Haifa vs. Damascus: The Quiet Race for the World's Economic Backbone | Dan Perry

For about three years, the discourse on the Middle East has revolved almost entirely around war. Gaza, Lebanon, Iran, the Houthis, and the political turmoil in Israel itself have dominated the headlines. Throughout this period, a quiet strategic development with potentially enormous consequences has received almost no attention. This must become a priority for a government of healing and sanity that may be formed after the elections.

Around the time of the October 7 massacre, the geography of global trade was facing a fundamental change. The tool intended to bring about this change was the India–Middle East–Europe Economic Corridor (IMEC), which was presented at the G20 summit in New Delhi in 2023. The corridor was designed as a network of ports, railways, energy infrastructure, fiber-optic cables, and logistics links that would connect India to Europe via the Gulf and Israel, and in particular via Haifa. Many saw it as the democratic world's answer to China's "Belt and Road" initiative.

For Israel, IMEC has the potential to become the country's most important strategic-economic project in decades - and it is about much more than collecting transit fees.

Countries that become vital trade hubs attract investment precisely because companies seek to locate where capital, infrastructure, and human talent meet. If IMEC succeeds with Israel at its center, Haifa could develop into the main logistics hub of the Eastern Mediterranean, while Israel's advantages in artificial intelligence, cyber, semiconductors, water desalination, and energy technologies would be integrated into supply chains stretching from Bangalore to Berlin. The corridor would not only move goods through Israel, but would also export Israeli services, innovation, and capital.

The wars that have since afflicted the Middle East have effectively frozen the project - but the disruptions to maritime trade in the Persian Gulf and the Red Sea have, if anything, made it even more urgent and necessary for all parties.

Indeed, as a long-term plan, it has survived the transition from Joe Biden to Donald Trump, who agree on almost nothing, as both recognized its importance far beyond the Middle East. The Trump administration reaffirmed in 2025, along with India, the corridor's status as a strategic priority.

In other words, IMEC could become the economic backbone of a much broader geopolitical shift: normalization between Saudi Arabia and Israel, the expansion of the Abraham Accords, and eventually the creation of a new array connecting India, the Gulf states, Israel, and Europe. October 7 knocked this vision off track, because in its original format, the corridor cannot realistically pass through Israel without normalization with Saudi Arabia. But IMEC itself has not disappeared.

Here, alongside a golden opportunity, lies the danger for Israel: as other routes are examined, infrastructure and investments may eventually bypass it instead of passing through it. Therefore, Israel faces a strategic choice. Its best chance to maintain its status as a regional economic hub - instead of watching the architecture of a new Middle East take shape without it - may depend on choosing a more moderate government that can restore relations with Europe, renew a political process with the Palestinians, and above all, make normalization with Saudi Arabia possible again. If this does not happen, eventually, Syria will stabilize enough that the corridor might pass through it instead.

The logic is irrefutable. India is increasingly establishing itself as the world's main engine of economic growth. Europe is trying to diversify its vital economic and energy ties. Artificial intelligence is driving unprecedented investment in data centers, power generation, and digital infrastructure. And governments increasingly see supply chains not just as a tool for trade, but as an issue of national security.

Recent studies estimate that a fully completed corridor could shorten transit times between India and Europe by up to 40 percent, while reducing logistics costs by about 30 percent - and lowering the cost of shipping a standard container from about $6,000 to about $4,200. Even at a relatively modest volume of 1.5 million containers per year, this is a saving of about $2.7 billion annually in transport costs alone.

History teaches that this saving is only the beginning, as large trade corridors create entire ecosystems around them. A corridor that connects Indian industry, the capital of the Gulf states, Israeli technology, and European markets could attract data centers for artificial intelligence, semiconductor and cloud infrastructure, renewable energy projects, digital networks, logistics platforms, and research collaborations spanning three continents.

For Israel, this is about much more than an opportunity to collect transit fees at the port of Haifa. IMEC could position the country within the physical and digital architecture connecting the fastest-growing large economy in the world to Europe's single market. It could turn Israel from a relatively small and politically exposed endpoint into an essential hub of trade, information, energy, and investment between Asia and Europe. Such a status would give Europe, India, and the Gulf states a lasting material interest in Israel's stability and its regional integration, while directing infrastructure, capital, and employment to Haifa, the Jezreel Valley, and logistics centers in the north.

Moreover, Saudi-Israeli normalization that is tied to a corridor of ports, railways, cables, and energy lines would be harder to cancel than a ceremonial agreement alone. That is, not only is normalization necessary for IMEC, but the project itself would make normalization more durable than it would have been without it. Every train, customs arrangement, data connection, and private investment would create interest groups that would have something to lose from a return to disconnection. Thus, normalization would turn from a fragile political event into a structure of shared interests.

Indeed, in the fall of 2023, it was widely estimated that such a normalization agreement was about to be signed soon, bypassing the traditional Saudi demand for progress toward a Palestinian state as a condition for it. This situation created a significant - even if unproven - motive for Iran and its proxies, particularly Hamas, to thwart the move.

And then the Hamas invasion and the October 7 massacre occurred, which ignited three years of war, distanced Saudi Arabia from any idea of cooperation with Israel, and also distracted the attention of Israel itself. But here lies a huge irony: the wars that knocked IMEC off track also illustrated how essential it is.

The Houthis' campaign against maritime trade exposed the vulnerability of the Bab el-Mandeb. Iran's repeated threats to shipping in the Gulf reminded the world that the Strait of Hormuz remains one of the most sensitive bottlenecks on the planet, while Russia's invasion of Ukraine in 2022 had already accelerated Europe's efforts to create more durable and diversified trade ties. Together, these crises illustrated the dangers inherent in concentrating global trade in a small number of vulnerable sea routes or in unstable transit countries.

The original vision was simple and elegant. Goods were supposed to move from India, cross the Arabian Peninsula through Saudi Arabia and Jordan, enter Israel, and continue through Haifa to Europe - while bypassing dangerous maritime bottlenecks and unstable countries like Iraq, Syria, and Lebanon - and simultaneously build a broad technological system around the corridor.

Former Knesset member Doron Avital, a former commander of Sayeret Matkal, has become one of the most prominent supporters of the initiative. He fears that if steps are not taken - and if the next government does not place the project at the top of its priority list - Israel might miss a huge and irreversible opportunity. "The question right now is whether it is possible to bypass Israel," he says. For the region as a whole, this would be a sub-optimal outcome.

Continued reliance primarily on the Suez Canal leaves global trade exposed to exactly the same weaknesses that the last three years have exposed. Land corridors through Iraq or Syria pass through countries whose security remains fragile and where politics is heavily influenced by armed militias or external forces. Lebanon does not offer a realistic route at all. Turkey offers some possibilities, but also geopolitical complications that many of the corridor's partners would prefer to avoid. If democratic countries seek a reliable bridge between Asia and Europe, geography leaves very few attractive alternatives.

Avital argues that the project should be understood less as a transport route and more as the backbone of a new economic system. Similar to the trade arteries that changed Singapore, Rotterdam, and Dubai, it could attract investments in artificial intelligence, advanced manufacturing, digital infrastructure, energy, logistics, and venture capital. Around central arteries, he says, economies grow.

From this perspective, Saudi-Israeli normalization becomes something bigger than just another diplomatic achievement in the Middle East. It is one of the missing political links between the fastest-growing large economy in Asia and the largest integrated market in Europe. For Israel, missing this connection means watching other countries shape the next economic architecture of the region, while it remains limited to narrower security relations with the United States and casual trade with the rest of the world. This broad strategic picture has been almost completely hidden by the war.

Israel has focused, understandably, on immediate security threats. However, among the many failures of the current government is also its inability to maintain Israel's place in this emerging economic architecture, says Avital. While some European governments have appointed senior officials tasked with promoting their part in the corridor, no parallel national effort has taken place in Israel. Such an absence carries a real risk that Israel will be bypassed - for example, by shifting the route north, through Syria, which might stabilize after the war.

If this happens, Israel's current geographical advantage could be lost for decades. Once ports, railways, industrial zones, and data infrastructure are built elsewhere, capital does not tend to return just because the political situation improves.

Meanwhile, everyone is waiting for the wars to end, and the project today is like a compressed spring: enormous strategic and commercial energy waiting for the political conditions that will allow it to be released. The economic logic only becomes more compelling, and every disruption in the Red Sea or the Gulf strengthens it. Every crisis that threatens one of the world's maritime bottlenecks strengthens the need for diversifying trade routes and reducing dependence on maritime trade, by moving a significant part of the journey to land on the way to Europe.

What might release this stored energy is the election of a moderate Israeli government on October 27. Restoring relations with Europe, returning to a credible political process with the Palestinians, and reviving the possibility of normalization with Saudi Arabia - all these could then return to the realm of the possible, says Avital.

And these would no longer be just diplomatic goals, but the missing components of one of the most significant economic projects of the 21st century - a project that could anchor Israel permanently within the economic architecture connecting Europe, the Gulf, and India.

"The emphasis must be on Europe as Israel's anchor," says Avital. "Israel is essentially a European country that needs to act as a bridge to the East. This is the only vision for Israel that is still alive. Any other vision is a ghetto from which people fly to Miami."