A commercial corridor involving the UAE could reshape Eurasia

President Sheikh Mohamed and Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation, attend the virtual I2U2 summit with the leaders of India, Israel and the US. All photos: Presidential Court

Sheikh Mohamed delivers the opening speech at the virtual I2U2 summit.

The quadrilateral I2U2 stands for 'I' for India and Israel and 'U' for the US and UAE.

Sheikh Mohamed and Sheikh Abdullah bin Zayed on the left of the screen, with Narendra Modi, the prime minister of India, top right, and US President Joe Biden, left, and Yair Lapid, the prime minister of Israel, right.

The leaders of the grouping referred to as the West Asia Quad were expected to discuss the global food crisis and other areas of co-operation.

The virtual meeting of the four leaders was the first summit of the I2U2 since it was formed in October last year to deal with issues concerning maritime security, infrastructure and transport in the region.

Sheikh Mohamed said food and energy security, climate change and healthcare were the greatest challenges requiring close partnerships to tackle them.

The UAE is the centre of a new geo-economic map. An Indian-Arabian-Mediterranean commercial corridor is emerging with the Emirates as its hub, reconfiguring patterns of trade between the Indian Ocean Region, the Middle East and Europe. In the process, the corridor is also redefining geopolitics along Eurasia’s southern rim.

The corridor’s foundation is a multi-modal, Asia-to-Europe commercial transportation route interlinking the Arabian Sea and the Eastern Mediterranean, with India, the UAE and Israel as the main connectivity nodes. The most recent development in the Indian-Arab-Med Corridor was Israel’s July 14 awarding of the purchase of its Haifa port to the consortium led by India’s Adani Ports and Special Economic Zone Ltd. The announcement was made on the same day as the landmark “I2U2” summit, the first convening of the heads of government of India, Israel, the UAE and the US. Although a consortium led by the UAE’s DP World had been in the running to buy the port, the UAE is still a strategic winner from the Haifa deal as Indian ownership consolidates the corridor and entrenches the already pivotal role being played by DP World and other Emirati firms.

The new corridor runs along Eurasia’s southern maritime rim, with the UAE’s ports acting as the Indian Ocean connectivity node. Goods arriving in the UAE from India’s western coast would then be transported by the rail link being established from the UAE via Saudi Arabia and Jordan to the Haifa port on Israel’s Mediterranean coast.

With the trans-Mediterranean maritime link from Haifa to the European mainland at Greece’s huge trans-shipment port in Piraeus or Italy’s major ports from Taranto to Trieste, the UAE sits at the maritime centre of an arc of commercial connectivity spanning India and Europe. Freight rail service from Piraeus or Italy’s ports means that goods from the corridor can reach major markets and manufacturing centres of Europe. For example, Indian goods leaving Mumbai could arrive on the European mainland at Piraeus in as little as 10 days.

The Indian-Arab-Med Corridor reshuffles the geopolitical deck of maritime connectivity by providing a third Asia-to-Europe route as an alternative to both China’s "21st-Century Maritime Silk Road" (the "road" of Beijing’s Belt and Road Initiative) and the Iranian-centred International North-South Transit Corridor (INSTC).

China’s Maritime Silk Road consists of a series of Chinese-built port installations extending westward from South-East Asia. With Chinese-backed ports in Myanmar and Bangladesh on India’s eastern flank, in Sri Lanka on India’s southern flank, and in Pakistan on its western flank, Beijing’s Maritime Silk Road is seen by some in New Delhi as a project leading to the maritime encirclement of India.

New Delhi’s response to this strategic challenge was the INSTC – a multi-modal corridor to reach Europe via Iran, Central Asia and Russia by constructing a modern deep-sea port on Iran’s coast at Chabahar and the road and rail links running northward from Chabahar via Iran and Afghanistan to Central Asia. Plagued by a series of geopolitical and economic setbacks for 20 years, the INSTC has yet to fully materialise. Putting all its eggs into the basket of an Asia-to-Europe commercial route centred on western-sanctioned Iran and Russia is as problematic for New Delhi’s current relations with Washington as it is strategically imprudent.

As an alternative, the Indian-Arab-Med Corridor provides a third way that is centred on the UAE, of which India is the second-largest trade partner. The Mediterranean outlet to Europe is Israel – India’s leading innovation, agricultural and water technology partner. While aspects of the corridor were touted at the I2U2 summit where the heads of the three Asian countries met US President Joe Biden, it would be a mistake to view the corridor as the brainchild of Washington’s effort to create a so-called Middle East Quad. In fact, the US has had very little to do with the corridor. As pointed out in a recent study by the Middle East Institute, the Indian-Arab-Med Corridor has been developing organically among the UAE, India and Israel “through private sector, joint venture investments carefully cultivated via bilateral public-private partnerships".

Abu Dhabi charted the course for the corridor in 2017 when it signed 14 Comprehensive Strategic Partnership agreements with New Delhi, including agreements on maritime transport, freight logistics and warehousing. Focusing first on food production and distribution from India to the Middle East, the UAE has been developing the logistics and distribution infrastructure of the corridor, with prominent Emirati companies, such as global logistics and port operations leader DP World, real estate development giant Emaar Group, and supply chain and retail sector conglomerate Sharaf Group, spearheading the $7 billion undertaking.

Separately, Israel’s innovative agritech and water tech have been contributing to the advancement of India’s food production system for more than a decade, helping to raise India’s level of food production to record-breaking yields. An integral part of India’s agrifood business ecosystem, Israeli firms have located manufacturing and research and development facilities in India, often as joint ventures. For example, Israeli crop protection company ADAMA Agricultural Solutions is an Indian industry leader with a formulation plant in the state of Gujarat and a research and development centre in Hyderabad. Israel’s drip irrigation systems manufacturer Metzer and Indian pipeline manufacturer Skipper are manufacturing drip irrigation system components in Hyderabad as a 50-50 joint venture.

In 2022, the Indian-Arab-Med Corridor was further advanced by the UAE’s drive to sign comprehensive trade agreements with both India and Israel. Reducing tariffs on more than 90 per cent of traded goods in each case, Abu Dhabi’s agreement with New Delhi was signed in February 2022, while the signing of UAE-Israel trade agreement took place three months later in May. With these two trade agreements in place, the UAE has become the anchor for three-way co-ordination in developing the corridor.

While a trilateral summit among the UAE, Israel and India was the logical next step for the corridor, the US’s participation in what became a quadrilateral I2U2 summit demonstrates the corridor’s strategic importance in the geopolitics of the Indo-Pacific region. In fiscal year 2021/22, the US surpassed China to become India’s largest trade partner.

Nonetheless, Beijing’s commercial footprint remains quite formidable. China is the UAE’s largest trade partner and Israel’s second largest. Beijing is slated to operate a state-of-the-art private port that it built in Israel’s Haifa Bay for the next 25 years.

The Indian-Arab-Med Corridor provides strategic balance for the UAE. By being at the heart of new trade routes and Emirati-Israeli-Indian value chains, co-operation between three countries helps ensure an enhanced level of resilience for the UAE’s growing international trade.