𝐓𝐡𝐞 𝐞𝐟𝐟𝐞𝐜𝐭𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐈𝐧𝐝𝐢𝐚-𝐌𝐢𝐝𝐝𝐥𝐞 𝐄𝐚𝐬𝐭-𝐄𝐮𝐫𝐨𝐩𝐞 𝐭𝐫𝐚𝐝𝐞 𝐜𝐨𝐫𝐫𝐢𝐝𝐨𝐫 𝐰𝐢𝐥𝐥 𝐟𝐚𝐫 𝐬𝐮𝐫𝐩𝐚𝐬𝐬 𝐂𝐡𝐢𝐧𝐚’𝐬 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐦𝐞𝐧𝐭.

The European Union, France, Germany, India, Italy, Saudi Arabia, the United Arab Emirates, and the United States all signed onto the India-Middle East-Europe Economic Corridor (IMEC) project to facilitate trade between India and those regions. A multimodal rail channel, underwater electrical cables, and environmentally friendly energy pipes will connect India and Greece as part of this project. By reducing expenses, ensuring secure communication, and bolstering ties with Arab governments, the IMEC solidifies India’s geoeconomic push into the Middle East. It coincides with U.S. attempts to foster mutual understanding between Saudi Arabia and Israel and hastens the process of normalizing ties between Riyadh and Tel Aviv. A strategic transit hub, the project is complementary to Beijing’s Belt and Road Initiative and in line with Riyadh’s Saudi Vision 2030.

There are, nevertheless, many difficulties and problems that the IMEC must overcome.

The omission of nations like Iran and Turkey from the economic corridor presents difficulties for the India-Middle East-Europe Economic Corridor (IMEC). Due to their isolation from the northern route, Egypt and Algeria rely heavily on Turkey as a production and commerce base. Chabahar Port in Iran is a project that India has been planning for over twenty years as a response to China’s support for Gwadar Port in Pakistan. However, India has had a difficult time following through on its promise to create this port. Since India has been unable to build Iran’s Chabahar Port due to ongoing US sanctions, the IMEC could pose a threat to the port.

Transit network development, customs and border rules, transit delays, and regulatory frameworks are all examples of local logistical issues. Trade, investment, and economic cooperation will all greatly benefit from a harmonization of these frameworks. It takes a lot of diplomatic work and compromise to find a happy medium between individual countries’ interests and regional collaboration.

The lack of financial backing is another major roadblock to IMEC adoption. In order to attract significant investments from various stakeholders, large-scale infrastructure projects often require a comprehensive financial system connecting all interested nations. The route’s economic activity and financial institutions would benefit from the establishment of local and regional financial hubs with solid regulatory frameworks. To maximize the economic benefits of the corridor, it is crucial to strike a balance between cost-effectiveness and the project’s long-term viability.

China, on its turn, is aiming to lure commerce and investment away from the IMEC and into its own corridors; it is also an economic competitor to the IMEC. Similar to the ambitions of the European Union’s and the United States’ own BRI, China’s BRI is much more ambitious. There is no public record of the total budgeted amount, but the heads of state from the Group of Seven have promised to raise $600 billion by 2027 to counter the BRI. In total, China has inked BRI cooperation documents with over 150 countries and 30 international organizations, allowing the country to raise over $1 trillion and initiate over 3,000 projects. Our target year for project completion is 2049. Several countries that signed the IMEC document are also members of the Belt and Road Initiative (BRI), including Italy, Saudi Arabia, and the United Arab Emirates, whose involvement in the two competing initiatives is overlapping and even contradictory.

Additional funding obstacles are that the International Monetary Fund (IMF) might not be forthcoming in backing up such megalomanic projects, which might be jeopardized by political unpredictability.

Conflicts in Syria and Yemen, threats to Israel from Iran-backed forces in Syria and Lebanon, and the current disagreement between India and Pakistan are all geopolitical issues that affect the IMEC’s chances of success. Iran’s proximity to the Strait of Hormuz poses a threat to the IMEC project, and the country’s strategic location at the crossroads These geopolitical issues have the potential to stymie collaboration and slow the rollout of regional connectivity initiatives. Different priorities and historically contrasting perspectives on numerous economic and political concerns can cause gaps among stakeholders, making a clear consensus and cooperation among participating nations vital.

@prognoz_news