I am somewhat annoyed as yesterday I linked to an article in the Telegraph on Suez and just as I was to post it disappeared. Nonetheless, this article encapsulates many of my thoughts on the matter.
I believe the failure to back Britain in the Suez crisis was a disaster for the U.S. and the worst mistake of foreign policy since World War II. It made Nasser a larger figure than he would have been (indeed humbled he would have soon been gone in the kill the weak scrum of middle east politics). Saddam Hussein would not be there as it is unlikely he would have been emboldened to overthrow the British backed King a few months after Suez. There would have been no six day war in 68 and Israel would not have taken Gaza or the West Bank (or Jerusalem). They would still be in Egyptian and Jordanian control. The PLO would be a controlled little terrorist organization with no territory. If there were no six day war, Egypt would not have attacked again in 73. There would have been no Arab oil embargo of the West, OPEC would not know its full power, and the stag-flation that hit the U.S. in the 70's would likely have been far less vicious.
Britain would have retained more of a foothold in some of its former Empire and the U.S. would bear less of the total burden for mideast stability than it now does. Property rights would have been vindicated in the Middle East, which would have been an enormous boon to the region, as would the early defeat of the strongman leadership.
France would have retained some of its power in Lebanon and Syria and there would be no Lebanese Civil War or PLO instigated invasion of Lebanon in the 80's.
Israel would be less isolated than it is now after having to hold the West Bank. But Lebanon and Jordan might well have developed strong civil societies by now.
The counter argument to this is that during the Cold War we needed to side against the "colonialists." This is nonsense. Nasser rushed into Russian arms regardless. We gained nothing in the Third World from showing we would not back old allies who stood up to a dictator. Suez was a show of Western disunity and emboldening a dictator that never, never, never pays off.
Two little corporals, Napoleon and Hitler, tried to break British influence in Egypt. It took the General of Normandy to do it. More's the pity.