The Banking Executive Magazine - October 2023

IMEC improve trade facilitation and sup- port an increased emphasis on envi- ronmental, social and governmental impacts. It will increase efficiencies, reduce costs, enhance economic unity, generate jobs and lower green- house gas emissions, resulting in a transformative integration of Asia, Europe and the Gulf. GEOPOLITICAL IMPLICATIONS The project will also have geopoliti- cal implications, as it raises United States profile in the IMEC region and enhances its role as a global player. The move came amid United States efforts for a broader diplomatic deal in the Middle East. In addition to the clear economic benefits, the IMEC could reap politi- cal benefits by defusing tensions and building trust and mutual interests along its routes. There is also an im- plicit commitment to security coop- eration to protect the IMEC participants’ investments and ensure its speedy establishment and smooth functioning. United States Joe Biden’s national se- curity adviser, said that IMEC reflects Biden’s vision for far-reaching invest- ments that come from effective American leadership and a willing- ness to embrace other nations as partners. The enhanced infrastruc- ture would boost economic growth, help bring countries in the Middle East together and establish that re- gion as a hub for economic activity instead of as a source of challenge, conflict or crisis. DEEP INTEGRATION BEYOND OIL IMEC is a manifestation of the deep- ening integration between India, Saudi Arabia and the United Arab Emirates UAE, and the broader geopolitical and economic conver- gence between the Middle East and South Asia into West Asia. India holds the distinction of being Saudi Arabia's second-largest trading part- ner, with bilateral trade reaching $52.75 billion during 2022-23, ele- vating Saudi Arabia to India's fourth- largest trading partner. Furthermore, trade between India and the UAE surged to $85 billion in 2022, posi- tioning the UAE as India's third- largest trading partner for the year 2022-23 and its second-largest ex- port destination. IMEC is a declaration that the bilat- eral relations with Saudi Arabia and the UAE are multidimensional, and energy is a core pillar but not the only pillar. The American objective from the IMEC is to change the trajectory in the Gulf, transforming it from a dual hierarchical structure where the United States is the dominant secu- rity partner and China is the domi- nant economic partner by bringing India into the geopolitical and eco- nomic mix. IMEC THREATS TO BELT AND ROAD AND SUEZ CANAL The pact comes at a critical time as United States President Joe Biden seeks to counter China's Belt and Road push on global infrastructure by pitching Washington as an alter- native partner and investor for devel- oping countries at the G20 grouping. The White House sees that the proj- ect would usher in a new era of con- nectivity. IMEC may be a direct challenge to China’s Belt and Road Initiative, a multi-trillion-dollar infra- structure project launched a decade ago by Beijing with the aim of con- necting China to the rest of the world. IMEC is a potential land-based alter- native to the Suez Canal. It will re- duce the risk of Suez Canal being a chokepoint, as it currently handles about 10 per cent of global maritime trade. IMEC could be a threat to Suez Canal revenue, but it could be also seen as an opportunity to integrate the vari- ous modes of transportation creating an air-sea-land custom-free corridor to support the movement of goods. IMEC IMPACT ON VARIOUS COUNTRIES Impact on United States For the United States (US), IMEC is an implementation of the flagship Partnership for Global Infrastructure and Investment initiative, the basis for which President Joe Biden first unveiled at the Group of Seven G7 summit in 2022. At the 2023 G7 summit in Hiroshima, Japan, he per- suaded the organization’s leaders to commit to identifying new opportu- nities to scale up the initiative to bet- ter respond to the global demand for high-quality infrastructure financing in low- and middle-income coun- tries. Since then, the US has announced steps to build several economic cor- ridors with the aim of driving infra- structure investments across multiple countries and sectors. It has mobi- lized more than $30 billion through grants, federal financing and the leveraging of private sector invest- ments. Impact on China IMEC is seen as a challenge to China’s economic power. China was absent from IMEC announcement. It seems this is a clear plan to rival China’s massive Belt and Road infra- structure initiative that was an- nounced back in 2013, which is designed to connect Asia, Africa and Europe. The corridor, which would include India, Saudi Arabia, the United Arab Emirates, Jordan, and the European Union, would help boost trade, de- liver energy resources and improve digital connectivity. United States president Joe Biden seeks to counter China’s Belt and Road push on global infrastructure by pitching Washington as an alter- native partner and investor for devel- oping countries at the G20 grouping. Experts sees that China’s powers are increasing so rapidly that many countries feel the need to have alter- ISSUE 178 OCTOBER 2023 the BANKING EXECUTIVE 19