The Jordanian economic dilemma was perfectly encapsulated on the first day of the World Economic Forum on the Middle East and North Africa last week.
As the government’s press aides were putting the finishing touches to releases that unveiled US$13 billion of investment in the country, and opportunities for $20bn more, an expert in the geopolitics of the Levant was gloomily forecasting years of protracted strife and recession such as devastated Europe at the end of the Second World War.
The gap between Jordan’s best intentions and the realities of the country’s situation could not have been more clearly illustrated. Just when the Jordanians appear to have things going their way, the economy of the street intervenes. It’s hard trying to be the good guy in a rough neighbourhood.
The country had no shortage of advocates at the forum. Such UAE luminaries as Mohamed Alabbar and Gerald Lawless spoke of the investment opportunities Jordan offered. Bankers and private equity investors similarly talked up the prospects.
They were all in basic agreement with the IMF’s most recent verdict on Jordan, to the effect that “growth is holding up, inflation is low, the current account deficit is narrowing, international reserves are at a comfortable level, and the banking system is robust”.
The favourable economic winds have been reinforced by the government’s own laudable efforts to give the country a long-term strategy for economic growth. The “Jordan 2025” blueprint launched by King Abdullah II a few weeks ago commits the country to an ambitious plan to hit 7.5 per cent annual growth in GDP in 10 years, more than double the current rate. Reductions in poverty and unemployment, and a big increase in the female workforce, are part and parcel of the blueprint.
The consensus of the economic experts at the forum was that if the big investment projects come off – totalling in value about half of current GDP – Jordan has a fighting chance of reaching those targets.
To do that would be a real achievement for a country that lacks most natural economic resources. Even water has been in dispute with its neighbours on the other bank of the Jordan river. It has some shale oil reserves, but these are so far under-exploited with the result that it imports 97 per cent of its energy requirements.
Many of the potential opportunities on offer were in the energy sector. But current low oil prices, while benefiting Jordan's balance of payments, do not encourage orthodox energy investment. Solar, nuclear and other renewables figure high instead. The royal family signalled its "green" energy credentials by announcing orders for fleets of electronic cars.
Beyond energy, most investment opportunities in Jordan are in infrastructure and construction, with some also in information technology and tourism.
There was also some talk of financial services investment, with at least one speaker tipping Amman as a potential “Dubai of the Levant”. This seems overoptimistic, and in any case the real Dubai already serves the financial needs of the Levant in most respects.
But in the end the economic ambitions of Jordan’s policymakers could be reduced to nothing by the political and social storm raging around it. Jordan shares borders with three of the most problematic countries in the world – Syria, Iraq and Israel – and while it has learnt to live with the aggressive neighbour to the west, the dangers from north and east are growing every day.
The economic strain is starting to tell as regional trade becomes almost impossible. The last official crossing into Syria was closed a few weeks back; the fall of Ramadi in Iraq blocks the road between Amman and Baghdad.
Refugees from both conflicts – comprising perhaps 20 per cent of the Jordanian population – are putting an increasing strain on the country’s public finances and distorting its economy.
In these circumstances, Jordan will continue to look to outsiders for help to ride out the storm. The IMF is continuing to give financial support, while the contribution from friends in the Arabian Gulf was acknowledged several times at the forum, and will remain essential.
Jordan’s economic ambitions and the plans of its policymakers are admirable. The question is whether they will be allowed to proceed.
fkane@thenational.ae
Follow The National's Business section on Twitter
