Chinese Role in Major Turkish Canal Project May Be More Likely as Turkish Lenders Express Reluctance
On April 27, senior banking sources in Turkey disclosed to Reuters that Turkish lenders are reluctant to finance the $13 billion Kanal Istanbul waterway project, citing the project’s environmental risks and exorbitant costs. As Beijing has shown consistent interest in both the financing and construction of Kanal Istanbul since its introduction in 2011, the resistance of Turkish banks could push the Erdogan administration toward China. President Erdogan has been an avid proponent of the divisive canal project.
The envisaged 45 kilometer waterway will connect the Black Sea and Marmara Sea and create an alternative east-west trade route through Turkey intended to divert some of the freight traversing the Bosphorous Strait. The Suez Canal crisis earlier this year created renewed impetus for the project due to newly perceived risk in being overly dependent on existing routes. If completed, the canal would handle an estimated 160 vessel transits per day, which is approximately the current volume of traffic along the Bosphorous Strait.
Chinese lenders have expressed consistent interest in financing the project. In 2018, Beijing reportedly included financing and construction of the canal as part of a $65 billion infrastructure proposal. Bank of China and more recently in 2020, the Industrial and Commercial Bank of China (ICBC), have also expressed interest. At the time, ICBC was reportedly attempting to form a consortium of lenders for this purpose.
In early April 2021, Turkish media reported that Kanal Istanbul had already received four proposals for the upcoming project tender, and all four were from Chinese companies. Past reports suggest that these included big Chinese state construction firms, including China Communications Construction (CCCC) and China National Machinery Industry Corporation (Sinomach).
The canal project has significant implications as it would create a new access point to the Black Sea and the Crimean peninsula that could potentially serve NATO military interests. Moscow has thus far opposed the canal project. For Ankara, however, control of a new geostrategic access point, such as the canal, would create another compelling source of leverage to balance Turkey’s Western and Eurasian interests. For Beijing’s part, Chinese participation in the project would elevate its role in this balancing act, particularly if Chinese lenders become critical financiers and technical participants of the project.
Despite its purported value and its support from the Turkish president, Kanal Istanbul remains divisive in Turkey. Critics claim that construction of the canal will severely pollutethe water resources surrounding the Marmara Sea and negatively impact local communities. Scientists also note that the location of the canal is prone to earthquakes. With approval already received from the Turkish Ministry of Environment, however, the Erdogan administration is reportedly expecting to launch the project as early as June 2021.