The vision is to create a single metropolitan area between Finland’s capital Helsinki and its Estonian counterpart Tallinn. It aims to bind together two economies and two nations with strong linguistic and cultural ties.

With an eye towards building closer physical ties, the Estonian and Finnish Transport Ministers signed an agreement to build an undersea tunnel between Tallinn and Helsinki in January 2016, a decision that followed an agreement between Tallinn’s Mayor and Helsinki in 2008.

Financial backing for the project has been provided by China’s Touchstone Capital Partners, which has said it hoped to become a major strategic investor in the €15 billion project, which is due to become operational by 2024.

If completed, the tunnel would see the trip between the two capital cut down from a three-hour ferry ride to a 20-minute train trip through a submerged tunnel in the Baltic Sea.

The Finnish developing company FinEst Bay Area Development will maintain a majority stake in the venture. The consortium led by the businessman Peter Vesterbacka signed a memorandum of understanding with Chinese Touchstone Capital Partners on 7 March.

Touchstone is linking the investment to the Chinese Communist Party’s increasingly controversial One Belt, One Road Initiative.

Estonia has raised concerns about China’s involvement in the project. In a statement to the Estonian News Agency, Estonia’s former minister of foreign affairs, Urmas Paet, urged caution as “political interests are generally tied to investments like these” and “the risks connected to using money from Chinese state companies are too high.” He later urged the Estonian government to focus on securing European funding.

The consortium plans to finance one-third of the project from private equity and two-thirds from debt. The consortium says it will secure European and Nordic private equity investment as well.

So far, the only other high-value, high-profile investment announced is by the Dubai-based engineering company ARJ Holding Ltd, which in December 2018 committed to investing €100 million.

Also: Chinese fund prepared to invest EUR 15b in Tallinn, Helsinki Tunnel