The India-Middle East-Europe Economic Corridor (IMEC), launched on September 9 at the G-20 summit in New Delhi, holds the potential to become one of the pillars of Europe’s Indo-Pacific strategy, which appears to be increasingly focused on India. The Memorandum of Understanding on the corridor signed by India, the United Arab Emirates, Saudi Arabia, the United States, the European Union (EU), and three of its major member states, namely France, Germany, and Italy, is extremely relevant not only for economic reasons but also, and above all, for its strategic significance.
From a European perspective, the new corridor seems to be in line with the new strategic priorities for the Indo-Pacific region. IMEC looks like a perfect initiative to translate the many declarations and diplomatic initiatives undertaken by the EU since 2021 into concrete actions. Indeed, the corridor may, firstly, complement the ambitious initiative known as the Global Gateway, thus facilitating the achievement of some of the goals set for the region, including connectivity and sustainable and inclusive prosperity. Second, IMEC can be a useful move to achieve what is known as “de-risking,” or the gradual rebalancing of trade and economic relations between EU and China.
Notably, the redefinition of the European strategy toward China has been underway for some time, stimulated by the United States’ own China policy and decisively accelerated by the Russian invasion of Ukraine, which revealed all the limits of economic interdependence between actors guided by conflicting values and visions. In this context, large-scale cooperation with India and the United States, through the Gulf, appears relevant for the EU because it has the potential to facilitate the creation of alternative and resilient supply chains and to link together states with large production capacity, advanced technologies, and capital to invest.
The EU has been looking at India with interest for some time and this MoU is only the last step in a rather long journey. Brussels’ willingness to engage with New Delhi emerged strongly already in April 2022, when the president of the European Commission, Ursula von der Leyen, mentioned strengthening and enhancing the EU-India partnership as a priority for the near future in her speech at the Raisina Dialogue.
In parallel, key EU member states have also accelerated the revitalization of relations with India. German Chancellor Olaf Scholz, for instance, visited the country twice in 2023, in February and against for the G-20 in September. Scholz also met with Modi on the sidelines of the G-7 summit in Japan, and in all these circumstances, the two leaders emphasized their willingness to strengthen bilateral relations, increase trade and economic ties (which are already excellent since Germany is the top trading partner for India within the EU), and increase cooperation in the defense field.
This issue has also been at the center of recent talks between French and Indian diplomats, showing that key EU states want to play an important role in the process of diversifying and strengthening India’s domestic production in the defense sector. Although Modi had already traveled to France to meet with Macron in July 2023, on the 25th anniversary of the strategic partnership, the two leaders decided to hold another bilateral meeting on the sidelines of the G-20, reflecting the priority they both give to the development of Franco-Indian relations.
In this context, an important role has also been played by Italy. Rome perceives IMEC as the missing building block of its strategy for the Indo-Pacific, which, although never formalized in a specific document, has been under development for some time now. The Italian vision, indeed, aims to connect the Mediterranean to the Indian and Pacific Oceans through the Middle East, which must therefore act as a bridge. IMEC, in addition to perfectly espousing this perspective, offers Rome the opportunity to capitalize on the multiplier offered by the presence of the EU allies, to enhance the maritime dimension vital to the country, and to leverage the good relations historically enjoyed with most Middle Eastern actors.
In terms of timing, then, IMEC comes at a decisive juncture for Italy, which appears determined not to renew the MoU signed in 2019 with China on cooperation under the Belt and Road Initiative. Rome thus needs to prepare for possible countermeasures from Beijing. Furthermore, the corridor serves the Italian national interest as it presents an opportunity for companies active in the maritime and railway sectors, as well as energy and telecommunications.
It was precisely the potential stimulus of energy interconnectivity that was emphasized by Italian Prime Minister Giorgia Meloni during the G-20. Meloni also symbolically retraced von der Leyen’s path by delivering a speech at the Raisina Dialogue in 2023. Italy’s focus on energy and South Asia also emerged from the country’s adhesion to the Global Biofuel Alliance, which includes India as well as Bangladesh, a country from which Italy hosts an important diaspora numbering around 150,000 people.
IMEC also includes the United Arab Emirates, where Meloni made a two-day stopover on her way back from India last March – a move that suggests the involvement of respective diplomats on the issue has been ongoing for several months. The inclusion of the Gulf countries allows, on the one hand, the Europeans to strengthen geoeconomic relations with the region and, on the other, India to revive its Look West policy, which has become increasingly relevant for the country.
Despite the initiative’s extraordinary potential, its development by the EU requires overcoming some pressing issues. The first concerns the deep economic and trade imbalance between EU-India and EU-China relations. Indeed, looking at the data, the total volume of trade between the EU and India, although growing steadily since 2012, remains about eight times smaller than EU trade with China, which reached 856 billion euros in 2022. Moreover, most of the EU and other actors involved in IMEC, including India, import high-tech products from China, so it is difficult to imagine self-sufficiency in critical sectors for IMEC actors in the short to medium term.
The different political priorities of the various actors involved, with the United States and the EU in particular grappling with the protracted conflict in Ukraine, which does not seem likely to end anytime soon, may also play a role in slowing implementation. Finally, the IMEC initiative comes at a time when a further slowdown in the global economy, and thus also in the EU, is expected. Notably, the German economy, which has always been the engine of European growth, stagnated in the second quarter of 2023, after a 0.1 percent drop in real GDP in the first quarter. Therefore, it seems clear that only a strong political will can make it possible to move beyond the difficulties described and can foster the rapid development of the European segment of IMEC.