Turkey’s banks reluctant to finance Erdogan’s canal

Some of Turkey’s biggest banks are reluctant to finance President Recep Tayyip Erdogan’s planned Istanbul canal, citing environmental concerns and other investment risks associated with the massive construction project, four senior bankers told Reuters news agency.

Two of the said sources stated that a global sustainability pact which was signed by six of Turkey’s top banks poses a stumbling block to funding the Kanal Istanbul. Erdogan himself reportedly dubbed it his “crazy project” when he first floated the idea a decade ago.

Erdogan himself reportedly dubbed it his “crazy project”

Now, the government plans to break ground in June on the canal, which is expected to connect the Black Sea to the north with the Marmara Sea to the south and would run 45km (28 miles) through marshland, farms and towns on the western edge of the city. A government report which was published in 2019 set the canal’s price tag at an estimated 75 billion lira – or $13bn at the time.

Erdogan argues that the canal would provide proper protection to the Bosphorus Strait, which runs through the heart of Istanbul, by diverting traffic.

However, mayors, engineers and even most citizens, as revealed by a poll, are opposed to the project for environmental reasons, citing the risk of destroying a marine ecosystem and resources that supply almost a third of the city’s fresh water.

Six Turkish banks, including Garanti Bank, Is Bank and Yapi Kredi, have signed the United Nations-backed Principles for Responsible Banking framework, which charges signatories to avoid harming people and the planet. “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.”