The G20 Summit in New Delhi ended a few days ago, and the most prominent event was the launch of the Economic Corridor project by India, Saudi Arabia, and the United States. The project aims to connect India, the Middle East, and Europe through railways and sea lanes, to boost trade and economic integration.
US President Joe Biden, disappointed by the absence of his Chinese and Russian counterparts at the summit, has made clear America’s eagerness to exploit the huge gathering of the world’s most powerful economies in the Partnership for Global Infrastructure initiative.
The Economic Corridor project is a step that Washington will view positively due to its increasing rapprochement with New Delhi. However, implementing the project requires large amounts of money, but in the end, the project could “change the rules of the game.” The Democratic administration in the White House sees the economic corridor as an opportunity to compete with China and give the Gulf region more space to break out of the Chinese encirclement represented by the Belt and Road Initiative. This is because it is important to have more than one road to connect the countries of the world to prevent monopoly.
The United States also has another important reason for supporting the economic corridor: to turn India into an alternative to China in the field of electronic chips and semiconductors. Washington seeks to reduce the world’s dependence on Chinese products. This is where Biden and Modi affirmed their support for building flexible global supply chains for semiconductors, noting the investment of nearly $700 million in expanding research and development in India.
India, in turn, aspires to become one of the giant economic entities and compete with China. However, it needs another 15 or 20 years to become a global power like it, as its domestic product is smaller than China’s and it needs capital that the American private sector cannot provide by its nature. This is because American companies want to invest but do not want to provide assistance like Chinese companies, so Washington must find other ways to compete with Beijing.
However, despite the diplomatic activity between India and America, they are still far from establishing an alliance. India still imports more than half of its weapons from Russia. Along with China, it is a major buyer of Russian oil that is subject to sanctions, and it often votes against Washington at the United Nations. India also continues to refuse to condemn the Russian attack on Ukraine, just as it failed to condemn the Soviet invasion of Afghanistan in 1979. This confirms India’s priorities of maintaining its access to arms and oil and avoiding pushing Russia further into the arms of China.
In any case, according to news agencies, the future project will be a railway and freight corridor, which is part of the partnership for global investment in infrastructure. The project will aim to increase trade between the countries concerned, including energy products. In addition, it will include an electricity transmission cable, a hydrogen pipeline, and a high-speed data cable. According to the same sources, the maritime trade line will start from the Indian port of Mumbai to the Jebel Ali area in Dubai in the United Arab Emirates. Then a railway line will be constructed from Dubai through Riyadh and from there to Jordan, then to the port of Haifa in Israel, after which the sea journey will be resumed to the ports of Greece, Italy, and France, and from those ports to all European countries via railway there.
Until now, the project, which is still just a theory, is believed to expand India’s strategic connection with the Arabian Peninsula and Europe, while some see it as a counter to China’s Belt and Road Initiative.
On the other hand, many economists believe that the investment feasibility of this project does not appear promising. They argue that if only one container carrier were to sail daily from Mumbai to Dubai and carry 20,000 containers, it would need approximately 100 trains, each containing 20 cars, each carrying 10 containers. In addition to that, there must be at least a quarter of an hour between each train so that containers do not accumulate in the port.
This is called the trickle rate. And then, after a long journey through the Emirates, Saudi Arabia, and Jordan, the trains finally arrive at the port of Haifa in Israel. There, the 100 trains are unloaded and reloaded on a ship, and the same scenario is repeated in Italy, France, or Greece.
In this case, the average economic cost will exceed at least three times the cost, in addition to the time factor, the difference in logistical procedures between each country and another, and container insurance. This is compared to the Suez Canal, which is faster, less expensive, and safer.
Certainly, the Economic Corridor project is an attempt to create an alternative to China, represented by India, which has cheap labour. Many major American companies have already begun moving parts of their operations to India, including semiconductor factories, which are essential to the technology industry.
However, the most exciting part of the project is the area extending from Riyadh in the south to the port of Haifa in the north, which suggests that the project is more political than economic in nature.
It is too early to say definitively whether the Economic Corridor project is a political or economic one. However, it is clear that the project has both political and economic implications. It will be interesting to see how the project develops in the coming years.
Dr Hatem Sadek is a Professor at Helwan University