Post-War US Economic Shift: From Intervention to Market Focus

After World War II, the United States intervened extensively in the economy to revive the national economy. However, by the 1970s, federal government agencies had become bloated and fiscal expenditures had grown significantly. At the same time, the United States experienced a crisis known as 'stagflation.' This crisis manifested as a decline in industrial competitiveness, severe disconnect between the virtual and real economies, fiscal debt, frequent debt crises, polarization, and intensified social conflict.

Therefore, the U.S. federal government attempted to eliminate the drawbacks of state intervention in the economy. President Nixon called for power and resources to flow back from Washington to the states and localities, back into the hands of the people, in his address. As a result, the United States established a policy of strengthening market regulation universally while weakening government intervention, and released economic vitality through the following policies:

1. Privatizing state-owned enterprises to enhance economic competitiveness.
2. Reforming the welfare system to reduce the government's financial burden.
3. Relaxing regulations on the economy and finance.

In international politics, the United States and the Soviet Union were in the midst of an intensifying Cold War. In the 1970s, various powers around the world rapidly developed, while the United States was deeply mired in the Vietnam War. Compared to the initial post-war period of global expansion, its economic strength had significantly declined, and its position was severely shaken. Therefore, the United States chose to adopt a defensive approach during the Cold War, such as changing its policy of hostility towards China and normalizing relations with them, partially retracting in the Third World while maintaining strategic focus, and establishing 'partnerships' with allies on a relatively equal basis. Thus, the United States maintained a balance of power between itself and the Soviet Union by relying on its strength and containment.

Regarding the Middle East, in the first Arab-Israeli war in 1948, the United States saved the newly formed Israel. This action demonstrated to Arab countries and the world that, regardless of the circumstances, the United States would faithfully fulfill its responsibility to ensure Israel's security. However, the U.S. government was unwilling to let the war escalate and harm its own interests. During his first term, Nixon's foreign policy objectives focused on ending the Vietnam War and implementing a policy of 'd￩tente.' The Middle East and Europe were crucial strategic bases in the United States' global strategy. In its struggle with the Soviet Union for influence in the Middle East, the United States needed the support and cooperation of Arab countries, particularly Egypt, which held a significant position in the Arab world.