Consideration to geostrategic pulse 261 - Jordan – NO to instability!

Jordan – NO to instability!
Corneliu PIVARIU

The end of May, 2018 was marked by strong and wide street protests in the Hashemite Kingdom of Jordan after a period of several years in which Jordan was the most stable country in a unstable region. Their amplitude and, at the same time, the attention King Abdullah II pays to the domestic situation was proved by the resignation of the prime minister Hani al-Mulki and by the royal decree appointing the minister of Education  Omar al-Razzaz to form a new government.

Razzaz, who formerly worked with the World Bank, succeeded in forming the new government (16 of the 28 ministers kept their portfolios), a government  that took the oath on June,15th. The prime minister’s resignation, as well as forming a new government and even snap elections were steps taken frequently in a usual manner by the Hashemite ruler in order to defuse some domestic situation crises. Furthermore, only between May, 2016 and March, 2018, the Jordanian government was replaced six times.

The crisis was triggered by the steps taken by the government in order to cut the budget deficit and to disburse the loan the International Monetary Fund granted in 2016.  The steps were meant to bring in new taxes (10% for some agricultural products previouly exempted from such taxes) as well as cancelling the subsidies on more than 150 other goods and products. In fact, the protests against the increase of  bread price begun already six months ago, although with a lesser amplitude.

Jordan’s economy was strongly affected by the regional crises, by the blockage of the commercial routes as a result of closing certain borders, of discontinuing Egypt gas deliveries and mostly by the important inflow of Syrian refugees, numbering 660,000 officially, but 1.5 million according to unofficial data, who created huge logistical problems and pressures on the labor market when the unemployment rate exceeds 18%, the highest in the last years, and the percentage of poor reached 14.4%.

The current government is made up to a great extent by conservative technocrats and a small number of liberal ministers and it is estimated they are not cohesive enough. The appointed deputy prime minister, Rajai Muasher, is a banker and an important businessman, follower of the predominant role for the private sector in the economy. Yet the government cannot have a predominant role in solving Jordan’s economic situation. It is the wise Jordanian monarch and the foreign support he can catalyse that may  alleviate the situation. On June 10th, Saudi Arabia, the United Arab Emirates and Kuwait decided at a meeting in Mecca to grant Jordan financial assistance of $2.5 billion to Jordan covering a five years period consisting of direct transfers to the Central Bank of Jordan and financial guarantees. The economic analysts estimate the grant will help – for a certain period – the troubled Jordanian economy. In fact, the farsighted Abdullah II  assessed that: “the international assistance for Jordan fell sharply in spite of the difficulties we are faced with as a result of the Syrian refugees problem. Jordan is confronted with an economic crisis and with unanticipated regional changes. No plan can solve these challenges quickly and efficiently”.

Jordan is particularly important for the current developments in the Middle  East and especially in Syria, it is an important USA’s ally that deployed around 2,800 military in Jordan with different missions, including handling Patriot missiles, it was a major logistical and not only hub in fighting Daesh from Muwaffaq Salti airbase, too. As of 2013, the USA granted Jordan defense loan guarantees amounting to $3.75 billion and in February 2018 a memorandum increasing the assistance by $1.27 billion yearly for the coming five years was signed.

Jordan needs a clear solution on a long term for its economic problems, something it can secure only with its allies and friends who should heed this purpose. A major instability in Jordan should be avoided as it may have unwanted and difficult to predict consequences for the entire Middle East.

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