Seventy Years After Suez: The Side That Took the Canal Surrendered First — Woody Magazine, Jul. 26, 2026
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Jul. 26, 2026 (Sun.)
Humanities
Seventy Years After Suez: The Side That Took the Canal Surrendered First
On July 26, 1956, Nasser nationalized the Suez Canal. Three months later Britain, France and Israel invaded to take it back and beat the Egyptian army in the field. Britain quit on the day its marines came ashore. What made the winning side stop?
The world is counting narrow waterways again this week. On July 20 the Houthis declared a naval blockade of Saudi Arabia; the territory they hold in Yemen runs along the Bab el-Mandeb Strait at the southern mouth of the Red Sea. By Lloyd's List Intelligence counts, transits through the Strait of Hormuz fell to 78 in the week beginning July 13, down from 174 the week before. Oil moved above $100 a barrel.
Who holds which channel is once again a question you answer with a map.
Seventy years ago today, a man took one of those channels. Three months later three countries invaded to get it back. They won the fighting and went home with nothing.
Why did the winning side quit first?
1. A Man Takes a Waterway
On the evening of July 26, 1956, President Gamal Abdel Nasser of Egypt spoke on the radio from Alexandria. He had signed a decree nationalizing the Suez Canal Company, effective immediately. While he was still talking, Egyptian officials were walking into the company's offices and taking over its management.
The canal opened in 1869, and a private company ran it for the next eighty-seven years. By 1956 most of its shares sat in British and French hands, and the British government was the largest single holder. Europe's Middle Eastern oil came through the channel.
London and Paris reacted as though they had been robbed. Their lawyers were less certain. Soon after the decree, a State Department legal adviser wrote a memorandum that still sits in the American diplomatic record. The company, he noted, had been established and registered under Egyptian law and was Egyptian. The concession was a contract between Cairo and that company, nothing more. Nasser had also raised compensation himself. The decree text, which Egypt's canal authority still publishes, promised shareholders the closing price on the Paris Bourse the day before the law took effect.
And Nasser did not close the canal. Most people remember this backward.
On September 13 the European pilots began leaving their posts, acting on instructions from their former employers. Two-thirds of them were gone within the month, by the canal authority's own count. The point was to show that the waterway would not run without international management. Egypt put its own pilots in the wheelhouse and kept the traffic moving. By October it had demonstrated that it could operate the canal safely and efficiently without European help.
While the ships kept sailing, there was no case for intervention. So a case had to be manufactured.
Between October 22 and 24, British, French and Israeli representatives met in secret at Sèvres, outside Paris. The document that came out of that meeting is known as the Protocol of Sèvres, and it scripted the sequence in advance. Israel would invade Sinai on October 29. Britain and France would then demand that both sides pull back ten miles from the canal. When Egypt refused, air and sea operations would begin on October 31.
All three governments knew Egypt would refuse. The ultimatum was not a demand addressed to Cairo. It was an alibi addressed to the world.
2. Eight Days, and the Winners Quit
The script held. Israeli forces crossed into Sinai on October 29. British and French aircraft hit Egyptian airfields on October 31. On November 5 the 3rd Battalion of the Parachute Regiment seized the airfield at El Gamil and French paratroopers took Port Fuad. The seaborne landing began at 4:30 the next morning. Some Royal Marines went in by helicopter. Britain's National Army Museum records this as the first combat use of the tactic.
The Egyptian army could not hold. Sinai collapsed and Port Said fell.
The prize was already ruined: Egypt had sunk ships across the channel. The canal stayed shut until April, and Britain, short of fuel, introduced petrol rationing that December and kept it until the following May. The invading side had cut its own fuel line.
Then, on the very day the marines landed, Prime Minister Anthony Eden accepted a ceasefire. The guns stopped at midnight between November 6 and 7.
Britain was not pushed off the beach. It put its hands up.
Eight days had passed since Israeli tanks entered Sinai.
3. Two Familiar Answers
Two explanations usually fill this gap.
The first is world opinion. On November 2 the UN General Assembly passed Resolution 997 by an overwhelming margin, demanding a ceasefire and a withdrawal.
The second is Moscow. Three days later, on November 5, Nikolai Bulganin, chairman of the Soviet Council of Ministers, sent letters to Eden, Guy Mollet and David Ben-Gurion. The Soviet Union, he wrote, was prepared to use every modern form of destructive weaponry to halt the intervention in Egypt. It read as a threat to fire rockets at London and Paris, and at the time many believed it forced the ceasefire.
Both things happened. Neither one explains what followed.
A General Assembly resolution carries no enforcement. It can demand; it cannot collect.
The Soviet letters need one more date beside them. On November 4, the day before they went out, Soviet tanks rolled back into Budapest and crushed the Hungarian rising. Bulganin also wrote to Eisenhower on the day he wrote to the others, proposing that the United States and the Soviet Union use force together to stop the Anglo-French operation. Washington declined. In twenty-four hours the same government crushed one rising and condemned another country's invasion. On a single day the same hand sent a threat and a partnership offer.
There is a sharper problem. All three governments received the same threat and absorbed the same condemnation, and they left at different speeds. Britain folded on the day of the landing, over French objections; Paris wanted to continue, and it was London that forced the ceasefire. Israel held Sinai until the following March, four months longer, under the same international pressure.
If threats and opinion were the cause, why was Britain alone in a hurry?
4. A Country in Surplus, Coming Apart
Britain's problem was not poverty.
The current account was in surplus through 1956: £159 million in the first half, and £245 million over the full year, slightly better than 1955. Trade was healthy.
The damage was in a different column. Sterling was pegged at $2.80, a rate set in 1949, and the market had begun to bet that the Bank of England would abandon it. Selling pressure built, and the Bank spent dollars buying pounds to hold the line.
One self-imposed rule made the position brittle. The Treasury treated $2 billion as the floor for its gold and dollar reserves, believing a drop below it would read as a devaluation signal. It published the figure every month. Anyone in the world could watch the balance fall.
Why not simply devalue and ride it out?
Cameron Cobbold, governor of the Bank of England, closed that door. Devaluation, he argued, would break up the sterling area and might dissolve the Commonwealth with it. Macmillan agreed.
For Britain the pound was not merely a currency. It was the last surviving form of the empire. So long as the sterling area held together as a single settlement zone, London remained the center of something. Let the rate go and the rest would scatter. Offered a choice between holding the currency and continuing the war, Britain chose the currency.
The IMF's official historian puts the point plainly: had devaluation or a float been available, Britain could have withstood outside pressure long enough to finish the military campaign.
A bank does not fail because the vault is empty. It fails because everyone reaches the counter at once. In 1956 Britain was a bank running a profit — and it was the only one of the three invading countries exposed to a run.
5. To Defend a Pound, You Need Dollars
One link in the chain deserves spelling out, because it decided the crisis.
Defending an exchange rate means buying up the pounds the market is dumping. Buying them requires dollars. Britain's dollars were draining away.
The place to find more was the International Monetary Fund, where a member could draw against its own quota. A drawing had to clear the Executive Board, and the largest quota and the largest bloc of votes belonged to the United States.
The Treasury had already counted the votes. Seven European directors, Australia and Canada were expected to back a British drawing. The United States, Egypt and all three Latin American directors were expected to oppose it. Only if China, India and Japan all abstained would the motion carry, and officials rated that prospect dim.
The key to sterling was in Washington. That was not a guess. It was the Treasury's own arithmetic.
6. November 6, in the Cabinet Room
Macmillan expected the Americans to help. He had met Treasury Secretary George Humphrey privately at the Fund's annual meetings in Washington that September. Humphrey made no promise, but Macmillan came away believing that support of some kind would follow the November election.
It did not.
Macmillan admitted as much in his memoirs. During the cabinet meeting of November 6, he learned that the United States would not back a British drawing until Britain accepted a ceasefire. Eden announced the ceasefire that evening.
A ceasefire, it turned out, was not enough. Washington wanted full compliance with the UN resolution, which meant immediate and complete withdrawal.
A second valve closed at the same time. With the canal blocked and Syria's pipelines cut, Europe needed American oil, and the Middle East Emergency Committee had a supply plan ready to activate. At the National Security Council, Eisenhower said the government should stay out of the oil problem until it had confirmation that the ceasefire was in effect. Britain and France protested that the delay was a lever to force them out. The plan was not approved until November 30.
As November closed, unable to secure a meeting, Macmillan sent word through his ambassador and his executive director at the Fund. Humphrey's answer came back short: American support would arrive when Britain was conforming to rather than defying the United Nations.
With the credit window shut and the oil tap closed, the only thing on offer was the exit.
The cabinet gave way. It set December 22 as the deadline for complete withdrawal, and only then asked Humphrey how much money that had bought.
On December 3 Humphrey reversed himself and told them to take the maximum. The point, he argued, was to post a number large enough to convince the market that sterling would hold. Britain drew $561.5 million at once and secured a further $738.5 million it could call on if needed: $1.3 billion, the full extent of what its quota allowed. It was the largest operation in the Fund's history to that point; the previous record was the $262.5 million standby arranged for France that October.
Getting it through was awkward. The Fund's Articles barred lending to finance a large and sustained capital outflow, and a capital outflow was precisely what Britain faced. Per Jacobsson, the incoming managing director, stretched the reasoning to bring the request forward. The staff report told the Executive Directors plainly that the money was needed for the capital account rather than the current account. The decision came first and the rule was fitted around it.
The next day Macmillan disclosed the November losses and announced the rescue in the same breath. A $500 million Export-Import Bank loan followed, made public on December 21 and executed the following March.
Britain then left most of the money untouched. It took the immediate drawing, but never called a penny of the $738.5 million standby. Humphrey had warned Macmillan that touching it would destroy the confidence it was meant to create. In the event, nobody had to. The announcement alone stopped the outflow, and reserves held above the $2 billion floor for months afterward.
The weapon was not the money. It was the number.
Read the order of events and the argument makes itself. The surrender came first. The money came second.
Macmillan denied to the end of his life that money had driven him out. The IMF's official historian, working through the archives, finds no credible alternative explanation anywhere in the record. Robert Rhodes James, Eden's biographer, called the financial factor decisive without calling it the only one. Decisive but not sole: that is where the evidence sits.
7. The Map and the Ledger
Nasser lost the fighting. He also kept the canal, made the nationalization stick, and became the emblem of Arab nationalism.
There is a footnote worth keeping. All four combatants came to the Fund's door. Over nine months it lent $858 million and committed a further $738 million. When Britain's drawing reached the Executive Board, Egypt abstained rather than oppose it.
Israel's business went through the same room. The Board approved its exchange rate in mid-March 1957, a week after Israeli forces left Sinai. That approval was the precondition for borrowing, and the drawing itself came in May. Egypt abstained on the March vote and on the May one.
The Fund's historian describes the 1956 run on sterling as the first major financial crisis of the postwar era, and calls it strikingly modern. When Mexico's peso collapsed in 1995, the Fund's managing director called it the first financial crisis of the twenty-first century. Almost every element that looked new had been present at Suez forty years earlier.
What 1956 leaves behind, then, is not a story about a canal. It is the observation that while everyone was counting waterways, the hand on the windpipe was in another room. Britain moved by reading the map. The United States moved by reading the ledger.
The Last Word
Britain went to recover a canal and lost a currency. The country that broke was running a surplus, and it broke in a column of figures rather than on a beachhead. The hand on that column belonged to a government that never fired a shot. The chokepoint was never on the map.
What Happened Next
- December 22, 1956 — British and French forces completed their withdrawal from Egypt.
- January 1957 — Eden resigned and Macmillan replaced him. Macmillan later told Secretary of State John Foster Dulles that the operation had been the last gasp of a declining power.
- March 1957 — Israel pulled out of Sinai, having secured passage through the Gulf of Aqaba, with a UN emergency force posted on the Egyptian side of the line.
- April 1957 — The canal reopened under Egyptian management, and control has stayed in Egyptian hands ever since. The waterway itself closed again in the 1967 war and did not reopen until 1975.
- 1958 — Compensation was settled. Egypt agreed to pay the equivalent of £E28.3 million; the company kept its assets outside Egypt and Egypt kept those inside. The old shareholders got a check instead of a stake.
- 1967 — Britain devalued sterling from $2.80 to $2.40. The rate it had abandoned a war to protect lasted another eleven years.
Sources
- Source ↗ Foreign Relations of the United States, 1955–57, Vol. XVI, Document 1 — Nasser's broadcast and the nationalization decree, July 26, 1956
- Source ↗ FRUS 1955–57, Vol. XVI, Document 8 — State Department legal memorandum on the company's status
- Source ↗ FRUS 1955–57, Vol. XVI, Document 554 — National Security Council record on oil supply and the ceasefire
- Source ↗ FRUS 1955–57, Vol. X, Document 234 — Withholding of the Middle East Emergency Committee oil plan
- Source ↗ FRUS 1955–57, Vol. XXVII, Document 249 — Memorandum of Macmillan's conversation with Dulles
- Source ↗ James M. Boughton, "Northwest of Suez: The 1956 Crisis and the IMF," IMF Staff Papers, 2002
- Source ↗ The National Archives (UK) — Macmillan's telegram to Humphrey, November 22, 1956 (FO 371/120816)
- Source ↗ Hansard — Suez Canal Compensation Agreement, May 14, 1958
- Source ↗ Suez Canal Authority — text of the nationalization decree
- Source ↗ Suez Canal Authority — canal history
- Source ↗ National Army Museum — the Suez campaign
- Source ↗ Imperial War Museums — canal closure and petrol rationing
- Source ↗ CVCE — Bulganin's letter to Guy Mollet, November 5, 1956
- Source ↗ Council on Foreign Relations — the Houthi blockade declaration, July 20, 2026
- Source ↗ USNI News — Strait of Hormuz transit counts, July 24, 2026
- Diane B. Kunz, The Economic Diplomacy of the Suez Crisis (University of North Carolina Press, 1991) (link unverified)
- Keith Kyle, Suez (St. Martin's Press, 1991) (link unverified)
- Anthony Gorst and Lewis Johnman, The Suez Crisis (Routledge, 1997) (link unverified)
- Adam Klug and Gregor W. Smith, "Suez and Sterling, 1956," Explorations in Economic History 36 (1999) (link unverified)
- Avi Shlaim, "The Protocol of Sèvres, 1956: Anatomy of a War Plot," International Affairs 73:3 (1997) (link unverified)
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