(MENAFN- Jordan Times) The four-way summit in Mecca on Sunday, called for by Saudi King Salman Bin Abdulaziz and attended by His Majesty King Abdullah, Kuwaiti Emir Sheikh Sabah Al Ahmad Al Jaber Al Sabah and UAE Prime Minister Sheikh Mohammad Bin Rashed Al Maktoum, has underlined Riyadh's commitment to preserving the stability of Jordan; a neighbour and a moderate country that embraces many shared values and goals. The summit was convened to help Jordan deal with an acute economic crisis that has triggered almost a week of mass protests across the Kingdom earlier this month. Under public pressure, the government submitted its resignation last week, and King Abdullah asked former minister of education Omar Razzaz to form a new government.
The three Gulf States agreed to provide a $2.5 billion aid package to Jordan that includes a deposit in the Central Bank of Jordan, World Bank guarantees, budgetary support over five years and financing for development projects. The aid package will help Jordan overcome an immediate financial crunch, but will also allow the new government to focus on medium and long term solutions rather than adopting quick and transient fixes. The long-term strategic objective in Razzaz's view is to transform Jordan from a rentier to a productive state.
The Gulf initiative will boost public morale in Jordan, assure local and foreign investors and creditors and provide a much needed reprieve for the new prime minister to adopt unorthodox methods in meeting a variety of social and economic challenges. In his letter of designation, King Abdullah called for a new social contract to be adopted, one that meets the aspirations of Jordanian citizens. He also instructed the government to initiate a national dialogue over the proposed income tax law that would also be expanded to include a thorough review of economic policies.
The Gulf initiative will encourage other countries, groups and international institutions to come to Jordan's aid. The International Monetary Fund has relaxed some of its terms, supported the call for a national dialogue and freed up some $70 million this year in credit facilities.
Jordan's economic crunch has been building up for some time. While short-sighted policies are partly to blame, regional conditions have compounded the problem. The hosting of Syrian refugees in the past seven years has put unprecedented pressure on the Jordanian treasury and the Kingdom's resources. Jordanian officials have been complaining of a decrease in international donations aimed at helping Jordan deal with the cost of hosting over 600,000 registered Syrian refugees. In addition, the crises in Iraq and Syria have led to the closure of borders; negatively affecting bilateral trade and the flow of goods and services.
Jordan has borne a huge responsibility in defending its borders with Syria and Iraq against terrorist infiltration and weapons and drug smugglers. Its security and stability has always been seen as part of the extended security and stability of the Gulf region. Regional turmoil has affected two important sectors; tourism and health services thus curtailing economic growth and straining government revenues. All of these factors have led to an exacerbation of the problems of unemployment and poverty resulting in an inflamed public opinion. Government austerity measures, adopted since 2010, have failed to kick-start the economy, reduce the size of the public sector and fix structural abnormalities in the Jordanian economy.
The latest aid package will support the local currency and help the government deal with critical budget deficits over the coming five years. But what is more important is the strategic decision by Gulf leaders to invest in the Kingdom's development projects in the long run. To its credit, Jordan remains one of the most stable and open countries in the Levant region. It has the human, legislative and institutional resources and infrastructure to attract foreign investors, especially in the fields of tourism, renewable energy, light industries, information technology, services, health, pharmaceuticals and others. Gulf investors, especially Kuwaiti, are already aware of the Kingdom's potential. It is hoped that the political will that was demonstrated in Mecca this week will open the path for fresh investments to pour in from the Gulf region.
Meanwhile, the new government in Jordan will have to respond to the Mecca initiative by preparing the right environment for local and foreign investors. Economic reforms will have to be given top priority in order to restore investor confidence and meet the high expectations of Jordanians. There is already a sense of optimism permeating across the Kingdom, but for that to last the government must be true to its promise to engage various political, economic and civil society sectors in a national dialogue that will provide a clear path towards common and realistic objectives.
It is important to note that Gulf Cooperation Council (GCC) had provided Jordan with a $5 billion aid package over five years in the wake of the so-called Arab Spring. But aside from the brotherly and historic ties that connect Jordan to its Gulf neighbour, hundreds of thousands of Jordanians work in GCC countries, coming to the Kingdom's aid reflects a responsible sense of leadership and a genuine realisation that the region's security and stability is whole and indivisible.
Osama Al Sharif is a journalist and political commentator based in Amman
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