A Tale of Three Islands
An anecdote about expropriation
Welcome (back) to Weltinnenpolitik! It is wonderful that within three months of launching, this newsletter has already gathered more than 1,000 subscribers and is growing at a steady clip. I took the month of December off to go on a much-needed holiday and to finish the edits on my forthcoming book on the history of expropriation, The Age of Confiscation: Making and Taking Property in the Creation of the Modern World.
By way of introduction to the new year, I offer here an anecdotal out-take from that project. Next week we will be back to regularly scheduled programming with long-form posts about economic coercion, and a review of two new books about China and global neoliberalism. In the meantime, please enjoy this amuse-bouche about nationalization in the 1960s.
In the year 1960 three mountainous island nations asserted their economic independence. Beyond the first letter of their name – C – they shared a number of remarkable similarities. Each country had been home to longstanding U.S. and British military bases, but now had nationalist leaders with left-wing leanings. Their new governments nationalized property and implemented land reforms.
Despite being located on separate continents, the trio of insular republics all identified as members of the Global South and became active members of the Non-Aligned Movement that was founded the next year in Belgrade. Among them, the two countries whose expropriations went furthest soon faced economic sanctions from the United States, but the decisions of their socialist governments would leave a decades-long imprint.
Cuba, Cyprus, and Ceylon (as Sri Lanka was called before 1972) displayed some striking commonalities. But the property-transforming agendas pursued in Havana, Nicosia, and Colombo had very different political outcomes.
Sri Lanka’s Bandaranaike, Cuban president Osvaldo Dorticos, and Cypriot leader Archbishop Makarios on a Yugoslav poster for the inaugural conference of the Non-Aligned Movement, Belgrade, 1961.
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The Cuban Revolution had begun as an armed uprising in the Sierra Maestra led by Fidel Castro and Ernesto “Che” Guevara and culminated in the fall of Havana in January 1959. Five months later the revolutionary forces passed an agrarian law that expropriated all landholdings above 400 hectares (1,000 acres) in size. This ceiling was set deliberately high to exclude many of the small and medium-sized farmers who had supported the insurgency. Out of the larger holdings confiscated, small landless farmers received an allotment of 27 hectares each. The Cuban land reform would be the largest of its kind in the Western Hemisphere, redistributing more than one third of the agricultural land of the island.
Foreign-owned property proved to be the undoing of Cuba’s tense but still manageable relation with its largest foreign investor, the United States. It was land reform that triggered a series of tit-for-tat acts of economic coercion. Unable to resolve the dispute over compensation for the seizure of the largest U.S.-owned sugar plantations under the Cuban land reform, Castro and Guevara turned to the communist bloc for aid and trade agreements. When Soviet oil delivered in exchange for Cuban sugar arrived in Havana in the summer of 1960, Western-owned refineries refused to process it. This prompted the revolutionaries to seize the refining plants.
The Eisenhower Administration immediately stopped all U.S. sugar purchases in retaliation. Increasingly radicalized, Castro nationalized all foreign property in July 1960. Although he managed to reach compensation settlements with most European governments involved, the U.S. refusal to accept the Cuban offer drove ever-tighter economic sanctions that solidified into a full embargo by 1962. This is the bloqueo that, with some modifications, survives until today.
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In Cyprus the fight for independence from Britain was led by the country’s first president, the Greek Orthodox Archbishop Makarios, who assumed power in August 1960. A complex figure who was both a revolutionary cleric and a conservative revisionist, Makarios sought to outflank the communist party AKEL, keeping the merchant class content while maintaining strong ties with the trade unions.[1] Because Makarios was prominent in the Non-Aligned Movement, strenuously avoided NATO involvement in Cyprus, and announced land reform as part of a Five-Year Plan, many U.S. officials misread him as a radical and Soviet sympathizer.[2] There was talk in Beltway circles of Cyprus becoming the “Cuba of the Mediterranean” led by a “Castro in a cassock”.[3] Kennedy, Johnson, and Nixon were all irked by the Cypriot stance on the international stage in the 1960s.
In the event, Makarios undertook very few nationalizations. In part this was because he realized that he could exercise quite effective control of the Cypriot economy through the corporation of which he was itself the head: the Archbishopric of Cyprus. Through subsidiary companies, the Orthodox Church was the largest proprietor on the island, as well as the premier owner of equity in the banking, manufacturing, and tourism sectors, and even in the wine and mining industries.[4]
The Third Worldist phase of Cypriot politics in the 1960s was cut short by external intervention. Makarios was overthrown in a right-wing coup in July 1974 backed by the infamous Greek military dictator Dimitrios Ioannidis, which precipitated a full-scale Turkish invasion of the north. This sparked a brief but intense war that tore the island into two halves and inaugurated Europe’s longest frozen conflict. In the late 1970s and 1980s, a heady mix of late Soviet intelligence operations and international capital flight would gradually turn Cyprus into a hub of offshore banking and a paradise for global investors. The result is a curious blend of radical politics and mercenary globalism. Cyprus had the first elected Communist head of state in Europe–AKEL’s Demetris Christofias, president from 2008 to 2013–but is also a notorious site of tax avoidance, sanctions evasion, and dodgy financing deals.
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Ceylon’s chief nationalizer in the 1960s and 1970s was the first female prime minister in history: Sirimavo Bandaranaike. A Buddhist aristocrat of great determination and with a forbidding manner, she took charge of the Sri Lankan Freedom Party at age 44 after her husband, the country’s first prime minister S.W.R.D. Bandaranaike, was assassinated. The Ceylonese socialist leader was a founding member of the Non-Aligned Movement at its first summit in Belgrade in 1961.
But her developmental agenda was imperiled by a familiar problem: foreign-exchange shortages. To economize on the country’s main imported good, oil, Bandaranaike created a national petroleum company that received a monopoly on the purchase, sale, and distribution of oil in the country. In 1962 she nationalized the properties of Shell, Esso and Caltex, worth approximately $8 million, which caused international furor.[5]
Bandaranaike’s expropriation also made Ceylon a target of retaliation by Washington. The Hickenlooper Amendment to the Foreign Assistance Act of 1961, named after the Iowa Republican who passed it, severed U.S. development aid to states that expropriated American property without “adequate compensation”. The bill had been a response to the Cuban expropriations of U.S. firms in 1959-1960; but it was Bandaranaike’s island that became the first country other than Cuba to suffer the consequences. Like Iran in 1951-1953 and Cuba after 1960, Ceylon was also subjected to a temporary oil embargo by Western firms in 1964, forcing Colombo to import its fuel from Egypt and the Soviet Union.[6]
Bandaranaike’s attempt to nationalize the country’s largest newspaper group caused her to lose the 1965 election to more business-friendly political opponents, who promised and provided compensation to the confiscated Western oil companies. But after the doyenne of Sri Lankan socialism was voted back into power in 1970, she resumed nationalization with unbending will. Banks, insurers, schools, graphite and gem mining, and most vital import and exports were brought under state control. When she passed her Land Reform Act in 1972, Bandaranaike made a show of giving up one thousand acres of her own family’s landholdings.[7]
Although the expropriations were compensated, Bandaranaike mainly dispossessed her more conservative political opponents. After most of the country’s tea, rubber and coconut plantations–which comprised 76 percent of export earnings–were nationalized in 1975, only tourism, textiles, food and drink, and rice agriculture remained in the private sector.[8] In terms of the amount of firms expropriated, Bandaranaike’s Sri Lanka was second to none in the 1970s.[9]
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Economic nationalization in the 1950s and 1960s was a hallmark of non-aligned states above all. Cold War binaries between capitalism and communism were not the most important guide to how states treated domestic and foreign-owned property. The more significant consideration was how strongly they sought to realize national desires for an autonomous development-path in a fast-growing world economy that remained dominated by the rich countries of the West.
The expropriation of property is a much less ideologically clear-cut practice than we think. In the post-WWII period it became a shared technique of postcolonial state- and nation-building among a dizzying array of national elites, from Communist revolutionaries to Japanese bureaucrats, Latin American generals to Arab socialists, and Hindu patricians to Buddhist noblewomen. There was a sense in the First, Second, and Third Worlds alike that the institution and distribution of private property was neither unalterable nor inviolable. The only question was what end its curtailment should serve. This growing resort to policies that exert political power over property by states and parties across the ideological spectrum is something that is on the rise once more in our own time.
[1] Demetris Assos, Makarios: The Revolutionary Priest of Cyprus (London: I.B. Tauris, 2018), p. 16, 34, 41, 208.
[2] “Makarios Sets Up 5-Year Plan; Relies Heavily on Western Aid,” The New York Times, 11 March 1961, p. 4.
[3] Taylor G. Belcher, Former U.S. Ambassador to Cyprus (1964-1969), in U.S. Congress House Select Committee on Intelligence, U.S. Intelligence Agencies and Activities: The Performance of the Intelligence Community (Washington: GPO, 1975), p. 763.
[4] Christopher Hitchens, “Détente and Destabilization: Report from Cyprus,” New Left Review I/94 (November-December 1975), p. 63; Victor Roudometof, “Les Activités Économiques de l’Église Orthodoxe de Chypre,” Archives de Sciences Sociales des Religions 158 (January-March 2019), pp. 107-124.
[5] Chittharanjan Amerasinghe, “The Ceylon Oil Expropriations,” American Journal of International Law Vol. 58 No. 2 (April 1964), pp. 445-450.
[6] Noel Maurer, The Empire Trap: The Rise and Fall of U.S. Intervention to Protect American Property Overseas, 1893-2013, pp. 332-336.
[7] James Jupp, “Democratic Socialism in Sri Lanka,” Pacific Affairs Vol. 50 No. 4 (Winter 1977-1978), pp. 632-633.
[8] Central Bank of Sri Lanka, “Economic Performance, Problems and Policies–1975,” p. 30.
[9] Charles R. Kennedy, “Relations between transnational corporations and Governments of host countries: a look to the future,” Transnational Corporations Vol. 1 No. 1 (February 1992), p. 73, Table 2.