Last week's surprise attack on Israel by the Palestinian group Hamas has led to Israel attacking Hamas-controlled Gaza, causing fears that the region will once again plunge into a long conflict. While the war in Gaza will destabilise West Asia, it will also scupper US President Joe Biden's ongoing efforts to bring Israel and Arab countries closer.
"This will slow considerably if not kill the Saudi Abraham Accords deal," Mara Rudman, a former Middle East peace diplomat under President Barack Obama, told NYT. "It strikes at the heart of key elements for Saudi entry, a pathway forward for Palestinians in West Bank and Gaza," she added. "And on the Israeli side, there will be zero appetite across a wide political spectrum for helping Palestinians, despite the fact that so doing could actually enhance, not detract from, Israeli security."
A key result of Israel and Saudi Arabia coming closer was an ambitious infrastructure deal to connect India through Saudi Arabia and Israel to Europe, a corridor that would immensely contribute to global trade.
The India-Middle East-Europe Economic Corridor (IMEC) is seen as a counter to China's Belt and Road Initiative (BRI) which is planned to link China's economy to different parts of the world through road, rail, ports and shipping routes, giving it direct access to the world.
Israeli Prime Minister Benjamin Netanyahu had said the "largest cooperation project in our history" will change the face of the Middle East and Israel, and will benefit the entire world. The new economic corridor was jointly announced by the leaders of the US, India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union on the sidelines of the G20 summit in New Delhi.
The IMEC was a landmark moment for India, promising to make it a big player in global trade. But now the Gaza war casts a shadow over this ambitious project and has dampened the spirits.
The IMEC will comprise two separate corridors, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe. It will include a railway which will provide a reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transport routes – enabling goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. It will also include an electricity c ..
The IMEC is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe. The corridor will increase efficiencies, reduce costs, enhance economic unity, generate jobs, and lower greenhouse gas emissions - - resulting in a transformative integration of Asia, Europe and the Middle East.
The IMEC will help India leverage its economic and geopolitical potential. India’s G20 Sherpa, Amitabh Kant, tells ET that it will be like “a plug-and-play project”, with a significant potential to unlock massive trade opportunities that were missing because of connectivity issues.
“For example, the IMEC has the potential to reduce trade time between the EU and India by 40%, which will be a significant boost in reducing energy costs and increasing trade,” Kant says, adding that the corridor will act as a green and digital bridge, linking key commercial hubs, enabling production and export of clean energy, expanding power grids and telecommunication networks. Once the project is complete, Indian exporters to Europe will likely gain both in terms of time and cost.
Prime Minister Narendra Modi had described the IMEC as the “basis of world trade for hundreds of years to come”.
Jayant Dasgupta, former ambassador of India to the World Trade Organization, argues that the corridor will hand India more geopolitical dividends than pure economic benefits. “Many countries are trapped by the Chinese BRI because of high interest rates and difficult repayment schedules. Yes, the IMEC is still a nebulous idea and its economics are being worked out, but it will definitely help India geopolitically,” he told ET recently.
Israel will be a key component of the IMEC project. But Israel's formal participation in the project depends greatly on its normalisation of ties with Israel which Biden aimed to achieve with his ongoing efforts. With the Israel-Hamas conflict, those efforts will stall and it will become ever more difficult to build trust between Israel and Arab countries.
It is riskier now for Saudi Crown Prince Mohammed bin Salman to normalise diplomatic relations with Israeli Prime Minister Benjamin Netanyahu, Reuters has reported. Popular sentiment in the Arab world sits with Gaza, into which Israel is launching retaliatory strikes. The record mobilisation of Israel's army reservists suggests a return to the previous status quo is a long way off, and the overall violence which has claimed more than 1,500 lives may continue to rise.
The war has certainly paused any progress being made on the IMEC, well before the project could take off. Many see the war to destabilise the Middle East for a long term, effectively nipping the IMEC in the bud. The IMEC is not possible without Israel where Adani's Haifa port will be a key component of the corridor, linking it to the Mediterranean sea and thus to Europe.
There is no doubt that the IMEC has taken a backseat amid concerns that the Middle East is set to returning to its past of sharp hostilities. There may yet be hope for the IMEC, simply because it is a long-term project and the work on it hadn't even started. The IMEC will take years to materialise. If hostilities subside in the short term, the IMEC will be in the works.
Captain Naveen Singhal, a maritime and shipping consultant based in Singapore, told ET Prime recently that the IMEC is a long-term project and may take some years before we can see some movement, so the present-day conflict between Israel and Gaza is unlikely to impact its future.
The origins of the IMEC lie in a forum created nearly two years ago in October 2021 called I2U2, comprising India, Israel, the UAE and the US while Saudi Arabia was later made part of the grouping, clearly reflecting the hope of strong ties of Israel with Arab countries. While the UAE has condemned Hamas for the attack on Israel, Saudi Arabia did not condemn Hamas. Instead, it noted that it had repeatedly warned that Israel’s “occupation, the deprivation of the Palestinian people of their legiti ..
For now, the IMEC may have taken a backseat but it's too early to pronounce its end. But it's future certainly depends on improved ties between Israel and Saudi Arabia.
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Source Name : Economic Times