This article examines the need for the IMEC amidst growing geopolitical tensions in the Middle East and India and Europe’s deteriorating relationships with China. It then analyzes the geopolitical and geoeconomic significance of this corridor, before looking at the potential drawbacks of this ambitious project.
Background, elements, and costs:
The potential impact of the IMEC on the global economy has generated much interest and scrutiny; the signatories contribute almost half the global GDP and make up 40% of the world’s population. Additionally, the corridor will connect Asia to Europe without going through the Suez Canal. The Suez Canal, which has been used for more than a hundred years for this connectivity, is fraught with pitfalls. Blockages in the Canal could greatly hamper world trade, as was seen in 2021, while geopolitical tensions in the region, such as attacks by the Houthis, could threaten the security of the ships passing through it. In such instances where trade through the Suez Canal is disrupted, ships are forced to reroute around the Cape of Good Hope, which adds 3500 nautical miles to the journey and greatly increases the costs of transportation. The IMEC could serve as an alternative route in such instances.
The IMEC- founded by India, the USA, Saudi Arabia, the UAE, Israel, the EU, France, Germany, and Italy- is a proposed economic corridor that would connect India to the European market. The first leg of the IMEC would connect the Indian west coast to the Middle East through a shipping route to the UAE. The IMEC would then traverse the Middle East via railway networks to the Haifa port in Israel, from where goods would be loaded onto ships for the last leg of the journey through the Mediterranean Sea till the Greek coast.
Apart from facilitating the transport of goods, the IMEC aims to also foster global digital connectivity through a channel of undersea data cables that would link Europe to Asia and reduce the present Chinese dominance over these cables. And, in a world increasingly threatened by climate change, where transitioning to green energy is the need of the hour, the IMEC would also involve the creation of long-distance pipelines to transport hydrogen from the Middle East to Europe and India.
While the IMEC is certainly an ambitious project, its geopolitical aims need to be studied to examine its viability, and the fact that it is susceptible to numerous drawbacks is something that cannot be ignored.
Analysis:
Apart from reducing the existing journey time by 40% and costs by 30% to transport goods between India and Europe through the Suez Canal, the IMEC could also offer numerous geopolitical gains to its signatories. And it is best to examine these potential gains through the lenses of these potential beneficiaries.
- India:
The ancient Silk Route that once connected India to Europe came to an end with the partition of India in 1947. And while the IMEC certainly does not provide a purely overground trade route linking India to Europe, it does provide a route where India does not need to rely on Pakistan or the security of the Suez Canal for the trade of its goods. Additionally, by increasing its trade with Europe, India can present itself as an alternative economic destination to China, facilitating increased foreign investment into the nation.
While India continues to maintain ties with Iran and invests in the Chabahar port so that it can trade with Central Asia and Europe, the threat of US sanctions and Europe’s strained relations with Russia could hamper the potential benefits that might arise out of this. In this situation, the IMEC could serve as an alternate trade route and ensure India is not indebted to either Iran or the USA to carry out its trade with Europe and Central Asia.
With the IMEC, India also aims to counter Chinese influence (through the Gwadar Port in Pakistan) in the Gulf of Oman. And by improving the integration of value chains, through the IMEC, India will also look to ‘intercept a greater share of global value chains from China and increase their country’s manufacturing potential.’
India’s role in the creation of the IMEC could further enhance India’s image as a potential leader of the Global South and lend it greater credibility and prestige on the global stage.
In an increasingly climate conscious world, the Middle East, by creating partnerships with both China and the West, is attempting to position itself as a global economic hub, rather than an inward looking region that relies on its oil for all its needs. Unlike India that aims to counter China’s BRI through the IMEC, the UAE and Saudi Arabia continue to be participants in the BRI and aim to foster greater connectivity with East Asia and Western nations.
As producers of green hydrogen, the UAE and Saudi Arabia will look to continue their dominance of the global energy market in a post-oil world, and the IMEC pipelines to Europe and India would ensure these Gulf states’ indispensability.
Apart from the benefit of having an alternative to the Suez Canal, Europe’s participation in the IMEC could help it de-risk from China. Currently 20.5% of Europe’s imports are from China, and ‘this share increases to more than 90 per cent for components vital for the green transition, from solar panels to rare earths.’ The IMEC will provide Europe opportunities to diversify so that it’s not dependent on one supplier. Additionally, easier access to India and the Middle East could also provide alternate destinations to export its goods, so that it doesn’t suffer in the event of a trade war with China.
The IMEC’s energy and electricity connectivity could also help Europe as it attempts to wean off its reliance on Russian fossil fuels following the invasion in Ukraine. And the Gulf states’ green hydrogen production potential could increase and diversify the supply of green energy into Europe.
And partnering with India and the Middle East, could strengthen Europe’s relations with other nations in the Global South, providing newer markets to venture and expand into.
American commitment to the IMEC is more about strengthening its influence in a region where China has been gradually making inroads for a number of years. America has close ties with the Gulf nations and Israel, and it has frequently had to walk a tightrope as it balanced these interests. But the IMEC and the Abraham Accords could strengthen economic integration in the region and get states, who have frequently not seen eye-to-eye, to cooperate with each other, ensuring peace and the stability of American interests in the region. American participation in the IMEC is also a sign of the USA’s deepening ties with India, as it tries to balance Chinese hegemony in Asia. And, more importantly, it provides America with more diverse markets to venture into, and more nations to form partnerships with, as it accepts the reality of an increasingly multipolar world.
Potential Drawbacks:
While promising, the IMEC is also characterized by a number of drawbacks that need to be addressed if it is to serve as a viable alternative to the BRI and Suez Canal.
The greatest hindrance is the existing hostilities between the nations in the Middle East. The conflict in Gaza has greatly affected the advancement of the project, and there are bound to be problems in the future between Riyadh and Israel until the Palestinian question is adequately addressed. Long term viability of the corridor would depend on enduring peace and stability in a region that has historically been fraught with tensions.
Additionally, Saudi Arabia and Iran have longstanding tensions as they vie with each other for supremacy over the Middle East. The eastern leg of the IMEC would connect the Indian west coast with a port in the UAE (either Fujairah or Jebel Ali). And in the event of a conflict, this could render the port susceptible to attacks and blockades from Tehran due to Iran’s proximity with the UAE.
Another issue is the rivalry between the UAE and Saudi Arabia as they compete to become the economic hub in the Gulf. Such a rivalry could affect cross border trade and affect the functioning of the IMEC, which greatly relies on the cooperation of its signatories.
Jordan, which is not a signatory, poses yet another issue. To connect the UAE and Saudi Arabia to Israel, Jordan will have to be enticed into investing in a western railway line that connects Amman and Israel.
If India, Europe, and the US are looking at the IMEC as a way of reducing Chinese dominance in the Middle East, they must keep their hopes in check. Both Saudi Arabia and the UAE are BRI participants and show no signs of scaling down their ties with China.
While de-risking from China and partnering with other nations like India is the way forward for Europe, there is still a long way to go. India’s manufacturing capacity is nowhere near China’s level, and a lot of raw materials used to manufacture finished Indian products are actually imported from China. So, in the event of a conflict, China could still directly and indirectly have a say in the trade volumes of both India and Europe.
The final port in Piraeus, Greece, is owned by the China Ocean Shipping Company Group. Such facts bring into question the IMEC’s true independence from China and highlights key vulnerabilities that need to be addressed. Additional ports in other European nations will have to be incorporated into the IMEC to minimize Chinese influence in the corridor and increase resilience.
The success of the IMEC will depend on careful planning and coordination due to the various modes of transport involved in the different legs of the journey, thus any inefficiency could lead to severe delays and costs.
And finally, financing the IMEC would require substantial investments from the signatories and other private entities. Estimates suggest each route of the corridor could cost anywhere between $3 and $8 billion to construct.
Conclusion:
The IMEC- not just as a trade route but also as a corridor for green hydrogen- could be a real game changer if implemented properly. Potentially providing an alternative to China’s BRI and the Suez Canal, the IMEC could increase global trade resilience, helping nations and companies absorb and adapt to any global challenges that might affect trade. While it does hold certain geopolitical and geoeconomic advantages for its signatories, the IMEC is also susceptible to numerous pitfalls that need to be quickly addressed before operations get underway. But despite these challenges, the IMEC provides a great opportunity to foster economic integration between India, the Middle East, and Europe. And more importantly, vested economic interests of the participants could lead to de-escalation of hostilities in the Middle East.