"Building the India-Middle East-Europe Economic Corridor: A Path to Prosperity"

"Strengthening Economic Ties: India-Middle East-Europe Corridor"

Our Prime Minister announced a mega investment and connectivity project ‘India-Middle East-Europe Economic Corridor (IMEC or IMEEC)’ during the G20 Summit held at New Delhi.

The eight signatory countries of this project are India, US, Saudi Arabia, UAE, EU, Italy, France and Germany.

Image source: The Bussiness Standard

Main Five Factors of the IMEC Project will:

It will consist Railroad, Ship-to-Rail networks and Road transport routes connecting two continents through two corridors:

• Eastern Corridor – connecting India to Arabian Gulf
• Western Corridor – connecting Gulf to Europe
• Link Energy cables to extend electricity connectivity
• Development Gas & hydrogen pipeline and exchange of Clean Energy
• Lay undersea cables and facilitate high speed data

Image source: India Today

This Project is a part of Partnership for Global Infrastructure and Investment (PGII). The Partnership for Global Infrastructure and Investment (PGII) is a collaborative effort by G7 countries to fund infrastructure projects in low and middle income developing countries.

According to The Hindu reports, details are still being finalized and multiple route options are being considered that will include Haifa in Israel and Piraeus in Greece. Among the Ports that could be connected:

Image Source: IndiaTimes

India: Mundra and Kandla (Gujarat), Jawahar Nehru Port Trust (JNPT) (Navi Mumbai)

Middle East: Fujairah, Jebel Ali and Abu Dhabi (UAE), Dammam and Ras Al Khair (Saudi Arabia)

Railway line from Fujairah Port (UAE) to Haifa Port (Israel) via Ghuwaifat and Haradh (Saudi Arabia) and Jordan.

Europe: Piraeus Port (Greece), Messina (Italy), Marseille (France)

Officials also stated “Multiple routes are bring considered to prospectively reduce the freight load on the route.” Apart from Government-owned ports, Mundra Port (India) and Haifa Port (Israel) are privately controlled by Adani Group.

Advantages:

• Opportunity for India to boost economic growth by engaging with key countries through trade connectivity.
• Will create a comprehensive transportation network that will connect Asian continent to European continent.
• Will reduce transportation cost and enhance efficiency and seamless movement and timely delivery of goods and services.
• Will generate employment and strengthen the economic and cultural tie between various partner countries.
• Aims to increase use to clean energy and thus lowers the greenhouse gas emissions.
• Will be used to develop Special Economic Zone (SEZ) along the route that will increase the foreign investment and leverage economic growth of the whole region.
• It will strengthen India’s presence in Indian Ocean as well as expand India’s reach into Mediterranean and Atlantic Ocean region.

Its implications on World Order:

• This corridor will deepen the India’s strategic engagement with Middle East, Arabian Peninsula and European countries through political, economic and cultural links with various nations in the region.
• This corridor will significantly reduce the transition time and 40% faster trade possible with Europe compared to Suez Canal route.
• World sees IMEC as a counter to China’s growing political and economic influence and also to China’s Belt and Road Initiative (BRI) widely known as One Belt One Road Project.
• IMEC will offers strategic opportunity for the US to rebalance and restore its influence over the region.
• IMEC will break the hurdle that thwarts the connectivity of India to the West by bypassing the Pakistan & Afghanistan through this new route.
• In future, the corridor will open the door for the direct connectivity to African continent by aligning it with US-EU’s plan for Trans-African corridor.

Challenges:

Coordination:

• As multiple partner countries are involved in this project, more coordination efforts will require with respect to policy, regulations and administration procedures.

Connectivity:

• It will require to develop a multimodal transport route involving rail, road and sea connectivity spanning over multiple countries across two continents. That will require complex logistic, transportation and connectivity planning and coordination among all stakeholders.

Image Source: Dhrishti IAS

Economic issues:

• It will require deep brainstorming before selecting most viable, optimal and cost-effective routes that must ensure feasibility, less construction and less investment efforts.
• Along with the new infrastructure, constructing missing rail or road links, terminals and Inland Container Depots (ICD) at major ports as well as hinterlands are crucial for the success of this project.

Geopolitical issues:

• It may pose opposition or objection from existing transport routes especially from Suez Canal authority (Egypt) as it may see reduced traffic and loss of revenue. That will create challenges and diplomatic hurdles.
• Additionally, it must overcome any diplomatic or geopolitical turmoil rise in any of the partner or nearby Country.

Investment:

• Construction, Operation and Maintenance of this corridor will be great challenge, as it may require identification and allocation of adequate and substantial funding as well as financing from various stakeholders.
• Sufficient investment and speedy & timely creation of infrastructure will be required to successfully complete this project.
• One initial estimation believe that developing each of these IMEC routes could cost between anywhere between USD 3 billion to USD 8 billion.

The Way Forward:

• In future, IMEC will be as a link to expand the scope of International North-South Transport Corridor (INSTC).
• It will facilitate and support the trade between Caspian Sea and Mediterranean Sea.
• IMEC will open new opportunity for debt-ridden Africa without much cost and efforts by utilizing already built assets.

 The Challenges Ahead:

• As India announces IMEC corridor, Turkey has felt itself ignored on the World order. As per the plan, IMEC will connect Saudi Arabia, UAE, Jordan and Israel by rail connectivity, entirely bypassing Turkey that will ultimately connect India to Europe through sea and rail-road network.
• So, Turkey views this corridor as threat to Turkey’s historically central role in connecting and transporting goods between Europe and Asia. That leads Turkish President to announce the plan for alternative trade corridor to the IMEC.

Image Source: GlobalData

Turkish Foreign Minister said that negotiations were already underway with Iraq, UAE and Qatar for transport route through Turkey to Iraq.

    Whatever the hurdles or challanges may be, but the truth is the IMEC will test India’s regional Leadership acumen and bring strategic and economic advantage for India through reviving its historic old-age Spice Route.

Note: The content is based on the based on the articles published in various news resources.