Middle East and North Africa

The standard story of the post-World War II international economic order is not wrong, but it is incomplete. Traditional accounts tell us that the alliance between Western Europe and the United States was consolidated immediately after World War II, as a result of the Bretton Woods order, which pegged global currencies to the U.S. dollar and stabilized global economic governance via the International Monetary Fund (IMF) and the World Bank. They explain that the partnership was further strengthened by the conclusion of the Marshall Plan at the start of the Cold War and, in 1957, with the founding of the European Economic Community.

In reality, it was the three major oil shocks of the postwar period—in 1956, 1973, and 1978-79—that helped confirm the alliance between Western Europe and the United States, laying the foundation for today’s political and economic order. They also explain its fragility.

The standard story of the post-World War II international economic order is not wrong, but it is incomplete. Traditional accounts tell us that the alliance between Western Europe and the United States was consolidated immediately after World War II, as a result of the Bretton Woods order, which pegged global currencies to the U.S. dollar and stabilized global economic governance via the International Monetary Fund (IMF) and the World Bank. They explain that the partnership was further strengthened by the conclusion of the Marshall Plan at the start of the Cold War and, in 1957, with the founding of the European Economic Community.

In reality, it was the three major oil shocks of the postwar period—in 1956, 1973, and 1978-79—that helped confirm the alliance between Western Europe and the United States, laying the foundation for today’s political and economic order. They also explain its fragility.

All three oil shocks were part of a broader effort by postcolonial states to use the “oil weapon” to bolster economic sovereignty alongside political independence. The three oil shocks were intertwined with a challenge to the Bretton Woods order by an emergent global majority of decolonizing states, which pushed against Western influence over the domestic economic policies of Asia, Africa, and Latin America.

The current energy crisis bookends these earlier crises by undoing the order that they helped create. The fourth oil shock marks a crucial chapter in the weakening of the United States’ geopolitical and economic power on the global stage. It has also pried apart the alliance between the United States and Western Europe—an alliance that will not be easy to glue back together.

Sunken ships block the Suez Canal in Port Said, Egypt, in November 1956. Keystone Pictures USA/via Reuters

The first oil shock emerged in 1956, when Egypt nationalized the Suez Canal in the name of resource sovereignty. Britain, France, and Israel responded militarily, expecting a swift victory. But when Gamal Abdel Nasser’s troops filled dozens of ships with rocks, blocking the Suez Canal, they disrupted Europe’s oil supply from the Persian Gulf. What began as a display of imperial strength ended in humiliation: Britain and France withdrew, as the United States declined to support its allies. Britain and France appeared to many observers like empires on the verge of extinction.

For Western Europe, Suez was a warning and a sign of things to come. Across Africa and the Caribbean, newly independent states were rejecting colonial ties, calling for resource sovereignty, and exploring alternative forms of economic regional cooperation, from the West Indies Federation to the Union of African States.

This context is essential for understanding European integration. The 1957 Treaty of Rome is often framed as a response to fascism, but it was also a response to the threat of an emergent anti-imperial economic world order. On Feb. 20, 1957, the six founding states of the Treaty of Rome agreed to associate more than a dozen overseas territories under Part IV of the treaty, even as “associated” states were denied voting powers. This created a system of preferential trade linking Europe to its former colonies while limiting the chances of non-Western resource sovereignty and curtailing forms of economic federalism that sought to bypass Western countries.

The United States supported European integration but only fully aligned with it in shaping global economic governance after the second oil shock in 1973. That year, Egypt and Syria launched a coordinated attack on Israel to regain the Sinai Peninsula and the Golan Heights. When shipments of weapons arrived from Western powers to supply Israel, oil-producing states moved decisively. OPEC sharply increased oil prices, while OAPEC imposed export cuts and an embargo targeting Western supporters of Israel. These actions were framed as a way to change what Jamaican Prime Minister Michael Manley called “the........

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