The announcement made it clear that several G20 members – such as India, Saudi Arabia, the United Arab Emirates, the European Union, France, Germany, Italy and the US – have come together to build a connectivity project that would rival China’s controversial Belt and Road Initiative (BRI). Even at the G20 summit, Russia and China were seen to be in an opposing camp than the rest. Chinese President Xi Jinping skipped the leaders’ summit and sent Premier Li Qiang to Delhi instead, and the US asked China to not “play the role of a spoiler” at the meeting.

Politically, this kind of rivalry between the two blocks is surprising because Saudi Arabia, the UAE and Italy are also involved with BRI. All the countries participating in the IMEC initiative are active trade partners of China. Beijing is the biggest trade partner of the European Union with a share of 16.2 percent. It is also the top buyerof Saudi crude, besides being the second-biggest trade partner for India and the US. But then contradictions are the stuff of geopolitics.

IMEC vs BRI

Since the IMEC announcement, analysts have been trying to determine what the US and its partners have set out to achieve and what are their chances. To understand this fully, it is essential to see how China’s BRI and the new economic corridor are different.

The seven countries and the European Union have come forward because they see huge trade opportunities and economic integration once the new route comes up. Spiting Beijing is not the only purpose of this joint approach, although the fear of the Chinese economy racing ahead of the US is a motivating factor.

“In the coming times, it (IMEC) will be a major medium of economic integration between India, West Asia and Europe,” Prime Minister Narendra Modi said. He added that the corridor will give a new direction to connectivity and sustainable development of the entire world. US President Joe Biden called the IMEC a “really big deal.”

Although not part of the IMEC, China publicly welcomed the new plan that aims to reduce trade costs, lower greenhouse gas emissions and increase trade efficiency between India and the Middle East and Europe. The Chinese foreign ministry chose to follow the advice of Sun Tzu, an ancient military general, in his ‘Art of War’: “Appear weak when you are strong, and strong when you are weak.”

Notwithstanding China’s public posturing, Chinese scholars are openly complaining that the new corridor is a ruse to counter the country’s influence in the Middle East and Europe.

“The Biden administration's Middle East infrastructure plan is an apparent effort to counter the China-proposed Belt and Road Initiative (BRI), which is entering its 10th year in 2023 with brought fruitful projects to partnering countries and regions,” said Zhou Rong, a senior researcher at the Chongyang Institute for Financial Studies at Beijing’s Renmin University. “The Biden administration is again engaging in bloc politics in order to slow down China's development,” he said.

China has a lot to worry about as it gets ready to celebrate BRI’s 10th anniversary next month. There are signs that it is slowing down on BRI because of economic issues at home. Italy has indicated it may exit the BRI. If this happens, it will be a big blow to Beijing – Italy is the only BRI signatory in the G7. Most of BRI’s other signatories are poor with limited international influence. Countries like Laos, Papua New Guinea, the Maldives, Brunei and Cambodia, owe a significant debt to China after they joined BRI.

"There are European nations which in recent years haven't been part of the Belt and Road but have been able to forge more favourable relations (with China) than we have sometimes managed," Italian Prime Minister Giorgia Meloni said. "The issue is how to guarantee a partnership that is beneficial for both sides, leaving aside the decision that we will take on the BRI," she added.

The BRI Web

BRI has had a huge head start when compared to IMEC. Chinese companies are building and financing a web of infrastructure projects in more than 60 countries. There are varying estimates about the extent of investments in these projects and some analysts suggest a stupefying figure of $1 trillion.

One of the biggest investments is the $60-billion China-Pakistan Economic Corridor (CPEC), a 2,400-km route connecting the northwestern Chinese province of Xinjiang with Pakistan’s southern Gwadar port on the Arabian Sea. A part of the CPEC passes through the Pakistan-Occupied Kashmir (PoK), which India claims as its own territory. Notwithstanding India’s objections, China has moved ahead with the CPEC, effectively endorsing Pakistan’s claim to the region.

In each BRI project, there are two players: China and the government of the host country. BRI deals are bilateral whereas the IMEC is a multilateral initiative. Seven different countries and the EU will need to coordinate their policies, financing methods and different railway gauges and systems besides tacking elections and domestic political challenges.

Chinese banks usually cough up funds for BRI projects, assuring the host nations – like Pakistan, Sri Lanka and those in Africa – that they do not need to strain their budgets. This sounds like a windfall for politicians of the host nations as they can make election promises about new infrastructure, expect to manage relations with local contractors and even explore the possibility of raising poll funds for themselves. If a BRI project pushes the host nation into a debt trap four or five years later, it is of no immediate concern for the local politician facing an election in a year or two.

While the world’s attention is on the high interest and penalty rates of the Chinese banks financing BRI projects, there is a lot more. There are six to eight revenue streams emanating from one loan. By contract or implication, a host nation has to agree to use Chinese equipment and labour for the first few years.

On the positive side, Chinese firms are able to meet project deadlines because most of them are state owned. Coordination is not an issue since company executives follow government orders.

The first task for the IMEC would be selecting projects and ordering pre-feasibility studies followed by detailed feasibility and environmental examination. Then comes the task of choosing specialist companies and agencies for carrying out diverse tasks. Each country would try to push for its own companies unless a norm for selection of agencies is established.

Get ready for lengthy negotiations for each aspect of the decision-making and execution process. Elections in India and the US as well as the European countries could also delay the decision-making process.

There is already some murmur about how useful the new route would be. Some believe Chinese companies, too, would use the new infrastructure since China remains the world’s biggest trader.China surely appears to have something like this on its mind.Welcoming the IMEC initiative, the Chinese foreign ministry issued an interesting rider, advocating that "various connectivity initiatives should be open, inclusive, and form synergy, and should not become geopolitical tools”.

We may even see a situation where China extracts more benefits from an infrastructure project meant to contain it.

(Saibal Dasgupta was a China correspondent for over a decade and has authored ‘Running with the Dragon: How India should do business with China’.Views expressed are personal)