Gulf aid to Jordan came at right time
ANALYSTS SAY AID PACKAGE ‘IS THE RIGHT MOVE AT THE RIGHT TIME’
Jordan’s stability is very important for the security of the Gulf region, and the GCC’s $2.5 billion aid package for the Hashemite kingdom came at the right time, analysts told Gulf News.
It was also slightly higher than expected. The assistance will help new Prime Minister Omar Razzaz focus on fixing the country’s economic problems.
“We were expecting aid of $2 billion. Also, the nature of the aid this time differs from previous years,” Waleed Al Khatib, from the Strategic Studies Centre at the University of Jordan, said in an interview with Gulf News.
“This aid is directed at supporting the budget and the financial system, rather than for developmental projects or infrastructure, because the crisis that Jordan is facing is a credit crunch crisis. Instead of dealing with the problem of generating the badly needed money, now Razzaz can focus on reforming the economic situation and reviewing the tax system,” said Al Khatib.
Those who know Razzaz, like Maha Yahya, director of the Carnegie Middle East Centre in Beirut, say he’s got the temperament and patience to deal with complex issues and bring people together.
The GCC trio’s $2.5 billion (Dh9.17 billion) aid pledge to Jordan will assist the newlyappointed Jordanian prime minister to focus on fixing the country’s economic policies, analysts said in Amman.
The aid offered by Saudi Arabia, the UAE and Kuwait will be used to support Jordan’s budget and reserves at the Central Bank, analysts said, adding that it came at the right time and was slightly higher than the expected assistance.
“It was the right move at the right time,” said Sa’ad Abu Dayeh, former diplomat and political science professor in Amman. “Jordan was in dire need of such support as it was going through a very difficult time,” he told Gulf News.
“We were expecting aid of $2 billion (Dh7.34 billion), and the nature of the aid this time differs from previous years,” said Waleed Al Khatib of the Strategic Studies Centre at the University of Jordan.
“This aid is directed at supporting the budget and the financial system, rather than for development projects or infrastructure, because the crisis that Jordan is facing is a credit crunch,” Al Khatib told Gulf News in an interview.
He referred to the statement made by the outgoing finance minister last week about the government not having enough cash to pay salaries of employees this month.
Price hikes and plans to raise taxes sent thousands of Jordanians to the streets last week against the government’s economic policies.
Protesters called for the resignation of the government of Hani Mulki. Later Mulki resigned after a meeting with King Abdullah, who appointed a new prime minister, Omar Razzaz, to form the new government.
Razzaz said on Thursday he would drop a proposed income tax bill, a main demand of the protesters. The Gulf aid will offer Razzaz the needed cushion and time to focus on his government’s economic policies, analysts said. “Instead of dealing with the problem of generating the badly needed money, now he can focus on reforming the economic situation and reviewing the tax system,” said Al Khatib.
The Gulf aid package includes a deposit in Jordan’s central bank, guarantees to the World Bank, annual budget support for five years, and development projects, according to a statement carried by the Saudi state news agency, SPA.
Stability vital
The announcement came at the end of a summit held late Sunday in the holy city of Makkah in Saudi Arabia, where King Salman Bin Abdul Aziz hosted a summit with Jordanian King Abdullah, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister and Ruler of Dubai, and Kuwait’s Emir Shaikh Sabah Al Ahmad Al Jaber Al Sabah.
Commenting on the aid, Jordanian economist Khalid Zubeidi said the details of how the aid would be divided are still not clear.
Meanwhile, Al Khatib said the Ministry of Planning would probably be tasked to iron out the details.
But all analysts agree that the stability of Jordan is of utmost importance to the Arab world.
“Jordan is like Switzerland in Europe, all its neighbours are stronger than it is,” said Abu Dayeh, adding that Amman had to deal with different parties throughout all previous crises and kept its distance.
“Jordan is at the confluence of three hot spots; the Palestinian, the Syrian and the Iraqi,” said Al Khatib.
One of the reasons behind its economic problems, he said, was the fact that Jordan hosts large numbers of Arab refugees, and its resources are limited.
The International Monetary Fund is pushing Jordan to take the kind of austerity measures that led to the downfall of Razzaz’s predecessor on Monday.
Trade and foreign investment have declined, unemployment is at its highest in 20 years, and foreign aid that it relies on to support its finances has shrunk.
The influx of 1.5 million Iraqi and Syrian refugees has strained the finances of a nation whose public debt equals its economic output.
Those who know Razzaz, like Maha Yahya, director of the Carnegie Middle East Centre in Beirut, say he’s got the temperament and patience to deal with complex issues and bring people together.
“I can’t think of anyone more qualified than him to be in this position right now, given the critical juncture Jordan is on now,” Yahya said.
In a statement last week, the IMF said “bold reforms” were needed to address unemployment. It urged the international community — including regional donors — to shoulder more of the burden of hosting Syrian refugees.
Ryan Bohl, Middle East and North Africa analyst at Texasbased Stratfor consultancy, said Saudi Arabia and the UAE could ease the pressure to rapidly proceed with reform measures the IMF is pushing by ponying up $500 million this year. That, in turn, would help Al Razzaz’s stand with the Jordanian people.
“Nobody wants to see Jordan reach a crisis point,” Bohl said.