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Let's say that in the early-to-mid 1500s, the Ottoman sultan becomes greatly concerned with the Portugese domination of trade with India and the East in general. Due to a different configuration of influence in court, he is able to act against the entrenched interests of land-based traders and promote sea-based trade (and Ottoman power) in the Indian Ocean, by building a Suez Canal. I see two possibilities here:

1. A canal connecting Cairo to the Red Sea, as was done many times from Ancient Egypt onwards (http://en.wikipedia.org/wiki/Suez_Canal#History).

2. A modern-style Suez Canal, connecting the Red Sea and the Mediterranean directly. This would allow larger ships through, shorten the passage and prevent any possible problems with a flow of saltwater into the Nile, but would be much more difficult to build.

So, here are my questions:

1. Is option #2 even possible with a 1500s level of technology? I would assume so - I mean, the Chinese built the Grand Canal with a lower technological level. So long as the Ottomans are willing to devote the labor and expense to it, I don't see why they couldn't build a sea-level canal.

2. Would this change economic patterns in any major way? The way I see it, this would essentially connect the Indian Ocean and Mediterranean spheres of trade into a single trading area far more effectively than land transit did. Would this trading bloc be able to compete with the growing Western Europe - Baltic - Americas - Africa trading zone being set up by Spain/England/Portugal at the time, or would it simply be subsumed into West European exploitation and hegemony as in OTL?

3. Could the Ottomans, with a canal allowing fast transit from Turkey to the Red Sea and beyond, compete successfully with Portugese naval dominance of the Indian Ocean? Or was it more of a matter of naval tech, and would Ottoman ships be crushed by the Portugese as they were at Lepanto by Spain and Italy?
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