Fortune in adversity.

Author:Album, Andrew
Position::Jordanian economy
 
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For many years, the Jordanian economy had to rely on handouts from foreign governments and the remittances of Jordanians working abroad. The Kuwait war signalled an end to all that but, as Andrew Album writes, rather than creating an economic collapse, it could well sow the seeds for a prosperous future.

The invasion of Kuwait by Iraq in 1990 was a nightmare come true for Jordan's King Hussein. Fearful of Saddam Hussein and fully conscious of the fact that Iraq was his country's principal trading partners, an impossible dilemma confronted the Jordanian monarch. Could he keep his fellow Arabs appeased without incurring the wrath of Iraq, knowing full well that Baghdad was capable of swallowing his kingdom almost as easily as it had devoured Kuwait? It was a "no win" situation for Amman and the neutral path it tried to follow won it no friends. Rather, it aroused intense anger amongst the Gulf states such that 350,000 Jordanians working in the area were summarily expelled from their host countries and the flows of aid from the oil-rich states of the region were stopped.

Foreign aid and the remittances of overseas workers were the lifeblood of the Jordanian economy. The country is almost devoid of natural resources, possessing no oil, virtually no minerals, suffers from a chronic shortage of water and an absence of the raw materials which are required to support heavy industrialisation. As one economic report on the country concluded, these natural constraints, coupled with the fact that Jordan had to devote a major proportion of its available resources to the military establishment, made Jordan dependent on foreign aid to survive. "Without such financial aid", agrees Hani Abu Jabarah of the Cairo-Amman Bank, "Jordan would not have been able to bridge the gap between its needs and its resources."

Several years later, economic ruin is not evident on the streets of Amman. Indeed, the World Bank considers Jordan to be an emerging market and several of the world's largest investment houses would appear to agree, with increasing interest being shown in the country's nascent stockmarket.

Furthermore, says the Israeli economic commentator David Rosenberg, "the kingdom may be better positioned than Israel to take advantage of the Middle East peace dividend." The country stands to reap handsome dividends not only from a reduction in military spending, but also from increased regional trade and from the eventual return of Iraq, formally its largest trading partners,...

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