Saudis Get Behind $705 Million Project for Fellow Arab Monarchy

(Bloomberg) -- Saudi Arabia is bolstering efforts to shore up the economy of a fellow Arab monarchy with a 500 million-dinar ($705 million) joint investment in Jordan.

The Saudi Jordanian Investment Fund and the Aqaba Special Economic Zone Authority signed a memorandum of understanding on Sunday to establish, develop and manage a railway connecting Aqaba, on the Red Sea across from the Israeli city of Eilat, to a future dry port in the Ma’an governorate, according to a joint statement.

Saudi Arabia and other Gulf states have used their financial muscle to keep friendly Arab governments in their orbit or to lure away those allied with their adversaries. The International Monetary Fund, which is backing Jordan with a $700 million loan, last month said “international donor support is more important than ever” for the country following talks between Managing Director Christine Lagarde and Prime Minister Omar Al-Razzaz.

The Saudi fund’s first major investment in Jordan follows pledges of $2.5 billion from wealthy allies to support the monarchy in the face of large-scale protests last year. Jordan, which shares a border with Saudi Arabia, has for decades relied on aid from the U.S. and oil-rich Gulf nations to prop up its economy, but has struggled after the influx of 1.5 million Iraqi and Syrian refugees further strained the country’s finances.

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Upon completion, the railway will operate along a 195-kilometer (121-mile) track, transporting cargo containers to and from Aqaba, Jordan’s only outlet to the sea, as well as phosphate from the mines in Shidiya for export.

The Jordan-Saudi fund was formed in 2016 as a partnership between the Saudi Public Investment Fund, which holds a 90 percent stake, and 16 Jordanian banks that own the rest.

--With assistance from Abbas Al Lawati.

To contact the reporter on this story: Mohammad Tayseer in Amman at mtayseer@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net, Paul Abelsky, Mark Williams

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