Foreign debt and colonization in Egypt and Tunisia (1862-82)

Abstract

This paper explores two interlinked questions: why Tunisia and Egypt were faced with the international financial control after their default in 1868 and 1876, and why the international financial control eventually led to the colonization of these two polities by France and Britain in 1881 and 1882. The chapter maintains that the emergence of international financial control was a multilateral solution to a range of private financial claims against the Egyptian and Tunisian governments following defaults. Yet, international financial control organizations were unable to successfully address the conflicting interests among foreign bondholders, as the existence of foreign bondholders from different European powers acted as a check over the concentration of the power in the hands of a single European country. Only after colonization, when the legal pluralism and multilateral nature of the financial control organizations came to an end, the creditworthiness of Egypt and Tunisia started recovering in international financial markets. At odds with other cases of international financial control in the region, this chapter shows that the success of multilateral international financial control organizations in the first age of financial globalization was not unconditional. Although other cases of international financial control before 1914 offered a solution to competing imperial and bondholder interests, in the case of Egypt and Tunisia, international financial control organizations became obstacles to the ongoing colonization process by Britain and France.