Tatsat Chronicle Magazine

Israeli Politics Can Hold Back Progress On The India-Middle East-Europe Economic Corridor

September 27, 2023
Corridor: India-Middle East_Europe
The proposed economic corridor is intended to counter the growing influence of China's Belt and Road Initiative. Photo: Zemedeneh Negatu | Twitter

The India-Middle East-Europe Economic Corridor (IMEC) hinges crucially on Saudi Arabia and Israel resolving their political differences of 75 years. Though Saudi Arabia and Israel do cooperate on various issues, they have not established diplomatic relations. But they are less prickly than before. Earlier this month for the first time an Israeli delegation of the antiquities authority attended a meeting of the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in Saudi Arabia and sat at a table with the name plate of Israel.

Saudi Arabia did not sign the 2020 Abraham Accords that normalised relations between Israel, the UAE and Bahrain. It is also not part of I2U2, a group comprising India, Israel, the UAE and the US, formed in 2021 for deeper engagement in six areas including transportation and energy. The US is trying to bring Saudi Arabia and Israel closer, but success will depend on the Saudis being reassured on security and being allowed to enrich uranium for production of nuclear power, which the US is wary of for fear of the enriched isotopes being diverted for nuclear weapons. Israel will also not want a country possessing nuclear weapons in its backyard, when it is straining to prevent Iran from acquiring them.

And the Saudis will not relent unless they also wrest meaningful concessions for the Palestinians from Israel. Though Israeli Prime Minister Benjamin Netanyahu has hailed the corridor as good for the country and transformative for the region, he is heading a hard right coalition that has as its goal annexation of the West Bank and denial of Palestinian autonomy.

The Times of Israel quoted a researcher from a Spanish university who specialises in strategic connectivity between Asia, Africa and Europe as saying that goods between Mumbai and Europe will take 10 days to reach either destination through the corridor — 40 percent less time than the Suez Canal route. According to former member (traffic), Railway Board, M. Jamshed, when the corridor is established, goods from Jawaharlal Nehru Port near Mumbai can reach Haifa in Israel through a combination of ship and rail in seven days compared to the 11 days it takes to move them by ship to Suez (which is closest to Europe).

As if in anticipation of corridor-stimulated traffic, India’s Adani group participated in a privatisation bid for Haifa port and won it in March in association with Israel’s Gadot group. Many Indian opposition parties have alleged that the group is favoured by the government.

The corridor, according to the MoU, has two parts. The eastern part will connect ports on India’s west coast with those in the Gulf. Goods from or bound for India will be moved by rail from these transhipment ports to Haifa, which is a deepwater port and can handle bulk cargo ships with a capacity of more than 69,000 tonnes (also known as post-Panamax vessels). From there they will be taken by ship to European ports like Piraeus and Kavala (Greece), Trieste and La Spezia (Italy), Marseille-Fos (France), and Barcelona and Valencia (Spain).

Saudi Arabia has ambitious plans to develop its economy under Crown Prince and Prime Minister Mohammed bin Salman. As per its Vision 2030 announced in 2016, Saudi Arabia wants to be a technology, green energy, logistics, trade and tourism hub and reduce dependence on oil. The country is building a railway network after neglecting it since 1951, when the first railway line was established. It has 2,100 km of freight track. Saudi Arabia Railways says on its website that it intends to extend the railway link from the Red Sea port of Jeddah to the borders with Israel, Yemen and perhaps Egypt.

According to Jamshed, railway lines are being planned from the Saudi border terminal of Al Haditha to Amman. Jordan will have to connect Amman with Beit She’an in Israel. This project is at the planning stage. Israel has plans to connect Haifa to Beit She’an through Jenin near the Jordanian border.

The UAE also wants to be like Singapore in trade, industry and tourism. In May 2022, it signed an economic cooperation agreement with India to increase trade to $100 billion in five years. Last year, India’s two-way trade with the country was worth $85 billion, up from $59 billion just before the pandemic in 2019-20. It also wants Indian industry to make it a base for exports. From 279 km of freight track in 2021, it now has 1,200 km connecting all the seven emirates and Saudi Arabia. Etihad Railways says it will have a cargo capacity of 60 million tonnes by 2030.

The other members of the Gulf Cooperation Council — Bahrain, Kuwait and Qatar — are also expected to join in with road and rail linkages.

But former Indian ambassador to Saudi Arabia Talmiz Ahmad says the project is “harebrained” and “as of now, a desperate American effort to reaffirm its relevance in South Asia and West Asian countries”. In an interview to StratNews Global, Ahmad said shipping lines between India, West Asia and Europe are well established.

About $200 billion of Indian trade moves through the Suez Canal. Israel, he says, is an outsider in Gulf politics. To shed its decades-old antagonism and be a good neighbour to West Asian countries, it will have to resolve the internal struggle on whether it wishes to remain a liberal democracy or become a Jewish supremacist state, where the Palestinians are suppressed.

Politics cannot be wished away in grand projects between countries with conflicting interests. In 2003, Prime Minister Atal Bihari Vajpayee publicly articulated aspiration of a South Asian common market with open borders. Twenty years later, India and Pakistan are further apart than they were. After the Pulwama attack on Indian soldiers in 2019, India imposed 200% tariff on Pakistani imports.

When Prime Minister Narendra Modi’s government abrogated Article 370 and made Jammu & Kashmir a Union Territory after returning to power that year, Pakistan suspended trade with India. During the Covid pandemic, it lifted the restrictions to some extent. But it bought goods worth just $600,000 from India last year. India’s direct imports from Pakistan in 2022-23 were worth a miserly $20,110! Both India and Pakistan import each other’s goods expensively via Dubai.

In 2003 in Shanghai, Prime Minister Vajpayee agreed that the India and China would expand on the areas of agreement while underplaying areas of disagreement. It was agreed to appoint special representatives to resolve the border issues. Trade has indeed boomed, from $4.76 billion in 2002-03 to $113.8 billion in 2022-23, with the trade balance hugely in China’s favour. But more trade has not made military conflict less possible. Tranquil borders have become active militarily, despite 25 meetings on the border issue.

Vivian Fernandes

He is senior journalist and columnist for several reputed publication. He was formerly with CNBC-Network18 and specializes in the agriculture sector and economy. He has written more 450 articles on agriculture alone.