A Revival Of The IMEC Corridor Idea Amid Choppy Geopolitics

Context: 

This editorial is based on the news “A revival of the IMEC Corridor idea amid choppy geopolitics” which was published in The Hindu. The recent Yemen conflict is highlighting the significance of India-Middle East-Europe Economic Corridor or IMEC Corridor as an alternative to the Suez Canal.

IMEC Corridor: Opportunities that Need to Be Used

• Hydrogen Pipelines & Economy: The IMEC corridor is proposed to carry hydrogen pipelines. 
  • Hydrogen sourced from fossil fuels would keep Gulf nations in business in the hydrogen economy too with the corridor serving that purpose.
• Containerisation: In IMEC, it is a big draw. It quickens trade and reduces port costs. 
  • India’s National Logistics Policy, unveiled in 2022, seeks to lower logistics costs to global levels by 2030. 
  • In India, 70% of containers move by road but optimum splits should be 30% road, 30% rail and the rest, coastal and inland shipping. Road is faster but rail movement of containers is cheaper.
• Dedicated Rail Freight Corridors: It links to two IMEC ports of Mundra and the Jawaharlal Nehru Port Trust (JNPT). And these rail projects skirt southern India, by and large. 
  • The south can potentially leverage IMEC that promises to cut delivery schedules by 40%.

IMEC Corridor

Challenges to IMEC Corridor

• Geopolitical Challenges: Turkey has been explicitly left out of IMEC and proposed an alternative to Saudi Arabia and Israel through Iraq and itself to access the Mediterranean.
  • The long-term trend towards greater trade and strategic links between Israel and Arab nations could help to counter this challenge.
• Changing Scenario: Critics of IMEC corridor say the Arab Street would simply not allow any major trade link between Saudi Arabia and Israel many years after the Gaza war ends. 
• Projects on Hold: Rail projects such as Etihad Rail and the GCC Railway are already underway in the United Arab Emirates and Saudi Arabia independently.
• High Container Traffic: Haifa cannot be India’s main gateway to the West since its current container traffic is barely one-third of Mundra and a tenth of India’s current container exports. 

Way Forward

• Capacity Expansion: The Adani stake in Haifa port could help sync it with Adani-owned Mundra in terms of planning for capacity expansion.
• Investment & Financing: The IMEC will likely draw U.S., European, and Saudi financing, coupled with Indian financing and implementation capacity, particularly in ports. 
  • The US International Development Finance Corporation funding for Adani Ports-owned Colombo deep water container terminal could be a template for Haifa.

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