US, EU Agree on Mideast-India Rail and Shipping Corridor at G-20

(Bloomberg) -- The US signed an agreement with India, Middle Eastern countries and the European Union aimed at connecting them via a network of railways and sea routes, a development that comes as China builds its influence across the energy-rich region.

The US has been quietly holding talks since January on the project with India, Saudi Arabia, the United Arab Emirates and Israel. The plan is to link Middle Eastern countries by rail and to India through shipping lanes from ports in the region, extending on to eastern Europe. 

“This is a game-changing regional investment,” US President Joe Biden said at an event announcing the plans. He thanked Saudi Crown Prince Mohammed bin Salman and India's Prime Minister Narendra Modi, who sat between them. 

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The Saudi prince also commended Biden, and they shook hands, appearing to want to emphasize improved relations after long-running frictions that flared again last year over oil.

The India-Middle East-Europe Economic Corridor will integrate railway lines and port connections from India to Europe, across UAE, Saudi Arabia, Jordan and Israel, leading to faster transit of goods.

The project will develop energy infrastructure and enable the production and transport of green hydrogen to all partner countries. It includes a new undersea cable connecting the region to improve telecommunications and data transfers.

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Leaders will also develop a trans-African corridor to improve transport connections between the Katanga region of the Democratic Republic of Congo and the so-called “Copper Belt” in Zambia to Lobito port in Angola. The US and the EU are also backing this project, known as the Lobito Corridor. 

The Middle East plan is more than just an infrastructure project, US Deputy National Security Adviser Jonathan Finer told reporters, saying the overall strategy was focused on “turning the temperature down” in a region that was historically a “net exporter of turbulence and insecurity.”

The US declined to give a timeline for completion but Biden's senior adviser Amos Hochstein said countries would meet within the next 60 days to discuss that.

US officials dismissed the idea the project was about countering Chinese influence in emerging markets. But a French diplomat said there was competition with China's Belt and Road Initiative and that it was not necessarily a bad thing. Countries were also looking at how to involve Egypt in the plans. 

The rail link will increase the speed of trade between India and Europe by 40%, European Commission President Ursula von der Leyen said.

US allies Saudi Arabia and the UAE have been moving closer to Beijing as they seek to strengthen ties with fast-growing economies to the east. Last month, Saudi Arabia and the UAE said they were joining the BRICS group of emerging-market nations after China led a push to open up membership of the bloc that was eventually backed by India.

The US and the EU have in recent years sought to counter President Xi Jinping's Belt and Road Initiative, which has financed hundreds of billions of dollars worth of infrastructure in emerging markets. China has also boosted ties with the Middle East, helping to broker a detente between Saudi Arabia and Iran earlier this year.

--With assistance from Samy Adghirni.

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