False flag is a covert operation designed to deceive; the deception creates the appearance of a particular party, group, or nation being responsible for some activity, disguising the actual source of responsibility.
The term "false flag" originally referred to pirate ships that flew flags of countries as a disguise to prevent their victims from fleeing or preparing for battle. Sometimes the flag would remain and the blame for the attack laid incorrectly on another country. The term today extends beyond naval encounters to include countries that organize attacks on themselves and make the attacks appear to be by enemy nations or terrorists, thus giving the nation that was supposedly attacked a pretext for domestic repression and foreign military aggression.
Operations carried out during peace-time by civilian organizations, as well as covert government agencies, can (by extension) also be called false flag operations if they seek to hide the real organization behind an operation.
One examples is the Lavon affair, a failed Israeli covert operation, codenamed Operation Susannah, conducted in Egypt in the summer of 1954. As part of the false flag operation, a group of Egyptian Jews were recruited by Israeli military intelligence to plant bombs inside Egyptian-, American-, and British-owned civilian targets: cinemas, libraries, and American educational centers. The bombs were timed to detonate several hours after closing time. The attacks were to be blamed on the Muslim Brotherhood, Egyptian Communists, "unspecified malcontents" or "local nationalists" with the aim of creating a climate of sufficient violence and instability to induce the British government to retain its occupying troops in Egypt's Suez Canal zone. Israel publicly denied any involvement in the incident for 51 years; however, the surviving agents were officially honored in 2005, being awarded certificates of appreciation by Israeli President Moshe Katsav.