Europe set to copy Egypt’s Suez Canal tolls with £20bn new waterway plan amid Strait of Hormuz tensions
Rising tensions around the Strait of Hormuz have heightened focus on alternative maritime chokepoints, increasing attention on Turkey’s Istanbul Canal.
The waterway would run parallel to the Bosphorus Strait, offering Europe a Suez Canal-style shipping route capable of handling around 160 vessels or oil tankers each year.
In turn, the project would allow Turkey to potentially monetise transit traffic in a manner similar to Egypt’s Suez Canal and Panama’s interoceanic route.
According to Express, the project is estimated to cost £20 billion, with £12 billion allocated to the canal itself and £8 billion for development on either side, and is expected to be completed by 2027.
In 2021, President Recep Tayyip Erdogan described the project as transformative for Turkey’s economy.
He said: “Today we are opening a new page in the history of Turkey’s development. We see Canal Istanbul as a project to save the future of Istanbul… to ensure the safety of life and property of Istanbul’s Bosphorus and the citizens around it.”
Suez Canal revenues drive global canal ambitions
The project mirrors the economic success of Egypt’s Suez Canal, one of the world’s most profitable waterways and a major source of foreign currency for Cairo.
According to Arab News, Suez Canal revenues reached $449 million between January 1 and February 8, 2026, with 1,315 ships transiting the route, compared with $368 million during the same period last year.
The canal generated about $40 billion between 2019 and 2024 and remains Egypt’s most important source of foreign currency.
The Suez Canal Authority forecasts revenues of roughly $8 billion in the 2026/2027 fiscal year, rising to about $10 billion the following year, while the IMF projects earnings could reach $11.9 billion by 2029/2030 as Red Sea tensions ease.
The strong revenue performance has reinforced interest in building artificial waterways that can legally charge transit fees, unlike natural straits.
Legal distinction between canals and straits
Under the United Nations Convention on the Law of the Sea (UNCLOS), ships have the right of “transit passage” through straits used for international navigation.
Countries bordering such straits cannot demand payment for passage, though limited service-related charges are permitted.
Egypt and Panama, however, levy tolls because the Suez Canal and Panama Canal are man-made waterways.
Natural routes such as the Bosphorus and the Strait of Hormuz generally cannot impose transit fees.
Turkey’s proposal to build an artificial canal parallel to the Bosphorus would allow Ankara to introduce structured tolls without breaching international law.
Iran push to charge Hormuz transit tests maritime rules
Nonetheless, the legality of charging vessels in strategic waterways is being tested as part of Iran’s demands in its standoff with Washington.
Reuters reported that Tehran is seeking provisions in any permanent peace arrangement with the United States and Israel that would allow it to demand fees from ships passing through the Strait of Hormuz, despite restrictions under international law.
Iran has also explored charging as much as $2 million per ship, raising concerns about higher transit costs across global energy and cargo routes.
Analytics firm Kpler estimates that formalising the Strait of Hormuz into a fee-paying corridor could generate between $5 billion and $8 billion annually for Iran and Oman if implemented.
A spokesperson for the UN’s International Maritime Organization warned that introducing such payments would set a “dangerous precedent” for international shipping, noting that global maritime rules prohibit tolls for passage through natural straits.
US President Donald Trump also warned Iran over reports of transit charges, saying, “If they are, they better stop now!”
Rerouting threatens Suez revenues and African trade
The emergence of new toll corridors comes as disruptions in key shipping lanes begin to weigh on the global economy, with US-Iran tensions affecting maritime traffic and forcing countries to reassess supply routes.
Shipping diversions have increased transit times, freight rates and insurance premiums for Africa–Europe trade, according to Atlas Institute, adding 10–15 days to Asia–Europe journeys.
The Istanbul Canal ambitions come as countries explore toll-based maritime corridors modelled on the Suez Canal and seek alternatives to the Strait of Hormuz.
Morocco and Spain have also renewed discussions around the Strait of Gibraltar, reflecting growing interest in strategic chokepoints.
