THU 2 - 10 - 2014
 
Date: Jan 24, 2013
Source: Gulf Research Center
Jordan between economic crisis and the GCC Responses

Dr. Abdulaziz O. Sager

Under the impact of the Arab Spring, Jordan today is facing mounting security and political pressures. Combined with a serious economic crisis, this potentially poses a threat to the stability and future of the state, which in turn could have a considerable impact on the entire region and on the Arabian Gulf states in particular.

 

From the outset, it should be understood that the political implications of the Arab Spring on Jordan are somewhat limited due to a number of factors specifically related to the nature of Jordanian state and society.  First, the majority of Jordanians continue to feel attached to the Royal Hashemite regime. They consider the regime a guarantor of the stability of the state and its long-term survivability. Most of the citizens are fully aware of the vulnerability of the state on account of its small size and diverse population comprising people of different ethnic and cultural backgrounds.
 
Second, the tribes in Jordan represent a significant power structure within Jordanian society and they exists at the moment among them a consensus on the value of maintaining the Jordanian monarchy. A similar position has been adopted by the military and security institutions as they also recognize the vital role of the Hashemite royal family in protecting the stability and security of the state. Third, the Iraqi experience since the downfall of the Saddam regime and the subsequent collapse of the security and economic situation in Iraq has had a negative effect on the perception of the Jordanian people. The lessons from the ongoing Syrian revolution have only added another discouraging factor for anyone contemplating to initiate an uprising in Jordan. More than 600,000 Syrians have fled their homes and many have sought refuge in neighboring states (according to a UN report at least 250,000 are already in Jordan). This, along with the destruction of the Syria n state's infrastructure, has sent a clear message to the Jordanian people of the negative consequences of a revolt.

 

The continued security, political, and economic crises in other Arab Spring states has added to the reluctance of the Jordanians. To them, the experience of the transition in neighboring Arab states has had a dark as well as a bright side. Nevertheless, major Jordanian cities have witnessed popular demonstrations during the past months, mainly in protest over the economic situation, the rise in basic food and fuel costs, as well as corruption in the state machinery. None of those protest rallies, however, demanded the downfall of the regime.
 
In this context, the Jordanian state does not face an existential political legitimacy problem, nor is it affected by sectarian or ethnic conflict as is the case in Syria and Iraq. Jordan has never been a dictatorship. Its political system is known for a degree of flexibility and a reasonable level of tolerance. It allows for relative freedom of expression and media as well as the right to establish political parties. Administratively, Jordan has a well-established tradition allowing a considerable degree of dynamism and adaptability, and an elected parliament which is open for all political groups, including the Moslem Brotherhood and other Islamic groups. Instead, it is the formidable challenge presented by the critical economic situation will remain the main threat to the stability of the Jordanian regime. The fact is that this crisis cannot be overcome without considerable outside assistance, in particular assistance from the Gulf States. Such assistance must be extended under a collective agreement among all GCC states and should be offered under the umbrella of the GCC organization as part of a specific formula and within a specified timeframe.

 

The GCC states must view widespread assistance to Jordan as an unavoidable necessity. Strategically, and because of its proximity to the Gulf region, Jordan is included in the Gulf region's security calculations. On one hand, Jordan is subject to mounting Israeli pressure given that by weakening Jordan the Israeli leadership hopes to implement its plan to force the Palestinian population of the West Bank to immigrate to Jordan in order to achieve the "transfer" by creating an alternative state to Palestine in Jordan and thus realize its plan of founding a Jewish state on the historical land of Palestine. Such a plan has been in existence since the establishment of the state of Israel back in 1948. From 1967, it has become part of the Israeli strategic objectives.
 
On the other hand, Jordan shares long borders with countries that are undergoing conflict like Syria and Iraq, which in turn could have a negative effect on the fragmented society of the country. The Hashemite regime in Jordan is known for its ability to maintain a degree of balance among all the internal forces and interest groups and for its ability to deal with external pressure as well as the regional and international balance of power. This has made Jordan an important player in the regional and international political arenas, despite the fact that it is a relatively small state with limited resources.

 

As such, there is an imperative for the GCC states to help Jordan out of its economic crisis. As it stands, the Arab world's political and security structure cannot at the present time cope with or manage another crisis. The Arab security system, if such a structure exists in reality at all, is not equipped to deal effectively with the multiple fires presently sweeping the Arab world. A further crisis in Jordan could easily spin out of control and add to the current vulnerability of the entire Middle East region. 

 

Statistics indicate that Jordan is in need of an assistance plan to aid the urgent recovery of its fragile economy. National debt is remarkably high, and the debt burden had reached more than $20 billion by the end of October 2012 of which approx. $8 billion is external debt reflecting 26.0% of GDP. The budget deficit for 2012 has soared to $1.175 billion while the inflation level touched 4.3 percent and official unemployment has settled at the 13.1 percent rate. Within these numbers, the major challenge facing the Jordanian economy is the cost of meeting the energy needs estimated at over 100,000 b/d (Iraq supplies 10,000-15,000 b/d at a discounted price).

 

Jordan's energy crisis has deepened as a result of the developments in Egypt after the February 25 revolution which led to demands for a swift increase in the price of natural gas supplied to Jordan by Egypt. Jordan was importing 6.8 million cubic meters daily, at a cost of $3.5 million (when the cost of each million Btu [British thermal unit] was at $7).

 

To enable Jordan to manage its economic and energy crisis, the GCC states could offer the country an economic assistance package including deposits to cover the state's central bank for a period until the end of 2013, and an interest-free amount equal to Jordan's external debt which could act as a collateral until the country is able to pay back or find some another settlement for the issue of its external debt. In order to reduce the burden of the energy bill, the GCC states should supply Jordan with 50,000 b/d of oil at a discounted price for a minimum period of four years.

 

At the same time, the GCC states should proceed with offering Jordan the financial assistance that has been already been agreed to, which amounts to $5 billion over a five-year period, and honor the payment timetable to avoid any unnecessary delay. An additional deposit of $5 billion could be made to underpin the Jordanian currency and an active investment program could be launched to help the Jordanian economy generate new employment opportunities and add value to the country's economic growth. The already existing agreements which exempt Jordanian products from customs duties and local taxes in the GCC need to be activated. Opening the GCC employment market to the Jordanian workforce and relaxing the residency regulations for jobseekers would also help in economic recovery efforts. 

 

For its part, the Jordanian government should introduce more transparency and clarity in the system, make a serious effort to fight corruption, and undertake political and administrative reforms with the aim to improve the economic and social well-being of the Jordanian citizens.

 

The above steps are the only possible means by which Jordan could begin the exit from the deep troubles it is faced with. Dealing effectively with Jordan's economic crisis is the only way to save the country from sliding into political instability and becoming the next stop for the Arab Spring.
 

Gulf Research Center, Chairman


The views and opinions of authors expressed herein do not necessarily state or reflect those of the Arab Network for the Study of Democracy
 
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