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Editorial Articles


Issue no 38, 16-22 Dec 2023

 

Trade Corridors to Europe:

India’s Ambitious Outreach to the West

 

 

Dr. Prabhas Chandra Sinha

 

The India-Europe Rail Network (IERN) and the India-Middle East-Europe Corridor (IMEC) represent ambitious trade corridors seeking to establish robust rail and shipping connections between India and Europe. In parallel, China's Belt and Road Initiative (BRI) strives for global infrastructure development, aiming to link China with Southeast Asia, Central Asia, Russia and Europe. In this article, we shall   explore the similarities and fundamental differences between the three.

India-Europe Rail Network

Anticipated to slash travel time between India and Europe by a remarkable 70%, the proposed IERN envisions an extensive 7,000-kilometer (4,350-mile) network of rail lines, intricately weaving through Iran, Turkey, Greece, and Bulgaria, promising substantial benefits to both the regions. Notably, it pledges to substantially reduce trade costs by mitigating transportation expenses, presenting a boon for businesses and consumers engaged in the movement of goods between India and Europe. Moreover, by streamlining trade processes, the rail network holds the potential to bolster trade volumes and foster economic growth in both regions. Beyond economic advantages, the IERN emerges as an environmentally sustainable mode of transportation, promising to contribute to pollution reduction in both India and Europe compared to conventional road or air transport. Yet, the journey toward the realisation of the IERN is marred by issues that demand attention. Chief among these hurdles are the exorbitant costs, with estimates surpassing $100 billion, and technical intricacies arising from the need to navigate diverse technical standards across participating countries. Security concerns, particularly in politically unstable nations along the route, add an additional layer of complexity to the project. A lack of coordination among the participating countries has already impeded progress, leading to delays exacerbated by funding issues and geopolitical tensions.

Therefore, the ultimate feasibility of the IERN hinges on critical factors such as securing funding, fostering political will among participating nations, and surmounting the technical challenges that loom large. Nevertheless, as this ambitious venture navigates the intricate landscape of global trade connectivity, the potential rewards beckon, underscoring the need for strategic collaboration and concerted efforts to transform the vision into a tangible and transformative reality.

 

Progress So Far: Noteworthy strides have been made, reflecting a commitment to overcoming the challenges and realising the transformative potential of this ambitious venture: Significant efforts are underway to enhance the rail infrastructure connecting India and Europe. Notably, the International North-South Transport Corridor (INSTC) is emerging as a multimodal transportation corridor, set to forge a vital link between India and Europe through the collaborative routes of Iran and Russia. These ongoing projects signify a tangible step towards establishing the groundwork for seamless connectivity.

Recognising the importance of uniformity in rail networks, Indian and European railway authorities are engaged in collaborative efforts to standardise rail systems between the two regions. This standardisation initiative aims to streamline the transportation of goods by rail, fostering efficiency and reliability in cross-continental trade.

Acknowledging the geopolitical intricacies along the IERN route, the governments of India and Europe are actively fostering cooperation with other nations involved in the project. This concerted effort seeks to enhance the safety and reliability of transporting goods by rail through regions marked by geopolitical complexities, demonstrating a commitment to overcoming challenges through diplomatic collaboration.

Addressing the hindrance posed by a lack of coordination, the railway authorities central to the IERN are actively working to enhance coordination mechanisms. This proactive approach aims to minimise delays and disruptions, crucially improving the overall efficiency and effectiveness of rail services traversing the expansive route.

As the infrastructure takes shape and collaborative efforts gain momentum, these positive developments signify a collective commitment to turning the vision of the India-Europe Rail Network into a reality. While challenges persist, the progress made thus far underscores the transformative potential of this ambitious project, offering a glimpse into a future where seamless rail connectivity fosters enhanced economic ties and global cooperation.

 

India-Middle East-Europe Ecomonic Corridor

The IMEC is a proposed 12,000-kilometre (7,456-mile) trade corridor that would connect India to Europe via the Middle East. Announced in 2023, cautious optimism surrounds the prospects for completing the IMEC, given the strong commitment from the participating countries. The IMEC envisions connecting India to Europe through an extensive network of roads, railways, and ports, traversing countries including India, Iran, Turkey, and Greece. Factors Favouring IMEC: Firstly, the IMEC holds the potential to be a significant economic driver for all participating countries. Facilitating trade and investment between India, the Middle East, and Europe, the corridor is poised to create jobs and spur economic growth in the region. Secondly, the IMEC enjoys support from the international community. The World Bank, the Asian Development Bank, and the European Union have all expressed their endorsement, a crucial factor for securing the necessary financing to bring the project to completion. Thirdly, against the backdrop of the global geopolitical landscape, the IMEC assumes increasing importance. Offering an alternative trade route between India and Europe, it reduces dependence on the traditional Suez Canal route, making both regions less vulnerable to disruptions in the canal.

Moreover, the development of new technologies such as hyperloop and autonomous vehicles could enhance the feasibility of the IMEC. Success in other regional trade initiatives, such as the China-Pakistan Economic Corridor (CPEC) and the Belt and Road Initiative (BRI), could set a positive precedent for the IMEC.

 

Challenges that Could Delay or Derail the IMEC Project: One significant challenge is the prevailing geopolitical instability in the Middle East. Ongoing conflicts and tensions may pose difficulties in constructing and maintaining the IMEC infrastructure. Another challenge lies in the financing of the IMEC project. Given its massive scale, securing the necessary investment remains unclear. Moreover, the IMEC project is complex and demands close coordination between participating countries with differing political and economic systems, presenting a potential challenge.

Key Differences between IERN and IMEC

Project

IERN

IMEC

Mode of Transportation         

Rail     

Multimodal

Route

India-Iran-Turkey-Europe

India-Pakistan-Iran-Turkey-

Greece-Europe

Countries Involved

India, Iran, Turkey, and European Countries

India, Pakistan, Iran, Turkey, Greece, and European Countries

 

  • The IERN is a more focused project, as it envisages developing a rail connection between India and Europe. The IMEC is a broader project, as it aims to develop a multimodal transportation corridor between India and Europe.
  • The IMEC has already received support from many countries, and there are concrete plans to develop the corridor.
  • The IERN is likely to be more expensive to construct than the IMEC, as it would require the construction of new railway lines. The IMEC could utilise existing roads and railways, which would reduce the cost of construction.

 

Overall, the IERN and the IMEC are both ambitious projects with the potential to transform trade and transportation between India and Europe. However, the two projects differ in terms of their scope, stage of development, and cost.

 

China's Belt and Road Initiative

The Belt and Road Initiative (BRI), initiated by China in 2013, stands as a monumental global infrastructure development project. It holds the distinction of being the most extensive infrastructure investment initiative in history, aspiring to forge connections between China and regions spanning Southeast Asia, Central Asia, Russia and Europe, encompassing an expansive network of roads, railways, ports, and pipelines.

 

Potential Benefits of BRI: The BRI envisions fostering economic development in participating nations by channeling investments into infrastructure, trade, and overall economic growth. An integral objective of the BRI is to enhance global connectivity, particularly between China and other parts of the world, achieved through the creation of an extensive network of roads, railways, ports, and pipelines. The BRI seeks to stimulate cultural exchange by facilitating increased people-to-people contact and cooperation between China and other nations.

 

Factors Favouring Progress of BRI: China's formidable financial resources, boasting the world's largest foreign exchange reserves, underscore its commitment to investing in and driving the success of BRI projects. The Chinese government demonstrates a strong political will, actively promoting the BRI initiative and fostering collaboration with other nations to ensure its success. The growing demand for infrastructure in developing countries, coupled with their limited financial resources and technical expertise, positions the BRI as a vital avenue for accessing necessary financing and expertise.

 

Issues and Challenges Facing BRI: Concerns arise as some participating countries accumulate substantial debt to fund BRI projects, raising questions about the sustainability of their debt levels. Criticisms are directed at certain BRI projects for their negative environmental impact, prompting scrutiny and calls for sustainable practices. There are apprehensions surrounding corruption in the implementation of BRI projects, necessitating measures to ensure transparency and accountability.

 

Initiatives Underway to Address the Challenges:

 

  • Debt Sustainability Framework: Launched by the G20 in 2019, this framework aids countries in managing their debt levels and preventing debt crises within the BRI.
  • Green BRI: This initiative strives to embed sustainable development practices within the BRI framework, mitigating environmental concerns.
  • Anti-Corruption and Integrity Initiative: Geared towards fostering transparency and accountability in the execution of BRI projects, this initiative underscores a commitment to combat corruption.

 

The Belt and Road Initiative represents a multifaceted and ambitious endeavour with the potential for significant benefits. However, it concurrently confronts several challenges. The ultimate success of the BRI hinges on the collaborative efforts of China and participating countries to effectively address and overcome these challenges.

 

Geopolitics of BRI

The geopolitics of the Belt and Road Initiative (BRI) are complex and multifaceted, with implications for both China and the countries along the BRI routes. China's motivations for launching the BRI include the following economic, political, and strategic objectives:

 

  • Expanding Market Access: The BRI aims to open up new markets for Chinese goods and services, particularly in developing countries.
  • Securing Access to Resources: China is a major importer of resources, such as oil and gas, and the BRI can help secure access to these resources from countries along the BRI routes.
  • Promoting Infrastructure Development: The BRI aims to invest in infrastructure development in participating countries, which can boost economic growth and create jobs.
  • Enhancing China's Global Influence: The BRI is a major foreign policy initiative that can help to enhance China's global influence and prestige.
  • Strengthening Ties With Developing Countries: China has traditionally had close ties with developing countries, and the BRI can help to strengthen these ties.
  • Promoting China's Model of Development: China hopes that the BRI can promote its model of development, which emphasises state-led development and infrastructure investment.
  • Countering Western Influence: China sees the BRI as a way to counter Western influence in the developing world.
  • Securing Strategic Sea Lanes: The BRI can help China secure its access to strategic sea lanes, such as the Strait of Malacca.
  • Enhancing China's Military Projection: The BRI can help China enhance its military projection, particularly in the Indian Ocean.

 

The BRI has been welcomed by some countries along the routes, that see it as an opportunity for economic development. However, there have also been concerns about the BRI's potential impacts, such as debt sustainability, environmental degradation, and corruption. The geopolitics of the BRI will continue to evolve as the initiative is implemented. Here are some specific impact of BRI so far:

 

  • China's Growing Influence in Central Asia: The BRI has helped China increase its influence in Central Asia, a region that is rich in resources and strategically important to China.
  • China's Growing Ties with Pakistan: The BRI has helped China strengthen its ties with Pakistan, a key ally in South Asia.
  • China's Growing Presence in Africa: The BRI has helped China increase its presence in Africa, a continent with a large and growing population.

 

Comparison of IERN, IMEC and BRI

Project

          IERN

          IMEC

            BRI

Length

7,000 km (4,350 mi)

12,000 km  (7,456 mi)

Global

Scope

Rail

Rail and Shipping

Roads, Railways, Ports, and Pipelines

Stage of Development

Under development

Early stages of development

Ongoing Launched in 2023

Geopolitical Objectives

Strengthen India's ties with Europe and  Central Asia; counter China's influence in the region

Strengthen India's ties with the Middle East and Europe; diversify India's energy sources

Enhance China's global influence; promote China's model of development secure access to resources and markets

Potential Beneficiaries

India, Europe, Central Asia

India, Middle East, Europe

China, countries along the BRI routes

Potential Challenges

Financing, security, bureaucracy

Financing, security, political instability

Debt sustainability, environmental impact, corruption

 

Conclusion

The IERN, IMEC and BRI are all ambitious infrastructure projects that aim to connect India to Europe and the rest of the world. These projects have the potential to boost trade, promote economic development, and create jobs, besides reshaping the geopolitics of the regions they pass through. However, these projects also face multiple challenges, including financing, environmental and political risks. It remains to be seen whether these projects will be successful in achieving their goals.

(The author is Ex-Faculty, School of International Studies, Jawaharlal Nehru University. Feedback on this article can be sent to feedback.employmentnews@gmail.com)

Views expressed are personal.