x Abu Dhabi, UAEFriday 19 January 2018

Upheavals highlight tension between Jordan's Palestinians and 'East Bankers'

Investment in Jordan's public sector will create jobs for indigenous citizens but may hurt the private sector, run mainly by naturalised Palestinians.

Jordan's high unemployment rate of 14 per cent was one of the triggers for public protests earlier this month.
Jordan's high unemployment rate of 14 per cent was one of the triggers for public protests earlier this month.

AMMAN // Like Yemen and Bahrain, Jordan recently has been shaken by popular protests stemming from rising food prices and high unemployment, especially among the young.

Yet the upheaval in Jordan also reflects a factor peculiar to the country - namely, its delicate demographic balance between indigenous tribes, known as "East Bankers", and Palestinians who have emigrated to Jordan in the past six decades and have received Jordanian citizenship.

Figures from a recent census have been kept secret, but most people agree that Jordanians of Palestinian origin now represent a majority and may even number as much as 70 per cent of the country's estimated 6.4 million people. This demographic divide has an economic dimension.

Traditionally, East Bankers have dominated the public sector, while Palestinian Jordanians commanded the private sector. This arrangement worked well until the late 1980s, when a financial crisis brought in the International Monetary Fund, which demanded that the government privatise parts of what was then a very large public sector. Jordan began selling off its profit-making state-owned companies and reducing the workforce in its government ministries.

Ismail Adbul Rahman, a professor of economics at the University of Jordan, said: "I think the main objective was to deal with the rising deficit and the rising public debt. The second thing was that this was a way of at least alleviating the growing gap between strata, between classes in Jordanian society."

Today, as a result of the changes in economic policy, Amman is dotted with start-up enterprises, many of which are being steered by young Palestinian Jordanians. At the offices of Kharabeesh, an Amman-based animation start-up, young, hip designers sit in front of their Apple computers designing cartoon characters or developing animation sequences. Started three years ago by four friends in their 20s, Kharabeesh is a classic product of Jordan's past 20 years of economic liberalisation.

Co-founder Wael Attili, 32, a Jordanian of Palestinian origin, who benefited from Jordan's recent reforms, which fostered private business, said: "There are so many rules and regulations that happened along the way that helped people to stabilise their businesses, to open their businesses - so there is a huge effort to decrease the amount of taxes that we pay."

He started Kharabeesh in 2008 and already has broken even. This year the company projects it will make US$700,000 (Dh2.57m) in profit. The firm has so far created 15 jobs and reflects the kind of entrepreneurial spirit much needed in Jordan, where the unemployment rate is at 14 per cent.

"The market is really changing, really rapidly, and the private sector is changing with it," Mr Attili said. "If the government works alone, they cannot follow the steps of this change. They need the partnership of this private sector."

But given Jordan's history, that is easier said than done. The demographic anxiety among East Bankers has caused them to see Jordan's recent pro-private sector economic policy as an attack on their welfare, in favour of the Palestinian population.

East Banker Mohammed Snaid, 34, who used to work in the Ministry of Agriculture but lost his job last year, said: "The companies that are owned by the state, they are selling them to the private sector and, because of that, many people are losing their jobs. Selling the governmental companies to the private sector is about selling the companies that the people of Jordan own to rich people."

It is this view that recently brought him out to the streets to demand change. He joined protests that sprung up over the past weeks, inspired by the uprisings in Tunisia and Egypt.

East Bank Jordanians like Mr Snaid are a key base for the monarchy and the cabinet. They occupy most of the crucial positions in government and the security services and are therefore integral to the maintenance of stability in Jordan.

To stave off an escalation of the protests, the king has responded to their demands. Earlier this month, he fired his cabinet, replaced his pro-privatisation premier, and promised to invest US$125 million in the public sector.

Mr Rahman, the University of Jordan economist, said: "There is a lot of pressure on the government to hire more and more, at least to lessen the tension and to reduce unemployment."

But Jordan is facing a $20 billion debt. The problem for King Abdullah now is that to pay for the reforms he has promised his East Bank constituents, he will most likely have to increase the taxes that have been slashed in recent years to promote private enterprise.

While this may cool tempers, it will be of little help to Jordan's ailing economy, and that is something analysts say might cause more protests if there is no improvement.