The One Without the Oil

For many countries war is associated with economic booms. For many countries in the Middle East oil is an abundant resource. Jordan is the exception to both of those generalizations and their economy suffers as a result. Geographically, Jordan is bordered by Israel and Egypt on the west, Syria in the north, and Iraq and Saudi Arabia in the east. Throughout their history, efforts to stay neutral in conflicts of their neighbors have only landed them helplessly in the middle. As tempers flared, and continue to flare, between Israel and Palestine, Jordan felt pressures from both sides. 90% of Jordan’s population is Palestinian and Jordan and Israel have battled numerous times over a water supply issue that plagues Jordan. Conversely, Jordan has long been influenced by the Americans and the British, both of whom as a whole are Pro-Israel. Knowing that choosing sides would only disrupt the situation more; Jordan made attempts to declare neutrality, only to see it backfire in terms of foreign aid.

During the early 1990’s a similar decision was made concerning the brewing Persian Gulf Crisis. Again, Jordan was torn between two of their border neighbors as well as the United States. And again, a declaration of neutrality caused economic hardship when aid payments declined, forcing Jordan to in turn suspend debt payments to the IMF. To worsen matters, during the crisis Jordan faced large numbers of refugees entering the country, placing serious strains on already poor economic and social conditions. At the time, unemployment was at 15% while 30% of a population of 5 million lived below the national poverty line.

The emergence of refugees flooding the streets only abated these statistics, but had a larger effect that would be felt in the years. Jordan, in addition to lacking oil, also lacks a large enough fresh water supply to meet the demands of its citizens. The situation during the Persian Gulf Crisis drained what little water there was, leaving many homes completely dry. While other economies who had chosen sides in the conflict prospered as a result of weapons productions and increased demand for labor, Jordan hit a stand still, something that developing countries so desperately need to avoid. But of course they fought right back. And I say of course because if they hadn’t fought back, or least given it a valiant effort, I wouldn’t be writing about them.

As the conflict came to a close, the government of Jordan immediately began to implement several structural reforms in the economy, all of which showed immediate gains. At the top of the list was an export oriented industrialization strategy targeted at utilizing the resources they did have to produce phosphates and other chemicals as cheaply as possible, and then turn around and ship them out.

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