Jordan has sense of nation but an underdeveloped economy

As an artificial country carved by colonial planners out of the sands of the Arabian deserts, Jordan has survived remarkably well. But while the country has developed a sense of nationhood, its economy has remained hopelessly underdeveloped. Years of dependence on international aid have left Jordan unprepared for the huge economic challenges ahead. The United States pledged more help on Saturday.

"The United States stands by Jordan and is determined to do all that it can to support and strengthen it," President Clinton said. A special aid package may be brought forward to Congress soon. The US already gives Jordan up to $300 million a year in grants.

Of late, the economic stagnation in Jordan has been the most pressing concern of both people and policymakers. Although official estimates put the unemployment figure at less than 15 per cent, community leaders and opposition politicians say it is as high as 30 per cent. It is not difficult to see why the economy has performed so poorly. Red tape and government regulation have swamped initiative, and corruption appears endemic. The dependence on free foreign money has not helped.

Mr Adam Stork has been trying to set up a pharmaceutical business in Jordan for the last six months and has finally abandoned his project. "The climate for doing business here is not conducive to long-term investment," he told The Irish Times, "Government officials seem to want to create barriers to doing business. I have been planning to manufacture and distribute in the region from a base near Amman. I had been repeatedly assured that the duty related to the products was zero."

He secured premises and sourced materials and machinery to set up the plant on the outskirts of the capital.

Six weeks before he was due to take possession of the factory, an official from the Ministry of Health informed him that a special tax of 65 per cent would be imposed on all his products. The tax rendered all Mr Stork's calculations void and he has decided to relocate his business to Dubai.

"Even if they rescinded the decision, which they told me they might, I couldn't take the chance. I'm going to a place where the business climate is more predictable and I'm taking my jobs and investment with me," he said.

The story is replicated across a range of sectors. The letter of the law appears very open and forward-looking but, in reality, few have been able to turn the noble ideas into concrete economic reality. Jordan has a funding gap and must rely on donations to maintain its modest standard of living.

Jordan's best hope is that the new king can reopen relations with the Gulf states and, crucially, with Saudi Arabia and Kuwait. Kuwait has held out the possibility of replacing Iraq as Jordan's source of cheap oil. King Abdullah told American journalists last week he was close to many highly-placed members of Gulf royal families.

Debts in Jordan have risen to $6.8 billion since the Gulf War in 1991. The country's close relationship with Iraq brought about an end to the stream of free Gulf money for King Hussein. More than 300,000 Palestinians working in the Gulf were sent back to Jordan, swelling the population by 10 per cent and creating a crisis. The advent of a new monarchy may change the perception of Jordan in the region, but the country seems a long way from standing on its own feet.