Egypt and the India-Middle East-Europe Economic Corridor

Background

The past year of war has consumed our attention. Yet one can anticipate the end of extraordinary hostilities and begin to discuss the management of a more orderly post-war era built on an Israeli victory over Iran’s vassals, Hamas and Hezbollah. Considering the coming period, it seems helpful to remember that the strategic exigencies that motivated cooperation with Israel before October 7, 2023, persist today. The war clarified and reinforced many concerns that motivated the pre-war collaboration among countries in the Middle East, Asia, East Africa, and the larger Euro-Atlantic community. Seasoned policymakers responsible for securing US, European, and aligned concerns will return to those matters, even as some in public life focus on momentary ruptures in long-developing geostrategic patterns. 

A significant development to which we should return occurred on September 9, 2023, in New Delhi, India. During the G20 Leaders’ event focused on the Partnership for Global Infrastructure and Investment, the US, European Union, India, Saudi Arabia, UAE, Germany, France, and Italy announced plans for a new transportation, energy, and telecommunications corridor connecting India to Europe. The project was named the “India-Middle East-Europe Economic Corridor” (IMEC). The White House published this announcement on the same day:

“…[W]e aim to usher in a new era of connectivity with a railway linked through ports connecting Europe, the Middle East, and Asia. The United States and our partners intend to link both continents to commercial hubs and facilitate the development and export of clean energy, lay undersea cables and link energy grids and telecommunication lines…. Across the corridor, we envision driving existing trade and manufacturing and strengthening food security and supply chains….”

Inferred, yet unstated in that announcement, is that the corridor’s railway will connect the UAE port of Jebel Ali to the Israeli Port of Haifa, thereby creating a bypass around the Suez Canal for containerized cargo and potentially also for some bulk cargo. Israel and Jordan – necessary participants – were not signatories to the G20’s affirming Memorandum of Understanding. Egypt was omitted, too, though it is the country that could be most deleteriously affected. 

To best promote Israel’s interests in all domains – security, diplomatic, commercial, and fiscal –  related to becoming a center of gravity within a more extensive trade and transport arrangement, we should begin a proactive discussion about how Egypt might fit into what we can call the IMEC cooperative system. While addressing an English-speaking Israeli readership, I wish to recognize the Egyptians who may read this essay by noting Egypt’s role in regional stability and global trade.  Here, I suggest the merits of integrating Egyptian interests with the IMEC project, ensuring that Egypt’s strategic concerns and capabilities are respected and most happily harmonized in the emerging economic landscape.

Strategic Bypass

IMEC’s proponents want to build a transportation route from India to Europe via the Middle East. They envision ships carrying containers from Indian ports to Dubai’s Port of Jebel Ali. The containers would be moved from ships onto railcars, taking them about 2200 kilometers (1370 miles) north across the UAE, Saudi Arabia, and Jordan to Israel’s Port of Haifa. In Haifa, containers would be reloaded onto smaller ships that can carry them to Europe’s seaports and through its inland waterways for distribution to their final commercial markets. IMEC’s infrastructure, container handling equipment and information systems stand to move cargo from India to Europe faster, using less fuel, and at a lower cost than the Suez Canal route. While the plan’s business case is speculative, it appears sufficiently sound to gain multilateral political support and actual investment among governments and private businesses based in its participating states and, thus, a corresponding political and commercial concern in Egypt.

Egypt’s Concerns 

Egypt’s Suez Canal currently enjoys a monopoly as the maritime shortcut between Asia and Europe. IMEC poses a business challenge to the Suez Canal’s dominance, implying that the canal’s status as a shortcut has come to be regarded as a commercial bottleneck. The proposed additional transportation route could siphon off some of the Suez Canal’s traffic. Egypt’s geopolitical influence could be diminished as a result of this shift. Additionally, Cairo’s fiscal well-being may be impaired due to the potential loss of revenue from reduced canal traffic.

Economic Impact

The Suez Canal is an anchor for Egypt’s economy. In 2023, the canal’s operator reported $9.4 billion in fees paid by about 21,000 ships. However, the canal is arguably at capacity and unable to accommodate the increase in cargo that is projected to flow between India and Europe; with this expectation in mind, IMEC need not necessarily cannibalize the canal’s traffic but rather service the increased overall trade transiting the region with more carrying capacity. However, the quantity of container volume that IMEC might draw from the canal remains unknown. We can envision conditions encouraging traders to reroute cargo away from the canal. If the canal operates inefficiently or the Red Sea maritime routes remain impeded by pirates and groups at liberty to launch missiles at ships, Egypt would foreseeably lose business to IMEC.

Regional Rivalries

IMEC’s coordination of some Saudi Arabian, Emirati, and Indian interests could also exacerbate Egyptian anxieties about conditions within the African countries along the Red Sea littoral. The project’s apparent exclusion of Egypt hints at a potential reconfiguring of regional relationships that could down-regulate Egypt’s sway in the countries to its south. Enumerating those concerns falls outside the scope of this essay yet should be understood as one of many worries that contribute to a generalized perception of risk in Cairo.

Security Concerns

The Red Sea and Suez Canal’s role in global maritime trade informs us of the importance of orderliness in the areas along the Red Sea. When the sea lanes are jeopardized, we can see how an alternative bypass by land may confer economic and political benefits on its hosts and the economies depending on those trade routes. IMEC’s land route is susceptible to disruptions akin to those presently afflicting the shipping lane through the Rea Sea. Both routes will need protection from the mischief fostered in Tehran, Beijing, and Moscow for the foreseeable future. However, the reality of shared concerns about security may not assuage Cairo’s dismay that an overland alternative to the canal will shrink American enthusiasm for securing the sea lanes connecting the Suez Canal to Asia. We have already seen American reluctance to project dispositive naval power to prevent the Houthis in Yemen from creating a maritime chokepoint. Moscow and Beijing’s diplomats and their public diplomacy activities will predictably amplify a tale that American attention is shifting away from the canal and the Red Sea to the IMEC corridor. 

Potential for Coordination

With these concerns in mind, American and European participating states should cast IMEC as a complement to, instead of a competitor with, the Suez Canal. Building an alternative land route outside of Egypt that alleviates congestion in the canal could enhance the canal’s commercial attractiveness for Asian and European shippers and work to make the commercial pie bigger for everyone involved. Planning for this outcome can be done in coordination with Egypt rather than apart from it. Egypt’s participation in the multilateral body that will coordinate IMEC could yield commercial and ancillary political and fiscal benefits for every country in the region.  

Symmetry of interests

Recognizing the potential for synergy between IMEC and the Suez Canal does not mean that all interests are aligned or need to be. There is room for competition. However, IMEC’s signatories could alleviate some of Cairo’s foreseeable concerns and demonstrate that Egypt’s economic and strategic standing is compatible with theirs.  

When one expands the scope of observation across time and geography, we notice that the conduct of Israel’s adversaries often underscores Israel’s argument that threats to its position are symptomatic of challenges to Western interests. In this case, Israel’s enemies regard both the Suez Canal and the potential IMEC as manifestations of Western influence. This condition affords Israel a unique perspective, voice, and persuasive authority in how the multilateral coordinating body for the corridor takes shape. Israel’s logistical position within IMEC arises from the Port of Haifa as the optimal terminus for IMEC’s freight railway. It broadens a bit further because one can see how Israel’s military and technological capacity will doubtless help to secure the corridor. But there is more to weigh.

Israel’s links with the West are exceptional, and despite recent protestations, not a mere legacy of habit but rather the expression of continuing reasoned and intuitive security, economic, and societal goals defined in Western capitals and mirrored in Jerusalem. These factors are a foundation for the strategic ambition shared by American, European, and Indian planners: to create a transportation network linking Asia and Europe for a global economy in which China is auxiliary. In this interconnected system – an IMEC Community, as it were – the Suez Canal and the India-Middle East-Europe Economic Corridor need not be viewed as disconnected entities but as complementary arteries of a cohesive infrastructure. The maritime route through the Suez Canal and the land-based IMEC corridor can be seen as two modes of connection, each enhancing and supporting the other. As Israel’s post-war period approaches, we can entertain such a conceptual reframing, even if we do not wholly adopt it.

A diplomatic model from the Balkans

A diplomatic starting point for Israel is to speak for Egypt’s participation in IMEC’s coordinating body. Because the topic of concern is open and conspicuous – commercial port, railway, and canal infrastructure – an Israeli attitude of welcoming multilateral coordination that includes Egypt can be expressed publicly. But nothing should be conceded to Egypt. Egypt should not enjoy any veto, which some elements of its opinion-shaping elite might be inclined to assert impulsively, contrary to their country’s actual interests and prestige. Moreover, Egypt’s participation in IMEC needs to be accompanied by responsibilities to play a constructive role in facilitating overall Middle Eastern, European, and American goals for expanded trade with India. In the aggregate, everyone in the IMEC Community – from Washington and Berlin to Riyadh and New Dehli to Jerusalem and Cairo– stands to gain from such expanded trade and an Egyptian voice in shaping a more extensive set of harmonized, functional relationships throughout the region. Coordinating transportation infrastructure and transport procedures is a proven way to start.

As we plan for post-war arrangements, we can draw on a successful precedent of the Southeast European Cooperative Initiative (SECI) of the late 1990s. SECI normalized containerized cargo transportation from Turkey and Greece to the then-contiguous EU and NATO zone across antagonistic Balkan countries that had recently fought grievous ethnic and religious wars. Drawing on this experience, the IMEC project could foster regional cooperation while addressing Egypt’s foreseeable concerns.