September 21, 2023

Taylor Daily Press

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The new trade route between India and the West is parallel to the Chinese Silk Road

The new trade route between India and the West is parallel to the Chinese Silk Road

Among the series of multilateral agreements made by G20 heads of government last weekend, one announcement stood out: India, the US, the Gulf states and European countries will create a new trade route between Europe and India: IMEC. What is in this corridor and what does it mean for world trade and world politics?

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1 What is IMEC?

India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy, the European Union and the United States signed on Saturday. Statement of Purpose India to Middle East Europe Economic Corridor (IMEC). Its objective is to enhance the communication and trade relations between the European continent and India and thereby promote the economic development of Europe, Asia and the Gulf countries. The Arabian Gulf acts as a ‘hinge point’ in this. In addition to the existing shipping and road transport routes, the project also provides for the establishment of a cross-border rail link, among others. In parallel, cables must be laid for electricity and digital communications, and piping for ‘clean’ hydrogen. Economic Corridor To improve and make more sustainable the transit of goods and services through India, Emirates, Saudi Arabia, Jordan, Israel and Europe.

2 How likely is this connection?

The letter of intent does not mention any costs or planning. The document establishes the political will for the development of connectivity. Further expansion is intended to include a timetable. In a few months the countries will be reunited.

It is clear that more investments are needed to implement the projects. A press release from India, the chair of this year’s G20 summit, Indicates the involvement of the World Bank. For the EU, IMEC fits the strategy of investing in infrastructure projects worldwide. In this context, the Union, the United States and Indonesia launched the Global Infrastructure and Investment Partnership during the G20 Summit in Bali last year. This again includes the EU’s Global Gateway programme, with around ninety projects spread across the globe For this, European member states will release 300 billion euros until 2027.

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Money for IMEC should flow, among other things, to expand and connect rail networks between Saudi Arabia and the Emirates and Jordan and Israel. Recently, the railways of the United Arab Emirates and Saudi Arabia have been linked, and work is underway to expand that shared network. Saudi Arabia has ties to Jordan. Investments in ports along trade routes Offered in Haifa, Israel.

In addition to physical connections, investments must be made in intergovernmental relations. Saudi Arabia and Israel do not currently have formal diplomatic relations. However, there are signs of ‘normalcy’ – the Saudis are now allowing Israeli planes into their airspace.

Israeli Prime Minister Benjamin Netanyahu, who did not attend the G20 summit, mentioned the IMEC project. “Incomparable”. “The State of Israel can now become a central hub of the world economy and a bridge to peace.”

3 What is the importance of IMEC?

Better rail and port connectivity will significantly reduce freight transit time between India and Europe. According to Michaël Tanchum, a professor of international relations affiliated with the American Middle East Institute, among others, the transit could take ten days, while it currently takes seventeen days through the Suez Canal. As early as 2021, he explains how India, the Gulf states and Europe are moving closer together for the Institute of South Asian Studies in Singapore. According to him, India is operating on “a new strategic world map”.

According to Dansum, improving the route between India and the Gulf countries will make a difference; Emirates is India’s third largest trading partner. Other analysts are skeptical. They wonder if traffic is really bad enough to justify billions in investment. From the public statements of the parties behind the Declaration, it is not possible to determine where freight traffic will currently encounter problems.

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So the significance of the IMEC announcement lies mainly in its geopolitical implications. According to Indian political analyst Kabir Taneja, economic and political-strategic decisions are increasingly aligned. International Signaling of the New Economic Corridor: How to Bind Regions Politically, Commercially, and Infrastructurally Not Just for China

American news site Axios also previously reported on the rapprochement between countries now affiliated to IMEC. For the US, the plan is an opportunity to reduce Chinese influence in the Middle East. The Biden administration wants to strengthen ties with Saudi Arabia ahead of next year’s presidential election, and US diplomats have been calling for rapprochement with the Gulf states since May. Axios Specifically pointing out junctions Biden’s security adviser, Jake Sullivan, was in Saudi Arabia last May with colleagues from that country, the Emirates and India.

4 Isn’t China also acting on an ambitious trade initiative?

For ten years, China has been investing heavily in ambitious infrastructure projects around the world, such as ports and roads. This is Belt and Road Initiative (BRI) does not sit well with the US and India, providing China with raw materials and political influence in relevant countries.

So the Indian media describes the new corridor as such Alternative transport system, intended to reverse Chinese expansionism. Talking about one thing ‘Masala Path 2.0’A modern variant of the Silk Road, centuries ago merchants traveled between East and West through the Middle East.

That analogy is apt because the BRI is also known as the ‘New Silk Road’. Also, the Chinese initiative is more comprehensive. This includes infrastructure projects and more recently investments in Africa In 21 Latin American countries.

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Nevertheless, IMEC is apparently touching projects on the ‘Chinese’ track. Saudi Arabia and the Emirates are already cooperating with Beijing. However, those countries are unlikely to choose the New Silk Road or the IMEC route.

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Things are different for Italy, which co-signed a declaration of intent last weekend. Due to rising tensions between the West and China, Prime Minister Georgia Maloney has long sought a way out of the BRI. If the Italians get money from IMEC for transport infrastructure that replaces Chinese investments, that would be a solution for them.