India, USA, Saudi Arabia & UAE in talks to sign crucial rail and port deal on the sidelines of G20

The USA, Saudi Arabia, India, and other nations are discussing a possible infrastructure deal that could redefine trade between the Gulf and South Asia, linking Middle Eastern countries by way of railroads and ports. It will also connect to India through shipping lanes from ports in the region, according to some U.S. officials aware of the development.

The talks, which have also included the United Arab Emirates and Europe, may or may not yield a concrete result in time for an announcement on the sidelines of this week’s Group of 20 (G20) leaders meeting, the people said.

Biden’s national security advisor, Jake Sullivan, declined to comment on any potential announcement at the G-20 but told reporters en route to the summit in New Delhi that it was an initiative the US was invested in along with its partner countries. “We believe that connectivity from India, across the Middle East to Europe is incredibly important and will bring a significant number of economic benefits, as well as strategic benefits, to all of the countries involved,” he said. Earlier this year, Sullivan traveled to Saudi Arabia for talks that also included Indian and UAE representatives on the topic.

U.S. President Joe Biden is on his way to the G20 conference in New Delhi, India, where he is set to meet Indian Prime Minister Narendra Modi and may also have talks with Saudi Crown Prince Mohammed Bin Salman.

Project aimed to counter China’s growing influence

The plans for a sweeping, multi-national ports and rail deal would come at a critical time. To counter China’s Belt and Road global infrastructure push, Biden is pitching Washington as an alternative partner for and investor in developing countries at the G20, especially in the Indo-Pacific region. The US in recent years has 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 of late, helping to broker a detente between Saudi Arabia and Iran earlier this year.

Separately, a US-backed proposal to speed up land-trade routes between Gulf Arab countries and the Mediterranean Sea has been floated among Israel and Gulf countries, but officials acknowledge that there is no set timeline as such for any changes.

US allies Saudi Arabia and the UAE have been moving closer to China as they seek to strengthen ties with fast-growing economies to the east. Last month, the two oil-rich Gulf states said they were joining the BRICS group of emerging market nations after China led a push to open up membership of the bloc. The leaders of the BRICS nations – Brazil, Russia, India, China, and South Africa – are trying to increase the group’s influence and counter US power over the global economy and trade, including through the role of the US dollar.

Biden administration seeks to complete its diplomatic push for a mega-deal with Saudi Arabia that could include a normalization agreement between the kingdom and Israel before the 2024 campaign consumes Biden’s agenda. It also comes as the Biden administration seeks a broader diplomatic deal in the Middle East that would have Saudi Arabia recognize Israel. If Saudi Arabia and Israel normalize their relations, Israel could also be part of the railway project and broaden its reach to Europe via Israeli seaports, according to sources.

Seeds of the initiative were sown last year

The negotiations over a multi-country infrastructure deal were first reported by American newsletter, Axios. The idea for this new initiative came up during talks that were held over the last 18 months in another forum called I2U2, which includes the USA, Israel, the UAE, and India, according to Axios citing two sources. The forum was established in late 2021 to discuss strategic infrastructure projects in the Middle East and to serve as a counterweight to Beijing’s growing influence in the region.

Israel raised the idea of connecting the region through railways during the I2U2 meetings over the last year. Part of the idea was to use India’s expertise on such big infrastructure projects, a source said. The Biden administration then expanded on the idea to include Saudi Arabia’s participation, Axois reported while citing the source.

Beyond the diplomatic implications, officials said they hope such an infrastructure deal could reduce shipping times, cost, and the use of diesel and can make trade faster and cheaper between the nations.

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