Turkish President Recep Tayyip Erdoğan expects to break ground on the Istanbul canal, a 45-kilometre waterway that would circumvent the Bosporus strait, in June.
But some of Turkey’s largest banks are reluctant to help finance the $13 billion project because of environmental concerns, Reuters reported on Tuesday, citing four senior banking sources that it did not identify.
Six of Turkey’s top banks have signed up to a global sustainability agreement that presents a barrier to their participation in funding, two of the sources said. Erdoğan first announced plans for the canal in April 2011, dubbing it his ‘crazy project’.
“I don’t think we can take part in the funding of Kanal Istanbul,” said one senior banker, who requested anonymity. “It may trigger some environmental issues.”
The six banks, including Garanti, İşbank and Yapı Kredi, have signed up to the U.N.-backed Principles for Responsible Banking framework, which calls on signatories to avoid harming people and the planet, Reuters said.
Erdoğan says the canal will protect the environment and public safety by diverting shipping away from the Bosporus, which winds through Istanbul. The majority of Turks oppose its construction, according to a nationwide survey by Metropoll, along with Istanbul’s mayor and environmental groups, who say it would upset the city’s ecosystem and destroy the environment.
“Definitely we don’t want to give a loan to this kind of project because of the environmental issues,” another senior banker told Reuters, saying that signatory banks must abide by the U.N.-backed pact.
Erdoğan may need to rely more heavily on state and foreign financing to make his dream come true, Reuters said.
The project could present highly lucrative opportunities for construction companies, who have in the past benefitted from state guarantees for building airports, roads and bridges. The plan envisages marinas, hotels and luxury housing flanking the waterway.
İbrahim Kalın, the spokesman for Erdoğan, said the project would definitely attract investors and creditors when tenders are held. A spokesman for the Treasury and Finance Minister did not immediately respond to questions, Reuters said.
Garanti, Denizbank and state-run Vakıfbank declined to comment, Reuters reported. Akbank, state-run lenders Halkbank and Ziraat Bank, along with İşbank and Yapı Kredi did not immediately respond to requests for comment.