International Trade Setbacks – the India-Middle East-Europe Economic Corridor
The India-Middle East-Europe Economic Corridor (IMEC) was originally agreed upon at the Group of 20 summit in September 2023. This agreement was between the unlikely triad of US President Joe Biden, Indian Prime Minister Narendra Modi, and Saudi Arabia’s Crown Prince Mohammed bin Salman.[1] This new trade route promised to allow the transportation of goods in ships, trains and trucks from western India’s ports through the United Arab Emirates, Saudi Arabia and Israel, into Western markets. The aim was to create a new trade route bridging South Asia with Europe, with Joe Biden hailing the project as a “real big deal”[2] and European Commission President Ursula von Der Leyen describing it as “nothing less than historic”.[3]
With a project of such a large-scale, there are multiple key stakeholders to account for. It will be crucial to identify and involve existing transport providers and regulatory bodies in each intermediary country. Furthermore, I expect a measured approach would be required to address and facilitate regulatory requirements across these corridor intermediaries. With goods transiting between ports, the impact of crossing of different land border interfaces will need to be balanced due to varying laws and regulations. Governments and large corporations involved in this project will also need to be considered regarding dispute resolution concerns.
Disruptions to IMEC:
However, Middle East regional conflicts have halted the development of this significant trade corridor plan. The 7 October 2023 Hamas attack on Israel triggered a wave of geopolitical upheaval starting from the Middle East region. Bloomberg News has since reported that IMEC’s plans for a transcontinental trade lane have been significantly affected and halted from the disruption caused by the war in Gaza.[4] With murkiness facing the future of what will happen in Gaza, IMEC’s fate is similarly unclear.
Significance of this disruption:
IMEC promised to create more efficient trade routes for goods between major economies.[5] Under Prime Minister Narendra Modi, India has attempted to impact China’s global supply chain dominance through involvement in this project. Modi has even advertised this project as being the “basis of world trade for hundreds of years to come”.[6] There was ultimately a hope from the West that IMEC would be able to stop China’s rising geopolitical influence and growing global dominance. This is particularly in the context of China’s Belt and Road Initiative – a large China-led infrastructure project that aims to invest around the globe. I expect that the disruptions caused from the shifting geopolitical landscape will cause an emergence of new trade regulations and sanctions. Thus, IMEC’s legal implications as well as its effect on global trade routes will need to be considered.
In sum, with the halting of IMEC and losing ground in the Middle East region as a result, the US is one step further from gaining an edge in the global power dynamics. The US struggle to counter China’s grand economic vision has highlighted IMEC’s collapse as a distinct reminder of grand strategic plans often failing against harsh geopolitical realities. The future of this international trade corridor is ultimately dependent on the renewal of normalisation talks between Saudi Arabia and Israel – which could go either way.
[1] https://www.bloomberg.com/news/newsletters/2024-01-23/supply-chain-latest-india-middle-east-europe-economic-corridor?leadSource=uverify%20wall
[2] https://www.reuters.com/world/us-india-saudi-eu-unveil-rail-ports-deal-g20-sidelines-white-house-official-2023-09-09/
[3] https://www.brusselsreport.eu/2023/09/26/trade-corridor-politics-heats-up-with-access-to-europe-as-the-prize/
[4] https://www.bloomberg.com/news/newsletters/2024-01-23/supply-chain-latest-india-middle-east-europe-economic-corridor
[5] https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/finance/me_india-middle-east-europe-economic-corridor.pdf
[6] https://www.bbc.co.uk/news/world-asia-india-66957019
