Economic Update

Turkey races ahead with high-speed rail links

Turkey | 19 Dec 2013

The first link in Turkey’s high-speed rail system is set to open in 2014, part of a broader effort by the government to make significant improvements to transport infrastructure in time for the republic’s centenary in 2023.

Trains and tunnels

During a recent presentation of his department’s 2014 budget to the Parliament’s Planning and Budget Commission, the transport minister, Binali Yildirim, reiterated the government’s intention to build high-speed and conventional rail lines to connect 15 of Turkey’s largest urban areas. He noted tests had begun on the high-speed service from Ankara to Istanbul and said the train should be operational by February 2014, cutting travel time to around three hours.

These statements came just weeks after the unveiling of one of the government’s most highly anticipated infrastructure projects, the Marmaray rail link. Running 1.4 km under the Bosphorus Strait, the tunnel has been hailed by some as the key link in a modern silk road, including Prime Minister Recep Tayyip Erdogan, who first advocated its construction when mayor of Istanbul, and Shinzo Abe, the prime minister of Japan, which invested $1bn in the $4bn project.

According to Suleyman Karaman, director-general of Turkish State Railways, almost 80,000 people use the tunnel to shuttle between Istanbul’s two halves each day. While there are hopes that the new service will help ease congestion on roads and waterways, it is too early to assess its impact on Istanbul’s overburdened transport infrastructure.

More in the pipeline

A high-speed rail network and the underwater tunnel are only two of the government’s plans for the coming years. By 2023, Istanbul is set to receive a third airport, a third bridge over the Bosphorus and a second tunnel under the same waterway for vehicle traffic.

In all, the government has been investing heavily in the transport, communication and maritime sectors over the past decade. According to Yildirim, total investment in on-going projects will amount to TL184.5bn (€66.3bn), including some TL86bn (€30.9bn) to be spent over the next 5-6 years. Many of the upcoming projects will utilise a public-private sector partnership model, including the proposed third bridge and airport, posing significant opportunities for businesses looking to get involved in the sectors.

Not everyone has welcomed these developments, suggesting they are wasteful and overly ambitious. The Marmaray has been particularly singled-out by critics, who have raised questions about everything from the soundness of the tunnel’s construction, especially given potential earthquake risks, to some of the details surrounding the tendering process.

Nothing, however, has attracted more criticism than Kanal Istanbul, which the prime minister himself has referred to as his “crazy project.” The scope of the plan, which calls for a 44-km manmade waterway connecting the Black Sea to the Sea of Marmara, has been likened to both the Panama and Suez Canals.

Proponents of the project say that the new waterway will be a safer, more efficient alternative for the thousands of cargo ships that travel through the Bosphorus each year, especially those carrying hazardous chemicals through the historic heart of Istanbul. Opponents, however, question the environmental impact of such a large project as well as its necessity and cost. Given that the plans for the canal are still in their early stages, the debate over the project will likely continue unabated for the foreseeable future.

While the canal has captured many headlines, it is likely that investments in projects like highways and the high-speed rail will contribute more to productivity and economic growth, as well as provide additional opportunities for construction firms and investors.

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