IMPACT OF MIDDLE EAST CORRIDOR ON TRADE – INTERNATIONAL

IMPACT OF MIDDLE EAST CORRIDOR ON TRADE – INTERNATIONAL

News: Analysis: Why India-Middle East-Europe Economic Corridor Is A

Gamechanger

 

What's in the news?

●       At a special event on the sidelines of the recently concluded G20 summit in New Delhi, a memorandum of understanding (MoU) was signed to establish the ‘India-Middle East- Europe Economic Corridor’ (IMEC).

●       Other than the two co-chairs of the event, Indian Prime Minister Narendra Modi and U.S. President Joe Biden, the signatories included leaders of Saudi Arabia, the United Arab Emirates (UAE), the European Union (EU), Italy, France and Germany.

 

Key takeaways:

●       During the recently concluded G20 summit, India, the U.S., UAE, EU, France, Italy and Germany signed a memorandum of understanding to establish the India-Middle East-Europe Economic Corridor (IMEC), on similar lines to China’s BRI.

 

India-Middle East- Europe Economic Corridor (IMEC):

The proposed IMEC will consist of Railroad, Ship-to-Rail networks and Road transport routes extending across two corridors, that is

1.      The East Corridor – connecting India to the Arabian Gulf,

2.      Northern Corridor – connecting the Gulf to Europe.

3.      The IMEC corridor will also include an electricity cable, a hydrogen pipeline and a high-speed data cable.

Partners: India, the US, Saudi Arabia, UAE, the European Union, Italy, France, and Germany.

 

Geopolitical and economic impacts of IMEC

Geopolitical impacts

Economic impacts

IMEC is seen as a potential counter to China's Belt and Road Initiative (BRI) in the Eurasian region. It can serve to counterbalance China's growing economic and political influence, especially in regions with historically strong ties to the U.S.

 

The route could significantly reduce transit times, making trade with Europe 40% faster compared to the Suez Canal maritime route.

The project can strengthen ties and integration across continents and civilizations.

It offers a strategic opportunity for the U.S. to maintain influence and reassure traditional partners amidst China's growing influence in the region.

The corridor can facilitate secure energy and resource supplies, especially from the Middle East. Reliable access to these resources will stabilize India's energy sector and support its growing economy.

 

IMEC bypasses Pakistan, breaking its veto over India's overland connectivity to the West, a hurdle persistently faced in the past.

As economic activities expand due to improved connectivity, there will be a surge in job opportunities across sectors.

The growth in trade, infrastructure, and allied industries will necessitate skilled and unskilled labour, promoting employment.

 

The corridor deepens India's strategic engagement with the Arabian Peninsula by establishing enduring connectivity and elevating political and strategic links with nations in the region.

Promoting digital connectivity will enhance the digital assets and technology based economic efficiency

Promoting Intra-Regional Connectivity and Peace: IMEC has the potential to promote intra-regional connectivity and could help reduce political tensions in the Arabian Peninsula. It holds the prospect of becoming an "infrastructure for peace" in the region.

Promotion of green energy will reduce carbon footprint in trade and transportation

India's Strategic Role in Africa: The corridor's model could be extended to Africa, aligning with the US and EU's plan to develop a Trans-African corridor. This signifies India's intent to strengthen its engagement with Africa and contribute to its infrastructure development.

 

The corridor will create an efficient transport network for the seamless movement of goods. This will encourage industrial growth, particularly in regions connected to the corridor, as companies will find it easier to transport raw materials and finished products.

 

 

WAY FORWARD:

●     Achieving technical compatibility and standardization in terms of gauges, train technologies, container dimensions, and other critical aspects across different countries is vital for seamless operations.

●     Balancing the geopolitical interests of participating nations and addressing potential political sensitivities, especially regarding Israel, is crucial for smooth implementation.

●     Addressing environmental impact concerns, ensuring sustainability, and adhering to green and eco-friendly practices in construction and operation are critical aspects of the project.

●     Implementing robust security measures to safeguard cargo and infrastructure from potential threats, theft, piracy, and other security risks is essential.