Egyptian President Nasser nationalized the Suez Canal in 1956 by freezing the assets of the company that previously managed it.
Nationalization occurs when a State takes ownership or control of certain assets, resources or private companies. A good example of this phenomenon in Quebec is Hydro-Québec: a company that was created following the nationalization of electricity. At that time, Hydro-Québec became public property and still remains under the control of the government of Quebec.
Egypt obtained the funds it needed to build a dam by nationalizing the canal. The Egyptian president intended to use this nationalization to disrupt the British monopoly: he wanted to evacuate British troops from the areas neighboring the canal. His actions caused deep discontent because the nationalization of the canal directly threatened British trade and procurement and also harmed the financial interests of France and Israel.
France, Britain and Israel joined forces to take military action against the Egyptian president (Gamal Abdel Nasser). These countries wanted to challenge this action because it restricted their trade. The plan called for military action: Israeli forces would invade Egypt, then France and Great Britain were to give Egypt an ultimatum. The invasion of Egypt was planned for October 29, 1956. If Egypt refused the ultimatum, the allied forces would retaliate within a few days on October 31.
On October 29, Israeli troops attacked Egypt as planned. Egypt refused the ultimatum, which led to bombings by the British army. As British and French troops occupied Egyptian territory, the USSR threatened the alliance with nuclear retaliation. In turn, NATO threatened the USSR with a nuclear response.
In an attempt to de-escalate the situation, the United States withdrew Western troops from Egypt, hoping to end the crisis by putting economic pressure on the allied countries. France and Great Britain bowed to these threats in order to avoid condemnation by the UN. On November 15, 1956, the UN intervened between Egypt and Israel.
The Suez Crisis marked the end of the influence of the colonial powers since they now were subjected to outside threats. From this point on, the world was to be dominated by powers that had nuclear weapons. The United States now enjoyed strong political capital while the USSR was henceforth considered the defender of small nations.