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Royal rewards

By James Gavin May 2012

Jordan is viewed as a useful political bridge for the GCC's six member states, but several issues must first be resolved if the resource-poor kingdom is to become the seventh member of the club
Lacking both hydrocarbons and water resources, the Hashemite kingdom of Jordan appears an unlikely target of a charm offensive by the Gulf states.

But Jordan has in the past year loomed increasingly large on the Gulf Co-operation Council's (GCC's) radar screens, as both a key strategic ally in a broader regional battle that is pitting like-minded Arab states against Iran and its allies Syria and Iraq, and as a country that is potentially vulnerable to domestic unrest that could have ramifications across the Arab world.

Last September, Jordan began formal talks with the GCC about it joining the six-state council, the most serious sign of Gulf interest in bolstering ties with the kingdom. Morocco was also named as a potential membership candidate.

The renewed enthusiasm for Amman's membership is connected to the kingdom's royal pedigree. The Gulf states have a vested interest in the survival of the Arab world's monarchies, which have - so far at least - survived the uprisings in stronger fettle than the secular leaderships of Libya, Tunisia, Egypt, Syria and Yemen.

"Jordan is a gateway to the Gulf countries," says Mohammed al Masri, a researcher at the Centre for Strategic Studies (CSS) at the University of Jordan. "It's a bridge to the Palestine problem and to Syria, so it's an important country to them."

The GCC's increasing concern at the deteriorating situation in Syria has afforded Jordan a key role as the country that separates the Arabian Peninsula from Syria. Reports that Gulf-funded arms shipments to the Free Syrian Army (FSA) have been delivered via Jordan have been officially denied by Jordanian officials, but with the majority of Syria's trade going through its southern border, there is no doubt that the kingdom is under pressure to play a critical role as a conduit for Gulf aid to Syria's rebels.

Saudi Arabia in particular is alleged to have pushed strongly for Amman to allow its borders to open for weapons to reach the FSA, with the Wall Street Journal reporting in late March that talks between King Abdullah bin Abdulaziz and Jordan's King Abdullah had resulted in a personal plea to allow his counterpart to permit weapons shipments into Syria in return for economic assistance. Though Jordan's king has not yet agreed to the request, the pressure to allow such shipments are unlikely to abate as the regime of Bashar al Assad continues its assault against opposition bastions.

The deepening political ties between the GCC and Jordan have been accompanied by a growing commercial presence from Gulf investors. The United Arab Emirates' investments in Jordan are estimated at around $15 billion, with Kuwait not far behind at $8 billion, according to research from Emirates Industrial Bank. Kuwait's Burgan Bank, meanwhile, holds a majority stake in Jordan Kuwait Bank, one of the kingdom's main lenders.

Some major Gulf investors have been ramping up their exposure to Jordan in recent months. The most recent deal has seen Saudi utility company ACWA Power International increase its stake in Jordan's Central Electricity Generating Company ( CEGCO ). In early April the Saudi group bought a 25 per cent share in Enara Energy Investments, which owns 51 per cent of CEGCO , from Malaysia's Malakoff Corporation.

Jordan stands to gain even more from the Gulf in the form of official aid. In Feburary this year, Jordan's minister of planning and international co-operation Jaafar Hassan said the kingdom was bidding for $2.5 billion in funding from the GCC Development Fund, as part of the agreement with the GCC struck last year. In December 2011, the GCC had announced the establishment of a $5 billion fund for development plans in Jordan and Morocco.

Individually, the Gulf states have dug into their coffers to help out the cash-strapped Jordanian government, with Saudi Arabia providing some $1.5 billion in grants to help Jordan balance its 2011 budget. More aid may be needed as Jordan deals with a growing influx of Syrian refugees, numbering upwards of 90,000 - more than either Lebanon or Turkey have taken in.

There are other reasons, beyond the availability of cash, for Jordan to reach out to the Gulf states. The confluence of interests between Sunni monarchies is a clear driver, say analysts.

"Politically, Jordan is close to many Gulf countries, especially Saudi Arabia, when talking about dealing with the Iranian issue as well as the security of the Gulf states," says al Masri. "From Jordan's point of view, it makes clear sense to have an institutionalised form of co-operation."

The key relationship is between Jordan and Saudi Arabia. This has been tricky in the past, given the tensions between the House of Saud and the Hashemite throne - most recently in the 1991 Gulf War when the GCC states resented King Hussein's public support for Iraqi leader Saddam Hussein - but in recent years those tensions have been overcome.

During his visit to Riyadh in March, Jordan's King Abdullah noted his country's appreciation of Saudi Arabia's "constant" support to his country in the face of difficult economic conditions and amid continued efforts to achieve reforms. Saudi Arabia's King Abdullah, for his part, stressed his country's support for Jordan's reform drive to achieve comprehensive development.

The latter is a sensitive point for many Jordanians, who fear that the price for joining the GCC will be a slowing down of their country's political reform process. "There is a part of Jordanian society that is a bit concerned that the invitation to join the Gulf club is partly in order to forget or to postpone political reform," says al Masri.

They fear that the Gulf monarchies will want to quash any attempted weakening of the Hashemite throne's powers. However, the obvious economic benefits of closer co-operation with the GCC may outweigh residual fears that Gulf influence will undermine Jordan's tentative political reform process.

Perhaps the greatest benefit for Jordan is the opportunity to enter the Gulf labour market with unfettered access. Some 600,000 Jordanians are already working in the Gulf states and a study published by the Dubai Chamber of Commerce and Industry last year deemed Jordan as having "the most efficient and low cost labour force in the region".

"The Gulf is widely open to the Jordanian workforce and this would be of great advantage to Jordan, taking into consideration that it's GDP [gross domestic product] is dependent on external remittances," says al Masri.

Jordanians are keen to access the Gulf labour market and not to have to wait months for work visas - a persistent gripe among many Jordanians.

But Jordan's entry to the GCC is far from assured. Some Gulf governments have appeared less keen on widening membership to include countries from the Mashreq (generally defined as those countries to the East of Egypt but North of the Arabian Peninsula) and the Maghreb.

UAE foreign minister Shaikh Abdullah bin Zayed al Nahyan said last November that the GCC needed to learn from the experience of the European Union (EU) in the wake of its expanded membership, and its subsequent problems with the Euro. "There is no consensus at the moment to include Morocco and Jordan," he told reporters in Abu Dhabi at the time.

There are other hurdles to overcome. Jordan's scarce water reserves - residents of the capital can only avail themselves of 36 hours of running water every week - has prompted the government to seek to exploit the Disi aquifer, located 325 km South of Amman and shared with Saudi Arabia.

The Disi project aims to access up to 100 million cubic metres of water annually from a non-renewable source, at a cost in excess of $1 billion. However, a senior water official in Jordan told The Gulf that this potential resource is being degraded by Saudi Arabia, which is allegedly pumping water from the aquifer to feed its agricultural sector.

This is a source of friction between Amman and Riyadh, since Jordan's only other alterative source of future water supply is the Red Sea-Dead Sea conveyor project, an ambitious plan to replenish the Dead Sea with Red Sea reserves. But that is politically complicated as it involves both Israel and the Palestinian Authority.

An agreement is therefore needed between the two kingdoms about sharing the Disi aquifer, in order for Jordan to make greater use of a resource that hitherto only the Saudis have been in a position to tap.

Jordan may see its increased strategic value with regard to Iran, and Syria, as a potential bargaining tool on these critical issues. GCC governments, flush with cash, have already shown themselves willing to help out with budgetary support. If issues like the Disi aquifer can be resolved amicably, Amman stands to gain royally from its growing status in the Gulf.

© The Gulf 2012

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