Why the India Middle East Europe Economic Corridor is a poor alternative to the Suez Canal

The industry is expressing its preference for the tried and tested existing Suez Canal route from India to Europe in no uncertain terms, discounting the grandiose IMEEC.

The hype and hoopla enveloping the India-Middle East-Europe Economic Corridor (IMEEC) announced on the margins of the G20 summit stems from two principal reasons.

Firstly, Joe Biden, President of the United States, Indian Prime Minister Narendra Modi, and European Commission President, Ursula von der Leyen, were ecstatic while signing the MoU of the multinational rail and ports deal. While Biden hailed it as “a really big deal”, Modi called it “a beacon of dreams” and Leyen dreamily described it as “a bridge between continents and civilisations”.

Secondly, as the new multimodal connectivity push is being projected as a challenge to China’s Belt and Road Initiative (BRI), which India opposes and boycotts, it is arousing nationalist instincts in many quarters, especially as China’s aggression at the border or elsewhere is showing no signs of abating – a reality that External Affairs Minister S. Jaishankar keeps harping on.

IMEEC Vs Suez

The IMEEC has three transportation components spanning shipping and railway lines. First by sea from Kandla, Mundra or Navi Mumbai to Jebel Ali in the United Arab Emirates. Then by rail across UAE, Saudi Arabia and Jordan to Israel’s Haifa port, and from there by sea to Piraeus port in Greece which is connected by rail to entire Europe.

But in marked contrast to the celebratory mood of our geopolitical and strategic community mainly because of the China angle, there is cynicism in the logistics industry. The industry is expressing its preference for the tried and tested existing Suez Canal route from India to Europe in no uncertain terms, discounting the grandiose IMEEC, as there is still no hard data available and only vague claims are being bandied about how IMEEC will be 40 percent faster than the Suez route and cut costs by 30 percent.

Shippers, freighters, stevedores and an Indian official with direct knowledge of the Gulf region through which the IMEEC will run harbour grave doubts about its feasibility and viability. They called IMEEC “puzzling”, a “non-starter”, “a shot in the dark” and a “pipedream” incapable of becoming an alternative to the existing Suez Canal route – or the BRI.

The pessimism, in part, is due to the IMEEC’s aspirational MoU, which merely states that the signatories will meet after 60 days to “develop” an “action plan” and “timetables”. There is no deadline for finalising the blueprint; nobody knows when the project will get off the ground – and the funding is ominously opaque.

Logistics Players Aren’t Impressed

Anil Devli, CEO of Indian Ship Owners’ Association, said that if the cargo shipped from Mundra or JNPT is discharged in UAE and put on a train, and again unloaded and reloaded in Haifa and Piraeus, multiple handling costs will be incurred. He pointed out at present consignments reach Europe directly without any handling in between. According to him, trade will always prefer an arrangement whereby consignments reach their destination without hindrances – and a channel for smooth movement of cargo is already in place.

Devli remarked that IMEEC would be a fabulous option if it provides a better, cheaper and faster mode of transport. But it beats him how cargo from Mumbai will reach Europe in 10 days, as is being claimed, whereas it takes 10-12 days to cover 6,500 nautical miles through the Suez Canal by the all-sea route.

Shankar Shinde, president of Freight Forwarders Federation of India, is no less sceptical. He said that a single mode is always preferable to multimodal transportation like the IMEEC. He underlined that every transshipment has a cost and a dwell time – time spent on discharging and loading cargo in transit in intermodal freight. Moreover, he pointed out that sending goods by sea is always cheaper than overland transportation whether it’s trains or trucks, adding that the sea mode through the Suez Canal is the best option from all angles.

The US’s Desperation

Talmiz Ahmed, retired diplomat, who was India’s ambassador in UAE and Saudi Arabia – the two Middle Eastern countries through which the new corridor passes – opined that the IMEEC is an unsound proposal both logistically and geopolitically. According to him, it is a shot in the dark and a pipe dream incapable of becoming an alternative to the existing Suez Canal maritime route.

He called the IMEEC a crude attempt by America to compete with China’s BRI which has been in place for 10 years, has over 120 countries as participants and enjoys the backing of many Asian and European nations. Overall, he said that IMEEC is a classic case of too little, too late.

Logistically, the railway network in UAE and Saudi Arabia – countries he has first-hand knowledge of – is weak, disqualifying them for becoming the critical land bridge in the corridor, making the whole project a non-starter. The GCC Railway spanning six Arab countries, including Saudi Arabia and UAE, which was due for completion in 2025, has hardly made any progress so far.

The virtues of ocean freight can’t be overemphasised: It accounts for 90 percent of goods transported globally. Countries with the best railway networks in the world, like the US and India, prefer to send goods within the country through the sea.

The US uses the Panama Canal – and not its extensive railways – for moving cargo cheaply between the east and west coast. Odisha sends coal from Paradip port to Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka and Gujarat by sea. Studies have shown that the cost of sending coal from Paradip to Dahej port in Gujarat by ship costs less than half of rail freight charges.

IMEEC And Saudi-Israel

Geopolitically too, there are incongruities from an Indian perspective. It is a settled fact that the US’s biggest goal for IMEEC is to somehow forge Saudi Arabia-Israel bonding. But it is doubtful whether Biden has taken PM Modi on board in this strategic bonding exercise.

If he had, and if Modi had approved of Biden’s objective, then Modi could have easily invited Israel to the G20 where IMEEC was unveiled, as the Saudi de facto ruler Mohammed bin Salman was also present for the summit.

As the host, India had invited as many as nine non-member countries – Bangladesh, Egypt, Mauritius, Netherlands, Nigeria, Oman, Singapore, Spain and UAE – but not Israel, despite Modi’s perfectly good equation with Israeli PM Benjamin Netanyahu. And after the IMEEC was announced, Netanyahu publicly thanked Biden but, significantly enough, did not mention Modi.

There is a lot of speculation, but only time will solve this jigsaw puzzle which is casting a shadow on the India Middle East Europe Economic Corridor.

SNM Abdi is an independent journalist specialising in India’s foreign policy and domestic politics. Views are personal, and do not represent the stand of this publication.