Jordan

Politics:

• Analysis

  Jordan politics: Quick View - Obama visits Jordan on his regional tour

  Event

  The US president, Barack Obama, visited Jordan on March 22nd-23rd.

  Analysis

  After a high-profile visit to Israel, Mr Obama's two-day sojourn in Jordan barely registered on the world's radar, with a visit to the ancient ruins in Petra virtually the only part of the visit to receive international media coverage. The visit could, however, provide King Abdullah with some satisfaction as an affirmation of US support at a difficult time. The king is under pressure both from economic problems and demands for political reform at home and from the continuing Syrian civil war, with its attendant security concerns for Jordan and the resulting refugee influx from Syria.

  King Abduallah did not get, and would certainly not have expected, the effusive promises of unstinting support for security that marked Mr Obama's visit to Israel. Nor could he, or any Jordanians, have held out much hope that the visit would bring any progress on the regional political issue of greatest importance to Jordanians after the more immediate issue of Syria-the lack of progress towards a solution to the Israeli-Palestinian conflict and the establishment of a Palestinian state.

  What the Jordanians were left with was some useful economic support. Mr Obama arrived with a promise of US$200m in US aid to help offset the cost of hosting an estimated 460,000 (and rising) Syrian refugees, which King Abdullah said was now costing Jordan some US$550m annually. At a joint press conference with King Abdullah, Mr Obama also said that his administration was working with the US Congress to provide guarantees for Jordan for the issue of up to US$2bn in international bonds. Jordan's first ever international bond issue was for US$750m in five-year bonds in 2010 and the government is hoping to issue new Eurobonds in 2013.

  Mr Obama's visit to Jordan was an opportunity for the US to confirm its support for King Abdullah, although the financial assistance promised was modest. The publicity for Petra, Jordan's premier tourism site, garnered from media coverage of the president's two-hour visit there may also generate some economic benefits.

  March 26, 2013

• 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

  March 13, 2013

• 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 will instead focus on demonstrations and other extra-parliamentary activities.
  • 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 expect the fiscal deficit (excluding grants) to narrow markedly, from an estimated 11.5% of GDP in 2012 to an admittedly still wide 6.2% 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.
  • Real GDP growth should pick up slightly in 2013, although it will remain low, at 3%, reflecting the dampening impact on domestic demand of recent fuel price hikes. The economy should recover thereafter, lifted by rising investment.
  • The removal of fuel subsidies will put upward pressure on prices in 2013, but inflation is expected to fall in 2014-15 and then rise gradually thereafter.

  Review

  • King Abdullah opened the new parliament on February 10th, calling it a "milestone on the road to democratisation and comprehensive reform".
  • The head of the Royal Court, Fayez Tarawneh, has continued consultations with parliamentary blocs over the choice of a new prime minister, previously the sole prerogative of the king.
  • A large group of MPs have petitioned the government to reconsider its lifting of fuel subsidies.
  • The government has announced plans to build a third camp as more Syrian refugees flood in, bringing the total to more than 400,000 by late February.
  • An IMF contingent visited Jordan in late February to review compliance with the requirements of a US$2bn stand-by arrangement. If Jordan meets the requirements, the next US$500m tranche of the loan is likely to be released.
  • Tourism revenue grew strongly in 2012 despite unrest in the region, contributing strongly to foreign-currency earnings. There are ambitious plans for the sector, with a new airport terminal and hotels planned.

  March 13, 2013

Economy:

• Background

  Jordan: Country fact sheet

  Fact sheet

  Annual data	2012a	Historical averages (%)	2008-12
  Population (m)	6.5	Population growth	2.7
  GDP (US$ bn; market exchange rate)	31.1	Real GDP growth	4.0
  GDP (US$ bn; purchasing power parity)	38.7	Real domestic demand growth	3.8
  GDP per head (US$; market exchange rate)	4,797	Inflation	5.4
  GDP per head (US$; purchasing power parity)	5,973	Current-account balance (% of GDP)	-9.0
  Exchange rate (av) JD:US$	0.709b	FDI inflows (% of GDP)	7.9
  a The Economist Intelligence Unit estimates. b Actual.

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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 (in consultation with parliament following a 2012 reform). The government is scrutinised by an elected Chamber of Deputies, which has the power to reject legislation, and an appointed Senate. 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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  March 13, 2013

• Structure

  Jordan: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 13, 2013

• Outlook

  Jordan: Country outlook

  Jordan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Despite regional unrest and growing domestic disquiet, King Abdullah II is expected to remain in power throughout the forecast period, supported by his loyal, well-trained and effective armed forces. The government was rocked in January 2011 by 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 in October 2012, with the appointment of a veteran politician, Abdullah Ensour, to replace 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; the modest changes put in place for the January 23rd parliamentary election have not satisfied those calling for reform. 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's successors in the new government (when it is formed) to be equally unsuccessful in this regard. In fact, the new parliament may well endorse Mr Ensour to continue in his role.

  ELECTION WATCH: Disappointed with the extent of recent electoral reform, the main opposition party, the IAF, and several other smaller opposition groups boycotted the January election, continuing to focus on extra-parliamentary activities instead. A centrist Islamist party did emerge with the most seats in the election but has failed so far to form an alliance with other parliamentary parties.

  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. The Jordanian government was careful to align itself with the Arab mainstream against Israel during the short-lived Gaza war in November 2012. Ties with Iraq will strengthen as commercial links between the two countries deepen, although Jordan will be wary of any resurgence in both violence and sectarian tensions in its neighbour. The deepening civil war in 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 the growing influx of refugees into the kingdom. However, the government has become increasingly nervous about the security implications, with, most seriously, the foiling of a bomb plot by a group of Jordanian militants who had allegedly been smuggling arms from Syria. Jordan also initially avoided giving public support to either side in the Syrian conflict. Yet, aware of the prevailing mood among its Arab and Western allies, it has recently aligned itself with the anti-Assad camp, with the foreign minister, Nasser Judeh, hosting a delegation from the opposition Syrian National Coalition in January. 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, which was reviewed by the IMF in early March, the government has agreed to introduce "socially acceptable" fiscal retrenchment and a number of structural reforms, which should prevent any wholesale policy reversals. Having raised fuel prices in November 2012 (and altered them on a monthly basis subsequently, in line with international price trends), the government will shift its focus to increasing electricity prices further (including for residential consumers) 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, in a concurrent effort to counter high unemployment (12.5% at the end of 2012), the government will encourage companies to replace expatriate workers with locals.

  ECONOMIC GROWTH: After a sluggish 2012, with growth estimated at a modest 2.7%, the economy is expected to recover gradually over the forecast period, particularly from 2014. Jordan's economy has suffered particularly from the ongoing regional instability, which has hit tourism, and the depressing effect on its exports of the continued poor performance of the world economy. As a result, real GDP growth averaged just 2.8% in the first nine months of 2012, and this figure was probably flattered by a beneficial base effect; in the first half of 2011 tourism and trade were hindered by domestic protests and instability across the region. 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: Inflation averaged 4.8% in 2012, and we expect it to rise considerably further in 2013, to 6%, reflecting a spike in inflation in November (following the complete removal of fuel subsidies) and a probable increase in electricity tariffs soon. 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 base effect), before rising to 4.6% in 2017, as global oil prices trend higher.

  EXCHANGE RATES: The Central Bank of Jordan is expected to remain committed to the maintenance of the Jordanian dinar's peg to the US 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 was buttressed by a total transfer of US$500m to the CBJ by Kuwait and Saudi Arabia in October and December 2012 respectively, and by a further US$200m from Saudi Arabia in February, 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 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$12.5bn in 2017.

  March 07, 2013

• Forecast

  Jordan: Country forecast summary

  Country forecast overview: Highlights

  • With the failure of successive governments appointed after protests in early 2011 to satisfy the demands of the opposition on political reform,King Abdullah has installed three prime ministers in 15 months. As the king (who still has a say in government appointments) is only likely to initiate modest changes, the next government is unlikely to bring in sweeping reforms.
  • 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 demonstrated by its recent removal of all fuel subsidies. However, austerity will be undermined by overarching political concerns, ensuring only halting progress in cutting the deficit.
  • 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 increase in fuel prices, but a strong US dollar, lower oil prices and a helpful base effect are forecast to push average inflation down in 2014-15. Inflation is projected to rise gently thereafter as international oil prices climb and domestic demand strengthens.
  • The public-sector debt burden will increase (although it will narrow as a percentage of GDP) on the back of consistently wide fiscal deficits and persistent losses at the national electricity company. In addition, the 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; %)	4.8	6.0	3.9	3.0	4.9	4.6
  Budget balance (% of GDP)	-11.5	-8.9	-8.1	-7.6	-7.0	-6.2
  Current-account balance (% of GDP)	-13.9	-11.7	-9.1	-8.0	-5.5	-4.2
  Exchange rate JD:US$ (av)	0.709	0.709	0.709	0.709	0.709	0.709
  Exchange rate JD:€ (av)	0.911	0.943	0.931	0.900	0.893	0.894

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  March 13, 2013

View detailed map

Country Briefing

Land area

89,206 sq km

Population

6.47m (mid-2010; IMF estimate)

Main towns

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

 Amman: 2,220

 Irbid: 1,019

 Zarqa: 853

 Balqa: 383

 Mafraq: 269

 Karak: 223

 Jerash: 172

 Madaba: 143

 Ajloun: 132

 Aqaba: 120

 Maan: 109

 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

January 21, 2013