A new acronym was minted in Delhi over the weekend: IMEC. On Saturday, Saudi Arabia, the UAE, India, France, Germany, Italy, the US and the EU signed a deal during G20 meetings in New Delhi to establish the India-Middle East-Europe Economic Corridor. The IMEC will comprise two separate corridors: the east corridor will connect India to the Arabian Gulf and the north corridor will connect the Gulf to Europe.
Addressing the IMEC summit, held in New Delhi on the sidelines of the G20 summit, US President Joe Biden said that “the world stands at an inflection point in history.” He described the new agreement as “historic.”
From a Gulf perspective, the new venture will solidify the region’s historical position as the primary trade route linking Asia, Europe and Africa. By emphasizing trade in energy, the project is banking on the region’s comparative advantage in providing cheap and reliable energy to the rest of the world.
The IMEC is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf and Europe. It is also likely to have far-reaching global economic implications beyond the three regions. The eight IMEC signatories account for about half of the world’s economy and 40 percent of its population. As such, they have the capacity to transform global trade and development if they are ready to commit the right resources.
The project could also have geopolitical implications, as it raises America’s profile in this region and enhances its role as a global player. Much has been said about the compatibility of this new US-led undertaking and China’s existing Belt and Road Initiative projects in the region, but looked at from a Gulf perspective it could be a win-win-win situation for China, the US and the Gulf countries through synergies of cooperation and integration. The cohabitation of the two ventures in the region could also help defuse tensions between the two superpowers. They may have to find a way to compete peacefully, at least in this region.
According to statements made by the IMEC’s principals, the corridor will include a railway that will provide a cost-effective, cross-border ship-to-rail transit network to supplement existing maritime and road transport routes. This will enable goods and services to transit to, from and between India, the Gulf and Europe. Along the railway route, the participants intend to enable the laying of cable for electricity and digital connectivity, as well as a pipeline for clean hydrogen export.
The IMEC founding countries are counting on it to secure regional supply chains, increase trade accessibility, improve trade facilitation and support an increased emphasis on environmental, social and governmental impacts. They expect it to increase efficiencies, reduce costs, enhance economic unity, generate jobs and lower greenhouse gas emissions — resulting in a transformative integration of Asia, Europe and the Gulf.
In support of this initiative, the participants committed to work “collectively and expeditiously to arrange and implement all elements” of these two new transit routes and to establish coordinating entities to address the full range of technical, design, financing, legal and relevant regulatory standards, according to a White House statement.
The venture will solidify the Gulf’s historical position as the primary trade route linking Asia, Europe and Africa.
Dr. Abdel Aziz Aluwaisheg
While the participants’ political commitments are clear, the memorandum of understanding signed in New Delhi on Saturday is a declaration of intent. However, it does not by itself create rights or obligations under international law, which means that there is not yet any obligation on any partner to take action toward the implementation of the IMEC. A lot depends on the priorities of the IMEC founders and the amount of resources they are willing, or able, to commit to this ambitious project.
For Saudi Arabia, Saturday’s announcement was the crowning achievement after several months of discussions on the project, which Crown Prince Mohammed bin Salman lauded as transformative for the region and the global economy. Speaking in New Delhi, he pointed to the long-run job creation potential of the new project and the expected growth in trade between India and the Middle East. India is already a key trading partner for Saudi Arabia and the two countries’ meetings following the G20 summit — including between the crown prince and Indian Prime Minister Narendra Modi — and the signing of dozens of bilateral deals were aimed at strengthening their trade and investment ties.
In addition, Saudi Arabia last week signed a memorandum of understanding with the US to provide a protocol to establish an intercontinental green transit corridor, taking advantage of the Kingdom’s geographical location while promoting green energy. Saudi Arabia praised the US’ leading role in supporting and facilitating negotiations to include additional countries interested in such green corridors.
For the US, the IMEC is an implementation of the flagship Partnership for Global Infrastructure and Investment initiative, the basis for which President Joe Biden first unveiled at the G7 summit in 2022. At this year’s G7 summit in Hiroshima, Japan, he persuaded the organization’s leaders to commit to identifying new opportunities to scale up the initiative to better respond to the global demand for high-quality infrastructure financing in low- and middle-income countries.
Since then, the US has announced steps to build several economic corridors with the aim of driving infrastructure investments across multiple countries and sectors. It has mobilized more than $30 billion through grants, federal financing and the leveraging of private sector investments. On Saturday, the crown prince lauded the Partnership for Global Infrastructure and Investment and announced Saudi Arabia’s pledge of $20 billion for its projects, while also suggesting the need for integration between it and the IMEC.
In addition to the clear economic benefits, the IMEC could reap political benefits by defusing tensions and building trust and mutual interests along its routes. There is also an implicit commitment to security cooperation to protect the IMEC participants’ investments and ensure its speedy establishment and smooth functioning.
To make sure that the promises made in New Delhi are fulfilled, the participants intend to meet over the next two months to develop and commit to an action plan, including relevant timetables.
The discussions over the next two months should reveal how fast the IMEC is actually launched and give a rough idea of its timescale. This will determine its scope and potential benefits to the participating nations and the three regions as a whole. However, it is important to move quickly and heed the crown prince’s call to “immediately start putting together the implementation mechanism.”
• Dr. Abdel Aziz Aluwaisheg is the Gulf Cooperation Council assistant secretary-general for political affairs and negotiation, and a columnist for Arab News. The views expressed in this piece are personal and do not necessarily represent GCC views.