Jordan

Politics:

• Analysis

  Jordan politics: King Abdullah struggles to foster election fever

  Jordan is preparing for elections on January 23rd and, as 2012 ends, the capital, Amman, is festooned with election posters. However, rather than being a campaign focused on policies, the relevance of the election itself has garnered the most debate, especially since the largest opposition party, the Islamic Action Front (IAF; the political wing of the Muslim Brotherhood), is boycotting the poll. With this in mind, King Abdullah has energetically been seeking to nudge Jordanians to embrace his version of political reform.

  The king's latest move came with the announcement that he will issue a series of discussion papers outlining his vision of Jordan's reform process, with the first paper promising to focus on the king's vision of the move towards democracy. A Royal Court statement issued on December 27th stated that the papers would "seek to facilitate national dialogue and encourage citizens' participation in decisionmaking".

  A nation ambivalent

  The need for the king to do more to enunciate both a clearer, and a more convincing, roadmap towards democracy is plain. According to a survey conduced by Al Hayat Centre for Civil Society Development (a local non-profit organisation) in early December, many Jordanians still do not understand the country's controversial new electoral system (introduced earlier this year), nor are they convinced that the January elections are relevant. The survey found that only 22% of respondents knew that they would be able to vote for party candidates on national lists as well as for local candidates. (The new system gives the electorate two votes: one for a representative from a local province, and another for a party candidate competing under proportional representation at the national level-a major shift from the previous "one person, one vote" system.)

  Jordan's new Independent Election Commission (IEC) says that 70% of eligible voters have registered, some 2m of a possible 3.7m, suggesting reasonably strong interest; however, the Al Hayat survey found wide differences between governorates, with just 45.9% of those polled in Amman saying that they had registered, compared with 98.4% of respondents in the southern governorate of Maan. The survey also suggested that not all of those registered intended to vote, with just 25.6% of those registered in Amman committed to voting.

  Nevertheless, with the public still indifferent, the new electoral commission has been working hard to ensure that the elections are at least clean. It has invited representatives from the Arab League, the EU and other organisations to observe the elections, and has promised to facilitate media coverage as long as it does not obstruct the electoral process. It has also promised to tackle a number of issues that had arisen well before polling day, with, for example, the IEC on December 25th saying that it would take a strong line against any efforts by candidates to buy votes.

  King Abdullah has acknowledged there are flaws in the electoral law, but he has argued that all sides should be involved in the new parliament in order to tackle them. However, if he is successful in encouraging a large voter turnout, this could prove a double-edged sword: on the one hand, a big turnout would lend his reform process credibility; on the other hand, he would then have to commit to more substantial reforms that would transfer more of his powers to politicians and, ultimately, the people.

  Opposition divided

  The pressure on the king is lessened by the wide divisions within Jordanian society and among those calling for reform. The IAF is boycotting the elections because the new electoral law restricts parties to contesting just 27 of the 150 seats in parliament, compared with 108 allotted for the provinces (a further 15 seats are reserved for women). As the largest and best organised party in Jordan, the IAF believes that it should have a major role in the new parliament, but that the electoral law is designed to reduce its power. For his part, the king has provocatively claimed that the Islamists are boycotting the elections because their support is much lower than they claim, and they do not want to face defeat.

  Secular activists, who have been prominent in demonstrations over the past two years, share the Muslim Brotherhood's yearning for a more genuinely accountable political system, but shirk its Islamist agenda-a separation that chimes with the increasingly bitter political debate within Egypt at the moment. The regime is also facing opposition from some elements of its traditional support base, the East Bank tribes and clans. However, their demands are for the preservation of their traditional privileged position in society, not for wider political reform that would give more power to urban Jordanians, and in particular to Jordanians of Palestinian origin.

  The restrictions on parties that led to the IAF boycott have not discouraged other groups from participating, with the IEC announcing on December 23rd that 34 national lists had already been approved. Each party or political group participating on the national level will field between nine and 27 candidates. A further 564 individual candidates, including 85 women, had registered at the district level. However, in reality, the number of voters who turn out on January 23rd is likely to be more important than the candidates they actually choose, given the function that turnout will have in ensuring not only the poll's legitimacy, but also in enabling a reasonable level of political stability in 2013.

  December 28, 2012

• Background

  Jordan: Political forces at a glance

  Present government: Jordan is a monarchy with a bicameral parliament. The king appoints the upper house and there are elections to the Chamber of Deputies (the lower house). The king appoints the prime minister, who in turn appoints the cabinet, in close consultation with the king. Cabinet changes are frequent, reducing the chance for any particular minister to build a power base. The king has ultimate power, although he needs to balance various interests in his decision-making.

  Samir Rifai, the former head of the royal court, was appointed as prime minister in December 2009, with King Abdullah II instructing him to concentrate on improving Jordan's social and economic conditions. The cabinet is dominated by technocrats and has two female members.

  The Islamic Action Front is the only effective opposition party

  Parliamentary forces: There has been a strong tradition of political parties since the 1950s, although the make-up of the Jordanian cabinet does not reflect the strength of these parties in parliament. The only relatively cohesive grouping is the Islamic Action Front (IAF), which is the parliamentary wing of the Muslim Brotherhood. Although the group's electoral performance and internal coherence has been damaged by divisions between moderate and hardline members, it does have a clear programme and identity. Jordan also has Baathist, Arab Nationalist and Communist parties, but they have limited representation. Under the Political Parties Law passed in 2007, the number of registered parties fell by two-thirds, to just 12, as many smaller parties failed to meet the new minimum requirement of having 500 founding members, drawn equally from at least five governorates—an impossible target for small parties built around one dominant figure. Jordan has a single non-transferable vote electoral system, which results in tribal and family candidates dominating parliament. However, a new electoral law is currently being drawn up.

  Extra-parliamentary forces: Jordan has a substantial and influential extra-parliamentary opposition, largely in the form of the Professional Associations (PAs). During the long period when Jordan's parliament was suspended, the PAs emerged as a focus for political opposition, a role they have not relinquished even after the return of parliament in 1989. The government has attempted to introduce legislation to control the PAs and to restrict their activities to "working on behalf of their members". The new law met with strong opposition and in February 2008 the government withdrew the legislation for further discussion.

  Next elections: The next election for the Chamber of Deputies will be in 2010.

  May 11, 2010

• Structure

  Jordan: Political structure

  Official name

  Hashemite Kingdom of Jordan

  Form of state

  Constitutional monarchy

  National legislature

  Bicameral National Assembly: a directly elected Chamber of Deputies of 120 members and a Senate of 40 members appointed by the king. Under the constitution, senators are selected from among prominent political and public figures

  Electoral system

  Direct universal suffrage

  National elections

  Last election November 2010; next election was due in November 2014, but is now set for January 23rd 2013

  Head of state

  King Abdullah ibn Hussein al-Hashemi

  National government

  Council of Ministers headed by the prime minister, who is appointed by the king; ministers are appointed by the king, partly on the advice of the prime minister. The Council of Ministers is responsible to the Chamber of Deputies

  Main political organisations

  Active parties include the Jordanian National Alliance; the Popular Unity Party; the Future Party; the Unionist Arab Democratic Party; the Islamic Action Front; the Democratic Party of the Left; the National Constitutional Party; and the Baathist and Communist parties. The professional associations are also politically influential

  Key ministers

  Prime minister & defence minister: Abdullah Ensour

  Deputy prime minister & interior minister: Awad Khleifat

  Agriculture: Ahmad Khattab

  Awqaf & Islamic affairs: Abdul Salam Abbadi

  Energy, mineral resources & transport: Alaa al-Batayneh

  Finance: Suleiman al-Hafez

  Foreign affairs: Nasser Judeh

  Health: Abdul Latif Wreikat

  Higher education, education & scientific research: Wajih Oweis

  Justice: Ghalib al-Zubi

  Labour: Nidal Mardi al-Qatamin

  Media affairs, communications & culture: Sameeh al-Maayteh

  Municipal affairs, water & irrigation: Mahir Abul Samin

  Planning & international co-operation: Jafar Hassan

  Political development & parliamentary affairs: Bassam Salamah Haddadin

  Public-sector development: Khleif al-Khawaldeh

  Public works & housing: Yahya Kisbi

  Social development: Wajih Azayzah

  Tourism, antiquities & environment: Nayef al-Fayez

  Trade, industry & information & communications technology: Hatem Hafez al-Halawani

  Head of the Royal Court

  Khalid Karaki

  Central Bank governor

  Mohammed Said Shaheen

  December 10, 2012

• Outlook

  Jordan: Key developments

  Outlook for 2013-17

  • Despite regional and domestic unrest, The Economist Intelligence Unit expects power in Jordan to remain firmly in the hands of King Abdullah II, who will retain the loyal support of the army and the security services.
  • The government will probably fail to draw the Muslim Brotherhood into the formal political process, and the group is set to boycott the January parliamentary election.
  • Jordan's pro-Western orientation will remain the cornerstone of the king's foreign policy. Ties with Iraq will improve as commercial links deepen, but the deepening civil war in Syria is a growing concern.
  • In light of the recent removal of fuel subsidies, we have lowered our projections for the fiscal deficit (excluding grants), which we now envisage will narrow steadily to an admittedly still wide 6.7% of GDP in 2017.
  • The Central Bank of Jordan will aim to keep interest rates low to encourage bank lending, and, with US rates set to be unchanged until 2015, we expect local rates to remain relatively stable until that time.
  • We have lowered our forecast for real GDP growth in 2013 to 3%, reflecting the dampening impact on domestic demand of the recent fuel price hikes. However, the economy should pick up thereafter, lifted by rising investment.
  • We have revised up our forecast for average inflation in 2013, to 6%, following the full removal of fuel subsidies in November. Inflation is expected to fall sharply the following year, however, before rising gradually thereafter.

  Review

  • Jordan's former intelligence chief, Mohammed al-Dahabi, has been sentenced to 13 years in prison and ordered to repay money after he was found guilty of corruption.
  • On November 13th the government announced the end of fuel subsidies. Although the decision had been widely expected, this did not lessen the public's anger, with protests starting up immediately after the news broke.
  • Cash payments have begun to families to compensate them for the removal of fuel subsidies. According to the government, households with an annual income below JD10,000 (US$14,100) will receive JD420 a year.
  • The energy and mineral resources minister has said that Egypt will boost its natural gas supplies to Jordan immediately from 42m cu ft/day to 60m cu ft/d, although it is unclear whether Egypt has sufficient spare capacity.
  • Saudi Arabia has agreed to transfer shortly some US$125m to Jordan, as part of a larger GCC aid package worth US$5bn over five years.

  December 10, 2012

Economy:

• Background

  Jordan: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	6.3	Population growth	2.9
  GDP (US$ bn; market exchange rate)	28.9	Real GDP growth	5.1
  GDP (US$ bn; purchasing power parity)	36.9b	Real domestic demand growth	4.7
  GDP per head (US$; market exchange rate)	4,563	Inflation	5.7
  GDP per head (US$; purchasing power parity)	5,836b	Current-account balance (% of GDP)	-9.6
  Exchange rate (av) JD:US$	0.709	FDI inflows (% of GDP)	9.9
  a Actual. b Economist Intelligence Unit estimates.

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  Background: Transjordan gained independence from the UK in 1921, and became the Hashemite Kingdom of Jordan in 1946. King Abdullah I, Jordan's ruler since 1921, was assassinated in Jerusalem in 1951. He was succeeded briefly by his son, Talal, and then by his grandson, Hussein, who ruled until his death in 1999. His son, Abdullah, then became king, and in July 2009 appointed his eldest son, Prince Hussein, as crown prince. Jordan has fought two wars against Israel, culminating in the loss of the West Bank and East Jerusalem in 1967. The two countries signed a peace deal in 1994. Jordan has been pursuing progressive economic liberalisation programme since the late 1980s, but reform has accelerated under Abdullah II.

  Political structure: Jordan is an absolute monarchy tempered by constitutional conventions. The king sets foreign policy and Jordan's strategic direction and appoints the prime minister. The government is scrutinised by an elected Chamber of Deputies, which has the power to reject legislation, and an appointed Senate. In 2011 a political reform process was initiated, but this has made little progress so far. Political parties are legal but generally less important than the tribal or family background of politicians, with the possible exception of the Islamic Action Front, Jordan's Muslim Brotherhood.

  Policy issues: Jordan has been undergoing economic stabilisation and liberalisation since a debt crisis in 1988-89. Progress has been mixed and has been affected by major regional events such as the 1991 and 2003 wars in Iraq, as well as recent regional popular unrest. Despite progress on economic liberalisation, slow political development contributed to public unrest in early 2011, leading to the appointment of a new government tasked with bringing about speedier political reform. The king established a National Dialogue Committee in March 2011 to propose reforms, although it is dominated by regime loyalists, and its slow pace and limited scope have frustrated Islamists and leftists.

  Taxation: A general sales tax was introduced in 1994; the rate has been progressively raised (currently 16%) and its coverage has been extended. The income tax rate is progressive, up to a maximum of 25%. Corporation tax is divided into three bands, with the bulk of companies taxed at a rate of 15% or 25%, and financial services firms paying a higher rate of 30%.

  Foreign trade: Jordan has a large structural trade deficit (US$8.3bn in 2011), largely owing to the strength of global oil prices since 2003. The current-account deficit narrowed in 2009-10 but widened again in 2011-12, as the cost of hydrocarbons imports surged.

  Major exports 2011	% of total	Major imports 2011	% of total
  Manufactured goods	24.2	Crude oil & petroleum products	25.0
  Chemicals	20.6	Machinery & transport equipment	18.3
  Crude materials	20.2	Manufactured goods	15.5
  Food & live animals	12.9	Food & live animals	13.9
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  Iraq	13.0	Saudi Arabia	22.7
  US	12.5	China	10.7
  India	10.6	US	6.3
  Saudi Arabia	8.2	Italy	5.1

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  December 10, 2012

• Structure

  Jordan: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 10, 2012

• Outlook

  Jordan: Country outlook

  Jordan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Despite ongoing regional unrest and growing domestic disquiet, King Abdullah II is expected to remain in power throughout the forecast period and beyond, supported by his loyal, well-trained and effective armed forces. The government was rocked in January 2011 by popular demonstrations inspired by protests in Tunisia and Egypt, and a vocal protest movement has emerged. In response, the king initiated a reform programme to appease the opposition, but this has largely failed to placate widespread public frustration. Irritated at the failure to make progress, the king has changed prime ministers three times in a year, most recently with the appointment of a veteran politician, Abdullah Ensour, in October, replacing Fayez al-Tarawneh. Successive administrations have been hamstrung by the unwillingness of the ruling elite to allow any large-scale influx of ethnic Palestinians into government and sensitive organs of the state--the likely outcome of a more representative electoral system. Consequently, political consensus--including drawing the Muslim Brotherhood (and its political arm, the Islamic Action Front--IAF) into the formal political process--remains elusive, and the Economist Intelligence Unit expects Mr Ensour, who is viewed as a reformist but is heading a conservative-dominated cabinet, to be equally unsuccessful in this regard.

  ELECTION WATCH: The recently dissolved Chamber of Deputies (the lower house of parliament) was elected in November 2010 under an electoral law that retained the single non-transferable vote (known locally as "one person, one vote") formula that opposition parties insist favours tribal candidates over political parties. It also discriminates in favour of rural areas, leaving the lower house dominated by loyalist and tribally orientated members, and largely fails to meet the political aspirations of Jordan's major cities (as well as Palestinians living in Jordan).

  INTERNATIONAL RELATIONS: Jordan's pro-Western orientation will remain the cornerstone of the king's foreign policy. However, the Jordanian public remains hostile towards the US because of its perceived bias towards Israel in its dealings with Jordan and the Arab world, and the Jordanian government was careful to align itself with the Arab mainstream against Israel during the short-lived Gaza war in November. Ties with Iraq will continue to improve as commercial links between the two countries deepen, although Jordan will be wary of any resurgence in violence. The deepening civil war in neighbouring Syria is also a worry for Jordan. Initially, its concerns were largely centred on the economic impact of the war, and the associated burden of supporting an influx of refugees into the kingdom. However, the government has become increasingly worried about the security implications, with, most worryingly, the foiling of a bomb plot by a group of Jordanian militants who had allegedly been smuggling arms from Syria. Thus far, Jordan has avoided publicly supporting either side in the Syrian conflict; yet, aware of the prevailing mood among its Arab and Western allies, we expect it to align itself gradually with the anti-Assad camp. However, as so often with Jordan, the country will depend on others to take the lead.

  POLICY TRENDS: Government attempts to liberalise the economy, including reducing the scope of the state, are likely to be impeded by continued nervousness about fomenting further public discontent. However, as part of the recently agreed US$2bn IMF stand-by arrangement, the government has agreed to introduce "socially acceptable" fiscal retrenchment and a number of structural reforms, which should prevent any wholesale policy reversals. In addition, both the finance and planning and international co-operation ministers retained their posts in the cabinet appointed in October, indicating a continuity of policy. Having raised fuel prices in November, the government will shift its focus to increasing electricity prices further in order to reduce losses at the state-owned National Electric Power Company (Nepco), and it may also seek to broaden the scope of the general sales tax. However, political pressures will preclude any major cutback in the bloated public-sector payroll, and the government will remain heavily reliant on foreign grants to cover its deficits.

  ECONOMIC GROWTH: Even though we expect growth to pick up over the forecast period, we have lowered our forecast for 2013 to 3%, reflecting what is likely to be the dampening impact on domestic demand of the recent fuel price increases. Persistent slow government spending growth will also remain a drag on the economy through the entire forecast period, with cuts in capital spending also restraining investment. More positively, however, foreign direct investment, especially from the Gulf Arab states, is likely to trend higher, having dropped back in 2008-11 amid the global economic downturn and fears of regional instability. Although private consumption is likely to be depressed in the near term, we expect it to be assisted by the ongoing recovery in the tourism sector (the second-largest employer in Jordan); however, spillover from Syria remains a risk. Meanwhile, exports will be constrained by sluggish growth in the US, but this should be partly offset by fast-rising demand for Jordanian goods from neighbouring Iraq, which will boost activity at the Aqaba Container Terminal (currently undergoing relocation and development). Overall, at an average of 4.1% a year in 2013-17, real GDP growth will remain well below the stellar levels seen before the downturn.

  INFLATION: We estimate that inflation will have risen slightly to an average of 4.5% in 2012, after the government introduced some small increases in fuel and electricity prices in May. However, we have revised up our forecast for consumer price growth in 2013, following the complete removal of fuel subsidies in November, and now expect average inflation to surge to 6%. However, as the impact of the subsidy adjustment falls out of the consumer price index, inflation will slow markedly in 2014 (assisted by the resulting helpful base effect), before rising gently to some 5% in 2017, as global oil prices trend higher.

  EXCHANGE RATES: The Central Bank of Jordan (CBJ) is expected to remain committed to the maintenance of the Jordanian dinar's peg to the dollar, despite the associated lack of monetary flexibility. The peg has instilled monetary confidence and has not substantially harmed competitiveness (perhaps because the US is one of Jordan's largest export markets). We also believe that the stock of international reserves, which were buttressed by a transfer of US$250m to the CBJ by Kuwait in October, will be sufficient to offset any pressure on the currency stemming from short-term liquidity problems or negative political developments.

  EXTERNAL SECTOR: The current-account deficit will have widened in 2012 as export earnings growth was depressed by lower agricultural and phosphates revenue. However, exports should recover from 2013, led by healthy demand in Asia (especially for phosphates and potash) and increased re-export trade with Iraq. Having surged in 2011 and 2012, lifted largely by higher oil prices, the rate of import growth should slow gradually over the forecast period as oil prices stabilise and natural gas imports from Egypt gradually recover. (These gas imports could be topped up by discounted liquefied natural gas from Qatar; Jordan already receives discounted oil from Iraq.) Nonetheless, we expect the trade deficit to widen gradually over the forecast period, reaching US$12bn in 2017.

  December 07, 2012

• Forecast

  Jordan: Country forecast summary

  Country forecast overview: Highlights

  • The failure of successive governments appointed after protests in early 2011 to satisfy the demands of the opposition on political reform has seen King Abdullah install three prime ministers in 15 months. Like his predecessors, the current prime minister, Abdullah Ensour, will fail to make headway, with the inability to reach a consensus over a new electoral law set to undermine the legitimacy of the next parliament (scheduled to be elected in January 2013).
  • The unrest has revitalised the opposition Islamic Action Front (the political arm of the Muslim Brotherhood), which will lead the calls for reform, alongside left-wingers and youth groups.
  • The king's pro-Western foreign policy has caused political strains and will continue to do so. Syria, meanwhile, will pose a persistent challenge, with Jordan struggling to distance itself from the conflict as growing numbers of Syrian refugees cross the border.
  • Having reimposed fiscal austerity in 2012, the government's commitment to budgetary prudence will remain (reinforced by a stand-by arrangement with the IMF), as evidenced by its recent removal of all fuel subsidies. However, austerity will be undermined by overarching political concerns, ensuring only halting progress in deficit-cutting.
  • Foreign investment is likely to grow slowly in the forecast period. Although Jordan will benefit from its relative stability, regional unrest and the weakness of the global economy will deter Western and some Gulf Arab firms from significantly boosting their investment. A number of large construction projects are under way, including the relocation of Aqaba port, which should help to support the economy, as should plans to step up the exploitation of Jordan's mineral resources. Growth is forecast to pick up slowly from an annual average of 2.6% in 2011-12 to 4.1% in 2013-17.
  • We expect consumer price growth to rise in 2013, in the wake of the recent hike in fuel prices, but a strong US dollar, lower oil prices and a helpful base effect are forecast to push average inflation down to 3% in 2014. Inflation is projected to rise gently thereafter as oil prices climb.
  • The public-sector debt burden will increase during the forecast period on the back of consistently wide fiscal deficits and persistent losses at the national electricity company. In addition, the consistent budgetary shortfalls will mean that the government is unable to end its reliance on foreign aid.
  • As export and services earnings increase, the current account will steadily strengthen over the forecast period, although it will remain in deficit.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	2.7	3.0	3.9	4.4	4.5	4.7
  Consumer price inflation (av; %)	4.5	6.0	3.0	4.1	4.4	5.0
  Budget balance (% of GDP)	-11.6	-9.1	-8.6	-8.2	-7.6	-6.7
  Current-account balance (% of GDP)	-10.8	-7.9	-5.9	-5.3	-4.1	-3.7
  Exchange rate JD:US$ (av)	0.709	0.709	0.709	0.709	0.709	0.709
  Exchange rate JD:€ (av)	0.910	0.895	0.888	0.877	0.893	0.893

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  December 10, 2012

View detailed map

Country Briefing

Land area

89,206 sq km

Population

5.1m (2004 census)

Main towns

Population by governorate, ('000; end-2007 estimates)

Amman: 2,220

Jerash: 172

Irbid: 1,019

Madaba: 143

Zarqa: 853

Ajloun: 132

Balqa: 383

Aqaba: 120

Mafraq: 269

Maan: 109

Karak: 223

Tafileh: 80

Climate

Hot and dry summers, cool and wet winters

Weather in Amman (altitude 777 metres)

Hottest month, August, 14-37°C; coldest month, January, 0-16°C; driest months, May-August, 0 mm average rainfall; wettest month, February, 75.5 mm average rainfall

Language

Arabic; English is also widely spoken

Measures

Metric system and local measures

Currency

Jordanian dinar (JD) = 100 piastres = 1,000 fils. The dinar is pegged to the US dollar at JD0.709:US$1

Time

GMT plus two hours

Public holidays

New Year's Day (January 1st); Prophet Mohammed's birthday (February 4th 2012); Labour Day (April 29th); Independence Day (May 25th); Eid al-Fitr (August 19th 2012); Eid al-Adha (October 26th 2012); Islamic New Year (November 15th 2012); Christmas Day (December 25th)

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate

March 13, 2012