Five months following the G20 summit, the India-Middle East-Europe Economic Corridor (IMEC), touted as a game-changer, faces viability challenges and the shadow of the Israel-Hamas conflict.

The IMEC Vision

• The IMEC consists of two corridors: one linking India to the Arabian Peninsula and another connecting the Arabian Peninsula to Europe.
• It aims to streamline energy and container traffic from the Gulf to Europe, reducing shipping times, costs, and fuel use.
• Supporters estimate it could cut India-to-Europe shipping time by 40% and reduce transit costs by 30%. The IMEC also plans to expand digital connectivity and green energy distribution.

Zoom in.

• The IMEC is among several “connectivity initiatives” focusing on infrastructure in low- and middle-income countries, aligning with the Partnership for Global Infrastructure and Investment (PGII).
• For Saudi Arabia and the UAE, the IMEC aligns with economic development plans and goals to become global logistics hubs.

Zoom out.

• ​​Hype vs. Reality: IMEC’s economic impact might be overstated, with financing, logistics, and harmonization posing significant challenges.
• Financing Hurdles: No dedicated funding exists, and attracting private capital requires guarantees. Gulf support and private investment is crucial but uncertain.
• Geopolitical Roadblock: The northern corridor relying on Israel-Saudi normalization seems unlikely amidst the Gaza conflict.
• Adaptation or Delay: Underlying economic motivations persist, but the project might adapt to exclude the northern route or face delays.

Why This Matters:

• The IMEC’s success could reshape trade routes, benefiting economies and enhancing connectivity between regions.
• It represents a significant shift towards green and efficient infrastructure development, in line with global sustainability goals.

Looking Ahead

• Progress in Gulf rail projects shows promise for the IMEC’s eastern route.
• Normalization of relations is crucial for the northern route through Israel, but recent conflict poses challenges, especially the northern route through Israel.
• Despite hurdles, stakeholders’ commitment indicates continued efforts towards the IMEC’s realization.

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For More: https://www.mei.edu/publications/war-delays-likely-will-not-fully-derail-imec-plans