The India-Middle East- Europe Economic Corridor is one of the most prominent outcomes of the successful G20 Summit 2023. The corridor connecting the two continents will revolutionize trade and serve to counter China's BRI at the same time.
The G20 Summit 2023 has been a historic feat, for not just India but the global community as the world’s leaders got together to form a consensus towards peace, security and economic development. The consensus on the New Delhi Declaration document gave way for a future marked by larger international cooperation on sustainable economic development and a peaceful recourse to global conflicts. The backdrop of this was of course the Russia -Ukraine war, the conflict has not only had an impact on the geopolitical landscape of the world but also on the international economic situation with the disruptions in supply chains, food shortages and the energy crisis. It is with this context that it became extremely important for the world’s stakeholders to come together and agree on the acknowledgment of the humanitarian and economic crisis that the conflict has created and thereby take a constructive approach to it.
As much as we need to commend the clarity with which the G20 countries deliberated on the geopolitical issues, it is also important to take into consideration the other major breakthroughs that have been brought out of this landmark Summit. The G20 is primarily a platform for economic cooperation and integration and this Summit of 2023 has achieved a milestone in this regard: The India-Middle East-Europe Economic Corridor.
As a part of the greater Partnership for Global Infrastructure and Investment (PGII) that was developed by the G7 countries to fund infrastructural projects and investments in middle and low-income countries, the India-Middle East-Europe Economic Corridor has been in the works for a year. The project was officially launched at the G20 meeting by the leaders of Saudi Arabia, UAE, Italy, Germany, France, the European Union and India. The India- Middle East- Europe corridor aims to foster interconnectedness in a world that seems to be disintegrating in the midst of deepening mistrust and conflicting aspirations. The countries came together to sign the Memorandum of Understanding (MoU) for the project and reiterated their commitments to bring the project to reality.
The economic corridor will link Asia to Europe through two main corridors. The east corridor, to link India’s Mundra port in the west coast to the Arabian Gulf and the northern corridor, to connect the Arabian Gulf to Europe. The corridor will consist of a railway line that runs along the Saudi Arabia, UAE, Jordan and Israel in the Middle East to move to Europe. This railway line will revolutionize the trade route between these countries and successfully integrate the maritime trade routes with the railway lines, thereby reducing the cost of transit as well.
For India, this is a major step forward in the country’s ambitions to get access to the Middle East and also to Europe. The corridor will benefit India’s trade routes to Europe and provide an alternative to the longer route that used to be accessed through the Suez Canal. For India and the Middle East, this will also reduce the overuse of Suez Canal in trade routes. The G7 countries have agreed to fuel the project through infrastructural investments and this will allow for the much needed logistical support to build the corridor. It has also been agreed upon that green hydrogen pipelines project will be merged with the corridor, allowing for more access to and investment in green hydrogen pipelines by the countries involved.
Apart from the benefits that the memeber countries will be reaping from this project, there is definitely the angle of China looming large when we consider the project in the context of the greater geopolitical situation. China’s investment projects under the Belt and Road Inititative attempted to achieve something quite similar, a corridor that would allow ease of access to trade for China. However, after all these years, the project seems to be falling apart. The India-Middle East-Europe corridor offers the alternative and even a challenge to the Belt and Road Initiative (BRI) of China since the BRI is reaping less benefits and creating progressive debts. As Italy has officially quit the engagements with the BRI, it provides a strong setback for China’s ambitions in Europe and at the same time, becomes a major strategic advantage for the countries involves in the India-Middle East-Eruope Economic Corridor.
While the India-Middle East- Europe Economic Corridor project has been considered a landmark agreement and heightens the foundations of economic and infrastrucal cooperation between Europe and Asia, there are still issues that need addressing as the project goes ahead.
The one major challenge is going to be regarding fostering commitment and cooperation among the states with great geopolitical disagreements. Saudi Arabia, UAE and Israel are important pieces to this corridor however in order to build the lines successfully, it would be essential for the coutnries to come to the table and cooperate. This may seem to prove a bit difficult considering the heightened tensions among the states, especially Saudi Arabia and Israel. It will also be necessary for the project to keep the transport of the goods cost effective as it will be integrating maritime routes with railway routes. The next important asepct is to maintain the project’s successful engagement as a trading route among the countries involved so it can stand as a strong opposition to China’s BRI and attempt to balance China’s efforts in making in-roads in the Middle East.
Holistically, this agreement is a major win for all the parties involved. It stands an extra feather in India’s cap as it completed the successful negotiations on the project and also fulfilled its own goal to get direct access to trade in the European and West Asian markets.