One of the most striking features of the postwar Middle East was the explosion of nationalist sentiment. Since the inauguration of the ‘peasants, not pashas’ policy and the establishment of the BMEO, the attitude of the Arab world toward Britain had deteriorated dramatically. Renegotiations with the Egyptians over the terms of the 1936 Anglo-Egyptian Treaty continued to flounder and this was joined by the Iraqi rejection of the Portsmouth Treaty in 1948 and the growth of nationalist pressure on the Shah in Iran to revise the terms of the concession of the Anglo-Iranian Oil Company (AIOC). Permeating all of these conflicts was the brewing storm in Palestine which erupted in 1948, severely weakening the existing political structures of the region and giving renewed life to the emerging nationalist opposition forces. When the development policy had been drafted in 1945, it was hoped that it would help to neutralize such political forces. It now seemed that economic and social development was dependent on the same factor which it was designed to promote. As John Troutbeck, Overton's successor as head of the BMEO, concluded upon completing his inaugural tour of the Middle East in late 1947: ‘Quite apart from the obvious difficulties of world shortages, poor administration … corruption, indifference, etc., economic development is everywhere bedeviled by politics. It needs tranquility, but on the one side you have the Russian menace and on the other Palestine.’

It was not that the political élites of the region were ignoring problems of socio-economic development.