The India-Middle East-Europe Economic Corridor will allow Europe to establish its own influence in the Arabian Gulf, thwarting any plans for solely Chinese influence. Euronews Business will analyze this economic corridor and the challenges it poses.
At the G20 Leaders Summit in September 2023, Narendra Modi, Prime Minister of India, announced India-Middle East-Europe Economic Corridor (IMEC) that will run from India to Europe, but what will this project mean? When will it be launched? And what perspectives and challenges will it bring to Europe?
IMEC will work with countries such as Saudi Arabia, the United Arab Emirates (UAE), Italy, Germany and France, along with the EU and the USto promote the project.
China did something similar with its various trade route mega-projects, such as the Regional Comprehensive Economic Corridor (RCEP) and the Belt and Road Initiative (BRI). The country is also building large rail and road networks to further integrate the region into trade.
Meanwhile, India, a growing global economy – which recently overtook Britain as the world’s fifth largest economy – is now trying to compete with this reality, and this geopolitical game represents an opportunity for Europe.
What will IMEC consist of?
The IMEC project is part of the wider Partnership for Global Infrastructure and Investment (PGII), which was launched in June 2022, and aims to meet the needs of low- and middle-income countries (LMICs).
El IMEC, of 4,800 km, it will consist of a railway, ship-railway network and other transport routes. It will be divided into two parts: the Eastern Corridor, which will connect the Arabian Gulf with India, and the Northern Corridor, which will connect the Gulf with Europe.
Famous ports such as Fujairah, Jebel Ali and Abu Dhabi in the UAE, Haifa in Israel, Mundra and Kandla in India, along with ports in Greece (Piraeus), France (Marseille) and Italy (Messina) will be connected.
To take into account contemporary problems and policy issues, special emphasis will be placed on increasing transport efficiency, reducing greenhouse gas emissions and creating employment.
Opportunities for Europe
The Middle East and the Gulf region have become the center of the great power game. China’s influence is the strongest and growing day by day in the Middle East, a region that is not only full of oil and gas reserves, but also contains important key points that govern the world economy.
As such, IMEC will allow Europe to establish its own influence in the Gulf and prevent any exclusively Chinese influence plan. It is also an opportunity for Europe to distance itself from Beijing and Moscow.
IMEC also has the potential to reduce the cost of transport by 30% – 40% from European ports to connected regions, as Ursula Von der Leyen said in her speech at the September 2023 PGII event in Delhi.
“It will be the most direct connection to date between India, the Arabian Gulf and Europe: with a rail link that will make trade between India and Europe 40% faster; with a clean electricity cable and hydrogen gas pipeline to promote clean energy trade between Asia, the Middle East and Europe, and with a high-speed data cable to connect some of the world’s most innovative digital ecosystems and create business opportunities across the entire journey,” he said.
There are a total of 8 IMEC signatories representing 40% of the world’s population and more than half of the world’s economy. This represents a huge opportunity for Europe to become more integrated in the future of global economic development.
Obstacles that Europe must overcome
He biggest obstacle for IMEC is the war in the Middle East, as it is expected to cause significant delays to the project by pouring cold water on the progress made so far in thawing diplomatic relations between Israel and Saudi Arabia. Navigating these complex geopolitical uncertainties will be difficult for Europe.
Furthermore, there is still uncertainty regarding the timing. Recently, participants did not convene a mandatory meeting after 60 days to implement the “action plan” for IMEC, as agreed at the original G20 meeting. There are also not many details about the financing: Expansion of port and rail connections, etc. will require billions of euros, and estimates suggest it could cost up to $8 billion (7.4 billion euros).
One of the biggest challenges for Europe will be to ensure that technology, money and other Infrastructures established under the IMEC umbrella are not used to promote or benefit the influence of Russia and China.
Since the Ukraine war, Russia’s role in the Middle East has grown significantly. The United Arab Emirates exported computer components and electronic and communication equipment worth $233 million to Russia in the first 5 months of 2023. This is a huge increase compared to $2 million in the same period of 2022. On the other hand, China has been the largest buyer of oil and gas in the Gulf Cooperation Council (GCC).
IMEC’s geopolitics are complicated, as both Saudi Arabia and the United Arab Emirates – the countries whose ports will play a major role in connectivity and trade enhancement – have dialogue partner status in the Shanghai Cooperation Organization (SCO), and the former is likely will become part of the rising BRICS economic bloc (led by China), while the latter has already accepted the invitation.
As the world moves towards ‘minilateralism’ – that is, small groups of countries working together to solve collective issues or pursue goals – IMEC enables Europe to increase its trade and improve their access to global markets.