The King’s US visit and its economic ripples

Many international observers, analysts, and politicians described His Majesty King Abdullah’s visit to the US as a major political development at this time, which has led to a repositioning of Jordan’
His Majesty King Abdullah, accompanied by HRH Crown Prince Hussein, meets with US President Joe Biden at the White House, in Washington, DC, on July 19, 2021. (Photo: Royal Court)
AMMAN — Many international observers, analysts, and politicians described His Majesty King Abdullah’s visit to the US as a major political development at this time, which has led to a repositioning of Jordan’s roles and status in the region. اضافة اعلان

However, political development was not the only pillar on the King’s agenda during the visit. There was a clear and positive leap on the economic level, too, which was articulated by US president Joe Biden’s direct question to His Majesty: “If you were in my position, how would you help Jordan?”

The question was a key indication of America’s willingness to aid Jordan and the US’s persistence to provide support to the King, in addition to Jordan’s exceptional status in relevance to the US political system. The King’s discussions with the US administration and chiefs indicated the full openness of the US government to provide economic support to Jordan.

The positive leap on the economic level was obvious in the following categories:

US aid to Jordan
The usual US aid to Jordan file, which amounts to $1.275 billion annually, as part of a five-year memorandum of understanding, will come to an end in April 2021. However, the green light was given to launch new negotiations to increase the aid to reach $1.65 billion annually within a new memorandum lasting between seven to ten years. The usual aid from the memorandum does not include any additional or exceptional aid to the Kingdom, which sometimes amounts to $300 million.

This file also included increasing the amount of direct support to the budget to $840 million annually, which would make Jordan the third highest recipient of American aid on a global level.

The Caesar Act
The Caesar Syria Civilian Protection Act sets strict sanctions on economic deals made with the Syrian government. The King has put this subject at the top of his discussions, since Jordan must have some leeway regarding this law as the host of one of the largest number of refugees, which puts more economic burdens on the Kingdom. The law also affects Jordan-Syrian economic deals, and increases the challenges and burdens on the state’s treasury, which already suffers a $2 billion deficit.

The American administration listened to the King’s demands with interest, and is currently studying the matter to help Jordan in avoiding the volatile regional situation. Many Jordanian economic sectors will have a chance to take part in that positive leap, including the airline sector, which will play a major role in Syrian, transferring shipments and passengers, in addition to the industrial sectors, which will have a chance to enter the Syrian market with high quantities of commodities and services. For example, the food industry, pharmaceuticals, construction services, and land transfer, in addition to Jordanian medical exports, will all certainly increase the national exports to Syria by more than $300 million.

The National Desalination Project
The National Desalination Project will be one of the most vital projects in Jordan in the next few years, since Jordan is among the 10 water-scarce countries in the world. Thus, the government must not delay the implementation of the project any longer, taking into consideration the total cost of the project, which amounts to around $2.4 billion. Additionally, the government will be submitting international tender documents in October 2021 to 7 investment coalitions, who are expected to study the papers and provide their technical presentations after seven months. The following stage will have an “economic sensitivity” feature, during which financial negotiations will take place.

US aid to the desalination project is very important, since it is not only limited to technical and financial support but is also about supporting Jordan in its stance to implement the project in the fastest possible manner, and abolishing any political obstructions that neighboring countries might impose on the project. 

Upon US approval, the aid will amount to $100 million, earmarked for the Al-Bahrain Channel Project, which was previously canceled due to political reasons. Jordan is also looking to increase the aid in order to decrease the financial cost on the national economy, and to find new financing sources at a lower interest rate, which will boost national economy revenues and support its development stability.  

Supporting the private sector
The fourth pillar involves supporting the private sector by launching economic campaigns to help the sector overcome the repercussions of COVID-19 and to benefit from the economic recovery initiatives that US financial institutions provide.

The King put forth the private sector issue before the American administration and international organizations. The first one involves opening the American market to receive Jordanian commodities and eliminate the obstacles these goods might be subject to in customs, in addition to other goods including animals, agricultural, iron, aluminum, panels, and renewable energy technology. This will provide a great opportunity for national products to penetrate the international market and receive exceptional privileges.

The second direction is related to supporting the establishment of entrepreneurship funds for promising sectors, including but not limited to information technology, which will increase national exports.   

Supporting employment for women and youth
The fifth pillar involves supporting the national economy and providing financial and technical aid that will enhance women’s participation and presence in the country’s economy, through incentives and facilitations, which will create jobs to empower women and youth in work and the economy. Hence, official efforts to counter unemployment will finally pay off after unemployment reached the unprecedented level of 25 percent, and youth unemployment 50 percent.

Developing the public sector
US aid will help Jordan develop its public sector administration and improve services for the public and the private sectors, while leveraging American expertise to improve services. Administrative services now constitute a nightmare for economic policy-makers due to their deterioration compared to previous periods.  

Ongoing support for Jordan
US political and economic support to Jordan has been reaffirmed, showing a persistence and American openness to provide support for the Kingdom. This, undoubtedly, will enhance Jordan’s presence and stance with international economic organizations, especially the International Monetary Fund, the World Bank, and international insurance companies, with which Jordan has made agreements and work programs. This will lead to more positive engagement and enhance the economic reform processes, abolish the structural disruptions and deficiencies from which the economy suffers, and support the COVID-19 recovery.

American aid to Jordan is a strategic matter, especially with the indirect “economic siege” the Kingdom suffers from due to neighboring countries. Thus, the government must rearrange its internal economic house and cooperate with the private sector to benefit from the recent positive political state that His Majesty created with US President Biden and other officials, as well as to benefit from the international economy, which runs the world and international economic decisions.

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