26. August 2019

Jordan’s Socio-Economic Woes and Foreign Policy

Employment, Trade, and International Cooperation – Policy Briefs from the Region and Europe

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.