Dr. Arvind Kumar*
Economic corridors are infrastructure projects designed to enhance connectivity and facilitate economic development between different regions or countries involving the development of transportation and logistics infrastructure, such as roads, railways, ports, and digital connectivity, to facilitate the movement of goods, services, and people. During the G20 summit in New Delhi in September, world leaders unveiled plans for an India-Middle East-Europe Economic Corridor (IMEC). Saudi Arabia, the European Union, India, the United Arab Emirates (UAE), France, Germany, Italy, and the United States all signed a Memorandum of Understanding, committing to work together to advance the project. While details of the corridor are still scant, the MOU revealed the basic outline of a ship-to-rail transit network that will supplement existing maritime and road transport routes. But does this announcement of the new corridor looks more an achievement for public diplomacy or a workable step towards increasing economic and transport connectivity?
The project’s physical infrastructure includes railway lines connecting the UAE to Israel via Saudi Arabia and Jordan, as well as electric cables to enhance digital connectivity and pipes for clean hydrogen export. IMEC offers a plethora of potential economic benefits both regionally and internationally, especially by cutting the cost and increasing the speed of cargo shipment. A key pillar of United States President Joe Biden’s Indo-Pacific and Middle East strategies the project is hailed as a real big deal. European Commission President called it nothing less than historic and Indian Prime Minister called IMEC as the basis of world trade for hundreds of years to come.
IMEC would likely aim to strengthen economic ties and cooperation between India, the Middle East, and Europe. The involvement of key countries and regions in the Memorandum of Understanding suggests a collaborative effort to improve transportation and trade links. However, the success of such projects often depends on various factors, including political stability, regulatory frameworks, financing, and regional cooperation. Additionally, the actual implementation and realization of the corridor’s goals may take time, and challenges could arise during the planning and construction phases. It’s essential to keep in mind that geopolitical developments and international agreements can change, and more recent information may be available beyond my last update in January 2022.
However, to achieve such goals, potential political challenges to the project have to be addressed. China has already expanded its influence in the region; will the United States be able to counter it?
More immediately, however, as Tel Aviv continues to bombard Gaza, will the Arab states sit at a table with Israel—let alone plan for regional integration projects?
Hindrances to this passage
Beneath the surface, IMEC largely repackages pre-existing, troubled connectivity projects, and participant countries have not yet described how these projects will be financed. For example, the Israeli government announced one component of IMEC, Tracks for Regional Peace, in 2017, which would link Israel, Jordan and Saudi Arabia by rail to allow the movement of goods between the Israeli ports of Haifa and Ashdod and Saudi ports. Regional countries approved another component, the Gulf Cooperation Council (GCC) Railway, in 2009 to link the six regional states via a US$250 billion freight and passenger rail network. The project, originally scheduled for completion by 2018, is far behind schedule.
The UAE is also building a railway network linked to Saudi Arabia, but the international connection is not yet finished. It is slated for completion in 2024. Likewise, although Saudi Arabia’s rail network reaches its border with Jordan, the two countries do not yet have a functional rail connection. Multiple economic and political factors could cause further delays. For example, a protracted drop in oil prices could constrain GCC states’ fiscal capacity, as happened from 2016–20, or new conflicts could emerge between the Saudis and Emiratis or Jordanians.
The announcement seemed to suggest that negotiations over Saudi–Israeli normalisation had gathered momentum. But the start of the Hamas–Israel war on 7 October has pushed the issue off the agenda, and it will now be far more difficult to build new economic and political links between Israel and the Middle East. Relations between Israel and Jordan are particularly tense. In a sign of trouble ahead, participant countries failed to convene a meeting within 60 days to develop an IMEC ‘action plan’ as described in the G20 announcement. The war also caused the postponement of a minilateral meeting of the I2U2 – comprising India, Israel, the UAE and the US – that had been scheduled for October. India has yet to propose a clear strategy for providing connectivity and infrastructure project alternatives and integrating further with its South Asian neighbours – six of which have joined the BRI. This raises questions about New Delhi’s ability to integrate meaningfully into connectivity frameworks and deliver on projects in the Middle East and Europe.
It can be said that IMEC’s goal is to compete with the Belt and Road Project, which was first announced by Chinese President Xi Jinping in Kazakhstan in 2013. In this context, the news that Italy will take part in this corridor and that it will exit the Belt and Road Initiative attracts attention. On the other hand, efforts are being made to establish an India-Europe connection with the corridor in question. This connection is aimed to be realized through the Arabian Peninsula. IMEC will consist of two separate corridors. The eastern corridor will connect India to the Arabian Gulf and the northern corridor will connect the Gulf to Europe. The decrease in the influence of trade routes between Europe and Asia after the start of the Russia-Ukraine War and the decrease in trade volume on these corridors are also important in this context. On the other hand, IMEC is planned to create an alternative to the rising Belt and Road Initiative and actions such as BRICS SCO.
Way Ahead
India’s “careful cultivation” of multilateral economic cooperation with such a corridor is of paramount importance. Despite India’s favourable demographics, geography and commercial transportation infrastructure are not alone sufficient to ensure that India will realise its potential as a Eurasian economic power. Commercial corridors only emerge where requisite large investments in port and rail infrastructure are coupled with an industrial base anchored in manufacturing value chains— precisely the purpose of the present corridor. It can be argued that the corridor in question will increase the influence of India, which is an important symbol of the Western Bloc and the Non-Aligned Movement. It can be predicted that with this project, the geopolitical, geoeconomic and geostrategic importance and spheres of influence of the relevant states will increase. In such a case, it can be predicted that while global geopolitical competition will increase, there will also be an international improvement in geoeconomic terms. While there is little doubt that the geopolitical landscape in West Asia is changing rapidly, formidable challenges will have to be overcome if the multi-modal corridor linking India with Europe is to become a reality.
*Editor, Focus Global Reporter
