By Guy Burton
Following the announcement of the India-Middle East-Europe Economic Corridor (IMEC) at the recent G20 conference, there has been some media commentary regarding the impact this might have on China and its Belt and Road Initiative. China critics in Washington and New Delhi argue that the announcement offers an alternative to the Chinese Belt and Road Initiative, which since 2013 has captured both regional attention alongside substantial contracts in infrastructure construction across the Eurasian landmass and including in the Gulf.
However, the IMEC is a vision that currently lacks details.
The proposal envisages a two-stage development, boosting connectivity between India, the Middle East and Europe through the enhancement of existing infrastructure and the development of new routes via land and sea. They would include a highspeed railway across the Arabian peninsula, cables to facilitate high speed digital connectivity and a pipeline providing clean hydrogen energy. The route would cut across Saudi Arabia, linking ports on its east coast and in the UAE with those in Israel, via Jordan.
The detail of the IMEC, including financing and likely partners, is expected to be fleshed out over the next two months. Already though, some policy makers in Washington, New Delhi and European capitals hope that it might blunt Chinese influence and head start in the regional connectivity and infrastructure race through its Belt and Road Initiative.
Such ambitions may be overstated, however.
For one, the Chinese response has been cautiously positive. A spokesperson for the Foreign Ministry stated that such activity could be beneficial for countries in the region, so long as the projects do not constitute a “political tool.”
For another, for India’s regional partners, IMEC is not seen as a substitute for the Belt and Road, but rather a complement to it. Saudi Arabia and the UAE may be important American allies in the Gulf, but they also have strong and developing ties with China.
Indeed, they may see both the Belt and Road and the IMEC as a way to diversify their foreign relations, reflecting a wider trend: as the world becomes more multipolar, states in the Global South want to build ties with the established and emerging poles and avoid being tied to one or another. That stance is also exacerbated by their own self-interest, which makes for a more transactional approach towards diplomatic and economic exchange.
Even if the Belt and Road and IMEC can co-exist, the former’s best days may already be in the past. Since the announcement of the Belt and Road in 2013, much investment activity occurred during its first five years.
The American Enterprise’s China Global Tracker calculates that Chinese investments in Belt and Road totaled $392 billion between 2014 and 2023, of which $240 billion or 61% was allocated during the first five years compared to $152 billion (39%) since 2019.
Chinese banks and firms have rowed back on investment in the wake of expensive projects that have resulted in debt traps in Sri Lanka and North Macedonia as well as slowing economic growth at home which predated the pandemic. More recently, a collapsing real estate sector bubble has further undermined Chinese economic confidence and appetite for investment.
Yet even if the Belt and Road is not the force it once was, the IMEC may well face its own challenges when it comes to implementation.
In contrast to the state-backed and largely state-financed nature of the Belt and Road, IMEC is expected to be led by the private sector. However, the Western governments that propose to “mobilise” private finance and enterprise on this project cannot be sure that there will be full alignment between themselves and the firms expected to deliver the IMEC.
Financial institutions and construction firms will base their decision to participate on their assessment of the risks involved and whether they will turn a profit – which for large-scale construction projects, may be a long time.
An additional important consideration will be the state of the wider economy, both in the region as well as at home; indeed, for Europe the economy has been sluggish for many years.
In sum then, while the IMEC proposal has garnered considerable attention since its launch, there is still much to be said about its content and the tension that exists not just between the governments sponsoring it, but also those who they expect to carry out the work and their capacity to do so.
While some in Washington and New Delhi may well see this as an opportunity to counter Chinese influence in the Middle East and the wider world, that is not necessarily how some of their partners in this – the Saudis and the Emiratis – may see this. To all this should also be considered the fact that the Chinese themselves may not see it as the threat that it has been portrayed as being, or the fact that there may well already be a Chinese retrenchment taking place, rendering the IMEC’s geopolitical objectives moot.
About the Author: Dr. Guy Burton is Adjunct Professor at Brussels School of Governance