“The Suez Canal is an artificial waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez.”
It was constructed by the Suez Canal Company between 1859 and 1869 and was officially opened on November 17, 1869. The canal offers ships and boats a much shorter journey between the Atlantic and the Indian oceans by avoiding a voyage around the Cape of Good Hope (South Africa), notorious for its harsh waters. This reduces the journey by approximately 7000 km. In 2012, 17,225 vessels traversed the canal (47 per day).

The canal is owned and maintained by the Suez Canal Authority(SCA) of Egypt. Under the Convention of Constantinople, it may be used “in time of war as in time of peace, by every vessel of commerce or of war, without distinction of flag”. The history of this canal tells us otherwise. The canal has caused a lot of deaths, revolutions, war and had pushed Egypt into bankruptcy.

In the mid-19th century, interest in a canal to revive the ancient trade routes between the west and the orient started piquing. The Ottoman Turks were really not interested. Muhammad Ali, the Viceroy (Khediv) of Egypt was not convinced that a canal was really needed. A project that would cost millions at the time. A canal project had already been rejected by Napoleon citing feasibility. A young enterprising engineer with a vision, Ferdinand de Lesseps tried convincing the Khediv, but he too couldn’t succeed. Instead he developed a relation with the Khediv’s son, Mohammed Said.
He became close friends with the prince. As the story goes, the young prince had an obesity problem which displeased his father. The strict father would put him on strict diets and encourage him to take up sports. So, the young prince would sneak out to the de Lessepps’ on the pretense of learning horse-riding while actually he would be out there filling up his belly with spaghetti.

When Mohammed Said became Viceroy of Egypt, he needed very little persuasion and gave his permission for the canal. He gave concessions to the Suez Canal Company, the first director was to be de Lessepps. The concession was to be in effect for 99 years from the date of opening and all the land on the isthmus of Suez was to be given to the company. Only 15% of the profits would be paid to the Egyptian government , 75% would be paid to the company’s shareholders and the remaining would be paid to the initial investors who gave de Lesseps the inital capital.

Ferdinand de Lessepps tried everything he could to make sure that the canal was open to all countries without discrimination. The board of directors had representatives from 14 different countries. His efforts were in vain as the British rose in opposition. At the time, the British and the French were not particularly chummy, owing to the fact that both were rival colonists. When the British learnt of the canal project, they had their reservations. Their primary concern was that the French might use the canal against them and their trade with India.

The British used their influence in European banking circles to prevent de Lesseps from securing the 40 million $ loan he required for the construction. Desperate for money, de Lesseps started selling shares of the Suez Canal Company to anyone who would buy them. The stock sold well, mainly bought by the French middle class. Even with the stock sale, de Lesseps still did not have enough money . So he turned to his old friend Mohammed Said and tried to sell 200,000 shares to the government of Egypt. Said agreed to buy 92,000 shares, nevertheless de Lessepps announced to the press that Said had to agreed to buy all the remaining 200,000 shares. When Said heard this, he confronted de Lessepps, but the gullible Said was easily convinced to buy all the shares. Mohammed Said borrowed 20 Million pounds from the same bankers who had refused to finance the canal. The government of Egypt now owned about half of the company. Mohammed Said had recklessly committed to the canal and brought Egypt into financial ruin by borrowing huge sums of money at high interest rates.

The construction of the canal posed many challenges. 90% of the work involved digging out sand. Manpower was a huge problem; getting the required labor, feeding them and providing for them. There were no earthmoving machines at the time, it was all to be done by hand. As per the terms of his concession, Said was to provide 60,000 peasants for the construction of the canal. They say that this labour force was uprooted from the the nearby cities and villages with their families. Some even say that the laboures were not paid or even given tools to dig with. There are pictures of them digging with their bare hands. They were expected to work 18 hours a day for 4 years before they could return to their villages. Some of them even worked for 7 years.

Soon after this, Mohammed Said passes away and is succeeded by his nephew Ismail who is faced with a daunting task. At the time, slavery was the hottest topic of debate, the Americans were fighting a war at that very moment to end slavery. The British seized this opportunity to accuse Egypt of providing slave labour for the construction of the canal. Bowing to global pressure, Ismail sent all the labourers back to their villages. But according to the terms of the concession made by Mohammed Said, the government of Egypt was to provide the labour force for the construction of the canal. If it could not provide the labour, then it would have to pay cash in lieu of the labour. Egypt was already in financial ruin, so Ismail like his predecessor borrowed money from European banks at much higher interest rates. De Lessepps used the money to buy the much needed dredging machines from France for widening the dug-out canal. Progress on the canal sped up dramatically owing to the new machines.

The canal opened on 15 August 1869 with much fanfare. Ismail invited guests from all over the world and threw lavish parties using borrowed funds. It is estimated that he borrowed around 15 million pounds for the parties. The people of Egypt paid the price for the extravagance of the ruling class.

By 1875, Egypt was facing bankruptcy and no bank would loan her any more money. Moreover, farmers soon came to realise that their government had mortgaged their cotton crop a decade earlier to pay for the canal. Soon that payment came due, now the only other asset that the government could sell were their shares in the Suez Canal Company. Even that was not enough. Desperate for money, Ismail sought a buyer for all the shares in the company. The British agreed to buy the shares for 20 million $. Egypt, whose people had toiled for nearly a decade to build a canal that brought them into financial ruin owned no part of it.

There was growing discontentment among the peasants against the rulers and aristocrats. Soon enough there was a rebellion and the ruler was deposed. The British sought to protect their investment and sent the army to quell the rebellion. The British occupied Egypt for the next 75 years. They were afraid that the canal would be blocked, affecting their trade with the east.

In 1936, the British installed a puppet ruler, Farooque and ended its official control of the Egyptian government. It maintained a solid presence in Egypt using its puppet rulers. Then in 1952, fed up with the aristocrats; the Egyptian army led by Gamal Abdel Nasser mounted a bloodless coup and took over the government. When he realised the magnitude of the financial problems faced by the government, he had no alternative but to seize the only reliable source of income – the Suez Canal. On 26 July 1956, Nasser nationalized the Suez Canal, intending to finance a very expensive hydro-electric project with revenue from the canal. On the same day that the canal was nationalized Nasser also closed the Straits of Tiran to all Israeli ships.

The Israelis invaded the Sinai Peninsula, forcing Egypt to engage them militarily, and allowing the Anglo-French partnership to declare the resultant fighting a threat to stability in the Middle East and enter the war – officially to divide the two forces but in reality to regain the Canal and bring down the Nasser regime. They sent out troops to invade Egypt. At the time, the British and French still had an imperialistic regime. If the Suez Canal were to fall into someone else’s control, it would mean the end of the British Empire. Not so surprisingly, the Egyptian government found unlikely allies in the Soviet Republic and the United States who felt that the Suez Canal belonged to Egypt. Of course they had their own ulterior motives in siding with Egypt. Until now, the Americans and the Soviets had very little influence over the trade routes in the east. By siding with the Egyptians, they thought they could perhaps gain some influence and prevent major powers like the British and the French from gaining complete control over an important trade route.

On 4 November 1956, a majority at the United Nations voted for a peacekeeping resolution, which mandated UN peacekeepers to stay in Sinai unless both Egypt and Israel agreed to their withdrawal. The United States backed this proposal by putting pressure on the British government by selling British currency, which would cause it to depreciate. Britain then called a ceasefire, and later agreed to withdraw its troops by the end of the year.

The Suez Canal had 120,000 deaths among its 1.5 million workers during the 11 year excavation project. The project called for the removal of 100 million cubic feet of sand and dirt; and cost twice the original estimate. Egypt had gone into deeper and deeper debt due to extortionist interest rates owed to European banks and foolish rulers. Egypt went bankrupt in 1875, European bankers then took control of Egypt financially. “The Suez crisis is often portrayed as Britain’s last fling of the imperial dice.”
All in all, it seems that Egypt lost more than it gained from the Suez Canal. Although it might have benefited, if it had a headstrong ruler.