Israel’s war on Gaza, now in its third month, shows no signs of abating. Early concerns among analysts and policymakers revolved around the potential spillover of the conflict beyond the Gaza Strip, involving various state and non-state actors. This apprehension was tied directly to regional and global impacts on energy markets, trade dynamics, and investment preferences. The involvement of the Houthis, particularly their targeting of cargo ships in the Red Sea, introduces significant disruptions, prompting shipping companies to suspend routes and Washington to form a naval coalition, albeit one struggling with internal cohesion.
Amidst this tumultuous landscape, it is paramount to reassess the regional outlook for regional connectivity projects, such as the proposed India-Middle East-Europe Corridor (IMEC) and the Iraq Development Road. Contrary to the overtly optimistic forecasts generally associated with interconnectedness projects, Israel’s war on Gaza has raised questions of feasibility and long-term sustainability.
Israel’s Interconnectedness Ambitions
A month before the war, the IMEC project was merely a hastily drafted proposal at the G20 Summit in New Delhi. The initiative envisions a new connectivity route from the Indian Ocean to the UAE, then through Saudi Arabia to Jordan, and ultimately reaching the Haifa Port.
Described by Israeli Prime Minister Netanyahu as the “largest cooperation in our history,” this mega trade network aimed to connect West Asian markets with Israeli ports, then to the Mediterranean and finally to European markets, making the Jewish state a centrepiece in the international trade.
These ambitions were nurtured by the normalization atmosphere fostered by the Abraham Accords, the strengthening of multilateral relations through the India-Israel-United Arab Emirates-United States (I2U2) framework, and the factors hinting at the impending normalization between Saudi Arabia and Israel.
Israel’s Strategic Play Amidst Tensions
However, since October 7, the brutality of the Israeli onslaught on Gazan civilians cast a shadow over the stability of the region and the future of IMEC. Still, the Israeli authorities decided to turn this threat into an opportunity, approving a project proposed by the Israeli logistics start-up Trucknet. The latter consists of a trade route from UAE’s Port of Jabal Ali and Bahrain’s Port of Mina Salman, through Saudi Arabia to Jordan, and then Haifa.
Israeli media platforms, such as the Times of Israel, Jewish News Syndicate, and the Jerusalem Post, reported this story, featuring quotes from Hanan Fridman, the founder and CEO of Trucknet.
While the alternative land corridor proposed by Trucknet was not new and existed even before the Abraham Accords. Incidentally, the Red Sea blockade by the Houthis gave momentum to this proposal.
Trucknet’s proposed road network embodies IMEC, with the sole absence being railway infrastructure. According to Fridman, this route offers a 4-day road alternative compared to a 14-day maritime route circling Africa, resulting in reduced freight and insurance costs, and, thus, it is more economically efficient. However, the security risks cannot be ignored. The Houthi threat extends to the UAE and Bahrain ports. Recently, the Houthis targeted a Liberian-flagged chemical tanker in the Indian Ocean and two oil-laden ships affiliated with Israel—one near the northwest of the Maldives and the other in the vicinity of Kochi.
Therefore, Trucknet’s road corridor carries risks and still raises questions about the safety and sustainability of IMEC.
The Development Road Project
Another connectivity project put forward recently is the Development Road, which aims to link European markets to the Grand Al Faw Port in the Persian Gulf. The project, spearheaded by Türkiye, includes a highway and railway. It also is an alternative since Türkiye was not included in the IMEC project. Turkish President Erdogan stated, “We say that there is no corridor without Türkiye” after announcing the route. Ankara and Baghdad are keenly invested in this multimillion-dollar project, hoping to woo regional connectivity towards it. This project could contribute to Iraq’s diversification goals. As highlighted in the 2023 World Bank report on Iraq, heavy reliance on oil renders it vulnerable to fluctuations in the global energy market and shifts in demand, underlining the significance of diversification for economic recovery.
In the historical context of trade corridors across the Gulf, the current Development Road project’s route reflects a reminiscent of geopolitical competition. Notably, during the late 20th century, the British Empire initially welcomed Kaiser Wilhelm’s efforts for the Baghdad Railway project. But then it showed strong opposition to the project’s connection of Basra with the Persian Gulf. The British Empire advised the Sheikh of Kuwait against conceding territory in exchange for protection.
Evaluating the project’s prospects involves weighing security challenges, such as terrorist activities, and Iran’s ambiguous position, given its sway in Baghdad.
The Iranian Connection
Although Tehran was invited to numerous multilateral conferences discussing the project, the Persian nation is not directly part of the route, which is a drawback, considering Tehran’s influence in the corridors of power in Baghdad. Iran may be apprehensive about a project that could reduce its regional influence.
While Tehran’s position remains uncertain, future developments could sway its decision favorably. For instance, if Trump returns to the White House in 2024, Tehran could adopt a more restrained approach that prioritizes economic development.
The successive democrat administrations have employed the carrot rather than the stick with Iran. Tehran benefited from the nuclear deal that opened its economy during the Obama administration. The Biden administration was about to revive the JCPOA. Conversely, Trump withdrew from the deal, striking a blow to the Iranian economy. The bottom line is that Trump would not hesitate to confront Iran, and arguably, this could make the Iranian authorities less prone to proxy warfare and more amenable to projects like the Development Road, which enhances trade and commerce in the region.
Kurdish Issues
Another hiccup is the position of the Kurdistan Regional Government (KRG). The KRG expressed dissatisfaction with the project as it bypasses the region due to topographic reasons and additional economic costs. However, this issue could be addressed by adding other connecting roads.
Several security risks loom over the Development Road, including terrorist activity. Joint efforts to eliminate the PKK and its affiliates in Northern Iraq are paramount for the success of the project. Ankara has made progress in this regard through cross-border operations, but there is still work to be done.
Cooperation between Ankara, Erbil, and Baghdad is ongoing, and Ankara maintains reasonably good relations with both parties. The project could bring a substantial economic contribution to the domestic economy, suffering from stagnation in non-oil sectors, and oil revenues are insufficient to fuel Iraq’s economic recovery.
Israel’s land connectivity initiatives and the Development Road both navigate through a sea of uncertainties. However, the Netanyahu government faces a more challenging situation. Unlike Israel’s moment of escalation, which suggests a conflict in crescendo and regional and domestic frictions, terrorism in northern Iraq is in the residual phase, and successful regional collaboration would lead to its eradication.
In any case, these interconnectedness projects represent a transformative vision for the regional economy. The outcome hinges on mitigating regional conflicts and fostering collaborative security efforts, with the potential to shape not just the economic landscape but also the geopolitical alliances in the Middle East for years to come.
This article originally appeared in the website of Amwaj Media.
