Is the attack on Iran a Suez moment for the United States?

The Suez crisis in 1957 was the end of the road for Britain’s 200-year role as a global rule-maker. From then on, it became a rule-taker. The recent political nostalgia for a different England pedalled by Brexiteers, that elegiac world of warm beer, sandwiches and Spitfires, was the world before Suez. The crisis was a monumental cock-up involving Britain, France and Israel, and a botched attack on Egypt to ensure European control over the critical Suez Canal. The fiasco resulted in the Egyptian nationalist leader, Gamal Nasser, having full authority over the canal.

Following a dressing down by new kid on the block the US, Britain and France withdrew with their tails between their imperialist legs. In the story of the global fight against colonialism, Suez was a famed victory for the colonised. It constituted the ultimate asymmetric war story where, like Iran and the Straits of Hormuz today, possession is nine-tenths of the law. Geography was on the Egyptian side.

Suez changed the global view of Britain for good. From then on, the risk of being associated with or adjacent to Britain in everything from geopolitics to finance increased. For more than 100 years, the UK had been a sure thing: the City of London was the epicentre of global finance; sterling was the world’s reserve currency; and the interest rates on UK gilts – the interest at which the UK government borrowed – was regarded as the global risk-free rate of return.

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This meant that whatever else happened in the world, the UK government was seen as always good for its money, and would never default. With sterling pre-eminent, investors could shove their money into UK gilts and go on holiday, safe in the knowledge that it was a risk-free bet. In short, the UK manufactured sterling assets and the rest of world bought them, without question.

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