If size matters, which it does for Turkey’s president, Recep Tayyip Erdogan, then the $12.5bn building site on Istanbul’s northern fringe matters a lot. The construction zone, a sea of concrete and cement, spills over 76.5 square kilometers (29.5 square miles), dotted by dozens of buildings, including an ultra-modern passenger terminal. It already covers an area bigger than Manhattan. A roaring hive of steamrollers, cranes, dredges, lorries loaded with piles of rubble and 35,000 workers completes the scene. By October all this will have turned into a new international airport capable of accommodating 90m passengers a year, says Ahmet Arslan, Turkey’s transport minister. Capacity will rise to 150m in five years, making it the world’s biggest aviation hub. Just to the west, an even more ambitious project, a 45km-long canal, bridging the Black and Marmara Seas, may soon be under way. Mr Erdogan wants to break ground on the project later this year.

Turkey’s megaprojects have been a source of jobs and revenue for builders, and spurred economic growth. For the man who has championed them tirelessly, they have also been a plentiful source of votes. On the campaign trail, when he is not angrily accusing Western powers of plotting to overthrow his government and carve up his country, Mr Erdogan rattles off the number of highways, tunnels and airports (29 of the latter, to be precise) that have been built on his watch.

He will soon have a chance to do so again. On April 18th, hours before his MPs rubber-stamped the extension of a state of emergency for another three months, the Turkish strongman called snap presidential and parliamentary elections. These will take place on June 24th, 18 months earlier than scheduled. Armed with emergency powers, in control of nearly all media outlets and state institutions, and enduringly popular with conservative voters, Mr Erdogan is expected to win easily in a contest that no one expects to be fair.

The new projects do make some sense. Istanbul’s main airport is bursting at the seams. Passenger numbers have nearly tripled in the past decade, reaching 63.7m last year, though they have plateaued since 2015, raising concerns that the city does not need an airport as colossal as the one now being built. Congestion is also a reason for the Kanal Istanbul project. The Bosporus, currently the only route available to vessels going in and out of the Black Sea, is one of the world’s most crowded waterways. With more twists and turns than a Turkish soap opera, and treacherous currents to match, the strait has witnessed scores of accidents over the years. In the most recent, a 225-meter-long tanker rammed into a famous waterside mansion, causing tens of millions of dollars in damage. Mr Erdogan hopes to reroute all shipping through his new canal.

Yet there is only so much development a city of 15m people can take. In the past four decades, Istanbul’s population has swollen by an average of about 300,000 every year. The glut of housing expected to spring up near the new airport, along the road connecting it to the Asian side of the city and along the planned route of the canal, will attract millions more. Opening these areas up to construction will threaten the city’s remaining freshwater sources and forests, says Tayfun Kahraman of Istanbul’s Chamber of Urban Planners. Trees are already a rare sight in the city. According to the World Cities Culture Forum, parks and gardens cover a mere 2% of Istanbul’s total area, compared with 33% in London. Among the 34 cities surveyed, only Dubai fares worse.

Turkey plans to invest $325bn in infrastructure over the next five years. Reality, however, may get in the way. The economy, which has grown at breakneck speed since 2017, powered by stimulus measures and cheap credit, may be in for a hard landing. The Turkish lira has been battered since the start of the year, and has lost more than half its value against the euro and the dollar since 2013. Companies that borrowed in foreign currencies are feeling the pinch. Two of Turkey’s biggest conglomerates, Yildiz and Dogus, have reportedly entered talks to restructure some $9bn of debt. “If companies like these are facing problems, it would be surprising if others were not,” says Inan Demir, an economist at Nomura International, a bank. The mountain of corporate debt, reckoned to have reached 70% of GDP, is starting to wobble. One reason Mr Erdogan called early elections was presumably to get them out of the way before ordinary Turks start feeling the tremors. “Even a minor sign of economic duress could jeopardize his objective of winning in the first round,” says Sinan Ulgen of Carnegie Europe, a think-tank.

Even in an uncertain economic climate finance for new bridges, highways and hospitals can be found. But paying for vanity projects like Kanal Istanbul, which may not generate much income, will be harder. It remains to be seen how Turkey plans to persuade ships to pay for using the canal when they can ply the Bosporus free of charge, a right enshrined in a convention of 1936. The project “would be so fraught with international-relations nightmares that foreign banks would be reluctant to touch it,” says Refet Gurkaynak, an economist at Bilkent University.

One way out would be for the government to provide guarantees for loans taken out by the contractors, a solution already in place for the new airport. (Finance for it came from Turkish banks after international ones steered clear.) The obvious risk, says Mr Gurkaynak, is that Turkish taxpayers will end up footing the bill if such projects do not turn a profit. That may not bode so well for the elections after next.

Source: economist