The impact of the geopolitical situation
At the cost of skilful manoeuvring and a real desire to normalize relations with its Israeli neighbor, Jordan has managed to keep itself out of the geopolitical knot in the Middle East. The stability of the monarchical regime makes the country a unique case in the region. It managed to spare its American ally and its Iraqi partner during the second Gulf War. It has weathered the Arab Spring without too many clashes and has managed to keep its population away from extremist radicalization. Nevertheless, Jordan is suffering the consequences of regional instability. Each new conflict brings a massive influx of refugees to the country. UNTSO, a United Nations agency responsible for monitoring the truce between Israel and Palestine, estimates that there are more than 2 million Palestinian refugees in Jordan. The two Gulf wars led to more than 500,000 Iraqis crossing the border. The civil war in Syria has thrown more than 1.3 million people into Jordanian refugee camps. This massive and repeated influx of refugees has left Jordan in an economically unsustainable situation. The vast majority of the immigrants live in poverty and struggle to integrate into the official economy. In 2021, the country has a record unemployment rate of 25%, compounded by the Covid-19 pandemic. In 2016, Jordan launched a refugee integration plan, "Jordan Compact," allowing it to increase the amount of international aid. France has thus put 1 billion euros on the table, while the United States has pledged 5.63 billion euros in aid over the period 2020-2025. This maintenance under perfusion is costing the country dearly. Its public debt amounts to 42 billion euros, or 106% of GDP.
Jordan's industrial resources
Unlike its Arab neighbors, Jordan does not benefit from any fossil fuel sources. The Iraqi conflict has weighed heavily on the country's energy balance, depriving it of cheap oil imports. In November 2021, a liter of petrol cost the motorist €1.33, while the average salary is barely €300 per month. To bring in foreign currency, the country nevertheless relies on two resources: phosphate and potash. Jordan is one of the world's leading producers of phosphate, with 8.5 million tons extracted in 2020. The ore is sold raw or processed into fertilizer. India accounts for 60% of these exports. The southern Dead Sea is rich in potash. With 2.35 million tons extracted annually, Jordan is the 7th largest producer in the world. It sells 90% of its production abroad, mainly to India and Asia. The king's desire to develop the economy, combined with foreign investment, has led to the emergence of new activities. The pharmaceutical industry, including the production of generic drugs, is the pride of the country. Some 30 sites provide 26,000 skilled jobs with above-average salaries. Hikma Pharmaceuticals, the industry leader, has posted a turnover of 3 billion in 2020. The population growth and the unstoppable development of the city of Amman have also generated new industries related to building and construction: cement and concrete, tile factories, air conditioners, elevators, piping, etc. The food industry (dairy products), the chemical industry (detergents, soap), leather processing, cigarette production, and an increasingly important textile industry make up the rest of Jordan's industrial spectrum. This all-out diversification has not, however, succeeded in tipping the balance of trade in the right direction. With a net deficit of 8 billion euros in 2020, the trade balance amounts to -21% of GDP.
Agriculture and services in the Jordanian economy
Agriculture is a very small part of the Jordanian economy, accounting for only 5.6 percent of GDP in 2018 and 3 percent of the labor force. It supports nearly 80,000 families in production areas in the Jordan Valley, the northern highlands and the eastern desert. The construction of a canal linking Lake Tiberias to Jordan in 1958 has greatly improved irrigation in the Jordan Valley. New agricultural techniques, the installation of greenhouses, and slightly more rainfall in the autumn led to some increase in productivity. However, with the loss of the West Bank in 1967, the country lost half of its arable land. Today, only 11% of Jordan's land is used for agriculture. Although agriculture feeds part of the population, it is not enough to meet all its needs and 98% of food products are imported. Jordan mainly produces alfalfa (337,000 tons), barley (38,000 tons) and wheat (31 tons). Fruits and vegetables (olives, tomatoes, cucumbers, almonds, pistachios, apricots, figs, dates, bananas, citrus fruits) are the only agricultural goods to be exported, mainly to the Gulf countries. The production of milk, eggs, poultry, goat meat and olive oil is self-sufficient.
The service sector is the most dynamic, providing nearly 80% of jobs in Jordan and contributing to more than 66% of GDP. It has continued to grow, driven in particular by the hotel and banking sectors. New information and communication technologies also play a major role in Jordan's service sector.
The place of tourism
Jordan's cultural and natural heritage is undoubtedly its greatest economic asset. The peace agreements signed with Israel in the 1990s led to an explosion in tourism. The country has invested considerably in its hotel and transport infrastructure to facilitate the stay of tourists. Hotels and travel agencies have multiplied, sites have been renovated and cities such as Wadi Musa (Petra), Diseh (Wadi Rum) and Aqaba now live mainly from this activity. The warm welcome of the Jordanians, the political stability of the country, the quality of the infrastructure allow to attract millions of visitors every year. The tourism sector contributes 20% of the GDP and provides 50,000 direct and indirect jobs. Nevertheless, the windfall is very dependent on the regional geopolitical context and international news. While the number of visitors had exceeded 2 million in 1988, it fell to 572,000 in 1990 during the First Gulf War. King Hussein's support for Saddam Hussein deprived the country of many visitors. The signing of a peace agreement with Israel in 1994 brought back tourists, especially from Europe. Israelis no longer hesitate to cross the border and have represented up to 11% of the tourist contingent in Jordan. But the periods of calm seem to be short-lived. The 2001 Intifada, the 2003 Iraq war, the 2005 Amman bombings, the 2009 economic crisis, the 2011 Arab Spring, and the lingering war in Syria have all caused Western tourists to flee. Only tourists from the Gulf States continue to visit the Hashemite Kingdom. In 2020, the Covid-19 pandemic hits the country hard again. By the end of 2019, the country recorded 4.5 million foreign tourist arrivals, breaking its record of attendance. The following year, only 750,000 showed up. Tourism revenues fell from 5.1 billion euros to 1.25 billion euros in the same years. The country's good management of the pandemic has allowed it to experience a slight rebound in visitation in 2021. Low-cost airlines resumed their flights from European countries in the fall. The government chooses to remain optimistic and expects a return to normal by the end of 2022. In the meantime, the site of Petra, which used to see up to 5,000 tourists per day, has only 500 on a good day. Travel agents and hoteliers have had to lay off staff while waiting for better days to return, while the hawkers of Petra have dipped into their savings to provide for their families. The lack of tourists is felt and those who still come sometimes have to pay a high price. While it used to cost 5 JOD to ride a donkey up to the Petra Monastery in 2019, Bedouins now charge 15 JOD.
Current issues
The anti-cost-of-living protests in 2011 and 2018 have acted as a clear signal to the government and the king. The priority is to maintain national unity at all costs by initiating economic reforms that should reduce the high unemployment rate and help integrate the millions of refugees. The good health of the Jordanian economy could also allow the country to get out of the infusion of international aid. The IMF, the World Bank, the Gulf States, the United States, Japan and France have all helped the country avoid sinking, but at the cost of an abysmal debt that has reached 106% of its GDP. The influx of refugees is putting a considerable strain on the country's infrastructure and resources, especially water. Although Jordanians consume only 90 liters of water per person per day (compared to 682 liters in Saudi Arabia), their needs exceed their resources. Jordan has only enough water for 20% of its population in its subsoil. The country compensates by buying 50 million cubic meters of water from Israel every year. In order to limit its dependence on the Hebrew state, a project to build a desalination plant for water from the Red Sea in Aqaba is currently being considered.
