IMEC: A Modernized Ancient Route

In ancient times, before Ottoman hegemony and the creation of the Suez Canal, the old world was interconnected through the Silk Road and the Red Sea Trade Route. Today, as the Chinese government expands its influence through the Belt and Road Initiative (BRI), the heir of the ancient Silk Road, a new revival of the Red Sea Trade Route is also taking place, mainly prompted by the i2u2 – an economic and security cooperation of the US, Israel, India and UAE. In this case, the heir is the India-Middle East-Europe Economic Corridor (IMEC), which was announced in the G20 summit in New Delhi in September. 

The IMEC has been praised by many world leaders, including President of the European Commission, Ursula Von Der Leyen, who described it as a “green and digital bridge across continents and civilizations,” and her American counterpart Joe Biden, who dubbed it as a “really big deal.”

Behind this revolutionary U.S.-led endeavor — expected to cost approximately $5 billion according to initial estimates — conflicting interests offer major gains for beneficiaries while putting at stake grand losses for some discontented regional and international powers. Nevertheless, since its inception, increasing doubts have been casted amid the Middle East’s instability, especially in relation to the ongoing Israeli-Palestinian conflict. 

Who benefits?

The U.S., despite not having a direct relation to the whole project, is its main driver. The U.S. proposed the endeavor as a sign of its continuous commitment in the region amid skepticism around the Biden administration’s disinterest. It aims to send a strong message to U.S. allies in the Middle East, in particular Saudi Arabia and Israel, that the U.S. has never stopped providing support in security as well as economic matters. This is especially pertinent following recent concerns from the latter over U.S. commitment in the fight against Iranian influence. Such concerns are reflected in the Saudi, as well as Emirati, approaches with China through joining the BRICS and Shanghai Cooperation Organisation (SCO). Accordingly, for the U.S., this project also serves to restrengthen its waning power over the region as Chinese contestation is growing ever more powerful. As such, it aims to recover U.S. influence over the UAE and KSA while proposing a competing proposal to the Chinese BRI. 

Israel benefits by playing a central role in such a project through its Haifa port, especially since neither Syrian ports nor the exploded and underdeveloped Beirut port are capable of accommodating expected demands. However, Israeli interests are not only economic but also political. The trade route would require the expansion of the Abraham accords to include Saudi Arabia, the leader of the Arab initiative to defend Palestine. If such an expansion were to take place, especially with the recent talks between KSA and Israel, it would constitute a major win to the state of Israel. Israeli ambitions are expressed through Israeli Prime Minister Benjamin Netanyahu who boasted that the project is “the largest cooperation project” in Israel’s history. 

As to the UAE and KSA, the neighbors’ objectives, even if in constant friendly competition, are aligned in the project. As aforementioned, the U.S. seeks to reimpose its influence on the growing independent authority of both countries, yet it does not seem as such for Riyadh or Abu Dhabi. Even though the project would entail U.S. economic and political influence and support, MBS and Sheikh Zayed only consider it as another opportunity to strengthen their geopolitical and economic independence, benefiting from the bipolarized economic cold war between the U.S. and China. Their ultimate goal is to make their respective countries focal points in world trade as potential substitutes to their economic reliance on oil and other natural resources. In addition, with regards to the Abraham Accords, which the UAE already signed in 2020, the kingdom sees a benefit in a stable, peaceful Middle East. Perceived internationally as the Arab leader of the Palestinian cause, extensive concessions would be expected if any potential accord with Israel were to take place in order to maintain Arab and Saudi approval. Nonetheless, amid the current Gaza conflict, any accords are surely halted. 

Furthermore, Europe will surely benefit as trade becomes cheaper and more environmentally efficient. 

With regards to India, the project is seen as a means to try and rebalance economic hegemony over Asia, while ensuring greater Indian influence in the world economy in sight of concerns of its exclusion from the BRI (and the inclusion of its neighbor Pakistan through the China-Pakistan Economic Corridor – CPEC). 

Who are the losers? 

Egypt is arguably the principle economic loser in this new proposed equation of world trade, especially because the IMEC would bypass the highly tariffed Egyptian Suez Canal. Moreover, Egypt would be excluded from the new order. In fact, two of the reasons which prompted the IMEC are to avoid any potential crises in the Suez Canal and to reduce the imposed tariffs.

Iran, on the other hand, is set to be the main political loser as the trade route dodges all the potential intersection with Iran or Iranian influenced countries like Yemen, Lebanon, Syria and Iraq. Indeed, the Strait of Hormuz and the Bab El-Mandeb Strait, both of which oversee a third and tenth of all the traded oil in the world, are the pivotal locations for Iranian, and Houthi, maneuvers to mitigate imposed sanctions. In other terms, the IMEC can be considered as a U.S., Israeli and Saudi counterreaction to potential threats. 

The Turks are also going to take a hit not only because of its exclusion, but also because in the Chinese alternative, Türkiye is promised to occupy an essential role, which would likely fade overtime amid more efficient and more rapid opportunities otherwise. This radical opposition is reflected through President Recep Erdogan’s high tone comments on the IMEC, stating that “there can be no corridor without Türkiye” and that Türkiye would “part ways with the EU.”

Would China be considered a loser in this agreement?

As for the Chinese, despite the BRI, which has reportedly attracted $1 trillion in investments, being largely contested, it does not look like China will be the greatest loser, but they certainly will not benefit. Evidently, certain trade opportunities along the BRI are going to shift towards the more attractive IMEC; however, the BRI is a greater project, covering larger areas over more continents, particularly in Africa. Accordingly, it is unlikely that China will reduce its investments in its intercontinental project. Instead, China might look to alternatives such as extending the IMEC route towards other excluded regions via the BRI. Optimistically, the BRI and IMEC may potentially complete each other, thus revolutionizing global trade. In such a scenario, economic players like India, UAE and KSA (all members and partners of BRICS and SCO) will have a strategic economic role. 

What are the consequences of the increased aggressions regarding the Israeli-Palestinian conflict?

In the marketing for and the analysis of the IMEC trade route, it is presumed that peace and stability relatively prevalent in the Middle East in the last two years will resume. In fact, it is expected that such a trade route will end the region’s incessant instability by expanding the Abraham Accords to include KSA in exchange for major compromises on behalf of Israel in the benefit of the Palestinians. However, ever since the October 7 violence, it seems unlikely that KSA will be able to achieve these compromises. As to the Abraham Accords, its attainment is inevitable, but the conflict has surely postponed it. 

Overall, this resurgence of violence sheds light on the predicament the IMEC, as well as the BRI, will constantly face: instability of the Middle East. Without lasting peace, no sustainable trade route can be accomplished. Finally, India’s Finance Minister Nirmala Sitharaman has expressed firmly, and quite optimistically, that “IMEC is for the long term” when asked about the current violence’s reality.