A broad alliance of states on Saturday unveiled a vast multinational rail and ports deal linking the Middle East and South Asia, boosting trade ties with potentially wide-ranging geopolitical implications.
The United States, the European Union, India, Saudi Arabia, the United Arab Emirates (UAE), and others launched the initiative to link railways, ports, electricity and data networks and hydrogen pipelines on the sidelines of the Group of 20 (G-20) summit in New Delhi.
The pact comes at a critical time as U.S. President Joe Biden seeks to counter China's Belt and Road push on global infrastructure by pitching Washington as an alternative partner and investor for developing countries at the G-20 grouping.
Although heavily trade-focused, the scheme could have wide-ranging implications – including developing contacts between long-time foes Israel and Saudi Arabia.
Signatories hope it can help integrate India's vast market of 1.4 billion people with countries to the west, offer a counterbalance to lavish Chinese infrastructure spending, boost Middle Eastern economies and help normalize relations between Israel and Gulf Arab states.
"This is a real big deal," said U.S. President Joe Biden at the launch event, calling the plan "historic."
Biden said it would bridge ports across two continents and lead to a "more stable, more prosperous and integrated Middle East." He said it would unlock "endless opportunities" for clean energy, clean electricity, and laying cable to connect communities.
European Commission President Ursula von der Leyen said the so-called India-Middle East-Europe Economic Corridor, or IMEC, was "much more than 'just' a railway or a cable."
"It is a green and digital bridge across continents and civilizations," she said.
Prime Minister Narendra Modi said, "Today, as we embark upon such a big connectivity initiative, we are sowing the seeds for future generations to dream bigger."
The deal will benefit low and middle-income countries in the region and enable a critical role for the Middle East in global commerce, Jon Finer, the U.S. deputy national security adviser, told reporters at the G-20 summit.
It aims to link Middle Eastern countries by railway and connect them to India by port, helping the flow of energy and trade from the Gulf to Europe, U.S. officials have said, by cutting shipping times, costs and fuel use.
A memorandum of understanding (MoU) on the IMEC was signed by the European Union, India, Saudi Arabia, the United Arab Emirates, the U.S. and other G-20 partners.
IMEC is envisioned to consist of two separate corridors, with an east corridor connecting India to the Arabian Gulf and a northern corridor connecting the Arabian Gulf with Europe, according to the MoU.
Along the railway route, participants intend to lay cable for power and data lines, as well as a pipeline for hydrogen derived from renewable energy for use in power generation.
One proposed project would link railway and port facilities across the Middle East – including the United Arab Emirates, Saudi Arabia, Jordan and Israel – potentially speeding trade between India and Europe by up to 40%.
Pramit Pal Chaudhuri, South Asia practice head at the Eurasia Group, said a shipping container that today travels from Mumbai through the Suez Canal to Europe could in the future go by rail from Dubai to Haifa in Israel and on to Europe, saving both money and time.
At present, the Suez Canal is a major bottleneck to world trade, handling roughly 10% of global maritime trade, but is often beset by disruptions.
In March 2021, the giant container ship Ever Given caused a nearly week-long stoppage in Suez traffic after it lodged diagonally in the waterway.
'Game changer'
At the same time, the plan neatly aligns with several of Washington's goals in the Middle East, and officials say the United States is keen to see the projects take flight.
Biden's administration is actively prodding Riyadh, a major oil producer and security partner, to normalize ties with Israel after decades of conflict and closed borders.
Saudi Arabia has never officially recognized Israel.
Israel's Prime Minister Benjamin Netanyahu said that the United States had approached Israel several months ago for this project, which, according to him, will "reshape the face of the Middle East."
"The State of Israel will be a central hub in this economic initiative," he said in a statement late on Saturday.
"Israel will contribute all its capabilities, all its experience, and full commitment to making this collaboration project the largest in our history," he added.
U.S. involvement could also help mend deeply damaged ties between Riyadh and Washington, which frayed after the U.S.-Iran nuclear deal and the 2018 murder of dissident journalist Jamal Khashoggi.
According to details seen by Agence France-Presse (AFP), the economic corridor would develop infrastructure to enable the production and transport of "green hydrogen." It would also strengthen telecommunications and data transfers through a new undersea cable connecting the region.
French President Emmanuel Macron said the pact offers opportunities for manufacturing, innovation and people.
"But our intention is to make it real and to be sure that after this commitment, we have concrete results," he said at the event.
All the projects could also help oil-soaked Middle Eastern states wean their economies off dependence on fossil fuels.
Michael Kugelman, South Asia Institute director at The Wilson Center, said the plan could significantly respond to China's much-vaunted Belt and Road Initiative (BRI).
The so-called BRI has spread Chinese influence, investments and commerce across Europe, Africa, Asia and Latin America.
"If finalized, it would be a game changer that strengthens connectivity between India and the Middle East and would aim to counter BRI," Kugelman posted on X, formerly known as Twitter.