Your correspondent worked at Banquet Indosuez in the 1980’s when the bosses decided to back the EuroTunnel between France and the UK. The EuroTunnel was a huge investment that finally cost around €15 billion, and was created by the Treaty of Canterbury between France and the UK on12 February 1986. The 2 countries authorised the construction of the Fixed Link as a concession without any public financing or guarantees. The final cost when it was finally opened in May 1994 was around double the original cost and has been subject to financial scandals and several court cases in both countries. After many financial twists and turns the private company was taken over by large international banks after huge debt write-downs. The result for Banque Indosuez, along with many other banks, were horrible losses and the premature death of the responsible director because of awful stress brought on from this project.
The Eurotunnel has 3 parallel tunnels – 2 for trains and one for service maintenance that are 51 km long of which 39 km are undersea. The tunnels now carry more than 20 million people per year as well a huge amounts of freight.
Building any long undersea tunnel is fraught with huge challenges. The present ideas presented by the Finnish and Estonian governments and backed by the European Investment Bank are about as flimsy as any other estimate of the cost and timetable. They are talking about €15 to €20 billion construction costs… there is another project proposal from the Chinese, but is not worth the paper it is printed on because there would be no free lunch with the Chinese.
There are three good reasons for challenging both project proposals:
- The population on both sides of the tunnel are tiny when compared to the Eurotunnel – this means that passenger numbers and freight volume will never allow the tunnel to be cost efficient. When you can travel easily by boat to Tallinn for Helsinki for €10 to €20, why would I want to pay more for a train trip in a dark tunnel?
- The costs of tunnelling are always going to be higher than first estimates, but the politicians, bankers and engineering companies will always throw in lower figures to get the projects accepted, and, then ask the unlucky taxpayers to fork up the extra costs 5 to 10 years later.
- The Finnish government has much more important investments to make in healthcare, education and in other basic services.