Infrastructure freeze be damned! Turkey to build $16bn Canal Istanbul

Infrastructure freeze be damned! Turkey to build $16bn Canal Istanbul
The Black Sea to the north will be linked by the canal to the Sea of Marmara in the south to ease Black Sea shipping traffic.
By bne IntelliNews December 6, 2018

President Recep Tayyip Erdogan on December 6 vowed to go ahead with the $16bn and 45-km-long Canal Istanbul project connecting the Black Sea to the Sea of Marmara. His declaration came despite earlier pledges that amid Turkey’s economic difficulties the government would rein in state infrastructure investments for the sake of austerity and fiscal prudence.

“A tender for the construction of Canal Istanbul, which has long been delayed, will be held in 2019,” Erdogan said in a speech delivered in Ankara.

Back in September, Erdogan himself declared that his administration’s ministries were reviewing their plans, including expenditure levels, for infrastructure. The government, he said, was not considering any fresh investments. The Canal Istanbul project can be considered an old proposal by now—in fact even during Ottoman times engineers explored canal designs for linking the two seas—but some economists might take a rather dim view of Turkey moving it to the tender stage at a time when the country appears to be entering a recession and consumers and the government can be expected to tighten their belts.

What’s more, environmentalists say the waterway, designed to ease traffic on the Bosphorus Strait, is not even needed and, they say, it will destroy water basins supplying the city with freshwater and alter oxygen levels in the seas.

The Sea of Marmara is an inland sea entirely within the borders of Turkey which connects the Black Sea to the Aegean Sea and thus separates the country’s European and Asian parts. The canal will turn the western side of Istanbul into an island.

There are clear signs that the Turkish economy is starting to stagger along and some analysts think it will be obvious a painful recession is under way by the time campaigning for the March 31, 2019 local elections peaks. But a lot of the growth seen during Erdogan’s 16 years at the top of Turkish politics has been driven by ambitious construction spending and the populist president has always tapped into the prestige generated by giant infrastructure ambitions. Just lately he inaugurated Istanbul’s third airport, complete with the world’s largest terminal, and Turkey wants to see it fairly lay claim to being the busiest airport on the planet within a few years. Some of the more voluble officials in fact already talk about it as the “world’s biggest”.

In October, the International Monetary Fund (IMF) cut its growth outlook for Turkey to 3.5% in 2018 and 0.4% in 2019 in the latest edition of its World Economic Outlook.

Its previous forecast, issued in April, predicted expansions of 4.2% and 4%, respectively.