Of the multiple outcomes from the G20 gathering in New Delhi earlier this month, perhaps the most intriguing was the sig ning of the India-Middle East-Europe Corridor (IMEEC) agreement. This announcement has met with both excitement and cynicism. So me have been dismissive of IMEEC’s very viability Others have seen it as a like-for-like competitor of China’s Belt and Road Initiative (BRI).
Where does reality sit?
Strictly speaking. IMEEC is not a corridor. A corridor implies goods travelling from a source to a market over a vast territory that contribu- tes a pathway but no significant value addition. BRI is such a corridor It is essentially a one-nation narrative that of Chinese manufactu ring seeking market access in dis tant countries. In contrast, IMEEC is designed as the intersection and interoperability of distinct economic initiatives with independent potential. More than a corridor, it envisages an ecosystem, even a geoeconomic megaregion.
IMEEC makes three discrete domestic bets: India becoming more of a manufacturing economy with rising exports as well as energy needs.
The Saudi and UAE/Gulf economies transforming into a sustai nable post-oil prosperity with state- incubated investments in new me gacities that become centres of finance, technology and innovation.
Europe’s strength as an inno- vation and manufacturing hub (Germany, Italy), with its quest for diversified and trusted non-China partners, In parallel, there are cross-border bets: The 2020 Abraham Accords see ded the 12u2-India, Israel, UAE, US initiative. When the foreign mini sters of the four countries met for the first time in this format in 2021.
it was emphasised 12u2 was to be a business and private sector-driven initiative. At its core is an Israeliquest to create new openings in the Arab world for its technology com- panies, including health, water, agriculture and space technologies.
India’s motivations are similar. Indeed, Indian and Israeli companies will both collaborate and compete in Arab markets in some of the areas mentioned. India will also build on existing supply chains and relationships with the Arab world in energy, food security, military equipment and services.
To illustrate that final point, in 2000, Indian exports to Saudi Arabia amounted to $861 million, with rice occupying 35% of the export
BRI, unlike IMEEC, is essentially a one-nation narrative-that of Chinese manufacturing seeking market access in distant countries basket. By 2021, Indian exports had expanded to $8.69 billion, with refi ned petroleum at 25%. The charac- ter of commerce is changing. iPhones and electric vehicles will change it further. More broadly.
IMEEC is not fixated on one key alignment between China and a customer country but on multiple hubs, nodes and axes. It is held -up by several pillars.
Take energy. More than one IMEEC – participant IMEEC allows India escape a keygeopo is looking at trap: green hydrogen. India and many Arab countries have massive solar energy plans. A key link in the ‘One Sun, One World, One Grid’ arrangement connects India to West Asia. Solar power generated in the Gulf region could be used at peak demand hours in India, available at very low prices. access to its wider because of Pakistaan
Signed in November 2022, the Partnership to Accelerate Transition to Clean Energy (PACE) com- mits the UAE to supporting investment of $100 billion to deploy 100 gw of clean energy globally using US backed technology. Among other things, there is scope here for nuclear energy, and supply chains and deployment of small modular reactors. All of this could easily be incorporated into a IMEEC framework.
IMEEC’s connectivity architecture is ambitious. It covers mariti- Ime and overland transport facilities. It envisages, at the very least, an upgraded port in Haifa and new railroads crisscrossing West Asia. IBRI has often built infrastructure in the absence of compelling commercial logic. Think of power pro- jects in Pakistan, the Gwadar and Hambantota ports. IMEEC facilities will be backed by demand.
Rather than sovereign debt, they will likely be financed by Saudi and the UAE sovereign funds, private equity from the US, and a combination of corporate and family-office investment from India. All of this will encourage compliance with market principles and viability. There will be opportunities here for Indian infrastructure corporations, and not just Adani Ports. Indian construction companies have long executed projects in the re gion. IRCON, Indian Railways’ international engineering arm, was y building rail networks in Iraq as far a back as the 1980s.
It is a fair point that a few of IMEEC’s connectivity projects could duplicate existing Chinese-owned facilities, or even ones in Turkey Is the cost worth it? This wo- uld reflect political choices and preferred infrastructure ‘trusted connectivities’, if you will. The fading of the globalisation model 1 of the late 1990s has meant countries prioritise manufacturing cent Vres in which they are invested but which are not necessarily the chea pest. There is no reason why a similar ‘redundancies rationale’ would not apply to connectivity.
Finally, IMEEC allows India to escape a key geopolitical trap: lack of territorial access to its wider west because of Pakistan. The long-term geopolitical implications are enordmous and should leave Islamabad thinking. Frankly, even if Pakistan were to suddenly offer India a green light, no respectable financial institution or insurance firm would back connectivity projects running through volatile landscapes in Pakistan and Afghanistan. In this regard. IMEEC’s geography is more stable and better placed. Hence the hope.