Economy

Unlike its Arab neighbors, Jordan is blessed with neither oil reserves nor abundant natural resources. Because of this, Jordan remains dependent upon Arab and American financial aid to augment its income from exporting phosphate and pre-season vegetables grown in the Jordan valley. Remittances from Jordanian workers in the Gulf states have traditionally constituted another important supplement to the Jordanian economy. With the outbreak of the Iran-Iraq War in 1980, Iraq became a major importer of Jordanian goods and services and the economy boomed. Recently, though, Jordan’s economy has been ailing. With a 2-3% annual growth rate, the country’s economy cannot keep pace with its burgeoning population. In

the late 1980s, when Iraq began threatening not to pay its war debts, Jordanian exporters held an ugly mountain of worthless Iraqi IOUs.

In April 1989, following steep government-imposed price hikes on gasoline and other goods, Jordanians took to the streets in protest until King Hussein fired Prime Minister Zaid Rifai and the cabinet. Stability soon returned, but the monarchy was sobered and remains jittery, while the economy went into decline; a 1991 growth rate of 1% was actually a step up from 1989 and 1990.

On top of that, the 1990-91 Persian Gulf crisis dealt a devastating blow to Jordan’s economy. In addition to the complex task of absorbing and caring for tens of thousands of refugees fleeing the turmoil, Jordan’s decision to side with Iraq cost the country dearly. The United States, along with Saudi Arabia and the other Gulf countries, suspended most aid to Jordan. Furthermore, Palestinian and Jordanian workers in the Gulf were sent home and largely replaced by Egyptians, whose government the Saudis found to be more politically correct. 320,000 of these unhappy Jordanians are now crowded into the cities, often in miserable conditions. Among this group, unemployment is 80%. Unemployment in the general population, once alarming at 15-20%, may have hit 25-30%. But Washington, by now less miffed over Jordan’s pro-Iraq tilt, has hinted none too subtly that it may reward Jordanian cooperation in the Arab-Israeli peace process by once again lending a hand. A 1991 agreement with the International Monetary Fund on a structural adjustment program is hoped to produce growth of 4% by 1998.