On October 29, 1956, Israeli forces entered the Sinai peninsula and drove towards the Suez canal, and the war that is known as the Suez crisis began. President Gamal Abdel Nasser of Egypt had announced in July 1956 that the Suez canal company would be taken into Egyptian ownership, and the canal would be run by the state, and the move followed the refusal of western governments to lend money for the Aswan high dam. Britain and France, whose ships and shareholders had a large interest in the canal, were determined to get it back under international control. The stakes were high.
The Israeli attack gave Britain and France the occasion they wanted. The two governments issued an ultimatum for both sides to stop fighting and withdraw from the canal, and when Egypt refused they bombed Egyptian airfields and landed troops at Port Said, and their stated purpose was to separate the combatants and protect the waterway. The three governments had in fact agreed on the operation in advance at a meeting outside Paris. Israel took the Gaza strip and the whole of Sinai.
The intervention collapsed under diplomatic pressure. The plan failed. The United States, which had not been told of the plan, opposed it and refused to support the pound, and the Soviet Union threatened to send forces, and the United Nations passed resolutions calling for a withdrawal, and a peacekeeping force was sent for the first time. British and French troops left in December 1956, and the Israelis gave up Sinai and Gaza in the following months, and the canal was reopened in 1957 under Egyptian control.
The longer effects were large. Nasser came out of the crisis with great prestige in the Arab world, and the European powers saw that they could no longer act in the region without the agreement of the superpowers, and the United Nations adopted the practice of sending observers and then a peacekeeping force to keep the two sides apart along the armistice line. The canal stayed. The waterway was blocked during the war by ships that had been sunk in it, and it was later kept open by a United Nations force until 1967, when it was closed again.