The Suez Canal is considered to be the shortest link between the east and the west due to its unique geographic location; it is an important international navigation canal linking between the Mediterranean sea at Port said and the red sea at Suez. The idea of linking the Mediterranean sea with the red sea by a canal dates back to 40 centuries. The first who dug it was Senausert III, Pharaoh of Egypt (1874 B.C.). This canal was abandoned to silting and reopened several times until 640 A.D.

The first efforts to build a modern canal came from the Egypt expedition of Napoleon Bonaparte, who hoped the project would create a devastating trade problem for the English.  but they miscalculated a difference of ten meters between the two sea levels and gave up the idea, as it would sweep away the Nile Delta. In 1858 ‘Universal Company of the Maritime Suez Canal’ was formed with authority to cut a canal and to operate it for 99 years, after which ownership would return to the Egyptian government. Excavation of the canal actually began in 1859 and completed in 1869 when the barrage of the Suez plains reservoir was breached and waters of the Mediterranean flowed into the Red Sea and the canal was opened for international navigation.

Under the terms of The Convention of Constantinople signed in 1888, the canal was opened to vessels of all nations without discrimination, in peace and war. After World war II, Egypt had proposed to build Aswan dam on Nile river to prevent flood sitations. Dam was being funded by USA. However during Israel conflict USA withdrew the dam funding in July 1956. Egypt president Gamal Abd El Naser’s response was the nationalization of the Suez Canal on account of expiry of lease period of Suez Canal company. That same day, Egypt closed the canal to Israeli shipping. In October, Israel invaded the Egyptian Sinai. Britain and France landed paratroopers along the Suez Canal. The Egyptian forces were defeated, but they did block the canal to all shipping. The three allies had attained a number of their military objectives, but the Canal was now useless and heavy pressure from the United States and the USSR forced them to withdraw. The Suez crisis is widely believed to have contributed significantly to Britain’s decline as a world power. Suez canal was reopened in 1957.
Reference:

http://www.historyorb.com/day/april/9

http://www.suezcanal.gov.eg/sc.aspx?show=8

http://en.wikipedia.org/wiki/Suez_Crisis