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Saturday, January 26, 2013
Chairman of Gulf Research Center calls for GCC to provide massive aid to Jordan

Jordan between economic crisis and the GCC Responses
Dr. Abdulaziz O. Sager
Chairman Gulf Research Center

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.

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