Jordan has always been an important country in the Middle East in terms of its essential role in regional and international efforts to achieve a diplomatic breakthrough on the Palestinian issue, its partnership with the US, and its position as a host of refugees from all conflict zones in the Middle East. However, the emergence of new domestic and regional political dynamics and the negative impact of the coronavirus have catalyzed preexisting problems and paved the way for economic failure within the country.
Israel-Jordan Relations: From Peace Treaty to Annexation
On July 25, 1994, Israeli Prime Minister Yitzhak Rabin and Jordan’s King Hussein signed the Israel-Jordan peace treaty. The treaty terminated the state of war between the two countries and recognized “the present special role of the Hashemite Kingdom of Jordan in Muslim Holy shrines in Jerusalem.” Nevertheless, the treaty has been very unpopular in Jordan, as illustrated in the Jordanian government’s decision to avoid any public events during last year’s 25th anniversary of the agreement out of fear that any gatherings revolving around the accord would turn violent.
Despite the treaty, Israel has continued to increase its number of settlements in the Jordan Valley along the border between Jordan and the West Bank, in addition to West Bank and East Jerusalem. This trend has particularly accelerated in recent years under the Netanyahu administration. Netanyahu has now gone so far as to declare an election promise that his government would annex the Jordan Valley, thereby creating yet another challenge for Israeli-Jordanian state relations and harming Jordanian public perception of Israel.
The annexation, as a part of US President Donald Trump’s so-called “deal of the century,” means the occupation of Palestinian territories and an end to the dream of a two-state solution. Considering this, Jordanians and King Abdullah firmly reject the plan, articulating three ‘no’s,’ namely, ‘no’ to giving up Jerusalem, ‘no’ to dropping the right of return for Palestinians, and ‘no’ to the resettlement of Palestinians in Jordan. The Trump administration has also dramatically stepped up its engagement in discussions about the status of Jerusalem, going so far as to move the American embassy from Tel Aviv to Jerusalem.
In response to Netanyahu’s annexation announcement, the Jordanian Parliament voted to abrogate the $10 billion natural gas deal Jordan had signed with Israel in 2016. However, the Constitutional Court in Jordan has ruled that the parliament does not have the right to cancel this agreement. There are two mutually exclusive dynamics at work here; on the one hand, if annexation proceeds, demands to annul the unpopular gas deal will increase; on the other hand, abolishing the gas deal would deprive Jordan of the myriad benefits of a lucrative deal.
Destiny of Jordan: Destination for Refugees
Jordan has a long history of hosting refugees. Most Palestinian refugees, who began arriving in Jordan more than six decades ago, have been granted Jordanian citizenship. Yet the Jordanian political establishment fears that since the majority of Jordan’s citizens are of Palestinian origin, including the current Queen, an extreme right-wing Israeli government might one day declare that a Palestinian state already exists in Jordan. In addition to those granted citizenship, Jordan hosts more than 2 million registered Palestinian refugees. On top of this, the American invasion of Iraq in 2003 resulted in a new influx of refugees from Iraq, more than 67,000 of which still live in Jordan.
Recently, Jordan has been experiencing another refugee surge as a result of the Syrian Civil War. According to the UNHCR, more than 650,000 Syrians have been registered in the country, but their actual number is estimated at 1.3 million. Since Syria’s Assad regime appears to have prevailed in maintaining control over the country, it is unlikely that many Syrian refugees will return home any time soon.
Accepting waves of refugees from bordering territories, Jordan, as one of the smallest economies in the region and home to a few natural resources, has suffered from an economy stretched thin. Considering that more than half its refugees are young, it is not surprising to see that youth unemployment in the country rose from 28% in 2014 to 34% in 2019.
Economic Implications of the Coronavirus Pandemic
Jordan’s stagnant economy has been crippled by banking and currency crises for more than a decade. The country’s economic woes, illustrated in increasing unemployment, a decline in purchasing power, and a public debt of 95% of GDP, have led to intermittent, widespread protests from 2010-2012, 2016, and most recently again in 2018.
Jordan’s economy has worsened amid the pandemic. Although Amman took swift action to lock down the country and close its borders, this move came at a cost. Tourism has dried up. Last year, five million foreign tourists visited the country, but now, Petra, a World Heritage Site and the backbone of the country’s tourism sector, is closed to tourists. Remittances from Jordanian workers in the Gulf states have also seen a marked decrease.
To assist in the country’s structural economic reform and its economic recovery from the coronavirus, the IMF has approved continued support to Jordan in the sum of $1.3 billion.
The government’s finances are also heavily reliant on foreign aid. The US, as Jordan’s closest friend, provides the country with approximately $1 billion of funding every year, and in 2019 it received $1.2 billion.
However, the Trump administration has recently adopted a different approach towards Jordan, and as a result, US aid to the country may face limitations. The Trump administration has ignored the advice of King Abdullah on critical issues, such as the movement of the US embassy to Jerusalem, the Israel-Palestinian “peace plan,” and the official status of Jerusalem. Trump has also encouraged Israel’s annexation of the Jordan Valley.
Saudi Arabia and the Gulf countries are another source of financial assistance for Jordan, but their bilateral relations have been rocky as of late. Last year Saudi Arabia, Kuwait, and the UAE promised Jordan $2.5 billion in aid, yet much of this assistance still hasn’t been delivered. Saudi Arabia is angry that Jordan did not participate in the boycott of Qatar and that it withdrew its support of Saudi involvement in the war in Yemen. When considering these circumstances, in addition to the steepest decline of global demand for oil ever recorded, the Gulf states are less likely to help Jordan, whether willingly or unwillingly.
Jordan finds itself between a rock and a hard place as its economy cannot afford to alienate itself from the US and Saudi Arabia while also being against to jeopardize the two-state solution by supporting Trump’s “peace plan.” This situation causes some concerns, such as Jordan might accept the US “peace plan” in the West Bank in return for debt forgiveness. Nonetheless, the Kingdom is more likely to insist on the two-state solution.
Israel and the US should acknowledge that the death of the two-state solution is detrimental to Israel in the long run. For the sake of the economic survival and stability in Jordan, a lynchpin of Middle Eastern and Palestinian peace processes, the current US and Israeli administrations would be wise to abandon rambling one-sided peace plans and annexation claims.