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Pakistan at cross road of IMEEC and BRI

September 21, 2023 at 1:43 pm | Economic Affairs

The IMEEC project carries substantial political and economic significance. It seeks to strengthen trade and investment ties between India and the rapidly growing economies of the Middle East and Europe.

By Qamar Bashir

The India-Middle East-Europe Economic Corridor (IMEEC) stands as a visionary proposal aimed at creating a robust trade and investment network that would seamlessly link India, the Middle East, and Europe.

This ambitious undertaking holds immense promise in terms of bolstering economic growth, fostering regional cooperation, and serving as a counterbalance to China’s expansive Belt and Road Initiative (BRI). In the following discussion, we delve into the origins, significance, and potential impact of the IMEEC project, while also examining its implications for India, the United States, and Pakistan.

On a broader regional scale, the IMEEC project aspires to create a new economic and trade bloc in the Middle East and South Asia, which could ultimately reduce the region’s dependence on China and contribute to improved stability.

The inception of the IMEEC project can be traced back to the 2016 G20 summit held in Hangzhou, China, where leaders from India and the United Arab Emirates (UAE) recognized the need for a collaborative effort to establish a trade and investment corridor. Subsequently, India engaged in similar agreements with other regional players, including Saudi Arabia, Israel, and Jordan. These agreements underscore the geopolitical and economic significance of the IMEEC initiative.

The IMEEC project carries substantial political and economic significance. It seeks to strengthen trade and investment ties between India and the rapidly growing economies of the Middle East and Europe. Additionally, it aims to enhance connectivity within these regions, potentially fostering cooperation in various sectors such as energy, transportation, and tourism. On a broader regional scale, the IMEEC project aspires to create a new economic and trade bloc in the Middle East and South Asia, which could ultimately reduce the region’s dependence on China and contribute to improved stability.

For India, the construction of the India-Middle East-Europe Economic Corridor presents a significant opportunity to counterbalance China’s growing influence in the region. China’s Belt and Road Initiative (BRI) has expanded its footprint across Asia, Africa, and Europe, which India aims to counter with the IMEEC project. By establishing this corridor, India seeks to create its own economic and strategic network, enhancing its connectivity with the Middle East and Europe—two economically vibrant regions.

For India, the construction of the India-Middle East-Europe Economic Corridor presents a significant opportunity to counterbalance China’s growing influence in the region.

The connectivity facilitated by IMEEC would open up new trade routes and markets for Indian goods and services. This diversification of trade partners could help India reduce its dependence on China, particularly in light of the significant trade deficit between the two countries. Furthermore, the Middle East is a major source of India’s energy imports, and IMEEC could enhance India’s energy security by facilitating the transportation of oil and gas resources from the region.

Strategically, IMEEC could strengthen India’s partnerships with countries in the Middle East and Europe, leading to deeper security cooperation. The infrastructure development and increased trade resulting from the project would boost India’s economic growth, creating jobs and increasing revenue, thereby solidifying India’s position as a regional economic power.

Moreover, IMEEC allows India to position itself as a proponent of sustainable and equitable development, countering some of the criticisms directed at China’s BRI. The project’s alternative infrastructure network aligns with India’s interests, potentially attracting other countries, including those wary of the BRI, to participate, thus bolstering India’s leadership in the region.

The financing of the IMEEC project is anticipated to involve a blend of public and private investments.

However, it is essential to acknowledge that the successful realization of these benefits hinges on effective planning, substantial investment, and cooperation with participating countries. The anticipated cost of the project is expected to reach billions of dollars, although precise funding mechanisms remain undetermined. The project encompasses the construction of new transportation infrastructure, including roads, railways, and ports, as well as the enhancement of existing facilities.

The financing of the IMEEC project is anticipated to involve a blend of public and private investments. While governments of participating countries are likely to contribute some funding, the majority of the financing is expected to come from private investors. Potential sources of financing include public funding from participating governments, private investments from commercial banks and investment funds, grants from international organizations such as the World Bank and the Asian Development Bank, concessional loans from governments and financial institutions, and blended finance arrangements that combine public and private funding.

From the perspective of the United States, the IMEEC project serves as a strategic response to China’s Belt and Road Initiative. It aims to provide an alternative and sustainable approach to infrastructure development while countering China’s influence in the region. Once realized, the IMEEC project could open up new markets for American products and services, generate employment opportunities, promote economic growth, and contribute to the vitality of American businesses.

Pakistan’s existing world-class road and communication network under the China-Pakistan Economic Corridor (CPEC) place it in a unique position to benefit from the IMEEC project.

The possibility of the BRI and the IMEEC joining forces and connecting with each other presents an intriguing prospect. Both projects share common goals of promoting economic growth and connectivity, and they could complement each other by creating an extensive global network of infrastructure.

The BRI, spanning over 60 countries across Asia, Africa, and Europe, involves the construction of roads, railways, ports, and other infrastructure primarily connecting China to Europe and Africa. In contrast, the IMEEC is more focused on strengthening connectivity between India, the Middle East, and Europe.

The convergence of the BRI and IMEEC could create a vast interconnected network of infrastructure, simplifying the movement of people and goods between different countries and boosting global trade and economic growth. Realizing this vision would require addressing several challenges, including extensive coordination to merge the two projects effectively, determining complex financing arrangements, and incorporating stringent environmental safeguards to minimize adverse impacts.

While joining the BRI and IMEEC presents significant potential benefits, such as facilitating global trade and cooperation, it also comes with substantial challenges. Nonetheless, the prospect of creating a comprehensive global infrastructure network is an exciting concept that could reshape the world’s economic and geopolitical landscape. Careful planning and international cooperation would be crucial to realizing this vision successfully.

Despite not being a member of the G20, Pakistan stands to benefit from the IMEEC project in various ways. It could create new avenues for trade and investment for Pakistan, opening up opportunities for Pakistani businesses to export goods and services to the participating countries in the region. Foreign investors may also find Pakistan an attractive destination for investment, capitalizing on the developments associated with the IMEEC project.

The possibility of the BRI and the IMEEC joining forces and connecting with each other presents an intriguing prospect.

Enhanced connectivity with the Middle East and Europe could make Pakistan an appealing destination for foreign investment and tourism. The improved infrastructure and transportation links resulting from the project could facilitate the flow of people and goods, benefiting various sectors of the Pakistani economy. Additionally, the construction and operation of new infrastructure could generate employment opportunities for the Pakistani labor force.

Importantly, Pakistan’s existing world-class road and communication network under the China-Pakistan Economic Corridor (CPEC) place it in a unique position to benefit from the IMEEC project. Integration of CPEC with IMEEC could be transformative, igniting trade and investment between Pakistan and the participating IMEEC countries and expanding Pakistan’s reach to regional nations, the Middle East, and Europe.

When combined with Pakistan’s connectivity to over sixty countries through the Belt and Road Initiative (BRI), the nation could enjoy a remarkable advantage over other member countries in both corridors. However, realizing this potential would necessitate astute political, economic, and financial strategies, alongside effective communication and diplomatic skills. Pakistan’s role in this evolving landscape could be transformative if played wisely.

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