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The Economy is Jordan’s Main Weakness and Source of Risk.

Yet, Islamist pressures exist in Jordan. Just as in the early 90’s, when Arab mujahedin fighters returned to their countries (Algeria, Jordan, Egypt, etc.) from the Afghan war, so too Islamist combatants have started to return from Syria, as government forces gradually retake the territory. In the past few years, Prince Rashid bin Hassan, head of the security forces and cousin of King Abdullah, has had to manage greater threats in an otherwise peaceful and tolerant Jordan. The economy has suffered while the flow of Syrian refugees has added to the socioeconomic burden. Meanwhile, it takes just one act of violence to harm tourism, the country’s principal industry. In this sense, Jordan is rather like Tunisia and Morocco – Egypt has some oil. It’s therefore important for the government to engage as much as possible with Islamist groups at a political level.

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In the aftermath of the U.S. invasion of Iraq and the intensification of radical Islamist movements, Jordan suffered significant terror attacks. In August 2005, there were attacks against American warships along the Red Sea coast. A few months later, three major hotels in Amman were bombed, traumatizing the country. Yet, despite the conflicts in neighboring countries and attempts to subvert it, The Kingdom of Jordan managed to preserve stability. But, Jordan became a base for the West to launch operations against Iraq or Syria. Meanwhile, King Abdullah continued with reforms to democratize the government. Jordan is by no means a perfect democracy. That means it had the system to absorb the many demonstrations that occurred, demanding the end of the monarchy in the wake of the Arab Spring.

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Still, it’s the economic front that puts Jordan at most risk. Despite Abdallah’s gradual democratization and loyal tribal support, Jordan faces great difficulties. Other than phosphate and potash, which it exports, the Kingdom lacks natural resources. It relies on aid from Saudi Arabia but the influx of refugees – which as noted, has been a constant of Jordan’s history – have strained the country’s finances. Indeed, perhaps more than political concerns, the ‘Arab Spring’ in Jordan has had a largely economic impulse. Since January 2011, Jordan experienced largely peaceful demonstrations during which demonstrators expressed economic grievances. The modest and middle classes demanded more social justice and greater efforts against corruption. On the other hand, several political parties, under the banner of the National Front for Reform, called for institutional reforms, including changes to the electoral laws. Chief among these was the election of the Prime Minister by the House of Representatives rather than by Royal appointment.

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Jordan has very limited energy resources, which forces it to rely on imports, leaving its economy vulnerable to major shocks. It has tried to diversify its suppliers and develop alternative energy relying on the vast deserts and frequent sunshine. Jordan also suffers from a scarcity of water resources. The Jordanian economy has been hit hard by the combined impact of the international financial crisis of 2008 – which ended the flow of international investment, especially from the EU. Moreover, the Arab Spring and the crisis in Syria have hurt its foreign trade and tourist industry. Thus, Jordan’s budget must deal with significant debt, which reached 91.7% of GDP in 2015. The kingdom receives aid from the IMF – World Bank, USA, Gulf countries, European Union, Japan, France).

The Impact of Syrian Refugees

The massive influx of nearly 650,000 Syrian refugees also has an impact on infrastructure (education, health) and the country’s resources (water, energy), as well as the employment situation and the real estate market. The United States has offered Jordan military and economic assistance. A free trade agreement was signed in 2001 (the first between Washington and an Arab country) and the United States is Jordan’s sixth largest supplier and number one importer of Jordanian products. Jordan’s relationship with the Gulf countries has developed strongly after the 1990’s and especially with Kuwait (top foreign investor in Jordan), the United Arab Emirates and Saudi Arabia. Jordan was invited to join the Gulf Cooperation Council (GCC) at a future date.

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But Jordan is experiencing the full impact of the Syrian crisis. This is both an economic and a security threat. The Kingdom has welcomed a large influx of Syrian refugees (650,000 registered to UNHCR, more than 1,200,000 were already present in Jordan before the conflict – Jordan also had tens of thousands of Iraqi refugees). The Zaatari camp, located near the Syrian border, has nearly 80,000 residents. This means Jordan fears the consequences of regional crises on its own stability. Jordan, unlike its GCC financial sponsors, has been more favorable for a political settlement of the Syrian conflict. It has supported the Iraqi – Shiite – government of Haidar Abbadi with the hope that it will lead a political process involving all the components of the Iraqi people. It has joined forces with the international coalition to support the Iraqi state in its fight against ISIS. In this context, it has participated in air strikes conducted against this terrorist organization since September 2014 in Syria. That year, ISIS burned alive a Jordanian pilot, sparking outrage, but also a renewed sense of pride and purpose in the armed forces.
The electoral law was subject to some cosmetic changes and in response to the protests the King appointed and dissolved five governments. In March 2016. Prime Minister Hani al Mulki was appointed on 29 May 2016, succeeding Abdallah Ennsour, who had headed the government since 10 October 2012. A Hani al-Mulki was reinstated on September 25, 2016, following the parliamentary elections of 20 September. The EU praised the latter as well-run. King Abdullah II is quite loved by his subjects.

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The affection of Jordanians for the monarchy proved crucial to ensuring that the street protests that have shaken the Arab world since 2011 have not resulted in regime change. In some ways, King Abdallah has more support than ever. But this doesn’t mean Jordan’s monarch can ignore the many risks outside and within its borders. In 2011 the collapse of the Mubarak presidency in the wake of the Tahrir Square protests had an immediate effect on Jordan. The gas pipeline from Egypt to Jordan has been hit by several attacks from militants in the Sinai, rendering it all but useless. The Egyptians sold the gas at reduced price. From that moment on, the National Electric Power Company, which operates the water and electricity in Jordan has absorbed a far greater percentage of the state budget.

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The disastrous state of the economy has not gone unnoticed. Indeed, it’s Jordan’s biggest political risk, because the more radical offshoots of the Muslim Brotherhood can exploit it to gain wider parliamentary representation in the best of case – threaten the monarchy in the worst. In some ways, Jordan is facing a situation not unlike Algeria in the early 1990’s or Tunisia in the months preceding the uprisings of December 2010 – January 2011. On several occasions, as it has done in the past, Parliament has sought to manage the public deficit by moderating public spending. This typically involves cutting subsidies on basic items from food staples to gasoline and energy. Electricity is effectively free for most Jordanians who do not have high consumption, but the parliament has introduced a yearly increase of 7.5 percent, prompting riots, especially among younger people. Conditions in Jordan are ripe for a major uprising.  The worsening economic conditions have left little to which unemployed – and often educated – young Jordanians can aspire. Youth, as in many Arab countries, account for the clear majority of the population. (A.B.)

 

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