Jordan in crisis as new Prime Minister takes control
Respected economist caught between calls for austerity and angry Jordanians who are taking to streets over price hikes and sense of uncertainty
With Jordanians continuing to protest against price and tax hikes – and the kingdom’s professional unions calling a two-hour general strike today – the Kingdom’s newly appointed prime minister faces some tough challenges in the days ahead.
Sworn in by King Abdullah on Tuesday, the widely-respected former World Bank economist Omar al-Razzaz will have to balance some powerful and competing demands.
On the one hand, there is an International Monetary Fund (IMF) austerity program, calling for cuts, while on the other there is a general public that now finds it difficult to meet some of its basic needs.
At the same time, too, “Jordanians have a sense that lower and middle-income citizens are paying the price for government mismanagement,” says the American University of Beirut’s Professor Rami Khouri. “They are fed up and feel politically marginalized, feeling they live in a system that doesn’t really care about them.”
The challenges are thus both financial and political – and come at a time when Jordan finds itself in the eye of a regional storm.
Conflicts on the country’s borders have closed off many of its trade routes, while declining international aid for Jordan’s massive Syrian refugee population places an additional burden on its creaking finances.
“All of these factors have been gathering together into a perfect storm,” says Amman-based political commentator and columnist Osama Al Sharif. “So there’s quite a bit of uncertainty now, about where we’re all heading.”
The current protests were triggered last week when the government of former Prime Minister Hani al-Mulki announced a new round of fuel price hikes. While these prices have been raised before, for many Jordanians, this was the last straw.
The country has been working under a succession of IMF programs in recent years, all of which have sought to pare back the kingdom’s large public sector deficit, which now stands at some 96% of GDP. A series of loans have been given by the fund, with these conditional on the government pushing through austerity measures.
Yet Jordan is in no great position to trim its economic sails. Its economy has long been dependent on its role as a stable trading hub, providing a small internal market, while also being a key transit corridor between the Mediterranean and Arabian worlds, the North African and Iranian.
Its political and strategic importance has also long been recognized by its Arab and Israeli neighbors, as well as by Western countries, who have long supported it financially and diplomatically.
Many Jordanian workers have also migrated to other Arab countries, notably in the Gulf, and have become a valuable source of overseas remittances for the Kingdom’s economy.
In recent times, though, economic support from Arab neighbors has dwindled, as the Gulf economies have themselves faced slowdowns, with declining oil and gas prices. More recently too, Jordan has backed away from supporting Saudi Arabia and the United Arab Emirates in their blockade of Qatar, alienating Amman from two of its traditional financial supporters.
The Gulf slowdown has also meant fewer Jordanians have been able to find work outside the country, while conflicts in neighboring Iraq and Syria have shut down frontiers and severed vital trade routes.
Those conflicts have also made Jordan a major destination for first Iraqi and then Syrian refugees. According to the UN High Commission for Refugees (UNHCR), Jordan has the second highest percentage of refugees to total population of any country in the world, at 80 per 1,000 inhabitants.
Despite international aid, providing for all these often-destitute people has also been a major burden on the economy.
At the same time, however, there is also a widespread feeling in Jordan that the economy itself is in need of major reform, with state finances lacking in transparency, and corruption rampant.
“People might put up with austerity if they think their money is being well spent,” says Joost Hiltermann, Program Director for the Middle East and North Africa with the International Crisis Group. “But here, that’s obviously not the case – things just break down and aren’t repaired.”
Thus, many Jordanians, spearheaded by the young, more educated middle classes and the professional unions, have taken to the streets. A proposed new tax bill also focused their anger, with demonstrators calling for this to be withdrawn and al-Mulki to resign. On Monday, they got their way.
Now, though, it remains unclear what the demonstrators – and the government – might do next.
“The protestors are largely leaderless,” Al Sharif says, “while the new prime minister faces a rather unbelievable task of having to maintain the IMF connections and meet the demands of the street.”
Yet Jordan does still have some cards to play. The new prime minister is well respected by both protestors and government and while a former World Bank man, “he is much more than that,” says Khouri. “He is a very capable guy and he well knows the economy’s weaknesses and what needs to be done.”
In addition, Jordan’s strategic importance in the region is also well known and recognized.
“If Jordan destabilizes, then Israel’s Palestinian problem increases dramatically,” says Hiltermann. Jordan has been the home of many thousands of Palestinians since they were first expelled from what is now Israel, back in 1948. “At the same time, the US needs Jordan as a buffer of stability in the region, while Saudi Arabia and its allies need Jordan in their conflict with Iran. No one wants instability.”
Yet, with demonstrations continuing, Hiltermann acknowledges that “this is a dangerous game. You can’t always control what happens – as we saw back in 2011.”
For now, though, protestors, the government, the king and Jordan’s allies will be waiting to see what the next few days will bring – and whether al-Razzaz will have the power to really tackle the country’s underlying problems.