Aishwarya Dutta
Abstract
Holding the current Presidency of the Group of 20 or G 20, India under Prime Minister Narendra Modi’s able leadership has adopted a number of fresh initiatives to bolster ties with the leading economies of the world. The adoption of the New Delhi Leader’s Declaration has been making headlines since September 10. Another major initiative of the summit is the announcement of the mega India-Middle East-Europe Economic Corridor (IMEC). This article tries to reflect upon the various details of the proposed economic corridor and the major reasons behind announcing such a massive project.
Background
The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 in response to the financial crises of the late 1990s and the growing awareness about the under-representation of key emerging states in the core of global economic discussion and governance. The group perpetually became a global forum including the heads of the respective states. The G-20 comprises nineteen member states, the European Union and the recent addition, the African Union.
The member states include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the USA. Thus the group includes most of the leading economies of the world.The rise of the G-20 has been heralded as marking a potentially historic shift.
Its high degree of inclusion and representativeness indicates the emergence of a new institutional world order that better reflects current economic realities and thereby enjoys greater global legitimacy.
The G20 New Delhi Leader’s Declaration, 2023
In the recently held two day summit, leaders across the world pledged to accelerate strong, sustainable, balanced and inclusive growth. There were also talks about implementation of the 2030 Agenda for Sustainable Development. Various environment related measures are also to be undertaken to reduce the disastrous consequences arising from the burning of fuels and the resulting greenhouse gas emissions, not to forget the issue of climate change.
There are also provisions for the facilitation of medical equipment in developing countries. Member states need to promote resilient growth by urgently and effectively addressing debt vulnerabilities in developing countries. The gender divide has also been addressed and more and more women are being encouraged to come to the forefront by participating in the economy. The adverse impact of wars and various ethnic conflicts were highlighted and it has been made clear that war at all cost is unacceptable.
Terrorism and all kinds of terrorist acts have been condemned, including those on the basis of xenophobia, racism and other forms of intolerance, or in the name of religion or belief, recognizing the commitment of all religions to peace. And, finally all member states were encouraged to uphold the principles of international law including territorial integrity and sovereignty, international humanitarian law, and the multilateral system that safeguards peace and stability.
Focus was also given on eliminating hunger, poverty, improving quality education and a Green Development Pact for a sustainable future has been undertaken. The declaration took into account various issues that needed immediate attention. Besides the declaration, the proposed India-Middle East-Europe Economic Corridor is of immense significance as far as the 18th G20 Summit is concerned. We shall now discuss further about the corridor.
The proposal of India-Middle East-Europe Economic Corridor (IMEC)
In a Memorandum of Understanding, the Governments of the Kingdom of Saudi Arabia, the European Union, the Republic of India, and the United Arab Emirates (UAE), the French Republic, the Federal Republic of Germany, the Italian Republic, and the United States of America (which would serve as the “participants” over here) commit to work together to establish the India-Middle East-Europe Economic Corridor (IMEC). The IMEC has been proposed to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf and Europe.
In the words of our respected Prime Minister Shri Narendra Modi, “-We all have reached an important and historic partnership. In the coming times, it will be a major medium of economic integration between India, West Asia and Europe.” The corridor will give a new direction to connectivity and sustainable development of the entire world.
PM Modi
The IMEC will comprise two separate corridors, the east corridor and the northern corridor. The east corridor would connect India to the Arabian Gulf and the northern corridor would connect the Arabian Gulf to Europe. The project would include railways and waterways. The railway will provide a reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transport routes.
This would facilitate goods and services to transit to, from and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. There is also a proposal to enable the laying of cable for electricity and digital connectivity along the railway route. There have been talks to set up hydrogen pipes for clean hydrogen export. This corridor would secure the regional supply chains, increase trade accessibility, improve trade facilitation, and support an increased emphasis on environmental, social and government impacts.
Calling the IMEC ‘historical’, Saudi Arabian investment minister Khalid Al-Falih said that the IMEC will be “equivalent to the Silk Route and Spice Route put together.” The corridor is significant because it is about new energy, data, connectivity, human resources, aviation routes and it’s about the alignment of countries with the same vision. The Sea and rail link is part of the Partnership for Global Infrastructure Investment (PGII). It is a collaborative effort by G7 nations to fund infrastructure projects in developing nations.
Developments on the other side indicate that China is virtually ‘spooked’ by the IMEC. Beijing has issued a warning that the corridor should not be used as a ‘geopolitical tool’. The Chinese government is skeptical about the purpose of the corridor and they are looking at the corridor as a counter to China’s Belt and Road Initiative (BRI). Beijing said that it supports the IMEC announced during the G20 summit so long as it does not become a ‘geopolitical tool’ and threaten Chinese interests.
Significance of the proposed corridor
The participants of the IMEC asserted that the corridor would increase efficiencies, reduce costs , enhance economic unity, generate jobs , and lower greenhouse gas emissions — resulting in a metamorphic integration of Asia, Europe and the Middle East. The stakeholders commit to work collectively and expeditiously to arrange and implement all elements of these new transit routes, and to establish coordinating entities to address the full range of technical, financing, design, legal and other relevant regulatory standards.
While addressing the media about the outcomes of the 18th G20 Summit, 2023 held in New Delhi and the G20 New Delhi Leaders’ Declaration, Union Minister of State (Independent Charge) Science & Technology; MoS PMO, Personnel, Public Grievances, Pensions, Space and Atomic Energy, Dr Jitendra Singh especially mentioned about the proposed India-Middle East-Europe Economic Corridor (IMEC). In his words, the “G20 Bharat-Middle East-Europe Economic Corridor redeems post-Partition India’s quest for restoring an extended and deeper connectivity in the region“.
The proposed corridor will address obstacles created by Pakistan’ s denial of over-land access and China’s reported connectivity designs in the region. Quoting Prime Minister Modi, Dr Jitendra Singh said better connectivity helps in proliferation of trade and deepening of ties.
“So, India has found a way out whereby it would not only connect for reasons of economics, but also connect for the reasons of greater cohesiveness among the world community,”
Dr Jitendra Singh
Railway Minister Ashwini Vaishnaw in an interview said that the IMEC will be “substantially different” from the BRI. “Compared to the Chinese project that has pitched some of its host nations into a debt trap, the G20 project will bring in revenue and be bankable. The PM’s vision of taking everyone along is an important part of this corridor.”
The BRI has recently been plagued by mounting concerns over its debt sustainability and the economic slowdown in China. With growth rates on a slump and debt levels on the rise, questions are being raised on the sustainability of the BRI. It has also been reported that Italy wants to exit the project.
“The ‘India-Middle East-Europe Economic Corridor’ project will be so bankable that several multilateral institutions are willing to fund it,” Vaishnaw said in an interview. “Transportation will bring so much revenue that it will be able to pay on its own without getting the host country into a debt trap.“
The India-Middle East-Europe Economic Corridor has strong backing from both the US and the EU. According to Financial Times, Biden said the corridor would offer “endless opportunities” for the countries involved, “making it far easier to trade [and] export clean energy”, and “lay cable that will connect communities”.
European Commission President Ursula von der Leyen termed the project historic.
“It is a green and digital bridge across continents and civilisations”
Leyen
adding that the rail link would make trade between India and Europe 40 percent faster.
Conclusion
If things go according to plans then the IMEC would indeed be a ‘historic’ achievement. The corridor would be of immense value, economically as well as geographically along with strengthening diplomatic ties.
Trade would increase and revenues would see an uprising. The 18th G20 Summit held in New Delhi between September 8 to September 10 has been one of the most successful G20 conferences till date in its stature, grandeur as well as in its outcome.
The New Delhi Leader’s Declaration was also adopted positively by the G20 members. The declaration of the IMEC remains one of the significant projects ever proposed in a G20 Summit. However, we are yet to witness this vision turn into a reality.
References
- Dash, D. K; 2023. ‘India-Middle East-Europe corridor to be ‘equivalent to Silk Route, Spice Route put together’:Saudi minister’. Times of India. https://timesofindia.indiatimes.com/india/india-middle-east-europe-corridor-to-be-equivalent-to-silk-route-spice-route-put-together-saudi-minister/articleshow/103586392.cms?from=mdr
Aishwarya Dutta is Research intern, IMPRI.
Acknowledgement: The author would like to thank Bhanvi, Satyam and Chaitanya for their kind comments and suggestions to improve the article.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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