An article by: Editorial board

To counter China's global expansion, the USA is assigning India the role of a new “world factory” and is going to build a new route that will pass through Saudi Arabia, Jordan, and Israel. India's Silk Road, an alternative to China's Belt and Road project, will give Indian manufacturers previously unseen access to global markets.

Let us say it straight: our hypothesis is only a hypothesis, based, however, on a scrupulous and careful analysis of the facts. Since the outbreak of the war in the Gaza Strip, Israeli Prime Minister Benjamin Netanyahu has repeatedly stated that in addition to the complete destruction of Hamas, the main goal of the ground operation will be to expand the territory of the Jewish state. The goals of the Israeli offensive outlined by Netanyahu are Israel “from the river to the sea”: once the war is over, “Israel will control the security of the Gaza Strip and all Jewish settlements west of the Jordan River,” the Israeli prime minister said.

This position, which denies Palestine its own state, indicates that Israel, along with the United States and a group of countries in the global South, is preparing to become a major player in the new supply chain. The implementation of the plan will dramatically increase the political and economic weight of the Jewish state in international affairs. In other words, the new Silk Road proposed by Chinese leader Xi Jinping as part of his ambitious Belt and Road project will no longer run from China to Europe, but from India to Saudi Arabia, Jordan, all the way to existing and new Israeli ports in the Mediterranean.

Monument to the Ancient Silk Road in Uzbekistan, Central Asia


The Houthis as an excuse to build an alternative route to the Suez Canal

Little was said about the Houthis until December 2023, when the Yemeni group launched its first attacks on ships traveling through the Gulf of Aden, the Bab el-Mandeb Strait, the Red Sea, and finally the Suez Canal. Yemen has been in bloody conflict since 2014 between Houthi rebels, an armed group that emerged in the country’s Shiite-majority north, and the central government. Ten years of civil war claimed the lives of about 50,000 people. 600,000 homes, 1700 mosques, 410 hospitals, and more than 1200 schools were destroyed. But the Houthis made international media headlines only after ineffective attacks inexplicable by normal human logic.

Officially, the movement is called Ansar Allah, literally “Defenders of God (Allah),” but the name by which the world knows them comes from their historic leader Hussein Badr al-Din al-Houthi, who founded al-Shabab al-Mumin, the Young Believers, in the governorate of Sa’da, in the north of this Shiite-majority Arab country.

The Houthis are inspired by Lebanon’s Hezbollah and have been fighting not only against the Yemeni government, but also against Saudi Arabia and the UAE for a decade. They are ironclad allies of Iran and are attacking ships to end what they say is a war in the Gaza Strip.

There are those who claim – and there is certainly no shortage of conspiracy theories – that over the past 10 years, the Houthis have been trained and armed to one day embark on a global project designed to steal China’s economic supremacy, providing the role of the “world factory” for India and finally creating a new route from Asia to Europe without further involving China in its Belt and Road project. It is no coincidence that European countries, including Italy, have gradually withdrawn from Xi Jinping’s initiative.

There are those who argue that serving as a demonstration of the historic route’s vulnerability was the March 2021 accident, when the giant 400-meter-long container ship Ever Given ran aground – coincidentally – in the narrowest part of the entire Suez Canal, causing it to become completely blocked.

The Houthi leaders guaranteed the “safety” of Russian and Chinese vessels, saying that “only vessels with any connection to Israel, the US, or the UK are attacked.” In reality, it is very difficult to establish the real ownership of ships or goods on board: on January 27, the tanker Marlin Luanda, carrying Russian oil but operated by British Trafigura Group trader, was attacked by a missile and severely damaged. Or how to establish ownership of the new BYD Explorer automobile carrier, which left China for Europe on Monday, January 17, with 5,000 Chinese cars on board? The vessel was built by the Chinese Yantai CIMC Raffles shipyard for the Israeli shipping company Zodiac Maritime.

The Houthi leaders also claim that the attacks on the ships are aimed at helping the Palestinian people and forcing Israel to withdraw from the Gaza Strip. So far, escalating tensions in the Red Sea have tripled the cost of shipping containers from China, significantly impacting Mediterranean ports and raising concerns about energy prices and inflation.

According to the report of the Italian agency ISPI-Datalab, from November 2023 to mid-January 2024, the cost of transporting a container from Shanghai to Genoa has more than quadrupled, from 1400 to 6300 dollars. Italy experienced a 24% drop in port traffic in a matter of weeks, with Northern European ports benefiting instead. In addition, ISPI’s data points to growing concerns about the energy sector due to a significant drop in liquefied natural gas (LNG) supplies from Qatar, which fell 70% in January.

India is chosen as the protagonist of the new “economic miracle”

In 2023, India and the USA have given a boost to cooperation in many strategic sectors. As the reputable Italian newspaper Il Sole 24 Ore noted, the two countries are “stepping up cooperation to contain China.” In November 2023, soon after the Hamas attack on Israel, the heads of diplomacy and defense of India and the USA met in New Delhi to deepen the strategic partnership between the two countries and establish cooperation on the technology and defense front. “We appreciate the fact,” U.S. Secretary of State Anthony Blinken said, “that India has strongly condemned the October 7 terrorist attacks from day one.” International analysts increasingly speak of “an unprecedented harmony between Narendra Modi’s Indian government and Israel, a valued supplier of security systems and software.” In the eyes of political leaders in the New Delhi government, “a democracy like Israel’s, built around the demands of a religious majority, certainly looks like a model.”

Moreover, as Il Sole 24 Ore writes, “after decades of mistrust during the Cold War, when New Delhi was the leader of the non-aligned movement and cultivated a strong relationship with the Soviet Union, now India and the USA are experiencing a season of close cooperation on diplomatic, economic, and military fronts.” Washington identifies India as one of its “closest” partners, pretends not to see that Indian refineries are importing Russian oil above the price ceiling set by G7, and “some administrations apparently consider this Asian country as the only credible counterweight to the political and military rise of China.”

New Delhi, which identifies the danger posed by China on India’s northeastern borders as “absolutely real,” has become less wary of the United States and has shelved the “global policeman” terminology. The American military industry has long been seen by India as a full-fledged substitute for the Russian one. Last year, India and the USA signed an agreement to “cooperate in the production of an unspecified number of Stryker armored vehicles” to be deployed in regions bordering China and Pakistan.

Medieval vignette from Atalante Catalano. Thirteenth-century caravan with Niccolò Polo (Marco Polo’s father) and Maffeo Polo (Marco Polo’s uncle) crossing Asia


New World Factory

In the last two years, more and more major companies in Western industry, from Tesla to Intel, have started manufacturing in India. India’s high socio-economic potential among all countries in the Global South is due to various factors ranging from demography to human capital. The country’s population has reached 1.4 billion, surpassing China. With an average age of 28, it is one of the youngest on the planet, and precious human capital is being crystallized in the 500,000 new engineers receiving higher education each year. India is rapidly overcoming the backwardness of transportation infrastructure (highways, railways, ports, airports) and power grids.

And among New Delhi’s ambitions is to assume leadership over the countries of the Global South. Among the initiatives announced by Prime Minister Modi during the G20 summit last November was also the upcoming launch of an Indian satellite to monitor climate change, which will be put at the service of developing countries.

However, experts note that, unlike the situation in Southeast Asia, India’s manufacturing sector is still relatively poorly integrated into global supply chains. The new India – Mediterranean route is supposed to solve this problem. It will create an alternative to China’s Belt and Road initiative and strengthen India’s ties with Israel and the Middle East, which have been shaping since the 2020 Abraham Accords.

The Abraham Accords are a set of declarations signed at various times and through U.S. mediation by Israel with the UAE, Bahrain, Morocco, and Sudan. Following the war between Israel and Hamas, the process of normalizing diplomatic relations between Saudi Arabia and Israel, as envisioned by the Abrahamic Accords, has been in crisis. In this context, there is much to suggest that in 2024, India, which has excellent relations with both Tel Aviv and Riyadh, will play an active and important role in the international political arena.

New global pathway and market access

India’s role has become increasingly central due to the Asian country’s geographic location, the true center of the naval routes that connect, via the Indian Ocean, the Middle East to regions accessing the Pacific.

Thus, a portion of the new Silk Road, which will speak Hindi rather than Chinese, will be able to start from Mumbai, cross the Indian Ocean, arrive in the Persian Gulf, and then from the ports and oil terminals of Saudi Arabia, head for the reconstructed Tapline oil pipeline and the new super-railroad toward Jordanian territory and promptly arrive at the ports of the State of Israel on the shores of the Mediterranean Sea.

And Saudi Arabia is preparing to become a kind of international hub, opening up to the world its spectacular landscapes and the finds of numerous ancient pre-Islamic civilizations dating back to the Bronze Age. The tombs carved in the sand are reminiscent of Petra, but there are many more of them and there are far fewer tourists. Its vast expanse has attracted the attention of tourism and hotel companies: the number of hotels will grow tenfold in the coming years. Aman Resorts and Banyan Tree arrived in 2022, and later will come Sharaan, a mega resort on sand designed by renowned French architect Jean Nouvel. With Italian participation, the city of Trojena is being built as part of the futuristic Saudi region of Neom, which will be the largest smart city in the world and host the 2029 Asian Winter Games. In this cosmopolitan context, there is no shortage of quirky initiatives: in recent days, Riyadh, the capital of Saudi Arabia, opened its first liquor store in more than 70 years. The sale of these products is currently targeted at foreign diplomatic staff from non-Islamic countries. The opening was seen as an attempt by the Saudi regime, one of the most conservative in the world, to loosen the strict rules imposed on the population, at least on foreigners. It is one of several measures Crown Prince Mohammed bin Salman has taken in recent years to turn the country into a place that can attract more foreigners and more investment.

Serious implications of the Red Sea crisis for Egypt

The Red Sea crisis is impacting transit to and from the Mediterranean through the Suez Canal, where 12 to 15% of world trade passes. In fiscal year 2022/2023, which ended June 30, 2023, Suez Canal revenues increased by 25.2% to approximately $8.8 billion compared to $7 billion in the previous year. However, in January 2024, ship traffic through the Suez Canal was reduced by about 50% year-on-year.

US bank JP Morgan announced on January 10, 2024 that it “excluded Egypt from its Emerging Markets Government Bond Index Series, effective January 31.” Hassan al-Sadi, professor of financial economics at Cairo University, told Al-Arabiya newspaper that such a development “will lead to huge difficulties for Egypt in floating new hard currency bonds.”

And the Egyptian government is taking steps to address the economic crisis exacerbated by the blockage of the Suez Canal. The authorities are evaluating the possibility of “securitizing foreign exchange earnings, particularly Suez Canal earnings.” This was stated in a document published by the Egyptian Council of Ministers, according to which the government “plans to raise $10 billion from securitizing these revenues to overcome the shortage of dollars in the Central Bank’s coffers.” The idea is to “use foreign currency receipts as collateral for the future value of financial securities.”

Finally, the diminished role of the Suez Canal in global supply chains and the billions of dollars in losses that Egypt risks will have to be partially offset by the implementation of some new infrastructure projects. In particular, it is the agreement between Italy and Egypt that provides for the connection of ro-ro (combined maritime transportation) between Damietta and Trieste with customs concessions and blockchain certification, creating economic opportunities and an alternative route that would be safe in the context of the threats in the Red Sea.

Giornalisti e Redattori di Pluralia

Editorial board