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India has stitched up some of its G20 allies to create the India-Middle East-Europe Economic Corridor (IMEC) that is being perceived as an answer to China’s flagship Belt and Road Initiative (BRI) launched in 2013.
India brought the US, UAE, Saudi Arabia, European Union (EU), Italy, France and Germany to the economic corridor agreement on the sidelines of the G20 Summit in New Delhi. The project aims to foster connectivity and economic integration between South Asia, Arabian Gulf and Europe.
Railway Minister Ashwini Vaishnaw told NDTV that the IMEC will be “substantially different” from the BRI. “Compared to the Chinese project that has pitched some of its host nations into a debt trap, the G20 project will bring in revenue and be bankable. The PM’s vision of taking everyone along is an important part of this corridor,” he told the TV channel.
G20 summit: India-Middle East-Europe connectivity corridor announced
Bankability of IMEC
The BRI has recently been plagued by mounting concerns over its debt sustainability and the economic slowdown in China. With growth rates on a slump and debt levels on the rise, questions are being raised on the sustainability of the BRI. It has also been reported that Italy wants to exit the project.
“The ‘India-Middle East-Europe Economic Corridor’ project will be so bankable that several multilateral institutions are willing to fund it,” Vaishnaw told NDTV. “Transportation will bring so much revenue that it will be able to pay on its own without getting the host country into a debt trap.”
Differences in the corridors
There are six corridors under the BRI. These are China-Mongolia- Russia, China–Central Asia–West Asia, China–Indochina Peninsula, China-Pakistan, Bangladesh- China-India-Myanmar, and the new Eurasian land bridge (connecting Lianyungang in Jiangsu province, with Rotterdam). The BRI was launched to create new opportunities for shared growth among countries through policy coordination, connectivity, unimpeded trade, financial integration and people-to-people connections.
But the IMEC will consist of two distinct corridors – the east corridor linking India to the Arabian Gulf, and the northern corridor connecting the Arabian Gulf to Europe. This will include a railway network to offer cost-effective cross-border ship-to-rail transportation. IMEC looks at increasing economic efficiency, reducing costs and fostering economic unity among participating nations. It also aims to align with sustainable development goals.
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US participation
China declared that 21 Latin American countries are now participants of the BRI. However, the US has been its strong critic. American President Joe Biden referred to it as the “debt and noose” project amid concerns about its lending practices.
The India-Middle East-Europe Economic Corridor has strong backing from both the US and the EU. According to Financial Times, Biden said the corridor would offer “endless opportunities” for the countries involved, “making it far easier to trade [and] export clean energy”, and “lay cable that will connect communities”.
European Commission President Ursula von der Leyen termed the project historic. “It is a green and digital bridge across continents and civilisations,” Leyen said, adding that the rail link would make trade between India and Europe 40 percent faster.
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