Published October 18th, 2000 - 02:00 GMT





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e - Al-Bawaba forecast 







Political Outlook  


Following the resignation of Prime Minister Abdur-Ra’uf S. Rawabdeh in mid-June, King Abdullah selected two-time Industry and Trade Minister Ali Abul Ragheb, aged 54, to form a new government. Jordan’s economic team, led by Finance Minister Michel Marto and credited with guiding the country through demanding economic and financial reforms, will remain intact. Ragheb, who for the past year has chaired the Lower House Financial and Economic Affairs Committee, should work closely with Marto to carry forward the process of liberalizing the Kingdom’s economy. Among the new cabinet faces are Jawad Hadid, general manager of the Arab Banking Corporation, who is the new Minister of Planning and Wasif Azar, director general of Al Ahli Bank, who is the new Minister of Trade and Industry. 


Rawabdeh’s capitulation marked the end to a strained 15-month tenure in which his authority was frequently challenged. Earlier in his term, the former Premier faced charges that he knew of bribes solicited by his son, Issam. Mahmoud Kharabsheh, head of the House Legal Affairs Committee, alleged that Issam had demanded a $21 million bribe from two Gulf nationals who sought to invest $100 million to construct a tourist village near Queen Alia Airport. 


Back in April, more than 50 parliamentarians sent a letter to King Abdullah II accusing Rawabdeh of nepotism, corruption, and failing to deliver on his promises of economic and political reform. While Abdullah publicly backed Rawabdeh at that time, the former Premier’s latest opposition to the Aqaba Special Economic Zone (SEZ) precipitated his demise. Rawabdeh felt that the SEZ, a project headed until recently by the new Prime Minister, would convert Aqaba, the Kingdom’s sole outlet to the sea, into a smuggling hub and eliminate its Jordanian identity. Such an attitude was in essence a slap in the face of King Abdullah, who aggressively seeks to attract foreign capital to his resource-poor country. 


Economic Outlook 


The SEZ project, which is due to open in January 2001, aims to establish an economic zone similar to Singapore or Dubai’s Jebel Ali. Customs will be abolished and taxes lowered to 5 percent on income and 7 percent on services and retail sales (compared to a 13 percent sales tax in the rest of the country). While the SEZ aims to allure foreign investment to the Aqaba area, several local lawmakers fear it might also deter projects from other regions of the Kingdom that lack similar concessions. Abul Ragheb, however, has insisted that investment to Aqaba will not come at the expense of other districts. He believes that 50 percent of projects will be in the tourism sector, while 30 percent will be related to auxiliary services, such as shipping. 


This scheme also aims to create thousands of desperately needed employment opportunities. Official statistics put the Kingdom’s unemployment rate at 15 percent, but independent analysts appraise that roughly 27 percent of Jordan’s labour force is without work. Other indicators also point to the Kingdom’s weak financial position. Jordan’s trade deficit in the first two months of this year climbed to JD213 million ($300 million) compared to JD151 million (almost $213 million) in the corresponding period of 1999. Due to high international oil prices, the budget deficit is certain to rise above 7 percent of the state’s GDP. Real GDP growth, which has lingered below 2 percent for several successive years, is projected to reach between 2-2.5 percent this year. 


Last year, the Kingdom's economy expanded by merely 1.89 percent, while its population grew by 3 percent. Fortunately, Jordan continues to be a beneficiary of tangible foreign aid. Early this year, the United Arab Emirates affirmed its commitment to Jordan by providing the Kingdom with a $200-million grant. These funds will be used to encourage investment projects to alleviate Jordan's excessive unemployment. The UAE’s declaration followed a $123-million aid package signed with the European Union. Over $40 million of this assistance will help export-oriented industries adjust to the challenges of globalization. 


After more than six years of negotiations, Jordan officially joined the World Trade Organization earlier this year. Jordan’s accession marked a step forward in its overall economic liberalization program. The Kingdom agreed to implement all pledges on opening markets for goods and services without the phase-in-period sought by most developing country applicants. 




In the medium-term future, Jordan's prospects of escaping from its enduring recession will depend largely on its ability to meet global challenges. This endeavor has become even more acute in light of Jordan's accession to the World Trade Organization, which became official on April 12. The country is now aggressively promoting its exports in international markets. 


Still, Jordan’s incoming Prime Minister faces an uphill battle in reviving the Kingdom’s economy. While he should enjoy the business community’s general support in privatizing unprofitable state-owned enterprises, powerful groups with vested interests will continue to do their utmost to block such plans. Nevertheless, the country’s leadership, composed of King Abdullah, Prime Minister Abul Ragheb and a new cabinet, shares a similar set of values and goals that strive to integrate Jordan into the global economy and establish the Kingdom as a regional IT hub. 

© 2000 Mena Report (

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