The British had little choice but to stop the mission. The Soviet Union was making blustering threats about "raining missiles" on London and Paris, and the American ally -- appalled by the neo-colonial venture of its two closest European allies -- was actively trying to collapse the French and British currencies.

One of the men in the cabinet room at 10 Downing Street when Prime Minister Anthony Eden first decided to go to war was Nuri Said, the pro-British Prime Minister of Iraq and a central figure in the politics of the Middle East since the 1930s. The humiliating climb-down by the British at Suez spelled Nuri Said's doom, and the fall of the Iraqi monarchy and parliamentary rule that the British had installed.

Eighteen months after the British humiliation at Suez, toppled in a nationalist coup, Nuri Said's body was being flattened, run over again and again by one of the British-built buses that served Baghdad. The chaotic and coup-ridden politics of Iraq, with the Communist Party fighting the Baathist Party and each side claiming the mantle of Arab nationalism and vying for the support of the army, led to the triumph of Saddam Hussein.

It is one of the might-have-beens of history to speculate what might have happened if the British, French and their Israeli allies had defied the Americans, re-taken the Suez Canal and overthrown the charismatic young Egyptian leader, Colonel Gamal Abdel Nasser. The Middle East might have been stabilized, or more likely, the British and French would have run into the kind of popular guerilla war that has since erupted against foreign occupiers in the West Bank and Gaza and now in Iraq.

There were some American regrets at the line they had taken, perhaps under the influence of President Eisenhower's re-election campaign. When the new British Foreign Secretary Selwyn Lloyd flew out to Washington to mend the smashed fences, the American Secretary of State John Foster Dulles was sick and in bed. According to Selwyn Lloyd's account, Dulles looked up mournfully from the sickbed and said "Selwyn, Selwyn -- you were just about to take the whole canal. Why did you ever stop?"

Because you Americans left us very little choice, with the pound in a state of collapse and the Russian brandishing threats and the White House making it clear that London and Paris could not count on U.S. support, Lloyd replied. Dulles grunted. The Americans had not meant it to be taken that way. And in retirement, Eisenhower repeatedly told visitors that his biggest foreign policy error had been not to back Britain over Suez.

In retrospect, the Suez crisis was one of the defining events of the Cold War period. It relegated France and Britain to middle-ranking status, and saw the replacement of British influence in the Middle East and over its oil by the Americans. The Soviet Union then determined to make the region a new cockpit for the Cold War by backing and arming Arab nationalism, while the Americans turned Israel and then Iran (still ruled by the Shah) into the two regional superpowers. The Shah fell, and the Palestinians revolted against Israeli rule and decided to deploy the classic weapon of the weak against the powerful -- terrorism.

The contours of the present are always shaped by the past, but the lines of historical causality are seldom more clear than in today's Middle East. The predicaments of America and Israel today are the direct heirs of the Suez crisis, 50 years ago, and despite the lamentable loss of American and British troops, the biggest price is still being paid by the Arab populations themselves.

But a different kind of loss now looms, according to some of America's top foreign policy experts. Richard Haass, who runs the Council on Foreign Relations, headed the Policy Planning Bureau at the State Department in the first Bush term. A practitioner as well as a theorist, he now reckons that the United States faces a dramatic loss of influence in the Middle East. Zbigniew Brzezinski, who ran the National Security Council in President Jimmy Carter's White House, says that as a result of the Iraq war, the United States faces the same eclipse from the region that the Suez crisis inflicted on Britain and France 50 years ago. He sees the United States losing its influence and its bases in the region, while the Iran of the Ayatollahs emerges as the regional superpower and a localized version of the Cold War with then ensues between Israel and Iran, complete with a stand-off between nuclear deterrents. And time and the demographics, the oil weapon and the Palestinians, are all on Iran's side.

The great difference between Suez and today is that the British and French were trying to keep the Middle East the way it had been, to maintain European dominance and profits and keep the Soviet Union out of the region. The Americans now are doing the opposite. The lesson the United States learned from the terrorist attacks of Sept. 11 was that U.S. policy since Suez of trying to replace the old Franco-British goal of stabilizing the region had become of fundamental strategic error.

"For sixty years, my country, the United States, pursued stability at the expense of democracy in this region here in the Middle East -- and we achieved neither," Secretary of State Condoleezza Rice said in Cairo in June last year. "Now, we are taking a different course. We are supporting the democratic aspirations of all people."

Stabilization had become the problem, as socio-political pressures built up under the repressive pro-Western regime of Egypt and Saudi Arabia that were staring to explode into Jihadist radicalism. The Middle East needed change, modernization, political reform and economic and educational and female opportunity. However clumsy the execution, the Bush administration's definition of the region's systemic problem was absolutely correct, and indeed it was endorsed by the Arab intellectuals and officials who wrote the seminal United Nations Development Program Report of 2002, the one that diagnosed the Arab world's greatest problem as a deficit of democracy.

There is no shortage of voices now condemning the Bush administration for trying to impose democracy, or for being too naïve about democracy's essential underpinnings in civil society and a free press and independent judges. But as an Iraqi court, acting on behalf of the Iraqi people who have elected their own government, imposes a death sentence on Saddam Hussein, it is important to remember what the Brute of Baghdad represented.

Saddam Hussein and his Baath Party were modernizers and reformers. They wanted to spread the country's oil wealth beyond the tiny hereditary elites who have kept their grip on power in much of the Persian Gulf. Iraq under the British, under Nuri Said and even under Saddam Hussein, did a better job of sharing out the wealth, investing in education and public health, than any other oil-rich country in the region. But modernization without democracy tends to become the kind of tyranny that Saddam Hussein embodied.

So from Suez in 1956 to Baghdad in 2006, the wheel of Western good intentions and Arab ambitions has come full circle. With Saddam Hussein's death sentence, an entire generation of Suez-inspired Arab nationalist leaders passes into history. The question now, and Iraq and the Palestinian territories are the critical battlegrounds, is whether the region's future lies with the Jihadists or the democratic reformers.