At the G20 summit in India this weekend, the U.S., India, Saudi Arabia and the UEA announced a new trade route that intends to connect India to the Middle East and Europe, with ports and rail, in a direct challenge to China's Belt and Road ambitions.
The proposed trade route-dubbed by U.S. President Joe Biden as the beginning of a "new era of connectivity"--envisions an eastern corridor that connects India to the Gulf Cooperation Council (GCC) nations and a northern route that connects the GCC to Europe.
While the new trade corridor could counterbalance China's Belt and Road initiative, it will also give Saudi Arabia and the UAE more options as they navigate stronger relations with China and shaky relations with the U.S.
On the sidelines of the G20, Reuters quoted Biden as saying the new trade route would create "endless opportunities for clean energy, clean electricity, and laying cable to connect communities".
Saudi Investment Minister Khalid Al Falish likewise praised the corridor's ambitions, calling it "the equivalent of the Silk Route and Spice Road", and heralding "greater energy connectivity, green materials and processed and finished goods that will rebalance the global trade," Reuters reported.
Beyond that, the geopolitical implications are wide-ranging. Not only will the massive project serve as a direct response to the Chinese level of infrastructure spending worldwide, but it also seeks to provide another push to Washington's attempts to normalize relations between Gulf Arab states and Israel.
It could also be a boost for Saudi Arabia, the world's largest exporter of crude oil, by creating a direct link to India, one of the fastest-growing economies in the world.
Beijing, in the meantime, has said it welcomes the new trade route, but warned against using it as a geopolitical tool.
The new trade corridor comes as China's multi-billion-dollar Belt and Road Initiative is faltering over investment issues. Adding to those woes, Italy recently announced it would withdraw from the project, under pressure from political parties.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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