Meanwhile, on the G20 sidelines, history in the making

Who says G20 meetings are all choreography and compromise, producing little in the way of real news?

Some of the formal parts of the weekend’s summit in New Delhi involved the usual shadow boxing between rival power blocks – the toing and froing over Ukraine, for example, and the fudge and nudge over fossil fuels.

India and its prime minister Narendra Modi were able to claim a triumph in a leaders’ declaration that announced: “We are building towards a system that better empowers countries to address global challenges, is human-centric and brings prosperity and well-being to humanity.”

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Hyperbole, of course, but India deserves credit for getting any communiqué out at all. If you believed some commentators ahead of the meeting, the gathering was destined to be a “flop”.

It was on the sidelines that the real news broke. In a move heavily promoted by the US, a memorandum of understanding was signed by seven countries, including the UAE and Saudi Arabia, to set up an India-Middle East-Europe Economic Corridor (Imec). The European Union is the eighth signatory.

The project aims to link India with the Arabian Gulf in a western corridor, with new cross-border ship-to-rail transit networks, energy connections and other infrastructure.

From the Gulf coast a rail system will transport goods across the peninsula to Jordan and Israel, where a northern maritime corridor will link the Middle East with Europe.

Reuters/Evelyn Hockstein/Pool

Perhaps the most eye-catching part of the memorandum is the section on energy and power. The participants will lay cables for electricity and digital connectivity, as well as a pipeline for clean hydrogen shipments between the Gulf and Europe.

The latter has long been a pet project of Saudi Arabia to ensure markets for the huge amounts of the fuel from Neom and its other hydrogen hubs.

The word “ambitious” scarcely begins to describe the project. An integrated infrastructure connection spanning the 6,500km between France and India, across oceans, deserts and mountains, navigating some of the most troublesome land borders on the planet. That is indeed a “real big deal”, as President Joe Biden understated.

But the fact that Biden, Modi and Saudi Crown Prince Mohammed bin Salman shook hands on the agreement – which was also endorsed by European Commission president Ursula von der Leyen in talks with UAE President Sheikh Mohamed in Abu Dhabi – means it has the potential for real buy-in from all the major players.

What happens next?

The participants have given themselves 60 days to come up with a provisional schedule and provide some details on financing.

So far, there is scant information on how much it will cost, though it will surely be hundreds of billions of dollars.

There were unconfirmed reports in New Delhi that Saudi Arabia would get the ball rolling with a $20 billion contribution.

There are other obvious challenges. The Imec will involve an unprecedented level of co-operation between Saudi Arabia and Israel, which seems almost impossible in the present diplomatic climate.

The signatures of France, Italy and Germany ensure heft from Europe’s core, but what of the countries on the peripheries of the continent?

The UK was notable for its absence from the memorandum although it is seeking a trade deal with India.

Greece and Turkey must also be feeling left out. President Recep Tayyip Erdoğan of Turkey said he hoped the India-Middle East-Europe corridor would be able to work with China’s Belt and Road Initiative. However, this does not seem remotely likely, given the state of animosity between Washington and Beijing.

The shadow of China loomed over the whole summit, in fact. Is the economic corridor agreement a cunning plan by the Americans to lure the Middle East away from the tilt towards Asia, and China in particular?

Of course it is, but it could be much more besides.

“This is nothing less than historic, a green and digital bridge across continents and civilisations,” said von der Leyen.

If it can overcome the big challenges and get beyond the memorandum stage, indeed it will be.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He also acts as a consultant to the Ministry of Energy of Saudi Arabia