The Significance, Potential and Challenges of the India-Middle East-Europe Corridor

ByNadeem Ahmed Moonakal

The G20 Summit recently held in New Delhi is seen as a diplomatic victory for India, especially with a complete consensus on all the issues mentioned in the joint communique. The outcomes of the G20 Summit  have also received appreciation from some opposition leaders in India. At the summit, the leaders of the United States, India, Saudi Arabia, the UAE, France, Germany, Italy and the European Commission unveiled an ambitious connectivity project called the India-Middle East-Europe  Corridor (IMEC) that consists of  an eastern route connecting India to the Arabian Gulf via sea lanes and a northern route connecting Saudi Arabia to Europe through Jordan and Israel via railways and sea lanes. The primary objectives of the project include generating economic growth, connecting Asia and Europe  to commercial hubs, exporting clean energy, supporting trade and manufacturing and strengthening food security. 

This multi-modal connectivity corridor involves rail connectivity, shipping lines, high-speed data cables and energy pipelines between India, the UAE, Saudi Arabia, Jordan, Israel and Europe. The proposed connectivity corridor complements Saudi Arabia’s and the UAE’s efforts in becoming  major trade and transit routes.   

While IMEC has been touted as a counter to China’s Belt and Road Initiative (BRI) it is important to realize that the scale and potential of BRI is much larger and it  is way ahead of IMEC. Moreover, Saudi Arabia, the UAE and Israel are a part of BRI and enjoy close economic and technological interactions  with Beijing. Hence, Riyadh, Abu Dhabi and Tel Aviv do not really view  IMEC as a counter to BRI, rather they see it as an opportunity to enhance their regional connectivity and trade and position it as a part of their economic diversification strategies, with less emphasis on geopolitical competition. For the  United States,  the IMEC is  a project through which it could project  its  influence in the Middle East amid growing geopolitical competition in the region.  

Currently, most of India’s trade with the EU, which is one of  New Delhi’s top trading partners, happens through the Suez Canal, hence an alternative route is  important. The project leverages  existing trade routes, including the ports in Israel, Greece and India, to enhance connectivity. Importantly, a majority of the ports involved are government-owned with exceptions like Mundra port in India which is controlled by  the Adani Group, an Indian multinational conglomerate, and Greece’s Piraeus port which is controlled by the Chinese state-owned COSCO shipping. Also, the port of Haifa was acquired by the Adani Group earlier this year. 

One of IMEC’s primary objectives is to reduce the freight load on existing routes,  hence enhancing global and regional trade. While it would be undeniably challenging for a single country to match China’s economic outreach, a coalition of technologically and financially capable nations  could collectively provide alternatives that are vital for global supply chains. IMEC also reflects the growing focus on geoeconomics in a world grappling with disruptions, supply chain crises and the weaponization of trade and finance. IMEC would strengthen India’s strategic and economic ties with the Gulf,  the United States and Europe and complement minilaterals like I2U2 (India-Israel-US-UAE). 

However, IMEC’s  operational effectiveness is questionable given the numerous challenges it faces and  the logistical complexities, including loading and unloading costs, time spent  at each port and future transit tolls and fees, also remain to be seen. Insufficient infrastructure in certain regions presents another hurdle. IMEC is envisioned as a component of the G7-led Partnership for Global Infrastructure and Investment, relying heavily on private-sector investments, unlike China’s BRI. Moreover, generating consensus among several stakeholders as the project proceeds also poses challenges. Shippers will eventually only consider IMEC depending on the volume and cost-effectiveness of the route in comparison with the traditional Suez Canal route. Moreover, distance and route efficiency, transportation costs, insurance and risk management  are critical factors that shippers will consider. Furthermore, India’s past efforts in establishing connectivity corridors and initiatives have faced several challenges and delays. For example, the trilateral highway project connecting India to Myanmar and Thailand, proposed in 2002, the International North-South Transport Corridor, Chabahar port in Iran and the Bangladesh-Bhutan-Nepal-India (BBIN) initiative have seen significant delays and challenges because of financing issues. While INSTC has faced numerous obstacles related to sanctions, IMEC’s inclusion of US allies in the Middle East and its economic powerhouses differentiates it. The impact of IMEC on INSTC remains to be seen despite the Russian premier’s  optimism that it  will complement INSTC. Meanwhile, Turkish President Erdogan has announced plans for an alternative trade corridor. Erdogan insists “there can be no corridor without Turkey” and is exploring co-opting Iraq’s Development Road project for this alternative route.

In 2022, the  EU imported $46.22 billion worth of goods from Saudi Arabia and exported $32.81 billion to the country. Similarly, EU exports to the  UAE amounted to $37.38 billion, while imports from the UAE reached $14.7 billion. At the same time, India has also strengthened its economic partnerships with Saudi Arabia, the UAE, Jordan and Israel, further enhancing its role as a key trading partner in the region. Hence, there is existing impetus for the member countries to collectively ensure the operationalization of IMEC.  

The emergence of IMEC comes amid shifting global dynamics. The United States sees the project as part of its strategy to influence the evolving multipolar world order. India, Saudi Arabia and the UAE represent the emerging order and they hope this project accentuates their regional and global geopolitical positions. IMEC aligns with Washington’s strategy to prevent a coalition of states, including China, Russia and Iran, from dominating regional connectivity. However, Saudi Arabia and the UAE view IMEC as a means to enhance their infrastructural capabilities, promote a multipolar world and engage closely with their partners and allies within and beyond the region  to further enhances their global stature.  

IMEC represents a promising initiative that holds the potential to reshape the geoeconomic landscape of the Middle East. It offers opportunities for economic growth, connectivity and international cooperation. IMEC’s success will depend on the ability of participating nations to navigate the challenges and capitalize on the opportunities it presents. In an increasingly multipolar world, IMEC could serve as a symbol of international cooperation and economic development, provided it can overcome the aforesaid obstacles. 

 Opinions in this article reflect the writer’s point of view, not necessarily the view of Rasanah

Nadeem Ahmed Moonakal
Nadeem Ahmed Moonakal
Research Analyst