02 April 2020
A $12.5 billion question: Why did Erdogan unshelve his ‘crazy project’?
Translated by: Sibel Utku Bila /
Orjinal Metin (tr-1/30/2020)
At a gathering in Belgrade in October 2017, Turkish President Recep Tayyip Erdogan had for the first time given a date for his “dream project” — an artificial waterway in Istanbul — saying groundbreaking would begin the following year. He had to postpone his dream, however, as the abrupt slump of the Turkish lira in the second half of 2018 fueled crisis and stagnation in the Turkish economy. With the currency losing 30% of its value against the dollar, the Canal Istanbul project went absent from Erdogan’s top political agenda — up until December 2019.
In a speech in the presidential palace Dec. 12, Erdogan propelled the issue back to the country’s agenda, vowing to go ahead with the planned waterway, which would connect the Black and Marmara seas, running to the west of the Bosporus on Istanbul’s European side. “God willing, we will kick off Canal Istanbul by inviting bids in the soonest time possible. … We cannot shelve this project, which will make Turkey grow and strengthen its hand strategically,” he said. Furthermore, he declared, the project would have a political aspect. “I am not using it now, but when the time comes, we’ll be using that as well. God willing, Canal Istanbul will be a big success internationally with that political aspect, too,” he said.
The president has thus far kept mum on what that aspect is, and none of the journalists allowed access to Erdogan have asked him the question. So the political aspect that will make Canal Istanbul a “big success internationally” remains ambiguous, along with many other ambiguities surrounding the project.
Erdogan had first unveiled the project in 2011 during his campaign for the general elections that year, calling it a “crazy project.” His assertion that the plan is not shelved comes also as an answer to an Al-Monitor article from October 2018 that quizzed whether Erdogan would go ahead with the project despite the economic crisis gripping Turkey. The article had concluded that, “In theory, Erdogan can still realize Canal Istanbul but with one prerequisite: finding a banker crazy enough to finance his ‘crazy project.’”
Shall we now assume that the “crazy banker” has been found? In other words, has Erdogan obtained a financing guarantee for the waterway, which would run 45 kilometers (28 miles) long, 150 meters (328 yards) wide and 25 meters (82 feet) deep? No clear answer was available as of late January as this article was being penned. Yet none of Erdogan’s statements since Dec. 12 suggest he had hunted out the “crazy banker” he needs for his “crazy project.”
On Dec. 16, for instance, Erdogan told a pro-government TV channel that finding a contractor on the basis of the build-operate-transfer model was the first option — “or else, we will build it with our national budget.” Speaking after Friday prayers a month later, he sounded more ambiguous. “We are adamant on Canal Istanbul. We are not really looking for funding at the moment,” he said, throwing a veil of uncertainty on how the project would be financed. He would have hardly done that if funding prospects were promising.
Nevertheless, Erdogan has taken every opportunity to stress he is determined to go ahead with the project. No doubt, his resolve will have a cost for Turkey.
In terms of the cost measurable in money, Erdogan said Jan. 18 that the bill is calculated as “75 billion liras ($12.5 billion) at present.” This figure, too, can hardly be credible as the project is still without a feasibility study.
An eventual decision to use the national budget to cover the purported 75 billion lira cost will mean a heavy additional burden on the budget, which is already under strain amid economic stagnation that is expected to continue. Of note, the economic turmoil led the government to miss its tax collection target in last year’s budget, which posted a tax revenue deficit of 75 billion liras.
So what has rekindled Erdogan’s assertiveness and insistence on digging a canal parallel to the Bosporus when the financing challenge and an eventual fresh burden on the budget are so obvious? Does the waterway really represent a public interest so urgent and pressing to justify Erdogan’s snub of critics that “Canal Istanbul will be built whether you want it or not”?
Erdogan has cast Canal Istanbul as a project that will “rescue” the Bosporus from the threats of commercial ships transporting crude oil and other hazardous materials. “Canal Istanbul is a signal, a message we are sending to the world. Just like the Suez Canal, the Panama Canal and many similar (artificial) canals, we are going to build a canal against traffic that constantly threatens our environment,” he said Jan. 17.
Erdogan’s comparison here does not make sense as the Suez and Panama canals provide commercial benefits to their operators and users, being shortcut routes that spare ships from circumnavigating the African and Latin American continents respectively. Canal Istanbul, however, lacks such an advantage because it does not shorten the route. Moreover, the 1936 Montreux Convention, which regulates the regime of the Bosporus and the Dardanelles, entitles commercial vessels to free and gratuitous passage through the Bosporus. So using a narrow canal nearby that offers no advantage but charges a fee has no commercial logic.
Erdogan’s safety argument is similarly weak. The Turkish Foreign Ministry says on its website that “life safety and commercial, environmental and navigational security have improved and control of maritime traffic has become more efficient since the inauguration of a radar-supported vessel traffic services system in the Turkish Straits in December 2003.”
Moreover, statistics cited by the ministry show a downtick in the number of tankers passing through the Bosporus. The figure stood at 8,832 in 2017, down from 10,153 in 2006. Similarly, no dramatic increase is seen in the amount of hazardous materials passing through the Bosporus. The amount fluctuated to 147 million tons in 2017 from 143 million tons in 2006.
The incident that Erdogan cites as an example of the disasters that Canal Istanbul would prevent dates back to 1979 when 43 sailors were killed as a Romanian tanker laden with 96,000 tons of crude oil collided with a Greek freighter off Istanbul’s Asian shore while approaching the Bosporus from the Marmara Sea. Since then, the Bosporus — whose shores are densely populated — has not seen a large-scale accident thanks in part to enhanced measures. Of course, the strait and the residential areas on its shores remain at certain risk from ships carrying hazardous materials. This, however, does not justify arguments that the risks are not manageable.
Moreover, even if the hazardous material freight is somehow rerouted to Canal Istanbul through fait accomplis, the satellite cities to be built on what is now farming land along the planned route would face the same risks due to strong currents, estimated to reach 10 knots (18.5 kilometers per hour) and the narrowness of the canal.
In sum, all the above arguments back the notion that Canal Istanbul is dysfunctional and unnecessary as a waterway.
Meanwhile, the main argument of opponents of the project is that it will exact a disproportionate and irrevocable toll not only on the budget but also on the environment, nature, the sea and Istanbul itself.
Istanbul Mayor Ekrem Imamoglu, who has emerged as the leader of the many opponents of the project, laid out his objections in 15 points at a press conference Dec. 25. The canal, he said, would destroy Istanbul’s water reservoirs, salinize aquifers and damage the ecosystem in the Marmara Sea. He warned also that the planned construction of so-called “smart cities” on both shores of the waterway for up to 1.5 million residents would destroy valuable agricultural fields and forests.
Earlier, Imamoglu had hinted at potential land speculation by government cronies in the area. “We are looking into all property sales on the route of Canal Istanbul. We are talking about 135 million square meters of agricultural land here,” he said Dec. 16.
Understanding what Canal Istanbul is not makes it easier to understand what it is. The “crazy project” has only one aspect free of ambiguity thus far — namely, a real estate project aimed at developing land with a canal view.
There are several reasons why Erdogan moved to revive the project and make it a policy pillar, having touted it as a secondary propaganda tool in the 2011 elections.
First, the project is Erdogan’s way to descend on Istanbul and amend the damage that his leadership and his party have suffered from his big debacle in last year’s local elections in the city. He wants to show he has not lost Istanbul and continues to be its master.
Second, he wants to test whether the project could serve him well in the event of early general elections, with Canal Istanbul being one of the few items left in his toolbox after more than 17 years in power that have largely exhausted his paradigms, narratives and pledges.
Third, depending on the viability of the first two factors, he sees Canal Istanbul as a means of creating rent in order to assure his cronies that he is still able to please them despite the economic downturn.
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