The Promises that IMEC Offers | 20 Sep 2023

Launching an alternative model for inter-continental infrastructure creation through the proposed India-Middle East–Europe Corridor (IMEC) is one of the many major takeaways of the 2023 summit of G20 held in New Delhi.

It would not be wrong to regard IMEC as the boldest geo-economic initiative the world has seen since China unveiled its Belt and Road Initiative (BRI) in 2013.

In scale, scope and impact, IMEC promises to be a game-changer as it brings together highly capable partner countries to pool resources and remake supply chains, production networks and zones of influence to make globalisation less China-centric.

What is the India-Middle East-Europe Economic (IMEC) Corridor?

• About:
  • The India-Middle East-Europe Economic Corridor (IMEC) Project was signed at the G20 Summit in New Delhi and holds significant geopolitical and economic implications for India.
  • Its 8 signatories are: India, the US, Saudi Arabia, UAE, the EU, Italy, France, and Germany.
• Components:
  • It will consist of Railroad, Ship-to-Rail networks and Road transport routes extending across two corridors - East (connecting India to Arabian Gulf) and North (connecting the Gulf to Europe).
  • Apart from rail and shipping options, IMEC would also offer electricity and energy (gas and hydrogen) pipeline connectivity options.

What is the Significance of IMEC for India?

• Overall Economic Growth: For India, IMEC presents a means for faster trade, transport and infrastructural growth and for building a regional architecture with strategically aligned nations.
  • India’s exports of engineering goods, green hydrogen and green ammonia could emerge as key gainers under IMEC.
• Strengthen Trade with EU: Through its multimodal design of linking distant ports, connecting several countries via ship, undersea cables, rail and road, IMEC can cut the time for economic exchanges between India and Europe by 40%.
  • Since the EU is India’s 2^nd-largest trading partner, this agreement can boost India’s trade with the EU.
  • If India’s free trade agreements with the Gulf Cooperation Council (GCC) and the EU come through, IMEC will be a massive institutional catalyst for the economic fortunes of all three of these partners.
• Increase Influence in Middle-East: For India, the project holds economic promise through its large diaspora in the Middle-East, contributing to energy security and serving as a market for Indian goods.
  • It positions India strategically, fostering influence over the Indian Ocean and expanding reach into Mediterranean, Atlantic regions.
• Reduced Trade Time: This project would confer various strategic and economic advantages in terms of reduced transit time between India, the Middle East, and Europe, and most importantly, it would help India bypass the troubled trade routes of Pakistan and Afghanistan and revive the age-old spice route.
  • At present, the only route through which goods are transported to Europe is the Suez Canal.
• Reducing BRI’s Influence: Another Keypoint is that China, who often tends to take centre stage, set the rules and standards and dominate economic flows wherever it is present, be it the BRI or the RCEP, has been excluded from IMEC.
  • Though some IMEC members remain part of BRI, IMEC’s success can reduce BRI’s ever-expanding influence.

What can be the Challenges in the Success of IMEC?

• Implementation Challenges:
  • The first and foremost challenge is to create a firm plan to establish the corridor. An ambitious project of this scale can face challenges in having sufficient investments and speedy creation of infrastructure.
• Challenges in Coordination:
  • Laying a network of railway lines, roads and port connectivity across countries requires a high-level of coordination and planning.
• Countries’ Own Geopolitical Challenges:
  • The corridor also passes through Jordan and Israel, which are now for a long time going through geopolitical challenges and would require a fine balance of economic and diplomatic manoeuvring.
• Rivalry with BRI:
  • The IMEC is undoubtedly being seen as a counter to the Chinese BRI. Competition between the two is inevitable as both the initiatives have similar objectives.

What Measures Can be Taken to Strengthen the IMEC Project?

• Leveraging Diplomatic Ties with US:
  • Geographically, the US is beyond the ambit of the IMEC’s area of operation. But diplomatically, it is a crucial driver of IMEC by knitting together a range of its formal allies and strategic partners across Europe, Middle East and South Asia.
    • In the present context, steering of IMEC by the US is valuable because that is how transit countries like Jordan and Israel can be integrated with the rest.
  • The India-Israel-UAE-US (I2U2) grouping and the US’s strategic goal of getting Saudi Arabia to formally recognise Israel are also, in some way, tied to the IMEC idea.
• Expanding Global Outreach:
  • Like its success in bringing Russia and the US to a consensus at G20, India may also help IMEC connect with the International North-South Transport Corridor (INSTC).
    • It would help facilitate trade in the vast region between the Caspian sea and the Mediterranean sea.
  • Most critically, IMEC can also open new connectivity options to debt-ridden Africa without much extra cost and ensure better utilisation of assets already built.
• Land-Bridging Requirements:
  • Mega infra projects for augmenting capacities are at various stages of development.
    • The focus needs to be on the land bridging requirements; constructing the missing rail links, terminals, and inland container depots (ICDs) at all major Gulf and Mediterranean ports is crucial.
  • No mega transport corridor can be viable by depending only on the end-to-end traffic.
    • Therefore, IMEC must consider connecting hinterlands by developing the feeder rail routes which could merge on the main corridor. This will have a multiplier effect on all stakeholders.
• India’s Role:
  • It is a historic moment for India as a regional leader that can bring up an entire regional economy through the combination of its technical leadership and outward-looking approach.
  • India should advocate for a mix of public and private financing as some projects may not be financially viable without public subsidies or grants. India can support the rail projects of GCC, Jordan, and Israel through its PSUs.
  • India should also consider a proposal of laying a dedicated gas pipeline from the Middle-East to India to support the needs of its household consumption.
  • Besides all this, India must continue to remain neutral but vigilant in evolving geo-politics keeping its national interests and remain committed and engaged with other transport and energy corridors; INSTC, Suez Canal, Arctic Route via Vladivostok.

Conclusion

The beauty of IMEC is that it contains something attractive in it for all eight parties that have signed the founding MoU. Undoubtedly, a multilateral cross-border and cross-oceanic connectivity endeavour requires diplomatic coordination and consensus management.

Compared to China’s unilateral BRI, the IMEC may be slower as it is a relatively large-group but the fact that India and its strategic partners are now present as a force on the geo-economic map through IMEC is a positive start.