The Indo-Middle East-Europe Economic Corridor (IMEC): Another Connectivity Scheme Headed Off the Rails?

At the September 2023 Group of 20 meeting in New Delhi, the United States (US), India, Saudi Arabia, the United Arab Emirates (UAE), the European Union (EU), and various European countries such as Germany signed a Memorandum of Understanding (MoU) for an India-Middle East-Europe Economic Corridor (IMEC). Two central features of IMEC are a so-called “North Corridor,” which entails a railway running from Saudi Arabia through Israel via Jordan as well as improved transportation (rail and shipping) networks between Israel and Europe and a so-called “East Corridor,” which involves better maritime routes between India and Gulf Cooperation Council (GCC) states. Other IMEC components reportedly include electricity grids, digital connectivity like undersea cables, and pipelines for clean hydrogen, which supposedly would make IMEC a “‘green and digital bridge across continents and civilizations.’”[1] Some IMEC proposals—e.g., the envisioned railway—are not entirely new, which is what one would expect by simply looking at the placement on a map of IMEC MoU signatories in the Middle East.

MoU signatories have multiple political and economic rationales for embracing the scheme, which is supposed to reduce transit times, cut transit costs, improve transportation capacity, create tens of thousands of jobs (presumably in infrastructure construction), and boost trade among IMEC participants such as India and the EU.[2] Washington touts the “‘significant economic benefits, as well as strategic benefits’” that would flow from increased connectivity.[3] It also hopes to facilitate the normalization of Saudi-Israeli relations, offer alternatives to the Belt and Road Initiative (BRI) and China, and improve ties with countries in the region, particularly Saudi Arabia. For GCC states, IMEC appeals because it could make them important logistics centers, help them diversify their economies away from energy (a long-standing goal), augment their economic ties with India, give them more diplomatic bargaining power, and advance a multipolar world. Looking at India and Europe, IMEC could boost India-Europe, India-GCC, and Europe-GCC trade and foreign direct investment (FDI) and other economic ties as well as contribute to India’s expanding global role and desire to find pathways to the Gulf without having to go through Pakistan.[4]

As many have noted, there are a surfeit of factors that can impede the progress of IMEC ranging from harmonizing customs procedures and tax laws to integrating disparate land and maritime networks to competition from existing port, road, and railway transportation networks such as the Suez Canal to unfavorable geographic and climatic conditions.[5] Regardless, three large hurdles seem to receive the most attention from those opining about IMEC. One challenge will be financing, an obstacle which critical Chinese analysts apparently have been at pains to highlight. Saudi Arabia supposedly will contribute $20 billion towards IMEC, but this is hardly enough, and India, one analyst argues, does not seem to possess the economic weight needed to carry IMEC meaningfully forward.[6] A second obstacle will be politics. The normalization of Saudi-Israeli relations is far from assured. GCC countries will be cautious about anything that could damage their relations with China, their main economic as well as a major political partner. And China, Egypt, Iran, and Turkey all have economic and political incentives to counter IMEC.[7] A third problem is the vagueness of the IMEC MoU which fails to list specific projects, project construction timeframes, or funding sources.[8]

Many of these obstacles are huge and it is hard to dispute that they can hinder IMEC’s progress. The vagueness of the MoU, though, hardly seems a valid reason for pessimism. After all, some of the BRI’s hallmarks are that it vague, lacking detailed project lists, construction deadlines, or money sources. Financing, too, may be less of an issue if IMEC proceeds piecemeal and its component projects draw upon investment and loans from GCC states and Israel, multilateral institutions (of note, the World Bank was a participant in the meeting where the MoU was signed), the EU, European states, and the US. In this regard, the BRI also is instructive. To date, moneys have been coming from multiple sources for discreet projects within and between countries and within and between regions, that it is hoped, one day, will, but are not ensured to, link together. The fact that we are talking about GCC states and India as central players in IMEC should not be forgotten. Although there are limits, they have resources that many BRI participant states in Central Asia, South Asia, and sub-Saharan Africa do not have. And, as noted above, there are powerful political and economic reasons for MoU signatories to make IMEC, in some shape or form, move forward. In the final analysis, it is likely IMEC will advance, albeit slowly and unevenly, dependent on regional and local conditions…which, ironically, is just like the BRI.

One matter that commentaries on IMEC have overlooked is the issue of getting buy-in from the private corporations that the US and European governments, the EU, and the World Bank badly want to play a role in infrastructure schemes, counter-BRI or not, across the globe. Another overlooked issue is the extent to which, if any, the US and European capitals and the EU will be willing to apply looser environmental, governance, and human rights standards to the aid, grants, and loans they orchestrate to advance IMEC. If ways are not found to bring in private businesses and traditional infrastructure development standards are applied, then the prospects the IMEC will go off the rails sooner rather than later will become much greater.