What India's economic corridor means for the Middle East

7 min read
13 September, 2023

In hosting the 18th summit of the G20 earlier this month, India seized an opportunity to make its case for a special form of inclusive multilateralism.

This G20 gathering spoke to India’s rise as a major diplomatic player at the international level.

Amid a period of intensifying great power competition and deepening East-West divides amid the fallout of Russia’s February 2022 invasion of Ukraine, Prime Minister Narendra Modi’s government, to its credit, has effectively leveraged New Delhi’s global position to demonstrate India’s growing influence in global affairs.   

Perhaps the most important breakthrough from this month’s G20 summit came when US President Joe Biden and other G20 leaders unveiled the India-Middle East-Europe Economic Corridor (IMEC) with the signing of a memorandum of understanding by the European Union, France, Germany, India, Italy, Saudi Arabia, the United Arab Emirates (UAE), and the US.

"The unveiling of the India-Middle East-Europe Economic Corridor speaks volumes about deepening GCC-India relations within the context of the Gulf Arab states' 'Look East' geo-economic orientations"

The IMEC is a massive infrastructure project which is to directly link India with four countries in the Middle East (the UAE, Saudi Arabia, Jordan, and Israel) and ten in Europe (Cyprus, Greece, Albania, Montenegro, Bosnia and Herzegovina, Croatia, Hungary, Austria, the Czech Republic, and Germany) through sub-sea high-speed data cables, railways, energy infrastructure, and shipping lines.

Biden hailed the IMEC as a “really big deal” which will “contribute to making the Middle East a more prosperous, stable, and integrated region.” According to the MoU, “The IMEC is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe”.

The American president publicly thanked his Emirati counterpart, Mohammed bin Zayed (MbZ), saying that without his efforts the IMEC would not be possible. Saudi Crown Prince Minister and Prime Minister Mohammed bin Salman (MbS), whom Biden shook hands with at the G20 gathering, said that his country will invest $20 billion in this project.

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Establishing an alternative to Beijing's BRI

In a grander geopolitical context, Washington is pleased to see this project launch given the White House’s interest in countering China’s Belt and Road Initiative (BRI) as Beijing’s influence in the Gulf and greater Middle East continues growing.

The idea of the US working with India, the UAE, and Israel in a “minilateral” framework, which Washington sees as having the potential to seriously challenge China’s geo-economic clout, is not new.

Last year, those four countries formed the I2U2 Group. This four-member group prioritises cooperation and investment across six main domains (energy, food security, health, transportation, space, and water) through the mobilisation of private sector capital. The aims are to advance green technologies, modernise infrastructure, improve the quality of public health, and decrease the carbon footprint of industries in all four countries.

Saudi Arabia's Crown Prince Mohammed bin Salman, India's Prime Minister Narendra Modi, and US President Joe Biden attend a session as part of the G20 Leaders' Summit at the Bharat Mandapam in New Delhi on 9 September 2023. [Getty]

The IMEC is meant to build on the I2U2 Group, which the US and India saw as a group with much potential to effectively counter China’s influence.

“The [IMEC] project can be seen as an alternative to China’s BRI, this one being led by India and the US,” Poornima Balasubramanian, a research scholar at the Department of Geopolitics and International Relations at India's Manipal Academy of Higher Education, told The New Arab.

“The announcement arrives in a timely manner, functioning as a way to strengthen India's connections with the Middle East as well as Europe. Although this move may curb China's increasing sway over these areas, we’ll have to wait until actual implementation commences to see how effective it proves,” added Balasubramanian.

"The IMEC is reflective of the extent to which the Middle East and India have become increasingly interconnected"

The centrality of Gulf states in a more multipolar world

The extent to which Gulf Cooperation Council (GCC) states - particularly Saudi Arabia, the United Arab Emirates (UAE), and the Sultanate of Oman - were a central focus at this month’s G20 summit was notable.

For the Gulf Arab states, IMEC stands to increasingly centralise their positions in a world that becomes more multipolar with each passing day. As policymakers in GCC states see it, this project fits into their multi-alignment strategies.

“Both ‘the belt’ and ‘the corridor’ support post-oil diversification plans in GCC states, placing the Gulf at the centre of competing connectivity plans,” Dr Eleonora Ardemagni, a Senior Associate Research Fellow at the Milan-based Italian Institute for International Political Studies, told TNA.

“Joining the corridor could also be understood as the Saudi and Emirati attempt to mitigate, through differentiated projects, possible financial losses in case of lasting China’s economic slowdown, or conflict escalation in the Indo-Pacific, although their partnership with Beijing is strong and still in development,” according to Dr Ardemagni.

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The Asia-Gulf-Europe corridor deal stands to bolster Saudi Arabia and the UAE’s geo-economic and geo-strategic roles in global trade routes and security while making Riyadh and Abu Dhabi increasingly ambitious in their economic diversification agendas.

“From a political perspective, Riyadh and Abu Dhabi become inescapable players in international policymaking,” added Dr Ardemagni. She went on to explain that the IMEC places the Strait of Hormuz at the “centre of the strategic landscape” which means that this artery and the Gulf of Oman will “stand even more at the top of global security concerns”.

[Elmurod Usubaliev/Anadolu Agency via Getty Images]

Growing Gulf-Indian linkages

The unveiling of the IMEC speaks volumes about deepening GCC-India relations within the context of the Gulf Arab states’ “Look East” geo-economic orientations. So does the fact that last month both Saudi Arabia and the UAE received invitations to join BRICS.

Further illustrating the extent to which New Delhi and Riyadh are serious about bolstering relations was the 11 September meeting between MbS and Modi at Hyderabad House in New Delhi following the G20 summit. There the two leaders agreed to elevate Saudi-Indian relations across multiple domains such as energy, food security, defence, and health.

“When it comes to seeing expanding geopolitical ties between the GCC and India, [the IMEC] makes a lot of sense,” Dr Courtney Freer, a fellow at Emory University, told TNA.

"Although this move may curb China's increasing sway over these areas, we'll have to wait until actual implementation commences to see how effective it proves"

“It’s quite logical, especially if we see the pre-existing economic ties that exist between India and the GCC. You have the massive amounts of Indian labour within the GCC, and also India and China are the primary consumers now of Gulf energy. So, it does make sense that there would be some kind of geopolitical connection following these economic ties that have been in place for far longer. We’ve seen this in particular with Saudi Arabia and India especially.”

High levels of friction between India and China factor into the equation. Since mid-2020, when there were deadly clashes between Indian and Chinese forces in the Galwan Valley in eastern Ladakh, bilateral relations have been tense.

Modi has been under domestic pressure to make moves which counter Beijing’s regional and international clout, which Dr Freer believes is relevant to New Delhi’s motivations for supporting the Asia-Gulf-Europe corridor deal.

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The unveiling of IMEC possibly indicates that India seeks a different type of partnership with GCC states than the type of relationships that China has with Gulf Arab countries, according to Dr Freer.

“Whenever people talk about China and the Gulf, they tend to focus just on the economic side and not so much a focus on shared geopolitical priorities. So, this may signal…in addition to the recent news about BRICS, that India wants a different type of relationship - one which is not just about investments and economics but rather is more encompassing. It’s too early to tell. But this could be the case,” she added.

Ultimately, at this early stage, it is difficult to predict what this project linking India, the Middle East, and Europe will amount to over time.

Regardless, the IMEC is reflective of the extent to which the Middle East and India have become increasingly interconnected. This project is “reflecting the reality that most of the trade, especially when it comes to energy, is not coming to the West,” Dr Freer told TNA.

“In particular this will have a huge impact when it comes to intra-Middle East and Middle East-India trade.”

Giorgio Cafiero is the CEO of Gulf State Analytics.

Follow him on Twitter: @GiorgioCafiero