China looms large in Turkey’s controversial waterway project


By Fehim Tastekin
April 12, 2021

[Turkey is reportedly gearing up to partner with China in the
construction of an artificial waterway parallel to the Bosporus, a
project with likely implications for Russia and the United States in
the Black Sea.]

While Turkey remains stuck between the West and Russia on a number of
strategic issues, its dilemmas might grow even more complicated with a
Chinese addition to the equations, as reports suggest that China could
assume a lead role in financing and building a controversial Turkish
waterway to the Black Sea.

Turkey’s purchase of Russian air defense systems, US legal proceedings
against a Turkish public bank for helping Iran evade US sanctions,
rows over the Syrian Kurds and Turkey’s posture in the Eastern
Mediterranean have led to unprecedented tensions in Turkish-US ties.
In a bid to open itself a wiggle room, Ankara has recently moved to
mend fences with its traditional Western partners, seeking to draw on
the value of military and economic collaboration.

One way to do that could be through a high-profile Turkish role in
NATO efforts to build up deterrence against Russia in its conflict
with Ukraine. Turkey has already fostered military cooperation with
Ukraine, including the supply of drones to Kyiv, and in January
assumed the command of NATO’s Very High Readiness Joint Task Force,
created in 2014 to deter Russia.

In another apparent move to woo the West and in conjunction with a
Western strategy to distress Russia in the Black Sea, Ankara is
seeking to speed up its project to build an artificial alternative to
the Bosporus Strait, called Canal Istanbul, with the apparent
intention of opening the 1936 Montreux Convention up for discussion or
even bypassing it. The convention regulates transit through the
Bosporus and the Dardanelles, which form a key maritime route linking
the Black and Mediterranean seas. It gives Turkey control of the
straits but rests on tight rules for military ships that restrict the
entry of non-littoral naval forces to the Black Sea.

Canal Istanbul, dubbed a “crazy project” by President Recep Tayyip
Erdogan when he first unveiled it in 2011, has attracted Chinese
interest as part of China’s Belt and Road Initiative. Chinese
companies are now reportedly eyeing the tender for the waterway,
estimated to cost more than $9 billion.

Given Turkey’s economic woes, many had assumed that financing problems
would snag the project, but the government came up with surprises.
Since March 20, Ankara has announced a legal amendment paving the way
for Canal Istanbul’s builders to benefit from state guarantees, the
approval of development plans for the project and preparations to
invite bids from contractors. Finally, Erdogan announced that
construction would kick off in the summer. “Canal Istanbul … will be a
new windpipe for the region. We will soon launch the tenders in phases
and break the ground in the summer,” he said April 7, adding that a
city for half a million people would be erected on the banks of the
45-kilometer (28-mile) waterway.

What led Erdogan to suddenly speed up the process? A financing offer
from China, according to Turkish journalist Jale Ozgenturk. “The
sought financial support is coming from China. Ankara is busy working
on the issue. There are four proposals at present for the upcoming
tender, and all of them are from Chinese companies,” Ozgenturk wrote
April 9. “Of course, China will not only finance Canal Istanbul, [but]
it will also assume the construction, having giants in the
construction sector,” she added.

According to another business journalist, Serpil Yilmaz, Chinese
lender ICBC and Hong Kong-based British bank HSBC are floated as the
prospective financiers of the project. Financial news site Finans365,
meanwhile, reported that ICBC was trying to create a consortium to
finance the construction of the waterway.

In earlier years, the head of the Bank of China’s Turkey branch had
said his bank was eager to finance infrastructure projects in Turkey,
while media reports had mentioned China National Machinery and China
Communications Construction among Chinese companies interested in
Canal Istanbul.

By tendering Canal Istanbul to the Chinese, however, Turkey might face
a trap reminiscent of its conundrum over the Russian S-400 systems.

First, there would be risks stemming from the modus operandi of the
Chinese. According to Turkish media reports, a Chinese proposal two
years ago involved up to $65 billion, including loans to finance the
construction of the waterway and other investments as part of the
sprawling project.

Though many see China’s purported “debt trap” diplomacy as a myth,
opponents of the Chinese option in Turkey point to controversies in
Kenya and Sri Lanka, where infrastructure projects have ended up in
Chinese hands after failures to repay Chinese loans. In such projects,
the Chinese typically issue loans and undertake the construction at
the same time, using workers and materials mostly from China.

In December, Ahmet Davutoglu, Erdogan’s former premier and foreign
minister who now leads an opposition party, brought up allegations of
plans to allocate land to China around Canal Istanbul, warning that
such a move would “do away with both national sovereignty and economic

As for the second risk, Ankara seems to be framing Canal Istanbul as a
way to bypass the Montreux Convention, hoping to draw closer to
Washington. But by awarding the project to the Chinese it would offer
them a geostrategic advantage at the meeting point of Europe and Asia
at a time when the United States is trying to contain China. The
Chinese, who have already put money in strategic routes such as the
railway tunnel under the Bosporus and the third suspension bridge
connecting its Asian and European shores, certainly see Canal Istanbul
as a precious leg in the Belt and Road project.

Two other potential projects might increase Canal Istanbul’s value for
the Belt and Road. The first, which appears a very distant prospect at
present, is a canal linking the Black Sea to the Caspian Sea, seen as
a gateway to Central Asia. The other is a waterway similar to Canal
Istanbul that would offer an alternative to the Dardanelles, running
from the northern entry of the Dardanelles to the Gulf of Saros to the
north. This proposal was mentioned only in a footnote in the
environmental evaluation report for Canal Istanbul. But still, it
seems a sign of integrated planning.

The prospect of Chinese financing backing bears on Ankara’s policy on
the Uyghur issue. In the face of the Uyghur diaspora’s mounting
campaign against China, Ankara’s attitude has stood out as indifferent
and even gratifying to China. On March 10, lawmakers of the ruling
party voted down a proposal by the opposition Good Party for a
parliamentary inquiry into “inhumane practices” against the Uyghurs in
China. The Uyghurs share ethnic roots with the Turks, and their
region, Xinjiang, is often referred to East Turkestan in Turkey.

Ankara’s policy seems to have emboldened Chinese diplomats to shake
fingers at Turkish politicians who are supportive of the Uyghurs. On
April 6, the Chinese Embassy in Ankara posted a threatening Twitter
message to Good Party leader Meral Aksener and Ankara Mayor Mansur
Yavas after the pair commemorated the "Baren massacre” in “East
Turkestan” in 1990. “The Chinese side resolutely objects to any person
or force challenging China’s sovereignty and territorial integrity.
The Chinese side reserves its right for a justified response,” the
embassy said.

In a speech in parliament only days before, Aksener recalled that the
development plans for Canal Istanbul were approved the day China’s
foreign minister was visiting Turkey. Addressing Erdogan, she asked,
“Are you hatching up something behind closed doors with China on the
Canal Istanbul nonsense in this difficult time for our nation? Are you
[giving up on] the rights and honor of the Muslim Turks in East
Turkestan for a few billion dollars?”

Almost two years after their delivery, Erdogan has yet to figure out
what to do with the S-400s, having bought them to show off to Western
partners that Turkey is not without alternatives. Now, could his dream
canal project turn into a nightmare tomorrow if he teams up with the
Chinese? Nothing is transparent in Ankara these days, and sweet dreams
cannot be taken for granted.


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