The IMEC Way

On the sidelines of G20 leaders of India, USA, Saudi Arabia, UAE, France, Italy, Germany and EU announced a new maritime and overland connectivity corridor between Asia and Europe i.e. India, Middle East Europe Economic Corridor (IMEC). Recently, someone asked me why it is not christened as IWAEC since we refer to the region as West Asia. Well since the West calls the region as Middle East and they led the initiative following President Biden' s 'Build Back Better' hence the nomenclature IMEC that has raised many an eyebrow and good amount of commentary and analysis has ensued even as only sketchy details were available. Some experts called it a still born proposal. But they forget that everything begins with an idea and a concept whose feasibility is duly analyzed and action plan is advanced to execute it keeping in mind the intra-member geopolitical dynamic, technical aspects, economic viability and financing mechanisms and above all eventual geo economic and financial viability lest it becomes a white elephant . However, let us not forget that historically the silk, spice, land-maritime routes did follow this trail thousands of years ago and connected the three continents of Asia, Africa and Europe .

Leaders have announced the IMEC initiative and Working Groups will design and discuss the viability from all angles. For not being included at this juncture, the Turkish President, also present at the G20 Summit and a NATO member, felt miffed and claimed that most viable trade route has to pass through Turkey which connects Eurasia underscoring his own geo strategic location. He announced his own initiative with Iraq and UAE whose viability is questionable due to Turkey’s own financial situation, Kurdish issues and Iraqi instability. How far can UAE bailout remains to be seen unless the proposed route somehow plugs into the IMEC.

With its North and Eastern corridors encompassing maritime connectivity, land and railway travel across the Middle East including Jordan and Israel and then on from the Haifa Port to Europe has many functional and important and complementary arteries. India and UAE, Saudi Arabia and other GCC countries already have a robust transit trade and shipping routes being the closest extended neighbourhood and historic connect. Both UAE and Saudi Arabia are India’s strategic and 3rd and 4th trading partners respectively. EU is also a major Indian trading and investment relationship, while USA is the largest and global comprehensive strategic partner of India. India’s relations with the Hashemite Kingdom of Jordan have been enriched and strengthened in the recent past including in the Red Sea domain. Many big Indian companies are benefiting from Jordan’s web of preferential trade agreements with major markets. It will be good for India to also enter a comprehensive FTA /CEPA with the Hashemite Kingdom to not only benefit from market access but to be able to cater to reconstruction in Syria and Iraq. Israel is India’s another major security, defence, agriculture and technology partner including in the I2U2 (India, Israel and USA, UAE) where the IMEC was first conceived and presented at the IUSU (India USA, Saudi Arabia and USA) meet in Riyadh. More importantly in the context of onward maritime connectivity of the IMEC to Europe -the port of Haifa is managed by an Indian company.

Hence, the proposed corridor makes ample geo-economic sense for India which will create a friendship route with focus on digital and energy connectivity apart from creating and harnessing more trade and other potential opportunities for the mutual benefit. For example, India, possessing the second largest railway network in the world, has tremendous expertise in collaborating for the railway and overland logistical connectivity in the Middle Eastern section.

Often the motivations of the countries involved become a point of debate and deliberation which are also important considerations. In my view there are geo-political, geo-economic and geo-strategic reasons or a combination thereof for each of the current and prospective participants.

Middle East or West Asia has been going through a churn with currents and cross currents of rapprochement and revisionism despite the presence of several hotspots and geopolitical and geo religious contestations. But the fact that recent efforts to deescalate tensions and find some modus vivendi and hopefully some collective security have become common in view of the emergence of alternate global power centers pursuant to seemingly US withdrawal from the region in favour of the strategic Indo-Pacific geography and the Eurasian war. Hence, countries like Saudi Arabia and UAE are following policies of regional accommodation with Iran and Turkey and even Israel as well as closer cooperation within GCC. More importantly they have evolved a new ‘Act East’ policy in which Asian countries like their biggest hydrocarbon markets in China, India, Japan and South Korea have acquired a renewed significance. No wonder seventeen countries from the region have also subscribed to the pet project even if faltering a decade old Belt and Road Initiative (BRI) by President Xi Jinping, whose visits to Riyadh and the region opened new vistas of cooperation including overt alignment of Saudi ‘Vision 2030’ with Chinese BRI.

But the regional majors have also resorted to a policy of strategic autonomy and zero problem policy where their own national interests become the driving force. Hence the quest of Gulf majors to join China centric regional and sub regional organizations like BRICS ++++ and Shanghai Cooperation Organisation (SCO) while remaining strong within the OPEC+ with Russia. They of course continue to have closer partnership with US and the West which have traditionally been their security guarantors. Hedging might yield better outcomes especially with the West. Hence their interest in IMEC may be perceived as an alternate trade and connectivity outlet and not in opposition to BRI. It is not seen in ‘either or terms’ by the regional countries. For that matter India also has been a strong advocate and part of the INSTC (International North south Transport) corridor in which the Iranian port of Chabahar is also being plugged in. More the merrier until you are forced to choose one in which case you do have a choice. In any case the GCC countries have been planning for the grandiose railway project for quite some time which could become an integral part of the IMEC and can get a quick boost. Likewise, there was nearly 100 years old Hejaz railway project from Israeli ports through Jordan which could be upgraded to link up.

Saudi minister al-Falih rightly observed "People talk about the silk route, the spice route of India through the Arabian Peninsula, but this is going to be more significant and relevant because it's going to be about new energy, data, connectivity, human resources, aviation routes and it's about aligning countries that are of the same mind and same vision".

Finance, that too the assured funding is the key to success of any project gigantic or otherwise. As per some reports Saudi Crown prince and Prime Minister Mohammed bin Salman (MBS) has committed $20 bn for the project. In any case although US not being a direct beneficiary may not fund but then the Multilateral Development Banks (MDBs) might pitch in with its support. However, the larger share will have to be borne by the major countries including India, Saudi Arabia and UAE. As the working groups meet to evolve the concept, design and funding modalities as well as viability of the business plan, more details will emerge. Now, political will is there which is very important. Of course, with several options becoming available businesses will choose the most viable and profitable route for them. IMEC is expected to reduce the freight cost and time by 40%.

PM Modi and US President Joe Biden co-chaired the special event on Partnership for Global Infrastructure and Investment (PGII) and India-Middle East-Europe Economic Corridor (IMEC) on the sidelines of the G20 Summit in New Delhi. As far as the biggest player of all the USA is concerned, the IMEC is a strategic option couched in President Biden’s grandiose ‘Build Back Better’ plan to geopolitically counter the Chinese BRI which has been beset by lack of transparency, debt diplomacy and increasing stress financial and otherwise. IMEC could emerge as the jewel in his 3B strategy. Moreover, this is also an American effort to assure the Saudis and others that US stays invested in the security and stability of the region while promoting Saudi-Israel rapprochement, as an extension of the Abraham Accords, for which Riyadh has its own conditions from ensuring its fool proof security, nuclear option to just and comprehensive solution to the Palestine issue as reiterated by the Saudi FM at the UNGA. If Bibi plays his cards well normalization with Riyadh could be faster than expected.

So, if all goes well this could be a win -win for all as PM Modi hailed “that the India-Middle East-Europe corridor will become a basis of world trade for the coming centuries and history will remember that it was envisioned in India.”

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