Israel's goal of becoming the Middle East's main trade hub is falling apart, according to a recent analysis. The India-Middle East-Europe Economic Corridor (IMEC), which was meant to connect India to Europe via Israel's port of Haifa, has stalled. Gulf nations are now creating alternative routes that bypass Israel entirely.
In June, Saudi Arabia and Turkey signed agreements to revive the historic Hejaz railway, linking them through Jordan and Syria while avoiding Israel. The UAE is also exploring a trade route from the Syrian coast through Iraq to its own Gulf ports. In July, DP World signed a 50-year deal to build new terminals on the UAE's Arabian Sea coast to avoid the Strait of Hormuz.
The IMEC was announced at the G20 summit in 2023, but the Gaza war and the subsequent conflict with Iran disrupted progress. Haifa port, which handled only about 1.5 million containers annually before the war, is considered too small. Saudi Arabia has rejected normalisation with Israel without a Palestinian state.
Gulf states are pursuing different strategies. Saudi Arabia aims to be an unavoidable transit point, launching a new freight corridor and boosting oil pipeline capacity. The UAE, however, is building multiple routes that depend on no single country, including links to Iraq and Syria.
Both approaches face challenges. Land routes cannot match the scale of sea freight, and Iran's ability to threaten shipping remains a problem. During the Iran war, the UAE reportedly paid Iran for protection, while Israel sent an Iron Dome battery to the UAE. Despite efforts to exclude Israel, the country's military power means it still influences regional trade.