Trade route talks meant to bridge Asia-Europe move at two speeds

An ambitious project to link the emerging industrial powers of South Asia with Europe and beyond is moving at two speeds, illustrating the difficulty of aligning aspirations for one of the world’s longest trade routes during a period of geopolitical turmoil.

After signing on to the India-Middle East-Europe Economic Corridor agreement at the Group of 20 meetings in New Delhi in September, governments in the US, European Union, and several European nations are bogged down financially and preoccupied diplomatically by two wars.

Meanwhile, India and the United Arab Emirates — two additional parties to the IMEC pact whose geopolitical alliances differ from those in Brussels and Washington — have taken swift action on infrastructure projects. Those include locking in a swath of port, railway, and digital work during Indian Prime Minister Narendra Modi’s visit to Abu Dhabi in mid-February. India is pushing on domestic projects like a western railway to help move its exports swiftly to the Middle East.

From the UAE’s perspective, talks about the trade corridor are still ongoing and progressing, according to a person familiar with the matter, having not been derailed by the Israel-Hamas war. The Gulf nation will aim to build on its relationships with all involved countries and particularly India, the person said, taking advantage of both existing and new infrastructure.

The UAE’s Ministry of Foreign Affairs didn’t respond to a request for comment. 

The ongoing Israel-Hamas conflict effectively stalled broader IMEC conversations as of Oct. 7, especially as the normalization of Israel-Saudi relations was a key goal to the US-led deal. 

With the US mired in domestic debate over whether and how to secure more funding for Ukraine’s defense against Russia, European officials are siphoning every last bit of available funds to the cause. That leaves both with little energy or resources to devote to pressing ahead with IMEC. European officials have privately affirmed that there are other priorities in the Middle East right now.

The White House’s National Security Council declined to comment.

The two conflicts are huge hurdles for the US and European goal of re-affirming the Western-led global order and offering an alternative to China, which has long made inroads in courting Global South countries on infrastructure.

“The EU needs to turn the project into a success as part of its efforts to counterbalance China’s BRI — but it is struggling to dedicate financing and diplomatic firepower to move it along decisively,” said Rym Momtaz, a Paris-based researcher for the International Institute for Strategic Studies, referring to China’s Belt & Road Initiative.

India, the UAE, and other Middle Eastern nations are moving ahead for the economic benefits of securing fresh trade routes — especially as conflict in the Middle East that’s stalled the project also has made IMEC ever more critical to supply chain resiliency.

Modi’s Outreach

Modi met with UAE leader Sheikh Mohammed bin Zayed Al Nahyan last month in Abu Dhabi, where the war and conflict in the Red Sea featured heavily in discussions, according to India’s Foreign Secretary Vinay Kwatra. 

In the same week, AD Ports Group, the Abu Dhabi logistics company, announced an agreement with the Indian transportation firm RITES Ltd. and the Gujarat Maritime Board. The three agreed to develop new ports, railways, and other infrastructure, as well as explore joint opportunities related to IMEC, AD Ports said in a statement.

India also has cut deals and moved to shore up domestic infrastructure in the name of fulfilling their part of the IMEC vision. 

DP World Ltd. signed a 250 billion rupee ($3.02 billion) contract in January to upgrade port infrastructure in Gujarat, including deep-draft ports, a special economic zone, and a private freight station. An India Mart facility in the UAE that Indian officials say will be ready by year’s end would allow 40,000 Indian firms to pre-position goods. A 1,506-kilometer (936-mile) rail line connecting northern India to ports in western India, part of which is already operational, is expected to keep goods flowing from production hubs to ports.

To be sure, the IMEC project hasn’t garnered support from all countries that it affects. Turkish President Recep Tayyip Erdogan, for one, has said it cannot exist without his sign-off, which he has withheld.  

French President Emmanuel Macron also is seeking to host a first meeting to lay the groundwork of IMEC, his special envoy for the project, Gerard Mestrallet, told Bloomberg.

But that proposal has been privately questioned by other countries because France didn’t have a primary role ahead of the IMEC announcement, according to officials from two countries that are party to the agreement and who declined to be identified discussing the topic publicly.

--With assistance from Sudhi Ranjan Sen and Alberto Nardelli.