A Short Treatise on the Importance of Jordan’s Economy to Regional Stability, Free Trade, American Middle Eastern Interests and the Recovery of Iraq 1

Because of my trip to Jordan, described in the previous post, I missed a mid-term exam in my History of the Middle East from 1915 to present, course. The professor was this extremely cool British Shiite-convert, and he agreed to let me take the test later if I wrote a paper about Jordan for him. I happily agreed. I ended up getting a B+ on the test, however the professor liked my paper so much, he gave me an A-!





A Short Treatise on the Importance of Jordan’s Economy to Regional Stability, Free Trade, American Middle Eastern Interests and the Recovery of Iraq
13 October 2004
Sam King

This paper is not meant to cover all aspects of Jordan’s economic impact on the Modern Middle East, but rather to give a brief overview of a few key historical roles Jordan has played in the region and some of the important trade agreements the kingdom has entered into.
Jordan plays four important economic roles in the Middle East: 1. A base for Palestinian refugees to live and prosper, to some degree, instead of remaining frustrated and occupied in the West Bank, 2. a role model of economic stability, development and free trade in the region (especially under Abdullah II), 3. a funnel for American money to enter the region in order to build soft power through specific development projects and free trade initiatives, 4. a major trading partner for Iraq and a conduit for supplies and money with which to rebuild the beleaguered country.
Jordan’s first effect on Middle Eastern stability came after the many wars and insurrections in Israel/Palestine when Palestinians moved to Jordan. After some problems with insurrections and Jordanian reprisals, the Palestinians actually became a major economic force in Jordan as hundreds of thousands of educated laborers flooded into Jordan. The Palestinians quickly established themselves as major bankers in the country (much to Mr. Shalabi’s chagrin) and began to contribute heavily to Jordan’s GDP. In this way Jordan became a sort of pressure valve for many of the region’s oppressed people and gave them an outlet, other than violence, for their energies.
Over time Jordan also managed to become a model of economic success and stability in a region wrought with oil corruption and dictatorships. Because of Jordan’s limited resources, King Hussein had to make friends with everyone and that meant becoming involved in all sorts of regional trade. This allowed it to do things like profit from UN sanctions on Iraq by getting free oil from its neighbor (although, because of its close trade ties with Iraq Jordan also suffered from the US blockade of Aqaba). King Hussein also managed to keep American money flowing in by making peace with Israel in 1996 and thereby getting the US to set up “qualifying industrial zones” in 1997, from which all goods produced by at least a certain percentage of Jordanians could enter the US for free. This also allowed outside investors to use these QIZs as a back door to the US, as long as they hired Jordanian workers, which benefited Jordan’s economy. Jordan therefore became, to a limited extent, a free trade conduit to the United States.
In the new millennium, under a new American president and a new King, Jordan became a center for American economic objectives in the Middle East. The Bush administration, hoping to woo Jordan in light of the damage the invasion of Iraq had on its economy, became Jordan’s biggest trading partner. Two objectives the US wishes to accomplish through Jordan are the Middle East Partnership Initiative (MEPI) and the Middle East Free Trade Area (MEFTA). These proposals, coupled with King Abdullah II’s economic reform packages, aim to use American money to build influence with the Hashimite Kingdom sandwiched between the two most volatile American interests on Earth, namely Palestine and Iraq.
In Iraq Jordan has a vested interest in and the means to capitalize on its reconstruction and development. The port of Aqaba in Jordan connects Iraq to the Red Sea and gives the almost completely landlocked state quick access to the Suez Canal so its exports can flow to Europe and America faster. Jordan also provides the simple service of being a stable, friendly country on Iraq’s border which allows for more trade and capital flows, all things essential for stabilizing a fledgling economy after a military invasion.
Jordan plays a vital role in the Middle East as a trade route, not only for goods, but also for people, ideas and alliances. The very nature of the Kingdom, a desert with no natural resources, forced it to become a politically crafty country. Jordan thereby reaped the benefits of an educated refugee class, industrious Kings, loyal citizens, Super Power support and the prime location to benefit from the newest developing economy in the Middle East. All these factors make Jordan a pivot around which the Middle East spins, and if Jordan continues to succeed it creating greater industrial capacity and freer trade, it will eventually have to bring its neighbor’s up to its standard of stability and prosperity so as to maintain its own economic growth.