In what could amount to a 21st century New Deal for the world economy Elon Musk and Valdimir Putin announced yesterday an agreement to spend $1.5 trillion on a Trans-Eurasian Hyperloop to connect New York and Moscow by 2035. The plan calls for spending $75 billion a year for the next 20 years. All told the project will cover 8,000 miles (13,000 km). The route will ultimately connect Russia and China via Mongolia, establish an iron Silk Road through Turkey, connect Siberia and North America via a new continental bridge or underwater tunnel and likely significantly improve relations between Western Europe and Russia. Trip times between popular destinations along the route will be measured in minutes and hours rather than days or weeks.
According to Musk who attended a press conference in London yesterday, Russia has agreed to a 15% stake in the project and will provide 15% financing. A consortium of US, Chinese, Japanese and Korean investment banks will split the remaining 85% stake and contribute 85% financing. In a key development the EU has wholeheartedly expressed support for the project which it believes may help keep the EU together because of the long term economic benefits.
Putin’ People to Work
With a flagging world economy and few bright spots the agreement comes as a World Bank reports that halving the world’s unemployment rate would add $5 trillion annually to global GDP. It is expected the project will employ close to 1 million people annually over the next 25 years and one quarter that number once the project is complete. The plan offers new hope to countries that will be home to the hyperloop line and the traffic it will bring.
Trans-Eurasian Hyperloop (Image Courtesy www.reuters.com)
Putin’s support for the project is seen as motivated by Russia’s current dire economic circumstances that are the result of falling oil prices. Fortunately for Putin, Russia’s vast natural resources are money in the bank even for a project of this size and scope and the project could change Putin’s legacy and put him in a more positive light.
Boosting Trade Amongst the World’s Regions
For his part Musk believes the hyperloop technology will be ready to deploy in the next several years. Musk’s test track in Texas is already in the works and is expected to be completed in 2016, Musk believes the concept will be tested and deemed safe by 2018 at the latest. In the meantime, plans for the Trans-Eurasian Hyperloop are already under development and with the agreement signed yesterday it is a matter of a few months before financing activities begin.
In his announcement Musk cited reports by private researchers that the Trans-Eurasian Hyperloop will pump an additional $3 trillion a year into the world economy above and beyond that provided by building the project.
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