Jordan’s Economic Crisis and Its Geopolitical Ramifications

The current economic crisis facing Jordan is not new. Jordan’s economy has been on a downward spiral since the Arab Spring, even the protests in Jordan during the Arab Spring were fuelled by the high rates of unemployment and the widening gap between the rich and poor. The urban life in Jordan is a stark contrast from the tribal system that pervades the rural life. The effects of the current economic crisis are more visible in rural areas, where poverty, unemployment, and political restlessness have worried the political elites of Jordan. The current economic crisis is due to the compounding national debt that stands at nearly 40 billion dollars, which has nearly touched the GDP value of Jordan. Also, its debt-to-gross-domestic-product ratio has reached a record 95%, up from 71% in 2011. The Arab allies (UAE and Kuwait) of Jordan have rushed in to help Jordan under Saudi Arabia’s leadership where the “Mecca Summit” was held last week. The objective of the summit was to finalize a deal over providing a durable aid package to Jordan. The Mecca Summit resulted in an aid package of 2.5 billion, that will be gradually infused in the Jordanian economy over a period of five years, which includes a deposit in the Jordanian central bank, World Bank guarantees, budgetary support over five years and financing for development projects.



Critical domestic scenario

A precarious economic situation in Jordan has also resulted in an internal political upheaval in Jordan where persistent protests against the tax hikes concluded with the removal of the Prime Minister Hani al-Mulki. King Abdullah was quick to make a cabinet shuffle as he is also wary of losing his popular legitimacy, moreover since the Arab Spring. Recently, the leader of Bani Sakhr tribe Fares Al Fayez was arrested for publicly calling for the ouster of King Abdullah. The resentment against the establishment came to the fore in the large-scale protests. The political significance of these protests is that the Jordanian people were willing to hit the streets against the anti-people policies. However, there is no immediate danger to the throne, though King Abdullah has attempted to portray himself as the people’s king by making timely interventions to redress their grievances. However, such an approach from the King doesn’t address the root causes of the politico-economic problems faced by Jordan. There is also a persistent danger of homegrown Islamist extremism, and there is a possibility of Islamists hijacking the “anti-governmental” sentiments among the Jordanian people. Also, a weak Jordanian state would be a doom for peace and stability in the region, in the context of the Syrian crisis, given that the Syrian crisis has spilled over to neighbouring countries due to large-scale displacement and the refugee influx, along with the terrorist operatives perpetrating cross-border terrorist attacks in the Syrian neighborhood. Hence, the “Politico-Economic” turmoil in Jordan could carry severe political risks for the whole region at this juncture of history. After the Arab Spring, a series of state collapses in West Asia has resulted in unsuccessful transitions of political power, since the vulnerable situation has been exploited by the “Militant Islamists” trying to consolidate themselves through state power.



Geopolitical ramifications

In lieu of a cold-war like situation between Saudi Arabia and Iran, and the heightened tensions between Qatar and Saudi Arabia, it became a dilemma for Jordan with regards to engaging Qatar and Iran. As Jordan’s economy is failing, Jordan has toed the Saudi line in imposing the blockade on Qatar and opposing Iran’s geopolitical ambitions. Such a scenario may create a systemic pressure over Jordan to soften its hardline stand against Iran and Qatar. Moreover, it was Qatar that first approached Jordan with an economic aid proposal by the Qatari Emir Sheikh Tamim Bin Hamad Al Thani and Jordan did reciprocate to the Qatari aid proposal but in a hushed-up manner, in order to avoid Saudi skepticism. A couple of days after the Mecca Summit last week, the Qatari foreign minister and finance minister arrived in Jordan with a declaration of a 500 million-dollar investments and a promise to create 10,000 jobs in Jordan. Hence, it has become apparent that Saudi led blockade of Qatar has run into troubled waters. It is also a sign of a downgrading of Saudi Arabian leadership in the region.


The systemic pressure created on Jordan by its politico-economic turmoil will only increase if the structural reforms in the civil administration are not initiated soon. It is because Jordan has failed to evolve as a modern state, where the tribal system still reigns supreme outside the jurisdiction of the state. The tribes play a major role in providing the king with political legitimacy. If the dissenting tribes turn violent and the dissent becomes major then it would be very difficult for the King to hold onto power. It may result in another civil war and state failure in the already turbulent West Asian politics, and an opportunity for the militant Islamists for wreaking havoc on the neighbouring states.



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