Top Turkish banks leery of Erdogan's 'crazy' canal

2021-04-27 15:20:16 GMT2021-04-27 23:20:16(Beijing Time) Sina English


Turkish President Recep Tayyip Erdogan

Some of Turkey’s biggest banks are reluctant to finance President Tayyip Erdogan’s planned Istanbul canal due to environmental concerns and the investment risks hanging over the massive construction project.

Two of four sources from top banks said a global sustainability pact that six of Turkey’s top banks have signed was a barrier to funding the Kanal Istanbul, which Erdogan dubbed his “crazy project” when he floated it a decade ago.

The government expects to break ground in June on the canal, which would connect the Black Sea to the north with the Marmara Sea to the south, running 45 kilometers through marshland, farms and towns on the western edge of the city.

Erdogan says the canal would protect the Bosphorus Strait, which runs through the heart of Istanbul, by diverting traffic.

Yet Istanbul’s mayor, engineers and, according to one poll, most citizens, oppose the project on environmental grounds, saying it would destroy a marine ecosystem and resources that supply almost a third of the city’s fresh water.

Russia, meanwhile, has signaled unease about the project on security grounds as the canal would open a second passage to the Black Sea, home to a Russian naval fleet.

“I don’t think we can take part in the funding of Kanal Istanbul,” said a senior banker who requested anonymity. “It may trigger some environmental issues.”

Six Turkish banks, including Garanti Bank, Is Bank and Yapi Kredi, have signed the UN-backed Principles for Responsible Banking framework which calls on signatories to avoid harming people and the planet.

“Definitely we don’t want to give a loan to this kind of project because of the environmental issues,” a second senior banker said, adding that signatory banks must abide by the UN-backed sustainability pact.

In 2019, the canal’s price tag was estimated at 75 million lira — or US$13 billion — in a government report.