At the September G20 meeting, host country India, along with the United States, the European Union, France, Germany, Italy, Saudi Arabia and the United Arab Emirates (UAE), signed a memorandum of understanding, a non-binding commitment to work towards building two separate "corridors", essentially envisioning a political line that is connected by some new and some existing, or already under construction, physical infrastructure.
The east corridor envisions connecting India to the Arabian Gulf, and the northern corridor connecting the Arabian Gulf to Europe. Its most visible infrastructure project is an old-fashioned railway.
It is a ship-to-rail transit network enabling goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. More important is what else would go along the rail line, including the laying of cable for electricity and digital connectivity and, most critically, a conduit for clean hydrogen export from the Gulf to Europe.
The political goal was a US and European effort to demonstrate the capacity for connectivity idea generation, or less generously, to try and out-China the Chinese Belt Road Initiative.
For the United States, it is a little late to the idea of infrastructure for development and increasing diplomatic soft power, as some of the states joining the corridors are already far along in their economic integration goals.
For the European Union, a political goal of de-risking with China also likely comes second to its more pressing need for energy security. For Europe, the prospect of securing transport and laying the infrastructure to help construct a market for green hydrogen is more important than demonstrating a regional economic development agenda.
The US and the EU lack the ability as government institutions to finance this corridor in the way that China has traditionally relied on its local bank sector to expand its infrastructure and connectivity to new emerging markets.
The IMEC is part of a larger collaboration among G7 governments, international financial institutions and private (mainly US) infrastructure investors. In a belated policy response to China's BRI, the US government and partners in the G7 announced a Partnership for Global Infrastructure and Investment (PGII) in May of 2023.
The intention is to politically support more blended finance for clean power, transport, health and climate-resilient infrastructure in low and middle-income countries. These are countries that would normally rely on higher-interest loans from private banks and concessional finance from the World Bank or International Finance Corporation for projects of scale.
China's BRI helped provide finance and the contracting firms to deliver such projects. The private sector approach to multilateral finance is more of a political commitment to help steer the available funding in existing development banks and agencies to join with private investors, with some risk guarantees in the case of default or currency depreciation.
It is innovative and necessary policy work but does not build power plants or major infrastructure overnight. The regulatory hurdles and issues of local governance to deploy available capital make these projects difficult in many low and middle-income countries.
The announced projects of the PGII should instead be seen as test cases of the possible, but with the caveats that each domestic political economy will face its own set of challenges and choices. The IMEC does not neatly fit into the PGII initiatives either, as it is not an accelerator of clean energy finance, and the countries it connects are not all low or middle-income.
However, the IMEC does serve broader energy security goals for European nations and allows the United States to advance a national security goal in supporting regional economic integration by knitting together its strategic partners Israel and Saudi Arabia — at least by rail.
The IMEC corridor is a Western political imagining of balancing in a multipolar system, mainly adding states to its side of the balance sheet in a future conflict with China. In reality, the IMEC corridor provides something for all — even China. The Gulf — and the UAE in particular — is already the region's most important re-export source of Chinese goods. An additional corridor by land would only facilitate that existing capacity from Jebel Ali.
The question is whether the new route is faster, cheaper, or safer than existing sea routes. It still navigates the Strait of Hormuz and depends on another sensitive location at Israel's Haifa — a port now managed by an Indian conglomerate backed by Emirati state investment.
The UAE is most advantaged in cementing its trade ties with India and growing new investments in strategic infrastructure assets through Israel, the Eastern Mediterranean, and onto Europe.