Background

The Suez Canal was opened in 1869, having been financed by France and the Egyptian government. Technically, the territory of the canal itself was sovereign Egyptian territory, and the operating company, the Universal Company of the Suez Maritime Canal (Suez Canal Company) was an Egyptian-chartered one (originally as part of the Ottoman Turkish Empire). During the British colonial era, the Suez Canal had been important in the Middle East, as well as for the penetration of Africa and in maintaining control of India. Thus, in 1875, the British government of Benjamin Disraeli bought out the Egyptian share of the company, giving it partial control over the canal's operations, which it shared with mostly French private investors. In 1882, during foreign intervention in Egypt, the United Kingdom took de facto control of the canal itself. The canal was of strategic importance, being the ocean trade link between the United Kingdom and its colonies in India, the Far East as well as Australia and New Zealand. The area as a whole was strategic to North Africa and the Middle East.

The Convention of Constantinople (1888) declared the canal a neutral zone under British protection.^[5] By ratifying it, Egypt agreed to allow international shipping to pass freely through the canal.^[6]

The importance of the canal as a strategic center was apparent during both World Wars. During the First World War, the British and French closed the canal to non-Allied shipping. During the Second World War, it was tenaciously defended during the North African Campaign.

Daniel Yergin, a historian of the oil industry, wrote:

[I]n 1948, the canal abruptly lost its traditional rationale. ... [C]ontrol over the canal could no longer be preserved on grounds that it was critical to the defense 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.^[7]

British troops were withdrawn from Palestine in 1948 and the state of Israel formally established in their wake, leading to the 1948 Arab-Israeli War which further established both Israel's independence and Arab-Israeli enmity. See history of Israel, history of Egypt.

In 1952, officers in the Egyptian army overthrew the monarchy of King Farouk who had been a close ally of the British. The new government abandoned policies friendly to the European powers, while at the same time asserting an independent and Arab nationalist identity.