The India-Middle East-Europe Economic Corridor: Promises and Challenges
On paper, IMEC has impressive backing, with the potential to boost regional and global trade, and help institutionalise piece. In reality, without strong investment and an early resolution to the Israeli-Hamas war, the initiative’s challenges may prove too much.
The India-led G20 Summit in New Delhi in September set out a program for the the establishment of the India-Middle East-Europe Economic Corridor (IMEC). This ambitious initiative aims to bolster transportation and communication links between Europe and Asia.
Since the volatile Middle East will be the linchpin between Asia and Europe for this initiative, understanding regional IMEC implications, including its strategic impact on Egypt, is important. With many IMEC details remaining uncertain—especially the cost—the following analysis is preliminary. Additionally, the Israel-Hamas war has added further complexity to the initiative. While the war’s outcome is obviously unknown at the time of writing (late October 2023), it will nonetheless have immediate geopolitical implications for IMEC.
Currently, most trade between India and Europe is by maritime routes, transiting the Egyptian-controlled Suez Canal. Waterways are the cheapest and easiest way to transport large and bulk goods over long distances. The envisioned IMEC is comprised of a multi-modal transport corridor connecting India’s west coast with the UAE by sea, and a rail route crossing the Arabian Peninsula to the Israeli port of Haifa. From Haifa goods will be transported by sea again to Europe through the Greek port of Piraeus. Plans for the corridor also include pipelines for hydrogen produced in Saudi Arabia and the UAE, and telecommunication connections.
In entering this initiative, each country has its own strategic calculus. The US views IMEC through the lens of countering China’s growing presence in the Middle East as well as China’s massive infrastructure projects worldwide, through the Belt and Road Imitative (BRI). It also seeks to keep Gulf Cooperation Council states close to the West and to counter several Indian commitments to major transit projects with Iran, like the International North-South Transport Corridor and development of the Iranian Chabahar Port. The US also desires to promote normalisation of relations between Saudi Arabia and Israel by integrating Israel into the initiative. Abu Dhabi and Saudi Arabia, furthermore, view this trade corridor as a means to strengthen their networks in Europe and diversify their non-oil economic models.
For Israel, this strategic endeavour aligns with the Abraham Accords, a series of agreements normalising relations between Israel and four Arab states. With respect to the bilateral Israel and India relationship, ties have flourished since Prime Minister Narendra Modi assumed office in 2014. The latest acquisition of the Haifa Port by the Indian Adani Group demonstrates that Haifa Port is also a key component of IMEC. Currently, Haifa Bayport is operated by the Shanghai International Port Group, which competes with the older Haifa Port, now run by Adani Group. This acquisition helps re-establish the Haifa port as a key Middle Eastern transport hub, and provides Israel with a unique opportunity to establish a trade route connecting the Mediterranean and the Gulf, bypassing the Suez Canal. The initial phase of this ambitious project involves operating the existing UAE-Saudi Arabia-Amman rail network, while constructing an additional 300 kilometers of rail track to connect Amman, Jordan with the port of Haifa. Although Israel and Jordan signed a peace treaty in 1994, the relationship remains fraught, which is not surprising given Jordan’s large Palestinian population. As an example, protests erupted in Jordan after it signed a deal to import Israeli gas in 2016.