New Indo-Saudi Trade Route Set to Bypass Iran, Rivaling China’s Belt and Road Initiative

In a groundbreaking development with far-reaching geopolitical implications, the United States, Saudi Arabia, and India are in discussions to establish a new trade route that will bypass Iran, potentially reshaping the trade landscape in the Eurasian region. The proposed route aims to connect the Persian Gulf and South Asia, creating a formidable competitor to a similar initiative led by Iran and China.

US officials, speaking to Reuters, revealed that the envisioned infrastructure project would encompass a vast network of railways and shipping lanes, connecting Middle Eastern nations with India while circumventing Iran as a key transit hub for trade routes from Asia to Europe. Talks have extended for the past 18 months and now appear poised to yield tangible results, possibly culminating in an announcement during the upcoming Group of 20 (G20) leaders’ meeting.

The news coincides with the arrival of US President Joe Biden at the G20 conference in New Delhi, India, where he is scheduled to confer with Indian Prime Minister Narendra Modi and may also engage in discussions with Saudi Crown Prince Mohammed bin Salman. This ambitious project forms a significant part of the Biden administration’s broader strategy, which includes the goal of having Saudi Arabia recognize Israel.

Referred to as the “Indo-Abrahamic Alliance,” this strategic concept has laid the groundwork for the formation of the I2U2 group, a collaborative effort involving India, Israel, the United Arab Emirates, and the United States. Jake Sullivan, Biden’s national security advisor, emphasized the United States’ commitment to this initiative, stating that there is a “broad understanding of many of the key elements” and that progress has been made, though much work remains before a comprehensive framework is established.

President Biden acknowledged in early July that achieving normalization agreements between Israel and Saudi Arabia would be a complex endeavor, potentially involving a US-Saudi defense treaty and a civilian nuclear program for Saudi Arabia supported by the United States. However, the administration draws inspiration from previous diplomatic successes, such as the agreements brokered by then-President Donald Trump between Israel and Morocco, Sudan, Bahrain, and the United Arab Emirates.

Apart from the significant diplomatic implications, this project promises to streamline trade by reducing shipping times and costs while diminishing reliance on diesel fuels. These factors, combined with improved efficiency, could render Iran redundant in the transit of goods throughout the region.

Iran, once aspiring to be a regional trade hub, has encountered numerous challenges that have hindered its ambitions. A lack of infrastructure investment, inadequate road and railway networks, and under-equipped ports have all contributed to its inability to serve as a vital transit point. Additionally, political instability and economic sanctions further exacerbate Iran’s predicament, making any improvements seem distant.

While Iran has clung to hopes of capitalizing on the situation caused by the Russian invasion of Ukraine, its opportunities remain limited. The Tehran Times, a pro-regime publication, suggested that Iran might benefit from the crisis to realize its long-awaited goal of becoming a global transit hub. However, the reality is less promising, with Russia seeking alternative trade routes, notably the International North-South Transit Corridor (INSTC), which involves Iran, India, and Russia.

Despite the initial hype surrounding INSTC, the project has faced significant challenges, primarily due to US sanctions on Iran. Nevertheless, the emergence of a new Indo-Saudi trade route presents a formidable alternative, potentially altering the balance of power and influence in the Eurasian trade landscape.

As discussions continue and the geopolitical chessboard evolves, the future of these ambitious trade initiatives and their potential consequences for the global economy remain a subject of keen interest and scrutiny.

Saudi Arabia's Crown Prince Mohammed bin Salman and India's Prime Minister Narendra Modi react ahead of their meeting at Hyderabad House in New Delhi, India, February 20, 2019.

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