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India-Middle East-Europe Economic Corridor

 September 19, 2023  Leave a comment
India-Middle East-Europe Economic Corridor

Syllabus: GS2 – Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests
Source: The Hindu – 17/09/2023
Context:
A memorandum of understanding (MoU) was signed to establish the ‘India-Middle East-Europe Economic Corridor’ (IMEC) on the sidelines of the recently concluded G20 summit in New Delhi.

Content

‘India-Middle East-Europe Economic Corridor’ (IMEC)

  • The proposed IMEC will consist of railroad, ship-to-rail networks (road and sea) and road transport routes (and networks) extending across two corridors.
  • The east corridor will connect India to the Gulf, the northern corridor will connect the Gulf to Europe.
  • It would provide a reliable and cost effective crossborder ship-to-rail transit network to supplement existing maritime and road transports routes.
  • It would enable the transportation of goods and services from India to the UAE, Saudi Arabia, Jordan, Israel and Europe, and back.
  • The corridor is expected to increase efficiency , reduce costs, generate jobs, and lower greenhouse gas emissions.
  • This in turn will translate into a “transformative integration of Asia, Europe and the Middle East.”
  • The project, which forms part of the Partnership for Global Infrastructure and Investment (PGII), may also serve as a counter to China’s economic influence in the Eurasian region.

Significance:

  • It is a multi-modal and multifaceted project and its connectivity envisages not only physical dimensions involving rail and shipping networks but also digital and financial.
  • This corridor links both continents to commercial hubs and facilitates the development and export of clean energy.
  • The corridor will make trade between India and Europe 40% faster. The reduction of time for transportation will reduce costs, save energy, increase trade, and energize economic development. 
  • IMEC has immense potential to put India, Middle East and Europe on a collective path to growth, triggering regional and global cooperation.
  • It exemplifies the potential for corridors to not only bolster commerce but also foster meaningful diplomatic engagements.
  • It will offer a viable alternative to the Chabahar route for the International North-South Transit Corridor (INSTC), which has been facing delays and challenges.
  • It will reduce the shipping time and cost between India and Europe, as well as the fuel usage and greenhouse emissions.
  • It will strengthen India’s strategic partnership with the US, Saudi Arabia, UAE, and other Middle Eastern countries, which are key players in the region.
  • It will create new avenues for cooperation and development among the countries involved in the corridor, especially in sectors such as energy, tourism, education, health, culture, and innovation.
  • It will revive the ancient maritime and overland commercial linkages between the countries of the Arabian Sea and the Mediterranean Sea region, which have a rich history and cultural heritage.
  • The IMEC will also foster people-to-people ties and mutual understanding among the diverse communities along the corridor.
  • It will showcase India’s leadership role in promoting regional and global connectivity, as well as its vision of an open, secure, and prosperous world order.
  • The IMEC will also demonstrate India’s commitment to multilateralism and international cooperation in addressing common challenges and opportunities.

Advantages:

  • Enhance connectivity and economic integration between India, West Asia and Europe.
  • Help in narrowing the infrastructure gap in developing countries.
  • The IMEC will also help towards accelerating progress on the Sustainable Development Goals (SDGs) globally.
  • Boost trade and investment opportunities for India and its partners, as well as create jobs and growth in the regions .
  • Promote food security and supply chain resilience between the participating countries, especially in times of crisis.
  • Facilitate the export of clean hydrogen from India to Europe, which will help in reducing greenhouse gas emissions and combating climate change.
  • Enable the transfer of technology and innovation between India and Europe, as well as foster scientific cooperation and research in areas of mutual interest.
  • Strengthen the strategic engagement and partnership between India and West Asia, especially Saudi Arabia and the UAE, which are India’s largest trading partners in the region.
  • Provide a counterbalance to China’s Belt and Road Initiative, which has raised concerns about debt traps, environmental impacts etc.

Challenges:

  • Requires huge investments and coordination among multiple stakeholders, such as governments, private sector, multilateral institutions and civil society.
  • It might face security risks and political uncertainties in some of the regions involved, such as West Asia and Afghanistan.
  • It will have to deal with legal and regulatory hurdles and harmonize standards across different countries and regions.
  • It will have to overcome geographical and logistical constraints and ensure efficiency and reliability of the transport and communication networks.
  • It will have to address the environmental and social impacts of the infrastructure projects and ensure compliance with the environmental, social and governance norms.
  • It will have to balance the interests and expectations of the participating countries and regions and avoid conflicts or rivalries with other initiatives or actors.
  • It will have to ensure its sustainability and resilience in the long term and adapt to the changing needs and circumstances of the participating countries and regions.
  • The exclusion of Turkey from the corridor created tensions in the global geopolitical arena. This can be a possible challenge to the implementation of IMEC as Turkey is among the world’s leading producers of agricultural products, textiles, motor vehicles etc.

Way Forward:

  • The corridor should be developed in a sustainable and inclusive manner, ensuring prosperity of all the participating countries.
  • The corridor should be based on the principles of transparency, openness, fairness and mutual respect.
  • The corridor should foster regional cooperation and integration.
  • The corridor should leverage the potential of digital and green technologies.
  • The corridor should promote trade facilitation and  investment protection.
  • The corridor should address the challenges of poverty, inequality, health, education, environment and climate change.
  • The corridor should address issues of common interest and concern, such as security, counter-terrorism, maritime safety, cyber security and regional stability.
  • The corridor should involve the participation and consultation of all the stakeholders, including the governments, civil society, private sector, academia and media.

Related topics

Belt and Road Initiative

  • China’s Belt and Road Initiative (BRI), also referred to as the New Silk Road, is one of the most ambitious infrastructure projects launched in 2013.
  • The Belt and Road Initiative is believed  to be a way to extend Chinese economic and political influence by linking South-East Asia, Central Asia, the Gulf region, Africa, and Europe with a network of land and sea routes.
  • The China-Pakistan Economic Corridor (CPEC), which connects Gwadar Port in Pakistan’s Baluchistan with China’s Xinjiang province, is the flagship project of BRI.

Partnership for Global Infrastructure and Investment

  • The Partnership for Global Infrastructure and Investment (PGII) is a collaborative effort by Group of Seven to fund infrastructure projects in developing nations based on the trust principles of the Blue Dot Network.
  • It is considered to be the bloc’s counter to China’s Belt and Road Initiative.
  • The India-Middle East-Europe Economic Corridor programme, part of the PGII, aims to build sustainable, resilient infrastructure in India, countries in West Asia and the US.

Practice Question:  
Discuss the strategic importance of the India-Middle East-Europe economic corridor. Analyze its potential impact on India’s trade and diplomatic relations. What challenges do you foresee in its implementation and how can they be addressed?  

Reference:

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