Saudi Arabia, UAE and Kuwait step in to support Jordan over financial crisis
LONDON - Three Gulf Arab countries pledged $2.5 billion to provide an economic lifeline to Jordan after anti-austerity protests shook the Hashemite kingdom.
Saudi Arabia, the United Arab Emirates and Kuwait made the pledge June 11 following an emergency meeting hosted by Saudi King Salman bin Abdulaziz Al Saud and attended by Jordanian King Abdullah II, Kuwaiti Emir Sheikh Sabah Ahmad al-Jaber al-Sabah and Dubai ruler and UAE Vice-President Sheikh Mohammed bin Rashid al-Maktoum.
The aid package includes a deposit in the Central Bank of Jordan, World Bank guarantees for Jordan, annual support for the Jordanian government’s budget the next five years and financing for developmental projects.
This is not the first time Gulf countries stepped in to help Jordan during a severe financial crisis. In 2011, the Gulf Cooperation Council pledged $2.5 billion to Jordan over a 5-year period after “Arab spring” protests broke out in the country.
King Abdullah sacked three prime ministers in an 18-month period and adjusted parts of the constitution as a result. In 2016, Jordan was granted $723 million by the International Monetary Fund, to be paid back within three years, the conditions of which resulted in the recent protests. Similar scenarios have taken place in Egypt, Tunisia and Iran.
Just as in 2011, protests in Jordan resulted in political casualties, including Prime Minister Hani Mulki, who was in office for two years. His replacement, Omar Razzaz, immediately withdrew the proposed income tax bill at the centre of protesters’ complaints.
Jordan, with a national debt of $37 billion, has long depended on foreign aid for survival, with Gulf Arab countries taking on most of that burden. However, foreign policy decisions have led to tension with Amman’s traditional benefactors.
Ryan Bohl, Middle East and North Africa analyst at Stratfor, told Bloomberg News that Saudi Arabia and the United Arab Emirates stopped economic aid to Jordan last year because of Amman’s refusal to support some of Saudi Arabia’s regional policies. This was likely a reference to the war in Yemen, which a Saudi-led coalition is fighting, and the international Muslim Brotherhood movement, outlawed in Saudi Arabia and the UAE.
However, the GCC cannot afford Jordan becoming a failed state because of its strategic geopolitical position, help in resolving the Syrian refugee problem and the fight against the Islamic State.
Following the formation of Jordan’s new cabinet and Razzaz’s pledge to review the income tax proposal, protesters withdrew from the streets. However, demonstrations could re-emerge unless citizens’ demands for transparency and a crackdown on corruption are met.
“The crisis has underlined the need to carry out a review of political and economic policies as Jordan calls for a new election law that would allow for the formation of parliamentary governments,” wrote Osama al-Sharif in Al-Monitor. “Jordanians now want full transparency that would expose public corruption and mismanagement, which many blame for the piling up of foreign debt.”
EU foreign policy chief Federica Mogherini assured King Abdullah of continued international financial support, saying it’s an investment in an ally in the “most heated and difficult area of the world.”