The idea of a Middle East rail link is back on the table. US President Joe Biden declared at the G20 Summit in New Delhi that a huge transport project would be promoted connecting India to the EU, via the UAE, Saudi Arabia, Jordan, and Israel.
The detailed plan is due to be published within 60 days. The route will begin at the port of Piraeus in Greece, and it is believed that it will go from there by sea to Haifa. A railway will run from Haifa to Jordan, and thence to Saudi Arabia and the UAE, ending at the Port of Jebel Ali, where goods will be loaded onto ships bound for Mumbai. Along the main route there will be branches to other countries of the region, such as Bahrain and Oman.
No details are yet known about the financing of the project. Answers should be provided in the forthcoming detailed plan.
What conditions have matured to engender such a project?
"As far as Saudi Crown Prince Mohammed bin Salman is concerned, the link-up to Israel does not necessitate normalization, and he can say ‘This is not normalization of relations with Israel,’, explains Dr. Yoel Guzansky, a senior researcher at the Israel Institute for National Security Studies. Instead, bin Salman can say ‘India and the EU wanted a link between them, I’m on the way, and I’m linking up to Jordan.’ Similarly, when he opened up Saudi Arabia’s skies to Israeli airlines, he pointed to the Chicago Convention by which he was bound, and said he was implementing it."
Meanwhile, in the US, the presidential election is approaching, and Biden wants international achievements to his name. Furthermore, the US seeks to block the spreading influence of China in the region.
What are the chances of it actually happening?
It’s too early to tell. Israel has shown itself to be a country that struggles to meet timetables in infrastructure developments, and the plan as presented by Biden is a general outline only.
The political situation in Israel will also affect the future of the plan. Such a project will require large investment on Israel’s part, and so Prime Minister Benjamin Netanyahu will have to secure broad consent to it within his coalition, and possibly from the opposition as well. Netanyahu could find himself trapped between his coalition partners, such as Bezalel Smotrich and Itamar Ben-Gvir, and the opposition, which seeks to deny him any diplomatic achievement that might improve his standing.
Who are the big gainers in Israel?
One of the biggest potential gainers from this ambitious initiative is Haifa Port. The transport corridor will go via the port, which can be expected to be chosen simply because of its location. Nine months ago, Adani Group of India bought Haifa Port for NIS 4.1 billion. Adani Group has thirteen ports in India, and so a project such as this will be of great benefit to it. Another company likely to gain from the initiative is SIPG of China, which owns the new Haifa Bayport.
Who are the losers?
First and foremost, Egypt, which controls the Suez Canal, through which 10% of all world trade passes, and 7% of global oil shipments. Revenue from the Suez Canal shot up to $9.4 billion in the fiscal year 2022-2023, from $7 billion the previous year. For Egypt, which has debt to the International Monetary Fund amounting to $12.5 billion, this revenue is vital. A reduction in the dependence of Europe and India on the Suez Canal, and a shortening of the time taken to transport goods between them by means of the new transport corridor, is liable to be a critical blow to Egypt.
Two other casualties from the US-led initiative are Russia and Iran. These two countries constructed the International North-South Transport Corridor to circumvent sanctions and boost revenues.
China is also a loser from the huge plan. Biden seeks to reduce China’s influence in the Middle East in general, and in Saudi Arabia in particular. An regional infrastructure project such as this with Saudi Arabian involvement certainly presents a challenge to China. At the same time, the planned transport corridor will shorten the supply chain, and reduce the dependence of developing countries on China.
To what extent are the Palestinians involved?
Saudi Arabia is acting to strengthen the Palestinian Authority economically. According to a report in "The Wall Street Journal", Saudi Arabia has offered to renew economic aid to the Palestinian Authority. Its aid fell from $174 million annually in 2019 to zero in 2021, among other things because of claims of deep corruption in the Palestinian Authority. It may therefore be that as part of Saudi Arabia’s efforts to rehabilitate the Palestinian Authority, it will demand that the railway from Haifa to Jordan should pass through Palestinian territory.
How does the project fit into bin Salman’s plans?
Mohammed bin Salman could make advancement of the project dependent on it connecting to the "city of the future" that he is building, Neom, the investment in which is estimated at around $500 billion. The city is situated, however, in the west of the country, and so it will require some thought on how to connect it to the regional transport initiative.
If Neom becomes part of the project, Eilat on the Israeli side could benefit substantially. The north-western end of Neom borders the Straits of Tiran, the entrance to the Red Sea.
Is this an unprecedented initiative?
The plan is far from being unprecedented. Overland transportation of goods has been gathering momentum in recent years. On December 4, 2020, the first goods train from China to Turkey set out on its 8,693 kilometer, 12-day journey.
In July 2022, RZD Logistics, a subsidiary of Russian Railways, became the first company to make use of the International North-South Transport Corridor that takes goods on the 7,200 kilometer journey between Moscow and Mumbai via Iran. According to professional sources in India, this route shortens the journey time to just ten days, from 30-45 days via the Suez Canal.
Published by Globes, Israel business news - en.globes.co.il - on September 11, 2023.
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