NIB Nordic Investment Bank

Interview

The Helsinki–Tallinn tunnel: a Silk Road in the slush

Peter Vesterbacka
Peter Vesterbacka presents his FinEst Bay Area idea at the FinEst Link seminar in Helsinki, November 2016. Photo: Kimmo Brandt

A tunnel across the Gulf of Finland? It may sound futuristic—and it very well may be so. Yet, the steadily increasing numbers of passengers and freight moving between Helsinki and Tallinn can help shake off a great deal of scepticism. Even more so, if you let Peter Vesterbacka, investor and champion of the idea, talk to you for just a few minutes.

The idea of a fixed connection between the capitals of Finland and Estonia has been in the air for at least ten years. Back then, the mayors of both cities signed a protocol of intent to raise funds for feasibility studies on an undersea railway tunnel.

What years ago seemed like a good, if futuristic, idea (or, rather, a dream), is now becoming a need. Numerous ferry crossings bring 10 million people, 1.2 million passenger cars and 200,000 trucks a year to both shores.

On top of bonding the two nations closer together and helping new businesses bud every day, the traffic, constantly growing in number, is literally slowing down. The environmental impact of the port traffic is also becoming a concern, as are the travel times and the overall quality of service. The ferry crossing between Helsinki and Tallinn is becoming a bottleneck.

In 2016, after many years of weighing all the pros and cons, the Helsinki–Tallinn “twin city” dream seems to have set sail. The local authorities on both sides of the gulf have applied for EU financing and received EUR 3.1 million to conduct a feasibility study for the tunnel and get innovative ideas about improving transport flows between the two harbours.

The applicants for funding were the cities of Helsinki and Tallinn, the Helsinki-Uusimaa Regional Council and Harju County, as well as the Estonian Ministry of Economic Affairs and Communications and the Finnish Transport Agency.

In November, they hosted a seminar (read a report) in Helsinki to kick off what is supposed to amount to an investment project to the tune of EUR 15 billion and culminate in a 90-kilometre tunnel sometime around 2035.

While the magnitude of the project and the time of completion are close to impossible to estimate and the figures above are just speculation, the people who are doing their best to make the tunnel happen want us to know at least the following.

Helsinki and Tallinn together form an economic region of about 1.5 million inhabitants. The cities have the potential to develop into a fully integrated twin city concept. The railway tunnel will hopefully cut the travel time between Helsinki and Tallinn to 30 minutes (some say less), and it will contribute to both cities’ international competitiveness. A pre-feasibility study done by Sweco in 2015 gave the green light to the tunnel idea (to be researched further). And if 40% of the total costs are covered by the EU and governments, the chances are that the project will be economically sustainable. A similar financing model was used to build the Fehmarn Belt tunnel between Denmark and Germany. The construction of the new tunnel would take eight to ten years. By the time the tunnel is completed, Rail Baltica will have been linking the Baltics to the Western European rail network for ten years. If the travel time by rail from Tallinn to Warsaw takes the expected time—slightly over four hours—there is every reason to believe that a traveller from Helsinki could reach Warsaw when still only halfway through her or his email backlog.

Rail Baltica or not, the FinEst (he pronounces it as “finest”, the superlative of “fine”) Bay area “will be using fast rail based on Chinese technologies with top speeds of up to 380 kilometres an hour for now.”

Meet Peter Vesterbacka, formerly the face of the massively popular Angry Birds, now the ambassador of a dream he calls the FinEst Bay Area.

“I say just get it done!” he starts off the interview. Years or talks about the tunnel may feel uninspiring.

“I started the FinEst Bay Area programme to make the tunnel project happen.”

Still, the tunnel is the key, but it is not the final goal. The FinEst Bay Area is developing into an investment fund to attract a large pool of investors “to enable the next phase of growth, to make it the fastest growing metropolitan area in Europe for the next fifty years.”

“We already have the biggest concentration of start-ups on the planet. This is a massive talent pool on the both sides of the gulf. It will attract talent from all over the world”, Peter continues.

He opens his pitch at the seminar in Chinese. He tweets in Japanese, Spanish and Russian, but not Chinese because Twitter is banned in China.

“We are looking towards the East. China and Japan have the ability and the financial muscle to participate in this project. We are working closely with Chinese investors, because the Helsinki–Tallinn area is a natural part of the Silk Road.”

Mr Vesterbacka sees the tunnel as a business case and an enabler of growth. With a faster connection in place, especially if linked to the airport, the number of travellers will soar to 30 million annually in no time with an income projection of about EUR 1.5 billion a year.

“These numbers let us build a business case based on a 40-year payback calculation. This is pretty rapid”, he says.

Tens of thousands of people cross the gulf every day, many of them for work. Statistics say 25% of those travelling from Tallinn and 11% from Helsinki are doing so with work in their mind, and an additional 17% and 5%, respectively, for “a meeting”, perhaps a business meeting. There are a good deal of small entrepreneurial businesses shuttling between the two harbours.

“There is already a common market. If you look at the start-up scene, both cities are very tightly integrated. This is how and why we started Slush [an annual start-up event in Helsinki held since 2008]—it is cold and dark here with slush on the ground. It’s not Silicon Valley—it’s better!” says Peter. He will not be side-tracked from his pet subject.

“Start-ups will integrate Helsinki and Tallinn and all of the Nordics. We are like the Northern Lights of leadership for Europe.”

“Start-ups are not about the future. The success is already here—look at Supercell this year, Rovio [both Finnish mobile game developers], Linux, MySQL, Skype, Spotify… There are a lot of success stories coming out of this region. In the future, we can expect many more. This is why we need not only the best digital infrastructure, but also the best physical infrastructure to bring people together.”

He keeps throwing out ideas that seem to make good sense: the fastest-growing capital region in Europe, commanding the 5-billion-strong market of the entirety of Eurasia, of which “we are the middle”. GDP growth of ten per cent every year. This is how Peter sees the next 50 years in the slush of the FinEst Bay area.

“There is no reason why not. The tunnel will be proof that we can accomplish anything”, he says.

Read more:

Pre-feasibility study (SWECO, 2015)

FinEst project kick-off, presentations

Seminar debates fixed connection between Helsinki and Tallinn

 

Dec 2016

  • AR2016

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