Corridor Politics: IMEC vs. BRI: Another Geopolitical Face-off in U.S.

-China
Rivalry
Arhama Siddiqa1

Abstract

In a rapidly changing global landscape shaped by the COVID-19

pandemic, the Ukrainian conflict, and the Palestinian crisis, heightened
geopolitical tensions are pushing nations toward strategic alliances and
economic collaborations. One such initiative, the "India – Middle East –
Europe Corridor" (IMEC), has emerged as a potential alternative to
China's Belt and Road Initiative (BRI), which plays a central role in
China's global influence. The intensifying rivalry between the United
States and China is a defining feature of contemporary geopolitics. IMEC's
potential implementation could compel Middle Eastern nations to make
strategic choices, particularly within specific industries, possibly hindering
socioeconomic progress in the region. This research paper takes a
neorealist perspective to analyse the U.S.-China rivalry and conducts a
comparative analysis of BRI and IMEC and exploring whether the IMEC
poses a challenge to the BRI within the global geopolitical and geo -
economic context. Ultimately, the paper concludes that IMEC, especially
against the backdrop of the 2023 Palestinian crisis, does not present a
substantial threat to the BRI.

Keywords: IMEC, BRI, economy, investment, China, India, Gulf, Europe

Article history:
Received on: November 23, 2023
Revised on: December 21, 2023
Accepted on: December 26, 2023
Published on: December 31, 2023

INTRODUCTION
Over the last several years, the world's political structure has seen substantial changes due to major
events including the COVID-19 epidemic, the Ukrainian war, and the Palestinian problem. The
interconnected crises have exacerbated existing geopolitical tensions, leading to a complex and
unstable global situation. As a reaction, countries throughout the globe have shifted their focus
towards establishing coalitions and collaborative partnerships, with a specific emphasis on
promoting economic cooperation. The "India–Middle East–Europe Corridor" operates as an
illustration of such a venture. This concept was conceived during the G20 summit that took place
in India on September 10, 2023. Crown Prince Mohammed bin Salman of Saudi Arabia, in
1
Institute of Strategic Studies Islamabad. email: [email protected]
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collaboration with delegates from the European Union (EU), the United Arab Emirates (UAE),
and the United States (USA), developed the proposal. The formalisation of IMEC's goal to create
an extensive commercial and transport corridor will occur through the ratification of a
Memorandum of Understanding, which will have the support of all parties involved.

IMEC has garnered significant international attention due to its potential status as a rival to China's
BRI. The BRI, which began in 2013, seeks to create extensive linkages across Asia, Africa,
Europe, and Latin America, with the primary goal of placing China as a prominent player in the
global economy of the 21st century. The intensifying hostilities between the United States and
China have attracted substantial worldwide attention in recent years. The economic disagreement
has transformed into a geopolitical competition fuelled by conflicting ideologies. During
discussions on the Washington-Beijing relationship, the Biden Administration has emphasized the
importance of both rivalry and collaboration occurring at the same time. President Xi Jinping
delineated China's strategic approach for 2021, highlighting a focus on merit-based competition
rather than pursuing the demise of an opponent. However, the global impact of this competition
has been significant, principally shown via the establishment of several alliances, such as the recent
formations of AUKUS, QUAD, and the IMEC project.

The geopolitical aspects of the IMEC become particularly important when analysing the reactions
of the six member nations of the Gulf Cooperation Council (GCC) to the changes in a world with
many centres of power. All Gulf Cooperation Council (GCC) states, save Oman, have obtained
Dialogue Partner accreditation within the Shanghai Cooperation Organization (SCO).
Additionally, the UAE and Saudi Arabia were extended invites to become members of the BRICS
club in August 2023. The UAE and Saudi Arabia's eagerness to sign the IMEC Agreement
highlights their increasing influence in redefining the global geopolitical environment and
economic structure. The Biden administration's endorsement of IMEC principally demonstrates its
determination to reassuring Middle Eastern friends and partners about Washington's commitment
to the area, while also offering an alternate to China's the Belt and Road Initiative (BRI). The
Gulf Arab nations have significant importance within the BRI framework, primarily because they
are aligned with Saudi Arabia's Vision 2030 and the socioeconomic diversification goals of other
Gulf Cooperation Council (GCC) members. In response to Beijing's increasing connections with
historically pro-Western Arab countries and Israel, the United States has implemented measures
to offset China's growing geoeconomic influence, particularly in the Middle East. Considering the
historical backdrop characterized by a series of fruitless efforts aimed at offering alternatives to
BRI is equally crucial. Notable examples of these programmes include the Build Back Better
World (B3W) programme, which was subsequently renamed as the Partnership for Global
Infrastructure and Investment (PGII), and the Blue Dot Network.

Due to the recent establishment of the IMEC project, there is a significant lack of scientific material
available on this issue. The lack of available literature has resulted in a dependence on speculation
and assumptions based on historical circumstances, as well as research focused on evaluating the
practicality and consequences of the Belt and Road Initiative (BRI). The Emirate Policy Centre’s
report, titled "IMEC and BRI: Beyond Complementary Competition," 2 suggests that the IMEC
project may not necessarily provide a direct competition to China's Belt and Road Initiative (BRI).

2
Emirates Policy Centre I Asia Research Unit. IMEC and BRI: Beyond Complementary Competition. 20 October
2023 https://epc.ae/en/details/scenario/imec-and-bri-beyond-complementary-competition.

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However, these two endeavours may exist simultaneously, since they meet at strategically
important logistical places. Beijing can enhance its logistical and technical connections, as well
as energy projects, by coexisting with states like Türkiye and Iran. This collaboration may benefit
these nations, whose interests might otherwise be negatively impacted by the IMEC project. Dr.
Giorgio Cafiero's paper on "The Geopolitics of the India-Middle East-Europe Economic Corridor"
highlights the significant role played by Gulf Arab governments in the Belt and Road Initiative
(BRI). This has particular importance since it aligns Saudi Arabia's Vision 2030 with the
economic diversification plans of other Gulf Cooperation Council (GCC) countries, as well as the
objectives of the Belt and Road Initiative (BRI). Washington is concerned about Beijing's efforts
to enhance its ties with Arab governments that have historically been linked with the West, as well
as with Israel. In response, the United States is taking measures to counteract China's growing
geoeconomic influence in the Middle East. 3

The article titled "The IMEC vs BRI: Taking the Cue" elucidates a contradictory facet of the IMEC
initiative. The IMEC's primary objective is to publicly confront BRI and limit Chinese influence.
However, it has intrinsic difficulties in accomplishing this goal. The influence of China in both
Europe and the Middle East is undeniably shown by the inclusion of important assets such as the
Piraeus port and the Etihad rail project in the IMEC connectivity project. The Piraeus port,
presently managed by China Ocean Shipping (Group) Company, a state-owned Chinese entity,
and with the active involvement of Chinese corporations like Power China and China State
Construction Engineering Corporation in the railway project, exemplify China's significant
influence and presence. Within this backdrop, the partner nations of IMEC are aware of this
scenario, undertaking a sophisticated and comprehensive effort to openly dispute the position of
China.4 Dr. Mohamed Eldoh's study on the "India-Middle East-Europe Corridor - Challenges
Ahead" argues that China's position as a strategic rival might redirect trade and investments into
its own corridors, thus undermining the efficacy of the IMEC corridor. India, the Middle East,
and Europe will have a formidable task in navigating this rivalry. Nevertheless, Europe
encounters obstacles because of its substantial commercial alliance with China, becoming China a
crucial trade collaborator. The presence of rivalry among the areas engaged presents geopolitical
dangers for the countries of IMEC. 5

In his article for the Diplomat, Burak Elmali suggests that the potential escalation of the Israeli-
Palestinian conflict may pose risks to IMEC. However, he believes that this is unlikely to deter the
parties involved, as they are determined to realign India's alliance position towards the Western
hemisphere. This realignment aims to exert pressure on China in the surrounding region and
redirect its focus towards local affairs. Furthermore, for the United States, IMEC serves to
strengthen economic collaboration and speed up normalisation in the Gulf. 6 On the contrary,
during an interview with Voice of America, Michael Kugelman, the director of the South Asia
Institute at the Wilson Centre in Washington, expressed that the recent conflict serves as a

3
Giorgio Cafiero, The Geopolitics of the India-Middle East-Europe Economic Corridor. 10 October 2023
https://arabcenterdc.org/resource/the-geopolitics-of-the-india-middle-east-europe-economic-corridor/.
4
Kashif Anwar, The IMEC vs BRI: Taking the cue. 29 September 2023
https://moderndiplomacy.eu/2023/09/29/the-imec-vs-bri-taking-the-cue/.
5
Dr. Mohamed Eldoh, The India-Middle East-Europe Corridor: Challenges Ahead. 26 September 2023
https://www.geopoliticalmonitor.com/the-india-middle-east-europe-corridor-challenges-ahead/.
6
Burak Elmali, Unrest in the Middle East Is Bad for Both CPEC and IMEC. 24 November. 2023
https://thediplomat.com/2023/11/unrest-in-the-middle-east-is-bad-for-both-cpec-and-imec/.

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sorrowful reminder of the immense challenges that lie ahead in developing the new corridor. These
challenges extend beyond financial obstacles and encompass issues of stability and diplomatic
collaboration. The battle serves as a stark reminder that these prerequisites are still difficult to
achieve. 7

Naveed Hussain contends in his essay "Enter the Corridor Wars" that despite the opposing
geoeconomic interests of key regional actors, the IMEC might face a similar outcome to past
endeavours. The main reason for this is the strategic imperative to counter China by employing
bloc politics, rather than a sincere desire to promote cooperation for the purpose of enhancing
economic development through improved connectivity and economic integration, resulting in
tangible benefits for the population. Therefore, the escalating competition between the United
States and China is expected to have significant implications for the nations in the Middle East.
This competition has the potential to worsen the current issues in an area that is already plagued
by violence, if it is not controlled or stopped. Therefore, it is crucial for Middle Eastern countries
to understand the ongoing discussion between IMEC and the BRI. These nations have carefully
balanced between the security guarantees provided by the United States and the economic
opportunities supplied by China. If IMEC's implementation is effective, Middle Eastern
governments may feel obligated to align themselves with certain sectors. Hence, if governments
are forced to choose between BRI or IMEC, this rivalry might hinder socioeconomic advancement
and endanger the accomplishments made in the Middle East.8

This research study will use a neorealist framework to clarify the competition between China and
the United States. The text will also include a summary of important components, such as the
IMEC, Gulf Sovereign Wealth Funds (SWFs), and a comparative examination of BRI in relation
to the IMEC. The study issue to be examined is: What factors contribute to the lack of major
opposition from the IMEC towards BRI within the framework of global politics and
geoeconomics? The study will finally determine that the IMEC does not provide a significant
threat to the Belt and Road Initiative (BRI), particularly considering the Palestinian situation in
2023

Using Neorealism as a Framework for Analysis

The rivalry between the United States and China in the modern global system is a complex
phenomenon that is garnering significant interest from academics, politicians, and the public. This
rivalry is unparalleled in its magnitude and intricacy, since it encompasses two of the globe's most
formidable and important countries. China has had a remarkable metamorphosis in the last several
decades, transitioning from a mostly agricultural nation to become the second-largest economy in
the world, as well as a leading force in global industry and technology. China's rise has not only
increased its economic standing but also its political and military might, posing a challenge to the
long-standing supremacy of the United States. China's expanding prominence leads to more
complex relations with the United States, spanning economic, military, technical, and geopolitical

7
Voice of America. Israel-Hamas Conflict Reality Check for India-Middle East-Europe Economic Corridor. 24
October 2023 https://www.voanews.com/a/israel-hamas-conflict-reality-check-for-india-middle-east-europe-
economic-corridor-/7323955.html
8
Naveed Hussain, Enter the corridor wars. 8 October 2023 https://tribune.com.pk/story/2439926/enter-the-
corridor-wars.

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aspects. The consequences of this competition have a broader impact beyond the direct interaction
between the two parties; they influence the dynamics of the whole global system.

Structural realism, also referred to as neorealism, is the prevailing paradigm within the field of
political theory. This theoretical paradigm, which emphasises the impact of systemic factors on
international relations, was developed by Kenneth Waltz. In contrast to traditional realism,
neorealism places greater emphasis on the influence of the international system on state behaviour,
as opposed to the intrinsic character of human nature. In his 1979 seminal work, "Theory of
International Politics," Kenneth Waltz, the progenitor of neorealism, established this concept.
Waltz's principal claim posits that the international framework operates in anarchy, devoid of a
centralised governing authority that regulates the conduct of nations. As a result, nations are
compelled to depend on their own initiatives, place security as a top priority, and aggressively
pursue influence to ensure their continued existence in this intrinsically competitive environment.9
When the competition between Washington and Beijing is analysed from a neorealist standpoint,
several crucial elements become relevant. The nature of the world system is multipolar. This
signifies a significant shift away from the bipolar period of the Cold War, which was marked by
rivalries between the United States and the Soviet Union. At the present time, a multitude of major
global powers, including the United States and China, wield considerable influence. The power
asymmetry that exists between the United States and China constitutes a pivotal element in their
conflict. Throughout history, the United States has upheld a hegemonic position on the
international stage, wielding substantial economic and military influence. The power transfer has
been influenced by China's burgeoning military capabilities and swift economic ascent. The
intensification of China's ambitions for a greater role in the international system has paralleled the
expansion of its influence.

An essential component of the antagonism between the United States and China is economic
competition. The economic sphere is profoundly intertwined with technological advancements,
national security, and international influence. As the world's two largest economies, the United
States and China contend vehemently for economic supremacy, trade control, and sway in pivotal
industries such as telecommunications and technology. Power, encompassing both military
strength and economic might, is the prevailing currency in world politics, according to the
neorealist paradigm. States aim to optimize their strength in comparison to other entities to bolster
their security and exert their influence. Hence, the rivalry between the United States and China
involves several aspects such as military development, geopolitical posture, and economic
initiatives, all aimed at bolstering their respective strength. Furthermore, neorealism emphasizes
the fundamental existence of security challenges inside a society without a central authority.
Measures used by a state to improve its security often create doubt and suspicion among other
nations, resulting in a cycle of rivalry. This phenomenon is clearly apparent in the struggle
between the United States and China, where both countries see one other's acts as menacing and
react accordingly, thereby sustaining a cycle of competitiveness and animosity. Therefore, at a
time characterized by significant changes in the worldwide distribution of power, the use of
neorealism to analyse the U.S.-China rivalry allows for a thorough investigation of the
fundamental structural foundations of their conflict.

9
S. Telbami, “Kenneth Waltz, Neorealism, and Foreign Policy." Security Studies (Taylor and Francis) 11 (3)
{2002} 158-170.

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Overview of the IMEC

(Source: Express Tribune)

The IMEC was introduced during the G20 summit in New Delhi in September 2023 by the heads
of state of France, Germany, India, Italy, Saudi Arabia, the United Arab Emirates, the United
States, and the European Commission. The economic and commercial effort is divided into two
corridors. The eastern corridor connects India to the UAE, Saudi Arabia, Jordan, and Israel. The
northern corridor links these Middle Eastern nations to Europe. The main goal of IMEC is to
strengthen the current land and sea transport systems to promote greater connectivity and economic
convergence between Asian and European countries. To accomplish this goal, the project will
prioritize the advancement of crucial elements such as energy facilities trains, high-speed
communication cables, and maritime routes. IMEC encompasses countries that combined
represent almost 40 percentage of the global populace and contribute to roughly 50 percent of the
world's GDP.10 The success of this corridor will depend on the seaports, road networks, and
logistical centres situated in the UAE and Saudi Arabia. This highlights the crucial role played by
these Gulf Arab states as key points in the global trade routes.

The corridor consists of two components. The eastern part serves as a maritime route between
India with the UAE. The northern part encompasses a terrestrial route that links the United Arab
Emirates with Israel by via Saudi Arabia and Jordan. This section furthermore includes a maritime
pathway connecting the Israeli port of Haifa in the Mediterranean Sea with the Greek port of
Piraeus in Europe. The corridor encompasses shipping and railway networks to interconnect
major economic centres, streamline the export of clean energy, install submarine fibre-optic cables
and pipelines for clean hydrogen, integrate energy grids, and establish telecommunication lines to
enhance widespread electricity access and foster collaboration in clean energy technology. 11 The
transportation infrastructure in the Gulf area facilitates the expeditious execution of the project.

10
Yagyavalk Bhatt and Jitendra Roychoudhury. India-Middle East- Europe Economic Corridor (IMEC) Bridging
Economic and Digital Aspirations. King Abdullah Petroleum Studies and Research Centre.2023
11
Rajeswari Pillai Rajagopalan, The Geopolitics of the New India-Middle East-Europe Corridor. 19 September
2023 https://www.apln.network/news/member_activities/the-geopolitics-of-the-new-india-middle-east-europe-
corridor.

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The project includes the following components on land: The UAE's National Railway Project
includes the construction of a 605-kilometer railway, connecting Fujairah Port to Ghuwaifat at the
UAE-Saudi borders. The concluding segment of the project's second phase, spanning a length of
145 km, is nearing its conclusion. The Saudi East Train Network provides a railway originating
from Dammam. The railway links with the North Train Network that starts in Riyadh and passes
via Haradh. From Haradh, it continues northwest towards Hadithah, which is located close the
Jordanian border. The connectivity project necessitates the construction of a direct route between
Ghuwaifat in the UAE and Haradh in Saudi Arabia, which presently lacks a connection between
the two locations. A railway spanning 300 kilometres, connecting Hadithah to Israel's Haifa Port,
has the potential to go through Jordan.12 Presently, there exists a functioning railway spanning 60
km, connecting Beisan near the border of Jordan and Israel to Haifa. The desired trajectory of this
line is to stretch from Beisan in an easterly direction until it reaches the border with Jordan. An
important aspect to consider is that Jordan's railway network is antiquated and requires
comprehensive upgrading. The participating nations want to optimize operational effectiveness,
minimize expenses, strengthen economic cohesion, stimulate employment opportunities, and
mitigate carbon emissions, so facilitating a profound amalgamation of Asia, Europe, and the
Middle East.

The IMEC is of great importance to India, especially in terms of ensuring energy security and
protecting the welfare of Indian expatriates. India relies significantly on energy supplies sourced
from West Asia, with 53 percent of its oil and 41 percent of its natural gas being imported from
this area. West Asia has a significant Indian diaspora, with over 8.5 million Indian migrant
labourers. In 2018, India received a considerable proportion of its overall remittances, totalling
$78.6 billion, of which a major $48.6 billion came from six Gulf Cooperation Council (GCC)
nations. It is important to mention that the Emirates is India's third-largest commercial partner,
while Saudi Arabia maintains the fourth place in terms of trade. India's strong economic
development and reliable creditworthiness position it well to independently make significant
commitments to the IMEC. Moreover, India has a diverse and robust cooperation with Israel,
which includes both economic and strategic aspects. The linkages within the IMEC structure are
firmly established in history, society, and culture, serving as a solid basis for joint efforts and
collaboration.

IMEC is currently exploring several techniques to develop linkages between different ports,
however precise specifics have not been revealed. The ports encompass Haifa in Israel, Piraeus in
Greece, and three ports situated on the west coast of India: Mundra (Gujarat), Kandla (Gujarat),
and Jawaharlal Nehru Port Trust (Navi Mumbai). There are five ports in the Middle East that will
establish connections with Indian ports. These are Fujairah, Jebel Ali, and Abu Dhabi in the UAE,
as well as Dammam and Ras Al Khair ports in Saudi Arabia. The available possibilities are being
refined to determine the ultimate choice, which will be dependent on the paths that have the
capacity to reduce the volume of cargo transported on a likely route. Authoritative sources cited
in media reports are doing investigations to assess the state of infrastructure, including railway

12
The Turkish Foreign Policy Institute (FPI). Connecting Continents: The proposed IMEC – India, Middle East and
European Economic Corridor. 18 September 2023 https://foreignpolicy.org.tr/connecting-continents-the-
proposed-imec-india-middle-east- and-european-economic-corridor/.

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systems, across the Middle East. New connections are being forged for construction activities
within the scope of IMEC. The precise cost of IMEC has not been revealed, however, it is
anticipated that participating countries would pay around $20 billion towards the advancement of
the economic corridor, as reported by a media source.13 According to other media sources, the
first cost estimate for establishing each of the IMEC routes ranges from $3 billion to $8 billion.
However, authorities have emphasized that it is now too early to determine the exact prices.

The signatory nations will convene in November 2023 to begin the process of finalizing the
specifics. Geopolitically, IMEC is presented as a response to China's Belt and Road Initiative
(BRI), however the BRI surpasses IMEC in terms of size and extent. BRI has garnered the
participation of more than 150 nations and around 30 international organizations since its inception
ten years ago. India has consistently voiced its opposition to the China-Pakistan Economic
Corridor, which is a significant part of the BRI, due to its passage through regions that India claims
as its own. Ambassador Anil Trigunayat, a former diplomat to numerous West Asian nations,
asserts that the IMEC has substantial potential in many crucial domains. He highlighted that IMEC
had the capability to develop resilient infrastructure and trade networks, therefore facilitating the
generation of employment opportunities and fostering the expansion of the industrial sector.
Furthermore, the project might have a crucial impact in guaranteeing food and energy security,
which are essential factors for the countries involved. Moreover, via the promotion of improved
connectivity and efficiency in transport and commerce, IMEC has the capacity to reduce
greenhouse gas emissions, so aligning with wider environmental objectives.14

Gulf Sovereign Wealth Funds (SWFs)

The number of sovereign wealth funds (SWFs) has significantly increased in recent years, growing
from 62 organizations in 2000 to 176 by 2023. The substantial expansion may be ascribed to a
confluence of causes, including an unyielding escalation in oil costs, the ongoing progression of
financial globalization, and enduring worldwide economic imbalances. SWFs have become
important tools for resource-rich states, particularly those in the Gulf area, since they may
effectively serve a wide range of strategic goals. In 2022, the International Monetary Fund (IMF)
said that Middle East oil and gas producers were projected to accumulate an exceptional $1.3
trillion in excess profits during the following four years, amidst worries of a worldwide economic
downturn. 15 The increase in SWFs was mainly influenced by the instability caused by Russia's
war in Ukraine, emphasizing the crucial role of SWFs in determining the economic strategy of
these countries with abundant resources. The Gulf nations jointly manage over 20 Sovereign
Wealth Funds (SWFs), each with unique characteristics including the amount of assets they
supervise, their investment strategies, approaches to diversification, mandates, goals, and
governance structures. Nevertheless, a shared characteristic binds them together: the excess
income mostly derived from the exportation of commodities, namely petroleum and natural gas.
These finances are subject to strict government or ruling family supervision. Currently, Sovereign

13
The Business Standard. Is the India-Middle East-Europe economic corridor going to upstage China’s BRI? 16
September 2023 https://www.tbsnews.net/features/panorama/india-middle-east-europe-economic-corridor-going-
upstage-chinas-bri-701458.
14
Usanas Foundation, Can IMEC Emerge as An Alternative To BRI? 16 October. 2023
https://usanasfoundation.com/can-imec-emerge-as-an-alternative-to-bri.
15
Andrew England, Middle East states set for $1.3tn oil windfall, says IMF. 19 August 2022
https://www.ft.com/content/94825404-e0a2-4a18-ab8d-2bc61fc7c1ab.

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Wealth Funds (SWFs) in the Gulf region together oversee over $3.7 trillion in assets.16 The world's
sovereign wealth funds are dominated by seven major funds, including as ADIA, ADQ, Mubadala,
PIF, and QIA. These funds have significant power and together control around 40% of the total
assets of all sovereign wealth funds worldwide.

Sovereign Wealth Funds (SWFs) have been subject to thorough scrutiny within the realm of
political economics. Andrew Rozanov's study highlights the substantial influence of sovereign
wealth funds (SWFs) on the worldwide financial environment, extending beyond their economic
roles. 17 This has far-reaching implications for economies globally. In addition, Kristian Coates
Ulrichsen emphasises the vital significance of Sovereign Wealth Funds (SWFs) in facilitating
diversification efforts. These funds enable governments to reduce their dependence on oil earnings
and promote economic sustainability. The latest investments made by Gulf Sovereign Wealth
Funds (SWFs) signify significant shifts in investment patterns and objectives. These trends include
a movement towards unconventional assets, deliberate investments in developing industries, more
investments in domestic markets, a growing fascination with global startups, and heightened
collaboration with private and startups. Geographically, these funds are extending their reach by
forming economic ties outside their own borders. There is a growing trend of strategic funds that
aim to attract international investments and support local economic development. Gulf sovereign
wealth funds (SWFs) are renowned for their adaptability, skilfully manoeuvring through both local
and international investment environments. Substantial reservoirs of money from the Middle East
have yet to be used. The Public Investment Fund of Saudi Arabia, which has a value of $620
billion, is under significant pressure to invest its resources due to the increased efforts of Crown
Prince Mohammed bin Salman to decrease the country's dependence on crude oil. The Qatar
Investment Authority, with a total worth of $450 billion, aggressively pursues international
investment prospects, particularly after its hosting of the FIFA World Cup last year in Doha. Gulf
sovereign wealth funds (SWFs) continue to hold significant amounts of North American and
European assets in their portfolios. However, these investors are aggressively pursuing
diversification by expanding their investments around the globe. This entails establishing
economic alliances with neighbouring countries, especially in historically hostile connections, as
shown by Egypt, Iraq, and Türkiye. Gulf sovereign investors are displaying a growing inclination
towards Chinese assets, indicating a transition from a conventional trade cooperation to a more
profound investment association. Furthermore, there is a discernible trend of reorienting their
investment priorities towards South Asia. 18

The present stage of Gulf Sovereign Wealth Fund (SWF) operations is marked by a determined
ambition to enhance global influence and take on more responsibilities. These funds have evolved
from mere financial organizations to assuming a pivotal role in job creation, fostering economic
development, and supporting decarbonization objectives, among other contributions. Despite
persistent obstacles such as a track record of subpar investment returns and the possible risk of
rising protectionism that might restrict international investments, sovereign funds are astute and

16
John Calabrese, The new wave of dealmaking by Gulf sovereign wealth funds. 20 July 2023
https://www.mei.edu/publications/new-wave-dealmaking-gulf-sovereign-wealth-funds.
17
Stanislav Audy Martínek, “The impact of Sovereign Wealth Funds on their investees: Methodology limitations."
Research in Globalization 3. 2021
18
Kristian Coates Ulrichsen, The United Arab Emirates: Power, Politics and Policy-Making. Taylor & Francis.
2016.

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adaptable. They have shown remarkable proficiency in manoeuvring through the intricate global
financial landscape. The involvement of Gulf Sovereign Wealth Funds (SWFs) in the India-Middle
East-Europe Economic Corridor (IMEC) has the capacity to provide several benefits. The Gulf
Sovereign Wealth Funds (SWFs) have substantial financial resources that may be used to fund
various infrastructure projects throughout the corridor. The allocation of these monies might assist
in meeting the financial needs for the construction and maintenance of trains, ports, and other
essential infrastructure that is vital for the efficient functioning of the corridor. Furthermore, the
investments made by the Gulf Sovereign Wealth Funds (SWFs) in IMEC have the potential to
enhance the ongoing economic diversification initiatives of the Gulf Cooperation Council (GCC)
nations. Participating in initiatives along the corridor could potentially help the GCC nations
reduce their dependence on hydrocarbon revenues and increase economic diversification.
Furthermore, the involvement of sovereign wealth funds (SWFs) from the Gulf region could
potentially foster the growth of stronger economic ties among the Gulf states and other
participating nations, including India and the European Union. It has the potential to result in
enhanced trade and investment streams, transfer of technology, and exchange of information,
eventually boosting the economies of all participating nations.

Assessing the Compatibility of the BRI and IMEC as Complementary Initiatives

(Source: Express Tribune)

The BRI, commonly referred to as the One Belt One Road (OBOR), is a prominent international
infrastructure development endeavour launched by China in 2013. This enormous endeavour
aims to provide physical infrastructure, such as trains, highways, and energy pipelines, to link
many areas spanning Asia, Europe, Africa, and Oceania. The primary goal of BRI is to bolster
economic integration, facilitate commerce, and foster cross-cultural interaction among the member
nations within this enormous network. The BRI is based on five fundamental goals that clearly
define its purpose. Infrastructure development is the most important aspect of this endeavour.
The objective is to create an extensive network of transport and communication infrastructure,
which will eventually enhance connectivity and enable the efficient movement of products,
services, and people. The BRI, apart from focusing on infrastructure development, is dedicated to
diminishing trade obstacles and improving trade facilitation among the member countries, thereby

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fostering commerce as an additional primary goal. The project also prioritizes economic
development, aiming to foster economic growth, provide job opportunities, and alleviate poverty
in the area. Moreover, BRI incorporates cultural interchange and financial cooperation as crucial
elements to foster mutual comprehension and collaboration across diverse nations, as well as to
mobilize resources for project execution.

Wang Wenbin, the spokesman for China's Foreign Ministry, expressed his views on the IMEC,
stressing the need of prioritizing collaboration over rivalry in global infrastructure projects . The
Chinese foreign ministry expressed support for measures that promote global infrastructure
development, while also voicing opposition to the use of such projects for geopolitical goals. 19
The IMEC overlaps with the Belt and Road Initiative's (BRI) projects at strategically important
logistical places. An important factor in this context is the ports in India, where the Chinese
company COSCO manages a maritime route between India and Europe. Furthermore, the Chinese
business also oversees a cargo facility at the Khalifa Port in the UAE. Haifa Bayport, operated
by the Shanghai International Port Group, is the third focus of interest. It is in competition with
the older Haifa Port, which is now administered by India's Adani Group in collaboration with local
organizations. COSCO maintains a majority stake of 67 percent in the Greek port of Piraeus.
Ocean Rail, a subsidiary of COSCO, purchased a 60 percent share in Piraeus Europe Asia Rail
Logistics (PEARL), a Greek rail firm, in 2019.20 This acquisition enables the efficient
transportation of commodities from Piraeus Port to many European and Asian nations. In addition,
Chinese corporation’s own railway networks, such as the China-Europe Railway Express and the
Hungarian-Serbian Express Railway, that facilitate the movement of merchandise across Europe.

The network of projects exemplifies the intersection and mutual reliance between BRI and the
IMEC. The IMEC provides advantages to Chinese companies operating in these strategically
important areas and opens possibilities for China to participate in logistical, technical, and energy
initiatives with countries whose interests may be impacted by the implementation of IMEC, such
as Egypt and Türkiye. Some Egyptian think tanks are concerned that the functioning of IMEC
may have negative impacts on the Suez Canal, which is a crucial maritime route that handles 10-
13 percent of global marine commerce. It is worth mentioning that the IMEC and BRI operate
within a context that includes previous efforts to offer alternatives to the BRI, such as the Build
Back Better World (B3W) initiative, which was later renamed as the Partnership for Global
Infrastructure and Investment (PGII), and the Blue Dot Network. These efforts did not have a
centralized hierarchical structure like the Chinese administration, which enables effective
coordination and rapid project execution. Furthermore, they had difficulties in obtaining the
requisite financial resources for effective execution. Significantly, a considerable number of these
efforts did not make much headway within the initial year of their declaration.

Palestine Conflict 2023 and its impact on IMEC

If hostilities escalate to encompass additional regions, the Israel-Palestine conflict could

potentially jeopardise the viability and long-term viability of the India-Middle East-Europe
Economic Corridor (IMEC) initiative. The recent dispute has a strong connection to the United

19
Resham Bhambhani, IMEC A Copy of Belt and Road Initiative, Says China Social Media. 11 September 2023
https://stratnewsglobal.com/china/imec-a-copy-of-belt-and-road-initiative-says-china-social-media/.
20
Kaki Bali, In Greece's largest port of Piraeus, China is the boss. 30 October 2022
https://www.dw.com/en/greece-in-the-port-of-piraeus-china-is-the-boss/a-63581221.

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Arab Emirates (UAE) and Saudi Arabia, two pivotal actors in the undertaking that are actively
working to maintain their positions. It is critical to recognise that the efficacy of their endeavours
might be compromised if the conflict escalates to encompass neighbouring regions, including Iran,
Lebanon, or Syria, where these countries could become directly or indirectly entangled. At the
conceptual stage, IMEC does not have any legally binding financial commitments. IMEC is a route
that surpasses the CPEC in terms of ambition, as it includes Gulf states and Israel. The action plan
designated a period of two months for the implementation of the Memorandum of Understanding;
however, this deadline has been missed. The current violence in Gaza and the territory under
Israeli occupation constitutes a security danger that compromises the potential outcomes of IMEC.
The potential for the conflict to diffuse across the entire region is a plausible apprehension. In
contrast, a multi-frontal engagement commanded by Iran is currently improbable, as Supreme
Leader Khamenei recently reaffirmed that Iran did not intervene in the October 7 escalation.21
Similarly, unless Iran is directly threatened, Hezbollah will likely employ a low-escalation
approach in a small region and remain on the periphery of the conflict. Nonetheless, there is a
high likelihood of a spillover in the regions, and it will inevitably escalate into a global issue via a
domino effect if the conflict continues.

Furthermore, the smooth movement of commodities along the northern IMEC route will be
contingent upon the restoration of diplomatic relations between Israel and Saudi Arabia. This is
since the Haifa port in Israel is anticipated to serve as a pivotal entry point for the maritime pathway
that links the main ports in southern and western Europe with the Middle East. This pathway is
also traversed by a rail artery that connects the United Arab Emirates, Saudi Arabia, Jordan, and
Israel. Reportedly, Israel was the one who proposed the notion of establishing railway connections
throughout the region during I2U2 forum discussions. However, given the current civilian casualty
count in Gaza, which has surpassed 20,000 as of December 26, 2023, and the widespread public
indignation throughout the Arab world, it is highly improbable that Saudi Arabia and the UAE will
work together with Israel on such a venture soon. The likelihood of tangible progress towards
enhanced regional connectivity appears exceedingly low in the absence of a cessation of hostilities
in Gaza. Likewise, progress towards the establishment of the northern IMEC route, which
traverses Jordan, is impracticable in the absence of a definitive indication regarding the manner
and authority that will govern Gaza after the conflict.

Challenges to IMEC

When considering the underwhelming outcomes of past Western infrastructure programmes, the
IMEC plan has many significant difficulties to its feasibility, once the exaggerated claims are
disregarded. It is crucial to remember that the primary objective of the U.S.-led Build Back Better
World (B3W) initiative was to use $40 trillion in investment in infrastructure by 2035. However,
after a year, the collective investment objective of the G7 nations and the private sector of the
PGII, which has been characterised as a modified iteration of B3W, was reduced to $600 billion
by 2027. Several initiatives, first presented as "new," were really pre-existing programmes that
were renamed as a component of the PGII.

21
Iran International. Iranian Officials Claim Tehran Had No Foreknowledge of Hamas Attack. 15 November 2023
https://www.iranintl.com/en/202311154861.

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Moreover, the IMEC will need a high level of collaboration between governments and enterprises.
Currently, there is no comprehensive, international system for coordinating funding and creating
high-quality infrastructure projects that includes all G7 nations. However, as seen by the execution
of the PGII, it seems that each G7 nation coordinates the contributions of its own institutions. For
instance, the United States has proposed the hiring of an extra presidential coordinator to lead its
comprehensive strategy and has provided specific information on how it would be implemented.
Currently, there is no group of high-ranking individuals specifically assigned to coordinate the
activities of various government development and financing agencies and to engage with those
around them in other G7 nations or the business community.

Although IMEC seems to have great potential, it is not without its own set of difficulties. An
essential obstacle is in ascertaining the precise demand along the planned route. Furthermore, it
is crucial to establish uniformity in rules, taxations, and customs processes to guarantee smooth
and efficient operations. The multimodal character of IMEC, which includes both land and
maritime components, poses logistical problems. Furthermore, well-established commercial
pathways, such as the Suez Canal, will persist in vying with IMEC. IMEC may have challenges
in establishing successful trade corridors due to the lack of readily accessible current infrastructure.
In Greece, the proximity of IMEC to EU ports is hindered by the presence of undeveloped
railroads, which are a result of topographical obstacles and budgetary limitations. Building a
railway network in the Gulf area, spanning over extensive deserts in Saudi Arabia and the UAE,
would significantly escalate the expenses of the project. Uncertainties remain over the funding of
this major project, since both the United States and the EU have not yet given detailed answers.
The IMEC statement is a continuation of the G7's pledge, announced in June 2023, to secure $600
billion over a span of five years from a combination of corporate and governmental sources. 22
These funds will be allocated towards supporting infrastructure initiatives in developing nations.
During the next two months, the nations involved in IMEC will collaborate on formulating a
strategic course of action. This strategy would include the establishment of precise time objectives
and the formulation of benchmarks pertaining to funding and regulations, among other subjects.

Although the geopolitical situation is favourable, IMEC is not as viable as it may seem in theory.
Upon deeper scrutiny of the project, other possible bottlenecks become apparent, which may
impede its implementation and hinder its success. Significantly, IMEC comprises of prominent
nations like as Saudi Arabia, the UAE, and Italy, which are all participants in the Belt and Road
Initiative. Additionally, Israel maintains strong commercial connections with China. The potential
for tension between Saudi Arabia and Israel might negatively impact its outlook. Jordan's security
situation and economy are significantly volatile because of hosting over three million Syrian
refugees. IMEC's proximity to the West Bank in Israel renders it susceptible to acts of terrorism.
An undertaking such as IMEC requires the consensus of stakeholders on technical specifications,
financial matters, logistics, and other facets of the planned infrastructure projects. The
operationalization of economic corridors involving multiple decision-making stakeholders, such
as INST (International North-South Transport Corridor), Iraq Development Corridor, North-South
Corridor, Europe-Caucasus-Asia Corridor, Trans Caspian Corridor, and Northern Sea Route, has
proven to be challenging. None of the pathways have reached full operating capacity currently.

22
Al Jazeera. G7 launches $600bn infrastructure plan to counter China. 27 June 2022
https://www.aljazeera.com/news/2022/6/27/g7-pledges-600bn-infrastructure-plan-to-counter-china.

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India has unique challenges. There are only a limited number of ports that meet international
standards, such as Mundra and Nhava Sheva, both of which were constructed by the Emiratis.
India has a substantial population, but it has deficiencies in terms of a proficient labour force,
technology and industrial infrastructure, and a bureaucracy that is conducive to business. The
transformation of the corridor into a prospective security and military platform for the nations
involved may give rise to scepticism about the motives of the sponsoring states. This has the
potential to erode the project's legitimacy and transform it into an instrument for intense power
rivalry. The funding sources for IMEC are similarly ambiguous. Despite the announcement of
$20 billion by member nations for IMEC, the reaction from European stakeholders is not
particularly promising. Countries such as Italy, Germany, and France have significant difficulties
in disentangling themselves from China. Approximations indicate that the development of each
IMEC component will need a budget ranging from $3 to $8 billion. Nevertheless, no definitive
determinations have been reached about the allotment. Furthermore, one may argue that most of
the route in IMEC traverses the water. Therefore, what is the need for building rail and road
networks? India now maintains a thriving maritime commerce with West Asia. What is the need
of having rail and road networks? The expenses and time required for the repeated processes of
loading and unloading would be much higher compared to a direct maritime route from India to
Europe.

In comparison to China, which accounts for 16.2 percent of the European Union's overall trade in
products, India's commerce with Europe is far lower at 2 percent. Nevertheless, it is important to
acknowledge that strategic connectedness plays a vital role in facilitating commerce and fostering
economic development. Therefore, it is necessary to introduce diversification. Dependence only
on maritime channels heightens susceptibility to sanctions, naval blockades, and piracy.
Furthermore, the extensive distances in the Middle East are connected by only a limited number
of railway links. As previously stated, the IMEC is anticipated to save travel time by 40 percent
and expenses by 30 percent.23 This phenomenon is most likely a result of the reduction in distances
achieved by the construction of railway lines. Furthermore, the establishment of a rail connection
between Saudi Arabia and Israel is contingent upon the presence of formal diplomatic relations
between the two nations. Due to the persistent turmoil in Palestine, it is very unlikely that the
mentioned event will occur soon. Furthermore, there are demands for the reversal of the Abraham
Accords, a diplomatic agreement between Israel and the Arab governments, which may potentially
jeopardies the whole undertaking. The actual execution of the corridor is expected to be halted
owing to the ongoing war and instability in the Israeli section, as well as the tensions in the Saudi-
and Emirati-Israel components. The Jordanian division of IMEC is particularly susceptible to
public sentiment since a significant portion of the country's population is of Palestinian descent,
including Queen Rania.

The ports encompass Haifa in Israel, Piraeus in Greece, and three ports situated on the west coast
of India: Mundra (Gujarat), Kandla (Gujarat), and Jawaharlal Nehru Port Trust (Navi Mumbai).
There are five ports in the Middle East that will establish connections with Indian ports. These are
Fujairah, Jebel Ali, and Abu Dhabi in the UAE, as well as Dammam and Ras Al Khair ports in
Saudi Arabia. The available possibilities are being refined to determine the ultimate choice, which
will be dependent on the paths that have the capacity to reduce the volume of cargo transported on
a likely route. Authoritative sources cited in media reports are doing investigations to assess the

23
The Business Standard 2023

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state of infrastructure, including railway systems, throughout the Middle East. New connections
are being forged for construction activities within the scope of IMEC. The precise cost of IMEC
has not been revealed, however, it is anticipated that participating countries would pay around $20
billion towards the advancement of the economic corridor, as reported by a media source.

Conclusion

IMEC is still in its nascent phase of development. At now, the participating nations have just
reached the stage of signing a memorandum of intent, without making any financial obligations.
The signatories are anticipated to meet again in the upcoming month to delineate an action plan,
however none of them are strictly obligated to undertake tangible measures for its execution.
India's involvement in the corridor project may be linked to its ambitious geopolitical goals and
geoeconomic interests. Nevertheless, it is important to acknowledge that Delhi could be deficient
in both the essential resources and experience required to embark on a substantial infrastructure
development project of such magnitude.

Disregarding the opposing geoeconomic interests of important regional actors, the IMEC's
outcome may not differ considerably from prior projects with comparable aspirations. The main
driving force behind this is primarily based on the strategic need to counter China through bloc
politics, rather than a genuine desire to promote cooperation for the purpose of achieving economic
development and integration, which would have a tangible impact on people's lives. Therefore,
although the IMEC has the potential to provide numerous opportunities for improving economic,
trade, energy, investment, and commercial relations between Western nations and the UAE and
Saudi Arabia, it is not realistic to expect that this project will cause these two influential Gulf Arab
countries to move away from their ties with China. Furthermore, there is a significant ambiguity
about its practical execution, particularly considering the continuing geopolitical conflicts
associated with Palestine.

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