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Khedive Ismail: The Debtor Ruler of Egypt (Demo)

History is full of leaders that have a tattered legacy due to incompetent leadership and corruption, but few have reached the level of mismanagement and lack of foresight that enveloped the administration of Egyptian Khedive Ismail Pasha.

While Ismail had benevolent intentions to modernize Egypt, his exorbitant spending paved the way for increased European influence in the country’s affairs.

In this article, let’s explore the tumultuous reign of Ismail Pasha and its effect on the modernization of Egypt.

Who Was Ismail Pasha?

Ismail Pasha lived from 1830 to 1895, ruling Egypt during the years leading up to the British occupation of the country.

After succeeding his uncle Said Pasha, Ismail greatly invested in cotton production throughout Egypt and began funding expansive modernization projects throughout the country. While many of these projects, such as improved schools and agriculture, brought great improvements to Egyptian society, they put the Egyptian government heavily in debt.

Ismail was eventually forced to relinquish much of his stock holdings in the newly created Suez Canal due to the enormous debt owed to France and Britain. In 1876 the two European creditors forced Ismail to allow British and French officials to effectively control Egypt’s finances to help recover the Egyptian debts.

Due to increasing political instability throughout Egypt, the French and British governments eventually convinced the Ottoman government to depose Ismail. His son, Tewfik Pasha, succeeded him, and Ismail died confined to house arrest in 1895.

Early Life

Ismail was born in Cairo, Egypt, on January 12, 1830. His father, Ibrahim Pasha, made sure that Ismail was well educated and sent him to a prestigious school in Paris, France, during his youth.

After his father’s death, the Ottoman Sultan made Ismail a member of the Ruling Council of the Ottoman Empire. He became the deputy of Sultan Said I, who sent him on many diplomatic missions to Europe. Said put Ismail in charge of 18,000 troops of the Egyptian Army and played a significant role in quelling a rebellion of tribes in Sudan in 1861.

Ruler of Egypt

In January 1863, Ismail succeeded his uncle Mohammed Said as the Khedive of Egypt. The title of “Khedive” was not officially recognized at first by the Ottoman government, as it implied that Ismail’s Egypt was independent of Ottoman rule. This title especially worried the Ottoman government due to the construction of the Suez Canal and its potential in making Egypt one of the Ottoman Empire’s wealthiest provinces.


Ismail eventually convinced the sultan to recognize him as khedive due to large bribes and tributes that the Egyptian government paid to the Ottomans. This title gave Ismail significant autonomy from Ottoman rule and let him control virtually all of Egypt’s affairs without resorting to Istanbul.

In 1866 Ismail created an assembly of delegates that worked as advisors for his administration. These delegates were largely local village leaders that increasingly played a major role in the Egyptian government. Ismail was often open to policies proposed by these delegates, which brought many reforms and improvements throughout the Egyptian countryside.

Improvements throughout Egypt

Ismail saw promise in constructing the Suez Canal and the increased demand for cotton caused by the American Civil War. Ismail heavily invested in both cotton and sugar production and increased Egypt’s agricultural land. Along with the Suez Canal, Ismail constructed multiple smaller canals throughout the countryside to help irrigate Egyptian farms. He created many factories throughout the country, including 19 sugar factories.

Ismail oversaw the construction of the Egyptian portion of the Suez Canal construction. During the construction, Ismail signed an agreement with Britain to prohibit the slave trade, which greatly slowed down the building of the canal. Upon the completion of construction in 1869, Ismail threw a lavish celebration and invited leaders from around the world to honor the opening of the waterway.

Ismail constructed over 900 miles of railroads, 5,000 miles of telegraph lines, 400 bridges, an extensive harbor in the port city of Alexandria, and 4,500 schools throughout Egypt. By the end of Ismail’s rule, Egypt and Sudan had the most railways per habitable kilometer in the world.

Ismail also focused heavily on improving the Egyptian education system. He greatly increased the ministry of education’s budget and made excellent progress in standardizing Egypt’s education system. Ismail improved both primary and secondary schools, and he created many specialized vocational schools. In 1871, Ismail founded the national library in Cairo, which would serve as one of the most prominent libraries of the Arab world.

Ismail wanted to make Cairo one of the world’s greatest cities and invited thousands of leaders across Europe to travel to the city. Ismail created an entirely new section in Western Cairo that was supposed to emulate Paris, France. Ismail also constructed the Opera House and the Qasr El-Nil Bridge, which would serve as two of Cairo’s most prominent landmarks.

Growing Debts

Ismail inherited an unstable economy and a large amount of debt from his predecessors. Instead of conserving government funds while ruling Egypt, Ismail was known for extravagant spending that increased the national debt exponentially. He built many lavish palaces, including Abdeen Palace, Ras El-Tin Palace, and Qubba Palace.

Despite the vast improvements he brought to the country, Ismail took on massive debts to modernize Egypt. Ismail spent around 46 million pounds on irrigation canals that would help modernize Egypt’s agriculture. The country’s national debt rose from 3 million pounds to around 90 million pounds by the end of his rule, while the country’s annual treasury revenue was only an estimated 8 million pounds.

Military Expansion

Throughout the 19th century leading up to Ismail’s ascension to power, Egypt had acted as one of the Ottoman Empire’s most prosperous and relatively autonomous states. Since Muhammad’s Ali rise to power in 1905, the Egyptian military steadily expanded its southern border into Sudan.

With ambitions to spread his influence across the West African coast, Ismail expanded into Ethiopia, which Emperor Yohannes IV controlled. Ethiopia was rich in valuable raw materials and fertile soils that could help provide much-needed funds to the ever-growing Egyptian debts of Ismail’s administration.

This military expansion was fueled by Ismail’s ambition to turn Egypt into the leading power of Africa that rivaled the European presence in the Mediterranean.

The Ottoman government gave Ismail the coastal Red Sea province of Habesh in 1865, and Ismail steadily expanded this province inland into Ethiopian territory throughout the early 1870s. Ismail began occupying the territory and starting ambitious projects, including cotton production in the Barka Delta.

In 1875, Ismail’s army tried to take the highlands of Hamasien that Ethiopia controlled, but the Ethiopians defeated the Egyptian forces at the Battle of Gundit. The following year the Egyptian forces once again encroached on this territory but were defeated at the Battle of Gura.

These military defeats effectively destroyed Ismail’s ambitions for an Egyptian empire stretching throughout the entirety of the Nile Valley and the Eastern African coast. The enormous costs of the military campaign in Ethiopia brought havoc to the country’s already deteriorating economy.

At a time when Ismail should have been saving funds and focusing on improving the failing economy domestically, he instead focused on a military expansion that the country could ill-afford. These military defeats further disgruntled the Egyptian army, who blamed the failed campaign on mismanagement by Ismail’s government.

The Ousting of Ismail

Ismail had many reasons to stay hopeful about the future of the Egyptian economy. However, this potential booming Egyptian economy never materialized due to many external factors.

The American Civil War caused an exceptional British demand for cotton production, which Ismail invested. However, when the American Civil War ended in 1965, this cotton boon quickly fizzled out. The Suez Canal was anticipated to bring in considerable revenue for Egypt, but it was not as profitable as expected in its first years during Ismail’s reign.

Facing increasing debts, Ismail was forced to sell many of his shares of the Suez Canal Company. British and French influence increased in Egypt due to the enormous European debts Ismail had taken out.

In 1876, a report of Ismail’s finances convinced the British government that direct intervention was needed in order for Ismail to pay back his debts. The British and French governments effectively took over the finances of the Egyptian government, and Ismail had no choice but to allow the intervention.

Throughout Ismail’s reign, European influence steadily increased its presence in Egyptian society. European outsiders lived in exorbitant wealth in cities like Cairo, while most of the population was forced to pay high taxes due to the country’s deteriorating economy.

Europeans, Turks, Circassians, and Albanians dominated many of the highest-ranking positions in the military, courts, and government and were given much higher wages than native Egyptians. Turkish and Albanian soldiers were given especially generous promotions in the Egyptian military.

To combat the growing economic crisis, Ismail decided to cut the military in 1874, which resulted in the displacement of thousands of unemployed, disgruntled Egyptian soldiers.

The Egyptian Army went from 94,000 troops in 1874 to 36,000 troops in 1879. This dissolution of the Egyptian army, the disastrous campaign in Ethiopia, the deteriorating state of the Egyptian economy, and the resentment of native Egyptians towards foreign privilege and influence created a perfect storm that would lead to Ismail’s ousting from power.

Along with the European intervention in Egypt’s financial affairs, these factors angered the Egyptian population and sparked a nationalist movement that rallied behind Colonel Ahmed Urabi, who had a native Egyptian peasant background. The Urabi Revolt, beginning in 1879, consumed the country and gained the support of much of the Egyptian population and army.

Ismail tried to use the increasing unrest of the native Egyptian peasant population to get rid of the European officials controlling the country’s finances. This enraged the British and French governments, who demanded that Ismail reinstate the French and British officials into the government. When Ismail refused to do so, Britain and France convinced the Ottoman government to depose Ismail in 1879.

The Legacy of Ismail’s Reign

The Ottoman government replaced Ismail with his son, Tewfik Pasha. Tewfik inherited an Egyptian government that was in shambles, with a decimated economy and an increasingly resentful population. Tewfik combatted the unrest in Egypt by giving in to the peasant rebellion, which caused Colonel Urabi to gain increasing power in the Egyptian government.

Urabi eventually ousted Tewfik from the government, but British and French military intervention put him back in power in 1882. It began Egypt’s British de facto occupation, as British officials hoped to restore European-friendly political stability in Egypt. This protectorate status of Egypt, ruled mainly by British influence, would last until the formal British occupation of the country at the start of World War I in 1914.

After being ousted from power in 1879, Ismail was forced into exile in Resina. However, he was eventually allowed to retire in Emirgan, where he effectively lived as a prisoner under house arrest until his death in March 1895.


We have covered many parts of the life of Ismail Pasha.

Let’s go over the main ideas:

  • While Ismail may have had sincere intentions for modernizing Egypt, his ambitions were not grounded in reality.
  • Ismail heavily invested in Egyptian sugar production and the Suez Canal construction, but these endeavors did not bring in the anticipated revenues that Ismail expected.
  • His lavish spending and extravagance and lack of pragmatic long-term planning put the Egyptian government in tremendous debt to European powers, who eventually took over the Egyptian government’s finances to recover their debts.
  • Ismail’s disastrous reign played a major role in the further growth of Western European influence in Egypt, as de facto British occupation of the country lasted into the 20th century.

We must give credit to Ismail for making massive improvements in the lives of the Egyptian people. However, his disastrous reign paved the way for increased foreign influence in Egyptian affairs, which has dramatically tainted Ismail the Magnificent’s legacy of modernizing Egypt.

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