Construction of the Suez Canal started in 1859, and was completed in 1869 powered by the Suez Canal Company. It was designed by Ferdinand de Lesseps a French "diplomat, entrepreneur, and promoter". (Yergin 2009, pg. 461) The canal connected the Mediterranean Sea with the Red Sea, making it of enormous importance and concern to the ruling hegemonic powers; especially the British, who could travel to India in a remarkably quicker journey, until India gained independence in 1948. Which prompted the new apparent motive for British immediate strategic security means: oil transportation. The strategic advantage of avoiding the journey across the Cape of Good Hope was obviously imperative. In addition the British were accumulating a respectable amount of money from tolls payed to the Canal Co.
In 1952, Colonel Abdel Nasser succeeded in a military coup, establishing a nationalist ideology paired with a hatred for Westerners and Israel in particular, and the goal of nationalizing and utterly dominating the Suez Canal. Realizing the political economic necessity of the Canal, Nasser's goal of nationalization of the Canal as an utmost concern was understandable. "A Gifted student of Mohammed Mossadegh, he mastered the use of rhetoric and the radio to inflame and mobilize the masses, stirring tens or hundreds of thousands of demonstrators to take to the streets in feverish passion. In turn, he was to become the model for the military officer turned fiery nationalist leader in the emerging nations of the Third World." Supplementing Nassers desire to impact the Arabs as a whole and not solely Egypt, he established "The Voice of the Arabs" a radio station preaching pan-Arabism with speeches and such by himself notably, and aired throughout the Middle East and North Africa (MENA) "...calling for the rejection of the West and threatening other Arab regimes in the region." (Yergin 2009, pgs 462-3)
In fear of Communist political gains the U.S. was increasingly wary of the specter of colonialism, and any reminders of it that would jeopardize their accumulating hegemony in MENA; of which the Suez Canal in itself and the Suez Canal Co. were a constant reminder of colonial times. These fears were reassured when Nasser started to buy weapons from the USSR in 1955.
"Britain still maintained a military base and a large supply center in the Canal Zone, under the terms of the 136 Anglo-Egyptian treaty; but Egyptians, impatient for their withdraw, were conducting a campaign of harassment against them, including terrorist raids, murders, and kidnapping." (ibid)
In case the Suez Canal was shut down to Westerners, they wondered if they should adapt the Voluntary Agreement of 1950 to allow the international oil companies and governments to work together. Although they were wary of inciting any momentum towards the Justice Departments ongoing antitrust cases of which several would-be participants of a revised Voluntary Agreement would be intimately ingrained with.
"At the end of 1955, in an effort to placate Nasser and strengthen the Egyptian economy, the Americans and British, in conjunction with the World Bank, had begun considering a loan to Egypt to build a huge dam at Aswan on the Nile." (Yergin 2009, pg 464) The British military left the canal on June 13, 1956 - a month later canceling the loan for the damn infuriating Nasser and prompting the Egyptians to take control of the Suez Canal on July 26th, 1956.
"Both London and Paris were strongly motivated towards military intervention. The French saw Nasser as a threat to their position in North Africa." (Yergin 2009, pg. 467) President Eisenhower was strongly against any military action in attempt to get the Canal back; contrary to the British and French. Afraid that violence would only turn Nasser into a hero to the Arab developing world, and threaten the building up of U.S. hegemony with that of the Soviet Union who would certainly exploit the situation to establish their own hegemony. The Americans were smart throughout their quest for dominance in MENA to avoid the endorsing of a neo-colonial era, fearing the consequences. Another motive for military action against Nasser for the French was his moral and military support for Algerian independence.
The threats of nationalization, Soviet expansion, and disruption in the oil industry was all too apparent, the question was what could be done? "To all of them, [Eden, Macmillan and others] Nasser was a resurrected Mussolini, even a nascent Hitler. Just a decade after the Axis defeat, they thought, another conspirator turned demagogue dictator had emerged to strut on the world stage and inflame the masses, promoting violence and war in pursuit of vast ambitions." (Yergin 2009, pg. 468)
Granted limited immunity from the Justice Department's anti-trust prosecutions, Eisenhower proposed an "Emergency Committee" which would tackle the scenario in which Western Europe's oil demands would be met in case of a blocking of the Canal; by a coalition of international oil companies and surplus oil from governments like the US. "Without petroleum, Nasser proclaimed, all the machines and tools of the industrial world are 'mere pieces of iron, rusty, motionless, and lifeless'". (Yergin 2009, pg. 469) Although this limited immunity was not enough to make the participating oil companies comfortable providing their full services and participation, proposing instead a reliance on surplus oil in Texas and Venezuela, or creating a massive pipeline reaching from the Persian Gulf through Iraq and Turkey to the Mediterranean.
Nasser reacted by blocking the Canal and destroyed pumping stations along the Iraq Petroleum Co. pipeline. The British and French foolishly assumed the U.S. would supply them with the oil they needed to continue their campaign, which turned out to be an audacious mistake. The Israelis were making great gains in their war effort "By November 5, the Israeli's had consolidated control over the Sinai and the Gaza Strip and had secured the Strait of Tiran. On that same day, British and French forces began their airborne assault on the Canal Zone." (Yergin 2009, pg. 473) The United States thus denied any petroleum aid as a sort of punishment and continued to urge the campaign to an end; demanding the withdraw of all forces immediately understandably fearing Soviet and Arab response. Also worth mentioning the Saudis created an embargo against France and Britain during this time.
The Americans even instructed the International Monetary Fund (IMF) to deny any supplemental loans to the three powers until they withdrew their forces; still refraining from enacting the Middle East Emergency Committee under the same circumstances. After the British and France withdrew in late November the Committee was enacted and kept them from plummeting into an energy crises. "The Organization for European Economic Cooperation (subsequently the OECD) created a Petroleum Emergency Group, which actually made the allocations, based on a formula that reflected pre-Suez oil use, stock levels, and local energy supplies." (Yergin 2009, pg. 475) Although not every company, such as the Texas Railroad Commission, was enthusiastic or even willing to dramatically increase production and exports to help the now incredibly energy weak Western Europe. Eventually they got back on their feet, and rations were lifted, pipelines were somewhat online again, and Egypt had complete domination over the Suez Canal.
And so the question formed throughout the oil companies and governments was how could they avoid their complete reliance on the Canal. pipelines were initially recommended, but they proved to be unreliable, easily interrupted. Another suggestion was the implementation of going back to the Cape of Good Hope route, using super-tankers.
There was of course still a bitter relation between the U.S. and Britain and France. "During the crises, the United States had focused on trying to bolster its position with Arab oil producers...[and] to support stable pro-Western governments in the Middle East as a bulwark against Soviet expansionism." (Yergin 2009, pg. 479)
Eventually the British-American relationship was restored to a somewhat friendly coalition recognizing the strategic importance of security in the Gulf, learning as much as they could from the crises, and how they could apply it to their future hegemonic endeavors.
Yergin, D. 2009. "The Prize: The Epic Conquest for Oil, Money, and Power." Free Press. New York, NY.
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