Jordan’s Royal Rift Underlines Its Need For Reform

The “strife has been buried,” Jordan’s King Abdullah II declared on Wednesday, referring to what his government had described as a plot to destabilize the country, involving Prince Hamzah, the former crown prince. But if the immediate threat to the monarch has been interred, and his half-brother interned, it would be foolish to infer that all is again well in the Hashemite kingdom. 

Whatever Hamzah was planning — it is unlikely to have been a full-scale coup d’etat, since the army remained fully behind the king — his rhetoric, at least, was aimed at corruption and incompetence in high places and, by extension, palaces. While his rebellion failed, the prince may have succeeded in drawing international attention to issues deeply felt by most Jordanians.

Economic discontent has simmered across the kingdom for several years, coming occasionally to a boil, as it did in 2018 when a proposed income-tax increase led to street protests in the early summer and again in the winter. The protesters demanded serious political reforms and measures to combat corruption.

Jordan has slipped alarmingly on both counts. The U.S. nonprofit Freedom House has downgraded the kingdom from “partly free” to “not free” in its assessment of the state of democracy worldwide. And in the past five years, Jordan has dropped from 45th to 60th out of 180 nations in Transparency International’s corruption perceptions index. 

Abdullah bears much of the blame. Although Jordan has elections, these are highly constrained and the king has ultimate authority over the government, its policies and functioning. 

The monarch has for the most part muzzled domestic opposition and media, but Hamzah’s public criticism will put Abdullah under pressure to deal with accusations of misrule. Moreover, to bury the strife among his subjects, he will need to come up with policy solutions to persistent unemployment, a faltering record of foreign investment, diminished revenues from tourism and remittances, a failing public health system, and ballooning external debt. 

A succession of governments has failed to address these issues, instead focusing on marquee investments in projects, ranging from high-end hotels and an oil shale-fueled power plant to industrial production of potash and fertilizer and premium real estate projects. These have created mostly low-skilled jobs and blotted landscapes, and do not provide for the affordable housing, higher-paying service sector jobs and urban green space many Jordanians crave.

These problems have been compounded by the economic damage wrought by the coronavirus pandemic, which led to a 3% contraction in real GDP last year and pushed as many as 1.5 million Jordanians into poverty. By the government’s own reckoning, around 25% of the labor force is unemployed; 50% of youth and 34% of women are out of work. 

The human toll of the virus has been substantial, with nearly 500,000 reported cases and more than 5,000 deaths — large numbers for a population of just 10 million. The government’s handling of the pandemic has been poor, confirming the worst fears of many Jordanians. Public outrage bubbled up again last month when a state hospital ran out of oxygen, leading to the deaths of at least seven Covid-19 patients.

Looking past the pandemic allows for little optimism. Even if Jordan achieves the 2.5% GDP growth predicted by the government and International Monetary Fund, it will remain burdened by public debt obligations at 85% of nominal GDP in 2020 and will need fresh external financing.

Where will the money come from? The traditional sources — Gulf Arab monarchies, in the main — will have other priorities as they deal with their own pandemic-induced problems. In 2018, the Jordanian central bank could count on deposits from its counterparts in Kuwait, the United Arab Emirates and Saudi Arabia to stave off a financial crisis; such support may not be forthcoming in the future. 

Foreign direct investment into Jordan from the Gulf has already dropped sharply. While investments from Saudi Arabia and the UAE surged between 2018 and 2019 to about $2 billion, they contracted to nearly a tenth of that size in 2020, according to the Gulf Financial Aid and Investment Tracker. Gulf capital investment in Jordan far outweighs that from China, the U.S. or Europe.

The “Abraham Accords” between the UAE, Bahrain and Israel have done little to boost Jordan’s economic outlook. The kingdom will have to compete with Israel for the attentions of Emirati and Bahraini investors. Direct flights from Israel to Abu Dhabi and Dubai, for instance, will remove the need for a transit through Amman, a dependable source of revenue for Royal Jordanian Airlines, which is already struggling to cope with the pandemic’s impact on travel. 

The larger problem for the kingdom is that the two Arab economies to which its economic wellbeing has traditionally been tied are both in tatters. This leaves Jordan with the burden of hosting millions of refugees from Syria and Iraq, without the economic sustenance those countries used to provide. 

Jordan cannot be insulated from the region. But it can reduce its dependence on its neighbors and on the Gulf. It possesses the human capital to expand its service sector and create new jobs. What the economy needs is policies to match, and investments in education and technological infrastructure as well as the promotion of entrepreneurship.

This would be a tall order for any government, but doubly difficult for one that doesn’t enjoy the confidence of its citizens. As for Prince Hamza and King Abdullah, the family drama is best put aside. But the power of public accountability is only sure to grow. The king will need to make the government much more transparent, the first step in any serious campaign against corruption. Letting some light into the palace would be a better response than the knee-jerk imposition of a ban on media coverage of last weekend’s events.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Karen E. Young is a resident scholar at the American Enterprise Institute.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.