Multinational corridors while demonstrating geopolitical vision, do these create geoeconomic advantage? Here is a comparison of the IMEC and INSTC
IMEC
The Union Cabinet chaired by Prime Minister Shri Narendra Modi gave its Ex-post facto approval on March 13 to the Inter-Governmental Framework Agreement (IGFA) that was signed on 13th February, 2024 during the High Level visit between the Government of Republic of India and the Government of the United Arab Emirates on Cooperation for the empowerment and operation of the India-Middle East Europe Economic Corridor (IMEC) as per a Government of India Press release.
The aim of the IGFA is to enhance bilateral relations and to further strengthen the relations between the two countries in the Ports, Maritime and Logistics sectors said the release.
The IGFA includes areas of cooperation between the two countries with the objective of exploring further potential of future joint investment and collaboration in respect of development of the IMEC.
The Agreement contains detailed framework for cooperation between the two countries.
The cooperation will be based on a set of mutually agreed upon principles, guidelines and agreements consistent with the relevant rules and regulations of the countries' jurisdiction.
Background of IMEC
As per the Ministry of External Affairs in response to the parliamentary question, on the sidelines of the G20 Leaders’ Summit, Leaders of India, European Union, France, Germany, Italy, Saudi Arabia, UAE and US announced an MOU on 9 September 2023 committing to work together to develop a new India-Middle East-Europe Economic Corridor (IMEC).
The IMEC will comprise of two separate corridors, the east corridor connecting India to the Gulf and northern corridor connecting Gulf to Europe.
The corridor will provide reliable and cost-effective cross-border ship to rail transit network to supplement existing maritime routes.
It intends to increase efficiency, reduce costs, secure regional supply chains, increase trade accessibility, enhance economic cooperation, generate jobs and lower greenhouse gas emission, resulting in a transformative integration of Asia, Europe and the Middle East (West Asia).
The IMEC corridor, which aims at integration of Asia, Europe and the Middle East involves multiple stakeholders and is at an incipient stage.
The approval for the first leg for cooperation with the UAE has now been given.
IMEC and INSTC
India has been engaged in developing another corridor to Eurasia the International North-South Transport Corridor (INSTC), which connects the Indian ports to Europe via Chabahar port in Iran.
A brief of the INSTC is as given below.
INSTC
The International North-South Transport Corridor (INSTC) is an initiative taken by India, Russia and Iran by signing an Inter-Governmental Agreement on 12th September 2000, to enhance trade and transport connectivity among countries along its route.
At present, there are 13 Members of INSTC, namely- India, Iran, Russia, Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Belarus, Oman and Syria. Bulgaria has joined as an Observer State.
The INSTC is a multi-modal, cost and time effective from India to Northern and Western Europe. It has the potential to enhance India’s connectivity with Central Asia and Eurasian Region and vice versa, taking into account the geo-strategic and economic importance of all the involved countries as per the Ministry of External Affairs response to a parliamentary question.
Wither Progress of Multinational corridors?
While the IMEC is in the conceptual stage with the first tranche of MOU signed between India and the UAE, the INSTC has been in place for over two decades now.
Despite considerable interest and investment by India and other members such as Iran and Russia, the corridor has not fructified due to several challenges even though trial run of convoys has been held.
One of the main challenges has been in terms of investment required to develop the multimodal routes in the face of sanctions on Iran and now Russia. Member states lack the capacity or are unable to envisage long term viability of the INSTC to invest in the same, thus through transportation has been lacking.
Interest in the INSTC has been revived after sanctions on Russia where merchant shipping has been hampered, however member states are not seen in a position to invest in the projects.
While the IMEC appears to have greater investment potential with commitment of the Gulf economic giants – UAE and Saudi Arabia – the second leg which has the Haifa port in Israel may be hampered by the War in Gaza.
Nevertheless, there appears to be greater commitment on the part of India to the IMEC, but progress would be in the medium to long term given the multiple issues involved in multinational corridors.
Moreover, IMEC fructification will also depend on trade volumes to and from India.
Some analysts see the IMEC as an alternative to China's Belt and Road Initiative (BRI)v which however may be a simplistic comparison.
Much will depend on geopolitics, financial commitment and resolve to push the corridors by the member states in the future.