"New Economic Corridor" importance, obstacles

There is still talk about the New Economic Corridor project, and despite its importance and the media momentum given to it, observers believe that it faces many challenges. What is the importance of this project? What are the obstacles it faces?

"New Economic Corridor" importance, obstacles
29 February 2024   07:08

The “New Economic Corridor” project, which connects South Asia with Europe and passes through the Arabian Gulf and Israel, which was approved on the sidelines of the G20 summit held in the Indian city of New Delhi (September 9, 2023), entered into oblivion after the Hamas operation on the seventh of last October. 

In addition to the United States, Saudi Arabia, and India, the United Arab Emirates, France, Germany, Italy, and the European Union signed, on the sidelines of the summit, a memorandum of understanding to establish an economic corridor linking India with the Middle East and Europe, known as IMEC. The corridor includes the construction of railway lines, pipelines for energy transmission, and cables for data transmission.

The concerned countries agreed to reach an action plan within sixty days, and all signatories will commit to financing, and Indian estimates indicate that the cost of the project will reach about 20 billion dollars.

The economic corridor, according to the G20 leaders, will include the establishment of railway lines, as well as linking sea ports and other aspects. The United States expects that the corridor will contribute to stimulating economic development by improving communication and economic integration between Asia, the Arabian Gulf, and Europe.

The project consists of two corridors: the Eastern Corridor, which connects India to the Gulf via the Arabian Sea, and the Northern Corridor, which connects the Gulf to Europe, via Israel, Jordan, and the Mediterranean coast.

According to the data, naval ships will depart from the shores of India towards the Emirates, then via a long line of railways that passes through Saudi Arabia, and from there to Jordan, and then moves to Israel, where naval ships will move from the shores of the Mediterranean to Greece and Italy. So that the goods can complete their journey to the rest of the European countries, via landlines.

In details, the eastern corridor will connect the port of Mundra on the western coast of India to the port of Fujairah or Jebel Ali in Dubai in the Emirates, and then use the railway line, via Saudi Arabia and Jordan. For transporting goods; through unified containers to the port of Haifa in Israel on the Mediterranean coast, where they are re-shipped by sea to the port of Piraeus in Greece or the main Italian ports from Taranto to Trieste or the port of Marseille in France.

Objectives of the economic corridor project

Not to mention the competition with the Chinese “Belt and Road” project, as the main idea of the “New Economic Corridor” project is to reduce the logistical costs of transportation (shipping costs and fuel consumption), by about 40%, not to mention Western support for India (China’s main competitor), as New Delhi has Population density characterized by cheap labor (compared to Chinese labor).

The success of this project will also affect the possibility of the Arab Gulf countries’ gas and oil reaching the West, and then the latter will no longer have any need for Russian gas and oil, this from an economic standpoint.

From a political standpoint, this corridor - which passes through the Gulf States and Israel - will have a role in bringing the Arab Gulf kingdoms and Israel closer together, especially since the United States seeks normalization between Riyadh and Tel Aviv, and the American diplomatic movement in the Middle East in recent months is only the greatest evidence of this.

Integrating Israel into the region, which the Biden administration seeks to achieve with great passion; After the signing of the “Abraham Accords” between Israel and the UAE, Bahrain, Morocco, and Sudan, the American focus during 2023 turned to trying to normalize relations between Saudi Arabia and Israel, and the economic corridor is a major step in this direction, as the Israeli Prime Minister, Benjamin Netanyahu, welcomed it and described it as... “The largest cooperation project in our history” that would “change the face of the Middle East, Israel and Europe and will affect the entire world.”

This project is also a confirmation of American influence in the region, an affirmation of Washington’s commitment to the strategic partnership with its allies, and an attempt to bridge the gap of trust that has grown in the region towards it and block China’s efforts to attract the Arab Gulf states, by offering an economic alternative that competes with the Belt and Road project.

Similar to the Chinese “Belt and Road” initiative, which has been prevented from being completed so far because of the fierce wars in the Middle East (one of the main pillars of this initiative), the “New Economic Corridor” project needs a safe environment in order to implement it, but crises and wars increased after the announcement. About this project, as there was the Hamas operation on October 7, which came about two months after the announcement of this project, as well as the Karabakh war on September 19 of last year.

The obstructing Iranian role

The corridor is considered a major strategic step, and it will have economic, political and social effects, as we mentioned earlier, the most important of which is the normalization of relations between the Gulf kingdoms and Tel Aviv. Therefore, Iran had a major role in obstructing its implementation, as the Palestinian Hamas, the Lebanese Hezbollah, the Iraqi Popular Mobilization Forces, and the Yemeni Ansar Allah are considered One of the powerful, striking arms of Tehran capable of complicating the scene and spreading chaos in the region, with the aim of standing mainly in the face of normalization between the Kingdom of Saudi Arabia and Israel, because if it is implemented, Iran’s backyard will be almost completely normalized with the latter’s enemy (Israel), not to mention the negative role. This normalization depends on the Saudi-Iranian reconciliation.

Therefore, the war that broke out between Hamas and Israel affected Arab public opinion, and had a role in suspending the negotiations that had reached decisive stages before the operation, from the Iranian role.

The new economic corridor will provide a safe alternative route to the Strait of Hormuz, which represents a strong pressure card in Iran’s hands that it will use against the Gulf states and international powers in the event that tension between Tehran and these countries increases. In addition, adopting Haifa instead of Beirut prompted some Lebanese to say that the presence of Hezbollah is... The reason for keeping Lebanon away from this project.

The obstructing Turkish role

As for Turkey, the latter’s exclusion from it made it one of those most affected by this project. This was demonstrated by Recep Tayyip Erdogan’s attack on this project and the countries participating in it, and his saying: “There will be no corridor without Turkey, and the most suitable line for traffic from east to west is the line crossing from Turkey.”

The new economic corridor competes with the “Iraq Development Road” project, which aims to connect the Gulf with Turkey and Europe via a railway line and a highway through ports in the Emirates, Qatar and Iraq. This explains the Turkish rejection of the “New Economic Corridor” project, which is considered a competitor to the “Development Road” project of Iraq".

The “development road” was first announced during the visit of the Iraqi Prime Minister to Turkey, in March 2023, where he revealed it in a joint press conference between Al-Sudani and Erdogan, and revealed that the development road includes “a railway line that transports goods, in the first stage, with a capacity of 3.5 million tons.” In the second phase, we will reach 7.5 million tons.

The development road or (the dry canal) between Iraq and Turkey: It starts from the “Al-Faw Al-Kabir” port in the Iraqi city of Basra on the waters of the Gulf via a high-speed railway line to transport millions of containers between the northern Gulf and the Turkish ports, and from there to Europe.

Estimates of the investment budget for the "Development Road" project amount to $17 billion, which includes the construction of several industrial and residential cities in Iraq on both sides of the road. The project schedule consists of three phases, the first ending in 2028, the second in 2033, and the third in 2050. So far, 40% of the first phase has been completed. However, the project faces internal challenges, most notably the difficulty of maintaining security stability, political division, as well as potential disputes with the Kurdistan Regional Government, which believes that the project planner deliberately excluded the region from its land route.

The project aims to build 15 train stations for goods and passengers along the line, starting from Basra in the south, passing through Baghdad and reaching the border with Turkey. The Iraqi government hopes that high-speed trains will transport goods and passengers at a speed of up to 300 km per hour, in addition to extending lines to local industrial centers. And energy, which can include oil and gas pipelines.

This corridor reinforces Turkey's policy of being a central country in the field of energy, as it allows Turkey to transport oil and natural gas from Iraq to global markets. Turkey will also be Iraq's gateway to Europe, and thus the two countries will form a bridge between Europe and Asia.

However, researchers and analysts considered that the implementation of this project was not possible, because its financing, as well as the context of its implementation, must be approved by the main region. Neither Iran, nor the Gulf States, nor the United States, nor China would agree to this project, and that is why Turkey sought, even temporarily, to open Zangizu Corridor, which connects Turkey to the entirety of Azerbaijan in order for the latter to reach Central Asia.

The data also indicate that the aim of this Azerbaijani attack last September 19 (10 days after the announcement of the economic corridor project) was to pressure Armenia to open this corridor, but the Turkish proposal also met with Iranian and Armenian rejection, and the military agreements between France and Armenia are... On the one hand, and military maneuvers between the United States and Armenia on the other hand, prevented the opening of this corridor.

Obstructing the project

The project ignored Turkey and Iran and did not include them in the project. Ankara considered it a big blow to it, and Erdogan said it explicitly, that there is no corridor without his country’s participation. Iranian officials also considered the project a threat to Iranian ports and the “North-South” corridor, which brings it together with Russia and India. And that the search for alternative routes is “completely unjustified.” Russia also sought to raise China’s concerns when the project was considered directed specifically against the Chinese “Belt and Road” corridor.

Therefore, since the project passes through the Strait of Hormuz, this will give Iran the ability to threaten the corridor and paralyze its movement almost completely. It also passes through the Mediterranean Sea, where Turkish maritime influence is increasing, which will be difficult to overcome, especially if it becomes clear that the project has political and ideological goals, and that the exclusion of some countries from the project or the attempt to isolate them was based on this very background and not based on any other data.

In addition, this project faces the challenge of the ongoing war between Israel and Hamas and the tensions in the West Bank, which could threaten the chances of “safe passage” of goods to the port of Haifa, and in light of the damage to Turkey and Iran from this corridor, this could lead to cooperation between them to foil it.

T/ Satt