Saudi Arabia Green-Lights an Economic Corridor Connecting India with Europe
The US hopes to mitigate China's influence via the Belt and Road Initiative by supporting the India-Europe economic corridor.
Indian Prime Minister Narendra Modi (R) shakes hand with Crown Prince Mohammed bin Salman (L) of Saudi Arabia upon his arrival at Bharat Mandapam convention centre for the G20 Summit in New Delhi, India on September 09, 2023. Photo by Anadolu Images.
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n September 10, 2023, Saudi Crown Prince Mohammed bin Salman (MBS) announced the signing of a memorandum of understanding (MoU) with India to establish a new economic corridor linking India, the Middle East, and Europe.
The Saudi crown prince announced the project on X, formerly Twitter, a day after it was announced by Saudi Arabia and the United States.
Bin Salman announced that, “As a culmination of what has been worked on during the last period, the Kingdom of Saudi Arabia, the United States of America, the Republic of India, the United Arab Emirates, and the Republic of France, The Federal Republic of Germany, the Republic of Italy and the European Union signed a memorandum of understanding regarding the project to establish a new economic corridor linking India, the Middle East and Europe.”
He added that the memorandum “crystallizes the foundations upon which it was built to achieve the Kingdom’s common interests, enhance economic interdependence with its partners from other countries, and reflect positively on the global economy in general.”
On September 9, the Saudi crown prince said, “The economic corridor will contribute to developing and rehabilitating the infrastructure that includes railways and ports and will help increase the exchange of goods and services.”
He continued, “The project will enhance economic integration and contribute to providing new and quality job opportunities in order to achieve long-term gains along the new cross-border corridors.”
The statement concluded that the MoU “requires continuing the pace of efforts that have been made, and immediately starting to develop the necessary mechanisms for their implementation, according to the time frame that was agreed upon based on what was stated in the memorandum.”
Economic cooperation: Beyond India and Saudi Arabia
Saudi Arabia and India signed more than 50 agreements during the G20 Summit, in the fields of information technology, communications, entrepreneurship, chemicals, energy, and advanced industries, according to the Saudi Ministry of Investment.
In his speech during the Saudi-India Investment Forum held in New Delhi, Saudi Investment Minister Khalid Al-Falih revealed that the Saudi Public Investment Fund, which manages assets exceeding $750 billion, is considering opening a branch in New Delhi. This indicates the sovereign fund’s interest in investing in Indian companies that have recently seen expansion and development.
The U.S. involvement in inking the agreement that will eventually link India to Europe through the Middle East suggests that Washington aims to mitigate the growing influence of China through the Belt and Road Initiative (BRI).
In addition to India, the UAE, Saudi Arabia, Jordan, Israel, Cyprus, Greece, and the rest of the European Union, the economic corridor will include shipping and rail routes.
Besides speeding up trade between India and the EU by 40%, the project aims to normalize relations between Israel and Saudi Arabia. When launched, the project is likely to impact the Suez Canal negatively; approximately 12% of global trade and 30% of global container traffic currently pass through the Suez Canal.
Turkey, Egypt, and the India-Europe economic corridor
The economic corridor connecting India with Europe will also negatively impact another trade corridor that was supposed to be established between Iraq and Turkey, connecting the Gulf with Europe through Ankara, known as the Development Road Project. Turkish President Recep Tayyip Erdoğan commented on establishing the economic corridor between India and Europe by saying, “We say that there is no corridor without Turkey.”
Speaking to journalists accompanying him to the G20 summit in India, Erdoğan added, “Turkey is an important production and trade base. The most convenient line for traffic from East to West must pass through Turkey.”
Erdoğan noted that many countries in the region, such as Qatar and the UAE, are in favor of Turkey’s proposed project, expressing hope that the Development Road Project will proceed as planned.
Some 2.7 million Indian workers work in Saudi Arabia and send billions of dollars in hard currency back home annually. The Saudi involvement in the economic corridor project reflects the growing economic ties bet3ween India and the Kingdom, which recently has been engaging in diversifying its economic resources to move away from oil dependency.
*Written by the staff of Politics Today
