It’s perfectly understandable that here in Israel we can look on at the collapse of the Lebanese economy with studied indifference. That’s the plus side of being in a perpetual state of war with your neighbor. All Israel needs to do is sit back, relax and watch as the situation goes from bad to worse and Hezbollah twists in the wind.
Unfortunately, a similar dynamic is developing in Jordan, which is also next door to Israel, but isn't an enemy state. The economy is deteriorating and it’s by no means clear that King Abdullah has any plausible strategy for coping with the problem. Yet, Israel seems to relate to it like another Lebanon, so near and yet so far, and not our problem. If anything, Prime Minister Benjamin Netanyahu may be making matters worse for the king with his talk of annexing the Jordan Valley, in his desperate effort to stay in power by appealing to rightist voters.
In terms of economic distress, in many ways Jordan looks like Lebanon. Its economy has been growing so slowly for the last decade that GDP per capita has actually shrunk. Its debt is 94% of GDP, less than Lebanon’s 150%-plus but dangerously high. Unemployment is in the double digits and both economies depend on bloated public sectors to provide make-work jobs. The Syrian war has taken a toll on both, cutting off trade ties and flooding them with refugees who have to be housed, fed and cared for. Lebanon is hosting 950,000 and Jordan 650,000.
But there are critical differences. The Hashemites – Abdullah and his father Hussein – have done an admirable job of keeping Jordan stable, in an area of the world where stability can’t be taken for granted. Jordan is no democracy, but they practice an acceptable form of autocracy-lite (the Economist’s 2018 democracy index names it the most democratic of the Middle East’s authoritarian regimes. Way to go, king!) That gives it an important edge over Lebanon’s deep corruption and patina of democracy.
Lebanon’s edge is a strong human capital base that could eventually emerge if the political system reforms itself. Jordan lacks that or any significantly natural resources that could compensate for its absence. On the other hand, Jordan has geopolitical importance as a Western ally, which the Hashemites have leveraged quite successfully by squeezing foreign assistance from the U.S. and the Gulf states on a regular basis.
The problem with this strategy is that aid tends to materialize when it's most needed. For instance, the Gulf powers pledged $2.5 billion to Jordan after mass anti-austerity protests in May 2018. But when things calm down, the aid grows scarce.
More critically, foreign aid can’t substitute for an economy that actually produces goods and services, and creates productive jobs. Jordan’s aid addiction has not just left it with paltry economic growth but an unemployment rate of 19% as of the second quarter, even though it has one of the world’s lowest rates of working age people in the labor force.
Worse still, Jordanian workers are growing even less productive over time as the country’s private sector and small, inefficient firms increasingly dominate the employment market.
Israel can’t afford to remain indifferent to the situation. The Hashemites have been around for a century, so it’s easy to take their continued rule for granted: Prime ministers come and go in Jordan with remarkable frequency, but the king remains and his citizens are loyal.
That dynamic, or most accurately inertia, may change under the pressure of a failing economy. But the odds are that change will not only fail to benefit Jordanians but put in place a regime hostile to Israel.
What can Israel do? As a $350 billion economy nearly nine times the size of Jordan’s, we are in a position to act. We’ve done it in small ways, but none of the really big schemes that were supposed to grow out of the 1994 peace accord ever got off the ground, either due to Israeli indifference, Jordanian hostility or economic unviability. Even the plan to export Israeli natural gas to a Jordan desperate for energy is a precarious affair due to grassroots opposition.
Israel should be promoting bilateral economic ties not with aid but by promoting business. A good start would be getting the Red-Dead canal project off the ground after years of waffling.
Israel may be right that linking the Dead Sea to the Red Sea would bring it little if any economic benefit. But whatever its ills, the project is supposed to bring desalination to desperately thirsty Jordan and hydroelectric power too, helping the kingdom to survive. It could help avert the scenario of Jordan sinking into chaos.
On another front, Israel’s high-tech companies should be outsourcing to Jordan wherever they can. Israel’s low-skilled sectors like hotels and restaurants could be importing more Jordanians, much like Eilat hotels already do. The construction industry could substitute Jordanian workers for Chinese at building sites.
There’s no shortage of obstacles, like Israel’s security concerns about so many Jordanians working in Israel and the deep hostility of many Jordanians to any economic ties to Israel. But it’s in the deep interest of both countries to swallow their anxieties, because the alternative is so bleak.
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