Israel-Gaza War Puts Billion-Dollar IMEC Project At Risk; India-Saudi Strains Leave China Smiling – Why This Corridor Matters

Launched to rival China’s Belt and Road Initiative, the India-Middle East-Europe Economic Corridor (IMEC) faces uncertainty as the Gaza war disrupts regional stability, stalls diplomatic engagement and threatens investor confidence in this ambitious trade and infrastructure project connecting India to Europe via the Gulf and Israel.

Prime Minister Narendra Modi addressing ‘Partnership for Global Infrastructure & Investment’ event during G20 Summit in New Delhi. (File photo: X/@narendramodi)

New Delhi: The war in Gaza is not only claiming lives. It is dismantling billion-dollar plans stretching from India to Europe. Among them is the India-Middle East-Europe Economic Corridor (IMEC), a flagship connectivity project backed by India, the United States, Saudi Arabia, the European Union and the United Arab Emirates (UAE).

The project had a grand vision. Announced during the G20 Summit in New Delhi in September 2023, the IMEC aimed to link India with Europe via the Middle East. A series of modern rail networks, ports, pipelines and digital infrastructure would form its spine. Israel was expected to play a central role as the corridor’s critical junction.

But war changed that.

The fighting in Gaza has triggered diplomatic cold fronts across the Arab world. Hostage crises and hunger deaths have gripped global headlines. Behind the scenes, the IMEC blueprint is beginning to look fragile. Several conversations linked to the corridor’s normalisation process have stopped. The air of political instability has raised new doubts.

Investors are now cautious. Talks have lost momentum. Security concerns loom larger. Reports from Israeli media outlets such Ynet cite growing fears that the project may now face indefinite delays.

The timing has worked in Beijing’s favour. The IMEC was widely seen as a counter to China’s Belt and Road Initiative (BRI), with its own web of global infrastructure alliances. A stalled IMEC is a strategic breather for China. It removes immediate competition from a rival corridor that was built to tilt trade flows away from Chinese influence.

For India, in addition to being a transport network, the IMEC was a geopolitical leap. With 47 trillion dollars in combined GDP between its partners, it held the potential to upgrade India’s role in global trade. The corridor also fit into New Delhi’s broader push to develop digital public infrastructure, enhance green energy ties and open secure channels to Europe and the Americas.

Though the dream has not died, it has dimmed.

The longer the war in Gaza drags on, the harder it gets for IMEC stakeholders to keep the political will alive. Saudi Arabia’s frustration over Israel’s war posture is deepening. Strategic cohesion among partner countries is thinning. The risk of indefinite pause is no longer a whisper.

Whether the IMEC becomes reality or remains a footnote in G20 speeches now depends on what unfolds on the ground in Gaza.