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Taking a different route: The India-Middle East-Europe Corridor need not be seen as a challenger to China’s Belt and Road Initiative

Among several events on the sidelines of the G20 summit in Delhi, the most significant was the signing of a memorandum of understanding on the India-Middle East-Europe Economic Corridor (IMEC).

The Partnership for Global Infrastructure and Investment (PGII) was launched by the EU, US, and Indonesia during the G20 summit in Bali last year to support infrastructure projects around the world. IMEC followed it and the signatories were the USA, India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy, and the EU. The planned corridor would connect India, Saudi Arabia, the United Arab Emirates, Jordan, Israel, and the EU to boost trade and economic growth by integrating South Asian, Arab, and EU markets.

IMEC is a network of multimodal transport routes (mainly rail and sea). Many see it as an alternative to China’s Belt and Road Initiative (BRI). The “Belt” – the Silk Road Economic Belt – covers land routes for road and rail transport to European countries through Central Asia along historical trade routes; already, Sino-European rail lines help transport goods to 50 cities in more than 20 countries. More than 1.08 million TEU (twenty-foot equivalent units) of cargo were transported between China and Europe in the first seven months of 2023, up 27% year-on-year. The route covers sea routes through Southeast Asia to South Asia, the Middle East, and Africa.

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IMEC cannot and should not appear as a challenge or alternative to BRI, as there are fundamental differences between them. External Affairs Minister S Jaishankar said he was not against any country or scheme. BRI is essentially a Chinese project. IMEC is a collective and cooperative project. The memorandum of understanding signed by the participating countries committed to working together to implement all elements of these new transit routes and to create coordinating bodies to address a range of technical, design, financial, legal, and regulatory standards. The ownership of the participating countries is therefore joint and individual. The MoU states that “in expanding connectivity, it is important to ensure that connectivity initiatives are consultative, transparent and participatory, respecting the sovereignty and territorial integrity of all countries. The principles of financial responsibility and economic viability must be followed to avoid creating an unsustainable debt burden on the beneficiaries and to comply with environmental and ecological standards”. Coordinated design and implementation are necessary, especially for land routes, to avoid pitfalls such as gauge variations on rail lines between China and Europe (Russia and Kazakhstan have a different track gauge than Europe and China). The reference to the debt burden is a subtle indicator of the damaging effects of Chinese investment in several countries.

The key question is the direction in which the load is moving. From China, the ships are fully loaded and return in ballast or with empty containers. Similarly, trains go west with full containers and return empty. The trade balance is so distorted. India would also aspire to a similar situation, but our manufacturing capabilities have a long way to go. There are reports of fatigue in China’s manufacturing sector and the natural desire of Western countries to secure their supply chains by not relying too heavily on China.

IMEC comprises two separate corridors – the Eastern Corridor connecting India with the Arabian Gulf and the Northern Corridor connecting the Arabian Gulf with
bypass the Suez Canal. It will include a rail line to be built connecting UAE ports to Israel via Saudi Arabia. Ports that could be linked on India’s west coast include Adani’s Mundra Port and private terminals at the government’s major ports of Kandla and Navi Mumbai. In the Middle East, there will be the ports of Fujairah, Jebel Ali, and Abu Dhabi in the United Arab Emirates, and the ports of Dammam and Ras Al Khair in Saudi Arabia. Israel’s port is Haifa, which is managed by the Adani Group. At the European end, the port of Piraeus in Greece is managed by China’s COSCO. Port ownership is irrelevant; only infrastructure and technology are important. And it’s no surprise if China gets involved in new projects.

IMEC can also improve the movement of goods and services between Southeast Asia and West Asia/Middle East/Europe via India. India is already more involved in Southeast Asia through multinational organizations (BIMSTEC), policies (Act East Policy), and various treaties. India could become a key hub for cargo movement between Southeast Asia and the Western world. There could be competition between BRI and IMEC here. The connectivity planned through IMEC is multifaceted, including digital and financial. The strategy includes laying submarine cables and telecommunications lines; submarine pipelines for pure hydrogen are also being considered.

Image Source: Oil Price

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