The Road to Decolonization
In 1922 Britain granted Egypt limited independence, ending its protectorate status and creating a sovereign state with Sultan Ahmad Fuad as king. In actuality, however, Egypt only achieved the same rights as British dominion states like Australia, Canada, and South Africa. Egyptian foreign affairs, the defense of Egypt against foreign aggressors, the protection of foreign interests in Egypt, the protection of minorities (ie Europeans, who formed only 10% of the population, albeit the wealthiest part), and the security of communications between the rest of the British Empire and Britain itself through the Suez Canal, were still under direct control of Britain.
Although Egypt was ostensibly ruled by King Faud and his prime minister, the British high commissioner was a significant power. Britain intention was for Egypt to achieve independence through a carefully controlled, and potentially long term, timetable.
'Decolonized' Egypt suffered the same problems that later African states encountered. It's economic strength lay in it's cotton crop, effectively a cash crop for the cotton mills of northern England. It was important to Britain that they maintained control over the production of raw cotton, and they stopped Egyptian nationalists from pushing the creation of a local textile industry, and gaining economic independence.
World War II Interrupts Nationalistic Developments
World War II postponed further confrontation between British post-colonialists and Egyptian nationalists. Egypt represented a strategic interest for the Allies – it controlled the route through north Africa to the oil rich regions of the middle east, and provided the all important trade and communications route through the Suez Canal to the rest of Britain's empire. Egypt became a base for Allied operations in north Africa.
After World War II, however, the question of complete economic independence was important to all political groups in Egypt. There were three different approaches: the Saadist Institutional Party (SIP) which represented the liberal tradition of the monarchists was heavily discredited by their history of accommodation for foreign business interests and the support of an apparently decadent royal court.
The Muslim Brotherhood
Opposition to the liberals came from the Muslim Brotherhood who wished to create an Egyptian/Islamic state which would exclude Westernized interests. In 1948 they assassinated the SIP prime minister Mahmoud an-Nukrashi Pasha as a reaction to demands that they disband. His replacement, Ibrahim `Abd al-Hadi Pasha, sent thousands of Muslim Brotherhood members to detention camps, and the Brotherhood's leader Hassan el Banna, was assassinated.
The Free Officers
A third group emerged amongst young Egyptian army officers, recruited from the lower middle-classes in Egypt but educated in English and trained for the military by Britain. They rejected both the liberal tradition of privilege and inequality and the Muslim Brotherhood Islamic traditionalism for a nationalistic viewpoint of economic independence and prosperity. This would be achieved through the development of industry (especially textiles). For this they needed a strong national power supply and looked to damming the Nile for hydroelectricity.
Declaring a Republic
On 22-23 July 1952 a cabal of army officers, known as the 'free officers', led by Lieutenant Colonel Gamal Abdel Nasser overthrew King Faruk in a coup d'état. Following a brief experiment with civilian rule, the revolution continued with the declaration of a republic on 18 June 1953, and Nasser becoming Chairman of the Revolutionary Command Council.