Challenges faced by IMEC – A revival of the IMEC idea amid choppy geopolitics

Source: The post Challenges faced by IMEC has been created, based on the article “A revival of the IMEC idea amid choppy geopolitics” published in “The Hindu” on 22nd January 2024.

UPSC Syllabus Topic: GS Paper 2 – International Relations – Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.

News: The article discusses the India-Middle East-Europe Economic Corridor (IMEC), a proposed trade route. It mentions how conflicts like the Yemen conflict and Gaza war affect trade through the Suez Canal, making alternatives like IMEC more important.

What is the IMEC Project?

India Middle East Europe Corridor is a network of transport corridors comprising railway lines and sea lanes to promote economic integration between Asia, the Arabian Gulf, and Europe.

For more information on IMEC read here

What are the challenges IMEC is facing?

Geopolitical Tensions: The conflicts in Yemen and Gaza have impacted regional stability, crucial for IMEC’s success. The Yemen conflict undermines confidence in the Suez Canal, highlighting the need for alternatives like IMEC.
Turkey’s Exclusion and Alternative Proposal: Excluded from IMEC, Turkey has shown dissatisfaction and proposed an alternative trade route. This route, positioning itself as an alternative to Saudi Arabia, would pass through Iraq to reach the Mediterranean.

Saudi Israeli Link Controversy: The key part of IMEC, connecting Saudi Arabia to Israel, faces opposition due to longstanding regional disputes. Critics argue that the Arab Street would not support a major trade link between these two nations, especially following the Gaza war.

Uncertain U.S. Support: The potential political return of Donald Trump casts doubts on the U.S.’s commitment to IMEC. Trump’s unpredictable nature raises questions about sustained U.S. interest in such a global project.

How does IMEC benefit India?

Enhanced Container Shipping: For India, particularly the southern region, IMEC holds the potential to reduce delivery schedules by up to 40%. This improvement hinges on the development of dedicated freight corridors as part of a comprehensive all-India network, thereby making trade faster and more efficient.
Reduced Logistics Costs: Aligning with India’s National Logistics Policy of 2022, IMEC could help in reducing logistics costs to global levels by 2030.

Optimizing Transport Modes: Currently, 70% of India’s containers move by road. IMEC could shift this towards a more balanced split among road, rail, and coastal shipping, as recommended by industry experts.

Integration with Indian Ports: The corridor plans to integrate with major Indian ports like Mundra and Jawaharlal Nehru Port Trust, enhancing their global connectivity and trade capacity.

Support for the Hydrogen Economy: IMEC includes plans for hydrogen pipelines, which could benefit India in the transition to a decarbonized economy.

Way forward

The future of IMEC hinges on overcoming geopolitical hurdles and infrastructure challenges. Successful resolution of issues, like Turkey’s exclusion and the Saudi Israeli link, will be crucial. With potential global financing and support, especially from the U.S., Europe, and Saudi Arabia, IMEC could become a major, transformative trade route, benefiting regional economies and enhancing global trade connectivity.

Question for practice:

Evaluate the key challenges and potential benefits of the India-Middle East-Europe Economic Corridor (IMEC).