A Panel Discussion on, India-Middle East-Europe Economic Corridor (IMEC) – Corridor of Prosperity? : Implementation & Impact was conducted by the Center for International Relations and Strategic Studies (CIRSS), IMPRI, Impact and Policy Research Institute, New Delhi on October 4, 2023.
The discussion was initiated with Dr. Simi Mehta, CEO & Editorial Director, IMPRI’s, introductory address about the IMEC and that it was launched at the G20 Summit held in New Delhi ushering a new chapter in global connectivity and development.
She also stated that the session explicitly focuses on how it is a game changer, what the project is all about, its objectives, its impact on other countries not covered in the IMEC, what happens to those countries who are members of the Belt and Road Initiative running in their countries, implications of the relations between China and other IMEC countries, would it generate further geoeconomic and geopolitical rivalries, prospects of the sustained progress of IMEC and its difference from the BRI.
Then she handed the session over to Prof Rafiq Dossani, Director, RAND Center for Asia Pacific Policy; Senior Economist; Professor of Policy Analysis, Pardee RAND Graduate School, RAND Corporation, USA (TBC) for his opening remarks. He focused on the history of international Asian corridors and that their record had been dismal as nothing came and actualized after the formulation of such corridors. So, there always comes a question of the relation between finance versus knowledge as for the success of such corridors management of finance plays an important role.
The second issue he raised was that all the countries involved in the IMEC apart from India, were developed countries, and his third concern lies in the fact that the competition to the Suez Max is obvious but there is no clear distinction between BRI and IMEC except routing structures. Moreover, he is also concerned with what is the Supply Chain whose growth shall be de-risked by this corridor initiative, and the cost issues.
He further highlights the positive outcomes of the IMEC after highlighting all the concerns and problems with the same. The geopolitical gain is a positive outcome in the sense that India has gotten involved with the USA more closely than ever before. Though this is partly a result of the antipathy between the USA and China, still India is valuable for its own sake and this has also helped countries like Saudi Arabia and the Middle East which have a certain agnostic attitude towards the US-China rivalry come closer to the USA sides.
Then the session was handed over to Amb Anil Trigunayat (IFS Retired), Distinguished Fellow, Vivekananda International Foundation (VIF), New Delhi who gave his ideas regarding the IMEC. He said that at the moment it looks like it will be a very good project from India’s point of view. Also, the fact that the Gulf countries are the third largest trading
partners of India, complements very well the changed policy of the GCC which means that they are trying to move towards having strategic autonomy. Moreover, IMEC is not the only corridor India is spending in. The quintessential corridors India has been a part of include INSTC and ASEAN Corridors, and it has been part of various important trade routes since ancient times.
Owing to the fact that India is one of the key ports already, has excellent shipping connectivity with UAE, and is managing the Haifa Port and the USA is dependent on the Middle East for oil and petroleum products having been involved in the Russia- Ukraine turmoil, all the major participants are looking at it from Geostrategic, Geoeconomic and Geopolitical point of view.
He further details that for the USA, it might be mostly geopolitical but for India, it is geoeconomic to a high degree. India wasn’t looking at it as something to replace the BRI rather India was looking at IMEC as a viable alternative which will obviously depend on how financing is done.
Addressing the Issues
Next, the session proceeded forward with the floor passed on to Prof Prabir De, Professor, of Research and Information Systems for Developing Countries (RIS), New Delhi who stated that there are various risks involved in a multimodal corridor. He defined an economic corridor in a way that it is a transport corridor with certain additions like high-speed logistics facilities, quality of transportation trade policies, and facilitation.
He stated that the primary objective of the IMEC is to enhance global integration but he thinks that the integration is not happening up to his and many others’ expectations. He highlights how COVID-19 provided us with the necessary reality check as to the requirement for an alternative global corridor if we look at global value chains. Hence, connecting the ports in India and the Middle East, all the way to some of the tripods in Saudis and Jordan including Israel Haifa, and then crossover material to Europe, insofar poses a brilliant opportunity as an alternate option.
Looking at the issue of Finance and Knowledge, he explicitly details how it shall be a gain of knowledge for India as it has learned from its own mistakes and set up multimodal transport corridors involving countries and India’s particular interests in the Western side, and in relation to finance, he stated that it was a G7 project, 2022.
India has certain interests in the private sector and connecting the new market. However, the risk here lies in too much dependence on the products as India couldn’t expand its export baskets in the way it was expected, and being cautious about the same is required. His last address explains capacity upgradations wherein, we don’t do domestic reforms because of our structural systems and hence these pool factors are also important in India.
What does IMEC mean for India?
Like everyone else, he stated that the details of the project are yet not well known. About BRI, he stated that it has been commercially viable and volumes are quite significant hence, in the case of IMEC, the open-ended question stated that along with physical infrastructure, what concepts of trade facilitation will be driven and whether all the parties involved will cooperate and get it done which he states that might be achievable by a top-down approach coming from a geopolitical point of view.
Then he states that if there are existing builds by BRI in the form of infrastructure, it will only complement the multimodal operation and add to the economic skills around business development and driving the particular route. However, the success of such interdependence depends mostly on how serious the
governments are about putting in the money for the infrastructure, the facilitation aspect, and how well that route is used operated, and sold to The Operators and networks built. According to him, the way trade works is through trading economics and UAE has already attained an essential role as an outlet for African Goods around the Indian Ocean, wherein, its interests lie in becoming even stronger as a Hub in the trading economics scenario.
Answering Prof Prabir De’s concern about demographics in India, it states that given that it doesn’t face any significant shock, India will continue to grow and over the years contribute an increasingly larger share of the incremental growth of the world economy making it a huge demand country in the current scenario.
Hence, given India’s strategic location and various successful transit and trade policies, there are attempts for Indian ports to emerge as transshipment hubs. Moreover, with the development of technology, cheaper storage which might not be possible today, may turn out to be a reality in the near future in a decade or so, where storage and distribution of renewable energy becomes cost-efficient.
About Amb Anil Trigunayat’s comment on the failure of the INSAT, he mentioned how it wasn’t a complete failure as it effectively connects the Swing states of Iran and Russia with India being a key player in this corridor along with being the initiator, conceptualizer, and financer of the corridor.
Hence, it is very much possible for India to visualize a situation where it can help normalize the situation between Iran Russia, and the United States, integrate the INSTC to IMEC, and use network effects of both these corridors to connect interlinked geography which goes north-south to the literal states of the African states in the Indian Ocean with the Middle East acting as a hub, East to West connecting India and Europe and further north from Russia to the Baltics making it a significant interlinked linkage of transportation.
He ends his monologue with the statement that if India plays its cards right, this opportunity is going to churn out extremely well and successfully thereby progressing its international stature and making it an essential player on the world stage.
Further Remarks on IMEC: Its Viability and Prospects
The session was then directed towards Prof Mukul Asher, Visiting Distinguished Professor, IMPRI; Former Professor, Lee Kuan Yew School of Public Policy, National University of Singapore (NUS) who stated that such a mega-infrastructure project comes with a lot of complexities and the key aspects of such projects are project management and procurement point of view which is required to be quite robust for the success of the project. He also states that there would be three industrial corridors in the IMEC namely food, green energy, and knowledge economy.
According to him, there is a dichotomy between finance and numbers as he says that knowledge has been diffused to a large extent. Although the kind of knowledge aggregation and concentration that countries like the US can have, others don’t. However, that doesn’t mean that knowledge will remain static so, looking at this initiative in terms of a larger canvas of India’s Sagar Mala and Bharat Mala projects, India’s share in total global shipping ports capacity is below what it should have if it is to realize the goals of the Amrit Kaal ending in 2047.
Therefore, he suggests thinking about the project in a dynamic way as to how the opportunities can be created through discussions. However, there is still a risk from the political economy point of view thereby creating both positive and negative externalities.
The session ended with an insightful panel discussion by all the speakers involved that gave the audience much-needed insights as to the prospects and consequences of the IMEC.
Acknowledgment: Samprikta Banerjee is a research Intern at IMPRI.
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