The Geopolitics of Cross-Border Trade Corridors

Amid the rapid international transformations affecting the hierarchy of powers within the global system and the dominating regional and international axes, emerging dynamics in international interactions and shifts in power and state conditions have been prominent. This focus emphasizes that the criteria for state power and status, as well as the dynamics of their foreign policies, largely depend on concepts and tools of power, such as geographic location and geopolitical advantages regarding the global trade corridor map, which influences economic movement and maritime trade worldwide. The potential impacts of these factors on the status and weight of states through their position in strategic trade corridors cannot be underestimated.

The diversity enjoyed by the South Asian region offers tremendous opportunities for trade, investment, and economic growth, as evidenced by the remarkable success the region has achieved in recent decades; its economies have flourished and become increasingly interlinked both among themselves and with the rest of the world. Generally speaking, South Asia, and particularly its largest economies, China and India, play an increasingly critical role in the global economy. Effective regional infrastructure and planning will not only reduce trade costs but also encourage industrial restructuring aimed at achieving efficiency.

On the one hand, economic corridors aim to bridge the infrastructural gaps that vary from one country to another, and on the other hand, they work to promote social and economic development that supports the poor. Such corridors help increase trade flows, create job opportunities, and reduce poverty. Sustainable economic growth has led to increased demand for transportation services. Thus, effective transportation networks have become critically important for regional cooperation, both in absolute and relative terms, as customs barriers diminish overall. Improving infrastructure through economic corridors will encourage production networks across South Asia, enhance regional and global trade, and achieve economic integration in the region.

Importance of Research

This research focuses on the impact and importance of the proposed study of trade corridors, which are expected to serve as a strategic turning point in the global corridor map. Many observers of international trade affairs anticipate that, if implemented, these corridors will propel international trade into a new pivotal phase with positive effects. These corridors require various political approaches to benefit from them and are also expected to influence the positions of competing nations concerning future impacts, especially since the participating countries hold significant weight stretching from Asia to Europe, some classified as promising emerging economies by international standards, while others are advanced industrial nations.

Research Problem

Cross-border trade corridors (Belt and Road) and the trade corridor (India-Middle East) are being established or planned amid political and economic conflicts among many participating parties, in addition to differing perspectives on regional and international gains and losses. How can such projects be accomplished amidst disagreements or differences among its parties?

Research Objectives

The research aims to achieve several objectives, including:

1. Highlighting the global power race for dominance over the world economy for geopolitical and geoeconomic considerations as essential components of state power.
2. Examining the economic objectives of the proposed trade corridors, which the participating countries are expected to work on to integrate their economies with each other and the economic opportunities and unemployment reduction that may arise from that.

Research Question

Are cross-border maritime trade corridors a field for economic cooperation among their parties, or are they an arena for geopolitical competition among major economic powers?

Research Methodology

The deductive method was used to address the relationship between the parties involved in the trade corridors, employing the analytical style of related indicators.

Research Structure

To achieve the objectives of this research, it has been divided into three sections as follows:

1. Section One: Parties involved in cross-border trade corridors.
2. Section Two: Objectives of cross-border trade corridors.
3. Section Three: The role of cross-border trade corridors in global trade.

Section One: Parties Involved in Cross-Border Trade Corridors

Clause One: The Chinese Trade Corridor (Belt and Road)

First: Parties of the Belt and Road Initiative

There is no clear definition of economic corridors in economic literature, and the concept has become popular through the Asian Development Bank’s Greater Mekong Subregion project, which defined economic corridors as infrastructure that facilitates economic activities by integrating transport networks, human resources, communications, energy networks, and institutional infrastructure. The idea of establishing trade corridors emerged after Chinese President Xi Jinping proposed the Economic Belt and Road Initiative in 2013, six months after he was elected president, during a lecture at Nazarbayev University in Kazakhstan titled “Moving Forward with Friendship among Peoples for a Better Future.” He called for the establishment of the “Silk Road for the 21st Century” at the informal meeting of the APEC leaders.

The Silk Road refers to a network of interconnected land and maritime routes, encompassing pipelines for oil and gas, electricity transmission, and the laying of internet and fiber-optic lines. The sea routes extended from China to Europe primarily for Chinese silk trade and stretch approximately 12,000 km, starting from commercial centers in northern China and branching into two routes: the northern route passing through Eastern Europe, the Black Sea, and Crimea to reach Venice, and the southern route passing through Syria to Egypt and North Africa or through Iraq and Turkey to the Mediterranean.

This initiative proposed by China represents an opening strategy on all fronts and a proposal for international cooperation based on broad consultations and mutual contributions, benefiting about 63% of the world’s population across 70 countries in Europe, Asia, and Africa. China follows a policy that focuses on economic relations, relying on Middle Eastern countries, especially the Gulf states, for energy resources while keeping up with its high economic growth. Additionally, it seeks to maintain relations with the United States, which is its largest trading partner and a massive consumer market.

The Belt part of the initiative refers to the economic belt of the Silk Road, aiming to build a comprehensive network branching from the primary Silk Road starting from China, linking it to Central Asia, Russia, Turkey, Europe, and the Mediterranean. The Belt consists of three main land routes:

1. The first route connects China to European countries via Southern Russia’s Siberia to the Baltic Sea.
2. The second route links East Asia, Northeast Asia, Southeast Asia, and parts of North Africa, extending from China through Central Asian countries, Iran, and the Arabian Peninsula to Europe.
3. The third route starts from China and passes through its southern region to India.

The Road part refers to the Maritime Silk Road of the 21st century, which aims to build a maritime network that connects the Chinese coast to Europe, starting from the South China Sea and the Indian Ocean, the Suez Canal, and the Mediterranean, reaching the African coasts, linking China and Southeast Asia.

In addition to the Maritime Silk Road, there is also the Digital Silk Road, which is part of the Belt and Road Initiative, promoted by the Chinese government as a sound investment, aiding economic development, and supporting digital infrastructure globally. However, there are concerns that the growth of Chinese surveillance technology and digital infrastructure, particularly through its dominance in 5G telecommunications and artificial intelligence, could threaten civil liberties in the Middle East and North Africa. With the decline of the influence of countries like the United States and Europe, some civil society activists and organizations in the Middle East and North Africa fear losing allies that support sound governance, democracy, and human rights.

The Maritime Silk Road for the 21st century includes what is known as the Arctic Silk Road announced by China in 2018, which is significant for China as it shortens travel time to Europe by 20 days compared to the traditional route through the Suez Canal. China seeks to use this route to cooperate with Russia to alleviate its concerns about Chinese expansion while this project bears significance for Russia as it allows for the transportation of its oil and gas exports to global markets via the Arctic region. The Silk Road benefits China by facilitating foreign direct investments in transit countries, penetrating the European and global markets, securing energy for China and its partners, and creating alternative routes for Chinese products, potentially having a massive impact on the states and regions through which the Silk Road passes, including the Arab region.

China’s selection of Arab countries for several reasons includes:

1. Arab states oversee several seas, gulfs, and passages.
2. They provide access to global trade gateways (Hormuz Strait, Bab el-Mandeb, Suez Canal).
3. Their geographic location serves as a bridge between Asia and Africa.
4. Abundant natural resources, especially energy resources.
5. The feasibility of establishing several logistics centers.
6. The significant economic partnership with Arab Gulf states and Iraq, which has markedly increased in the second decade of the 21st century.

Second: Challenges and Obstacles Facing the Trade Corridor (Belt and Road Initiative)

There are numerous economic challenges and obstacles facing the Chinese Belt and Road Initiative, the most notable of which are:

1. At the Macro Level: The primary source of funding for the Belt and Road Initiative comes from the Asian Infrastructure Investment Bank and the Silk Road Fund. China needs to adapt to numerous potential problems that may affect these institutions. The AIIB, as one of China’s innovations, will face several economic challenges, especially since European countries joining the bank may attempt to increase their influence over its decisions, raising the question of China’s ability to balance the quota structure among various groups. The emergence of the AIIB will inevitably impact the interests of the U.S. and Japan and challenge the dollar’s dominance. Thus, China will need to unify the varied efforts of states and leverage its diplomatic capacity to enhance cooperation between them.
2. The Initiative as a Development Plan for the World: The Belt and Road Initiative must not only address China’s excessive capacity issues and its global orientation but also take responsibility for achieving industrial advancement and shared economic development for countries along the routes of the initiative. Therefore, China must be mindful of the industrial structure of the countries along the initiative’s paths, their market sizes, and pay attention to the risk of inadequate industrial infrastructure resulting from investments made without thorough study.
3. Lack of Risk Response Mechanisms: China must disclose its economic capacities to foreign markets to deepen its reforms on all levels, especially in terms of its capital; in the past, China needed to attract foreign capital, but now it is time for Chinese capital to operate beyond its borders. This has led to a general lack of adequate awareness of risks associated with global operations, as well as the absence of mechanisms to respond to related risks.

Clause Two: The Trade Corridor (India-Middle East)

First: Parties Involved in the Trade Corridor

Recognizing the potential gains, implications, and status on the global logistics map, U.S. President Joe Biden announced during the G20 summit in September 2023, an initiative dubbed the “Economic Corridor between India, the Middle East, and Europe,” referred to in the media as the “Grand Corridor,” involving India, Saudi Arabia, the UAE, Jordan, Israel, and the European Union.

According to the official White House website, a memorandum of understanding was signed to establish the project, which is expected to include two corridors; the first is a route from India to the Gulf, and the second is a route from the Gulf to Europe. Western statements have enthusiastically praised the project as a massive cross-border infrastructure initiative, with Ursula von der Leyen, the President of the European Commission, stating that this corridor could reduce the time to deliver goods by approximately 40%. Although specific details about the project are scarce, it seems to be a geoeconomic strategy resulting from the efforts of American and Indian policymakers to regain global standing against China. For the United States, the project serves as a developmental response to China’s Belt and Road Initiative.

Three main advantages exist that India can leverage to solidify its relations with Gulf Cooperation Council countries: First, India can utilize its substantial soft power in the region, enjoying a favorable image among governments and populations in the Middle East, paving the way for stronger relationships. Second, the size and significance of the Indian diaspora in the region provide significant leverage; finally, India enjoys good relations with the U.S., the primary supporter of the Gulf states.

The new corridor is part of the “Partnership for Global Infrastructure and Investment,” a partnership that President Biden announced during the G7 summit in June 2022 in Germany. This partnership aims to “accelerate investments to scale up high-quality infrastructure projects and develop economic corridors,” as stated in a U.S.-Indian declaration. The declaration confirmed that “around the world, from Asia through Africa to the Western Hemisphere, the Partnership for Global Infrastructure and Investment will continue to build and strengthen alliances among partners, including governments, the private sector, and multilateral development banks, to develop key economic corridors and drive high-quality investments.”

Second: Challenges and Obstacles to the Implementation of the Indian Economic Corridor Project

Despite the promising potential of the Indian-Middle Eastern economic corridor project in theory, its implementation faces a range of complex challenges and obstacles that lead some analysts to regard the project as a mere promotional initiative that might not transcend its theoretical framework into tangible reality. The most prominent obstacles can be classified as follows:

1. Divergence in Economic and Geopolitical Alliances of Participating Countries: The varied economic affiliations of the countries involved present a fundamental challenge, as the United States, France, Germany, and Italy belong to the Group of Seven (G7), while India, Saudi Arabia, and the UAE are part of the BRICS group that also includes China and Russia. The ongoing geopolitical competition between these two blocs creates uncertainty about the strategic use of the new corridor. If viewed as a tool to enhance G7 interests, this could pose a direct threat to other initiatives, particularly China’s Belt and Road Initiative. Moreover, the limited volume of regional trade makes it difficult to sustain both projects simultaneously, prompting some participating nations to adopt cautious positions for fear of provoking China and framing the project as a Western move aimed at curtailing its global economic influence.
2. India’s Competitive Ability Against China: A question arises concerning India’s capacity to replace China in global supply chains, given that the Chinese economy is roughly five times larger than India’s. Additionally, India grapples with structural challenges in human development, including widespread poverty and high unemployment rates, making the economic gap between the two countries likely to require a timeframe of 15 to 20 years under favorable economic conditions. Furthermore, India cannot confront these challenges alone, necessitating sustainable economic and strategic support from major powers.
3. Infrastructure-Related Challenges: Infrastructure development represents one of the most significant obstacles facing the project, as connecting the railway network in the Gulf region necessitates extensive development to complete the link between the Port of Fujairah in the UAE and the Port of Haifa in Israel, covering approximately 2,915 kilometers. These efforts encounter additional challenges, such as modernizing outdated sections of the railway lines, some of which date back to World War I, requiring massive investment and advanced engineering efforts to ensure the project’s operational readiness.
4. Financial Challenges and Cost-Sharing: The participating countries face significant financial challenges, as economic capabilities vary widely between wealthy nations like the UAE and Saudi Arabia and economically weaker nations like Jordan, which struggles with economic challenges stemming from hosting over one million Syrian refugees. The high costs of the project are likely to become a contentious point among partners, potentially leading to delays in implementation or adjustments to its scale and ambitions.
5. Regional Concerns and Potential Reactions: The project faces objections from regional powers such as Turkey, Iraq, Iran, and Russia. Turkish President Recep Tayyip Erdoğan has emphasized the strategic importance of his country in regional economic initiatives, reflecting Ankara’s desire to maintain its economic influence. Iraq may perceive the project as a threat to its strategic ports and related investments, leading to potential opposition. Both Iran and Russia may view the corridor as a competitor to alternative corridors that have been central to their economic and political strategies, particularly the International North-South Corridor.

Section Two: Objectives of Cross-Border Trade Corridors

Clause One: Objectives of the Belt and Road Initiative

China aspires to achieve numerous goals through the Belt and Road Initiative by blending all material and human resources, including linking China’s economy with the international economy through new mechanisms and creating new routes for oil and trade. Other goals relate to the international system and relations, seeking to change the nature of these relationships. The Belt and Road Initiative aims to achieve several objectives, which can be outlined as follows:

1. Developing the Chinese Economy: The Belt and Road Initiative seeks to open up comprehensively to other countries, transforming China’s productive, technical, financial advantages, and expertise into market benefits and collaboration that serve all stakeholders; China focuses on enhancing cooperation and establishing economic partnerships to lay the foundations for a more balanced and stable global economic development.
2. Global Trade Growth: Global trade is expected to increase in the coming years due to the anticipated growth in the middle class in several countries, including those in the Asia-Pacific region, the Middle East, and North Africa, enabling China to market its products globally.
3. Strengthening the Status of the Chinese Currency: China aims to utilize its currency as a foundation for global exchange, particularly with the countries participating in the initiative.
4. Establishing Chinese Presence in Eurasia: Eurasia is strategically significant, as countries that dominate it wield political, economic, and geographic power.
5. Infrastructure Development in Engaged Countries: This includes land transportation networks (highways, bridges, railways, high-speed trains), maritime shipping networks (ports), airline routes, communication networks, and energy resource transmission networks in various forms.
6. Expanding China’s Global Influence: Mitigating geopolitical plots led by the U.S. while building a new international system that enhances China’s overall national strength and soft power. Hence, Chinese security firms are operating in these countries to protect commercial vessels and oil tankers passing near Somalia from pirates.
7. Securing Energy Supplies: Enhancing energy security through alternative shipping routes while combating terrorism, separatism, and religious extremism domestically and internationally via economic development and wealth redistribution.
8. Enhancing International Maritime Connectivity: The Belt and Road Initiative strives to rebalance globalization; traditional globalization began from the sea, developing coastal regions and maritime nations, thus creating a significant gap in wealth distribution.
9. Cultural Exchange: The Belt and Road Initiative aims to enhance cultural exchanges among countries along the initiative, fostering mutual benefits among civilizations and building a human and cultural environment that serves peaceful development in China while promoting learning, understanding, and mutual respect.

Clause Two: Objectives of the India-Middle East Corridor

First: Economic, Political, Cultural, and Security Objectives of the Indian-Middle Eastern Trade Corridor

The project seeks to connect India to Europe through existing ports, railways, and roads in the UAE, Saudi Arabia, Jordan, and Israel, facilitating the connection between commercial centers in Asia and Europe, promoting clean energy development and export, and enhancing food security. It also aims to connect power networks and communications lines through underwater cables to ensure continuous electricity access, unleash new investments among partners, including the private sector, and create new job opportunities. Accordingly, the preliminary geographical map of the proposed project suggests that the proposed corridor will extend across the Arabian Sea from India to the UAE, cross Saudi Arabia, Jordan, and Israel before reaching Europe via the Mediterranean.

The economic corridor project between India, the Middle East, and Europe represents the pinnacle of American efforts to challenge China and halt its expansion in a region that is vital to American interests. The United States aims to maintain its spheres of influence in light of Chinese expansion and present itself as an alternative partner and investor for developing countries through the G20. The participating countries in this corridor have signed a memorandum of understanding to cooperate towards advancing the project.

1. Economic Goals: The economic corridor offers a wide array of potential economic benefits at both regional and international levels by reducing costs and increasing shipping speed, alongside planning for regional integration projects. The most notable economic goals of the corridor include:
   • Economic Development and Stability in the Region: The new economic corridor aims to link India with Europe, generating economic growth, stimulating new investments, creating new jobs to combat poverty, and facilitating clean energy development and export, connecting energy networks and communication lines through underwater cables to expand reliable electricity access.
   • Infrastructure and Industrial Development: The corridor plays a critical role in developing industry and infrastructure by linking ports across the Middle East, Europe, and India along with developing transport routes and pipelines, vital for economic well-being and increasing foreign investments.
   • Creating Commercial Facilities: The corridor facilitates trade between the Asian and European regions, enhancing commercial and economic exchanges. These facilities, including fast-moving consumer goods, logistics, and customs facilities, hold centralized importance in accelerating the flow of goods and services among nations, thus making European markets accessible to both India and the Middle East.
   • Increasing Trade: Railways are expected to bolster trade and expedite the arrival of goods to targeted locations by 40% compared to current transport networks.
   • Tourism Development: The corridor holds significant potential for tourism. Its development is expected to increase tourist numbers and generate foreign currency, contributing to the economic prosperity of the regions it traverses.
   • Financial Diversification: India aims to boost its GDP to $5 trillion by 2025 and diversify financial transactions in interconnected regions, establishing financial and banking links among countries to facilitate trade, investment, and international money transfers.
2. Political Objectives: Understanding the India-Middle East-Europe corridor necessitates considerations beyond an economic perspective, embedding strategic political objectives, including reducing regional violence, resolving disputes, and alleviating regional tensions through economic and commercial cooperation.
   • Strengthening Regional Political Relations: This corridor plays a vital role in enhancing political and economic cooperation among states.
   • Enhancing American Influence in the Arab Region: This project aims to confront the Belt and Road Initiative and diminish China’s rising influence among Arab states. It represents an alternative economic initiative put forth by the United States to bolster its influence in the region amidst concerns regarding China’s expanding trade relations. The Biden administration’s support of the economic corridor emphasizes the U.S. commitment to remaining a primary player in the region and countering the influences of China, Russia, and Iran.
   • Integrating Israel into the Region: The U.S. focus on normalizing relations between Israel and Saudi Arabia serves as an impetus to strengthen and expedite diplomatic relations between the two countries.
   • Isolating Iran: The U.S. aims to enhance partnership and create an economic alliance between India, Gulf Arab countries, and Israel, thereby isolating Iran and curbing its close relations with India.
3. Security Objectives: The economic corridor aims to significantly enhance global energy security by providing critical pathways for energy supplies from primary producing states, such as the Gulf Cooperation Council countries (Saudi Arabia, the UAE, Kuwait), contributing 14% of the global output of crude oil and 28% from both Saudi Arabia and Qatar.
   • Regional Security Stability: The India-Middle East corridor acts as a pivot for regional and global stability. It fosters security collaboration by facilitating relations and interactions among states, helping to combat threats like terrorism and illicit trade.
   • Economic Security: Developers of the corridor aspire for economic prosperity and job creation in linked regions through trade and investment enhancement, thus contributing to economic development and poverty alleviation while also securing energy pathways through oil and gas-rich regions.
   • Geographic Security: The development of the corridor linking areas of tension and threats is essential for establishing broad trade and economic relations. This strengthens regional cooperation and aids in resolving conflicts and enhancing diplomatic relationships among states.
   • Transport Security: The corridor significantly influences transport security as a critical international transit route. Modern and safe transport facilities reduce risks and threats linked to international transit, thereby enhancing regional and international security.
4. Cultural and Social Objectives: The India-Middle East corridor to Europe constitutes an integral part of fostering cultural exchanges, creating educational and research opportunities, and enhancing peace and mutual cultural understanding.
   • Cultural Exchange: The corridor promotes mutual cultural understanding among various regions and communities, deepening the recognition of diverse cultures through international relationship-building.
   • Creating Social Opportunities (Educational and Research): The corridor opens avenues for knowledge and education exchange through promoting collaboration among universities, cultural institutions, and research organizations, significantly contributing to scientific and cultural advancement and raising levels of knowledge and technology.

Section Three: Competition between the India-Middle East Corridor and the Chinese Belt and Road Initiative

The geoeconomic landscape is witnessing an escalating competition between the Indian-Middle Eastern economic corridor project and China’s Belt and Road Initiative, as both initiatives strive for strategic influence in the region and bolster trade and economic linkages.

Competing Factors:

1. Geographic Competition: The Indian corridor focuses on Central Asia and the Middle East, while the Belt and Road Initiative is more oriented toward East Asia and Eastern Europe.
2. Economic Competition: The Indian corridor aims to develop the Middle East and contribute to economic development, while the Belt and Road Initiative seeks to expand and enhance China’s influence in Asian and European regions and contribute to their economic and regional development by facilitating trade and transport.
3. Political Competition: The India-Middle East corridor intends to strengthen American influence in the Gulf region, bolster relations between Saudi Arabia and Israel, and limit Chinese expansion while isolating Iran. In contrast, the Belt and Road Initiative aims to strengthen relations with Gulf states for energy resources.

Conclusion

This study indicates that cross-border maritime corridors represent a new strategic arena in the competition for global economic dominance, providing promising opportunities to reshape the map of economic alliances. The Middle East, broadly defined, emerges as a vital pivot for these corridors due to its geoeconomic and geopolitical capabilities, making it a pivotal factor in global trade flow. The sector of fossil energy, represented by crude oil and natural gas, remains a fundamental component of international trade given the role of producing states in meeting the growing global demand for these resources. Furthermore, establishing these corridors presents an opportunity to enhance economic integration and achieve mutual developmental gains, albeit with varying economic shares depending on each country’s contribution to international trade dynamics.

These transformations occur against the backdrop of current geopolitical developments, particularly the ongoing ramifications of the Russian-Ukrainian war, which have presented both challenges and fresh opportunities. Establishing these corridors becomes a strategic option within future international economic cooperation scenarios. A balanced approach that fosters economic interconnectedness between nations while avoiding turning these projects into battlegrounds for geopolitical rivalry among major powers becomes essential. This requires formulating flexible policies that ensure optimal utilization of these corridors in ways that serve shared strategic interests in the long term.

In this context, developing high-quality infrastructure, localizing labor for construction projects, and enhancing national industries are core pillars to achieve maximum benefits from these corridors. Moreover, both the geopolitical and geo-economic potentials that these corridors provide present opportunities to elevate the position of the relevant countries within global supply chains, supporting sustainable development and boosting economic competitiveness.

The “Development Road” project in Iraq exemplifies the opportunities these initiatives can provide for economic diversification and regional integration, benefiting from the country’s vital strategic location within cross-border economic initiatives like the Belt and Road Initiative. Additionally, current international variables, including the accession of some Gulf countries to the BRICS group, enhance the importance of strategic coordination among the nations bordering these corridors to ensure the achievement of shared economic goals and optimal utilization of their exceptional geographic positioning amid rapid shifts in the international economic landscape.

In light of these data, formulating a comprehensive and sustainable strategic vision for managing these corridors becomes crucial for maximizing economic gains and enhancing the positions of participating countries in the global economic arena, ensuring that integration and economic cooperation occur based on principles that achieve mutual interests in the long term.

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