One of the major outcomes of the recently concluded G20 Summit in New Delhi was the signing of a Memorandum of Understanding (MoU) among the governments of India, the United States, Saudi Arabia, the European Union (EU), the United Arab Emirates (UAE), France, Germany, and Italy to create the India-Middle East-Europe Economic Corridor (IMEC) for establishing an economic corridor stretching from India to Europe.

Prime Minister Narendra Modi hailed IMEC as “a beacon of cooperation, innovation, and shared progress charting a journey of shared aspirations and dreams,” which he again highlighted on September 24 in his monthly radio programme, Mann Ki Baat. Many commentators and leaders have also described IMEC as a “historic” development that would prove to be a “game changer”.

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Leaving aside the euphoria generated by the announcement of IMEC as the modern incarnation of the ancient “spice route”, some hard questions need to be asked about its financing, credibility, and profitability. Who will foot the bill? Does the limited volume of trade involved justify a new and isolated rail line when there is already convenient maritime transport between India, the Middle East and Europe?

For example, India is the EU’s 10th largest trading partner, accounting for just 2 per cent of the total EU trade in goods. Is IMEC part of the US grand strategy to contain China’s growing foothold in the Asia-Pacific, Middle-East, and African regions by drawing other countries into its fold and using them as pawns? Will China’s Belt and Road Initiative (BRI) be successfully countered by IMEC, an objective that the United States and India have been striving for? We are mistaken if we think that IMEC is merely an infrastructure project.

The proposal represents a multimode transit corridor spanning over 3,000 miles, consisting of two separate wings, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe. It will be a combination of railroads, ship routes, and roadways.

According to the MOU, the participants also intend to lay along the rail routes a pipe for clean hydrogen export and cables for electricity and communications. IMEC is being seen as effective transport connectivity, which would promote investments and strengthen regional supply chains. It is expected to increase trade accessibility and facilitate the movement of goods and services by reducing transaction time by 40 per cent and cost by 30 per cent, compared to the present Suez Canal route, as estimated by an analyst from the Jerusalem Institute of Strategy and Security.

However, the claim that IMEC would substantially reduce the time and cost is doubtful, as due to the combination of transportation means involved, this would also entail multiple loading and unloading costs and time in each port along the way, as well as transit tolls and fees.

The normalisation of relations between Israel and Saudi Arabia is a crucial factor for the success of IMEC and the seamless transport of goods, which appears to be a remote possibility. The political stability in the Middle East is yet another important factor in its success, whose longevity is always questionable. The proposed corridor offers India a specific geopolitical advantage as it would find an alternative trade overland connectivity route to the west, independent of Pakistan.

India’s growing economic and strategic ties with the UAE and Saudi Arabia, which IMEC aims at, would help isolate its arch rival Pakistan in the region. There are many challenges and roadblocks that IMEC will face once the project is finally rolled out. Financing is one thorny issue on which the MOU is silent. It is not yet clear what the cost of the project would be, and how the requisite funds would be mobilised.

According to the initial estimate, the project would require around US$20 billion, which would have to be generated by the participating nations. The substantial funding is expected to come from the Partnership for Global Infrastructure Investment (PGII), a collective endeavour by G7 nations to finance transparent, climateresilient, and gender-equal critical infrastructure projects in developing nations.

Though not directly referred to in the MOU, one of IMEC’s implicit objectives is to counter China’s BRI, which strengthens its connectivity with countries across Asia, Africa, Europe, and Latin America with an extensive network of land and sea routes. Despite accusations of promoting predatory lending practices and “debt trap diplomacy” which undermine international norms and values, BRI has bolstered China’s clout at the international level.

What worries the US the most about BRI is the inclusion in it of many of its very close allies and IMEC partners, such as Greece, Italy, Saudi Arabia, and the UAE. While Italy has recently expressed its desire to withdraw from the BRI, it would still instead work on its broader economic relationship with China. It remains to be seen how a balance is struck between the two commitments.

India is deeply upset with China’s BRI, as one of its major components, the China-Pakistan Economic Corridor (CPEC), passes through Pakistan’s illegally occupied Kashmir. India considers CPEC a direct infringement on its sovereignty and territorial integrity. The divergence of interests among the partner countries may also undermine the prospect of IMEC’s success. It must be noted that all participants in IMEC are not necessarily ranged against China. Saudi Arabia and the UAE, the two main pillars of the corridor, are opposed to a bipolar world order that forces them to choose between these two rivals, China and the United States.

This is evident from the fact that they not only recently joined the BRICS group but are also trying hard to become members of the China-led Shanghai Cooperation Organization, which was established in 2001 as a political, economic, and security forum to rival Western institutions. Saudi Arabia may not share the United States’ objective to counter China’s BRI through IMEC. Saudi Arabia is getting closer to China, which recently mediated its landmark agreement with its arch-rival, Iran.

This has the potential to change the strategic dynamics of the region. It is worth noting that Saudi’s net trade with China has substantially risen to US$87 billion, while its trade with the US has declined to US$25 billion, which was almost the same as a decade ago. Saudi Arabia is also seeking to become a member of the Shanghai-based BRICS Bank, which is being developed by the world’s major developing economies as an alternative to the West-dominated World Bank and the International Monetary Fund.

The growing cooperation between China and many middle-eastern countries would pose a major challenge to the successful operationalisation of IMEC, as China’s economic engagement with these countries far exceeds that of the United States’ and its European allies. Over the last few years, China’s trade with the Middle East has grown by US$100 billion, with the total volume exceeding US$300 billion.

Obsessed with China’s growing global footprint and its desperate desire to rein it in, the US is looking for opportunities to wean away the nations that were enticed by China through BRI. IMEC is thus America’s endeavour to project itself as an alternative partner and investor for developing countries to contain China’s growing economic and political influence.

Our euphoria about IMEC should not blind us to the fact that many similar infrastructure projects like the Asia-Africa Growth Corridor (2017) and the Indo-Pacific Economic Framework for Prosperity (2022), despite United States commitments, have remained nonstarters for want of fundraising and questions about the sincerity of the United States. In the long run, if the United States or EU withholds funding due to changes in domestic and international political dynamics, IMEC would also meet the same fate. The success of IMEC will depend on the sincerity of the member states in addressing these challenges.

(The writer is a professor at Aligarh Muslim University and heads its Strategic and Security Studies Programme)