Egypt's history: a canal sold for debt in 1875 and taken back in 1956

How the first Egyptian state was formed

A Neolithic farming culture had taken root in the Nile Valley by about 6000 BC, and the earliest known hieroglyphic inscriptions appear on Naqada III pottery dated to about 3200 BC. The usual date for the unification of Upper and Lower Egypt is about 3150 BC, under a king the later lists call Menes. Britannica is more cautious. It calls Menes "a creation of the later record, not the actual unifier of the country", and dates the ceremonial palette of King Narmer, which shows him wearing the two chief crowns of Egypt, to the beginning of the 1st dynasty around 2900 BC. Both accounts arrive at the same state, with writing, a bureaucratic administration and a capital at Memphis.

That state ran on the river and on drafted labour. Under the vizier, officials collected taxes and coordinated irrigation, and farmers owed a labour tax, the corvée, worked off on irrigation or building projects. The river set the calendar. Akhet, the flood, lasted from June to September, and the seasons of planting and harvest followed it. The Old Kingdom, from about 2700 to 2200 BC, built the Step Pyramid of Djoser and the pyramids at Giza. The New Kingdom, from about 1550 to 1070 BC, held an empire from Syria to Upper Nubia after Ahmose I drove out the Hyksos, the first foreign dynasty to rule in Egypt.

Who ruled Egypt after the last native pharaoh

Cambyses II of Persia conquered Egypt in 525 BC. Native rule returned in 402 BC and lasted until 343 BC, when the Persians came back and Nectanebo II, the last native pharaoh, was defeated in battle. Eleven years later the Persian ruler Mazaces handed Egypt to Alexander the Great without a fight. Greek, Roman and Arab rule followed, and the Ottoman Empire from 1517.

Britannica reads the long period through the question of where Egypt's revenue went. Under the caliphs, it says, Egypt's status "was much the same as it had been for centuries under foreign rulers whose main interest was to supply the central government with Egyptian taxes and grain." The Ptolemies ruled from Alexandria and called themselves successors to the pharaohs. Rome, which annexed Egypt in 30 BC, drew the greater part of its grain from the province, where the army under a prefect appointed by the emperor enforced the collection of heavy taxes. After the Council of Chalcedon in 451 a distinct Coptic Church was firmly established, and Coptic was the most widely spoken language in Egypt until at least the 10th century.

Amr ibn al-As invaded in 639 with some 4,000 men, and the Byzantine forces had withdrawn by 642. The conquerors kept the Byzantine land and poll taxes, founded a garrison town at Al-Fustat and reopened Trajan's Canal, so that grain bound for Arabia could go by ship to the Red Sea. Arabic replaced Greek as the language of the state in 706. Governors appointed by the caliphs ran the province for more than two hundred years, until Ahmad ibn Tulun, governing from 868, raised an army strong enough to defy Baghdad. Under the Tulunids, in Britannica's words, "for the first time since the pharaohs, Egypt became virtually autonomous and the bulk of its revenues remained within its borders."

Cairo replaced Al-Fustat in 969 as the seat of the Fatimid caliphs. About 1250 the Mamluks, a Turco-Circassian military caste, took power and held it until the Ottoman conquest of 1517. A French army under Napoleon Bonaparte invaded in 1798 and was expelled in 1801.

What Muhammad Ali built on peasant labour

The commander of the Albanian regiment, Muhammad Ali, came out of four years of fighting after the French left, and in 1805 the sultan acknowledged him as viceroy. The title implied that he answered to Istanbul, though Ottoman power in Egypt was finished, and his dynasty ruled until 1952. Between 1805 and 1815 he dismantled the tax farming that had passed most of the revenue to the Mamluks, and in 1811 he had many of their leaders massacred at the citadel. He ended as effectively the sole landholder in Egypt, with a monopoly on the trade in crops.

From 1823 he conscripted Egyptian peasants for the ranks of his army, under officers who were mostly Turkish-speaking Ottomans, and the conscription was brutally administered. His forces took much of the northern Sudan in 1820 and 1821 and Syria in 1833, until the European powers compelled his son Ibrahim to evacuate Syria in 1840. In 1841 the sultan made the rule of Egypt hereditary in the family. Long-staple cotton, introduced in 1820, turned the country's agriculture into a cash-crop monoculture before the end of the century.

How a canal concession became a national debt

A waterway between the Nile and the Red Sea was already old. Necho II began one around 600 BC, by Herodotus's account, Darius I of Persia completed it, and Napoleon's engineers found its remains in 1799.

Who dug the canal across the isthmus

In 1854 Said Pasha granted his French friend Ferdinand de Lesseps a concession to cut a canal across the isthmus of Suez, to be run by a company for 99 years from its opening. Work began at the future Port Said on 25 April 1859, and forced labour under the corvée was used to dig it until 1864. The number who died is disputed. Some estimates run to tens of thousands, many from cholera, and Gamal Abdel Nasser gave 120,000 in his speech of 26 July 1956. A calculation in Wikipedia's account, built on the company's chief medical officer reporting no more than 2.49 deaths per thousand in 1866, comes out below 3,000.

Ismail, who succeeded Said in 1863, refused to supply unlimited and largely unpaid peasant labour, a practice that had caused an outcry in England and continental Europe. Arbitration imposed a large indemnity on him, and he agreed to pay for a block of shares that de Lesseps had placed in Said's account. The canal opened on 17 November 1869, and its final cost was more than double the original estimate.

Why Ismail sold Egypt's canal shares

The American Civil War had raised the price of Egyptian long-staple cotton fourfold, and when peace returned in 1865 it collapsed. Ismail had also inherited a burden of debt, and the firmans of 1866 and 1867 that fixed the succession in his line by primogeniture and gave him the title of khedive were paid for in bribes to Ottoman officials and a higher tribute. In 1875 he sold Egypt's 44% share in the Suez Canal Company to the British government for £4 million. It was one of several expedients to put off bankruptcy, and none of them worked.

In 1876 the Caisse de la Dette Publique, a commission of the public debt with members nominated by France, Britain, Austria and Italy, took over the service of the debt, and a British and a French controller took charge of revenue and spending. By 1878 both sat in Ismail's cabinet, where, with the money of the bondholders behind them, they "were the real power in the Government". In June 1879 the sultan, prompted by France and Britain, deposed Ismail in favour of his son Tawfiq. Under the Law of Liquidation of July 1880 the annual revenues were split into two roughly equal portions, one for the commission and one for the government. The commission sat until 1940.

Why British troops came to stay

Army officers led by Ahmad Urabi resented both the khedive and European control. By 1881 they had allied with nationalists in the Assembly of Delegates as the National Party, and in 1882 Urabi became minister of war. Riots broke out on 11 June 1882 after British and French warships were sent to Alexandria. France refused to join the bombardment of the city on 11 July, and Britain went on alone. An expeditionary force under Sir Garnet Wolseley was sent to the Suez Canal, defeated the Urabists at Tel el-Kebir on 13 September 1882 and occupied Cairo the next day.

The khedive's government stayed in place as a facade, and British advisers attached to each ministry carried more weight than the ministers. Evelyn Baring, the British agent from 1883 and Lord Cromer from 1892, steadily took control of the whole administration. The Convention of Constantinople of 1888 declared the canal open to ships of all countries in war and peace alike, and Britannica notes that without British cooperation it remained a dead letter. Under Cromer's successor the General Assembly threw out a project to extend the Suez Canal Company's 99-year concession by 40 years, and Butrus Ghali, the prime minister who had advocated it, was assassinated by a nationalist a few days later.

Britain declared a protectorate in 1914. When it exiled the Wafd leader Saad Zaghlul to Malta on 8 March 1919, the country rose in its first modern revolution, and in February 1922 Britain declared Egypt independent while keeping its rights over the Sudan and over foreigners. The Anglo-Egyptian Treaty of 1936 withdrew British troops from most of the country and left them on the canal, where a garrison of some 70,000 remained after the Second World War. Egypt renounced the treaty in 1951. On 25 January 1952 British troops at Ismailia ordered the Egyptian police to surrender their weapons, the police refused, and 56 Egyptians and 13 British died in the fighting. The next day crowds in Cairo burned 750 foreign-owned stores, in what became known as Black Saturday.

Why Egypt took the canal company back

The Free Officers, a group of army conspirators, overthrew the monarchy on 23 July 1952. A law of the same year limited land ownership to 200 feddans, about 84 hectares, per person, and on 18 June 1953 Egypt became a republic. Gamal Abdel Nasser won the contest for power in 1954. Under the Anglo-Egyptian Agreement of that year British troops were to leave the canal zone in stages, and the last of them left on 13 June 1956.

In December 1955 the United States and the United Kingdom had pledged 56 million and 14 million dollars towards a high dam at Aswan. Because of Egypt's overtures to the Soviet Union, which included an arms deal through Czechoslovakia announced in September 1955, they withdrew their support in 1956, and so did the International Bank for Reconstruction and Development. Nasser answered on 26 July 1956, in a speech in Alexandria in which the name of Ferdinand de Lesseps was the code word for Egyptian forces to take over the canal. The company passed to the Suez Canal Authority, and its revenue was to pay for the dam. Its 99 years would have run until 1968.

Britain and France, the company's major shareholders, planned with Israel to regain the canal. Under the Protocol of Sèvres, Israel invaded the Sinai on 29 October 1956, and British and French troops then reoccupied the canal zone, officially to separate the two forces. Pressure from the United States and the Soviet Union ended the crisis. The United States sold sterling to press the British government, and on 4 November a majority at the United Nations voted for Lester Pearson's proposal for a peacekeeping force. Ships sunk on Nasser's orders kept the canal closed until April 1957, and it stayed in Egyptian hands.

What the High Dam ended on the Nile

A first dam at Aswan, built by the British between 1898 and 1902, was too small to stop the floods and droughts. King Farouk's government favoured the plan of the British hydrologist Harold Edwin Hurst to store the river's water in the Sudan and Ethiopia, where evaporation is much lower. The Free Officers held that it had to be stored in Egypt, for political reasons, and within two months of the coup they had accepted Adrian Daninos's plan for a high dam. Construction began on 9 January 1960, though Britannica dates the start to 1959, and the dam was completed with Soviet credits on 21 July 1970. In 1970 it produced around half of Egypt's electric power, and Britannica says the annual flood, "for the first time in history, is under human control".

The reservoir, Lake Nasser, flooded much of Lower Nubia. Wikipedia's account gives 100,000 to 120,000 people resettled in the Sudan and Egypt, Britannica's 90,000. In Egypt most of some 50,000 Nubians were moved to a "New Nubia" near Kom Ombo, and in 2019 and 2020 Egypt began compensating those who had lost their homes. A UNESCO rescue that began in 1960 moved twenty-two monuments, among them the temples of Abu Simbel and Philae, and they were inscribed on the World Heritage List in 1979 as the Nubian Monuments from Abu Simbel to Philae.

Britannica gives 40 million tons as the silt the flood used to deposit on the fields before 1970, and says artificial fertiliser has not adequately replaced it. Wikipedia's account adds that 88% of the sediment was carried out to sea before the dam was built and that its value as a nutrient has often been overestimated.

How the wars with Israel closed the canal

On 5 June 1967 Israel launched what it called a preemptive attack on Egypt, Jordan and Syria, after Egypt had ordered the UN force out of the Sinai and closed the Gulf of Aqaba to Israeli shipping. An estimated 10,000 Egyptians died, and Israel occupied the whole of the Sinai and the Gaza Strip. Egypt closed the canal on the first day of the war, and fifteen cargo ships caught inside it, later called the Yellow Fleet, stayed there for eight years. In Britannica's phrase the waterway became "a fortified ditch between the two warring sides".

Nasser died on 28 September 1970. His successor, Anwar Sadat, sent nearly all Soviet military advisers home in July 1972, and on 6 October 1973 Egypt and Syria attacked together. The ceasefire left Egyptian troops east of the canal and Israeli forces west of it. After disengagement agreements in 1974 and 1975, and mine clearing by American and British crews, the canal reopened on 5 June 1975, eight years to the day after it closed. Sadat addressed the Knesset in Jerusalem on 19 November 1977, and the peace treaty of 26 March 1979 provided for Israel's withdrawal from the Sinai within three years. Egypt was expelled from the Arab League. Sadat was assassinated on 6 October 1981 at a parade marking the anniversary of the 1973 war.

What changed after the January uprising

Protests against Hosni Mubarak's government began on 25 January 2011, and after eighteen days he resigned, on 11 February, leaving the army in control. A government fact-finding commission counted at least 846 dead. Mohamed Morsi of the Muslim Brotherhood won the presidential run-off of June 2012 with 51.7% of the vote. On 3 July 2013, after mass protests, the head of the armed forces, General Abdel Fattah el-Sisi, announced that Morsi had been removed. On 14 August security forces broke up the sit-ins of his supporters, and Human Rights Watch estimated that at least 817 people were killed at Rabaa al-Adawiya Square alone.

How the river dispute reached the Security Council

Ethiopia announced the Grand Ethiopian Renaissance Dam in April 2011, and Egypt's State Information Service records the announcement as coming in the imbalance that followed the January revolution. The Egyptian government states that Egypt "depends entirely on the Nile to meet its water needs". Egypt, Sudan and Ethiopia signed a Declaration of Principles on 23 March 2015, and talks on rules for filling and operating the dam followed in Washington and then under the African Union.

At the UN Security Council on 8 July 2021, Egypt's foreign minister called the dam an existential threat to more than 100 million Egyptians and said Ethiopia refused to sign a legally binding agreement. Sudan's foreign minister described a 74 billion cubic metre dam near Sudan's border. Ethiopia's minister for water, irrigation and energy said the Council's time should not be spent on the dam, spoke of 65 million Ethiopians without electricity, and said that Egypt and Sudan had built dams and canals of their own without regard for the rights of other riparian countries. The UN special envoy told the meeting that negotiations had been going on for a decade. Ethiopia's economy article records the same dam from upstream.

What the canal has earned since the widening

The New Suez Canal, a parallel channel of more than 35 kilometres opened on 6 August 2015, cost more than LE 59.4 billion and was paid for with interest-bearing certificates issued only to Egyptian entities and individuals. Ahram Online gives canal revenue of US$10.2 billion in 2023 and US$4 billion in 2024, after tensions in the Red Sea diverted shipping around the Cape of Good Hope, and, citing the canal authority's chairman, US$4.67 billion in the 2025/26 fiscal year. In 1875 Egypt's stake in the canal went to a foreign government to meet a debt to European banks. The certificates that paid for the widening of 2015 could be bought by Egyptians only.