Escalating Israel-Palestine conflict causes concern about new economic corridor project: Experts

ANKARA/ISTANBUL

The Israel-Palestine conflict may pose a significant threat to the feasibility and sustainability of the India-Middle East-Europe Economic Corridor (IMEC) project if clashes extend to other regions, according to experts.

“Presently, it is evident that the future prospects of IMEC are quite grim in the face of the ongoing conflict,” Md. Nazmul Islam, a political science professor at Ankara Yildirim Beyazit University, told Anadolu.

Islam said it is noteworthy that the recent conflict is intertwined with one of the two crucial actors of the project – Saudi Arabia and the United Arab Emirates (UAE) – which are actively striving to secure their positions.

“It is important to acknowledge that their efforts may not prove entirely effective if the conflict extends to other regional areas, such as Lebanon, Syria, or Iran, as these nations may become embroiled in it, either directly or indirectly,” said Islam.

He said consequently, the IMEC initiative is likely to encounter various opposition, encompassing security and political challenges in the future.

Nonetheless, the initiative, instigated by India and led by Western powers, is positioned for long-term shallow success, he said, adding that ultimately reverting to its original course as its primary objective is to establish a strategy of checks and balances in the global strategic competition, especially against China and its initiatives like the Belt and Road Initiative (BRI) and the China-Pakistan Economic Corridor (CPEC), as well as against entities opposed to the Western alliance in global politics.

“While short-term obstacles may impede its progress, the initiative is poised for long-term resurgence, as it is well-prepared to confront the political, security, trade, and business challenges that lie ahead,” Islam added.

The IMEEC was unveiled at the G-20 summit in New Delhi in September. It aims to connect India to Europe with a route that runs through the UAE, Saudi Arabia, Jordan, Israel and Greece.

A memorandum of understanding was signed at the summit between India, US, Saudi Arabia, UAE, France, Germany, Italy and the EU to establish the IMEC, which will help increase trade, provide energy resources and develop digital connectivity.

While the countries signing the memorandum did not make a binding financial commitment, they agreed to prepare an "action plan" for the creation of the corridor within two months.

One of the middle points of the IMEEC is planned to be in Israel, making the current escalation in the region another cause for concern.

Big question hangs over IMEC Project

Dr Ajay Sahai, Director General and CEO of the Federation of Indian Export Organizations, said the effect of the ongoing Israel-Hamas conflict has until now, not led to countries coming together and openly joining the war, either partying ways with Israel or Palestine.

“However, if the war does not prolong, we may not see much impact of that except on the oil prices front, about which we in India has a little concern,” he told Anadolu. “Oil prices have already moved upward and probably this kind of conflict may give a further push to that.”

Sahai expressed concern regarding logistics, saying the conflict may push up the freight costs as there may be a limited availability of fleet, and with war insurance premiums going up, the freight rate may go up.

The crises may also result in a “little” challenge on the credit front as well and probably the premium of companies, the international insurance or re-insurance companies and Export Credit Guarantee Corporation of India may go up, he said.

“Much will depend on whether we will be able to contain this conflict to the region also. But if some of the major countries join this conflict, we will probably have a very dampening impact on global trade,” according to Sahai.

“We are already seeing what is happening in Russia and Ukraine. Probably we cannot not afford a second war in our Asian Gulf region,” he said.

Sahai believes the conflict between Hamas and Israel will be contained, but if it escalates into a kind of conflict with Mideast countries joining, there will probably be “a big question mark over the entire IMEC project also.”

The IMEC is being envisioned as a network of transport corridors, including railway lines and sea lanes, that is expected to aid economic growth through the integration of Asia, the Arabian Gulf and Europe.

The project, which has been compared to the old Spice Road, will start from Mumbai, India, and reach the port in Dubai, the UAE by sea, and from there to Al Gheweifat district by iron.

It will then pass through the Haradh district of Saudi Arabia and Riyadh, reaching Jordan, and then the Israeli port city of Haifa.

Products that will be taken from Haifa to Greece's port of Piraeus by sea will be transported to Europe by land from here.

If the project is implemented, the existing route used for product trade between India and Europe will be shortened by about 40%.

The economic corridor, poised to connect India to the Middle East and Europe, is widely seen to counterbalance China’s trillion-dollar Belt and Road Initiative.

After the announcement of the IMEC agreement, it was speculated in international media that with the project, the West aims to develop an alternative to China's Belt And Road Initiative by winning over India.

If implemented, IMEC will also serve, from the US perspective, to strengthen trade relations of American partners in the Middle East with India, instead of China.