Global Journal of Economic and Finance Research

This article examines the nationalisation of the Suez Canal on 26 July 1956 as a combined political and economic initiative that preserved the 1888 Istanbul Convention principle of free and non-discriminatory passage while bringing canal income under Egypt’s sovereign budget. It argues that the decision generated three linked outcomes. First, by deliberately separating the navigation regime from the former company concession, Egypt kept the international character of traffic intact but redirected revenue flows to Cairo. Second, because the canal was a strategic infrastructure that produced steady foreign exchange at a moment of tightening external finance for the Aswan Dam, nationalisation reduced dependence on external credit conditions and allowed receipts to be channelled directly to public investment. Third, London-based initiatives and the SCUA mechanism, although designed to institutionalise free passage, failed to create a durable shared authority over administration, reinforcing Egypt’s claim that the canal would remain open but be managed nationally. These outcomes are read as a reassertion of economic sovereignty with intertwined geo-economic, fiscal and political dimensions, including freight costs, oil and transit flows, budgetary incorporation of revenues, compensation arrangements and anti-imperialist discourse.

Suez nationalisation, Canal revenues, Expropriation, Transit rent, External financing

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