Gaming out the consequences of an India-Middle East-Europe Economic Corridor

On the first official day of the G-20 summit, the leaders of United States, India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union announced that they had signed a memorandum of understanding outlining a plan to create an India-Middle East-Europe Economic Corridor (IMEC) that would “stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe.”

The corridor actually will consist of two branches. An eastern branch will connect India to the Arabian Gulf, while a northern branch will connect the Gulf to Europe. The eastern route will cross the Indian Ocean from Mumbai to Dubai and Jebel Ali in the United Arab Emirates. The northern branch will combine both land and sea routes. An overland rail route will cross Saudi Arabia, Jordan and Israel, then a sea route will link Haifa to Piraeus, Greece, and then overland via rail again from Greece into Europe.

The rail link would foster increased trade between India and Europe because it would represent a 40 percent decrease in the time to move trade between the two regions. The plan also envisages both an electricity cable and a clean hydrogen pipeline to Europe.

The MOU represents another feather in the cap of Indian Prime Minister Narendra Modi: he had successfully pushed for a consensus leadership declaration that elided the thorny question of Russia’s invasion of Ukraine; included the African Union as a G-20 member effective January 1, 2024; and reached new agreements on biofuels.

Modi announced the new plan jointly with President Joe Biden. Modi hailed IMEC as a “beacon of cooperation and innovation” charting a journey of “shared aspirations and dreams,” while the White House stated that the “landmark corridor is expected to stimulate economic development through enhanced connectivity and economic integration across two continents, thus unlocking sustainable and inclusive economic growth.” Perhaps of even greater significance than the self-congratulatory statements of Biden, Modi and the other MOU signatories was the announcement by Saudi Prince Mohammed bin Salman that his country would contribute $20 billion to the project.

Neither Modi nor his fellow summiteers explicitly stated that the proposed economic corridor is meant to compete with China’s flagging, but still important, Belt and Road Initiative. But Modi took a not-very-subtle swipe at the massive Chinese project, which he has criticized virtually since its inception, stating that Beijing employed the Initiative as a vehicle for “debt trap diplomacy” in order to establish hegemony over resource-rich or strategically important states.

There was at least one other putative winner — and apart from China, one possible loser — as a result of IMEC’s creation. Israeli Prime Minister Benjamin Netanyahu exulted in the fact that his country would be one of the corridor’s critical hubs. He also viewed the link to Saudi Arabia as another indication that Riyadh was moving toward normalization with his country.

Whether that is the case remains an open question, since the Saudis have increasingly been public about their still unofficial relationship with Israel while not yet committing to formal diplomatic relations. Indeed, the ailing Saudi King Salman has been adamant that no normalization would be possible without an agreement on a real roadmap to create a Palestinian state, a move that is anathema to Netanyahu’s extremist right-wing partners and could bring down his government. Still, the explicit linkage between the Kingdom and Israel represents a significant step forward in the relationship between the two states.

In contrast to Netanyahu’s delight over Israel’s inclusion in IMEC, Turkish President Recep Tayyip Erdogan is bitter about his country’s exclusion from the proposed sea and land based links from India to Europe. Speaking on the day after the corridor was announced, Erdogan asserted that “there is no corridor without Turkey.” He added that “the most convenient line for traffic from east to west has to pass through Turkey.” That the MOU signatories did not agree could further alienate Turkey from its nominal Western allies.

IMEC is a long-term plan that will require far more than the billions to which the Saudis have committed themselves. Should America actively participate in developing either of the IMEC routes, it will have to find the money to do so. Given current budget priorities and the uncertainties surrounding both present and future federal spending, those funds may not be forthcoming. In that case, Washington may find itself reduced to the role of cheerleader, which may not be sufficient to give it a seat at the IMEC table — when and if IMEC ever becomes a reality.

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was undersecretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy undersecretary of Defense from 1985 to 1987.