History of the Suez Canal
The Suez Canal was opened in 1869, after ten years of work financed by the French and Egyptian governments. The canal was operated by the Universal Company of the Suez Maritime Canal, an Egyptian-chartered company; the area surrounding the canal remained sovereign Egyptian territory and the only land-bridge between Africa and Asia.
The canal instantly became strategically important, as it provided the shortest ocean link between the Mediterranean and the Indian Ocean. The canal eased commerce for trading nations and particularly helped European colonial powers to gain and govern their colonies.
In 1875, as a result of debt and financial crisis, Egypt was forced to sell its shares in the canal operating company to the British government of Benjamin Disraeli. They were willing buyers and obtained a 44 percent share in the canal's operations for less than £4 million; this maintained the majority shareholdings of the mostly French private investors. With the 1882 invasion and occupation of Egypt, the United Kingdom took de facto control of the country as well as the canal proper, and its finances and operations. The 1888 Convention of Constantinople declared the canal a neutral zone under British protection. In ratifying it, the Ottoman Empire agreed to permit international shipping to pass freely through the canal, in time of war and peace. The Convention came into force in 1904, the same year as the Entente cordiale between Britain and France.
Despite this convention, the strategic importance of the Suez Canal and its control were proven during the Russo-Japanese War of 1904–1905, after Japan and Britain entered into a separate bilateral agreement. Following the Japanese surprise attack on the Russian Pacific Fleet based at Port Arthur, the Russians sent reinforcements from their fleet in the Baltic Sea. The British denied the Russian fleet use of the canal and forced it to steam around Africa, giving the Japanese forces time to consolidate their position in East Asia.
The importance of the canal as a strategic intersection was again apparent during the First World War, when Britain and France closed the canal to non-Allied shipping. The attempt by German-led Ottoman forces to storm the canal in February 1915 led the British to commit 100,000 troops to the defense of Egypt for the rest of the war.
The canal continued to be strategically important after the Second World War as a conduit for the shipment of oil. Petroleum business historian Daniel Yergin wrote of the period: "In 1948, the canal abruptly lost its traditional rationale. ... [British] control over the canal could no longer be preserved on grounds that it was critical to the defence either of India or of an empire that was being liquidated. And yet, at exactly the same moment, the canal was gaining a new role—as the highway not of empire, but of oil. ... By 1955, petroleum accounted for half of the canal's traffic, and, in turn, two thirds of Europe's oil passed through it".
At the time, Western Europe imported two million barrels per day from the Middle East, 1,200,000 by tanker through the canal, and another 800,000 via pipeline from the Persian Gulf to the Mediterranean, where tankers received it. The US imported another 300,000 barrels daily from the Middle East. Though pipelines linked the oil fields of Iraq and the Persian Gulf states to the Mediterranean, these routes were prone to suffer from instability, which led British leaders to prefer to use the sea route through the Suez Canal. As it was, the rise of super-tankers for shipping Middle East oil to Europe, which were too big to use the Suez Canal meant that British policy-makers greatly overestimated the importance of the canal. By 2000, only 8 percent of the imported oil in Britain arrived via the Suez canal with the rest coming via the Cape route.
In August 1956 the Royal Institute of International Affairs published a report titled "Britain and the Suez Canal" revealing government perception of the Suez area. It reiterates several times the strategic necessity of the Suez Canal to the United Kingdom, including the need to meet military obligations under the Manila Pact in the Far East and the Baghdad Pact in Iraq, Iran, or Pakistan. The report also points out how the canal was used in past wars and could be used in future wars to transport troops from the Dominions of Australia and New Zealand in the event of war in Europe. The report also cites the amount of material and oil that passes through the canal to the United Kingdom, and the economic consequences of the canal being put out of commission, concluding:
The possibility of the Canal being closed to troopships makes the question of the control and regime of the Canal as important to Britain today as it ever was.
In the aftermath of the Second World War, Britain was reassessing its role in the region in light of the severe economic constraints and its colonial history. The economic potential of the Middle East, with its vast oil reserves, as well as the Suez Canal's geo-strategic importance against the background of the Cold War, prompted Britain to consolidate and strengthen its position there. The kingdoms of Egypt and Iraq were seen as vital to maintaining strong British influence in the region.
Britain's military strength was spread throughout the region, including the vast military complex at Suez with a garrison of some 80,000, making it one of the largest military installations in the world. The Suez base was considered an important part of Britain's strategic position in the Middle East; however, increasingly it became a source of growing tension in Anglo-Egyptian relations.
Egypt's post-war domestic politics were experiencing a radical change, prompted in no small part by economic instability, inflation, and unemployment. Unrest began to manifest itself in the growth of radical political groups, such as the Muslim Brotherhood in Egypt, and an increasingly hostile attitude towards Britain and its presence in the country. Added to this anti-British fervour was the role Britain had played in the creation of Israel. As a result, the actions of the Egyptian government began to mirror those of its populace and an anti-British policy began to permeate Egypt's relations with Britain.
In October 1951, the Egyptian government unilaterally abrogated the Anglo-Egyptian Treaty of 1936, the terms of which granted Britain a lease on the Suez base for 20 more years. Britain refused to withdraw from Suez, relying upon its treaty rights, as well as the presence of the Suez garrison. The price of such a course of action was a steady escalation in increasingly violent hostility towards Britain and British troops in Egypt, which the Egyptian authorities did little to curb.
On 25 January 1952, British forces attempted to disarm a troublesome auxiliary police force barracks in Ismailia, resulting in the deaths of 41 Egyptians. This in turn led to anti-Western riots in Cairo resulting in heavy damage to property and the deaths of several foreigners, including 11 British citizens. This proved to be a catalyst for the removal of the Egyptian monarchy. On 23 July 1952 a military coup by the Egyptian nationalist 'Free Officers Movement'—led by Muhammad Neguib and future Egyptian President Gamal Abdul Nasser—overthrew King Farouk and established an Egyptian republic.