How Will IMEC Ensure India-Euro Trade Future?

Policy Puzzles: India fortifies trade resilience through IMEC, addressing Euro trade challenges. Can this corridor navigate geopolitical complexities to offer a lasting economic solution? Explains Lt Gen Philip Campose

The Processor
New Update
red sea

India takes diplomatic and intelligence-sharing measures to counter the Houthi threat, engaging closely with allies like the US and Israel. The Indian Navy deploys four P 15A class destroyers, supported by surveillance resources such as P 81 long-range aircraft, Dorniers, and helicopters, to protect merchant shipping from missile and drone attacks. While effective nearer home for limited periods, sustaining this shield proves expensive and impractical for long-term security, particularly in areas like the Red Sea.

IMEC Corridor: A Promising Solution

Possibly, the answer may lie in activating alternate secure trade routes over land and sea which enable Indian cargo to bypass conflict areas as well as the trade routes which are more prone to disruption. One such trade route which has been announced recently, in September 2023, by seven countries  and the European Union (US, EU, France, Italy, Germany, India, Saudi Arabia and UAE), and MOU signed on the margins of the G-20 summit meeting in New Delhi, is  the India Middle-East Europe Corridor  (IMEC).

This latest in a series of initiatives by the United States, which is proposed to be funded by it, is aimed at integrating partners in the Middle East and South Asia into a common geo-economic architecture, while providing an alternative to the Belt and Road Initiative led by China.

Two corridors, consisting of rail, ship to rail and road transport networks, are proposed to be established: the East Corridor  connecting the Arabian Gulf to India and the North Corridor connecting Europe to the Gulf. The IMEC Corridor will also include an electricity cable, a hydrogen pipeline and a high speed data cable.

IMEC: Connecting Continents

The corridor will include a shipping route connecting Mumbai and Mundra ports on India’s western coast to Jebel Ali port in the UAE, and a rail network connecting the UAE, Saudi Arabia and Jordan with the Israeli port of Haifa on the Mediterranean Sea. Haifa will be connected by sea to the port of Piraeus in Greece and eventually on to the rest of Europe by road and rail from there.

The IMEC as a concept appears viable, especially as it is led and funded by the US, and has some major global players, both from  Europe and the Middle East, including Saudi Arabia, UAE and Israel, invested in ensuring its success. Once this route gets functional, it is likely to provide a more efficient, safe and economic alternative to the current trade route through the Red Sea and the Suez Canal.

Challenges Ahead: Navigating Uncertainties

Political Uncertainties Post-Hamas Attacks: The IMEC appears to be a further development of the I2U2 (India-Israel-US-UAE)  project by extending this partnership strategically and through multiple infrastructure connectivity to the Sunni Arab states of the Middle East and to Europe. However, it pre-supposes the successful completion  of US led rapprochement efforts between Israel and the Arab Gulf states, which, suddenly has been thrown into a phase of  uncertainty after the Hamas attacks of 7th October 2023 and the Israeli bombing of Gaza thereafter. Thus it is a moot point whether Saudi Arabia, UAE or Jordan will be able to pursue this project unless a permanent solution is found to the contentious Palestinian problem.

Geopolitical Implications: IMEC as a Counterpoint: The IMEC appears as a US-EU-Israel-India alternative to China’s BRI which seemingly puts India firmly in the Western camp – as a counterpoint to China, Russia, Iran, other Shia states like Iraq,  and the non-Arab Sunni states like Turkey. Thus these states could rally against India and see merit, individually or collectively, in acting as spoilers against this project. Moreover, at this point, when sentiments in the Global South are clearly ranged against Israel on the Palestinian question, India may be jeopardising its leadership claims among  the nations of the Global South by appearing to align with Israel and the US.

Regional Relations: Balancing Act for India: The IMEC project, to be truly successful,  pre-supposes India’s better cooperation and good relations with its South Asian neighbours as well as its benign influence and better connectivity with them as well as, by extension, with the South-East Asian countries. All these countries maintain strong relationships with China and are firmly ensconced in the BRI project. Thus they are unlikely to endanger their relationships with China by cooperating with India on what is clearly perceived as an alternative to the BRI.

Piraeus Port Challenge: BRI vs. IMEC: Piraeus Port in Greece has been upgraded by China as part of the BRI project. The Piraeus Port Authority in Greece is owned by COSCO, China Ocean Shipping Corporation Ltd, one of the world’s largest shipping companies, owned by China.  Since taking over the port, COSCO has not only transformed an inefficient and loss-making organisation into an efficient one but the port city has also developed by leaps and bounds. Further, COSCO has developed a multi-modal China-Europe Land-Sea Express (CELSE) based on Piraeus Port from where a rail link extends to Budapest in Hungary through Skopje in Macedonia and Belgrade in Serbia. CELSE operates 17 trains on a weekly basis which touch hundreds pf inland points in nine European countries. The IMEC will find it difficult to displace the BRI at Piraeus.

Infrastructure Hurdles: Meeting Deadlines is Key: India has a poor record in meeting deadlines on road, rail and other infrastructure projects in neighbouring countries. Therefore, to ensure the success of the IMEC, it will have to step up its infrastructure development capabilities through collaborations with companies of proven capabilities in these fields.

This is the second in the three-part series on The Houthi Attacks in the Red Sea by Lt Gen Philip Campose