The Triangle to the Nile: The United States’ Effort to Recycle Petrodollars into Egypt

Egypt’s military and political maneuvers were significant factors in the development of the 1973 oil shock and the rapidly accumulated petrodollar wealth of the Persian Gulf states. Egypt’s president Anwar Sadat sought to capitalize upon the oil crisis to induce political and economic support from the United States and the countries of the Gulf.  In 1974 US Treasury Secretary William Simon visited Cairo to lay the groundwork for an American-Egyptian plan to attract petrodollars from the Gulf states to fund Egyptian development projects which could be contracted to US corporations. 

            This paper, using extensive declassified US government sources and contemporary Arabic language media, retraces this unprecedented but largely forgotten project and analyzes its wide-ranging impacts. Simon called this plan “triangulization,” as the Gulf states, Egypt, and America formed a three-sided flow of petrodollars.  The US government applied diplomatic pressure on the newly wealthy Gulf states to increase grants, loans, and investments in Egypt.  The Treasury Department simultaneously fostered new networks between US businesses and the Egyptian government.  Egypt then used the petrodollar funds from the Gulf states for large-scale development programs, with many of these lucrative projects being contracted to American corporations.  These revenues in turn helped America afford the suddenly far higher cost of imported oil from the Gulf states. 

            Triangulization would prove to be a critical event in facilitating the liberalization of Egypt’s economy and giving its development a strong American influence.  It was likewise an important factor in changing the American-Egyptian geopolitical relationship from one of antagonism to alliance.  Ultimately, triangulization is an important but hereto ignored example of how the oil shock spurred globalization and increased interdependence between the United States and oil-poor countries in the Middle East.