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The U.S. and Europe are seeking to rival China by launching a huge joint project. Saudi Arabia and the Gulf States will also play a key role – because the battle for world domination is not being fought on China’s doorstep, but in the Middle East.
September 24, 2023
BERLIN — When world leaders are so keen to emphasize the importance of a project, we may well be skeptical. “This is a big deal, a really big deal,” declared U.S. President Joe Biden earlier this month.
The "big deal" he's talking about is a new trade and infrastructure corridor planned to be built between India, the Middle East and Europe.
Indian Prime Minister Narendra Modi described the project as a “beacon of cooperation, innovation and shared progress,” while President of the European Commission Ursula von der Leyen called it a “green and digital bridge across continents and civilizations."
The corridor will consist of improved railway networks, shipping ports and submarine cables. It is not only India, the U.S. and Europe that are investing in it – they are also working together on the project with Saudi Arabia, Israel and the United Arab Emirates.
Saudi Arabia is planning to provide $20 billion in funding for the corridor, but aside from that, the sums involved are as yet unclear. The details will be hashed out over the next two months. But if the West and its allies truly want to compete with China's so-called New Silk Road, they will need a lot of money.
The new corridor is part of the G7’s investment program Partnership for Global Infrastructure and Investment (PGII). The seven largest industrial nations, which are all Western or Western allies, want the initiative to act as a counterweight to China’s New Silk Road program; for more than ten years now, Beijing has been building infrastructure in developing and newly industrialized countries, thereby gaining significant influence in those regions.
The G7’s program wants to be better than the Silk Road: it aims to only support projects that are environmentally friendly, socially responsible and conform to standards of good governance. And unlike the Chinese programme, no states will get into debt as a result.
Over the next five years, PGII aims to reach $600 billion, with more than half being raised from private investors. It remains to be seen whether this sum will actually be achieved. However: if we add on the contribution of the Global Gateway Initiative, the EU’s response to the Silk Road, which should represent around €300 billion, then the two together will total €900 billion of investment – around the same amount that China has invested in the New Silk Road over the past ten years.
Because the total sum is not yet confirmed, the importance of the new corridor mainly lies in the strategic signal that it sends, which can be broken down into two main areas.
Friends of convenience
Probably the most important message of the new corridor is that those states that formerly had close links to the West and have since drifted towards China and Russia are by no means a lost cause. For some time now, Saudi Arabia and the UAE have been working on building closer relationships with China. They receive investment from China, but also help in areas where the U.S. refuses to engage with them – such as support in building up their own nuclear programme, which can be used for both civil and military purposes.
The West still has something to offer there.
However, this new project launched by Europe and the U.S. shows that the governments of the Persian Gulf have not entirely switched sides, and that India equally does not want to be seen as part of China’s sphere of influence, in opposition to the West.
Rather, these states, as middle-sized powers in a multi-polar world, are building contacts and relationships where they seem most convenient. And the West still has something to offer there.
Map of the new "Economic Corridor" project aiming to connect India, the Middle East, and Europe through railways and sea lanes.
The Middle East is still an important battleground
The other signal that this corridor sends is that, in the struggle between different poles of influence, the Middle East remains an important battleground. In recent years, as Islamic terrorist groups have grown weaker, Arab dictatorships have become more stable and the importance of fossil fuels such as oil and natural gas has continued to decline, some observers have argued that the wider Middle East is becoming less important on the global stage.
U.S. President Barack Obama announced the so-called Pivot to Asia. This decision to shift the focus to the east of this huge continent was a response to China’s growing influence, and it also meant a partial retreat from the Middle East. But now things are changing.
Biden is holding firm to the pivot – after the G20 summit he visited Vietnam, a new ally in the conflict with China – but observers in Washington are starting to ask exactly what it means. Because so far there has been no significant increase either in US military activity or investment in East Asia. The battle for world domination is not being fought on China’s doorstep, but in the region that is seen as the hinge between Asia, Europe and Africa – the Middle East.
That is clear to see, and not only from the new corridor. The expansion of the BRICS group, the international alliance that China wants to build up into a rival to the West, has mainly seen Middle Eastern states – Egypt, Saudi Arabia, Iran and the UAE – invited to join the bloc. And through its role as an intermediary in the rapprochement between Saudi Arabia and Iran, China has set out on one of its most important, but also riskiest manoeuvres of recent years on the international stage.
A critical trade route
There are many reasons why the Middle East remains so important despite the rise of Asia. Firstly, fossil fuels will still be the most practical alternative to green energy for many decades to come, and the Middle East is also a hub for green energy, with its investment in green hydrogen.
The Gulf States are the most important players on the global financial markets.
Secondly, the region’s geographic location continues to play a role. All the trade routes between Europe and East Asia run through it – two regions that together make up almost three quarters of global trade. What’s more, the Gulf States have taken the billions of dollars they earned from oil and used them to make sound investments. They are the most important players on the global financial markets. And they are more politically agile than many other countries.
It remains to be seen whether America is justified in hoping that the new corridor could also bring about a rapprochement between Israel and Saudi Arabia, perhaps even a first step towards the resumption of diplomatic relations between the two. What is not in doubt is the fact that Israel and the Arab states are equally skilled at securing investment and political guarantees from a range of world powers. That is also what makes the region so attractive on the world stage – and so hotly contested.
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