ECONOMY-JORDAN: Peace Dividend Brings no Gains

By Emad Mekay Reprint | | Print |

Emad Mekay

AMMAN, Jul 4 2003 (IPS) - Eight years after Jordan was promised prosperity for signing a peace deal with Israel, many find that economic conditions have worsened.

"We were promised floods of money and rivers of milk and honey," says Hassan Haider, bureau chief of al-Quds Press, one of the few independent news agencies in the Arab world.

"We were told that the very rich citizens of Kuwait would come to work for us as taxi drivers," he says. "But with the exception of a few businessmen, Jordanians are much worse off than before."

The United States brokered a peace agreement between Jordan, a small Arab country that emerged from the post-World War I division of the Middle East by Britain and France, and Israel in October 1994. This was held up as a model for future peace agreements between Israel and its other Arab neighbours.

The governments of the United States, Israel and Jordan all joined in a chorus promising Jordanians unprecedented prosperity as a peace dividend. King Hussein who was the ruler then, made the promises to market the agreement to his people, half of them of Palestinian origin who came to live in this desert kingdom after many wars with Israel.

Israeli, U.S. and Jordanian officials all said that peace would stimulate economic growth through a flow of investment into Jordan, cancellation of public debt owed to the U.S., and subsequent reduction of the remaining foreign debt.

The officials said Jordan Valley would be developed through cooperative ventures, and the country would become a commercial gateway to the Arab world. People were promised technological advances, modernisation of the administrative system, and decentralisation.

The prosperity promise was so convincing that even the Islamist opposition, which sees Israel as an occupation force, brushed its fears aside in hope of an economic payback.

The idea of a prosperous future resurfaced last week during the three-day meeting of the World Economic Forum, which brings together economic and political leaders to map out common interests.

"Economic reform and freer trade" was the prescription U.S. Secretary of State Colin Powell held out for the Middle East. "That is a combination that works in Jordan, a combination that we want to spread throughout the Middle East," he said.

But Jordanians, who now count nearly five million people, say they live with harder economic realities than before, starting from higher prices as result of trade liberalisation to lifting of subsidies on basic goods.

They also complain of higher taxes while salaries remain the same. Unemployment has risen, and there have been no marked reforms to bureaucracy.

The Jordanian government introduced sweeping changes two years ago as the United States drew the country, which borders Israel on the West and Iraq on the East, further into its orbit.

The pension system is being overhauled to reduce liabilities. Taxes are higher on certain goods and services. The privatisation programme has accelerated to cover most remaining public sector enterprises, including cement companies and oil refineries. The government has sold 34 of its 40 major transport, electricity, water, and telecommunications companies.

Under King Abudllah II who succeeded his father to the throne in 1999, the government has increased electricity tariffs, and extended the general sales tax to petroleum products.

The World Bank has acknowledged that he highly acclaimed growth rate of 4.7 over the last two years, which the Jordanian and U.S. governments present as evidence of an economic boom, has not translated into a proportionate increase in jobs, or into poverty reduction.

Official estimates place 12 percent of the population below the poverty line, but several Jordanians believe the figure could be three times higher. The World Bank says unemployment stands at least at 15.5 percent, and that deep pockets of poverty remain.

Per capita income has remained around its 1984 level of 1700 dollars. The much-touted Qualifying Industrial Zones that manufacture goods for export to the United States free of quota restrictions and tariffs as long as they include a mandatory input from Israel, have turned into sweatshop-like textile assembly lines.

Half the labour in the zones comes from foreign countries, mostly from South Asia, and few economic benefits trickle down to Jordanians.

"The government and the Americans keep on making promises," says Firas al- Jabri, an employee with Amman municipality. But he says peace with Israel simply means that his country is open for more products from Israel.

Economists, activists and regional experts increasingly share this view. Ibrahim Alloush, a Jordanian activist and writer, says the United States is working to increase Israel’s influence and trade in the region, with little benefit for Jordan.

"Jordan’s experience with U.S.-led free trade, peace and development is a model of warning for the rest of the region," Pete W. Moore who teaches political science at the University of Miami in Florida wrote in the publication of the Washington-based The Middle East Research and Information Project (MERIP). "The effort to link trade and peace negotiations in Jordan has failed."