BATTLE FOR TRANSIT

Asia and the Middle East are close to launch a new large-scale transport and economic project, the India-Middle East-Europe Economic Corridor (IMEC). The agreement was reached on the margins of the recent G20 summit in New Delhi between the EU, the US, Saudi Arabia and India. Indian Prime Minister Narendra Modi announced the launch of the route, while the text of a memorandum of understanding between the participating countries was released by the White House.

The corridor will require rapid development of railway network, ports, container depots, terminals, high-speed data cables and energy pipelines. It is expected that other countries of the region (UAE, Europe, Jordan, Israel, etc.) also join the project. The corridor is expected to stimulate economic development by increasing trade links and integration between Asia, the Gulf and Europe. Project participants hope that the IMEC will reduce transport costs, create new jobs and even reduce greenhouse gas emissions. For example, India and Saudi Arabia expect bilateral trade to double to reach $100b in the coming years from the current $52b.

According to the document, IMEC will go through two separate corridors: the eastern corridor connecting India with the Persian Gulf countries, and the northern corridor between the Persian Gulf and Europe. The new route will make it easier to carry goods from India to European countries bypassing the Suez Canal. Details are still unknown, but the IMEC is exploring many different routes connecting several ports along the way, including Haifa in Israel, Piraeus in Greece, ports on the Indian coast, as ell as Fujairah, Jebel Ali and Abu Dhabi in the UAE, etc.

From developing to developed

IMEC is expected to reduce by 40% the time needed to transport Indian goods to Europe and also reduce by 30% the cost of their delivery. In fact, India's interest in the IMEC is well expected. As experts note, the corridor may facilitate India's transition from a developing country to a developed one by 2047. Meanwhile, it is clear that such a large-scale project is driven more by geopolitical reasons than economic ones. First of all, India with its growing economic potential wants to find a solid ground to counterbalance the famous Chinese Belt Road Initiative (BRI), which, for well-known reasons, it is not a part of.

India particularly dislikes the inclusion of the China-Pakistan Economic Corridor (CPEC) in the BRI. It has been speculated that these contradictions might be the main reason why the Chinese leader did not attend the G20 summit in New Delhi. By the way, international observers have righteously dubbed the IMEC as the New Spice Road. Historically, the Spice Road was the overland part of one of the oldest trade routes on earth spanning from India, the Spice Islands and East Africa to the Mediterranean.

Unsurprisingly, some regional observers suggest that India, if IMEC is successful, may leave BRICS, an organisation that recently decided to expand to include Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the UAE. With its strong orientation towards China, the BRICS is regarded to be generally anti-Western and is gradually transforming into a political alliance. India is also known to be part of an anti-Chinese alliance called the Quad group of nations (QUAD), which positions itself as a strategic dialogue between Australia, India, the US and Japan on security issues in the Indo-Pacific region. In fact, the main objective of the association is to contain China's aspirations in the Indo-Pacific region. In addition, the US and India have well-established channels for sharing intelligence data, holding regular military exercises. Washington also supports India in border crises with China and Pakistan.

In this sense, India's aspirations and interests bring it closer to the US, which warmly supported the IMEC initiative because it could be a response to China's BRI. That's why the White House called the agreement a historical breakthrough. Apparently, the main objective of the US is to distance India from the Russian and Iranian influence, as they collectively try to get New Delhi involved in the North-South corridor. Therefore, IMEC increases the US presence in the region and strengthens its position as a global player. The same is true for Europe, which is India's second largest trading partner and gets a chance to increase its geo-economic influence in the Gulf.

Geopolitical and geo-economical factors

Apparently, Saudi Arabia also shows an obvious interest in the project, realising that in the coming green era it would be very reasonable to invest part of its hydrocarbon income in shares of transit corridors and attract foreign investors. The normalisation of relations between the Gulf states and Israel fits nicely into the same equation. Indeed, it was Israel's proposal to interconnect the regional countries through a network of railways. Since everything is mediated by Washington, we have a perfect picture, which is never true in the world of geopolitics and geo-economics.

Thus, China's reaction to competitors has so far been restrained. It seems that Beijing is confident that the IMEC will not be realised soon, will be unprofitable and too complicated logistically due to constant reloading of goods along the route from ships to railways and vice versa. There are other shortcomings as well. For example, there are no mechanisms for public and private sector participation in the project. Moreover, it is clear that the route will strongly depend on the geopolitical situation in such an unstable region, particularly on the relations of the Gulf countries with Iran, the situation in Syria, and the Arab-Palestinian conflict.

On the other hand, China is quite confident in its BRI initiative, which already involves more than 150 countries, home to 75 per cent of the world's population and producing more than half of the world's GDP. Although the image of BRI has been tarnished by debt problems in countries like Sri Lanka, it is still the strongest, the most realistic and the most promising project. In addition, China's presence in the Gulf through its Huawei company, stakes in strategic ports and even a naval base should be taken into account as well.

As for Russia, it unexpectedly gave a rather optimistic reaction to the IMEC. Speaking at the WEF plenary session, President Vladimir Putin said that the corridor would only help Moscow develop logistics and would generally complement the North-South corridor, with India being a key participant of the project.

Obviously, there is a new aspect in the global battle for new transit routes. In general, the IMEC suggests the countries of the region to diversify their relations and join efforts wherever possible for the common benefit and success. While the world powers are engaged in fighting, the smaller countries are taking advantage of the situation to advance their interests and impose conditions. At the same time, India's ambitions to become a full-fledged geopolitical pole of influence are now clear. It is obvious that Africa will soon become another actor of the ongoing game. Thus, in addition to the IMEC, the EU announced at the G20 summit its plans to create the Trans-African Corridor - a transport network between Angola, Zambia and the Democratic Republic of Congo.

The most important thing is that these projects serve to increase the welfare of these regions by attracting investment and opening new jobs.