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Abu Dhabi, UAESaturday 20 October 2018

UAE extends a helping hand to Jordan and Bahrain

Economic support to both nations is based on loyalty and a sincere wish to see them prosper once more

The Bahrain economy has been suffering since oil prices tumbled in late 2014. Reuters
The Bahrain economy has been suffering since oil prices tumbled in late 2014. Reuters

In the past week, the deep bonds of solidarity between Arab states have been on clear display. On Thursday, the UAE, Saudi Arabia and Kuwait followed through on promises made in Makkah in June by supporting the troubled Jordanian economy with a $2.5bn financial assistance package that will see the three Arab states act as Jordan’s guarantors to the World Bank.

With national debt lingering around 95 per cent of GDP, high unemployment and popular unrest spilling onto his country’s streets earlier this year, Jordan’s King Abdullah II expressed his sincere appreciation. It was an act of supreme generosity, underpinned by the natural impulse to help neighbours and friends in need.

And it did not stop there, as Kuwaiti, UAE and Saudi finance ministers then flew to Bahrain, where they pledged $10bn in financial support for a comprehensive economic reform package that will balance Manama’s budget by 2022.

At a time of great flux for the Middle East, warm ties between Arab states are central to hopes of regional stability and prosperity.

Behind the economic contributions is an implicit understanding that Jordan and Bahrain are victims of circumstances beyond their control. In recent years, conflict in its immediate region has choked the Jordanian economy.

The war in Syria is case in point: Damascus was one of Jordan’s largest trading partners, but now imports little, while the Syrian conflict has pushed more than 700,000 refugees into Jordan.

Given that just three per cent of Jordanians pay income tax and unemployment is high, meeting the refugee burden has been difficult. Meanwhile, Bahrain’s economy, the smallest in the GCC, was hit hard by declining oil prices in 2014.

That is why demands of sound financial reform are at the heart of any financial assistance the trio provides. In Bahrain that constitutes a plan to diversify away from oil, while in Jordan it is long-term structural reforms, infrastructure building and development projects.

That does not diminish the spirit of benevolence underpinning loans of this kind, but demonstrates a desire for both nations to be self-sufficient in the long-term.