The fallout from the 1956 Suez Crisis was a significant factor in encouraging the growth in demand for small cars across Europe in the late 1950’s and early 1960’s. Here is a brief summary of that historic event.
The 1956 Suez Crisis shattered the complacency that had prevailed in Europe since the end of the Second World War with regard to the security of Middle East oil supplies. With strong historic colonial ties to the region, Britain and France assumed that their interests could be protected via diplomatic ‘soft’ power and the perceived threat of military intervention in extremis.
General Gamal Abdel Nasser became the second President of Egypt in October 1954. He had cleared the way for this by leading the 1952 coup d’état that deposed the monarchy and, having survived an assassination attempt in 1954 by a member of the Muslim Brotherhood, he banned that organisation and all opposition political parties, put his predecessor as president, Mohamed Bey Naguib, under house-arrest and assumed the presidency. His appointment was formalised by a vote to approve a new constitution in June 1956, with a single political party, the National Union, led by Nasser.
Nasser was fiercely nationalistic and angered Western governments by adopting a neutral stance in the Cold War and recognising the legitimacy of The People’s Republic of China. In retribution, the UK and US reneged on a promise to fund the construction of the Aswan Dam. Nasser retaliated by nationalising the Suez Canal, which had been under joint British and French control. The decision was announced on 26th July 1956 in a speech denouncing foreign imperialism and demanding self-determination for Arab nations.
Britain and France responded by conniving with Israel to justify a military invasion of Egypt. Israel invaded the Egyptian Sinai in late October, in response to which Britain and France called for a cease-fire. When this call was ignored, an Anglo-French force of paratroopers landed along the canal in early November. The Egyptian forces were defeated, but the canal had been sufficiently damaged as to be impassable for all shipping. Moreover, an oil pipeline through Syria had also been put out of action in the conflict.
When it became known that the military action had been orchestrated in advance, US President Dwight D. Eisenhower threatened to destabilise the UK economy by vetoing a requested IMF loan and dumping Gilts(1) unless the British forces stood down. Britain, facing a potential economic collapse, had to comply. The scandal and national humiliation forced the resignation of Prime Minister Anthony Eden.
The canal was re-opened to shipping in March 1957 under Egyptian control, but the shock caused by the temporary disruption to trade was profound. After five months of petrol rationing, there was a realisation that fuel supplies (and prices) were now under the control of forces at best ambivalent and more likely hostile to the interests of Western Europe.
The Suez Crisis and its aftermath was by no means the only factor in the growing demand for small and economical cars in Western Europe. Increasing affluence was making the prospect of car ownership a reality for many who had previously only dreamt of it. The Suez Crisis merely added further impetus to this trend.
(1) Gilts are UK government bonds, debt instruments that are freely traded in the money markets. The US was a major holder of Gilts and even a threat to sell them could have driven Sterling interest rates sharply higher, crippling an already heavily indebted post-war UK economy.