1920: Fully Independent Egypt-Sudan & British Sinai

[ArtosStark]

As an aside, I would hope the British would not be so stupid as to sign such a one-sided alliance with Egypt.

Overpaying is not always a problem if you get what you need for a price you are willing to pay. Protecting Egypt meant protecting Suez, which the British needed to be able to do. And not having the Egyptians involved could be considered a plus as much as a minus. For one thing, the quality of their troops and willingness to cooperate were probably not guaranteed. And them being involved means that they would need to be adequately represented at the peace talks. In that light the 1936 treaty could be framed as the British getting the right to do what they would need to anyway, without the added complications of direct Egyptian involvement.

 

[Eric C Johnson]

I see, and agree with the general thrust of Egypt being an uncertain quantity in the 1930's. The question I still have is whether Egypt as a neutral buffer state is adequate protection for the Canal?

If Egypt isn't involved in the 47-49 Palestine war (since the British in Sinai are sitting in between Egypt and the Mandate) would that save Fuad? Fuad would be avoiding an embarrassing situation here (getting beaten by the Zionists).

An Egyptian Sinai probably has knock-ons for the 47-49 war. Israel probably performs better and grabs the Gaza Strip and Hebron.

I also think this comment by Jackson Lennock deserves a re-look. If a British Suez does block direct Egyptian intervention, then the odds of King Farouk, Fuad's successor surviving the coup of 1952 is much greater. Does Egypt then evolve politically along the lines of Saudi Arabia of Jordan? Or are Farouk's days numbered anyway?

On the other hand, if, and as ArtosStark points out it is a big if... the Egyptians participate as full Allies of the British after the summer of 1940, then the Egyptian Army officer corps may develop the command and staff competence that OTL proved so inferior to the Israelis in 1948-49. The Egyptian Navy would also grow, probably to the sloop/frigate/corvette level of operational capability. Could blockade Israel, disrupting arrival of refugees and arms after independence? Egypt may not be able to reach Israel directly, but with control of sea lanes may be able to transport an expeditionary force to Lebanon. The result could well be Israeli expansion into Gaza and Hebron, but at the expense of losses in Northern Israel?

If a close Lebanese-Egyptian alliance developed, do the Palestinians of the north become incorporated into a somewhat greater Lebanon? As another political minority to fit into Beirut politics?

 

[ArtosStark]

The question I still have is whether Egypt as a neutral buffer state is adequate protection for the Canal?

My guess would be no. For the British, it will still look much better to be defending Suez from the other side of Egypt it that is an option. They could try to maintain basing rights in some form in the original treaty, though that might not be feasible. But if Italy does make Egypt open to a defence pact with Britain, I would expect that British would go for it.

I also think this comment by Jackson Lennock deserves a re-look. If a British Suez does block direct Egyptian intervention, then the odds of King Farouk, Fuad's successor surviving the coup of 1952 is much greater. Does Egypt then evolve politically along the lines of Saudi Arabia of Jordan? Or are Farouk's days numbered anyway?

I don't know enough about Egyptian politics in the early Cold War to give a very considered opinion, but I don't think Saudi Arabia would be a good comparator. Egypt is much more populous, and metropolitan than Saudi Arabia and I think had a much more expansive political movement. And I understand the Egyptian monarchy was not entirely popular even without the loss in Palestine. I think that if the monarchy survives it will take some clever political maneuvering and at some point they may need to accept a reduced role in running of the state. Though, as mentioned, this is a somewhat uninformed opinion.

On the other hand, if, and as ArtosStark points out it is a big if... the Egyptians participate as full Allies of the British after the summer of 1940, then the Egyptian Army officer corps may develop the command and staff competence that OTL proved so inferior to the Israelis in 1948-49. The Egyptian Navy would also grow, probably to the sloop/frigate/corvette level of operational capability. Could blockade Israel, disrupting arrival of refugees and arms after independence? Egypt may not be able to reach Israel directly, but with control of sea lanes may be able to transport an expeditionary force to Lebanon. The result could well be Israeli expansion into Gaza and Hebron, but at the expense of losses in Northern Israel?

Hard to say. It might be possible. Egypt would have to be careful not to annoy the British next door. Not that I think Britain had any interest in getting involved, just that a Blockade can raise tensions when you may be stopping ships of a more powerful naval power than you. But if they have a navy capable of blocking the coastline and can avoid international incidents then in theory that should be a considerable contribution to the Arab cause without a large number of troops on the ground.

If a close Lebanese-Egyptian alliance developed, do the Palestinians of the north become incorporated into a somewhat greater Lebanon? As another political minority to fit into Beirut politics?

Making for an even more volatile political scene there than IOTL.

Something else that could change from this POD is the inter-Arab political situation around the war in Palestine. IOTL the 1948 war, as much as it was a conflict between Palestinian Jews and Palestinian Arabs, was also an exercise in political maneuvering between Syria and Jordan. Jordan wanted to reunite with Syria, by force if necessary, and the Jordanian Military was much stronger and better trained than anything the Syrians had. There was also a considerable amount of support in Syria for a reunification under the Hashemite monarchy. Supposedly King Abdullah had come to some sort of understanding with the Jewish Authority to absorb the Arab Palestinian areas into Jordan. Presumably this would have allowed the situation in Palestine to be dealt with and Jordan to focus on Syria as soon as possible. The President of Syria worked to undermine this by creating an inter-Arab coalition to help the Arab Palestinians fight the Jews. This gave them support from Egypt and Saudi Arabia and a valid reason to undermine Abdullah's plans. It also allowed them to use the outrage over Palestine to erode Jordan's local support in Syria and build up Syria's own forces. In the end very little help was given to the Palestinians. In fact, in some cases the coalitions involvement might have hurt the Palestinians fight. But Syria had successfully moved past the threat of Hashemite led unification with Jordan.

A lot of this would be as true ITTL as IOTL. But if Egypt is more removed from the rest of Arab politics ITTL, it is possible that Syria's plans are not quite as successful and Jordan is able to successfully absorb the Palestinian Arab regions and perhaps even effect a reunification with Syria. It seems unlikely but it might be possible.

 

[Eric C Johnson]

There's not a lot to disagree with there. Especially the spot-on broader Arab State vs Palestinian Arab conflict of interests. I think the problem with Farouk was Farouk himself, and the lack of an heir old enough to replace him. As I recall his son was an infant, and duly deposed within hours of Farouk's abdication.

 

[Pelranius]

Not entirely. I wouldn't be surprised if the workforce would just be imported from India.

Highly unlikely, since they didn't do it OTL, so why bother when they already have a labor pool of Egyptians they've been using for a long time (Guess who dug the canal. And if nothing else, you don't have to pay the tickets for Indian workers if you use Egyptians).

 

[Eric C Johnson]

Very good query. Regarding population, below is what I posted in the original thread quoted by Jackson Lennock. Here is a link to that thread:

AHC: Make the Sinai Peninsula and Independent Country

With a pod of 1900, make the Sinai Peninsula an independent country by 1990 at the latest. Personally, I think the best bet is for the British to rule the Suez Canal and Sinai Peninsula as a separate territory from the rest of Egypt, and possibly even encourage Zionists to move there and then...

www.alternatehistory.com

"Is the Suez Colony viable? The 1927 Encyclopedia Britannica set that got my father through college seems to indicate the answer is yes. The population of the Suez Protectorate area excluding nomadic Bedouins is estimated at about 88,000 in 1920. About 15% is European with the nationalities represented in ranking as Greek, Cypriot, French, British, Maltese and Italian. The largest employers of Europeans are the Suez Canal Company and the Egyptian Protectorate. It appears that British military personnel were not included, but after the withdrawal from Egypt would number about 9,000 Army, 800 RN and 500 RAF personnel, with few dependents outside of officers, senior NCOs and senior Other Ranks/Ratings. This is my estimate only.
The population is distributed as follows: Port Said – 52,600, the main commercial hub and center of the Suez Canal Company. Considerable light industry geared to support of canal shipping. A ferry serves rail connections on both sides of the canal.
Ismailia – 15,918, terminus of the Nile Canal providing fresh water to the entire protectorate and irrigation to the largest agricultural zone. (Kind of an exact count for an estimate.)
Suez (including Port Tewfik and Port Ibrahim) – 9,091, southern terminus of the Canal with a small drydock at Port Tewfik. Port Said on a much smaller scale.
El Arish – 4,632, commercial center with a seasonal agricultural output; site of a major rail repair center built by the British Army in 1917, and a major RAF station since 1916.
Kantara – 1,562, major base for the Canal Infantry Bde.
Abu Suweir – 1,530, site of the largest RAF base in the Protectorate, built in 1917.
El Kubri – 725; Taba – 450; El Rumania – 385; El Tor – 210 (site of a quarantine station); Sharm-el-Sheik – 182, site of a RN Observation post; Nuweiba – 170; El Kuntilla – 150 (border post); El Quseima – 150 (border post and abandoned rail terminus); Nabq – 150 fishing port; El Thamad – 120.
One additional site, Nakhl is occasionally inhabited for mining iron, copper and zinc when market shortages make it profitable.
Other places of note: Fayid is established as an RAF base in April 1921 and by 1930 had a population of 980. Oil was discovered in 1922 near Abu Durba which had an estimated population of 750 in 1930. Port Fuad opposite Port Said was established in December 1928 and in 1930 had an estimated population of 1500.
Manganese and iron mining began in scale at Abu Zenima in 1932.

"What does the future of the Suez Protectorate hold? I doubt the Arab population would increase much, and may well decline. Those employed by the Pasha would be replaced by British Commonwealth nationals. Others may find attractive opportunities in an independent Egypt, and manual laborers would be sought from the British Commonwealth. Most mechanics and technicians for the expanding automobile and aviation fields will also come from Great Britain. As with South Africa, Kenya and Uganda, small business and craftsmen from India will arrive and likely displace some Egyptians. A public school system will be established, bringing their staff primarily from the Caucasian Commonwealth. Graduates will assimilate into British identity as opposed to their Greek, Cypriot, French or Maltese parents. British expatriates will filter in, former military, due to low cost of living, etc.

"For the first 15 years the Suez Protectorate is probably fairly stagnant, as is most of the Empire. This is one of the few parts of the world not affected by the Great Depression. The Italian invasion of Ethiopia will bring considerable modernization and expansion of the Army and RAF garrisons. The naval facilities will also be expanded and improved. Local industry will also expand, both to support the garrison but also in commercial sectors."

As noted: The largest employers of Europeans are the Suez Canal Company and the Egyptian Protectorate (civil service). As correctly noted by Pelranias, the Egyptians dug the Canal, but didn't really get to run it. The recruitment of Europeans by the Canal Company was expanded during the First World War because of fear Egyptians sympathetic to the Turkish Sultan may engage in sabotage. This caused deep resentment among Egyptians, and although I cannot document it, was probably one of the many causes of the 1919 Wafd Rebellion.

Egyptians with significant skills will voluntarily leave - the opportunity to replace British nationals in the port of Alexandria, Egyptian rail and banking systems and elsewhere is too lucrative to pass up. The Egyptian court system, police, and other government officials will be replaced, and Sikh or Punjabi police were common throughout the colonies. In the case of Palestine, these former Turkish officers were discharged en-masse, and significant numbers of Anglo-Irish took key positions. This is not a significant number of Egyptians displaced but is a most important segment of society.

As noted by Pelranius, I doubt the Suez Colony Government is going to pay steamship passage for Indian or African labor to immigrate. They won't have to. They will come seeking economic opportunity on their own. They will be aided by direct policies favoring Commonwealth nationals over immigrants from a now independent Egypt whose relations with their former colonial masters are not always the best.

As a side note - the Encyclopedia Britannica total population figures in 1920 add up to 88,025. I assume permanent rural inhabitants are lumped into the nearest significant locale. Most farms were around Ismailia. 15% of 88,000 is about 13,200.

 

[Pelranius]

Very good query. Regarding population, below is what I posted in the original thread quoted by Jackson Lennock. Here is a link to that thread:

AHC: Make the Sinai Peninsula and Independent Country

With a pod of 1900, make the Sinai Peninsula an independent country by 1990 at the latest. Personally, I think the best bet is for the British to rule the Suez Canal and Sinai Peninsula as a separate territory from the rest of Egypt, and possibly even encourage Zionists to move there and then...

www.alternatehistory.com

"Is the Suez Colony viable? The 1927 Encyclopedia Britannica set that got my father through college seems to indicate the answer is yes. The population of the Suez Protectorate area excluding nomadic Bedouins is estimated at about 88,000 in 1920. About 15% is European with the nationalities represented in ranking as Greek, Cypriot, French, British, Maltese and Italian. The largest employers of Europeans are the Suez Canal Company and the Egyptian Protectorate. It appears that British military personnel were not included, but after the withdrawal from Egypt would number about 9,000 Army, 800 RN and 500 RAF personnel, with few dependents outside of officers, senior NCOs and senior Other Ranks/Ratings. This is my estimate only.
The population is distributed as follows: Port Said – 52,600, the main commercial hub and center of the Suez Canal Company. Considerable light industry geared to support of canal shipping. A ferry serves rail connections on both sides of the canal.
Ismailia – 15,918, terminus of the Nile Canal providing fresh water to the entire protectorate and irrigation to the largest agricultural zone. (Kind of an exact count for an estimate.)
Suez (including Port Tewfik and Port Ibrahim) – 9,091, southern terminus of the Canal with a small drydock at Port Tewfik. Port Said on a much smaller scale.
El Arish – 4,632, commercial center with a seasonal agricultural output; site of a major rail repair center built by the British Army in 1917, and a major RAF station since 1916.
Kantara – 1,562, major base for the Canal Infantry Bde.
Abu Suweir – 1,530, site of the largest RAF base in the Protectorate, built in 1917.
El Kubri – 725; Taba – 450; El Rumania – 385; El Tor – 210 (site of a quarantine station); Sharm-el-Sheik – 182, site of a RN Observation post; Nuweiba – 170; El Kuntilla – 150 (border post); El Quseima – 150 (border post and abandoned rail terminus); Nabq – 150 fishing port; El Thamad – 120.
One additional site, Nakhl is occasionally inhabited for mining iron, copper and zinc when market shortages make it profitable.
Other places of note: Fayid is established as an RAF base in April 1921 and by 1930 had a population of 980. Oil was discovered in 1922 near Abu Durba which had an estimated population of 750 in 1930. Port Fuad opposite Port Said was established in December 1928 and in 1930 had an estimated population of 1500.
Manganese and iron mining began in scale at Abu Zenima in 1932.

"What does the future of the Suez Protectorate hold? I doubt the Arab population would increase much, and may well decline. Those employed by the Pasha would be replaced by British Commonwealth nationals. Others may find attractive opportunities in an independent Egypt, and manual laborers would be sought from the British Commonwealth. Most mechanics and technicians for the expanding automobile and aviation fields will also come from Great Britain. As with South Africa, Kenya and Uganda, small business and craftsmen from India will arrive and likely displace some Egyptians. A public school system will be established, bringing their staff primarily from the Caucasian Commonwealth. Graduates will assimilate into British identity as opposed to their Greek, Cypriot, French or Maltese parents. British expatriates will filter in, former military, due to low cost of living, etc.

"For the first 15 years the Suez Protectorate is probably fairly stagnant, as is most of the Empire. This is one of the few parts of the world not affected by the Great Depression. The Italian invasion of Ethiopia will bring considerable modernization and expansion of the Army and RAF garrisons. The naval facilities will also be expanded and improved. Local industry will also expand, both to support the garrison but also in commercial sectors."

As noted: The largest employers of Europeans are the Suez Canal Company and the Egyptian Protectorate (civil service). As correctly noted by Pelranias, the Egyptians dug the Canal, but didn't really get to run it. The recruitment of Europeans by the Canal Company was expanded during the First World War because of fear Egyptians sympathetic to the Turkish Sultan may engage in sabotage. This caused deep resentment among Egyptians, and although I cannot document it, was probably one of the many causes of the 1919 Wafd Rebellion.

Egyptians with significant skills will voluntarily leave - the opportunity to replace British nationals in the port of Alexandria, Egyptian rail and banking systems and elsewhere is too lucrative to pass up. The Egyptian court system, police, and other government officials will be replaced, and Sikh or Punjabi police were common throughout the colonies. In the case of Palestine, these former Turkish officers were discharged en-masse, and significant numbers of Anglo-Irish took key positions. This is not a significant number of Egyptians displaced but is a most important segment of society.

As noted by Pelranius, I doubt the Suez Colony Government is going to pay steamship passage for Indian or African labor to immigrate. They won't have to. They will come seeking economic opportunity on their own. They will be aided by direct policies favoring Commonwealth nationals over immigrants from a now independent Egypt whose relations with their former colonial masters are not always the best.

As a side note - the Encyclopedia Britannica total population figures in 1920 add up to 88,025. I assume permanent rural inhabitants are lumped into the nearest significant locale. Most farms were around Ismailia. 15% of 88,000 is about 13,200.

A lot of African and Indian laborers can't afford the steamship tickets on their own (they'd need their employers to do that, and why would the employers potentially double their labor costs if they can just keep on using the natives, who've they've gotten used to exploiting?)

There's also the fact that the Sinai will be dependent on water from Egypt, if its population grows into the 1+ million range.

 

[Eric C Johnson]

A lot of African and Indian laborers can't afford the steamship tickets on their own (they'd need their employers to do that,

Exactly. It is not the British Government hiring most laborers. Private companies are doing so, and this offers a sharp contrast to the Egyptian Labour Corps (ELC) during the First World War. Although many in the ELC were volunteers, a large number had to be conscripted, especially after 1916. After Egyptian independence, that ability to conscript, which private employers never had, is no longer an option at all.

Secondly, almost none of the ELC were residents of the Suez area, nearly all were recruited from the Nile River Valley. Although closer geographically, Egyptian labour would either have to walk to the Suez Colony, travel via rail or by ship from Alexandria. The distance is shorter, but costs are not necessarily cheaper than steerage class aboard regularly scheduled passenger vessels. Thirdly, although the ELC was vital to winning the Palestine Campaign, in the first half of 1918 a number of the 600-man companies in the 55,000 man ELC either mutinied or rioted due to poor food, pay not sent to their families by the Egyptian authorities in their home villages, involuntary extension of their contracts and unnecessary combat casualties. By the time of its disbanding, the ELC did not enjoy a high reputation from either the British or their own members. The ELC experience was one of many factors in the Wafd rebellion - it gave Egyptians invaluable organization skills, and the British are not interested in furthering Egyptian nationalism within their new colony. Fourth, British Government emigration policies favoured issuing work visas to Commonwealth nationals (can't quite call them citizens in 1920) over foreign nationals. Fifthly, I am not sure the newly independent Egyptian Governments wants its labour force building up the Suez Colony, especially if it is viewed as exploitative or a relic of Colonialism.

There's also the fact that the Sinai will be dependent on water from Egypt, if its population grows into the 1+ million range.

I will gently disagree with the entire comment. The Ismailia Canal was built between 1861 and 1863 because 10,000 Suez Canal workers required it. The 1+ million range figure is overestimated by a factor of 100 at least. If the Egyptian Government were to consider destroying the Ismailia Canal, the British have far greater retaliatory power at their disposal.

 

[Pelranius]

Exactly. It is not the British Government hiring most laborers. Private companies are doing so, and this offers a sharp contrast to the Egyptian Labour Corps (ELC) during the First World War. Although many in the ELC were volunteers, a large number had to be conscripted, especially after 1916. After Egyptian independence, that ability to conscript, which private employers never had, is no longer an option at all.

Secondly, almost none of the ELC were residents of the Suez area, nearly all were recruited from the Nile River Valley. Although closer geographically, Egyptian labour would either have to walk to the Suez Colony, travel via rail or by ship from Alexandria. The distance is shorter, but costs are not necessarily cheaper than steerage class aboard regularly scheduled passenger vessels. Thirdly, although the ELC was vital to winning the Palestine Campaign, in the first half of 1918 a number of the 600-man companies in the 55,000 man ELC either mutinied or rioted due to poor food, pay not sent to their families by the Egyptian authorities in their home villages, involuntary extension of their contracts and unnecessary combat casualties. By the time of its disbanding, the ELC did not enjoy a high reputation from either the British or their own members. The ELC experience was one of many factors in the Wafd rebellion - it gave Egyptians invaluable organization skills, and the British are not interested in furthering Egyptian nationalism within their new colony. Fourth, British Government emigration policies favoured issuing work visas to Commonwealth nationals (can't quite call them citizens in 1920) over foreign nationals. Fifthly, I am not sure the newly independent Egyptian Governments wants its labour force building up the Suez Colony, especially if it is viewed as exploitative or a relic of Colonialism.



I will gently disagree with the entire comment. The Ismailia Canal was built between 1861 and 1863 because 10,000 Suez Canal workers required it. The 1+ million range figure is overestimated by a factor of 100 at least. If the Egyptian Government were to consider destroying the Ismailia Canal, the British have far greater retaliatory power at their disposal.

Rail/steerage travel from the Nile Delta is still a heck lot cheaper than shipping, even if steerage, across an entire ocean.

Commonwealth citizens are going to be in low numbers (very low five digits is the upper limit) at best since they'll be in white collar managerial positions (no one is daft enough to pay a Canadian to come out to Ismailia to repair the streets, shovel coal into the power plants, cook food, sweep the floors etc).

If the British are scared of Egyptian nationalism, then they're going to look even less favorably upon mass importation of Indian workers.

The Suez Colony is going to grow, assuming it develops industry and becomes a maritime hub, and that means water.

 

[Eric C Johnson]

If the British are scared of Egyptian nationalism, then they're going to look even less favorably upon mass importation of Indian workers.

In 1920? Really?

Your population point is made. An Indian commercial class will develop in every British Colony or Protectorate from the British Guiana to the West Indies islands to Sierra Leone to South Africa to Uganda to Aden to Malaya to Fiji. But not in Suez. I just don't agree with that assessment, especially since you do not address my arguments (visa issue which the British extensively used OTL in the first half of the 20th Century, etc). A non-response is not persuasive to me.

Specifically - your point about water is?

 

[Bloodraven]

In 1919 Britain is unlikely to offer Egypt full independence/sovereignty as creating sovereign Arab states from former Ottoman territories isn’t British policy at this point in time and British foreign policy was dominated by triumphant imperialism (for example Britain dreamed of ruling Iraq as a colony until the 1920 put a stop to those plans).
IMO if Britain were to offer Egypt independence in exchange for recognizing the loss of Sinai (plus Suez Canal Zone) of an alt-Treaty of Sevres, the best terms it would offer Egypt would be pretty similar to the terms of the 1922 Unilateral Declaration of Egyptian Independence and would include British control/oversight of Egypt foreign relations, British right to interfere in Egyptian affairs under the guise of protecting minorities or protecting foreign interests, retention of the capitulations and foreign privileges, though Britain would offer to withdraw most of its troops from Egypt and could offer to keep the status quo in Sudan (instead of the OTL strengthening of British control) and increased Egyptian control over the army (like in the 1936 treaty).
It is very unlikely that Fuad could afford to sign such a treaty, even if the nationalist opposition is weak at the moment, as it would see him lose all credibility with Egyptian public for losing the Sinai (and the Suez Canal Zone) and his regime would become wholly dependent on British military support in case of a coup or revolution.
If Fuad signs this treaty, he is in danger of being overthrown in the 1920s to 1930s and Britain can then choose to re-occupy Egypt or come to terms/live with a hostile nationalist Egypt that is clamoring for revoking the alt-Treaty of Sevres and returning the Sinai to Egypt.
If the monarchy survives with British backing, it is likely overthrown in the aftermath of WW2 as it will still have a massive corruption problem, still be the dynasty that signed away Egyptian territory and likely be blamed for the Arab defeat in the war with Israel (‘if only Fuad had signed away the Sinai, then Egypt could have invaded Israel and surely we would have won’ or something like this).

If Britain wants Sinai (including the Suez Canal Zone) as a colony it is IMO more likely that the 1922 Unilateral Declaration of Egyptian Independence includes the severing this region from Egypt. This would make Egypt more unstable, increases nationalist and anti-British sentiment in Egypt and the relationship between Britain and the Egyptian monarchy even more strained and would make negotiating something like 1936 Anglo-Egyptian treaty harder (likely the question of Sinai plus Suez Canal Zone is left open, but as long as Egypt doesn’t have to formally recognize the cession of the region to Britain it will gain quite a lot from the treaty and sign and Britain wants the treaty and accordingly will refrain from requiring Egypt from recognizing the cession), but the biggest change would come in 1948 when the Egyptian army isn’t allowed to cross the region and Israel does better in the war.

Britain will be in a bad position in the Arab world as Arab nationalists will blame Britain for the Arab states losing the war and Britain likely to tries to restrain Israel somewhat in regards to Jordan meaning that while Jerusalem and its surroundings very (Ramallah, Bethlehem), Gush Etzion and possibly Hebron and the area up to Hebron will become Israeli in 1949, Jordan might be allowed to keep the rest of the West Bank.
Gaza definitely becomes part of Israel and Israel might occupy part or the whole of the Golan Heights as a buffer zone.
The British position in the Middle East is weakened and it is possible that the Hashemite monarchy in Iraq falls earlier and the Hashemite monarchy in Jordan falls as well.
It is possible that Britain either decides to or is pressured by Washington to return the Sinai to Egypt but if not Egypt, either under the monarchy or a republic (monarchy overthrown due the incredible corruption of the regime), will sooner or later start a version of the Konfrontasi (neither the monarchy nor an Arab nationalist regime are insane enough to start an open war with Britain) but with the addition of popular support from people of the Sinai Zone (no matter the exact demographics there will be Egyptians in the region supporting reunification with Egypt).
Sooner or later Britain either has to return the region to Egypt or, if the demographics of the Sinai make it a viable project, grant it independence.
This independent state will be pretty unstable as its Egyptian minority or majority depending on the demographics will want reunification with Egypt (an Egyptian majority bared from participation in politics will make it extremely unstable), either be a dictatorship or a ‘Rhodesian democracy’ (property qualifications exclude most Egyptians from voting, Bedouins are given autonomy and excluded from national politics), and be dependent on British and Israeli assistance to keep Egypt from invading.
The future for this post-colonial state likely won’t be bright and by the 1970s we will likely see the beginning of an exodus of the educated middle class as political tensions, Egyptian military attacks and terrorism and diplomatic isolation (a state created by such blatant colonialism won’t have many friends in the world by the 1970s) will begin to bite.
It is possible that a beleaguered government calls for Israeli military support to stabilize the country in the 1980s and Israel more or less occupies the place and keeps it on life support, this then might lead to a war with Egypt or a de facto division of the country in which Israel keeps the Sinai while Egypt gains the Suez Canal Zone (even after a war with Egypt Israel might be forced to withdraw from the canal zone later on).

In the long run, likely only Israel benefits from a British colony of Sinai, at least if greater Arab nationalist sentiment and butterflies don’t lead to the creation of a more successful and powerful alt-UAR that is hell-bent on fighting Israel, then Israel loses as well.

 

[Eric C Johnson]

Its not that I necessarily disagree with the first paragraph, its just that I feel it is a strong argument in favour of my thesis. "The Treaty of Sevres gives an opportunity for Britain to permanently secure her military and commercial interests in the Suez. The entire Sinai Peninsula and a zone 20 miles west of the Suez Canal is severed to form a new Suez Protectorate. Approximately one-quarter of the 20 mile zone is under the waters of the Nile Delta, and the remainder is open desert with few inhabitants. 20 miles is sufficient from the standards of 1920 to protect the Canal from attack."

"It was quite possible to tie Egyptian independence and the Suez Protectorate into the final draft of the Treaty of Sevres. The Egyptians have a choice between rejecting both, or accepting an independence that is unexpected. In the power vacuum existing in Egypt in the summer of 1920, I believe Pasha Fuad would accept independence and elevation to the status of king. Acceptance via the Treaty of Sevres also gives the Egyptians the legal right to force the withdrawal of British forces from Egypt. This is quite acceptable, the British garrison of three brigades – Cairo Cavalry, Cairo Infantry and Canal infantry is just adequate to protect the Suez. The floating drydocks and stores at Alexandria can be moved to Port Said or Haifa." (Both quotes from the original threads cited by Jackson Lennock. Note - after later analysis I correct an error of mine and designated the Suez as a British Colony.)

As you point out successfully, waiting until the Unilateral Declaration of Egyptian Independence does not permanently secure British interests in the Middle East. (Historical Note: For those unfamiliar, the Declaration was not an Egyptian declaration of independence from Great Britain - It was a British declaration of Egyptian independence from Great Britain. It carried the onerous terms Bloodraven described, and as a result Egypt refused to accept its independence. Consequently, there was no exchange of ambassadors, Britain remained represented by a High Commissioner. Egypt did not accept sovereignty until after the 1936 Treaty of Alliance when Britain made a number of concessions to Egyptian nationalism.)

The Treaty of Sevres in August 1920 is a better opportunity because:
1) It was a treaty with the Ottoman Empire, the internationally recognized sovereign of Egypt - Britain had only a protectorate over this part of Ottoman territory. It is the Ottoman Empire that is legally granting Egyptian independence, not Great Britain. Fuad cannot satisfy Egyptian nationalists' demands, which from 1919 onward included abolition of the monarchy. He may as well accept credit for what he could get, including personal elevation in status from Pashha to King.
2) The Sinai boundaries of Egypt were internationally recognized at the OTL Treaty of Sevres. (Indirectly by defining the boundary of Palestine.) If Britain took the Suez Colony at the Treaty of Sevres it is taking it from the Ottoman Empire - not from Egypt. (The Egyptians will not see it that way, but the international lawyers will. Three guesses as to which opinion the British will give more weight to.) It is much harder for Great Britain to recognize the Sinai and Suez as sovereign Egyptian territory at the OTL Treaty of Sevres and then eighteen months later try and separate it as a part of a British Unilateral Declaration of Egyptian Independence.
3) As for increasing Egyptian instability, I would argue that is a matter of degree over the OTL instability. Better for Britain that it be contained as much as possible within the borders of another independent nation.

These views and analysis are of course mine, but they are influenced by those of Allenby, and broader world-wide British strategic interests. Anthony Clayton's book "Great Britain as a Superpower 1919-1939" does a superb job of detailing the problems Britain faced in Egypt, but of course as a scholar he offers no potential solutions. This is my attempt at one potential solution.