New trade route to Israel involving Mundra port

New trade route to Israel involving Mundra port

Context:

• As Houthis continue to attack Israel-linked ships in the Red Sea, Israeli transport minister Miri Regev recently announced an alternative route for trade which involves the Mundra port in Gujarat.

What is happening in the Red Sea?

• Yemen’s Houthi rebels have been attacking ships linked to Israel in the Red Sea, in solidarity with Gaza which is suffering under a relentless Israeli military campaign.
• This has disrupted global trade because some 12% of which passes through the Red Sea.
• The Red Sea also links the Indian Ocean with the Mediterranean Sea via the Suez Canal.
• To avoid the danger zone around the Red sea, ships are going all the way to the south of Africa and crossing the Cape of Good Hope which is increasing both costs and the time taken.
• In fact, seafarers now have the right to refuse to sail on ships which are passing through the Red Sea, in a new industry agreement signed last week.

What is the new route?

• In this disturbing scenario, Israel has been looking for ways to carry out trade bypassing the Red Sea.
• Under the newly announced arrangement, goods move from Mundra to ports in the UAE, such as Dubai’s Jebel Ali Port, by sea, and then via land through Saudi Arabia and Jordan to Israel.
• It is noted that a major part of the land transport will be carried out on trucks.
• According to reports in Israeli and Arab media, these trucks will be operated by two shipping companies namely, Israel’s Trucknet and the UAE’s PureTrans.
• Crucially, a similar route might also be used in the India Middle East Europe Economic Corridor (IMEC) too.
• The ambitious project aims to link India to Europe via the Middle East, but its final shape is yet to be decided and the Gaza war has thrown a disturbance in its progress.

What are the benefits, costs of the new route?

• It is said that land route has not been thought of suddenly, but had been in the works for some time.
• Al-Araby Al-Jadeed which is a London-based Arab news outlet, quoted economic affairs expert Nehad Ismail as saying that the land corridor had first been proposed at the time of the Abraham Accords (aimed at normalising ties between Israel and some Arab states) in 2020.
• The land route will significantly cut travel time and costs for Israel, and will also generate revenue for Saudi Arabia and Jordan in terms of transport fee and duties.
• However the drawback is trucks can carry far fewer goods than a ship can, and to that extent, trade will be limited.
• Also, the route mainly depends on Israel maintaining friendly ties with the two countries, in a rapidly fluctuating situation in the Middle East.

About India Middle East Europe Economic Corridor (IMEC):

• The India-Middle East-Europe Economic Corridor(IMEC) is a planned economic corridor which aims to bolster economic development by fostering connectivity and economic integration between Asia, the Persian Gulf and Europe.

• The corridor is proposed from India to Europe through the United Arab Emirates, Saudi Arabia, Jordan, Israel and also Greece.
• The project was launched to bolster transportation and communication links between Europe and Asia through rail and shipping networks and the project is seen as a counter to China’s Belt and Road Initiative.
• The IMEC will comprise of two separate corridors which are:

1. the east corridor connecting India to the Gulf and
2. northern corridor connecting Gulf to Europe.

• Both the corridors will provide reliable and cost-effective cross-border ship to rail transit network to supplement the existing maritime routes.
• It intends to increase efficiency, reduce costs, secure regional supply chains, increase trade accessibility, enhance economic cooperation, generate jobs and also expected to lower greenhouse gas emission which results in a transformative integration of Asia, Europe and the Middle East (West Asia).