The India-Middle East-Europe Economic Corridor (IMEC) is a connectivity project that seeks to develop a seamless infrastructure of ports, railways, roads, sea lines and pipelines to enhance trade between India, the Arabian Peninsula, the Mediterranean region and Europe. The IMEC aims to capitalize on the existing trade routes between India and the Arab Gulf and the Eastern Mediterranean and Europe and build the missing infrastructure to link the Gulf and Mediterranean regions.

The project is an outcome of the growing diplomatic and political convergence between India, the Arab Gulf monarchies, Israel, the United States (US) and the European Union (EU) with a common understanding for the need to enhance sea and land connectivity towards greater economic exchanges among these regions.

The Memorandum of Understanding (MoU) for the IMEC was signed in September 2023 in New Delhi during the G-20 summit by India, Saudi Arabia, the United Arab Emirates (UAE), France, Germany, Italy, the US and the EU. In addition to the signatories of the MoU, Israel and Greece are two major nodal points in IMEC and have expressed enthusiasm about joining the project.

From an economic perspective, the IMEC builds on the Arab Gulf monarchies’ efforts to develop greater connectivity with India and Europe in preparation for a post-oil economy. It hopes to capitalize on the Arab-Israel normalization under the Abraham Accords signed in September 2020. For this reason, analysts have termed it the Indo-Abraham Accords and a natural extension of the I2U2 (India, Israel, US and UAE) announced in October 2021.

Source: ‘India’s Arab-Mediterranean Corridor: A Paradigm Shift in Strategic Connectivity to Europe’, a paper by Michael Tanchum published by National University of Singapore and Institute of South Asian Studies. Issue no. 14, August 2021

Geoeconomics or Geopolitics?

The IMEC has been received with enthusiasm and suspicion because of its geoeconomic and geopolitical implications. In a globalized world, economic integration is considered inevitable bring prosperity, which, in turn, can build economic interdependence and help bridge divides and create shared interests. The concept is rooted in the liberal international order, with Europe and Southeast Asia regions as its finest examples.

Hence, those who view the IMEC as a positive development underline that economic integration and interdependence can create the necessary imperative towards peace in the conflict-ridden Middle East. The juxtaposition of India, a rising economic power, and the European economic region, can prove significant in this geoeconomic endeavour, especially as it has the support and participation of the US.

Alternatively, a geopolitical understanding of the IMEC focuses on it being an ill-conceived idea launched only to rival China’s increasing economic footprints in the Middle East and Iran’s centrality in connecting South Asia with Europe through the Chabahar Port. Such a view underlines that the idea is rooted in the shared concern among the US, Europe and India on China’s Belt and Road Initiative (BRI) that seeks to build transport and communication networks to connect Eurasia with nodes in southern, central and western Asia, and China, Russia and Europe. The underlying assumption is that IMEC should be viewed as a competitor to the BRI, and the latter, having a head start over the former, has an inherent advantage.

Challenges

Besides, the detractors underline the practical economic challenges that can hinder its success as the Arabian Gulf countries are not manufacturing hubs. Hence, the freights will be costlier if they have to remain empty. Another important point noted is that three big regional economies in the Middle East, namely Türkiye, Egypt and Iran, and other smaller but vibrant economies, namely Iraq, Qatar and Kuwait, have been left out of the IMEC, making it inherently lacking in the idea of ​​bringing greater economic integration. The BRI, therefore, is more economically incentivized as it creates a greater connectivity bringing most regional countries into its network to ensure that the freights are fully utilized.

Among other issues, the criticism of IMEC notes the existing routes passing through the Bab al- Mandab, the Red Sea and the Suez Canal that connect South Asia to Europe through the Arabian Sea. Hence, the IMEC is just a costly infrastructure project that does not consider that large parts of the Arabian Peninsula passing through Saudi Arabia are barren deserts and does not have the economic depth to sustain such a connectivity project.

Advantages

However, a major point that is missed in underlining the IMEC’s ​​shortcomings is that it capitalises on the existing economic integration within the Gulf Cooperation Council (GCC) States that have doubled down on the preparation for a post-oil economy through diversification and creating a knowledge -based and interconnected economy.

Further, the IMEC does not rule out the future possibility of connecting other regional countries, including Qatar, Oman, Egypt, Türkiye and Iraq, which means that eventually, the idea is to develop the necessary infrastructure for trade and economic engagements to capitalize on technological advancements and eventually create economic interdependence among the Middle Eastern states.

Moreover, there remains the question of regional conflicts, as reflected by the ongoing Israel-Hamas war in the Gaza Strip, the disruption of Red Sea trade by Yemen’s Houthi rebels in support of Palestinians and against Israel, and the escalation of tensions and heightened possibility of a direct war between Iran and Israel, undermining the IMEC.

Notably, the geoeconomic logic behind the IMEC emphasizes the same point that economic interdependence can disincentivise wars and conflicts, and the region needs alternative routes in case of disruptions due to wars and conflicts. The latter became a reality as the IMEC has become a preferred route for Israel because of the Houthi actions in the Red Sea.

Significance for India

Why has the Government of India joined the IMEC and what are its pros and cons? India has three broad reasons for joining the IMEC. Firstly, it builds on the existing trade and economic relations between India and the Arab Gulf region, which has the potential to grow further if the necessary infrastructure and connectivity gaps are filled, and the IMEC precisely intends to do that. Thus, the IMEC supplements the existing goal of developing Indo-Gulf economic relations. It further connects the other regional countries, especially Israel and Jordan, important regional partners of India, making it even more economically attractive.

Through the IMEC, India’s economic presence in the region will increase and create opportunities for Indian companies, already active in the area, to invest in building the missing infrastructure.

Moreover, greater economic integration can help India develop diplomatic and political goodwill to attract investments in the Indian market, a necessity for economic growth.

The question, however, remains why the IMEC when India has already invested in Chabahar Port in Iran and is part of the International North-South Transportation Corridor (INSTC) that promises to connect India to Afghanistan, Central Asia, Russia and Eastern Europe. One, it creates additional and alternative trade routes and connects India to the southern Eurasian landmass, while Chabahar and INSTC connect it to the northern Eurasian plate. And two, the IMEC complements the existing trade and connectivity routes rather than being a replacement.

Secondly, the IMEC does not end in the Middle East. It promises to connect India with the Eastern Mediterranean and Western Europe with a shorter route bypassing the naval choke points of Bab al-Mandab and the Suez Canal. The mega offshore gas fields in the Eastern Mediterranean are an additional attraction as India’s appetite for energy and gas will continue to grow. Moreover, the EU and the GCC are India’s largest trading blocs, and the IMEC promises to connect both regions through one economic corridor, creating extraordinary opportunities for growth in trade and commercial activities.

Thirdly, there is geopolitical logic for India as far as the IMEC is concerned. India is the world’s largest democracy and has carved a path for economic growth since embarking on liberalization in 1991. As a major G-20 economy with a large youth population, it aspires to emerge as a global power. With greater integration with its eastern and western neighborhoods and the larger world, the big power aspiration can be realized. Hence, the underlying geopolitical objective in joining the IMEC is rooted in the Indian aspiration to develop faster and become a global power.

Finally, despite the challenges it faces due to the limited existing economic infrastructure in the Arabian Peninsula and the ongoing conflicts in the Middle East, the IMEC can prove to be a game changer in creating the necessary infrastructure for increased trade volumes between India, the Middle East and Europe, and eventually incentivise economic integration and interdependence that can help de- Escalate tensions and move towards a future where peace can be a possibility.

Post Read Questions

The India-Middle East-Europe Economic Corridor: Discuss the significance and challenges for India.

The India-Middle East-Europe Economic Corridor complements the existing trade and connectivity routes. Comment.

How does the India-Middle East-Europe Economic Corridor help de-escalate tensions and incentivise peace?

Why have analysts termed the India-Middle East-Europe Economic Corridor the Indo-Abraham Accords? Discuss.

(The author is an Associate Professor of Middle East studies at Jawaharlal Nehru University, New Delhi. Views are personal. @MuddassirQuamar)