river built up and then burst through, causing the massive flooding downstream.
And ends thus:
Planners must not privatize the profits made from infrastructures while demanding public investments and socializing the risks. For infrastructure to work, for it to serve the public and steward the world’s air, water and soil for future generations, it has to be planned through more open, egalitarian and environmentally militant processes.
I was thrilled to publish a piece for the London Review of Books on China’s Belt and Road Initiative. Instead of wanting to look at it through the eyes of the Chinese or -more egregiously- US policy-makers, I was really interested in thinking about how the countries where the BRI’s infrastructure investments and constructions take place are experiencing the process. And it was really important for me to situate the BRI in a longer historical trajectory – of Chinese labourers and traders spread across the globe at the end of the 19th century, on to the South-South solidarity projects of the moment of decolonisation, to today’s BRI.
In a short story called ‘The Chinese Road’ written in the 1970s by the Yemeni-Ethiopian Mohammad Abdul-Wali, a Yemeni man befriends a Chinese construction worker on the new road from the port of Hodeida on the Red Sea, ‘cutting through the mountain’, to the capital, Sanaa, more than two hundred kilometres away. Abdul-Wali describes the competent and friendly Chinese labourers who live in tents with the Yemenis. They all learn Arabic, unlike an earlier group of foreigners: the British, sweaty and florid, with their colony in Aden, who remained aloof from the locals, and departed ‘leaving nothing behind but the hatred of [the] people’. The Chinese construction workers, by contrast, leave a lasting legacy.
The completion of the first paved road in Yemen in 1961 was commemorated in a series of stamps that also celebrated the building of a modern port in Hodeida with the help of Soviet engineers. By that point 1100 Chinese construction workers and engineers were building roads in Yemen. Work on the Sanaa-Hodeida road had begun in 1959, the same year China started blasting through the Himalayas to build the Karakoram Highway to Pakistan. In 1967, China completed the sky-high ‘friendship road’ between Lhasa and Kathmandu, and between 1970 and 1975 it built a railway between Tanzania and Zambia. Chinese railway experts were remembered respectfully by their local counterparts for passing on their skills.
The project includes a film by Hira Nabi on shipbreaking in Gadani, Pakistan, titled All that Perishes at the Edge of Land (2019), as well as Salwa’s conversation with myself and an artistic curator based in Vienna and Istanbul, Övül Durmuşoğlu. The conversation can be heard here: