Will the IMEC Survive after New Delhi G20 summit?

With a view to the future of IMEC, to make its dream come true, it should conquer various challenges, including the ongoing conflict between Israel and Hamas.

To comfort people who doubt the future of the India-Middle East-Europe Economic Corridor (IMEC) amid the ongoing conflict between Israel and Hamas, Indian Finance Minister Nirmala Sitharaman said On 27 November that “The IMEC has long-term considerations. IMEC is not going to be dependent on one or the other major event of concern.”

Is her answer trustworthy, whereas she had just said on November 15 that the IMEC was facing geopolitical challenges in the current conflict? Two months have passed since the announcement of the IMEC, but no blueprints are emerging.

With a view to the future of IMEC, to make its dream come true, it should conquer various challenges, including the ongoing conflict between Israel and Hamas, the divergence of political interests and funding issues.

Ongoing conflicts add uncertainty to the envisioned IMEC

The project came out in the context of peace deal negotiations between Saudi Arabia and Israel, supported by the US. However, the conflict in the Middle East has widened the estrangements between Israel and the Arab world, which has led to a diplomatic complexity between the Arab countries and Israel, and has created obstacles for IMEC-related negotiations.

Month ago the United Arab Emirates, Jordan, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait, Egypt and Morocco jointly condemned Israel’s heavy bombardment in Gaza, so did Turkey on other occasions. Jordan’s Foreign Minister Ayman Safadi said in mid-November that “the Israeli war is bringing, not just on Gaza, but on the region in general”, and he called it a “catastrophe”.

Although a ceasefire has begun from 24 November and has been prolonged for 2 days, Israeli Defense Minister Yoav Gallant has told his troops of the Navy’s Shayetet 13 commando unit that the truce is temporary and when it ends, Israeli troops will resume the fighting “with intensity” for at least two more months. Israel has made it clear that cease-fire doesn’t mean the ending of its war on Hamas. But how long will the war last is still unknown.

Among the multiple routes being taking into account for the IMEC, Israel is a crucial component of it with its Haifa port as a necessary route for goods from India and Arab countries to get to Europe. With IMEC aiming to connect India to Europe with a route that passes through Arab countries, the lasting conflict in the Middle East could cast a dim light on IMEC.

Funding adequacy can’t be guaranteed

Major participating countries of IMEC haven’t given a clue to how to allocate financial burdens among them. The IMEC has being perceived as a “Rich Men’s Club”, regardless the fact that many of the participants are fighting with significant financial dilemmas. While Saudi Arabia may have the capacity to fulfill its promise of investing $20 billion in the IMEC, other countries like the US, the EU, Germany and India may have difficulty in funding.

The US has no enough money for its bold global infrastructure projects, either does the EU. Debt burdens in the US and the EU are so heavy that they can spare nothing from its budget for IMEC.
Is the EU able to push the fresh IMEC forward when its Global Gateway is facing with funding issues too? On 27 November, the EU has just been warned by ECB President Christine Lagarde that Eurozone economy likely to stay weak through the year end.

On 10 October IMF said that Germany’s economy encumbered by high inflation and a slump in manufacturing, was expected to shrink by 0.5% this year. Early in November the German Council of Economic Experts has slashed German growth prediction for next year by almost half to just 0.7%, which can be taken as a signal that Germany economy likely to stay weak, consisting with ECB President’s words. Italy, struggling to deal with inflation stubbornly above the eurozone average, also saw its growth prediction slashed by 0.4% points to 0.7%, according to IMF.

In terms of India, it may hesitate contributing to such a magnificent plan under the condition that the other IMEC partners can’t fulfill their financial commitment. Last but not the Least, India’s engagement in past corridors has been hampered by challenges including deficits in financial.

Different Political interests lead to difficult coordination

Washington-style infrastructure projects are emulative, it aims to isolate China with the help of its allies, as well as to reshape the future of the Middle East by normalizing relations between Israel and several Arab countries in the backdrop of the Abraham Accords. There is no doubt that Brussels under the leadership of von der Leyen will follow in Washington’s footsteps.

However, 2024 is the Election Year for both Washington and Brussels. In the US, The No Labels political group is plotting a third-party presidential run. Joes Manchin, West Virginia Democrat backed by No Labels will add a new twist to Biden’s re-election bid, von der Leyen feces with the same dilemma. Although she hasn’t given her stand on whether she will run for European elections 2024, dissatisfaction in the EU with the President of EU Commission is huge, especially for her “double standards” on Ukraine and Gaza. Who knows what will happen to IMEC if Biden and von der Leyen lost their reelection?

Competition with Beijing drives India to the IMEC. Being considered as a growing power in Indo-Pacific by the West in recent years, India has become more and more aspirant in rivaling China. As for Middle East countries, focusing on diversifying their economy, they seek to broad their connections with the rest of the world.

Different political interests probably lead to mounts of difficulties in multilateral negotiations, such as disagreement on regulatory rights, irreconcilable differences in trade policies. Therefore, the IMEC will be far away.