Standing between the tramline and the Grand Bazaar, with no plaque to mark it out, a forlorn column bears witness to Istanbul’s long history as a world city.
This ancient mass of porphyry, once topped by a statue of the emperor Constantine, was built to mark the inauguration of the new centre of the Roman empire in 330AD. Only in 1923, after 16 centuries of triumphs and defeats under Byzantines and Ottomans, did the city lose its status as a capital.
But today Istanbul is at the forefront of the world stage once again. Kadir Topbas, mayor, argues that Istanbul’s “increasing prestige, brand value and economic power” is more than a match for the challenges it faces in infrastructure and other areas. “Istanbul is a city the world looks at with envy,” he claims.
Home to the biggest banks and companies of a self-confident Turkey, Istanbul is a multitude of cities crammed into one – an industrial hub; a centre of financial activity; a diplomatic and conference meeting point with a backdrop beyond compare; a megacity whose 15m-strong population makes it Europe’s largest.
“If you are thinking about the world that is taking shape today, with the current geopolitical evolution, Turkey is becoming more of a centre,” says Karim Karti, chief executive of the Istanbul-based regional operations of GE Healthcare, the medical technologies subsidiary of General Electric. His comments allude to the country’s push to take a leading role in the Middle East and beyond.
Mr Karti’s argument – and that of many other businesspeople – is that a headquarters in Istanbul makes the most of that new prominence.
The governments of both the city and the country have still greater ambitions. One is to make Istanbul an international financial centre with a base on the Asian side, where construction work is at fever pitch. Another is a series of grand infrastructure projects, including a third bridge over the strait and, possibly, a canal to run parallel to the Bosphorus waterway that links the Sea of Marmara and the Black Sea.
Besides these far from uncontroversial projects, Istanbul has to wrestle with many daunting challenges, such as managing its sheer size, attracting higher value-added investment and protecting itself against earthquakes. In this vast city with its limited public transport and concentration of industrial and economic activity that represents more than 25 per cent of Turkey’s gross domestic product, congestion is a serious problem.
But for all that, Istanbul’s re-emergence as one of the world’s indispensable cities is gathering speed.
“Istanbul has come to prominence again, particularly over the last decade,” says Michael O’Neill, chief executive of Coca-Cola Içecek, the soft-drink company’s Istanbul-based bottler, who after six years of international expansion presides over operations in 10 countries, including Jordan, Pakistan and Kazakhstan.
“It has become a more and more attractive point of location, more and more of a hub, not just for us, but for many other multinationals who are operating in central Asia, the Middle East and some of the Balkan countries,” he says.
Indeed, in 2000 Microsoft, the technology company, chose Istanbul as the headquarters for its 79-country Middle East and African operations and in 2008 GE Healthcare decided to base regional operations in the city, covering 85 countries, including Saudi Arabia, Russia, South Africa, Nigeria and Pakistan.
One perennial advantage is location. The tankers and container ships that push their way through the Bosphorus show that Istanbul remains, as it has been for centuries, a key crossing point between north and south, as well as east and west.
Today, there are also direct flights to much of the wider region – including all the countries where Mr O’Neill’s company operates. Mr Karti says many of the countries he is responsible for are four hours or fewer away and enthuses about the Turkish government’s success in establishing visa-free travel to many of its neighbours.
The country’s internal market of more than 70m people is unlikely to repeat the 10 per cent year-on-year growth it achieved in the first half of the year, at least in the near future. But, fuelled by favourable demography, its prospects of further expansion in the medium term dazzle in comparison with western Europe.
The city also has a unique pull. Mr O’Neill remarks that it has become “almost the congress capital of the world”, so many conventions gather at its hotels. The monuments, gastronomy and nightlife continue to attract throngs of tourists; and, as visits by dignitaries such as Joe Biden, the US vice-president, attest, Istanbul threatens to eclipse Ankara, the capital, as a hub for diplomatic activity.
But the grand vision of the government of Recep Tayyip Erdogan, Turkey’s powerful, Istanbul-born prime minister, is to transform the city still further.
Part of that is the goal to make Istanbul an international financial centre by 2023 – a place between London, Frankfurt and Hong Kong where big investment decisions are made and large banks are based.
Years after the idea was first mooted, halfway through the last decade, it faces a series of tests.
The government is in the process of shifting financial regulatory agencies and big state-owned banks from Ankara to a new campus in the Asian part of Istanbul, although the central bank has so far resisted the move.
Mr Erdogan’s team has also asserted more control over the Istanbul stock exchange, with a view to modernising and privatising it.
“We want to turn Istanbul into a global financial centre and we need the stock exchange to modernise,” Ali Babacan, the deputy prime minister responsible for the economy, told the FT in a recent interview.
“We will turn it into a corporation with shareholders and then do an initial public offering. Today, it’s a state body run by member dealers and a structure where there really is no competition.”
Even more important is a long-promised legislative package, supposedly due out early next year, that would seek to ease the way for the development of the financial centre through tax and regulatory changes, specialised courts, and an arbitration chamber, as a much-anticipated commercial code is implemented.
Meanwhile, the infrastructure plans – which include the proposed new $6bn bridge over the Bosphorus and election-time talk by Mr Erdogan of the canal and two new cities to the west and east of Istanbul – augur further big change.
The bridge, in particular, inspires strong emotions. Its backers defend it as a means of reducing the city’s crushing traffic jams. Its opponents decry it as a threat to the few green areas remaining north of the city, the harbinger of more urban sprawl and, ultimately, more traffic.
Yet even this project – and similar ones such as new road and rail tunnels under the Bosphorus – is far from the main infrastructure problem facing Istanbul. That title belongs to the essential, yet enormously difficult, work of reducing the damage likely to be inflicted by the big earthquake widely expected to hit the city in the next 20 or so years.
Istanbul still has too many substandard buildings, and anxiety has increased after the recent deadly earthquake in the eastern province of Van. Mr Topbas has declared that the only solution is to “build a new city” – but the cost of doing so in a megalopolis of 1.6m buildings is prohibitive.
“It’s a very expensive process to take measures to reduce this risk,” says Ali Pamir, an Istanbul property adviser.
Of course, failing to prepare for such a disaster could be more expensive still; Constantine’s battered column is testimony to the frailty of even the greatest of achievements.
But if this monumental and dynamic city can escape, or at least manage, such threats in the years ahead, its allure is only likely to grow. Istanbul’s rise in the past decade has been impressive; its prospects could be even better.