Ottoman History Podcast - Shipping and Empire around the Arabian Peninsula, Part 2

Episode Date: December 3, 2022

with Laleh Khalili hosted by Matthew Ghazarian | How did massive, modern shipping ports emerge from the sands of the Arabian Peninsula, and what they teach us about our present forms of global exchange? Combining historical research with site visits that included multiple voyages around the Arabian Peninsula, our guest Laleh Khalili sheds light on these questions in this two-part series on shipping and empire around the Arabian Peninsula. Through her investigation of the entangled realms of commerce, technology, and empire in the Indian Ocean world, Khalili shows how changes in any of one of them sparked associated changes in the others. In this second part, we focus on the period from the mid-20th century period when new centers of trade like Dubai vied to attract commerce and investment to their shores. As vessel size grew, so too did ports, whose construction and maintainence have remade coastal ecologies in the Gulf. We discuss the the impacts of armed conflict and the COVID-19 pandemic on shipping, as well as the recent shifts in global logistics that have arisen with the rise of large Middle East-based ports management firms. « Click for More »

Hello, this is Ottoman History Podcast. I'm Matt Kazarian. This is the second installment of a two-part series on shipping an empire around the Arabian Peninsula. In our first installment, we began with the arrival of Ottoman and later British imperial rule in the Indian Ocean, covering topics including technological change, imperial commerce, and labor aboard ships. We'll be speaking with our guest Laleh Khalili, and I'm a professor of international politics at Queen Mary University of London. Dr. Khalili is the author of Sinus of War and Trade, Shipping and Capitalism in the Arabian Peninsula, out from Verso in 2020. In this episode, we'll pick up in the mid-20th century, when new shipping centers like Dubai

were fast ascendant in the Gulf. We'll discuss the ecological effects of ports construction in the region. You change the flow of rivers, you change the speed of rivers, you destroy the ecosystems in those places. We'll also explore how shipping companies saw massive windfalls in the midst of the supply chain issues of the past few years. These companies have actually like billions of dollars in profits. And we'll look at how the current architecture of global shipping is primed to produce such crises. Efficiency is the enemy of resilience. We started by discussing ecology and the ports of the Arabian Peninsula, the kinds of environments that ships are navigating, and how shipping and ports construction have widespread ecological effects. So as the daughter of a geologist, and as somebody who's undergraduate

degrees in engineering, I was really interested in the sort of nerdy technical bits about the construction of the ports, actually, and the particular sort of geological and topological kinds of peculiarities of the ports around the Arabian Peninsula. So one of the things that's really striking when you travel around the Arabian Peninsula, as I did in the ship, is the extent to which the Red Sea ports, on the one hand, have quite deep harbors because the Red Sea, it has very, very extremely steep sides. So it suddenly becomes very deep, very fast. And at the very center of it, because obviously it's where two continental plates meet. But what is also interesting about that is that a lot of the

Red Sea and actually some parts of the coast of the Indian Ocean as well, are actually extremely rich in corals. And so these coral reefs end up becoming extremely hard kind of floor, but also very dangerous because there are little coral islands essentially jutting up from the water and sometimes you can't see them. So as the ship, for example, came into Jeddah, what one becomes very aware of is the extent to which there are these tiny little sort of coral islands strewn everywhere and that a very large ship has to navigate in between them in order not to damage its hull. So that's one thing. Along the coast of Indian Ocean, one of the things that obviously made Aden such a sort of an amenable port was because it had a very deep harbor and

it actually did not have that kind of a coral reef running alongside it, which made it a little bit less dangerous for ships to come into. The geological features of the seafloor in the Red Sea are quite different from those on the other side of the Arabian Peninsula in the Persian Gulf, also sometimes called the Arabian Gulf. Then when you come around the Arabian Peninsula and you arrive into the Persian slash Arabian Gulf, one of the things that you become deeply aware of is the extent to which, first of all, it's a very shallow sea, especially when you compare it to the Red Sea.

And second, the bottom of the sea, which is very, very shallow, is actually extremely unstable, very sandy and very subject to currents. And so when the Shamal wind blows, which usually brings with it, for example, sandstorms into the Gulf, it also actually affects the currents. And the currents are affected in such a way that the sand at the bottom of the sea ends up shifting in ways that makes actually the bottom of the sea quite dangerous. So if you have a ship with a very large draft... Draft is basically how deep the ship sits beneath the waterline. Or a laden ship, which means that it sinks even further down. You have to constantly dredge the bottom of the sea in order to make sure that this shifting sand at the bottom doesn't cause the ship to run aground.

We, of course, know that ships running aground could cause a lot of problems, as your listeners probably remember from Ever Given running aground in the Suez Canal. But that is definitely a concern. And in fact, one of the times that I was on the ship going into Jabal Ali, one of the things that was really striking was that apparently a wind had blown and a ship had blown off course. And it was actually ran aground a bit because it came off the channel that is dredged frequently that goes from the deeper part of the Gulf into the port in Jabal Ali. Jabal Ali is the massive modern shipping port of Dubai. So the sea there is so shallow that they have this particular channel that the ships just can't go off route out of this channel,

because if they do, they might run aground. And this channel is constantly dredged, and so ships often convoy down the channel into the port of Jabal Ali. In addition to dredging required for ships to navigate into the port and others in the Arabian Peninsula, Khalili discussed the land reclamation used in ports construction and how sourcing the materials for land reclamation has had far-flung negative ecological effects. Now, in order for them to dredge this at the port itself, you also have to have other kinds of engineering construction.

So in addition to dredging, which has to be done constantly, it has to be done in order to rip up some of these coral reefs in the harder part of the Red Sea. These ports also are involved in land reclamation. Now, land reclamation is where you extend the port. And it could be just as simple as doing something as building a breakwater, which is essentially like an arc of cement, essentially. Or it can be much more substantial than that. The port of Singapore, for example, is dependent on land reclamation. And over the course of 150 years, I believe it has expanded by something like 150%. So in order for land reclamation to take place, you need to make concrete. In order to make concrete, you need cement and something called aggregate. And aggregate is a combination of sand and pebbles.

But you have to use particular kinds of sand and pebbles in order to build aggregate. And not all sand is actually useful for this. So rather interestingly, the sand that is windblown, that emerges because of wind erosion, which is the kind of sand that you find in the Arab Al-Khali or in the Arabian Peninsula more widely, is too even in its size between different grains of sand, but also too perfectly rounded because of wind erosion. And therefore, it's not very good for making of concrete.

The kind of sand that you want is water eroded sands, which often comes from either beaches or often more often than not from riparian river bottom kind of ecosystems. And of course, those kinds of riparian ecosystems are perhaps most frequently available in Southeast Asia. So what you find is huge amounts of sand being exported from South and Southeast Asia to build in the Arabian Peninsula, but also elsewhere. Of course, what happens is that because sand ends up becoming such an incredibly desirable commodity, like all desirable commodities, there's a lot of smuggling of it also that happens alongside. And sand smuggling is where sand miners come in without having the necessary permits and without making any kind of gesture towards replenishability or sustainability of the sand that they're mining illegally and just dig in and take stuff away. And of course, when you do that, you change the flow of rivers, you change the speed of rivers, you destroy the ecosystems in those places. So the land

reclamation process often entails the destruction of ecosystems in far remove. And then the process of dredging itself actually destroys a lot of the ecosystem in situ because, of course, it digs up these sensitive ecosystems that are subsea. It digs up these coral reefs. And in the case of the Gulf, because of the successive wars that have happened there, what lies at the bottom of the sea includes a lot of the kind of remnants from the various wars, including oil residues. And so digging up, dredging the bottom of the sea means that the stuff that has settled, that has silted down to the bottom, ends up being suspended again in the water

and, of course, affecting the flora and fauna. In addition to that, all of that dredging and land reclamation also, of course, changes the shoreline ecosystems along the Gulf, but also along the rest of the Arabian Peninsula. The Gulf area had some of the most amazing kind of shoreline amphibious kinds of flora and fauna and sub-hazards being salt flats, which are actually quite rich in living things. And dredging and land reclamation actually destroy these mangroves and salt flats by completely reconfiguring and re-engineering these areas. So there's all these levels and

distances and proximities and forms of ecological devastation that happens when you build these infrastructures. We also discussed the armed conflicts of the 20th century in the Middle East and their effects on ports development there. So it's a bit of a cliche now to say that wars are not only destructive, but also productive and generative. And one of the things that one really can see is the extent to which the maritime transportation infrastructures, but also the sort of the processes of maritime transportation in the Arabian Peninsula, but even far beyond that, are affected by war. So one basic example that we can start with is, for example, the closure of the Suez Canal first in the 1950s during the 1956 tripartite war on Egypt by France, Britain, and Israel, which lasted about eight months in 1956 to 57. And then an eight year closure that happens in the wake of

the 1967 war, the Israeli attack on Egypt from 1967 onwards for eight years. And what is really fascinating is that the closure of the Suez Canal during that period forces ships, obviously, mostly oil tankers at this stage. At that point, I think more than half of all the ships that were traveling in the world were actually oil tankers. And what that results in, the closure, is that these oil tankers now have to go from the Gulf area around the Cape of Good Hope to Europe and elsewhere. And I think that that kind of a multifold increase in the length of the route results in the ship owners looking for economies of scale. And so you see this massive jump in the size of the ships, particularly tankers at that stage, but also bulk carriers. That happens in the 1950s and 60s. And this, of course, changes transport infrastructures, not only in the

Gulf, where these bigger tankers have to come and lift oil, but also in the places which are in receipt of the oil, and in particular, the ports of the North Sea and the North Atlantic. So that's one of the effects of the war that happens in that period. You can see the sort of the after echoes of it being quite important and significant for decades to come. So here we see an example of an armed conflict, the 1967 war between Israel and its neighbors, and then that conflict's results, the Suez Canal closing for eight years, and how together they played a part in changing technologies and shipping by increasing demand for larger ships. We also discussed how armed conflict created opportunities for rising ports to gain new business by providing alternatives to ports in war zones

and also by facilitating ongoing military operations in the region. But you also see the devastation, but also the benefits of the war, being unevenly distributed across the Middle East. So from the 1970s onwards, you not only have the occasional skirmishes between Israel and its neighbors, but also the civil war in Lebanon, which was enormously significant for the Gulf, because a lot of US-based engineering firms, a lot of European banks, a lot of European insurers, a lot of European maritime industries were actually based in Beirut at that stage. And

with the civil war happening, many of them shift their headquarters over to the Gulf. Some end up in Kuwait and Bahrain, others end up in Dubai. And with the civil war being followed by the Iran-Iraq war in the 1980s, that also is enormously significant for the countries of the Gulf, because as the war intensifies, as Iran and Iraq attack each other's ports, and eventually in the latter half of the war, in the last four years of the war between 1984 and 1988, also attacking ships that were lifting oil from each other's ports, what you end up seeing is the development of the ports across the waters of the Gulf as kind of transit ports for Iran and Iraq, Dubai for Iran and Kuwait for Iraq, and the development of both the cargo and oil ports in those places as a result of becoming sort of entrepot stopping points for Iran and Iraq. And then, of course, that is followed by the U.S. war on Iraq at the beginning of the 1990s. And then, of course, the U.S. war on terror, which has enormous impact on all of the Gulf's various ports

in various ways. Now, what are these various ways? And I think this is quite interesting. What one finds is that, for example, some ports end up becoming very important to the U.S. logistical process, particularly for the transportation of oil, because, of course, the U.S. war effort requires a lot of fuels. And so the various ports that serve the U.S. in this way, Qatar, Kuwait, during the no-fly zone and onwards, end up becoming really important as those kinds of logistical stopping points, refueling places for the U.S. But in addition to that, the U.S. needs cargo capacity because, of course, in order to wage war on all of these different places,

it requires ships to carry its material. And in addition to that, it needs places for R&R for its soldiers and sailors. And so the ports in the Gulf, and particularly Dubai, become really important in that regard. Because Dubai makes a decision to trade with everybody during all of these wars, it becomes quite a useful stopping point for the U.S. It becomes enormously significant for the US lifting of material into Afghanistan, because ships can bring stuff into Jabal Ali, things can be then airlifted into Afghanistan. So what one sees is that these constant moments of conflict, whether they were civil conflicts, as in the case of Lebanon, whether they were regional conflicts, as in the case of the Iran-Iraq war, or whether they were international conflicts, as in the case of Lebanon, whether they were regional conflicts, as in the case of the Iran-Iraq war, or whether they were international conflicts, as in the case of the US and its various coalition allies, again and again and again against Iraq, but also against Afghanistan.

And also, obviously, its drone wars in the Indian Ocean Basin. What one finds is that the ports belonging to the US allies end up being the commercial beneficiaries of the kind of bounties of U.S. warfare. I pointed out that Khalili had mentioned a similar trend in our previous episode, that during the 19th century, the spread of British influence in the Indian Ocean had sparked reorientations of commerce, and many of the traders who could make themselves useful to the empire did quite well for themselves. She agreed that they were similar, but she was also quick to highlight that this resulted both from conscious decisions and economic structures.

Absolutely, and some of that is very conscious. I mean, I think that the particular potentates in the region throwing in their lot with whoever the imperial power is at a moment is a conscious decision. But some of that is also an outcome of the set of commercial transactions that appear alongside a war as a sort of a process of logistical ramp up and draw down that end up being quite definitive in developing new firms, new modes of trade, in fact, new products and goods that are necessary for warfare. So while war and conflict were one driving force for the shipping business, another has been, and continues to be, the growth of modern ports management companies. These companies have portfolios in ports spread across the globe. We spoke in depth about one of these companies, a formerly British

enterprise called P&O, the Peninsular and Orient Steam Navigation Company. I think the history of the P&O is in a way a kind of an embodiment of the maritime empire of the British because the Peninsula and the Orient that are actually discussed in the title of the company are interestingly in the Iberian Peninsula and the Orient that are actually discussed in the title of the company are interested in the Iberian Peninsula and the Orient is Eastern Mediterranean. So the company is established in order for the British to engage in competition with the French in the Mediterranean. And when they feel that the Mediterranean has become a French lake, as they mentioned it, obviously, because the French had at that stage in the 19th century had gone and colonized Algeria

and were spreading their sort of military, strategic and commercial interests across the entirety of the North Africa. Then the British, of course, then put their focus on trying to ensure that they have the upper hand in the Indian Ocean. And so the Peninsular and Oriental Company, which is a private company, but was quite significant. It was trying to benefit from this kind of a British imperial expansion in the Indian Ocean. And one of the ways that it does so is by securing packet trade, the posting contract, the communication contract. So piano ends up becoming really important in the 19th century as this kind of a sinew, if you will, of empire. Sinew of empire is actually the terminology that New York Times used about P&O when Dubai

Ports World tried to acquire some of the P&O's holdings. So the P&O ends up becoming this incredibly important node of empire, sinew of empire. But of course, as the empire recedes and as maritime sort of power of the British recede to some extent, P&O ends up trying to expand and contract and reshape and re-engineer its various holdings and interests. There's a period of time where, for example, it puts in a lot of investment into buying tankers. There's another period of time where it invests a lot in other forms of transportation, whether it's cargo or port management. In the early 2000s, a port management company called Dubai Ports World acquired the P&O. And so in the early 2000s, Dubai Ports World, which is today, I think the fourth largest port management company in the world after two companies based in China and one in Singapore.

So if you can imagine, that's actually quite a significant location to have for a small city-state in the Arabian Peninsula. Dubai Ports World is looking to expand. And one of the ways that it does so is by acquiring concessions to different ports across the world, particularly in the Indian Ocean Basin. So what that means is that it signs a contract with the country or port management authorities in a particular country where it has the right to use a given port anywhere between 20 to 95 years. This is the kind of contracts that these port management companies sign with various ports. And what it allows it to do then is, of course, to either invest or use these ports

whose concessions it has acquired for its business. Because, of course, then that allows it to determine routes of trade, it enters deals with shipping companies, etc. And as part of this process of acquisition of ports, it also tries to acquire six ports whose contract was owned by P&O in the US. I believe these are Miami, New York and New Jersey and four other ports. Now, this ends up being a very big deal in the US for reasons that are mixed and problematic. So part of the reason that a lot of people push back against Dubai Ports World acquiring these ports is because Dubai Ports World has a reputation for not recognizing the collective bargaining agreements of unions. So various maritime unions in the US end up becoming extremely agitated about having to deal with Dubai Ports World. I mean, rightfully

so. When Dubai Ports World, for example, acquired the Port of London Gateway here in London, it took actually global solidarity movements, court cases, pressure from the government, pressure from the unions in order to get them to recognize the port workers unions here. So that element of it was definitely true. This is a company that is not amenable to labor. But then what happens is that those valid labor concerns are taken by people like at the time, Senator Hillary Clinton, Senator Chuck Schumer of New York, and transmuted into, frankly, deeply racist, deeply Arabophobic discourses about, oh my God, the terrorists are coming to take over our ports. And those campaigns end up succeeding. And in fact, the government of Abu Dhabi, which at this point is extremely closely aligned to the U.S.,

orders Dubai Ports World to sell those ports at a bit of a loss to AIG, which then goes under two years later in the U.S. So what is really interesting about this is the extent to which the UAE was willing, this is the extent to which the UAE was willing, or the government of Abu Dhabi was willing to sort of acquiesce to this kind of a racist pressure from the US. The reason that it's interesting is because Dubai Ports World is one of the most litigious ports management companies, and it often takes over various ports in the Indian Ocean Basin. The story of Djibouti, I would recommend your readers look it up, is fascinating and very indicative. And it ends up actually running down these ports.

And when they try to extract some sort of concessions from it, it ends up like taking them to courts of arbitration. And it absolutely had every right to take the US to courts of arbitration, but it decided not to. Whereas it, you know, is very promiscuous in taking, I don't know, ports in everywhere from Brazil to Djibouti to Belgium to court, Dubai Ports World does to courts of arbitration. So to me, that also says something about the way that these processes of legal arbitration globally are actually very much determined by kinds of imperial attachments and imperial hierarchies.

And of course, it also traces the way that imperial holdings have shifted. So you see that P&O, which was set up in order to protect British imperial interest in the Mediterranean, expands to the Indian Ocean, becomes a really important imperial transport infrastructure in the Indian Ocean, and then about 100 years later is bought up by Dubai because capital's center has now shifted or at least expanded across the world. It is no longer only London that determines which companies are owned that are important and significant nodes in this kind of a maritime network of trade. It's also now capital emanating from places like Dubai, but also in Singapore and elsewhere. In addition to these shifting centers of capital, another major force has been the COVID-19 pandemic, which simultaneously boosted profits for global

logistics companies while exposing the fragility of global logistics networks. What is really interesting about the COVID era maritime transportation, and not just about this current supply chain bottleneck, but also what happened in sort of the spring of 2020 with the price of West Texas crude going below zero. This is all actually a structural part of the maritime transportation industry. And it in some ways shows the centrality of the process of circulation to actually the process of production. But what both the price of oil going below zero and what the current supply chain bottlenecks have shown is the importance of this maritime transportation. I'll explain. In April of 2020, a lot of oil traders started becoming incredibly nervous about some futures contracts in oil coming due where they had to take delivery of oil in Pershing, Oklahoma, which is not a port. But what is interesting about the reason that this was relevant to maritime transportation

was because at that same moment, because of overproduction of oil, and the reason that oil was being overproduced was partially because production of goods had, for example, massively abated in the world's factory in China and Southeast Asia. And so there wasn't as much need for oil. But there was also geopolitical competition going on between Saudi Arabia and Russia, and they were both overproducing. And so all the oil that was being overproduced was being stored at sea on tankers. And they were running out of tankers, they were running out of these kinds of easily convertible kind of storage spaces, which are ships usually, I mean, that is something

that happens all the time. If you know, you have too much oil, ships with oil aborts end up sitting at anchor until the price of oil shifts a little bit, and then they take their oil where it could be sold. But what was happening, because all of these kinds of storage spaces were taken up, and the storage on land storage spaces in Pershing, Oklahoma, were also filled, suddenly the traders that were supposed to be taking delivery of oil were actually paying people to take the oil off their hands, which is what resulted in the price of oil, West Texas crude dropping below zero. So to me, that's fascinating, because of course, what that indicates is not only the way that we are in the

process of sort of trade in oil is so dependent on these financial instruments, futures contracts, and things like that, but also on the brick and mortar, if you will, metal and diesel transportation of oil in that instance. So that's one of the things that is really interesting. The Suez Canal blockage in early 2021 only added to the disarray of the shipping industry. But this and other disruptions actually brought in hefty profits for a number of shipping majors. The second thing that you mentioned is the sort of the kinks, if you will, in the global supply chain that became massive, that has become massive, both in US and Europe, but also elsewhere in the world. And which actually the small blockage of the Suez Canal earlier this year also highlighted.

Part of the reason that that's interesting is because when the lockdowns happened, when China actually shut down its ports in order to be able to control COVID, one of the things that happened was that a lot of ships and a lot of containers were out of place. So they were supposed to be in one place, but when the ports shut down, they ended up being stranded in another place. That was number one. Number two, that process also made clear the extent to which the movement of goods depended on frontline workers who were also vulnerable to the effects of COVID itself. So I have written multiple things about seafarers that were stranded at sea, way beyond their nine or 11 month contract, sometimes for two years. But also what you saw

was, for example, delivery drivers, you know, becoming frontline workers in a lot of places. And these delivery drivers could be delivery drivers, the guy who comes to your door and brings your products from e-commerce to your door. But it also would be truck drivers that go and pick up containers from the ports and take them, deliver them from one location to another location. And these frontline workers ended up obviously also becoming very vulnerable to COVID. I think the Office of National Statistics in the UK showed that the category of workers that were most susceptible, that had the most cases of COVID, but also the most deaths, other than medical workers, were actually delivery drivers.

And so I think it says something about the significance of these workers and the fact that COVID kind of made us realize how important they were, they and the seafarers were. So that was the second thing. On top of all of this, of course, you have the profit-making motive of the shipping companies. The shipping companies, when they saw that there was shortages in goods or where containers were located in one place, but they were supposed to be in somewhere else, they upped their prices. When they noticed that there was going to be a demand for good, they also upped their prices. So whatever happened, their profits have been just skyrocketing. And it has been astonishing. Again, I encourage your listeners to just do a quick Google search on the profits of

Maersk, which is the world's biggest shipping company, or the profits of CMA CGM, which is a major shipping company based in France. And these companies have actually like billions of dollars in profits, some of them record setting levels of profits. And of course, what this translates into is the cost of those things being passed on to us. So the high costs of supply chain problems came along with high profits for shipping companies. The current just inin-time models that much of the industry utilizes are also primed for these disruptions. Another element of this, which I think is quite interesting, is that both the Suez Canal blockage, but this whole process, this whole COVID supply chain process, has made it very clear to us that the processes of kind of neoliberal efficiency that comes with just-in-time

production, for example, might be very efficient. It extracts enormous back-breaking labor from people. It extracts speed from the workers and from the supply chains themselves, but it is not very resilient. Efficiency is the enemy of resilience. And what we're finding is that, of course, a lot of these just-in-time systems, manufacturing, movement of goods, et cetera, were dependent on nothing going wrong. And of course, when these ordinary forms of friction happen, quarantines, blockage of Suez Canal, or you name it, or containers being out of place. But also when you have a kind of a unplanned, perhaps spontaneous general strike of delivery drivers, if you will, where they demand higher wages, where they simply stop going into that

business, which also explains why there is a quote quote unquote, shortage of drivers. It's actually a low wages. It's a way of responding to lower wages. When all of these kinds of modalities of friction happen in the global supply chains, what you see is the breakdown of the system or it's unraveling. Then in all of this, of course, what is clear is the significance and importance not only of the landside workers, but also of the maritime workers, of the seafarers that have been stuck on ships and unable to disembark and sometimes refused entry because, for example, when the Delta variant had taken off, ports closed their borders to seafarers from India.

And so what you find is that this kind of global supply chain problem happens on the back of the workers, while the profits of the big shipping companies is still going up and up and up. And so the effects of it are very unevenly felt throughout the globe. Dr. Halili, I want to thank you for joining us on the podcast today. It's been really enjoyable, Matthew. Thank you. For those who want to find out more, we encourage you to check out Laleh Halili's book, Sinus of War and Trade, Shipping and Capitalism in the Arabian Peninsula, out from Verso in 2020. and Capitalism in the Arabian Peninsula, out from Verso in 2020. For more information about this episode, you can check out our website, ottomanhistorypodcast.com, where we will post a select bibliography as well as related episodes. That's all for this episode. Until next time,

take care. Thank you.