- Hubert Walas
East gate.
Projects such as a 100 km long undersea railway tunnel spark the imagination and cause admiration for human engineering. And this is exactly what Finland and Estonia have wanted to do for 20 years, linking their capitals Helsinki and Tallinn on the bottom of the Gulf of Finland, which is part of the Baltic Sea. However, these plans had been lying in a drawer for years due to the high construction costs. Recently however, hopes have been revived and the ubiquitous Chinese have noticed their own interest in the proposed underwater tunnel. Will it be China's new gateway to Europe?
Separated Brothers
Finns and Estonians have maintained close relations for years. Both countries are culturally close to each other and the Finnish and Estonian languages belong to the same language group. From a strategic and geographic point of view, Estonia is usually presented as one of the Baltic States along with Lithuania and Latvia. However, culturally and mentally Estonians feel closer to Finns and, more broadly, to the Nordic peoples. This despite the difference in wealth between Estonia and Finland which is a good indicator of how devastating nearly 50 years of communism in Estonia has been for the economy. In 1993, the difference in Gross Domestic Product per capita between the two nations was nearly 15 fold. Estonians have managed to catch up quite a bit in the last 30 years, but still the average Finn is twice as rich as an Estonian.
Both countries are now working closely together. Finland is by far Estonia's largest export market, while many Finns come to Estonia for tourism and Estonians are eager to work in Finland where wages are higher. However, in order to get from one country to another, the Gulf of Finland must be crossed. People with seasickness are only left with driving around through the Russian Federation, yet the ferry crossing remains the most popular. This makes Helsinki the world's largest passenger port. The Port of Helsinki serves up to 25,000 passengers from Tallinn daily and over 8 million annually.
Tallinn and Helsinki are separated by an approximately 80km straight line. With the increasing wealth of both countries, as well as human and commercial exchange, there were plans to improve the communication line between the two capitals. This is how the idea of an underwater railway tunnel was born about 20 years ago. It would potentially be the longest railway tunnel in the world - twice as long as the Channel Tunnel between France and the UK. Over the years, the idea waited for better times until the 2018 profitability study was carried out. The study showed that the tunnel would be profitable if 40% of funding was provided by the European Union. The tunnel would bring both capitals even closer, in effect, creating a united metropolitan area of both capitals inhabited by 2 million people - for northern Europe this would be a real megalopolis resembling the San Francisco Bay Area along with nearby Silicon Valley.
This comparison is not accidental, as the common name for the area of the Gulf of Finland, including Tallinn and Helsinki, is FinEst Bay Area. Both countries boast one of the highest rates of unicorn companies - that is start-ups valued at over $1bn - per capita in the world. It is the cradle of companies such as Skype, Bolt, and Rovio. The underwater tunnel would facilitate the exchange of people, ideas, and technology. Currently, a boat trip takes 2-3 hours. A fast train would make it possible to reduce travel time to a mere 20 minutes.
Looking more broadly, the tunnel would connect Finland with the rest of Europe by the Rail Baltica project which is currently under construction and therefore connecting the Baltic States and Finland with the rest of Europe by rail as part of the larger Trans-European Transport Network. Importantly, the entire route is built in the standard gauge for Europe (1.435m), while Lithuania, Latvia, Estonia and Finland still use the Russian standard which is 1.520m or 1.524m gauge. The tunnel, financed with EU funds, would also have a European gauge.
None of the officials will say it directly, but the tunnel also reduces Moscow's leverage on both capitals. The tunnel, if built, would give Tallinn a chance to break the geographic dependence on the east-west direction, where the cards are dealt by the Russians, to the north-south, over which Russia has no direct influence. The dependence is shown by a large share of Estonian imports from Russia, which is second only to German and Chinese. Moreover, the tunnel could be a serious complication for the Kremlin's strategic planners. Should Estonia reach an agreement with Finland in the future as part of an alliance of some kind, the tunnel will then create a new line of communication providing a route for troops and supplies that cannot be easily blocked by the Russians. Thus, the tunnel has a chance to improve the geostrategic isolation of the Baltic States which is not in Moscow's interest. Even if such an alliance did not exist, the close ties between Finland and Estonia could change the perception of Moscow and complicate the dominant position of the Russians in the region.
However, despite some voices of opposition, Russia has been restrained in its criticism of the project for the time being. Initially, because it knew that the EU’s bureaucracy would mean that the project would take decades to complete. And currently, because an informal, but important, ally of the Russian Federation, has become directly involved in the project. And that is China.
Distrust of the Dragon
This is where Peter Vesterbacka, a Finnish entrepreneur and co-founder of Rovio Entertainment which created the popular game Angry Birds, comes into the picture. Vesterbacka, coming from the start-up world and realizing the ineffectiveness of the bureaucratic machine of the European Union, went to China for money.
And he got it... or at least a pledge that the project has backing. China's Touchstone Capital Partners Ltd. would co-finance the tunnel with $17 billion which would be about 70% of the total cost. The rest would be provided by European funds. The use of plasma drilling technology would result in the tunnel being built very quickly. It is also favored by underwater geological conditions. Moreover, the cavity from the drilling would be used to build 4 artificial islands that would make the FinEst Bay area more attractive and potentially create a home for 50,000 people. In the eyes of Vesterbacka, the whole thing is to present an attractive location for potential entrepreneurs from the world of start-ups. And on top of that, everything is to be built in a record time of 4 years.
The Finns seem to have welcomed the news of their messenger. Helsinki-Beijing relations are good and Finland sees itself as China's aviation gateway into Europe. Helsinki Airport is closer to China than any other capital city in the European Union. "When we think of the new corridors to China, we are in the middle between Europa and Asia. Finland is not an island anymore. We look at our geopolitical position in a whole new way," said Risto Murto, deputy director-general in the Networks Department of the Finnish Ministry of Transport and Communications.
However, the same cannot be said of the Estonians who, distrusting of the Chinese, blocked the possibility of Chinese financing. Strong skepticism towards China is a common feature of the Baltic countries. Recently, the most emphatic proof of this was provided by Lithuania, leaving the 17 + 1 format associating the countries of Central Europe and China. Following Tallinn's reaction, Helsinki, in turn, stated that it did not intend to fund the project out of its own pocket. Thereby reaching a stalemate.
Estonia's fears, an economy nearly 500 times smaller than China's, are well-founded. Small countries can easily get into financial trouble by doing large-scale business with China. Montenegro knows something about this. However, here the situation is different. The Chinese will not provide a loan, rather they want to finance and build the tunnel with the participation of 3 Chinese companies. Vesterbacka is not naive and is aware of geopolitical difficulties, but at the same time says: “There is this cold war between the US and China. And I think the EU is caught in between. Of course, we shouldn’t be naive about this; every nation including Finland, Estonia, Germany, China, the US, has its best interests in mind, but what is the worst thing that could happen? The Chinese close the tunnel – or they take it away? How is this worse than what we have, which is no tunnel at all?”
Some analysts support this rhetoric and encourage China to be allowed into the project. One needs to remember that China is not getting involved in this project out of the goodness of its heart, but it is also keenly eyeing its own economic interests.
New Gate to Europe?
The Northern Sea Route, or the Arctic Route, which you can find out more about in one of our previous episodes, meets the northern side of the Scandinavian Peninsula. Although Finland does not have direct access to the Barents Sea, there is only a few dozen kilometers from the Norwegian port of Kirkenes to the Finnish border. The connection to the arctic ports of northern Norway, via Finland, the Helsinki-Tallinn tunnel and further into Europe creates, if the tunnel is to be built, the shortest and potentially fastest connection between China and Europe. And this fits perfectly with Beijing's flagship Belt and Road initiative. The Arctic Corridor, as this road is called, in terms of volume, of course, will not take away the primacy of maritime transport. However, for products that cannot be shipped by air, but must be shipped quickly and relatively cheaply, this may be the best solution. The Arctic Corridor would also overlap with a broadband cable that will connect Finland and China and run along the bottom of the Arctic Ocean. In addition to the tunnel mentioned above, Finland would have to build the missing 500km of railway line connecting it with the Barents Sea.
The problem is that the Finns find that building 500km of railway in a difficult climate, and with the current transport volumes, is not currently profitable. However, these plans only take into account today's situation - if the undersea tunnel were built and the Chinese cared enough - an additional $3 to 5 billion for the Finnish railway line would also be found. ALl the more so as the new railway would also pose a great export potential for Finland itself. The northern part of the country is rich in deposits such as iron, lithium, uranium, vanadium, zinc and nickel, all which the insatiable Chinese economy will gladly buy. The Chinese plans are also a potential explanation why Moscow is silent about the project, as it does not want to torpedo the plans of its informal ally.
It seems that these arguments finally reached the Estonians who, after months of deliberation, signed a new memorandum of understanding with the Finns on infrastructure projects connecting both countries, including the Helsinki-Tallinn tunnel. This seems to bring back the possibility of Chinese involvement in the project. Taavi Aas, the Estonian Minister for Economics and Infrastructure, said: “Helsinki should be the final destination for Rail Baltica, not Tallinn. By integrating the tunnel into the Trans-European transport network, it will serve as a new gateway to Europe and make our capitals twin cities.”
Time will tell if the Helsinki-Tallinn tunnel will be built. If so, it would be a powerful development stimulus for both capitals and support Peter Vesterbacka’s dream of creating a European Silicon Valley. Interestingly, this tech center would not be located in the West, but in the East of the continent. This fact is symptomatic of the whole project. If the entire Arctic Corridor became a reality, it would create new opportunities for the hitherto geographically excluded Eastern European countries. Including Finland, Estonia, Latvia, Lithuania, or even Poland.
The question is whether the common interest that Finns, Estonians, and Chinese clearly share in this situation will be stronger than cold Nordic mistrust?
https://www.bloomberg.com/opinion/articles/2019-08-13/let-china-build-longest-undersea-finland-estonia-tunnel
https://jamestown.org/program/tallinn-helsinki-railroad-tunnel-could-transform-geopolitics-of-northern-europe/
https://jamestown.org/program/moscow-seeks-to-block-tallinn-helsinki-tunnel-as-project-gains-first-foreign-funding/
https://tunnelcontact.com/discussion/view/32323/finland-and-estonia-to-sign-agreement-to-build-the-100-km-long-undersea-tunnel-between-their-capitals
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https://www.bloomberg.com/news/newsletters/2021-02-02/supply-chains-latest-world-s-longest-undersea-tunnel-resurfaces
https://www.bloomberg.com/news/articles/2020-07-30/record-rail-tunnel-suffers-setback-as-estonia-dumps-developer
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https://www.bloomberg.com/news/articles/2019-10-11/estonia-casts-doubts-over-world-s-longest-undersea-rail-tunnel
