November 2023

Corridors of power

An ambitious infrastructure project by the West hopes to offer a credible counter weight to China’s BRI. But, writes Amit Agnihotri, it faces obstacles due to recent world events

The proposed India-West Asia-Europe Economic Corridor (IWEEC) is the West’s second big geopolitical counter to China’s Belt and Road Initiative (BRI), following the Partnership for Global Infrastructure and Investment (PGII) announced in 2022.

Last year, days after the US-led Quad, whose members are India, Japan and Australia, announced a $50 billion infrastructure plan for the strategic Indo-Pacific region, the G7 group of wealthy nations – comprising Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – had promised to mobilise $600 billion to counter the BRI till 2027.

The €300 billion Global Gateway, launched in 2021, is further set to be a key part of the IWEEC, which is expected to consolidate the geopolitical ideas being discussed in Washington and among anti-China groups like the US-led Quad.

As no initial estimates are available for the IWEEC, announced on the sidelines of the G20 Summit held in New Delhi in October, the countries that signed the MoU will meet up in November to firm up a blueprint.

The West’s reasons for announcing a series of global infrastructure pacts are clear – to check a rising China, which aims to replace the US as the world’s number one economy and wants to dominate the strategic Indo-Pacific region.

Chinese President Xi Jinping recently organised a mega diplomatic conclave to celebrate ten years of his dream project and presented the BRI as a stamp of Beijing’s global economic outreach.

At present, the BRI includes nearly $1 trillion in cumulative investments across more than 3,000 projects.But it also faces a lot of flak over the debt traps that it creates for the host nations.

India says CPEC, a key component of the BRI, runs through territories that have been controlled illegally by Pakistan

The significance of the proposed Western project can be gauged from the fact that the participating countries constitute 40 percent of the world’s population and roughly 50 percent of the global economy.

Against this backdrop, the IWEEC offers yet another alternative to the BRI and serves the strategic purpose of all the member nations when seen from their perspective.

The US plans to reshape West Asia’s geo-economic landscape through connectivity projects like the IWEEC. It is keen to reduce tensions with Iran, wants to push normalisation between Israel and Saudi Arabia, and is desperate to reassert Washington’s leadership in the region.

Therefore, America aims to counter China’s growing influence in the region as the Asian Dragon has become West Asia’s biggest economic partner over the past years.

After signing a mega 25-year trade pact with Iran in 2021, China brokered a deal to restore ties between Saudi Arabia and Teheran, which set alarm bells ringing in Washington. China and the UAE’s first ever joint military drills in Xinjiang in August only added to Washington’s concerns.

Xi presented the BRI as a stamp of Beijing’s global economic outreach

The I2U2 group, involving India, Israel, the US and the UAE, is another platform to push US objectives in West Asia. For India, the US-led Abraham Accords, signed in 2020, have helped boost New Delhi’s relations with both Israel and UAE.

In addition, India has been against the China-Pakistan Economic Corridor, a key component of the BRI, saying the project runs through territories that have been controlled illegally by Pakistan.

Therefore, New Delhi, which acts as a counterbalance to China in Asia, sees the IWEEC as an opportunity to secure greater economic leverage over the Asian Dragon and its protégé Pakistan by joining a natural alternative to the BRI.

Weeks after the IWEEC was announced, the geopolitical fallout of the Israel-Hamas war has cast a shadow over its future

Saudi Arabia, a long-time ally of the US, has of late been trying to diversify its petro-dollar based economy and views the IWEEC as a means to both forge economic relations with developing countries and pursue a more independent foreign policy.

Europe, too, wants to enjoy the fruits of economic ties with China but is wary of giving up the US-led Atlantic Alliance which provides it a security buffer against threats from Russia.

As it is not possible for one country to counter the BRI, given the economic outreach of China’s global infrastructure project, a collective effort from the US and its allies may present an effective counter to the Asian Dragon in the long run.

The IWEEC is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe.The plan involves two separate projects – the east corridor, which connects India to the Arabian Gulf, and the northern corridor, which connects the Arabian Gulf to Europe.

The proposed corridor also aims to provide reliable and secure regional supply chains, better trade accessibility, and trade facilitation to the member nations.

Participating countries are looking to ‘increase efficiencies, reduce costs, enhance economic unity, generate jobs, and lower greenhouse gas emissions – resulting in a transformative integration of Asia, Europe, and West Asia’.

DOMINO EFFECT: The fallout of the Israel-Hamas war has cast a shadow over the IWEEC’s future

However, weeks after the IWEEC was announced, the geopolitical fallout of the Israel-Hamas war has cast a shadow over the future of the ambitious infrastructure project.Both Iran and Saudi Arabia, two important nations in West Asia, have started making pro-Palestine noises, much to the chagrin of the US, which is backing Israel in the bloody conflict.

Then there is the cost factor. The new route may promise to be cheaper for transporting goods from India to Europe via West Asia, but financing and taxation issues among the member nations will need to be resolved.

Furthermore, the proposed corridor will be competing with the Suez Canal, the sea-level waterway in Egypt used to transport freight between India and Europe.

Another obstacle is that a project of this size will certainly take several years to get rolling on the ground, as it will have to overcome complex power equations in West Asia.

In comparison, the scale and scope of the BRI, which connects China with Southeast Asia, Central Asia, Russia and Europe, is much greater than the IWEEC.However, although a large number of countries have endorsed it, the flipside of the BRI has been exposed by the debt woes in countries like Sri Lanka and Zambia. Most recently, Italy announced a decision to pull out of the BRI because the project ‘did not bring the results expected’.

Irrespective of Xi’s grandstanding, a word of caution has been sounded within China, which is trying hard to deal with an economic slowdown that has adversely impacted the flow of funds towards its numerous BRI projects.

Amit Agnihotri is a Delhi-based journalist who has worked with several national newspapers and focuses on politics and policy issues