{"id":22041,"date":"2024-02-26T17:50:10","date_gmt":"2024-02-26T12:20:10","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=22041"},"modified":"2024-02-27T12:48:14","modified_gmt":"2024-02-27T07:18:14","slug":"red-sea-crisis-importance-of-imec","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/26-02-2024\/red-sea-crisis-importance-of-imec","title":{"rendered":"Red Sea Crisis &#038; Importance of IMEC"},"content":{"rendered":"\n<p><strong>Syllabus: GS 2\/International Relation<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-0dab4a35479cb7a88ac0f778de143bb9\" style=\"color:#015aa7\"><strong>In Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Red Sea crisis has caused economic implications like the surge in container ship costs, highlighting the need to revisit alternate routes for global trade.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Do you know ?<\/strong><br>&#8211; The Red Sea is a semi-enclosed, inlet (or extension) of the Indian Ocean between the continents of Africa from Asia.&nbsp;<br><br><img loading=\"lazy\" decoding=\"async\" width=\"248\" height=\"171\" src=\"https:\/\/lh7-us.googleusercontent.com\/vtHjoVPeGpzcjDGIwYYR3AeQXW-6q8Te2VFARkNTdnmEl4XVW0ISytgLXyMmrnxGggsQo44CZcW5cE4WFUdaV0qIZo0CBJqzD_ZEQuqYY3Peb-HuCuxwX-j4hPYLLskuriYDPt9qRcHesIOIpPf0I7Q\"><br>&#8211; It is connected to the Arabian Sea and the Indian Ocean to the south through the Gulf of Aden and the narrow strait of Bab el Mandeb.<br>&#8211; The countries of <strong>Yemen and Saudi Arabia <\/strong>border the Red Sea to the east.<br>&#8211; The Red Sea is bordered by <strong>Egypt <\/strong>to the north and west, and by <strong>Sudan<\/strong>, <strong>Eritrea<\/strong>, and <strong>Djibouti <\/strong>to the west.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-28e04fea74c33b25f1525b0aed3bf1dc\" style=\"color:#015aa7\"><strong>About Crisis&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Houthi rebels in Yemen have significantly stepped up attacks on commercial shipping vessels travelling through the lower Red Sea since mid-November 2023 in response to Israel\u2019s bombardment of Gaza.<\/li>\n\n\n\n<li>The Red Sea owes its strategic importance for global trade to the <strong>Bab el-Mandab Strait <\/strong>which lies between <strong>Yemen and Djibouti.<\/strong><\/li>\n\n\n\n<li>It is one of the <strong>world\u2019s busiest cargo <\/strong>and <strong>oil transit points<\/strong> with almost 12% of international merchandise trade passing through it.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-c0a574255dc037e03abbba0f119279ba\" style=\"color:#015aa7\"><strong>Impacts<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Major container and oil carriers have been forced to re-route shipments via the <strong>Cape of Good Hope.&nbsp;<\/strong><\/li>\n\n\n\n<li>The re-routing has led to<strong> rising ocean freigh<\/strong>t, <strong>inflated insurance cost<\/strong>s, and <strong>longer voyage times<\/strong> leading to delays and shortage of products.<\/li>\n\n\n\n<li>&nbsp;It has also<strong> driven up transportation costs.<\/strong>&nbsp;<\/li>\n\n\n\n<li>The higher shipping costs will be passed onto consumers in the form of <strong>increased commodity prices.<\/strong><\/li>\n\n\n\n<li>As global supply chains are battling delayed shipments and rising costs, <strong>China is actively projecting China-Europe freight trains,<\/strong> which are part of the Belt and Road Initiative (BRI), as an alternate route.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-ffdae7cd15d82030ee31a19602ce398e\" style=\"color:#015aa7\"><strong>How has it Affected India?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s trade with European and North African countries flows entirely through the Red Sea route which is almost <strong>24% o<\/strong>f its exports and <strong>14% of its imports<\/strong>.<\/li>\n\n\n\n<li>In the year 2022-23, <strong>India\u2019s bilateral trade<\/strong> with <strong>Europe and North Africa stood at $189 billion<\/strong> and <strong>$15 billion respectively<\/strong>.&nbsp;<\/li>\n\n\n\n<li>The rising fears among traders have already seen a drop in Indian shipments. As per the Federation of Indian Export Organisations (FIEO), rising threats have prompted<strong> Indian exporters to hold back around 25%<\/strong> of their cargo ships transitioning through the Red Sea.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-374c080e8c8862e82f3e8d6dde992ec1\" style=\"color:#015aa7\"><strong>Significance of&nbsp; the IMEC in Present Scenario&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The India-Middle East-Europe Economic Corridor (IMEC) was announced during the <strong>G-20 summit in 2023.<\/strong><\/li>\n\n\n\n<li>It will comprise two separate corridors, the <strong>east corridor <\/strong>connecting <strong>India to the Gulf <\/strong>and <strong>northern corridor<\/strong> connecting <strong>Gulf to Europe.<\/strong><\/li>\n<\/ul>\n\n\n\n<p><img loading=\"lazy\" decoding=\"async\" width=\"359\" height=\"225\" src=\"https:\/\/lh7-us.googleusercontent.com\/LG2CI0dm0bJnA0pFnz5Vh5DaQ8o_Fia_eeGJ_2C6EFKmzLnQ4YMT1BXFe0kbHsBvEn3cYvrK2ebm-6d2spb2wXOBaI8UR5INUYGnZdHcXI7jeRG_rF13pgLeD6adsogt4HlAZBpytAAy35MyXJ3SppY\"><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It aims at integration of <strong>Asia, Europe<\/strong> and the <strong>Middle East<\/strong>.<\/li>\n\n\n\n<li>It will provide a reliable and cost-effective cross-border ship to rail transit network to supplement existing maritime routes.&nbsp;<\/li>\n\n\n\n<li>It is estimated to cut the journey time from <strong>India to Europe by 40%<\/strong> and slash transit costs by 30%.<\/li>\n\n\n\n<li>IMEC also provides an opportunity to <strong>counter the growing Chinese geopolitical influence.&nbsp;&nbsp;<\/strong><\/li>\n\n\n\n<li>This Corridor will help to bring countries in the <strong>Middle East together and establish that region as a hub for economic activity<\/strong> instead of as a \u201csource of challenge, conflict or crisis\u201d as it has been in recent history.&nbsp;<\/li>\n\n\n\n<li>The initiative aims to address the <strong>insufficient infrastructure required<\/strong> for development in lower and middle-income countries.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-a97086b64e4d058818cb349fb335482a\" style=\"color:#015aa7\"><strong>Concerns&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It is not receiving much attention&nbsp; and there have not been any investments or operations regarding the corridor.&nbsp;<\/li>\n\n\n\n<li>Furthermore, the<strong> Israel-Palestine conflict <\/strong>has put a <strong>pause on the normalisation of Arab-Israel relations<\/strong> which is a key element of the multi-nation initiative.&nbsp;<\/li>\n\n\n\n<li>Another major challenge is the<strong> vulnerability of the Strait of Hormuz<\/strong>.\n<ul class=\"wp-block-list\">\n<li>The entire trade of the IMEC architecture flows through the Strait of Hormuz and with Iran\u2019s proximity and control over the strait, the risk of disruptions remain very high.&nbsp;<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-e2418cc5398a3a7f2d9236aad7d7492c\" style=\"color:#015aa7\"><strong>Conclusion and Way Forward&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The growing crisis in the Red Sea poses a significant global concern, necessitating a united response from the international community.<\/li>\n\n\n\n<li>An<strong> empirical study <\/strong>on the economic benefits of the IMEC&nbsp; needs to be conducted.<\/li>\n\n\n\n<li>There are speculations that multiple handling of cargo and multi-nation transit would increase carriage and compliance costs.\n<ul class=\"wp-block-list\">\n<li>Therefore, it is<strong> <\/strong>critical to<strong> quantify the economic advantages<\/strong> of the corridor to attract more stakeholders.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>A <strong>robust financial framework needs<\/strong> to be in place.\n<ul class=\"wp-block-list\">\n<li>Since there are no binding financial commitments on any of the signatories of the corridor, investments will have to be attracted from governments, international organisations, and private sector entities.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>A comprehensive <strong>multi-nation operational framework<\/strong> is needed.\n<ul class=\"wp-block-list\">\n<li>As the corridor involves facilitating trade across different legal systems, a multi-national framework is necessary.&nbsp;<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>A <strong>forum for the corridor need<\/strong>s to be constituted to undertake the aforementioned activities.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Mains Practise Question\u00a0<\/strong><br><strong>[Q] <\/strong>The ongoing disruptions along the Red Sea route is devastating for global trade and supply chains. In light of above statements, analyse the importance of India-Middle East-Europe Economic Corridor (IMEC).<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2024\/02\/Daily-Editorial-Analysis-26-02-2024.pdf\">Download PDF<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Red Sea crisis has caused economic implications like the surge in container ship costs, highlighting the need to revisit alternate routes for global trade.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-22041","post","type-post","status-publish","format-standard","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/22041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=22041"}],"version-history":[{"count":6,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/22041\/revisions"}],"predecessor-version":[{"id":22071,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/22041\/revisions\/22071"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=22041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=22041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=22041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}