Lesson 16: European Intervention, the London Settlement (1840) and the Fall of Monopoly

01European intervention

The peace of Kütahya (1833)

• Muhammad Ali's wars in the Levant ended with the expansion of the Egyptian state: his influence stretched between the Levant and Adana.
• His authority over Crete and most of Arabia and the Hejaz was recognised under the peace of Kütahya (1833).

The secret Ottoman–Russian agreement

• After Kütahya the sultan concluded a secret agreement with Russia (July 1833).
• It was a defensive and offensive treaty by which each party helped the other against external or internal danger.

Muhammad Ali's attempt to declare independence

• He resolved to declare complete independence from the Ottoman authority and confided his intention to the consuls of the European states (1834) — who warned him off the step.
• He renewed his resolve in 1838 because of the sultan's intrigues against his rule in the Levant, but the European powers again did not encourage him, fearing the growth of his influence and power and the danger it posed to the international balance.

02The battle of Nasibin and the winning of supremacy

• The sultan arranged matters to confront Muhammad Ali militarily and expel him from Syria.
• England encouraged the sultan to subdue him so that the commercial Treaty of Balta Liman (1838), accepted by France, could be applied.
• Peace efforts failed because of England's incitement to fight.
• The Egyptian and the sultan's forces clashed at Nisibin (Nasibin) in June 1839, on the Turkish–Syrian frontier north of Aleppo: the Ottoman army suffered a resounding defeat.
• The commander of the Ottoman fleet handed his fleet over to Muhammad Ali without a fight, so his strength and supremacy over the Ottoman State at sea and on land increased.

03The London Settlement (1840)

Why the Great Powers intervened

• Egypt's victory raised the question of the balance of power in the region for the great European powers — Russia, France, England, Austria and Prussia.
• These states would not allow Egypt's supremacy and the extension of its influence over the Levant, Arabia and Crete.
• They entered negotiations with the sultan to impose terms on Muhammad Ali, ending with the Treaty of London (July 1840), known as the London Settlement.

The terms of the settlement

• Muhammad Ali and his heirs were given the rule of Egypt hereditarily, and Acre for his lifetime, with the evacuation of Crete, the Hejaz and Adana and the return of the Ottoman fleet.
• He was to pay an annual tribute to the sultan.
• He was to apply all the treaties the Sublime Porte had made with the European states, headed by the Treaty of Balta Liman.
• His land and naval forces were to be part of the forces of the Porte and at the sultan's service.
• If he did not accept within ten days he would be deprived of Acre; if he kept refusing for another ten days, the sultan would be given the right to deprive him of Egypt as well.
• If he refused, the signatory allies would use force against him, while undertaking to protect the sultan's throne.

France's position

• The Great Powers signed the treaty except France: the agreement had been made behind her back because of her traditional rivalry with England.
• France incited Muhammad Ali to reject the terms but then left him alone in the field.

04Results of the London Settlement

• The people of Syria revolted against him, and matters ended with Muhammad Ali accepting the terms of the treaty.
• The treaty deprived Egypt of the fruits of its external victories and kept it within its pre-expansion borders.
• But it secured hereditary rule of Egypt for him and his family.
• The sultan issued two firmans in 1841 (February and June) that placed Egypt under several restrictions:
  • the rulers of Egypt from Muhammad Ali's sons receive the firman of appointment from the sultan;
  • Egypt must carry out all agreements the sultan makes with foreign states;
  • coin is struck and tax levied in the sultan's name, and Egypt sends him a quarter of the government's revenue;
  • the army in peacetime must not exceed 18,000 soldiers, and Egypt may not build warships without the sultan's permission.
• The two firmans delayed Egypt's final independence from the Porte, yet the chance of real independence had been open after Muhammad Ali's victories.
• Egypt remained bound by these restrictions (the London Settlement 1840 and the two firmans of 1841) until Isma'il came to power.

05The collapse of the monopoly policy

Why it fell

• Monopoly was an obstacle to European commercial penetration: Egypt had closed its markets to Europeans at a time when Europe, after the Industrial Revolution, needed markets.
• Britain concluded a commercial treaty with the sultan (August 1838) — Balta Liman, named after the place of signature in Turkey.
• It required the abolition of Muhammad Ali's commercial monopoly; he refused to implement it to protect Egypt's domestic production and its capacity to market it.
• Its application within the London Settlement marked the beginning of the fall of monopoly, opening the door to commercial treaties with foreign states and the reign of an atmosphere of economic freedom — in the foreigners' favour more than Egypt's.

06The effects of the fall of monopoly on the economy

Agriculture

• Farmers became free to grow whatever they wished in whatever way, and farming methods fell into lag and stagnation.
• Under Said the dakhuliya tax — levied on crops and goods passing between markets — was abolished.
• Cotton farming flourished and its price rose when Europe, and England especially, needed cotton.
• In Isma'il's era the state tried to develop farming methods again by introducing new plants.
• Land ownership widened from a right of use to rights of inheritance, gift and endowment.
• With foreign investment and lending from foreign banks, the government faced the problem of repaying debts, so the Muaraza Law (August 1871) was issued: whoever paid six times the tax on his land at once was exempted from half of it permanently and gained full ownership.
• This was one reason for the settlement of the peasants and attention to production.

Industry

• The output of state factories fell after most of them were closed.
• Small craft industries deteriorated and stagnated, unable to compete with foreign production; some disappeared, especially in Cairo.
• Some war industries boomed late in Abbas' reign and early in Said's, because of Egypt's part in the Crimean War (1853–1856) between Turkey and Russia, at the sultan's request.
• Under Isma'il the recovery continued through a larger army and the lifting of restrictions on building war equipment.
• Extractive industries: cotton-ginning, oil extraction and leather tanning; transformative industries: sugar, spinning and weaving, and paper.

Trade

• Internal trade was not much affected, but its restrictions were relaxed step by step:
  • agricultural producers were allowed to hold auction sales instead of selling through the government storehouse (shawuna);
  • English merchants were allowed to trade in agricultural and industrial products, sell them inside Egypt and export them;
  • foreigners supplied whatever the Egyptian market needed.
• The railway was built between Alexandria and Cairo and between Cairo and Suez.
• Land routes and agricultural railways were prepared, and the telegraph and postal networks were expanded.
• Two navigation companies were founded, one maritime and one riverine, with foreign capital.

07The Suez Canal project

Approval of the project

• It was among the most important projects to appear in the atmosphere of the fall of monopoly and the entry of foreign investment, to ease the passage of trade between the East's marketing, consumption and raw-material zones and the West's European production zones.
• Muhammad Ali had rejected it, saying "I do not want a Bosphorus in Egypt" — an allusion to the Turkish strait that had caused European intervention in Ottoman politics to guarantee freedom of navigation.
• Said Pasha agreed to grant the concession to dig the canal to his French friend Ferdinand de Lesseps, with the company's monopoly of its exploitation for 99 years from its opening to navigation in November 1869.

The most important conditions of the concession

• The Egyptian government relinquished all the lands needed to dig the canal, exempt from taxes.
• The government dug a fresh-water canal to supply the workers.
• The company could expropriate privately owned land needed for the project in return for fair compensation.
• The company could extract raw materials from state mines and quarries without tax.
• The government provided four-fifths of the workers, all Egyptian.
• Egypt received 15% of the net profits in return for the lands and privileges.
• Egypt received 44% of the company's shares in order to settle debts.
• Despite its commercial importance, the developments of its execution made it a manifestation of foreign intervention and of the weakness of political will.

08The effects on society and education

Social conditions

• The craft guilds and the standing of their sheikhs deteriorated.
• The role of the local merchant declined in favour of the foreign agencies.
• The class of large and middle landowners emerged, and they began to look forward to sharing in political life.

Education

• The political shrinking of Muhammad Ali's power and the end of monopoly had negative effects on education.
• Under Abbas and Said:
  • the schools worsened and some were closed, and the missions to Europe shrank;
  • Diwan al-Madaris was abolished and missions almost stopped;
  • foreigners from Europe and the United States were encouraged to open their own schools (missionary schools), which deepened the duality of thought and culture.

09Exam traps and key takeaways

• Kütahya 1833 recognised his gains; the secret Ottoman–Russian agreement came the same year, after it — sequence questions test this.
• He disclosed his independence plan in 1834 and renewed it in 1838; both times it was the European powers who discouraged him.
• Nasibin (June 1839): an Egyptian victory — and the Ottoman fleet surrendered without a battle.
• The powers that negotiated were Russia, France, England, Austria and Prussia; in the event France did not sign, then urged rejection and abandoned him.
• The timetable of pressure: 10 days → lose Acre; another 10 days → lose Egypt.
• Terms keep Egypt hereditary, Acre lifetime — swapping them is the usual wrong option.
• Firmans 1841: tribute = one quarter of revenue, army ceiling = 18,000, no warships without permission; restrictions lasted until Isma'il.
• Balta Liman (August 1838) was signed with the sultan, not with Muhammad Ali — who refused to apply it until 1840.
• Muaraza = six times the tax → half exemption + full ownership (1871); it encouraged private ownership, not state farming.
• Crimean War service was under Said/Abbas timing — the war industries boom is not Muhammad Ali's.
• Canal figures to hold: 99 years · opened November 1869 · 4/5 Egyptian labour · 15% of net profits · 44% of shares; Muhammad Ali's refusal quote is "no Bosphorus in Egypt".
• Educational regression (Abbas and Said): Diwan al-Madaris abolished, missionary schools encouraged → deepened cultural duality.