Rhea Kapoor
30 Sept 2023
Aspiring Analysts #2
India Middle East Europe Economic Corridor- Silk Route 2.O?
-Rhea Kapoor
The G20 summit 2023 in New Delhi was one of the most successful international meetings conducted, considering the fact that India managed to include the African union as the 21st member, something which hasn’t been done since the past 17 meetings. This meeting strengthened India’s position both economically and politically. Another striking conclusion of this meeting was the introduction of the India-Middle East Europe Economic Corridor (IMEEEC). The corridor will comprise India, Saudi Arabia, UAE, Jordan, Israel and the European Union. The project will also be backed by the United States of America. This project will facilitate trade, making it easier and more efficient and reducing transit time.
The Indian Middle East Europe Economic Corridor (IMEEEC) aims to establish an economic integration and direct connection between India, the gulf and Europe. IMEEEC is a multinational rail and shipping project which is divided into three sections- firstly, India will be connected to The Arabian Gulf through a ship, the middle east will be connected to Israel through a railway network, then a ship transit will connect Israel to northern Europe. IMEEEC is a collaboration between those strategic locations which are responsible for most of the trade that takes place throughout the world. This economic corridor will improve digital connectivity, boost trade and facilitate the movement of energy resources. Looking at it from an economic perspective, this corridor won’t just boost the economic growth but also establish the IMEE region as a hub for economic activity instead of a region that boasts conflicts and crisis. The countries involved in this project are also the nations dealing with low-income levels since ages. This corridor will help contribute to the GDP of these developing economies by efficiently helping the flow of energy and trade from the gulf to Europe. The most striking part is that this will reduce the transit time by 40%, thus cutting the cost, time and fuel.
Looking back in history, all the major trade routes established have led to one common conclusion – Stronger International Relations. The Silk Route is one of the most powerful and well-planned routes throughout history that helped China become the trade supergiant it is today. Astonishingly, Saudi Arabia’s Investment Finance Minister Khalid Al Falih said that IMEEEC is equivalent to the silk and spice route, assuring that this proposition by India will have historical success and leave a monumental mark. This route will further strengthen India’s economic, political and trade relations with the Middle East and Europe. This will help in setting up Special Economic Zones, which will drive foreign direct investments that will cater to the manufacturing and economic needs of the eight nations involved. Considering the positives of India’s economic, political and international development, this project will change the trajectory of India’s future.
The business aspect of such huge projects cannot be ignored especially when the developing nations with hefty potential are involved. The most in-demand resource in this resilient economy is energy whether it is through fuels, hydral or other fossils. And that is exactly the market that these nations will be strengthening their hold on through IMEEEC. The business motive behind this is simple- Give and Take. The Middle East and northern Europe are infamous for their energy resources, and India is willing to give the required infrastructure to cater to the trading needs of the other seven nations. At the end of this project, it will be a win-win situation for all the nations involved because of the free flow of money through FDIs, an infrastructure that strengthens the trade and a grip over the market that is rapidly growing. As of now, the initial funding has begun, although an exact figure isn’t available because the private sector is yet to be involved. The only funding sanctioned is $20 billion by Saudi Arabia.
A successful project can’t be entirely successful if it isn’t draped in some controversy, and this project is no different. It is believed that this corridor will counter the Belt and Road Initiative (BRI) by China. Back in 2013, when BRI was announced, more than 150 countries agreed to join hands. But over the years, it has hit a rocky end due to China's flailing economy. Nations believe that this project hasn’t lived up to its expectations with little to no benefits to the other countries involved. China has been accused of using this project to strengthen its strategic influence with no heed to local needs and its detrimental impact on the environment. BRI lacks transparency and accountability, thus seemingly being far away from the reality of catering to transportation and trading motives.
To nobody’s surprise, nations like Italy have planned to pull out of BRI and be a part of IMEEEC instead. This corridor is the answer to numerous problems posed by China. Firstly, unlike BRI, the centre of this project is not solely going to be just one nation and one government. There are going to be equal efforts by all and, thus, equal accountability and responsibility. This is a multi-stakeholder project with absolute transparency between the 8 nations involved. It’s just that India will give it a much-required impetus, making sure the project is economically and financially feasible. However, China surprisingly has given a green signal and welcomed this new project as long as it is not used as a geopolitical tool to command power or falter the existing political and economic relations.
Coming to the structure of IMEEEC, as mentioned previously this a multi-stakeholder project, with no concentration of power with one country. History has shown that all such projects have been successful because of the lack of conflicts and the achievement of common goals that benefit all. The Global Alliance for Vaccines and Immunisation (the GAVI Alliance), the Global Polio Eradication Initiative (GPEI), and the Renewable Energy and Energy Efficiency Partnership (REEEP) are a few examples of such alliances that have been successful. This model works for the benefit of all. Single-stakeholder projects like BRI put some countries in more advantageous situations than others. Nations that are poor are subjected to exploitation and increased monetary loans, due to which they get stuck in debt traps. Alongside, the leading party doesn’t disclose complete information and transparency regarding finances, thus keeping other nations in the dark.
A suggestion to avoid the faltering of this project will be to involve private companies as little as possible. There’s no denying that funds from private corporations can be a huge help. However, the motive behind this project is to be environmentally and economically sustainable, two things that are never on the priority list of such companies. With so many nations involved, chances of corruption and window dressing increase, which unfortunately can lead to the failure of the project. This can be avoided if the Government has the upper hand and is constantly supervising the limited involvement of Private Companies. This will ensure there are no malpractices and the project is actually catering to what it originally intended to economic upliftment and Enhanced Political Relations.
Unlike every other project, this isn’t going to be a utopian project with an idealistic beginning; there will be numerous challenges to this project, including navigating complex geographical terrain. The area that will be covered is geographically diverse and comprises a vast geographical area. Infrastructure will determine this project’s success. Thus, there’s a need to create a transportation system that facilitates smooth movement between such diverse nations with different political, geopolitical, economic and infrastructural dynamics. Proper ports, railway lines, and roads have to be made after logistically studying the regions. Also, there will be a need to overcome diplomatic and bureaucratic differences to ensure quick decision-making and a stronger foundation for the initiation of this project.
This project is a work in progress, and all we have now is a draft and a vision. However, if done right, this project will be the most comprehensive strategic partnership and will change the course of trading among the eight nations involved.
As of now, the information available is scanty, as reported by Al Jazeera’s Katrina Yu. However, she also mentioned that despite the little information available, both US and European officials present during the G20 meet hailed this project historic and a total game changer.
Disclaimer:-
This piece expresses the opinions of the author alone and not S.C.A.R.
S.C.A.R neither endorses nor discredits any claims or opinions made in this write-up.