Many A Bump On India-Middle East-Europe Corridor

The initial response was positive. Israel’s Benyamin Netanyahu called the India-Middle East-Europe Economic Corridor (IMEC) as the “largest cooperation project in history”. In a deft move, the United States dispatched its envoy to Pakistan to visit Gwadar Port, at the southern end of the rival China-Pakistan Corridor (CPEC). All applauded the MOU signed alongside the G20 summit, from Joe Biden to host Narendra Modi.

Undoubtedly, because it was floated by Biden, the idea was widely welcomed. The ceremony was attended by the leaders of Saudi Arabia, the UAE, the European Union, Italy, France and Germany. Everyone keen to ‘contain’ China joined what would now need a closer look and a coherent, collective follow-up.

Connecting an emerging powerhouse like India with Europe is a dream that has been nurtured for centuries. Linking it further across the Atlantic would be a win-win for all. But ifs and buts have cropped up way too soon about the feasibility of the nascent project.

While diplomatic analysts visualise numerous strategic and territorial obstacles, the economists find it is not feasible. Better and cheaper alternatives, are already available along the waterways or can be forged without cutting through mountains on the Arabian Peninsula to reach Greece, one of the weakest of European economies. All trade between India and Europe, anyway takes place via the sea route, passing through the Suez Canal. Questions arise about whether this corridor can better the Suez route or can attract more takers than the CPEC that it is widely perceived as competing with.

Unlike the BRI, which is aimed at securing China’s access to natural resources and building more direct trade and transport links among countries in Asia, Africa, Europe and the Middle East, IMEEC is much smaller in scale and so far, does not include African, Central Asian, Southeast Asian or other South Asian countries besides India.

The “new spice route” is a bridge too far. It is even a “bridge too late” and could duplicate the BRI’s effort. In its 10th year, BRI has seen more than 150 countries and upward of 30 international organizations sign cooperation agreements with China. The CPEC, its flagship, is also ten years old. Despite mutual disputes, slow and lopsided progress in Pakistan and security challenges for both, have at least met China’s objective of accessing the energy-rich Gulf. Assuming the IMPEEC takes off, its success will largely depend upon how many BRI members will be ready to switch to it to make it cost-effective.

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Undoubtedly, India stands to gain. For one, it can hope to circumvent the ‘wall’ of the volatile Afghanistan-Pakistan to reach West and Central Asia. But it has also to circumvent the objections, real or subtle, of its Western allies.

Take Chabahar Port which has languished because the Americans do not like Iran’s Ayatollahs. The US not only curbed the Indo-Iran ties but also scared away Japan and the ADB who were keen to invest in this corridor at one stage. The new corridor will require billions in consistent investment, over a long period to fructify and bring benefits to all participants.

At the diplomatic level, is a highly polarised world ready for it? Is the proposed corridor an American / Western response to China’s brokering peaceful ties between Riyadh and Tehran?

India has good ties with the Middle East and would need to stay neutral against the moves of those more powerful. The IMPEEC favours the UAE (Jebel Ali) and Israel (Haifa) but keeps out Egypt and Iran, two major players in the region. At the ground – or sea level — for India, loading-off-loading would mean multiple handling and container charges, among other levies, at every terminal and transhipment point.

At the political level, both Biden and Modi are looking at elections next year. Is the MOU a diplomatic harbinger for mutual political benefits? Modi is forever looking to consolidate his political domination to win a third term. Biden, while battling China in the global arena, needs to score a major point, especially after China took credit for the Saudi-Iran rapprochement in what was once an Anglo-American backyard. Although a Trump legacy, Biden has yet to live down the cumbersome evacuation from Afghanistan that has weakened the Western presence in the region.

As for India, to be able to see through a multi-billion project like the IMPEEC from its end, it has to constantly worry about its allies even more than its adversaries. The US/West have constantly pushed it to the defensive on human rights issues. Ukraine remains a major irritant, despite the G20 resolution, as India will continue to trade with Russia. Not strictly an ally, Turkey’s Erdogan, while at G20 lent qualified support to India getting a permanent place on the UN Security Council. But within days, he attacked India, yet again, on the Kashmir dispute.

Think of developments across this month. Emerging from the success of the G20 summit (and of its moon mission), India has been pilloried by these very allies in the new confrontation with Canada. Like Ukraine, this is not likely to go away anytime soon.

The world is informed daily of the counter-offensive against the Russians in Ukraine. The US-led alliance is keeping its war-like determination and its chin up. If it doesn’t produce the desired results, will “Ukraine fatigue”, like it had happened in Afghanistan, set in at some stage?

Beyond the initial official enthusiasm, it is not surprising to see a more considered response that underscores patience and the need to invest wisely in this long-term project.  India has seen interest in many transnational projects like the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas grid rise and fade with shifting economic interests and changing strategic goalposts. Economists have already dampened the diplomats’ enthusiasm, for politicians to take note. Overall, it means putting the money where the mouth is.

The writer can be contacted at mahendraved07@gmail.com

Is the US Backed IMEC a Copy-cat Project of China’s BRI?

On the sidelines of the G20 summit that was hosted by India in New Delhi, a new project called the India-Middle East-Europe Economic Corridor (IMEC) was announced. Backed by the US, it is a joint initiative of India, Saudi Arabia, the United Arab Emirates, Jordan, Israel, and the European Union to create a network of railway lines and port connections from India to Europe, across the Middle East. The project aims to boost trade, deliver energy resources, improve digital connectivity and enable the production and transport of green hydrogen to all partner countries.

It could also resemble a copy-cat project, which aims to emulate China’s massive Belt and Road Initiative (BRI), an infrastructure project that spans across Asia, Africa and Latin America and has given China considerable influence over countries that have struggling economies. The BRI was unveiled by China’s paramount leader Xi Jinping in September and October 2013 during visits to Kazakhstan and Indonesia, and was later promoted by Chinese premier Li Keqiang during his state visits to Asia and Europe.

Progress of the BRI, however, has been affected by various factors, such as the COVID-19 pandemic, the increasing tensions between China and the United States, and the changing perceptions and policies of the participating countries. 

There have been delays, cancellations, or renegotiations of some major projects due to health risks, environmental concerns, debt sustainability issues, or political changes. For example, in Malaysia, the East Coast Rail Link project was suspended and later restarted on a reduced scale.

In some countries that fall in the proposed BRI route, there have been criticism and opposition to the plan because of lack of transparency, accountability, and standards of the projects that make up the BRI. Much of this also centres around the geopolitical implications of China’s growing influence in the world and its ambition of evolving a New World Order to challenge the West, and, particularly the US. 

There have been recent dissenting ripples. Italy was the first from the G7 grouping (the intergovernmental political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the US) to join the BRI in 2017 by singing a memorandum of understanding with China but it has since faced pressure from its allies, notably the US , to reconsider its involvement in BRI and align its policies with the European Union and NATO. Recently, there were reports that Italy now wants to withdraw from the BRI before its five-year MoU expires next year. 

According to some reports, Italy is now seeking to withdraw from the BRI before its five-year memorandum expires in March 2024. 

The IMEC is expected to offer an alternative model of development that is based on shared values, transparency, sustainability and respect for sovereignty. It wants to nurture and foster regional cooperation and stability in the Middle East, a crisis riddled region of the world where countries such as Israel and Saudi Arabia have been at odds with each other, as well as other schisms within the Arab world. 

It is easy to surmise that the IMEC is a proposal aimed at countering or even checkmating China’s BRI but whether it can do that remains to be seen. BRI has a 10-year head start over IMEC and among the 150 countries that have signed agreements with China for its BRI, are Greece, Italy, Saudi Arabia and the United Arab Emirates, which are. allies and partners of the US. Will they dump BRI and swarm to IMEC? 

The IMEC is still in its early stages and many details are yet to be worked out, such as the financing, timeline and technical feasibility of the project. The IMEC will also face challenges such as geopolitical tensions, security risks and environmental concerns in the regions it passes through. Moreover, the IMEC will not necessarily replace or compete with the BRI, but rather complement or coexist with it, as some of the partner countries are also involved in the BRI or have good relations with China. And many BRI signatories might want to evaluate the IMEC’s value propositions and comparative advantages over the BRI before they decide to sign up or choose one over the other.

The IMEC proposal should also be viewed from the perspective of Saudi Arabia, the biggest player in the Middle East, and a close ally of China. 

China and Saudi Arabia established diplomatic relations in 1990 and have since developed a comprehensive strategic partnership that covers various areas of cooperation, such as oil, defence, infrastructure, culture and tourism. China is Saudi Arabia’s largest trading partner and the largest importer of Saudi crude oil. 

Besides Saudi Arabia being a key part of China’s BRI, China has also played a mediating role between Saudi Arabia and Iran, two regional rivals that have been at odds over various issues, such as the nuclear deal, the war in Yemen, the crisis in Syria and the influence in Iraq. China has proposed a security framework for the Gulf region that emphasizes multilateralism, non-interference and mutual respect.

China’s mediation efforts led t oa landmark agreement between Iran and Saudi Arabia that was signed in Beijing in March this year. After seven years of broken relations, the agreement aims to restore ties between the two countries, which are divided by a religious rift that dates back to the early history of Islam. Saudi Arabia and Iran follow different branches of Islam – Saudi Arabia is largely Sunni Muslim, while Iran is predominantly Shia Muslim. This has global implications with Muslim dominated nations around the world either looking up to Saudi Arabia or Iran, depending on which sect is dominant in their regions. China’s importance in geopolitics in general, and the Middle East, in particular, can be gauged by the fact that it brokered a deal between the two biggest rivals in the Mulsim world.

China’s growing global influence, and its close ties with the other major power, Russia, which is embroiled in the ongoing war in Ukraine, and its economic importance–it is still the dominant manufacturer for global markets, should not be viewed separately from its BRI ambitions. China’s president Xi Jinping decided to skip the recent New Delhi summit of the G20 but how his country will react to the IMEC proposal will be highly anticipated.

Indian PMs and Their Media Shyness

Shortly after the conclusion of the G20 Summit in Delhi, attended by a panoply of world leaders, including some of the most powerful, Prashant Bhushan, a noted Indian public interest lawyer and activist tweeted a parody of the late Harry Belafonte’s song, Jamaica Farewell, with lyrics that satirized and lamented the denial of access that journalists covering the summit had to face. Mainly it was aimed at the American media corps that travels with President Joe Biden on his Air Force One aircraft and who traditionally expect to interact informally with the leaders and with the US president when he meets them for talks. 

Some of the lyrics of the parody, quite artfully done and accompanied by an animated clip, said: …”They thought free speech was in their reach but when they landed in Delhi, they got a shock: “I’m sad to say they were kept at bay and in the van they just had to stay”…. and “where Smiley Joe met PMO, the press corps simply could not go…”

Funny? Yes. But sad as well. Ever since 2014, when Narendra Modi became Prime Minister of India after his party, the Bharatiya Janata Party (BJP) won massively in India’s parliamentary elections, a feat that it bettered before his ongoing second term, Modi has adopted a somewhat reclusive media policy. True, he has and does agree to be interviewed from time to time but usually to very selective media publications, TV channels, or journalists (Disclaimer: this writer along with a colleague from a leading Indian newspaper was granted an interview with him in April 2015), but he has never addressed a press conference or faced the press in the manner that some heads of states in other democracies routinely do.

The Indian mainstream media has gotten used to restrictions and there was hardly a murmur about access or the lack of it during the G20 media. On social media such as X and Facebook some tired posts made the rounds but not much else. 

Here’s the thing, though. Is it a practice for Indian Prime Ministers to shun the media? Modi’s predecessor, the Congress party’s Manmohan Singh, had a tenure that began in 2004 and lasted till 2014. Guess how many press conferences he addressed during that decade? Three. The first press conference was in May 2005, the second was in February 2010, and the third and last one was in January 2014. Singh was often called the “silent PM” and considered by many to be a puppet of his party’s then president, Sonia Gandhi.

More Violence in Manipur

Manipur may have dropped off from the front pages of Indian newspapers, overtaken by other deemed important stories such as  afterglow of the G20 summit in Delhi, but violence still rages in the northeastern state that has been in turmoil since May this year. Last Friday, a group of armed Meitei men attacked a Kuki village in the Chandel district, killing 12 people, including four children, and injuring 18 others. The attackers also set fire to several houses and vehicles, and looted valuables. The police said they have registered a case and launched a manhunt for the culprits. 

Ethnic violence between the Meitei and the Kuki tribal communities in the state has claimed more than 180 lives and displaced nearly 70,000 people besides causing widespread destruction of property, including churches and temples. 

The violence in Manipur is a conflict between the Meitei people, who are the majority in the Imphal Valley, and the Kuki tribal community, who live in the surrounding hills. The violence began after a protest by the Kukis against the Meiteis’ demand for tribal status, which the Kukis feared would give them more power and land rights. The violence has also been fueled by other issues, such as drug trafficking, illegal migration, land disputes, and religious differences. Besides killings and destruction of property, women have been targeted and humiliated by sexual violence and public shaming. 

Although the central and state governments have deployed security forces, such as the army, paramilitary, and police, to restore law and order and protect civilians, and imposed curfews, internet shutdowns, and prohibitory orders to prevent further violence, this has clearly not helped in stemming the violence, which has far deeper socio-economic and communal problems that need to be resolved.

Does India Have a Talent Shortage?

Last week, a report by ManpowerGroup, a global staffing company, revealed that four out of five employers in India report facing difficulty in finding the talent they need. Meanwhile, 52 million additions were made to the payrolls over the past four years. The report also said that India has one of the highest talent shortages in the world, with 80% of employers struggling to fill roles compared to 69% globally. The most in-demand roles are IT professionals, engineers, technicians, sales representatives, and accounting and finance staff.

Why do companies have trouble recruiting for such roles in India? There could be several factors.

First, is the fact that  the impact of the COVID pandemic continues to impact the job market with uncertainties and insecurities among many jobseekers, some of whom prefer to work from home or avoid exposure to crowds. This has had an impact on the number of workers available for onsite work.from home or avoid exposure to crowds.

Second, it is the lack of qualified job-seekers. Demand may have increased  for skilled and high-performing workers with companies seeking productivity and performance-driven hires. Job seekers with average or poor performance may find it hard to compete and get selected for the right job opportunities. And although India has a vast cohort of working age population (aged 15-59), many are just not qualified for the sort of roles employers are looking for. 

India’s working-age population was 61% of its total population in 2011; the proportion is growing rapidly, and is now estimated at 64-65%. In numbers, and try to wrap your head around it, it is 900 million. If the majority of these people are not qualified or capable enough to do the jobs that employers are seeking workers for, what do you think will happen? Hear the ticking? It’s a time bomb.

To End With Some Heady Stuff…

Quick, which country drinks the most beer per head? According to a survey by Kirin Holdings (it’s a Japanese group; and, yes, it also makes beer!), it’s the Czech Republic. Presumably because beer is cheap in that country, people drink an estimated nearly 200 litres per capita every year. That’s a whole lot of guzzling. In Austria, which comes a distant second, the comparative figure is less than 100 litres. And, if you’re wondering where India ranks on this list, it doesn’t figure among the top 30. And not even in the top 100. According to the survey, Indians drank a measly 1.2 litres of beer per head, the lowest among the 170 countries surveyed!

Beijing Sharpens BRI To Woo Global South

Whatever success is claimed by the Delhi Summit of G20 countries under the presidency of India, the absence of Chinese President Xi Jinping and Russian President Vladimir Putin from the conclave of leaders even while they were represented by their prime minister and foreign minister, respectively, robbed the meeting of some glitz.

Putin has been extremely circumspect with foreign travel since the International Criminal Court (ICC) issued a warrant for his arrest on alleged war crimes in March. Though India like the US is not part of ICC, Putin must have believed that his presence in Delhi would invite smirks from many attendees. Then he has preoccupation with the challenges that the Ukrainian war has thrown up and internal dissensions. Xi had quite a few considerations to avoid being in the summit, for he knew that with the support of the West, the summit would herald an ambitious infrastructure project touching many countries amounting to a challenge of China’s own Belt and Road Initiative (BRI).

While many saw Xi’s absence as a snub to the G20 summit, Prime Minister Li Qiang who joined the party instead played, to every other participating country’s relief, a role that didn’t leave a room for dissonance. In the meantime, Xi is continuing with subtle that finally would amount to something profound changes in diplomacy aimed at seeking leadership of the global South. At the recent BRICS meet in South Africa’s Johannesburg, Xi had reasons to celebrate that Saudi Arabia and Iran in whose reconciliation Beijing had an important role were inducted as two of the six new members.

At the same time, it is to be said to the credit of Indian Prime Minister Narendra Modi that he is making an outreach to the Islamic world and this has come for praise from none other than Congress Working Committee member Shashi Tharoor. It was largely at the instance of Modi that the African Union representing 55 countries was inducted as a new member of G20.

India has good relations with all the new BRICS inductees. But for Beijing BRI is an important handle to have the global South on its side in the influence war with the West, the US in particular. Launched ten years ago, BRI that revived vision of Chinese attempts to revive the Silk Road is seen as Xi’s signature foreign policy initiative. Since its launch, China’s cumulative BRI engagement amounts to over $1 trillion, with nearly $596 billion in construction and $420 billion in non-financial investments.

Even while many flaws have been identified in project selection and execution and governance resulting in many project and aid receiving developing countries now tittering on the brink of default, BRI finance and investments are once again picking up. A report by think tank Green Finance and Development Center says in the first half of the current year, over 103 BRI deals worth $43.3 billion were done compared with approvals claiming investment of $35 billion in six months to June 2022.

This is proof that though Xi is aware of the factors telling on many BRI projects such as bending of rules by Chinese banks while financing projects in unstable countries marked by human rights violations, rigged elections and fratricidal warfare, he will not allow atrophying of the programme. At the same time, he wants the projects to pay for themselves. Times have changed since the unveiling of BRI. The country’s economic performance continues to disappoint, the economy having grown at an annualised rate of 3.2 per cent in the second quarter. China grew by only 3 per cent in 2022.

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According to a survey of 37 economists by Nikkei, the Chinese GDP growth counting average opinion will be 4.7 percent this year, but with many putting it still lower at 4.0 per cent. Beijing is greatly concerned that the country’s exports took a year on year dive of 8.8 per cent in August, the fourth month in a row of decline. Property developers continue to be haunted by payment defaults to banks and the economy is facing deflationary risk unlike the Western countries and India where inflation continues to remain a major concern.

As China remains in search of economic recovery, citizens keep on wondering why Beijing should remain the world’s largest creditor to developing countries supporting their infrastructure development instead of announcing a big bang fiscal stimulus package to fix its own faltering economy. But for China there is no backtracking on BRI, for it will now be engaged in a contest with India inspired India-Middle East-Europe Economic Corridor (IMEE-EC) project accepted at New Delhi G20 summit. Earlier, sensing that they are missing out on the goodwill of low and middle income countries where China’s presence is increasingly felt, advanced economies represented in G-7 have too proposed an investment of $600 billion in infrastructure development of poorer regions. But nothing concrete has happened as yet.

Facing such challenges, Xi wants cleaning up BRI related accounts without, however, going for a haircut. Earlier dodgy lending practices are shunned and funds siphoning by politician-bureaucrat nexus at aid receiving countries are largely plugged. Beijing has given a clear message that henceforward projects will be chosen based on their viability and a fair return. The Economist says Chinese President wants investors to focus on “small but beautiful” projects with promise of good returns, effective governance and oversight not to allow fund misuse. While funding of infrastructure that poor and developing nations need more than anything else, Beijing now is also talking of a digital silk road through the global south enabling it to participate in world digitalisation.

Arguably, IMEE-EC is the single most important breakthrough at the G20 summit, which if funded properly will prove to be a significant booster of trade encompassing India, the Middle East and Europe. Multi-modal connectivity of the three continents is a much discussed idea. The challenge is in getting all the countries on board and arranging funds. What, however, is to be accepted that in scope and the number of countries to be covered, IMEE-EC will not stand in comparison with BRI.

Xi must be patting himself on the back that over 150 countries touching all geographies and home to nearly 75 per cent of the world population and accounting for half the global GDP are part of BRI initiative. Come October, China will be hosting the third BRI forum in its capital city where it is expecting attendance of more than 90 countries. Interestingly, President Putin will make his first trip abroad since the issue of arrest warrant by ICC to attend the Beijing meeting.

Ahead of the BRI meeting, Xi is hosting Zambian President Hakainde Hichilema and Venezuelan President Nicolas Maduro. BRI is no charity. China is carefully choosing the countries rich in minerals and crude oil and gas but short of resources to build infrastructure. Thereby it is earning goodwill. Some years preceding the launch of BRI, China became a key lender to Venezuela in 2007 providing funds for infrastructure and oil projects. In the next phase of development of its oil industry, Maduro will need more foreign funding. He has described his visit to China as historic since this is happening after years of frosty relations with the BRI promoter. In the meantime, the US is seeking engagement with Venezuelan officials after lifting of sanctions. But this will be conditional on Maduro making a promise of fair elections to be held next year.

While this being so, Beijing is not in the habit of raising issues of human rights violation and absence of democracy in its engagement with aid receiving countries. Incidentally, President Biden while in Delhi for the G20 summit made it a point to raise the “importance of respecting human rights” with the Indian prime minister. Biden told reporters in Hanoi: “As I always do, I raised the importance of respecting human rights and the vital role the civil society and a free Press have in building a strong and prosperous country with Biden.” If this is the kind of US engagement with the world’s largest democracy, then it does not leave to one’s imagination what Washington will be demanding of Venezuela for lifting sanctions. No wonder Beijing has an edge in dealing with regimes, which are not bound by democratic norms.

China is the world’s largest importer of oil and despite US sanctions, Beijing is importing crude – mostly heavy sour Merey and Boscan – from Venezuela. The South American country with proved reserves of 304 billion barrels are ahead of Saudi Arabia’s 298 billion barrels. Naturally China will be keen to have normal relations with Venezuela likely resulting it investing in development of oilfields and related infrastructure. Repairing relationship with China will help Maduro in his bid for third presidential terms as he is to derive political and economic benefits from rivalries between the world’s two largest economies. It will be recalled that Beijing was a major lender to Venezuela in 2007 when the country under the leadership of Hugo Chavez was engaged in developing its oil industry and infrastructure.