Map representing India-Middle East-Europe Economic Corridor
The India-Middle East-Europe Economic Corridor’s (IMEC) advent on the sidelines of the G20 Summit 2023 held in New Delhi is the brainchild of India, the US, the United Arab Emirates (UAE), Saudi Arabia, Italy, France, Germany and the European Commission. IMEC project focuses on several verticals of connectivity, such as transport connectivity, railways links, regulatory landscape, digital connectivity, telecommunication networks, fostering digital payment ecosystem, interconnected grids of renewable energy, clean hydrogen pipelines, supply chain resilience, etc.
Emerging from the 2020 Abraham Accords and I2U2 grouping, the focus areas included strategic transport links. The project is an interplay of a plausible establishment of diplomatic ties between Riyadh and Tel Aviv and re-entry of the US in the region. The Israeli port of Haifa and to southern ports in Europe like Naples and Marseilles are indispensable part of this proffered corridor. But since the unprecedented terror attacks carried out by Hamas in Israel on October 7, 2023 has compelled the ambitious plan to go on a hiatus. However, the confidence over the project seems to be resolute. The US President, Joe Biden has also called the signing of the memorandum of understanding as real big deal as it is an all encompassing and multifaceted connectivity project.
Geo-political and geo-economic aspects are the lynchpins for the IMEC. The corridor essays itself as a fulcrum as it is based on the conflict-resolution process and manages differences among the major West Asian countries. The optimistic trajectory from the Arab quarters were visible as Egypt, the UAE, Saudi Arabia and Bahrain let bygones be bygones with Qatar and Turkey’s relations with Saudi Arabia and the UAE were back on track, this further blossomed the opportunity between Israel and the UAE and the revamp of diplomatic ties between Iran and Saudi Arabia.
However, the domino effect since 7th October has given a temporary yet a major setback to these building blocks in the West Asian region. Israel is facing the world’s ire for its massive retaliatory attack on Gaza. This has also irked the Arab world. Fissures are emerging as Israel is fighting on several fronts simultaneously and the inability of the Biden administration to push for a ceasefire have also led incendiary remarks from Riyadh and Abu Dhabi. The anti-US sentiments in the region are certainly leading to concerns that the war could drag on. Now, Iran and Israel are at loggerheads and engaged in intense war, the situation is abysmal and the situation is not simmering down anytime soon.
Regional dimensions have further exacerbated the situation as Houthi militia in Yemen have created an obstacle for the global trade as the sip plover effect are evident from Arabian Sea to the Red Sea and towards Suez Canal.
The Red Sea route accounts for approximately 30 percent of container volumes and 12 percent of the global trade. The detours have added burdens on the longer travel time and additional astronomical costs. It has been reported that longer journey time curtails global shipping capacity by 20 percent which will further lead to higher prices and put adverse effect on supply chains.
This is immensely worrisome for India as its two significant markets, Europe and the US pass through this channel. India’s chances to become an integral part of global value chains is set to boost as improved infrastructure would decrease logistical costs, and the manufacturing sector would be recipient of production-linked incentives (PLI) programmes.
India has leveraged benefits as a production and supply hub due to its strategic location along vital trade routes linking Far East and Southeast Asia with Europe, Africa and West Asia. This is further emboldened with its staggering consumer market, immense workforce and proximity to the critical Asian manufacturing centres.
As India’s trade links are expanding, it is in India’s strategic interest to promote IMEC as an alternate connectivity door that will reduce the dependency on the established trade routes. Notably, IMEC’s commencement would break the grapevine rhetorics of India been seen as a protectionist. Popularly discussed when India exited Regional Comprehensive Economic Partnership (RCEP). Since then, India has signed numerous trade agreements, such as with the UAE, and the recent European Free Trade Association. The IMEC template would provide Indian economy to align with global value chain. IMEC has paved path for India’s critical entry linkage with GCC nations.
Geo-political commentators have popularly pit IMEC against China-led BRI. BRI has become infamous for its debt trap diplomacy as its instrumental strategy to expand Beijing’s objectives by hoodwinking local markets and accessing resources. BRI is born from China’s shift to a ‘consumption-led growth’ approach. Most cited examples are Srilanka’s Hambantota port, several African countries gasping from the vice grip of China, the China-Pakistan Economic Corridor are seen analogous to ‘market imperialism’.
Juxtaposing, IMEC is viewed as a project based on mutual respect and partnership which synergises with existing harmonies. It is an avenue to cater the needs of 6 billion people which will include a plurilateral replicable framework for both the developing world and developed world. The testament towards a democratise connectivity route is evident as notwithstanding the war in Gaza and its fall-out in West Asia, India and the UAE have begun work on the first stage of the pathbreaking IMEC with the first senior official meeting expected to take place by May 15, 2024.
One fear that such opulent projects grapples with is significant barriers as theses long term projects frequently encounter political instability and high corruption that are common in several nations. Hopefully, IMEC does not repeat the BRI history to unable to discern the ground level issues. They require several diverse actors to be on the same page to culminate, which is a task in itself for a stable risk-adjusted project.
There are four imperative issues that IMEC needs to take into account: the enhanced cooperation while maintaining and coordinating continuity between participant countries; second issue pertains to a unified policy approach where regional trade policies should converge with trade facilitation and transport cooperation; thirdly, the crucial need for inclusivity and climate change considerations; and lastly, expediting and fostering digital trade to overcome supply chain disruptions, and promote cross-border paperless, resilient, and sustainable trade.
However, as of the current unfolding of the geo-political situation in West Asia, India needs to keep its finger crossed. The active cooperation between Israel, Saudi Arabia, Jordan and the UAE as envisaged for the corridor is not conducive at the moment. Also, Turkiye and Egypt are also miffed as the former is bypassed from the project and the latter views it as an unnecessary competitor to Suez Canal monopoly. With such embroiling concerns within the West Asia, the undivided attention required to realise this ambitious corridor is lost at the moment.
The inter-continental transit project linking Asia and Europe is futuristic and the array of challenges it is facing are convoluting, but are on ground problems. However, the it has leveraged the contemporary geo-political and geo-economical paradigm. Yet, the present unraveling of the West Asian dilemma have quickly altered the contours of the plan. The Arab world’s resentment is real and this may have a deterring effect on the IMEC project which requires active cooperation with Israel.
Despite this desolation, it is important to note that the connectivity project is a long-term project. Several situations may come and go, so the silver lining in the shifting sands of West Asia is that it will provide some time to concoct to continue. The potential of IMEC is strong, but the challenges it confronts always tests the collaborative spirits across multiple states with varying agendas. IMEC appreciates the heterogeneities to attune for a single goal and eliminate any monopoly. The aim is to accelerate global connectivity and trade facilitation. It is coupled with overwhelming geo-political conditions, only time can unveil the political and economic willingness.
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