Jordan banked more heavily than any other Arab state on hefty returns from peace with Israel and the vision of a future Middle East Common Market.
But after years of disillusionment regarding Israel’s behavior towards the Palestinians, capped by the Trump administration’s partisanship towards Israel and hostility towards the Palestinians, Jordanians across the political spectrum – including members of parliament – are now convinced more than ever before that Israel is an irreconcilable enemy.
King Abdullah II of Jordan has consistently maintained the need for a just, comprehensive and lasting peace in the region. However, Israel’s hardline position against a two-state solution, together with dangerously unbalanced American rhetoric on the Palestinian issue (soon to be ratified in the Mideast "Deal of the Century," whenever it finally emerges) have rendered his stance increasingly difficult to sustain.
Jordan finds itself now trapped between the demands of an aggressively unilateralist, pro-Israel Trump camp unwilling to channel more aid, and an increasingly radicalized local public opinion that wants to cut all diplomatic and trade relations with Jerusalem.
There is growing grassroots pressure to abandon the $15 billion gas deal with Israel. There is outrage at the delay in Israel returning the land plots of Naharayim in the north and Tzofar in the south leased from Jordan under the terms of the 1994 Jordan-Israel peace treaty. What’s more, Jordanians haven’t forgotten the incident in 2017 involving an Israeli guard who reportedly shot dead a Jordanian attacker near the embassy in Amman.
Jordanians from all walks of life have come to view Israeli operations in the West Bank and Gaza as unjustifiable and disproportionate attacks on innocent civilians. Then there is what the kingdom claims are Trump and Israel’s alleged attempts to change the historic and legal status quo of the Al-Aqsa Mosque site.
In concluding a peace accord with Israel on 26 October 1994, a top U.S. strategic interest, the late King Hussein became the first Arab head of state to come to terms with the Jewish state since President Anwar Sadat led Egypt to a similar pact in 1979.
The two countries, though formerly self-proclaimed enemies of one another, shared parallel fears, including that of an assertive Palestinian nationalism seen by many across the two borders as diluting the raison d’etre of both a modern Jordanian or Israeli state.
From a Jordanian perspective, a Jordan-Israel Benelux-style union of cross border economic integration, which would later include Palestine, could have the potential to overcome any signs of Palestinian discontent in the two countries, not least from Jordanians of Palestinian origin who resist the normalization of relations with the Jewish state. For the time being however, such a framework remains elusive, pending an end to the Palestinian-Israeli conflict.
Despite the many benefits to the Jordanian economy of ending the state of war with Israel, the peace-building vision never materialized. For Jordan, critical external debts were written off, foreign aid came through in abundance, preferential trade agreements were inked one after the other.
Jordan joined the WTO and Qualifying Industrial Zones (QIZs) – a special form of U.S.-Jordan-Israel trilateral "diagonal cumulation" accord seeking to "reward" Jordan for participation in the Middle East peace process, and to bring the country closer to Israel – were established across the country. In the first 10 years after their launch, the QIZs helped spike Jordanian exports to the U.S. massively, from a mere $15 million to more than $1.5 billion.
But little of this wealth and growth has trickled down to ordinary Jordanian citizens.
Per capita income actually decreased in the years since the conclusion of peace with Israel, and unemployment has grown. None of the proclaimed development projects (such as the Red Sea-Dead Canal) have yet been implemented and, contrary to initial expectations, the Palestinian market did not open up to Jordanian trade.
Disillusionment with peace has grown. Jordanians are asking: "Where are the fruits of peace?"
What are the reasons for this dreadful failure? On the Israeli side, Israel's political system failed to mobilize to push regional cooperation plans and peace, preferring to defer to the demands of domestic pressure groups. At the same time, excessive security measures inhibited Jordanians from coming to Israel in significant numbers.
On the other side, Jordan's overly apprehensive, suspicious and unhelpful bureaucracy stymied progress. Paradoxically, the same people who boycotted contact with Israelis because of their opposition to normalization, were often the loudest to complain when it came to the absence of a peace dividend.
Meanwhile, Jordanian business activity within Israel is still clandestine and extremely modest. The movement of goods between the two economies remains limited and is significantly down from about the halcyon days of 14 years ago when the QIZs were booming. Jordan exported goods to Israel worth $84 million in 2018 (inorganic chemicals making almost half of this total), while trade in the other direction amounted to a measly $71 million.
The primary requirement for a product to qualify for QIZ benefits is that Jordanians and Israelis must share in appraised value, with possible input by the U.S. or the Palestinians. Mandatory Israeli value-added in QIZ products was, therefore, behind the expansion of Jordan’s imports from Israel.
The silver lining for this economic disappointment wasn't about Israel: thanks to the QIZ, themselves a part of the peace dividend, Jordan emerged as a processing base for garments heading for the American market, and the industry became Jordan's largest export sector in the mid- to late-2000s.
One key message from the aftermath of this "economic peace" is that Israel’s share of the peace dividend pie is all too obviously far more significant than that enjoyed by Jordan. Despite 25 years of peace with Israel, Jordanians have not yet benefitted from Israeli expertise in industrial sectors that seem to be obvious candidates for cooperation, such as light manufacturing or technology.
Nor has Jordan benefited even indirectly from greater and more certain flows of foreign direct investment. On the contrary, these have actually declined over the period, rebounding only in the mid- to late-2000s.
For Israel, the outcome of the peace accord with Jordan has been totally different. It not only liberated Israel from being a pariah state in the region, it also brought with it enormous flows of inward foreign direct investment and opened up new trade vistas with Asia and other countries where the Star of David flag was banned for decades.
The difficulties are not confined to the economic field alone. Jordan made its peace with Israel soon after the conclusion of the Oslo agreement, in the expectation that a rapid resolution of the Israeli-Palestinian conflict was in train. That resolution was the basis of the legitimacy of Jordan's reconciliation with the Jewish state. Subsequent developments, however, especially after the assassination of Prime Minister Yitzhak Rabin in 1995, have taken a quite different direction.
The Jordanian public has been shaken by the lack of progress, even regression, in terms of Palestinian rights. Particularly harmful have been the construction projects launched in East Jerusalem, which Jordan regarded as violating not only the letter and spirit of Oslo, but also Israel's commitment to Jordan under Article Nine of the peace treaty. This has caused friction between the kingdom’s leadership and the Israeli government, eroding mutual confidence.
The only area that exhibits stability and confidence is that of security cooperation, where the two countries’ intelligence services appear to be in bed with each other.
Jordan cannot and should not base its economic future, or even a major stake of it, on economic relations with Israel. Even if the Jewish state opens up its market to Jordan on an equal footing to other countries, the fact remains that the kingdom has a very limited productive base; its economy suffers from low rates of GDP growth and high unemployment.
Change is only possible if Israel’s leadership wises up and goes for a just, lasting and comprehensive peace in the region. Otherwise, we may be in for yet more meager business activity, a lot more political frustration, and deteriorating bilateral relations across the Jordan River.
Marwan A. Kardoosh is a development economist with 20 years of experience working in the Middle East and North Africa
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