The Banking Executive Magazine - October 2023

IMEC ers from Mumbai to Europe. Cur- rently, they have to go through the Suez Canal, which is longer. This corridor will reduce the dependency of Suez Canal. DEVELOPMENT TIMELINE Amos Hochstein, US President Joe Biden's co-ordinator for global infra- structure and energy security, laid out a rough timetable for IMEC proj- ect. The first phase of IMEC project will involve identifying the areas that need investment and where physical infrastructure can be connected be- tween countries. Whilst it remains unclear as to the speed and scope of the proposed corridor aimed at enhancing rail and shipping connectivity between India, the Middle East and Europe, what is clear is that the transformative part- nership could potentially open a new era of global connectivity that will increase efficiencies, reduce costs and bolster economic unity. IMEC ECONOMIC BENEFITS The cross-border, ship-to-rail transit corridors are expected to reduce shipping costs across the network and support trade in goods and serv- ices to, from and between the United Arab Emirates UAE, Saudi Arabia, India, and Europe. There will also be benefits across the Gulf Cooperation Council (GCC). According to Jon Finer, the United States US deputy national security adviser, the deal will benefit low and middle income countries in the re- gion, and enable a critical role for the Middle East in global commerce. IMEC aims to link Middle East coun- tries by railway and connect them to India by port, helping the flow of en- ergy and trade from the Gulf to Eu- rope by cutting shipping times, costs and fuel use. CHALLENGES Deep trade agreements need to be signed to reap the full benefits from the corridor. The region should im- prove trade facilitation measures, in- cluding easing the movement of goods at the border and focusing on reducing overall trade costs. While the participants’ political com- mitments are clear, the memoran- dum of understanding signed in New Delhi is a declaration of intent. How- ever, it does not by itself create rights or obligations under international law, which means that there is not yet any obligation on any partner to take action toward the implementa- tion of the IMEC. A lot depends on the priorities of the IMEC founders and the resources they are willing to commit to this ambitious project. GLOBAL ECONOMIC IMPLICATION The IMEC is expected to stimulate economic development through en- hanced connectivity and economic integration between Asia, the Ara- bian Gulf and Europe. It is also likely to have far-reaching global economic implications beyond the three re- gions. The eight countries who signed the IMEC agreement account for about half of the world’s econ- omy and 40 percent of its popula- tion. As such, they have the capacity to transform global trade and devel- opment if they are ready to commit the right resources. IMPACT ON GLOBAL TRADE AND SUPPLY CHAIN IMEC may secure regional supply chains, increase trade accessibility, the BANKING EXECUTIVE 18 ISSUE 178 OCTOBER 2023