10.10.2023 Author: Salman Rafi Sheikh

The Future of the India-Middle East-Europe Economic Corridor

The Future of the India-Middle East-Europe Economic Corridor

The India-Middle East-Europe Economic Corridor (IMEC) was hailed as a major geopolitical breakthrough immediately after it was announced at the 2023 G20 summit held in India in the second week of September. The IMEC is a trade corridor that will connect India with Europe via sea and rail links passing through the UAE, Saudi Arabia, Jordan, and Israel. Most political pundits from around the world saw this development as an “obvious” alternative to China’s Belt & Road Initiative (BRI). A logical conclusion is that Washington’s support for this idea stems from its (hitherto unsuccessful) attempts at building a global coalition against China and protecting the US-led global economic and financial order. All of this sounds rhetorically fancy, but ever since the project’s announcement, some of the reality has sunk in, leading people to raise more questions about this project’s trade and geopolitical feasibility than its potential benefits.

Let’s see what the IMEC memorandum of understanding itself tells us about the nature of this corridor. The memorandum “sets forth political commitments of the Participants and does not create rights or obligations under international law”. Parties will start meeting in the near future to deliberate on the details in the future. And, that is precisely where complex geopolitics will come into play.

For instance, keeping all other things constant, for this corridor to be really successful and manageable, normalization between Saudi Arabia and Israel might be necessary, not only in a legal sense but in a geopolitical sense as well. Legally, harmonizing regulatory frameworks represents a formidable challenge for the IMEC. The corridor involves multiple countries with differing legal systems, policies, transportation protocols, and regulations. Streamlining and unifying these frameworks is essential to facilitate trade, investment, and economic cooperation. A pre-requisite for this harmonization is for the member countries to have legal relations first and foremost. Thus far, Washington’s attempts at making Saudi Arabia recognise Israel have met a very strong bargaining from Riyadh in terms of extracting a NATO-like security deal between the US and Saudi Arabia.

To ensure that the IMEC has a future, Washington needs all of its participants together as a legal entity. Doing that may run into trouble if the Saudi-Israel normalization process trips. This is especially because Washington has been trying to push Saudi to limit its ties with China in exchange for Washington’s defence support. Working out a deal because of these contentions has been difficult. While a deal may still happen, there is little denying that this deal is a geopolitical pre-requisite for the IMEC embryo to be born at all.

Secondly – and most importantly – even though Washington’s primary motivation for this project is to build a corridor to counter China, it is entirely conceivable that Beijing might take advantage of this project to further its own interests. So far, China has welcomed the project, saying that connectivity is healthy so long it is not used as a “geopolitical tool”.

But beyond that, a lot of the infrastructure that will need to be built for the IMEC to become operational will still have Chinese involvement. For instance, Saudi Arabia and the UAE are two key IMEC countries, and China has a very large presence in both of them.

For instance, China is one of the largest players in Saudi Arabia’s railway system, which is a key component of the IMEC project. Saudi Arabia is in advance-level talks with China to build a very significant Land Bridge Rail project in Saudi Arabia to link the country’s eastern and western parts. This is in addition to the successful completion of another key Saudi rail project by the Chinese companies.

As far as the UAE is concerned, its port management industry is deeply tied to China. Now, the IMEC involves the use of ports for the trade corridor to work at all. Who is managing and running these ports as key aspects of global supply chains? The UAE’s state-owned DP World is one of the world’s largest port operators. In May 2023, DP World signed agreements with China’s Ningbo-Zhoushan Port and Zhejiang Seaport to cooperate on automobile industry chain services and logistics. The purpose of this collaboration is to create an express logistics channel service to the Middle East and North Africa and enhance trade between China for trading, logistics and cross-border e-commerce companies. This collaboration is not limited or new. Over 6,000 Chinese companies have set up operations in the Emirates in the last few years.

For IMEC to rival BRI and for Washington to marginalise China’s presence in the Middle East and Europe, they will have to dismantle the Chinese presence. Can IMEC pull this off at all?

We don’t know how much funding will be available for IMEC at all. As opposed to BRI, where Chinese money is involved across all countries, IMEC will require each member country to build its own infrastructure and spend its own money. While countries may still be able to invest in these projects, whether will they be able to do that in a coordinated and timely manner remains to be seen. As mentioned above, a lot of this actually depends upon some key legal aspects to work out first.

More importantly, even if everything works out for the IMEC to function, it will be naïve to expect countries like Saudi Arabia and the UAE to simply abandon their Chines ties to serve Washington’s agenda. China’s trade with the UAE is all set to cross the US$200 billion benchmark in the near future, and China is already one of the largest buyers of Saudi oil. This is in addition to China’s role in developing Saudi Arabia’s tourism industry. Now that Washington is courting these countries against China, not only will China pursue its ties with these countries even more deeply, but China will also benefit from the fact that the IMEC excludes many important regional countries, e.g., Turkey and Egypt. This exclusion is an opportunity in itself for the Chain to expand on its existing strengths in the region.

The IMEC, in this sense, is far from an automatic formula that can work wonders and push China out of the way for Washington to step back in. For now, the IMEC is a fancy tale that has a real giant to tackle and none of the proponents know how that will happen, if it can happen at all.


Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”.

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