The India-Middle East-Europe Economic Corridor, dubbed IMEC, was recently announced on the sidelines of the G20 Summit in New Delhi. It is a part of the Partnership for Global Infrastructure Investment (PGII). PGII was first announced in June 2021 during the G7 summit in the United Kingdom.
United States President Joe Biden referred to the Build Back Better World (B3W) framework as a "values-driven, high-standard, and transparent infrastructure partnership led by major democracies." He said it was to help narrow the $40+ trillion USD infrastructure need in the developing world. That gap was been exacerbated by the COVID-19 pandemic. However, the B3W initiative was officially launched only in June 2022, during the G7 summit in Germany.
The IMEC would consist of two distinct corridors. One is an eastern corridor connecting India to the Gulf region. The other is a Northern Corridor connecting the Gulf region to Europe.
In his remarks at the launch of the IMEC, Indian PM Narendra Modi noted that "IMEC would help promote economic integration between India and Europe." A Memorandum of Understanding released by the White House on this occasion also describes the initiative. It says, "This corridor will secure regional supply chains, increase trade accessibility, improve trade facilitation, and support an increased emphasis on environmental, social, and government impacts."
What Ports Are Being Considered?
The signatories to the IMEC include India, the US, Saudi Arabia, United Arab Emirates, the European Union, Italy, France, and Germany. However, as of now, its routes are still on the drawing board and multiple options are being considered.
In India, ports like Mundra (Gujarat), Kandla (Gujarat), and Jawaharlal Nehru Port Trust (Navi Mumbai) are under consideration. Meanwhile, in the UAE, Fujairah, Jebel Ali, and Abu Dhabi ports are on the list. Dammam and Ras Al Khair ports in Saudi Arabia are also listed for consideration.
In Israel, the port of Haifa is being considered, although Israel is not currently an IMEC member. However, both the Mundra port in India and the Haifa port in Israel are controlled by India's Adani Group. Meanwhile, Europe is thinking about adding the port of Piraeus in Greece.
First, this is a new initiative and involves big players like India and the United States. The fact that many governments in the Middle East and Europe, besides the European Union are also on board suggests that IMEC will receive government support at all ends. This is a good sign since such massive projects would not be possible without it.
Second, as the triumph of the recent G20 Summit in New Delhi demonstrates, India has been successful in building an international consensus when it comes to issues of global development. The IMEC is another step in that direction.
Third, currently, all trade between India and Europe takes place via the Suez Canal. However, once the IMEC becomes operational, it will definitely facilitate the speed of transportation.
What's There For Japan?
Japan has what is known as the Free and Open Indo-Pacific (FOIP) initiative and also the "Partnership for Quality Initiative." These could gel well with the IMEC. Japan has already been investing in high-quality infrastructure development, especially in Southeast Asia.
In the future, Japan could also join IMEC. As it is a country dependent on external trade, joining the IMEC would be in its long-term interest. This could, for example, benefit Japanese automakers that export cars to Europe from plants in Southeast Asia.
Already there are many new and exciting connectivity projects that are being envisioned. With global warming and melting ice, Russia and other countries may start using the Arctic route.
In addition, as the G7 countries have announced a policy of "de-risking" from China at the 2023 G7 Hiroshima Summit, initiatives like the IMEC will become the order of the day.
However, there are many challenges before this initiative shows results.
For one, some countries that have joined the IMEC are also part of China's Belt and Road Initiative (BRI). Saudi Arabia, the United Arab Emirates, and Italy are among them. (However, Italy has expressed its desire to walk out of the BRI in times to come.)
These countries would be keen not to harm their growing economic ties with the world's second-biggest economy: China. In fact, Saudi Arabia and the UAE have been invited to join the BRI-related development group at this year's BRICS Summit in South Africa. Naturally, China is a core member.
In addition, one of the landing ports that is being considered in Europe is the Piraeus port in Greece. That port is controlled by the state-owned China COSCO Shipping Corporation Ltd.
Then there is the fact that the countries involved in the IMEC are in different stages of development. In addition, some sections in the proposed project are yet to be completed and this could take time. Then, there are geopolitical issues, of course.
At present the relations between Saudi Arabia and Israel are pretty cordial. However, that has not been the case in the past. The political situation in the region could impact the IMEC if the port of Haifa in Israel is part of it. In addition, once the IMEC takes off, countries like Egypt along the Suez Canal stand to lose a lot of revenue. Therefore, we will have to see how this plays out.
The Road Ahead
It seems unlikely at this stage that the IMEC will be a rival to the China-led BRI. The BRI is much bigger in scope and it started 10 years earlier than the IMEC. In addition, the BRI involves more than 150 countries and more than 30 international organizations.
However, as things stand now, the Chinese economy seems to be losing steam and this will surely impact the BRI as well. Moreover, there are already concerns in many BRI countries that they are caught in a debt trap. For this reason, there could be many countries walking out of the BRI in times to come.
All said and done, there is no doubt that the IMEC is an idea whose time has come.
- Prime Minister Narendra Modi Makes a State Visit to Washington: Is It the Beginning of a New Era?
- [Tokyo Outlook] India, a First Look at Where It's Heading
- EDITORIAL | G20 Summit’s Failure to Condemn Russian Aggression a Shame
Author: Dr Rupakjyoti Borah
Dr Rupakjyoti Borah is a Senior Research Fellow with the Japan Forum. The views expressed here are personal.