Can the IMEC compete with China’s Belt and Road Initiative?

In September, the G20 summit served as the stage for a significant geopolitical development: the unveiling of the India-Middle East-Europe Economic Corridor (IMEC). This initiative, jointly announced by leaders from India, the United States, Saudi Arabia, the European Union, and several other nations, represents a bold strategic foray, ostensibly positioning itself as a rival to China’s Belt and Road Initiative (BRI). Indian Prime Minister Narendra Modi articulated that while IMEC aims to bridge infrastructural gaps in the Global South, its primary focus would be on the financial sustainability of projects, rather than creating debt burdens.

This statement seemed to subtly echo the sentiments of S. Jaishankar, India’s foreign minister, who had earlier emphasized in May the necessity of a multipolar Asia for a multipolar world, a concept he put forward during the European Union-India Pacific Ministerial Forum.

However, the finer details of IMEC’s funding strategies and cost efficiencies remain undetermined. Amidst various speculative analyses, questions have also arisen about the key stakeholders. European economies, grappling with internal challenges, appear constrained in their capacity for overseas investments. Similarly, a sharply divided U.S. Congress, wary of excessive spending and soaring national debt, limits America’s financial outreach. Nevertheless, the U.S. could play a pivotal role in maintaining cohesion among IMEC members, given its unique position as a common ally.

The BRI, with over a decade of global influence, has demonstrated its impact, albeit varied across regions. A World Bank policy research paper noted significant reductions in trade costs for specific economic corridors under the BRI, such as the China-Mongolia-Russia Economic Corridor (CMREC) and the China-Central Asia-West Asia Economic Corridor (CCWAEC). These reductions point towards the importance of improved customs policies and highlight the potential role of Chinese trade in the success of IMEC. For instance, China could benefit from utilizing IMEC for transportation between Gwadar Port in Balochistan and the United Arab Emirates. The ports of Haifa in Israel and Piraeus in Greece are also crucial to the IMEC route.

Despite the evident Chinese influence in the region, notably with Cosco’s majority stake in the Port of Piraeus since 2016, other ports like Mundra and Haifa are under Indian control, specifically the Adani Group. The stability and development of Myanmar are critical for IMEC’s eastward connections, thus emphasizing the need for concerted efforts towards governance standards there.

IMEC emerges as more than just a connectivity initiative; it represents a strategic rebalancing in global trade dynamics. While the BRI has often been viewed through the lens of China’s foreign policy ambitions, IMEC symbolizes a shift towards a more multilateral trade approach. This vision aligns with S. Jaishankar’s advocacy for plurilateralism, as outlined in his book The India Way: Strategies for an Uncertain World. Moreover, the U.S. has been vocal about the strategic nature of BRI, perceiving it as a tool for China to reshape global order in its favor, potentially compromising the security and sovereignty of its partners.

The IMEC initiative is not about isolating China, but rather about creating a more balanced global framework. The European Union’s primary concern might be the burgeoning Sino-Russian relationship, rather than the outright isolation of China, given their significant economic ties. Similarly, despite India’s measures to reduce dependency on China, like banning Chinese apps and imposing anti-dumping duties, China remains a key economic partner.

This corridor signifies a strategic shift, with Saudi Arabia and the UAE, both wielding substantial sovereign funds, poised to accelerate IMEC’s development. India’s potential as both a producer and consumer within this corridor, coupled with its ability to secure financing, exemplifies its strategic positioning. The inclusion of Saudi Arabia and Israel in this initiative underscores a pragmatic approach where economic interests often transcend traditional political boundaries.

The BRI, however, faces its challenges, including perceptions of Chinese neo-colonial ambitions and debt trap diplomacy. Conversely, the West’s previously lackluster engagement with Africa is now being counterbalanced by expanded market opportunities for African exports. Italy’s departure from the BRI, influenced by pressure from other G7 members concerned about the Sino-Russian axis and its relations with India, highlights growing geopolitical complexities. Additionally, the West’s increasing scrutiny of Chinese business practices and human rights concerns necessitates greater transparency from China if it seeks to remain competitive against IMEC.

The launch of IMEC during India’s G20 presidency, which also saw the elevation of the African Union’s status, reflects India’s commitment to championing the Global South. This move, juxtaposed with China’s longstanding engagement with Africa through initiatives like the Forum on China-Africa Cooperation (FOCAC), underscores the evolving dynamics of global diplomacy. While IMEC does not directly engage Africa, India’s leadership role in the Global South and the burgeoning EU-U.S. collaboration for a Trans-African Highway network signifies a multifaceted approach to addressing global infrastructure deficits.

The India-Middle East-Europe Economic Corridor is a strategic endeavor that seeks to recalibrate the global economic order, emphasizing multilateralism and strategic partnerships, while also acknowledging the nuanced roles of key players such as China, the U.S., and the European Union.