By Samyak Rachit Banerjee
Abstract
The India-Middle East-Europe Economic Corridor (IMEC) marks a significant shift in US and EU strategies for Middle East trade, aiming to enhance connectivity and economic integration. It will feature a railway line improving ship-to-rail transit, offering India direct access to European markets. Pledged collaborations at the G20 summit in 2023 include enhancing trade infrastructure. The corridor is expected to reduce transit time and costs, benefiting Southeast Asia, India, West Asia, and Europe. This article examines the corridor’s current status and future prospects.
Introduction
The establishment of the India-Middle East-Europe economic corridor signifies a significant change in the strategies of the United States and the European Union aimed at fostering trade in the Middle East. Formally announced during the G20 Leaders’ summit on the Partnership for Global Infrastructure and Investment, this significant corridor is projected to boost economic development by improving connectivity and fostering economic integration between the two continents. Its objective is to create connectivity through a railway system that is interconnected via ports, linking Europe, the Middle East, and Asia. The following piece aims to elucidate the situation of IMEC along with highlighting the future prospects of this initiative.
The Genesis
Formally inaugurated at the G20 summit in New Delhi in September 2023, the India-Middle East-Europe Economic Corridor (IMEC) was announced. The European Union (EU), France, Germany, India, Italy, Saudi Arabia, the United Arab Emirates (UAE), and the United States have committed to collaborate on enhancing and standardizing trade infrastructure between India, the Arabian Peninsula, and Europe. The proposed corridor will comprise two distinct segments. The Eastern corridor will link India to the Middle East, while the Northern corridor will connect West Asia and the Middle East to Europe. The corridor will incorporate a railway line that, once finished, will establish a dependable and cost-efficient cross-border ship-to-rail transit network. This railway line will complement the current multi-modal transportation routes, improving the trans-shipment of goods and services from Southeast Asia, through India, to the Middle East and Europe.
At the G20 Summit, President Joe Biden praised the corridor project, emphasizing that it “will stimulate investment opportunities spanning two continents.” He remarked, “This initiative is integral to our endeavor to cultivate a more sustainable and integrated Middle East.” During the inauguration of the third Global Maritime India Summit (GIMS) in October 2023, Indian Prime Minister Narendra Modi emphasized that the India-Middle East-Europe Economic Corridor has the capacity to revolutionize the global maritime sector. Supporters of the initiative anticipate that the IMEC could reduce the time required to transport goods from India to Europe by 40% and decrease transit costs by 30%.
The Early Assessment and Challenges
The inauguration of IMEC coincided with the 10th anniversary of the announcement of Xi Jinping’s flagship economic project, the Belt and Road Initiative. Since its introduction, IMEC has attracted significant attention as well as criticism. Economists and regional experts have voiced doubts regarding the viability, both politically and financially, of a corridor that would redefine the infrastructure landscape across Eurasia. IMEC is currently exploring various routes linking multiple ports, including Haifa in Israel, Piraeus in Greece, and three ports on India’s west coast: Mundra (Gujarat), Kandla (Gujarat), and Jawaharlal Nehru Port Trust (Navi Mumbai). Five Middle Eastern ports, namely Fujairah, Jebel Ali, and Abu Dhabi in the UAE, as well as Dammam and Ras Al Khair ports in Saudi Arabia, are set to connect with Indian ports. All these locations have been shortlisted to ensure efficient trade with reduced time, thereby enhancing the route’s effectiveness.
The project is widely regarded as a response to China’s BRI and is deemed strategically important for India. The IMEC would offer India a direct pathway to European markets, facilitating increased trade and investment between India and the Middle East. However it is too early to truly proclaim the fact that it is a counter to BRI. BRI has existed for 10 years at this point, reaching far and wide and has also helped China gain access to strategic points in small countries through debt trap diplomacy. One prominent example of such is the case of Sri Lanka which had to give up Hambantota Port to China by leasing it for a period of 99 years december 2015 onwards due to it being unable to repay the loan it took from China.
BRI has thus in these past years managed to earn China a huge amount of strategic and economic influence over the global south and it will take a considerable amount of time for IMEC to catch up to it at the rate things are. The total investments if BRI has also crossed $1 Trillion in July 2023. IMEC still remains in the planning stage with not even the total proposed cost of this project being available besides the Saudi Crown Prince Muhammad Bin Salman pledging to invest $20 billion in the initiative.
The recent outbreak of war between Hamas and Israel in October 2023 has cast a shadow over the ambitious IMEC project. The conflict has resulted in heightened tensions and instability in the Middle East, potentially dissuading investment in the area. Moreover, it may disrupt maritime transportation and trade routes, thereby increasing the complexity and expense of shipping goods between India and Europe. Indian experts are expressing apprehension regarding the war’s implications for the safety of Indian nationals residing and employed in the Middle East. The conflict has resulted in escalated violence in the area, with instances reported of Indian citizens being inadvertently affected, as exemplified by the recent incident involving Bollywood actor Nusrat Bharucha.
Implications
The involvement of the countries mentioned above weakens the influence of the United States and the European Union on the agreement. Countries overseeing existing or potential transit points along the IMEC will be required to consider and adapt to the interests and requirements of the Gulf region and India. In contrast to previous trade initiatives led by the EU and the US such as the Transatlantic Trade and Investment Partnership, the IMEC is expected to focus primarily on trade and infrastructure matters, without delving extensively into areas such as democracy and human rights. Past trade agreements commonly included provisions addressing these broader issues, but the IMEC is characterized by a narrower scope of objectives.
The IMEC’s emphasis on infrastructure represents a significant departure from previous EU and US trade endeavors in the area. Analysts perceive the IMEC as a Western countermeasure to China’s Belt and Road Initiative (BRI) in the region. Instead of fostering robust trade relations through policies like the FTA, IMEC aims to build a robust infrastructure network to foster trade relations between the countries involved in it. In March 2023 China facilitated a reconciliation agreement that restored diplomatic ties between Saudi Arabia and Iran following a seven-year hiatus. Saudi Arabia and Iran joined BRICS in 2023, signaling a move away from the Western bloc, particularly the US. IMEC aims to reveIn March 2023 China facilitated a reconciliation agreement that restored diplomatic ties between Saudi Arabia and Iran following a seven-year hiatus. Saudi Arabia and Iran joined BRICS in 2023, signaling a move away from the Western bloc, particularly the US. IMEC aims to reverse this trend.
Furthermore, the IMEC concept is beneficial as it builds upon several diplomatic initiatives championed by US diplomats in recent times. It represents a continuation of the Abraham Accords, which facilitated the normalization of relations between Israel and the Gulf states, as well as the I2U2 minilateral framework, which seeks to enhance economic cooperation among Israel, India, and the United Arab Emirates. This underscores the significant interests of both the US and India in the project. For the US, it represents a means to uphold its influence in the Middle East, which is being increasingly challenged by China. For India, the project is crucial due to its own territorial disputes and concerns regarding China’s BRI. China’s involvement is the common factor that links the US and India to this project.
The Future Prospects
It is imperative for all stakeholders in the IMEC to prioritize peace and stability in the Middle East, given the region’s role as a vital link between India and Europe. This prospect of peace in that region however has been ruined by the conflict between Israel and Hamas with the involvement of Iran, this will just lead to the implementation of the IMEC being delayed. Gulf states such as Oman and Qatar could perceive themselves as being excluded from the IMEC initiative. They might view IMEC as a policy instrument aimed at pressuring them to normalize relations with Israel. Therefore, the immediate priority for all IMEC members should be to diplomatically resolve the ongoing conflict, as this would pave the way for the project’s implementation.
IMEC should aspire to achieve accomplishments similar to or greater than those of the BRI while also establishing itself as a distinctive “alternative” to the BRI. The United States already possesses considerable influence in the Middle East, and its participation in the IMEC would assist in fostering trust among countries in the region. India is also regarded positively by these nations, so its involvement could further bolster the credibility of the IMEC. The BRI, while successful for China, has also hit China’s global image due to allegations of engaging in “Debt Trap Diplomacy,” which has raised doubts about China’s intentions. IMEC, therefore, has the opportunity to capitalize on this sentiment by presenting itself as an ethical initiative focused on fostering economic integration through the development of a robust trade infrastructure linking India, the Middle East, and Europe, rather than putting developing nations in a debt trap to capture strategic locations for itself.
About the Author
Samyak Rachit Banerjee is a third year student in the Jindal School of International Affairs. He is interested in India-China relations and India’s domestic policies.
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