The Iran war’s shock to global fuel prices has pushed European leaders to look for new trade and energy routes that would bypass the Strait of Hormuz, as the bloc scrambles to shield itself from the fallout of conflicts launched by the U.S. and Israel and the damage they inflicted on Gulf Arab countries.
Who Pays When the Routes Break
European Commission President Ursula von der Leyen said the EU spent 25 billion euros ($29 billion) more on oil and gas in the first 54 days of the Iran war, while also facing the risk of a longer-term jet fuel shortage. That is the bill ordinary people and public systems are left to absorb when global energy flows are jolted by war and the infrastructure of empire starts shaking.
Von der Leyen told G7 leaders at this week’s summit that “alternative export routes have been created that are more resilient and offer choices” while “other routes will be built — for example, a typical one is IMEC.” The European leaders are now looking at ways to bolster energy security and minimize the impact of future conflicts as they turn to Gulf states and India.
The EU has supported the India-Middle-East-Europe Economic Corridor, or IMEC, through a memorandum of understanding, but only a handful of its 27 member states are formal signatories. A high-ranking EU diplomat, speaking on condition of anonymity because he wasn’t authorized to disclose confidential discussions, said political commitment to IMEC is strong behind the scenes. He said the focus is on “translating that vision into practical implementation across its three pillars: transport and trade connectivity, energy connectivity and digital connectivity.”
The Corridor of Power
IMEC is being sold as a route to “greater economic resilience, supply-chain diversification and energy security” and to bolster the bloc’s “strategic autonomy” at a time when Russia shows few signs of curbing its belligerence and the U.S. chips away at strategic bonds. The EU’s press office declined to provide a prospective timeline for the project.
The diplomat said the project could involve new pipelines and transmission cables, among other infrastructure. Another EU official, speaking on condition of anonymity because they can’t speak about the EU’s plans publicly, said the bloc would encourage European companies to invest in renewable energy projects in the Gulf to supply the EU’s energy demand.
The value of such alternatives is already visible in the East-West Pipeline running across Saudi Arabia from its eastern oil fields to the Red Sea. After the Iran war started, Aramco ramped up transport to the maximum capacity of 7 million barrels of oil per day.
French Foreign Ministry spokesperson Pascal Confavreux said the leaders of G7 nations are discussing ways of financing and building infrastructure, “sometimes on the terrestrial part, that will be able to go outside of the track of the Strait of Hormuz.”
Deals, Normalization, and the People Left Out
IMEC would pass through Israel and enjoys its support. Israeli Prime Minister Benjamin Netanyahu last year said he had spoken with his Indian counterpart Narendra Modi about IMEC, calling it “a very revolutionary and transformative development that we want to bring into place.”
Lianne Pollak-David, co-founder of the Israel-based Coalition for Regional Security, told a recent online briefing that U.S. leadership would be key to moving IMEC forward by helping in the normalization of relations between Israel and Saudi Arabia, an essential player in the project. “Without normalization between Israel and Saudi Arabia, IMEC cannot be truly realized,” she said.
Saudi Arabia has said it will only normalize relations with Israel if accompanied by a clear pathway to Palestinian statehood, something Netanyahu opposes. It remains unclear how the Iran war may influence Saudi Arabia’s thinking. Asked about their position regarding IMEC, Saudi officials declined to comment.
Gabriel Mitchell, an analyst with the German Marshall Fund think tank, said getting the EU involved with collaborative projects in Gulf countries will take time. He said the most likely projects in the near term are oil and gas pipelines, which have the shortest construction timeline, and subsidizing repairs at Gulf facilities that Tehran targeted during the war.
Mitchell said any new projects would need to fall in line with the EU’s green policies, which means pipelines, for example, would likely be built with future “dual-use” capabilities of transporting both gas and possibly hydrogen.
Another project is the Great Seas Interconnector, an EU-backed electricity cable envisioned to stretch 1,208 kilometers (750 miles) to connect the power grids of continental Europe with EU member Cyprus and eventually Israel. The GSI is bogged down in red tape over its financing, but its potential is significant not only for ending the energy isolation of Cyprus and Israel but also acting as an energy link to India and likewise forming part of IMEC.
Gallia Lindenstrauss, senior fellow with the Israel-based Institute for National Security Studies, called GSI a “very pragmatic solution for the modern energy needs” that paves the way for the transition to green energies. “As energy security and grid backup move to the forefront of the global agenda, this project provides a flexible platform,” Lindenstrauss said.
What the Institutions Are Building
European leaders said during an EU leaders’ meeting in April that the bloc is “ready to team up with Gulf countries” to help set up new energy infrastructure circumventing conflict hot spots like the Strait of Hormuz. Von der Leyen and European Council President Antonio Costa have provided no specifics on EU-backed projects.
The U.S. is helping to foster closer energy ties among Greece, Cyprus and Israel as it sees the Eastern Mediterranean as “an increasingly important region for global energy development,” U.S. Secretary of Energy Chris Wright said last week. Wright was in Houston to inaugurate the Eastern Mediterranean Energy Center at Rice University, which aims to boost cooperation on developing natural gas deposits, U.S. liquefied national gas infrastructure and energy transportation networks in the European region.
Associated Press writers Sam McNeil in Brussels and John Leicester in Paris contributed to this report.