A revival of the IMEC idea amid choppy geopolitics

• The Yemen conflict has raised concerns about the reliability of the Suez Canal for east-west trade, leading to increased interest in alternative routes.
• The India-Middle East-Europe Economic Corridor (IMEC) is seen as a potential alternative, connecting Al Haditha in Saudi Arabia to Haifa in Israel.

Challenges and Developments

• Yemen Conflict Impact
  • The Yemen conflict has strengthened the case for alternatives to the Suez Canal, even if the conflict subsides.
  • Shippers are considering longer routes around Africa.
• Gaza War Impact
  • The Gaza war has posed challenges to IMEC, especially regarding trade links between Saudi Arabia and Israel.
  • The conflict has delayed stakeholder meetings promised in a memorandum of understanding on IMEC.

Geopolitical Hurdles

• Critics argue that geopolitical factors, including the Arab Street's resistance to trade links between Saudi Arabia and Israel, pose challenges.
• Turkey, excluded from IMEC, has expressed irritation and proposed an alternative route through Iraq for trade access to the Mediterranean.
• The potential political resurgence of Donald Trump raises concerns about US support for IMEC.

IMEC Components

• IMEC aims to facilitate trade, electricity, and digital cables, along with carrying hydrogen pipelines as the world moves towards decarbonization.
• Containerization through rail and road in IMEC is particularly appealing for India, offering quicker trade and reduced port costs.

Containerization and Rail Connectivity

• India's National Logistics Policy aims to lower logistics costs by 2030, and IMEC's containerization through rail and road supports this goal.
• The dedicated rail freight corridors linked to IMEC ports such as Mundra and Jawaharlal Nehru Port Trust (JNPT) align with IMEC's objectives.

Debottlenecking and Capacity Expansion

• Challenges include Haifa's current container traffic being less than Mundra or JNPT.
• Syncing Haifa with Mundra's planning for capacity expansion is considered crucial.

Financial Support

• IMEC is expected to draw financing from the US, Europe, Saudi Arabia, and India.
• The United States International Development Finance Corporation's funding for Adani Ports-owned Colombo container terminal could serve as a template for Haifa.

Conclusion

• IMEC faces geopolitical challenges, especially post-Gaza war dynamics and potential shifts in US leadership.
• However, its strategic importance for trade, energy, and decarbonization initiatives makes it a significant regional corridor with potential global implications.