Resolution of Palestinian Question Necessary for IMEC

Egypt’s Warning: Palestinian Question Could Stall IMEC

On October 18, 2025, during the inaugural India–Egypt Strategic Dialogue in New Delhi, Egyptian Foreign Minister Sameh Shoukry delivered a pointed observation: progress on the much-touted India-Middle East-Europe Economic Corridor (IMEC) will remain elusive unless the Palestinian conflict is resolved. This comes at a time when the region’s geopolitical calculus, particularly in West Asia, is fraught with longstanding tensions. The dialogue marks India’s increasing diplomatic engagement with Egypt, but the warning is a critical moment for India’s ambitions in the Middle East.

Palestine: The Faultline in IMEC’s Connectivity Vision

The context of Egypt’s statement reveals more than surface-level diplomatic posturing; it presents a structural dilemma for IMEC stakeholders. Unlike other regional connectivity projects defined by economic ambition, IMEC’s trajectory intersects with the Middle East’s most entrenched political conflict — the Israeli-Palestinian issue. Egypt’s argument that economic integration must accommodate political realities stems from its own role as a mediator in Gaza and its participation in the 2025 Gaza Peace Agreement. The realpolitik behind IMEC is clear: ignoring Palestine risks making this ambitious corridor merely aspirational.

Notably, the IMEC plans include Haifa port in Israel and railway lines linking Saudi Arabia, Jordan, and the UAE to Europe. This geography raises questions about whether Palestinian territories will be bypassed entirely, undercutting long-term regional inclusivity. When Egypt calls for addressing the Palestinian question, it forces members to confront a contradiction: attempting to build infrastructure of unity within a region fragmented by unresolved disputes.

Legal Architecture and Institutional Machinery

IMEC’s institutional underpinnings currently lack teeth. The memorandum announced at the G20 Summit 2023 is non-binding, relying on voluntary participation without enforceable commitments. Divergent priorities among the eight key members — India, UAE, Saudi Arabia, the U.S., the European Commission, France, Germany, and Italy — have already slowed coordination and planning. Issues of financing also loom large. The project involves ports, railway integration, and energy pipelines, yet there is still no clarity on whether funding will come from multilateral institutions, public-private partnerships, or direct state investments.

On ground infrastructure deficits further complicate execution. West Asia faces gaps in cross-border railway connectivity, incompatible railway gauges, and customs barriers. Technical integration remains unresolved since countries like Saudi Arabia and Israel operate distinct standards. The existing frameworks, including multilateral railway partnerships and pipelines, lack the cohesion required for a megaproject spanning three continents.

The Numbers Behind IMEC’s Aspirations

The corridor promises transformative reductions in trade transit time and costs. Shipping times could decline by up to 40%, while transportation costs may fall 20–30%, according to Ministry estimates. Ports such as Jawaharlal Nehru Port Trust in India and Haifa port in Israel are linchpins of this grand vision. Yet, the logistic claims seem inflated when one examines regional instability. A project cost exceeding ₹15,000–20,000 crore requires infrastructure commitments that neither Saudi Arabia nor Israel have yet solidified.

The other narrative concerns trade volumes. The corridor estimates an annual trade throughput of billions, but bilateral trade between India and Egypt itself has fallen from ₹7.26 billion in FY 2021–22 to ₹5.2 billion in FY 2024–25, revealing economic unpredictability and unrealized expectations. The corridor risks similar constraints if security challenges persist unresolved.

Uncomfortable Questions for IMEC’s Future

Several questions remain unaddressed, with implications reaching beyond economic logistics. First, implementation mechanisms remain opaque. While IMEC positions itself as eco-friendly infrastructure, energy pipelines and railway integrations will require substantial carbon offset measures. Who bears this cost? Furthermore, political divergences could derail timelines. For instance, Saudi Arabia's increasing cooperation with Israel under IMEC risks alienating Palestinian stakeholders, even as India continues reiterating support for the two-state solution.

Second, regional instability is a glaring blind spot. Gaza remains a flashpoint, and Egypt’s recent mediation highlights that peace in Palestine is not ancillary but central to long-term connectivity. Despite Egypt’s geostrategic role via the Suez Canal Economic Zone, the IMEC overlooks lessons from international precedents in layered connectivity diplomacy.

Learning from South Korea’s Connectivity Strategy

The IMEC debate mirrors lessons from South Korea’s Northeast Asia logistics framework initiated in 2018. South Korea’s corridor faced challenges in integrating North Korea’s politically sensitive zones. Recognizing the need to address geopolitical instability early, South Korea tied infrastructure development to political dialogue mechanisms. Four years later, progress was tangible but cautious — transit times reduced, bilateral trade with Japan increased, and even Russia negotiated smoother logistics partnerships.

Here, IMEC could learn at least one key lesson: economic corridors in politically fragmented regions require geopolitical accommodation, not avoidance. Ignoring Palestine’s inclusion risks hollowing IMEC’s ambitions, much as isolated North Korean zones limited early progress in Northeast Asia.

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