Jordan’s Socio-Economic Woes and Foreign Policy
Grievances have been growing over Jordan’s socio-economic and political problems, including high public debt, a significant current account deficit, and high unemployment. In June 2018, former Prime Minister Hani al-Mulki was forced to resign after mass protests swept the country in response to a new income tax law proposal. Jordan’s socio-economic challenges are further augmented by its challenging neighborhood.
This includes the conflicts in neighboring Syria and Iraq, the threat posed by extremist actors in the region as well as the impact which the Gulf Cooperation Council’s crisis over the blockade of Qatar has had on Jordan. As a result of these developments, Jordan has been facing a significant influx of refugees on the one hand, and a more difficult environment to conduct trade and attract foreign direct investment (FDI) on the other. In addition, the US’ announcement of the so-called “Deal of the Century” for the Israel/Palestine conflict has heightened concerns in Amman that a two-state solution to the conflict may no longer be a viable option. This would have serious consequences for Jordan, which currently hosts more than two million registered Palestinian refugees. Given the strategic importance of Jordan, it is in the European Union’s own interest to support Jordan and ensure that the growing socio-economic challenges, as well as the various regional challenges, do not lead to a (further) destabilization of the country.
This edited volume brings together papers written by the participants of the workshop series “Promotion of Think Tank Work on Socio-Economic Reforms and Jordan’s Foreign Policy”, held in Berlin in April and in Amman in June 2019. The workshops were conducted as part of DGAP’s project on strengthening think tanks and similar institutions in the Middle East and North Africa (MENA) region and in Europe. The authors analyze key challenges to Jordan’s socio-economic development and assess potentials for improved cooperation with the EU, while a smaller faction discusses the implications of regional developments. The volume offers recommendations for the Jordanian government as well as the EU and its member states.
Among the recommendations are the following: High energy costs are a key factor hindering Jordan’s economic growth and the competitiveness of its companies on the international market. The Jordanian government should, therefore, further support the development of renewable energy sources and prioritize decentralized, small-scale renewable energy systems to achieve energy security and reduce energy costs. In addition, targeted policies to improve employment are considered crucial to foster socio-economic development. These include more inclusive flexible work schemes, state-sponsored employment programs and greater stimulation of Jordan’s entrepreneurial potential through simplified business registration procedures, easier access to financing for micro, small and medium enterprises (MSMEs), and incentives for MSMEs to grow and formalize their businesses.
The EU should support Jordan’s economic development through different means, e.g. by supporting vocational training programs and private sector employment as well as by enhancing the bankability of small and medium enterprises (SMEs) and startups. In addition, Brussels and Amman should encourage more Jordanian producers to make use of the EU-Jordan Free Trade Agreement as this would benefit the country’s economy. At the same time, the EU should set incentives and use development programs as leverage to achieve better cooperation by those political forces in Jordan which currently undermine socio-economic reform efforts. To do so more effectively, the EU should improve its understanding of political processes in Jordan by combining political economy analysis (PEA) with elite research. As Jordan’s socio-economic situation is also strained by the presence of a very large number of refugees, the EU and its member states should facilitate the resettlement of refugees by granting humanitarian visas. The support of the EU and the international community is even more pressing in light of the US administration’s announcement that it will defund the United Nations Relief and Works Agency for Palestinian Refugees in the Near East (UNRWA). As UNRWA has been essential in alleviating the impact of hosting a vast number of Palestinian refugees in Jordan, Amman should work with the international community to secure funding for UNRWA to counter-balance the US’ funding cut. Since a two-state solution to the Israel/Palestine conflict appears increasingly unlikely, Jordan should develop a plan to respond to the circumstances. As part of this, it should increase cooperation with other Arab states, seek the blessing of the Arab League and the Islamic Conference Organization to recognize the Palestinian passport as a Jordan’s Socio-Economic Woes and Foreign Policy travel document for all refugees, and reduce bilateral relations with Israel.