Analysis |

Jordan Looks to Biden for a Warm Embrace and Lots of Cash

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People wait to receive a Pfizer vaccine at a vaccination center, in Amman, January 13, 2021.
People wait to receive a Pfizer vaccine at a vaccination center, in Amman, January 13, 2021. Credit: Raad Adayleh,AP

Maha Ali, Jordan’s trade and industry minister, has a plan to restore the kingdom to normal life. Last weekend, the Friday coronavirus curfew was canceled. The move followed a reduction in the curfew hours on weekdays, and breathed a little life into the largely shuttered commerce at the malls and on the streets, at the shops that have managed to stay in business and at the mosques.

The minister also gave permission for outdoor swimming pools to open (albeit not the most significant gesture given the stormy winter weather) and for horseback riding clubs to operate. In the plan’s second stage, set to start at the beginning of February, health clubs and hotel pools will also reopen. Then in March, in the third and final stage, movie theaters, billiard halls, amusement parks and convention centers and other public venues will also reopen.

For the owners of event and wedding halls, these good tidings may be coming too late. According to the chamber of commerce, there are approximately 1,100 such venues in the country, which directly employ 30,000 to 40,000 people and indirectly provide jobs for another 100,000. It’s an industry that also supports 27 manufacturing and service industries that have been drastically affected by the coronavirus crisis.

And this isn’t the only industry that is collapsing. Figures from the International Monetary Fund and the World Bank show that Jordan’s economy has shrunk by 5 percent in the past year. While the forecasts for 2021 do signal possible improvement, the question marks are numerous and troubling. More than 250,000 people in Jordan have been infected with the coronavirus. The country’s king, Abdullah II, was photographed getting vaccinated, but the vaccination campaign is not proceeding very smoothly, and it’s unclear how long it will last.

Any economic planning being done now is essentially guesswork or wishful thinking, since the government budget is based on a $3 billion deficit (in a total budget of $11 billion). The amount of financial aid that Jordan is expected to receive from Arab and European countries has yet to be determined. Fortunately, the U.S. Congress blocked President Donald Trump’s attempt to cut the annual $1.28 billion aid package by 30 percent that Jordan receives from the United States.

This week, King Abdullah flew to the United Arab Emirates to seek urgent financial assistance, while his foreign minister, Ayman Safadi, flew to the Saudi capital, Riyadh for the same purpose.

Jordanian King Abdullah II at a meeting in Amman with representatives of Egypt and Iraq, Jan. 2021.Credit: AFP

In 2018, both countries promised Jordan generous aid to help extricate it from a severe economic crisis that sparked mass demonstrations in the kingdom. In June of that year, in Riyadh, the Emirati crown prince Sheikh Mohammed bin Zayed Al Nahyan and a Kuwaiti representative promised to deposit $2.5 billion with the Jordanian central bank, to pave the way for five years of assistance from the World Bank. In the end, however, $1 billion was deposited and not much else was accomplished.

Jordan not only found itself in difficult economic straits. It also had to walk a very fine line between Saudi Arabia and the UAE, on the one hand, and Qatar on the other, after the Saudis, the UAE, Bahrain and Egypt imposed a suffocating economic blockade on Qatar.

Up to then, Jordan’s relations with Qatar had been close and beneficial. Roughly 40,000 Jordanians work in Qatar and send millions of dollars back home to their families. If Jordan were to have joined the boycott of Qatar, it would have put this financial conduit at risk.

Jordan decided to reduce its diplomatic representation in Qatar and to demand that the Qataris recall their ambassador. And trade over land with Qatar was halted because Jordanian trucks could not pass through Saudi territory to reach it.

Nevertheless, it was actually Qatar, which did not participate in the conference in Saudi Arabia, that made the most significant donation to Jordan, providing a $500 million aid package for investment and job development. A year later, in July 2019, Jordan decided to quit the boycott – to the dismay of Saudi Arabia and the Emirates – to restore its ambassador to Qatar and to receive Qatar’s ambassador in Amman. This month, after a reconciliation agreement was signed between Saudi Arabia and Qatar, Jordan resumed dispatching trucks and goods to Qatar.

The reopening of the land crossings between Saudi Arabia and Qatar and Saudi permission for trucks from Jordan to pass through Saudi territory to Qatar is crucially important for Jordan, but it’s not enough. Qatar is also prepared to increase the number of work permits it grants to Jordanians by 20,000, but that would also only make a slight dent in the situation, due to the number of Jordanians who have been forced to return home from other Gulf states due to the pandemic and plunging fuel prices.

Jordan requires a direct infusion of cash and massive investment to create tens of thousands of jobs. That would help address the country’s unemployment rate, which is more than 25 percent, and to reduce the incidence of poverty, which has surged by 38 percent in the past year.

Last March, the IMF provided Jordan with a cushion, in the form of a $1.3 billion loan, but with a national debt of 100 percent of GDP, and with the loss last year of over a billion dollars due to the coronavirus, it’s clear that without major economic reforms, Jordan will simply sink further into debt.

Demonstrators protesting price increases, Amman, Jordan, Feb. 2020.Credit: Muhammad Hamed/Reuters

The king is well aware of this, as is parliament, which last week was sharply critical of the policy of the government, which presented a hollow plan replete with declarations and lofty rhetoric. The plan was devoid of explanations as to where the money would come from to rehabilitate the economy, or how it will be divided and when Jordanian would begin feeling its effects in their pocketbooks.

The government needs to tread very cautiously in making its economic plans public, as they will likely contain unpopular measures such as higher fuel prices and cutbacks in government services. And all of this would be on top of major cuts in subsidies, which have been replaced by direct transfers to the needy. Each measure separately, but certainly all of them taken together, is a surefire formula for street protests and possibly civil insurrection. To date, nearly every attempt to raise fuel or bread prices has ended in government capitulation, after clashes with thousands of demonstrators have led to the replacement of the government.

Biden to the rescue?

Jordan needs a warm embrace with purse strings attached to ensure its stability. But when Trump was elected, he viewed it as a marginal country and saw no pressing need to accord it assistance or even respect. Washington ignored Jordan when it began its efforts to promote normalization between Israel and Arab countries, and Amman was not let in on the decision to move the U.S. Embassy to Jerusalem.

President Joe Biden on his first day in office, Jan. 20, 2021.Credit: Evan Vucci/AP

Trump’s son-in-law and senior adviser, Jared Kushner, didn’t even bother to visit the kingdom during his recent travels in the Middle East and King Abdullah hasn’t been to the White House in two years. No one spoke with the Jordanian monarch when Prime Minister Benjamin Netanyahu announced plans, since put on hold, to annex portions of the West Bank, despite the threatening implications that such a move would have had for Jordan.

Fortunately, Emirati crown prince Sheikh Mohammed bin Zayed Al Nahyan scuttled the plan when he conditioned normalization on the suspension – essentially the cancellation – of the annexation plan. One would hope that President Joe Biden, who has a good relationship with King Abdullah, gives Jordan its rightful due and also backs his friendship with generous financial assistance.

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