Just last month, Israeli Prime Minister Benjamin Netanyahu and Saudi Crown Prince Mohammed bin Salman had hinted at a historic agreement, facilitated by months of mediation efforts by the United States. The U.S. has been actively working towards this goal for some time. However, with the outbreak of the latest violence, Saudi Arabia shifted its stance by expressing support for the Palestinians and suggesting that Israel bears responsibility for the ongoing conflict.

This development comes shortly after the announcement of the India-Middle East-Europe Corridor (IMEC) project, unveiled at the G20 summit with the participation of India, the European Union, Saudi Arabia, and the United States. Immediately following the attack on Israel, Indian Prime Minister Narendra Modi expressed his condolences and solidarity with Israel, given that the proposed corridor’s route is connected to the region. This project was seen as India’s response to China’s Belt and Road Initiative.

The ongoing conflict introduces complications within this grouping, as Arab states and Western powers hold differing positions on the Israel-Palestine issue. Saudi Arabia called for an end to violence and emphasized the dangers of the situation, reiterating concerns about the occupation and the deprivation of Palestinian rights. In contrast, the United States declared support for Israel and planned to deploy a carrier strike group to the Eastern Mediterranean. The European Union also voiced support for Israel’s right to self-defense.

In the midst of these conflicting stances, Jordan’s King Abdullah reached out to other Arab leaders to discuss de-escalation efforts and reaffirm support for the Palestinian cause.

Amidst these diplomatic efforts and growing tensions, Israel found itself under pressure after its security forces were caught off guard. The tentative route of the IMEC corridor involves connecting India to the UAE through a sea link and further establishing a rail route through Saudi Arabia, Jordan, and Israel, which would eventually connect to Europe through Israeli ports.

While the complete details of the IMEC project are not yet disclosed, the ongoing conflict could disrupt its development. The project is expected to be funded by the G7’s Partnership for Global Infrastructure Investment (PGII) initiative. The differing positions of G7 nations and Middle Eastern powers on the Israel-Palestine conflict raise concerns about the project’s future.

Speculations have also arisen regarding the possible involvement of Iran in the recent attack on Israel. Iran’s President Ebrahim Raisi had previously expressed opposition to regional countries establishing relations with Israel, hinting at potential Iranian influence.

This further complicates India’s diplomatic situation, as the country maintains significant trade ties with both Arab nations and Israel.

In terms of trade, India has witnessed substantial growth in its exports to Israel, which surged by 76% in the last fiscal year, reaching $8.4 billion. Imports from Israel stood at $2.3 billion. Key Indian exports include agricultural products, chemicals, electronics, machinery, and vehicles, often handled through Israel’s major ports: Haifa, Ashdod, and Eilat.

Disruptions at these ports due to the conflict could seriously impact India’s trade with Israel, which reached around $10.7 billion in the last fiscal year. Additionally, there are concerns about potential disruptions in trade with Iran, especially as India was reportedly finalizing a long-term agreement for Chabahar Port.

Iran has expressed support for Palestine and denied any involvement in the attack, emphasizing the autonomous decisions made by the Palestinian resistance. This complicated web of international relationships and trade interests places India and other nations in a challenging diplomatic and economic position, as they navigate the evolving dynamics of the Middle East conflict.