Jordanians divided on economic reforms

While foreign aid or IMF loans buy time for the country’s ailing economy, they also expose the government to political criticism locally.
Sunday 21/10/2018
Jordanian Prime Minister Omar Razzaz speaks during a news conference in Amman, last June. (Reuters)
At a crossroads. Jordanian Prime Minister Omar Razzaz speaks during a news conference in Amman, last June. (Reuters)

LONDON - Jordanian King Abdullah II vowed to crack down on corruption as the country faces a series of economic challenges. However, he did not spell out specific steps on how authorities would do that with Jordanians remaining divided on how to deal with the economy.

“All Jordanians have an equal right to justice and corruption will not be left unaddressed to become a chronic social illness,” King Abdullah said in a speech October 14 marking the opening of parliament.

“I hereby affirm that the state’s institutions are well capable of uprooting corruption and holding to account those who dare to encroach on public funds,” he added.

Jordan ranked 57th in Transparency International’s corruption perceptions index in 2017, down 11 places from the previous year. It has an unemployment rate of 18.5%.

King Abdullah acknowledged the government had made mistakes amid public “dissatisfaction with the way current challenges are being addressed.” He acknowledged “a weakening (of) public trust in government institutions, as well as an atmosphere of scepticism.”

“The process of development in Jordan, as in other countries, has been marred by some mistakes and challenges, which we must learn from, resolve and prevent from recurring, so that we may move forward,” he said.

Jordan, which relies heavily on foreign aid, recently received a $2.5 billion aid package pledge from Saudi Arabia, the United Arab Emirates and Kuwait. In 2016, the country took out a $723 million loan from the International Monetary Fund (IMF).

Thousands of Jordanians protested in June against an income tax bill, price hikes and austerity reforms, in addition to corruption. The demonstrations ended when the tax bill was withdrawn and Prime Minister Hani Mulki was sacked.

The king appointed Omar Razzaz prime minister. Razzaz announced a cabinet reshuffle on October 11 in a bid to push through IMF-inspired reforms. “We will pay a heavy price if we enter next year without a tax bill,” Razzaz told state television in September.

Trade unionists said Razzaz’s bill was a watered-down version of Mulki’s austerity measures. Razzaz’s plans divided commentators in Jordan.

“This cabinet reshuffle… can be said to have gone some way in restoring the faith of Jordanians that the Razzaz government aims to forge ahead with a national recovery programme based in reform,” wrote columnist Nermeen Murad in an opinion article in the Jordan Times.

In an opinion piece in the same newspaper, however, Hassan Barari, a professor of Middle Eastern politics at the University of Jordan, argued the opposite.

“Some still reiterate the same boring mantra ‘Razzaz is popular’ even when the public trust in the government and Razzaz has significantly dropped in recent polls,” he wrote.

“The current government has done nothing to address the pressing issues for Jordanians. Unemployment, poverty and inflation remain the key issues for the public. Sadly, the government puts the three issues on back burner and the cabinet reshuffle only reflects this conclusion,” he added.

“Some liberals in Jordan — who never experienced poverty and who do not care about the hike in prices — see Razzaz as a vehicle for realising their political agenda.”

The problem remains that reliance on foreign aid is not enough, observers said. “Like putting a Band-Aid on a gunshot wound, Jordan traditionally uses foreign aid to alleviate its short-term problems without addressing the root causes of its economic issues,” wrote Daniel Levin in the National Interest magazine.

While foreign aid or IMF loans buy time for the country’s ailing economy, they also expose the government to political criticism locally.

“Even as Hashemite leaders preach about economic independence at home, Amman has accelerated its reliance on external aid, turning to Riyadh and Washington during moments of crisis. In turn, activists are able to exploit the apparent hypocrisy to deepen public mistrust of the government and whip up a frenzy about alleged foreign influence over government policies,” wrote Aaron Magid in Foreign Policy.

“And that makes it all the harder for the government to enact the real reforms that could make Jordan self-reliant,” he added. “The problem… is that the Jordanian government has done such a good job preaching independence at home that accepting foreign aid and loans has started to come with a domestic political price.”

Nevertheless, Amman is searching for alternative options. Jordanian Minister of State for Investment Affairs Muhannad Shehadeh said Amman was looking to foreign investors for Jordan in addition to its “natural market” in Syria and Iraq.

“The truth is, we’ve lost our natural market in Syria and Iraq and it has been really tough for our exporters,” Shehadeh told CNBC in September.

“We have a growth map and in 2018 and 2022 there are certain projects that we need to start filling in and this is an opportunity to invite investors to have a look at… investments (opportunities),” he said.

Jordan is aiming to attract businesses by offering low tax rates. “Manufacturers can come and set up shop,” Shehadeh said.